Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2016shares | |
Document and Entity Information | |
Entity Registrant Name | INTERNATIONAL BUSINESS MACHINES CORP |
Entity Central Index Key | 51,143 |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2016 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 959,961,852 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q1 |
Trading Symbol | IBM |
CONSOLIDATED STATEMENT OF EARNI
CONSOLIDATED STATEMENT OF EARNINGS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenue: | ||
Services | $ 12,391 | $ 12,366 |
Sales | 5,879 | 6,757 |
Financing | 414 | 467 |
Total revenue | 18,684 | 19,590 |
Cost: | ||
Services | 8,382 | 8,278 |
Sales | 1,378 | 1,625 |
Financing | 238 | 235 |
Total cost | 9,999 | 10,138 |
Gross profit | 8,686 | 9,452 |
Expense and other (income): | ||
Selling, general and administrative | 6,012 | 5,362 |
Research, development and engineering | 1,458 | 1,298 |
Intellectual property and custom development income | (217) | (173) |
Other (income) and expense | 253 | (143) |
Interest expense | 147 | 108 |
Total expense and other (income) | 7,652 | 6,451 |
Income from continuing operations before income taxes | 1,034 | 3,001 |
Provision for/(benefit from) income taxes | (983) | 585 |
Income from continuing operations | 2,016 | 2,415 |
Loss from discontinued operations, net of tax | (3) | (88) |
Net income | $ 2,014 | $ 2,328 |
Assuming dilution: | ||
Continuing operations (in dollars per share) | $ 2.09 | $ 2.44 |
Discontinued operations (in dollars per share) | 0 | (0.09) |
Total (in dollars per share) | 2.09 | 2.35 |
Basic: | ||
Continuing operations (in dollars per share) | 2.09 | 2.45 |
Discontinued operations (in dollars per share) | 0 | (0.09) |
Total (in dollars per share) | $ 2.09 | $ 2.36 |
Weighted-average number of common shares outstanding: (millions) | ||
Assuming dilution (in shares) | 964.4 | 992.3 |
Basic (in shares) | 961.7 | 988.1 |
Cash dividend per common share | $ 1.3 | $ 1.1 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||
Net income | $ 2,014 | $ 2,328 |
Other comprehensive income/(loss), before tax: | ||
Foreign currency translation adjustments | 239 | (452) |
Net changes related to available-for-sale securities: | ||
Unrealized gains/(losses) arising during the period | (36) | 32 |
Reclassification of (gains)/losses to net income | 37 | 0 |
Total net changes related to available-for-sale securities | 1 | 32 |
Unrealized gains/(losses) on cash flow hedges: | ||
Unrealized gains/(losses) arising during the period | (265) | 619 |
Reclassification of (gains)/losses to net income | (91) | (249) |
Total unrealized gains/(losses) on cash flow hedges | (356) | 370 |
Retirement-related benefit plans: | ||
Prior service costs/(credits) | 5 | |
Net (losses)/gains arising during the period | (147) | (77) |
Curtailments and settlements | 5 | 4 |
Amortization of prior service (credits)/cost | (25) | (26) |
Amortization of net (gains)/losses | 690 | 835 |
Total retirement-related benefit plans | 522 | 740 |
Other comprehensive income/(loss), before tax | 406 | 690 |
Income tax (expense)/benefit related to items of other comprehensive income | 202 | (657) |
Other comprehensive income/(loss) | 608 | 33 |
Total comprehensive income/(loss) | $ 2,622 | $ 2,361 |
CONSOLIDATED STATEMENT OF FINAN
CONSOLIDATED STATEMENT OF FINANCIAL POSITION - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 14,354 | $ 7,686 |
Marketable securities | 515 | 508 |
Notes and accounts receivable - trade (net of allowances of $336 in 2016 and $367 in 2015) | 8,527 | 8,333 |
Short-term financing receivables (net of allowances of $529 in 2016 and $490 in 2015) | 16,646 | 19,020 |
Other accounts receivable (net of allowances of $55 in 2016 and $51 in 2015) | 1,557 | 1,201 |
Inventories, at lower of average cost or market: | ||
Finished goods | 393 | 352 |
Work in process and raw materials | 1,296 | 1,199 |
Total inventories | 1,690 | 1,551 |
Prepaid expenses and other current assets | 4,334 | 4,205 |
Total current assets | 47,623 | 42,504 |
Property, plant and equipment | 29,627 | 29,342 |
Less: Accumulated depreciation | 18,717 | 18,615 |
Property, plant and equipment - net | 10,910 | 10,727 |
Long-term financing receivables (net of allowances of $154 in 2016 and $118 in 2015) | 9,266 | 10,013 |
Prepaid pension assets | 2,332 | 1,734 |
Deferred taxes | 4,809 | 4,822 |
Goodwill | 34,322 | 32,021 |
Intangible assets - net | 4,373 | 3,487 |
Investments and sundry assets | 5,223 | 5,187 |
Total assets | 118,856 | 110,495 |
Current liabilities: | ||
Taxes | 2,203 | 2,847 |
Short-term debt | 5,303 | 6,461 |
Accounts payable | 5,302 | 6,028 |
Compensation and benefits | 3,444 | 3,560 |
Deferred income | 12,609 | 11,021 |
Other accrued expenses and liabilities | 5,804 | 4,353 |
Total current liabilities | 34,664 | 34,269 |
Long-term debt | 40,254 | 33,428 |
Retirement and nonpension postretirement benefit obligations | 16,939 | 16,504 |
Deferred income | 3,662 | 3,771 |
Other liabilities | 8,264 | 8,099 |
Total liabilities | 103,784 | 96,071 |
IBM stockholders' equity: | ||
Common stock, par value $0.20 per share, and additional paid-in capital; Shares authorized: 4,687,500,000 (Shares issued: 2016 - 2,222,272,532; 2015 - 2,221,223,449) | 53,439 | 53,262 |
Retained earnings | 146,888 | 146,124 |
Treasury stock - at cost (Shares: 2016 - 1,262,310,680; 2015 - 1,255,494,724) | (156,404) | (155,518) |
Accumulated other comprehensive income/(loss) | (28,998) | (29,607) |
Total IBM stockholders' equity | 14,925 | 14,262 |
Noncontrolling interests | 147 | 162 |
Total equity | 15,072 | 14,424 |
Total liabilities and equity | $ 118,856 | $ 110,495 |
CONSOLIDATED STATEMENT OF FINA5
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||
Notes and accounts receivable - trade, allowances | $ 336 | $ 367 |
Short-term financing receivables, allowances | 529 | 490 |
Other accounts receivable, allowances | 55 | 51 |
Long-term financing receivables, allowances | $ 154 | $ 118 |
Common stock, par value (in dollars per share) | $ 0.2 | $ 0.2 |
Common stock, Shares authorized (in shares) | 4,687,500,000 | 4,687,500,000 |
Common stock, Shares issued (in shares) | 2,222,272,532 | 2,221,223,449 |
Treasury stock, Shares (in shares) | 1,262,310,680 | 1,255,494,724 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 2,014 | $ 2,328 |
Adjustments to reconcile net income to cash provided by operating activities | ||
Depreciation | 677 | 670 |
Amortization of intangibles | 347 | 298 |
Stock-based compensation | 133 | 127 |
Net (gain)/loss on asset sales and other | 172 | 352 |
Changes in operating assets and liabilities, net of acquisitions/divestitures | 2,302 | (165) |
Net cash provided by operating activities | 5,645 | 3,610 |
Cash flows from investing activities: | ||
Payments for property, plant and equipment | (956) | (857) |
Proceeds from disposition of property, plant and equipment | 129 | 47 |
Investment in software | (144) | (113) |
Acquisition of businesses, net of cash acquired | (2,590) | (148) |
Divestitures of businesses, net of cash transferred | 47 | 19 |
Non-operating finance receivables - net | 1,358 | 1,615 |
Purchases of marketable securities and other investments | (1,041) | (819) |
Proceeds from disposition of marketable securities and other investments | 1,169 | 816 |
Net cash (used in)/provided by investing activities | (2,028) | 560 |
Cash flows from financing activities: | ||
Proceeds from new debt | 8,085 | 2,290 |
Payments to settle debt | (2,211) | (2,824) |
Short-term borrowings/(repayments) less than 90 days - net | (910) | (776) |
Common stock repurchases | (939) | (1,165) |
Common stock transactions - other | 59 | 161 |
Cash dividends paid | (1,250) | (1,088) |
Net cash provided by/(used in) financing activities | 2,834 | (3,402) |
Effect of exchange rate changes on cash and cash equivalents | 217 | (449) |
Net change in cash and cash equivalents | 6,668 | 319 |
Cash and cash equivalents at January 1 | 7,686 | 8,476 |
Cash and cash equivalents at March 31 | $ 14,354 | $ 8,796 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Millions | Total | Total IBM Stockholders' Equity | Common Stock and Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income/(Loss) | Non-Controlling Interests |
Equity - at Dec. 31, 2014 | $ 12,014 | $ 11,868 | $ 52,666 | $ 137,793 | $ (150,715) | $ (27,875) | $ 146 |
Net income plus other comprehensive income/(loss) | |||||||
Net income | 2,328 | 2,328 | 2,328 | ||||
Other comprehensive income/(loss) | 33 | 33 | 33 | ||||
Total comprehensive income/(loss) | 2,361 | 2,361 | |||||
Cash dividends paid - common stock | (1,088) | (1,088) | (1,088) | ||||
Common stock issued under employee plans (Shares - 1,049,083 and 2,125,560 for the three months ended March 31, 2016 and 2015, respectively) | 259 | 259 | 259 | ||||
Purchases (Shares - 216,803 and 363,779) and sales (Shares - 40,129 and 187,271) of treasury stock under employee plans - net, for the three months ended March 31, 2016 and 2015, respectively | (35) | (35) | (3) | (33) | |||
Other treasury shares purchased, not retired (Shares - 6,639,282 and 7,738,744 for the three months ended March 31, 2016 and 2015, respectively) | (1,227) | (1,227) | (1,227) | ||||
Changes in other equity | 3 | 3 | 3 | ||||
Changes in noncontrolling interests | 3 | 3 | |||||
Equity - at Mar. 31, 2015 | 12,289 | 12,141 | 52,928 | 139,030 | (151,975) | (27,842) | 148 |
Equity - at Dec. 31, 2015 | 14,424 | 14,262 | 53,262 | 146,124 | (155,518) | (29,607) | 162 |
Net income plus other comprehensive income/(loss) | |||||||
Net income | 2,014 | 2,014 | 2,014 | ||||
Other comprehensive income/(loss) | 608 | 608 | 608 | ||||
Total comprehensive income/(loss) | 2,622 | 2,622 | |||||
Cash dividends paid - common stock | (1,250) | (1,250) | (1,250) | ||||
Common stock issued under employee plans (Shares - 1,049,083 and 2,125,560 for the three months ended March 31, 2016 and 2015, respectively) | 185 | 185 | 185 | ||||
Purchases (Shares - 216,803 and 363,779) and sales (Shares - 40,129 and 187,271) of treasury stock under employee plans - net, for the three months ended March 31, 2016 and 2015, respectively | (22) | (22) | 0 | (22) | |||
Other treasury shares purchased, not retired (Shares - 6,639,282 and 7,738,744 for the three months ended March 31, 2016 and 2015, respectively) | (863) | (863) | (863) | ||||
Changes in other equity | (9) | (9) | (9) | ||||
Changes in noncontrolling interests | (14) | (14) | |||||
Equity - at Mar. 31, 2016 | $ 15,072 | $ 14,925 | $ 53,439 | $ 146,888 | $ (156,404) | $ (28,998) | $ 147 |
CONSOLIDATED STATEMENT OF CHAN8
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) - shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||
Common stock issued under employee plans (in shares) | 1,049,083 | 2,125,560 |
Purchases of treasury stock under employee plans (in shares) | 216,803 | 363,779 |
Sales of treasury stock under employee plans (in shares) | 40,129 | 187,271 |
Other treasury shares purchased, not retired (in shares) | 6,639,282 | 7,738,744 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Basis of Presentation: | |
Basis of Presentation: | 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 sta tement of the company's results of operations, financial position and cash flows. T he preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, r evenue, 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, action s 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. Refer to the company's 201 5 Annual Report on page s 64 to 67 for a discussion of the company's critical accounting estimates. In January 2016, the company made a number of changes to its organizational structure and management system. These changes impacted the company’s reportable segments, but did not impact the company ’s C onsolidated Financial Statements. Refer to n ote 6, “Segments,” on pages 26 to 27 for additional information on the changes in reportable segments. The periods presented in this Form 10-Q are reported on a comparable basis. The company intends to file a revised 2015 Annual Report in a Form 8-K in the second quarter of 2016 to reclassify its historical segment information to reflect these changes. In the first quarter 2016, the company classified certain properties, primarily office space, as held for sale. As a result of the company's reassessment of its real estate portfolio, certain properties were approved for sale and are being actively marketed. The sales are expected to be complete d within twelve months. A pr e-tax impairment charge of $252 million was recorded to other income (expense) related to the applicable land, buildings and furniture and fixtures. The pre-tax charge reflected the difference between the net book value and the fair value (estimated procee ds) less the estimated costs to sell the properties. The fair value of these assets was not material at March 31, 2016. In the first quarter of 2016, the company reported a benefit from income taxes of $983 million, and its effective tax rate was (95.1) percent. This was primarily driven by the resolution of a long-standing non-U.S. tax matter in February 2016. See T axes on pages 56 to 57 for additional information. On October 20, 2014, the company announced a definitive agreement to divest its Microelectronics business and manufacturing operations to GLOBALFOUNDRIES. The assets and liabilities of the Microele ctronics business were reported as held for sale at December 31, 2014, and the operating results of the Microelectronics business have been reported as discontinued operations. The transaction closed on July 1, 2015. Refer to note 9, “Acquisitions/Divestit ures,” for additional information on the transaction. Noncontrolling interest amounts of $ 1.3 million and $ 1.2 million, net of tax, for the three months ended March 31, 2016 and 2015 , respectively , are included in the Consolidated Statement of Earnings within the other (income) and expense line item. 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 2015 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. Ce rtain prior year amounts have been reclassified to conform to the current year presentation. This is annotated where applicabl e. |
Accounting Changes
Accounting Changes | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Changes: | |
Accounting Changes: | 2 . Accounting Changes: New Standards to be Implemented In March 2016, the Financial Accounting Standards Board (FASB) issued guidance which changes the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification in the Consolidated Statement of Cash Flows. The guidance is effective January 1, 2017 and early adoption is permitted. The company is currently evaluating the impact of the new guidance. In February 2016, the FASB issued guidance which changes the accounting for leases. The guidance requires lessees to recognize right-of-use ass ets and lease liabilities for most leases in the Consolidated Statement of Financial Position. The guidance makes some changes to lessor accounting and aligns with the new revenue recognition guidance. The guidance also requires qualitative and quantitati ve disclosures to assess the amount, timing and uncertainty of cash flows arising from leases. The guidance is effective January 1, 2019 and early adoption is permitted. The company is currently evaluating the impact of the new guidance and the effective d ate . The com pany’s operating lease commitments were $6. 4 billion at December 31, 2015. In January 2016, the FASB issued guidance which addresses aspects of recognition, measurement, presentation and disclosure of financial instruments. Certain equity investments will be measured at fair value with changes recognized in net income. The amendment also simplifies the impairment test of equity investments that lack readily determinable fair value. The guidance is effective January 1, 2018 and early adoption is not permitted except for limited provisions. The guidance is not expected to have a material impact in the consolidated financial results. The FASB issued guidance on the recognition of revenue from contracts with customers in Ma y 2014 with amendments in 2015 and 2016 . Revenue recognition will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services . The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period pres ented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The guidance was initially effective January 1, 2017 and early adoption was n ot permitted. The amended guidance provides for a one-year deferral of the effective date to January 1, 2018, with an option of applying the standard on the original effective date. The company will adopt the guidance on January 1, 2018 and apply the cumul ative catch-up transition method. The company is continuing to evaluate the impact of the new guidance in the consolidated financial results. Standards Implemented In November 2015, the FASB issued guidance which requires deferred tax liabilitie s and assets be classified as noncurrent in the statement of financial position. The guidance was effective January 1, 2016 with early adoption permitted. The company adopted the guidance in the fourth quarter of 2015 on a retrospective basis. The company reclassified current deferred tax assets of $2.0 billion at December 31, 2014 to deferred tax assets and current deferred tax liabilities of $ 19 million at December 31, 2014 to other liabilities from other accrued expenses and liabilities in the Consolidat ed Statement of Financial Position. In order to offset deferred tax assets and liabilities for presentation as a single noncurrent amount by tax jurisdiction, the company also reclassified $ 178 million at December 31, 2014 from deferred tax assets to other liabilities in the Consolidated Statement of Financial Position. In September 2015, the FASB issued guidance eliminating the requirement that an acquirer in a business combination account for a measurement-period adjustment retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which the amount of the adjustment is determined. In addition, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previou s reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date should be presented separately on the face of the income statement or disclosed in the notes. The guidance was effective January 1, 2016 on a pr ospective basis. The guidance did not have a material impact in the consolidated financial results. In May 2015, the FASB issued guidance which r emoved the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also removed the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expe dient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. The guidance was effective January 1, 2016. The guidance was a change in disclosure only and did not have an impact in the consolidated financial results. In April 2015, the FASB issued guidance about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should ac count for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a services contra ct. All software licenses recognized under this guidance will be accounted for consistent with other licenses of intangible assets. The guidance was effective January 1, 2016 and the company adopted it on a prospective basis. The guidance did not have a ma terial impact in the consolidated financial results. In April 2015, the FASB issued guidance which requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The guidance was effective January 1, 2016 with early adoption permitted. The company adopted the guidance in the fourth quarter of 2015 on a retrospective basis. The company had debt issuance costs of $ 95 million and $ 74 million at March 31, 2016 and December 31, 2015, respectively . Debt issuance costs were previously included in investments and sundry assets in the Consolidated Statement of Financial Position. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2016 | |
Financial Instruments: | |
Financial Instruments: | 3 . Financial Instruments: Fair Value Measurements Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the company is required t o classify certain assets and liabilities based on the following fair value hierarchy: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date; Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3—Unobservable inputs for the asset or liability. The guidance requires the use of observable market data if such data is avail able without undue cost and effort. When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items as Level 1. If quoted market prices are not available, fair value is based up on internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value dr iver that is significant to the valuation. The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument. In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calcula ted using the methodologies described below for several parameters that market participants would consider in determining fair value: Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument. Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The metho dology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market. As an example, the fair value of derivatives is derived utiliz ing a discounted cash flow model that uses observable market inputs such as known notional value amounts, yield curves, spot and forward exchange rates as well as discount rates. These inputs relate to liquid, heavily traded currencies with active markets which are available for the full term of the derivative. Certain financial assets are measured at fair value on a nonrecurring basis. These assets include equity method investments that are recognized at fair value at the measurement date to the ex tent that they are deemed to be other-than-temporarily impaired. Certain assets that are measured at fair value on a recurring basis can be subject to nonrecurring fair value measurements. These assets include available-for-sale equity investments that are deemed to be other-than-temporarily impaired. In the event of an other-than-temporary impairment of a financial investment, fair value is measured using a model described above. Non-financial assets such as property, plant and equipment, land, goo dwill and intangible assets are also subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for nonfinancial assets depend on the type of asset. During the three months ended March 31, 2016 , the compan y recorded an impairment on certain assets that are classified as held for sale. See note 1, “Basis of Presentation,” for additional information. There were no material impairments of non-financial assets for the three months ended March 31, 2015 . Accounting guidance permits the measurement of eligible financial assets, financial liabilities and firm commitments at fair value, on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. This election is irrevocable. The company has not applied the fair value option to any eligible assets or liabilities. The following tables present the company’s financial assets and financial liabilities that are measured a t fair value on a recurring basis at March 31, 2016 and December 31, 2015 . (Dollars in millions) At March 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ 5,784 $ — $ 5,784 Commercial paper — 325 — 325 Money market funds 3,076 — — 3,076 U.S. government securities — 1,300 — 1,300 Canadian government securities — 463 — 463 Other securities — 162 — 162 Total 3,076 8,034 — 11,109 (6) Debt securities - current (2) — 514 — 514 (6) Debt securities - noncurrent (3) 1 7 — 8 Available-for-sale equity investments (3) 9 — — 9 Derivative assets (4) Interest rate contracts — 876 — 876 Foreign exchange contracts — 206 — 206 Equity contracts — 48 — 48 Total — 1,129 — 1,129 (7) Total assets $ 3,086 $ 9,685 $ — $ 12,770 (7) Liabilities: Derivative liabilities (5) Foreign exchange contracts $ — $ 460 $ — $ 460 Equity contracts — 1 — 1 Interest rate contracts — 0 — 0 Total liabilities $ — $ 461 $ — $ 461 (7) (1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. (2) U.S. government securities, time deposits and certificates of deposit reported as marketable securities in the Consolidated Statement of Financial Position. (3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. (4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in t he Consolidated Statement of Financial Position at March 31, 2016 were $165 million and $964 million, respectively. (5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Statement of Financial Position at March 31, 2016 were $443 million and $18 million, respectively. (6) Available-for-sale securities with carrying values that approximate fair value. (7) If derivative exposures cover ed by a qualifying master netting agreement had been netted in the Consolidated Statement of Financial Position, the total derivative asset and liability positions each would have been reduced by $270 million. (Dollars in millions) At December 31, 2015 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ 2,856 $ — $ 2,856 Money market funds 2,069 — — 2,069 Other securities — 18 — 18 Total 2,069 2,874 — 4,943 (6) Debt securities - current (2) — 506 — 506 (6) Debt securities - noncurrent (3) 1 6 — 8 Trading security investments (3) 28 — — 28 Available-for-sale equity investments (3) 192 — — 192 Derivative assets (4) Interest rate contracts — 656 — 656 Foreign exchange contracts — 332 — 332 Equity contracts — 6 — 6 Total — 994 — 994 (7) Total assets $ 2,290 $ 4,381 $ — $ 6,671 (7) Liabilities: Derivative liabilities (5) Foreign exchange contracts $ — $ 164 $ — $ 164 Equity contracts — 19 — 19 Interest rate contracts — 3 — 3 Total liabilities $ — $ 186 $ — $ 186 (7) (1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. (2) Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of Financial Position. (3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. (4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated S tatement of Financial Position at December 31, 2015 were $292 million and $702 million, respectively. (5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consoli dated Statement of Financial Position at December 31, 2015 were $164 million and $22 million, respectively. (6) Available-for-sale securities with carrying values that approximate fair value. (7) If derivative exposures covered by a qualifying master n etting agreement had been netted in the Consolidated Statement of Financial Position, the total derivative asset and liability positions each would have been reduced by $139 million. There were no transfers between Levels 1 and 2 for the three mon ths ended March 31, 2016 and the year ended December 31, 2015 . Financial Assets and Liabilities Not Measured at Fair Value Short-Term Receivables and Payables Notes and other accounts receivable and other investments are financial assets with carrying values that approximate fair value. Accounts payable, other accrued expenses and short-term debt (excluding the current portion of long-term debt) are financial liabilities with carrying values that approximate fair value. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. Loans and Long-term Receivables Fair values are based on discounted future ca sh flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At March 31, 2016 and December 31, 2015 , the difference between the carrying amount and estimated fair value for loans an d long-term receivables was immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. Long-Term Debt Fair value of publicly-traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. The carrying amount of long-term debt was $ 40,254 million and $ 33,428 million, and the estimated fair value was $ 42,980 million and $ 35,220 million at March 31, 2016 and December 31, 2015 , respectively. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy. Debt and Marketable Equity Securities The compa ny’s cash equivalents and current debt securities are considered available-for-sale and recorded at fair value, which is not materially different from carrying value, in the Consolidated Statement of Financial Position. The following tables summar ize the company’s noncurrent debt and marketable equity securities which are considered available-for-sale and recorded at fair value in the Consolidated Statement of Financial Position. Gross Gross (Dollars in millions) Adjusted Unrealized Unrealized Fair At March 31, 2016: Cost Gains Losses Value Debt securities – noncurrent (1) $ 5 $ 3 $ — $ 8 Available-for-sale equity investments (1) $ 1 $ 8 $ 0 $ 9 (1) Included within investments and sundry assets in the Consolidated Statement of Financial Position. Gross Gross (Dollars in millions) Adjusted Unrealized Unrealized Fair At December 31, 2015: Cost Gains Losses Value Debt securities – noncurrent (1) $ 5 $ 3 $ — $ 8 Available-for-sale equity investments (1) $ 186 $ 6 $ 0 $ 192 (1) Included within investments and sundry assets in the Consolidated Statement of Financial Position. During the fourth quarter of 2014, the company acquired equity securities in conjunction with the sale of the System x business which were classified as available-for-sale securities. Based on an evaluation of available evidence as of December 31, 2015, the company recorded an other-than-temporary impairment loss of $86 million resulting in an adjusted cost basis of $18 5 million as of December 31, 2015. In the first quarter of 2016, the company recorded a gross realized loss of $37 million (before t axes) related to the sale of all the outstanding shares. The loss on this sale was recorded in other (income) and expense in the Consolidated Statement of Earnings. Sales of debt and available-for-sale equity investments during the period were as f ollows: (Dollars in millions) For the three months ended March 31: 2016 2015 Proceeds $ 148 $ 4 Gross realized gains (before taxes) — 0 Gross realized losses (before taxes) 37 0 The after-tax net unrealized holding gains/(losses) on available-for-sale debt and marketable equity securities that have been included in other comprehensive income/(loss) for the period and the after-tax net (gains)/losses reclassified from accumulated other comprehensive income/(loss) to net income were as follows: (Dollars in millions) For the three months ended March 31: 2016 2015 Net unrealized gains/(losses) arising during the period $ (22) $ 20 Net unrealized (gains)/losses reclassified to net income* 23 0 * There were no writedowns for the three months ended March 31, 2016 and 2015, respectively. The contractual maturities of substantially all available-for-sale debt securities are less than one year at March 31, 2016 . Derivative Financial Instruments The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other fina ncial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchan ge rate fluctuations. As a result of the use of derivative instruments, the company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the c ompany has a policy of only entering into contracts with carefully selected major financial institutions based upon their overall credit profile. The company’s established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. The right of set-off that exists under certain of these arrangements enables the legal entities of the company subject to the arrangeme nt to net amounts due to and from the counterparty reducing the maximum loss from credit risk in the event of counterparty default. The company is also a party to collateral security arrangements with most of its major derivative counterparties. Th ese arrangements require the company to hold or post collateral (cash or U.S. Treasury securities) when the derivative fair values exceed contractually established thresholds. Posting thresholds can be fixed or can vary based on credit default swap pricing or credit ratings received from the major credit agencies. The aggregate fair value of all derivative instruments under these collateralized arrangements that were in a liability position at March 31, 2016 and December 31, 2015 was $166 million and $28 milli on, respectively, for which no collateral was posted at March 31, 2016 and December 31, 2015 . Full collateralization of these agreements would be required in the event that the company’s credit rating falls below investment grade or if its credit default swap spread exceeds 250 basis points, as applicable, pursuant to the terms of the collateral security arrangements. The aggregate fair value of derivative instruments in asset positions as of March 31, 2016 and December 31, 2015 was $1,129 million and $994 millio n, respectively. This amount represents the maximum exposure to loss at the reporting date if the counterparties failed to perform as contracted. This exposure was reduced by $270 million and $139 million at March 31, 2016 and December 31, 2015 , respectively, of liabilities included in master netting arrangements with those counterparties. Additionally, at March 31, 2016 and December 31, 2015 , this exposure was reduced by $131 million and $90 million of cash collateral, and $71 million and $40 million of non-cash collateral in U.S. Treasury securities, respectively, received by the company. At March 31, 2016 and December 31, 2015 , the net exposure related to derivative assets recorded in the Consolidated Statement of Financial Position was $657 million and $726 milli on, respectively. At March 31, 2016 and December 31, 2015 , the net exposure related to derivative liabilities recorded in the Consolidated Statement of Financial Position was $191 million and $47 million, respectively. In the Consolidated Statement of Financial Position, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments. No amount was recognized in other receivables at March 31, 2016 or December 31, 2015 for the right to reclaim cash collateral. The amount recognized in accounts payable for the obligation to return cash collateral was $131 million and $90 million at March 31, 2016 and December 31, 2015 , respectively. The company restricts the use of cash collateral received to rehypothecation , and therefore reports it in prepaid expenses and other current assets in the Consolidated Statement of Financial Position. No amount was rehypothecated at March 31, 2016 and December 31, 2015 . The company may employ derivative instruments to hedge the volatility in stockholders’ equity resulting from changes in currency exchange rates of significant foreign su bsidiaries of the company with respect to the U.S. dollar. These instruments, designated as net investment hedges, expose the company to liquidity risk as the derivatives have an immediate cash flow impact upon maturity which is not offset by a cash flow f rom the translation of the underlying hedged equity. The company monitors this cash loss potential on an ongoing basis and may discontinue some of these hedging relationships by de-designating or terminating the derivative instrument in order to manage the liquidity risk. Although not designated as accounting hedges, the company may utilize derivatives to offset the changes in the fair value of the de-designated instruments from the date of de-designation until maturity. In its hedging programs, th e company uses forward contracts, futures contracts, interest-rate swaps, cross-currency swaps, and options depending upon the underlying exposure. The company is not a party to leveraged derivative instruments. A brief description of the major he dging programs, categorized by underlying risk, follows. Interest Rate Risk Fixed and Variable Rate Borrowings The company issues debt in the global capital markets to fund its operations and financing business . Access to cost-ef fective financing can result in interest rate mismatches with the underlying assets. To manage these mismatches and to reduce overall interest cost, the company uses interest-rate swaps to convert specific fixed-rate debt issuances into variable-rate debt (i.e., fair value hedges) and to convert specific variable-rate debt issuances into fixed-rate debt (i.e., cash flow hedges). At March 31, 2016 and December 31, 2015 , the total notional amount of the company’s interest rate swaps was $7.3 billion at both peri ods. The weighted-average remaining maturity of these instruments at March 31, 2016 and December 31, 2015 was approximately 7.0 years and 7.2 years, respectively. Forecasted Debt Issuance The company is exposed to interest rate volatility on futur e debt issuances. To manage this risk, the company may use forward starting interest-rate swaps to lock in the rate on the interest payments related to the forecasted debt issuance. These swaps are accounted for as cash flow hedges. The company did not hav e any derivative instruments relating to this program outstanding at March 31, 2016 and December 31, 2015 . At March 31, 2016 and December 31, 2015 , net gains of less than $1 million (before taxes), respectively, were recorded in accumulated other compreh ensive income/(loss) in connection with cash flow hedges of the company’s borrowings. Within these amounts, less than $1 million of gains, respectively, are expected to be reclassified to net income within the next 12 months, providing an offsetting econom ic impact against the underlying transactions. Foreign Exchange Risk Long-Term Investments in Foreign Subsidiaries (Net Investment) A large portion of the company’s foreign currency denominated debt portfolio is designated as a hedge of net investment in foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates in the functional currency of major foreign subsidiaries with respect to the U.S. dollar. The company also uses cross-currency swaps and foreign exchange forward contracts for this risk management purpose. At March 31, 2016 and December 31, 2015 , the total notional amount of derivative instruments designated as net investment hedges was $6.6 billion and $5.5 billion, respectively. The weighted-average remaining maturity of these instruments at March 31, 2016 and December 31, 2015 was approximately 0.2 years for both periods. Anticipated Royalties and Cost Transactions The company’s operations generate significant nonfunctional currency, third-party vendor payments and intercompany payments for royalties and goods and services among the company’s non-U.S. subsidiaries and with the parent company. In anticipation of these foreign currency cash flows and in view of t he volatility of the currency markets, the company selectively employs foreign exchange forward contracts to manage its currency risk. These forward contracts are accounted for as cash flow hedges. The maximum length of time over which the company has hedg ed its exposure to the variability in future cash flows is four years. At March 31, 2016 and December 31, 2015 , the total notional amount of forward contracts designated as cash flow hedges of forecasted royalty and cost transactions was $8.2 billion for both periods. The weighted-average remaining maturity of these instruments at March 31, 2016 and December 31, 2015 was 0.7 years for both periods. At March 31, 2016 and December 31, 2015 , in connection with cash flow hedges of anticipated royalties and cost transactions, the company recorded net losses of $193 million and net gains of $147 million (before taxes), respectively, in accumulated other comprehensive income/(loss). Within these amounts, $232 million of losses and $121 million of gains, respectivel y, are expected to be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions. Foreign Currency Denominated Borrowings The company is exposed to exchange rate volatility on foreign currency denominated debt. To manage this risk, the company employs cross-currency swaps to convert fixed-rate foreign currency denominated debt to fixed-rate debt denominated in the functional currency of the borrowing entity. These swaps are accounted for as cash flow hedges. The maximum length of time over which the company has hedged its exposure to the variability in future cash flows is approximately nine years. At March 31, 2016 the total notional amount of cross-currency swaps designated as cash flow hedges of foreign currency denominated debt was $1.4 billion. At December 31, 2015 , no amounts were outstanding under this program. At March 31, 2016 and December 31, 2015 , in connection with cash flow hedges of foreign currency d enominated borrowings, the company recorded net losses of $18 million and net losses of $2 million (before taxes), respectively, in accumulated other comprehensive income/(loss). Within these amounts, $19 million of gains and less than $1 million of losses , respectively, are expected to be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying exposure. Subsidiary Cash and Foreign Currency Asset/Liability Management The company uses i ts Global Treasury Centers to manage the cash of its subsidiaries. These centers principally use currency swaps to convert cash flows in a cost-effective manner. In addition, the company uses foreign exchange forward contracts to economically hedge, on a n et basis, the foreign currency exposure of a portion of the company’s nonfunctional currency assets and liabilities. The terms of these forward and swap contracts are generally less than one year. The changes in the fair values of these contracts and of th e underlying hedged exposures are generally offsetting and are recorded in other (income) and expense in the Consolidated Statement of Earnings. At March 31, 2016 and December 31, 2015 , the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $9.7 billion and $11.7 billion, respectively. Equity Risk Management The company is exposed to market price changes in certain broad market indices and in the company’s own stock primarily related to certain obl igations to employees. Changes in the overall value of these employee compensation obligations are recorded in selling, general and administrative (SG&A) expense in the Consolidated Statement of Earnings. Although not designated as accounting hedges, the c ompany utilizes derivatives, including equity swaps and futures, to economically hedge the exposures related to its employee compensation obligations. The derivatives are linked to the total return on certain broad market indices or the total return on the company’s common stock, and are recorded at fair value with gains or losses also reported in SG&A expense in the Consolidated Statement of Earnings. At March 31, 2016 and December 31, 2015 , the total notional amount of derivative instruments in economic hedg es of these compensation obligations was $1.1 billion and $1.2 billion, respectively. Other Risks The company may hold warrants to purchase shares of common stock in connection with various investments that are deemed derivatives because they cont ain net share or net cash settlement provisions. The company records the changes in the fair value of these warrants in other (income) and expense in the Consolidated Statement of Earnings. The company did not have any warrants qualifying as derivatives ou tstanding at March 31, 2016 and December 31, 2015 . The company is exposed to a potential loss if a client fails to pay amounts due under contractual terms. The company may utilize credit default swaps to economically hedge its credit exposures. The swaps are recorded at fair value with gains and losses reported in other (income) and expense in the Consolidated Statement of Earnings. The company did not have any derivative instrumen ts relating to this program outstanding at March 31, 2016 and December 31, 2015 . The company is exposed to market volatility on certain investment securities. The company may utilize options or forwards to economically hedge its market exposure. The d erivatives are recorded at fair value with gains and losses reported in other (income) and expense in the Consolidated Statement of Earnings. At March 31, 2016 the company did not have any derivative instruments relating to this program outstanding. At December 31, 2015 the total notional amount of derivative instruments in economic hedges of investment securities was less than $0.1 billion. The following tables provide a quantitative summary of the derivative and non-derivative instrument-related risk management activity as of March 31, 2016 and December 31, 2015 , as well as for the three months ended March 31, 2016 and 2015 , respectively. Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position As of March 31, 2016 and December 31, 2015 (Dollars in millions) Fair Value of Derivative Assets Fair Value of Derivative Liabilities Balance Sheet Balance Sheet Classification 3/31/2016 12/31/2015 Classification 3/31/2016 12/31/2015 Designated as hedging instruments: Interest rate contracts: Prepaid expenses and Other accrued other current assets $ — $ — expenses and liabilities $ — $ — Investments and sundry assets 876 656 Other liabilities — 3 Foreign exchange Prepaid expenses and Other accrued contracts: other current assets 37 197 expenses and liabilities 363 70 Investments and sundry assets 47 5 Other liabilities 11 19 Fair value of derivative Fair value of derivative assets $ 960 $ 858 liabilities $ 374 $ 92 Not designated as hedging instruments: Foreign exchange Prepaid expenses and Other accrued contracts: other current assets $ 81 $ 90 expenses and liabilities $ 79 $ 75 Investments and sundry assets 41 40 Other liabilities 7 — Equity contracts: Prepaid expenses and Other accrued other current assets 48 6 expenses and liabilities 1 19 Investments and sundry assets — — Other liabilities — — Fair value of derivative Fair value of derivative assets $ 170 $ 136 liabilities $ 87 $ 94 Total debt designated as hedging instruments: Short-term debt N/A N/A $ 386 $ — Long-term debt N/A N/A $ 8,947 $ 7,945 Total $ 1,129 $ 994 $ 9,794 $ 8,131 N/A-not applicable The Effect of Derivative Instruments in the Consolidated Statement of Earnings For the three months ended March 31, 2016 and 2015 (Dollars in millions) Gain (Loss) Recognized in Earnings Consolidated Statement of Recognized on Attributable to Risk Earnings Line Item Derivatives(1) Being Hedged(2) For the three months ended March 31: 2016 2015 2016 2015 Derivative instruments in fair value hedges(5): Interest rate contracts Cost of financing $ 137 $ 97 $ (112) $ (66) Interest expense 147 74 (120) (51) Derivative instruments not designated as hedging instruments(1): Foreign exchange contracts Other (income) and expense 121 17 N/A N/A Interest rate contracts Other (income) and expense 0 (1) N/A N/A Equity contracts SG&A expense 21 24 N/A N/A Other (income) and expense (1) 0 N/A N/A Total $ 426 $ 211 $ (233) $ (118) (Dollars in millions) Gain (Loss) Recognized in Earnings and Other Comprehensive Income Consolidated (Ineffectiveness) and Effective Portion Statement of Effective Portion Reclassified Amounts Excluded from Recognized in OCI Earnings Line Item from AOCI Effectiveness Testing(3) For the three months ended March 31: 2016 2015 2016 2015 2016 2015 Derivative instruments in cash flow hedges: Interest rate contracts $ — $ — Interest expense $ (2) $ 0 $ — $ — Other (income) Foreign exchange (265) 619 and expense 87 160 1 0 contracts Cost of sales 3 50 — — SG&A expense 3 40 — — Instruments in net investment hedges(4): Foreign exchange contracts (693) 694 Interest expense — — 10 0 Total $ (959) $ 1,313 $ 91 $ 249 $ 11 $ 1 N/A-not applicable Note: OCI represents Other comprehensive income/(loss) in the Consolidated Statement of Comprehensive Income and AOCI represents Accumulated other comprehensive income/(loss) in the Consolidated Statement of Changes in Equity. The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. The amount includes basis adjustments to the carrying val ue of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. The amount of gain/(loss) recognized in income represents ineffectiveness on hedge relationships. Inst ruments in net investment hedges include der ivative and non-derivative instruments. For the three month period s en |
Financing Receivables
Financing Receivables | 3 Months Ended |
Mar. 31, 2016 | |
Financing Receivables: | |
Financing Receivables: | 4. Financing Receivables: The following table presents financing receivables, net of allowances for credit losses, including residual values. At March 31, At December 31, (Dollars in millions) 2016 2015 Current: Net investment in sales-type and direct financing leases $ 3,145 $ 3,057 Commercial financing receivables 6,906 8,948 Client loan and installment payment receivables (loans) 6,596 7,015 Total $ 16,646 $ 19,020 Noncurrent: Net investment in sales-type and direct financing leases $ 4,350 $ 4,501 Client loan and installment payment receivables (loans) 4,915 5,512 Total $ 9,266 $ 10,013 Net investment in sales-type and direct financing leases relates principally to the company’s systems products and are for terms ranging generally from two to six years. Net investment in sales-type and direct financing leases includes unguaranteed residual values of $ 627 million and $ 645 million at March 31, 2016 and December 31, 2015 , respectively, and is reflected net of unearned income of $ 588 million and $ 536 million, and net of allowance for credit losses of $ 246 million and $ 213 million at those dates, respectively. Commercial financing receivables, net of allowance for credit losses of $ 14 million and $ 19 million at March 31, 2016 and December 31, 2015 , respectively, relate primarily to inventory and accounts receivable financing for deale rs and remarketers of IBM and OEM products. Payment terms for inventory and accounts receivable financing generally range from 30 to 90 days. Client loan and installment payment receivables (loans) , net of allowance for credit losses of $ 420 millio n and $ 377 million at March 31, 2016 and December 31, 2015 , respectively, are loans that are provided primarily to clients to finance the purchase of hardware, software and services. Payment terms on these financing arrangements are generally for terms up to seven years . Client loan and installment payment financing contracts are priced independently at competitive market rates. The company has a history of enforcing the terms of these financing agreements. The company utilizes certain of its f inancing receivables as collateral for nonrecourse borrowings. Financing receivables pledged as collateral for borrowings were $ 600 million and $ 545 million at March 31, 2016 and December 31, 2015 , respectively. The company did not have any financing receivables held for sale as of March 31, 2016 and December 31, 2015 . Financing Receivables by Portfolio Segment The following tables present financing receivables on a gross basis, excluding the allowance for credit losses and residual value, by portfolio segment and by class, excluding commercial financing receivables and other miscellaneous financing receivables at March 31, 2016 and December 31, 2015 . The company determines its allowance for credit losses based on two portfolio segments : lease receivables and loan receivables , and further segments the portfolio into two classes: major markets a nd growth markets. (Dollars in millions) Major Growth At March 31, 2016 Markets Markets Total Financing receivables: Lease receivables $ 5,461 $ 1,566 $ 7,027 Loan receivables 9,034 2,897 11,931 Ending balance $ 14,495 $ 4,463 $ 18,959 Collectively evaluated for impairment $ 14,404 $ 4,005 $ 18,409 Individually evaluated for impairment $ 92 $ 458 $ 550 Allowance for credit losses: Beginning balance at January 1, 2016 Lease receivables $ 25 $ 188 $ 213 Loan receivables 83 293 377 Total $ 109 $ 481 $ 590 Write-offs (1) (17) (19) Provision 6 74 80 Other 4 10 14 Ending balance at March 31, 2016 $ 118 $ 548 $ 666 Lease receivables $ 32 $ 214 $ 246 Loan receivables $ 86 $ 334 $ 420 Collectively evaluated for impairment $ 39 $ 105 $ 144 Individually evaluated for impairment $ 79 $ 443 $ 522 (Dollars in millions) Major Growth At December 31, 2015 Markets Markets Total Financing receivables: Lease receivables $ 5,517 $ 1,524 $ 7,041 Loan receivables 9,739 3,165 12,904 Ending balance $ 15,256 $ 4,689 $ 19,945 Collectively evaluated for impairment $ 15,180 $ 4,227 $ 19,406 Individually evaluated for impairment $ 76 $ 462 $ 539 Allowance for credit losses: Beginning balance at January 1, 2015 Lease receivables $ 32 $ 133 $ 165 Loan receivables 79 317 396 Total $ 111 $ 450 $ 561 Write-offs (14) (48) (62) Provision 20 122 141 Other (8) (43) (51) Ending balance at December 31, 2015 $ 109 $ 481 $ 590 Lease receivables $ 25 $ 188 $ 213 Loan receivables $ 83 $ 293 $ 377 Collectively evaluated for impairment $ 43 $ 36 $ 79 Individually evaluated for impairment $ 65 $ 445 $ 511 When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For individually evaluated receivables, the company determines the expected cash flow for the receivable and calculates an estimate of the potential loss and the probability of loss. For those accounts in which the loss is probable, the company records a specific reserve. In addition, the company records an unallocated reserve that is determined by applying a reserve rate to its differ ent portfolios, excluding accounts that have been specifically reserved. This reserve rate is based upon credit rating, probability of default, term, characteristics (lease/loan) and loss history. Financing Receivables on Non-Accrual Status The f ollowing table presents the recorded investment in financing receivables which were on non-accrual status at March 31, 2016 and December 31, 2015 . At March 31, At December 31, (Dollars in millions) 2016 2015 Major markets $ 2 $ 2 Growth markets 49 63 Total lease receivables $ 52 $ 65 Major markets $ 15 $ 13 Growth markets 107 91 Total loan receivables $ 123 $ 104 Total receivables $ 174 $ 168 Impaired Loans The company considers any loan with an individually evaluated reserve as an impaired loan. Depending on the level of impairment, loans will also be placed on non-accrual status. The following tables present impaired client loan receivables. At March 31, 2016 At December 31, 2015 Recorded Related Recorded Related (Dollars in millions) Investment Allowance Investment Allowance Major markets $ 66 $ 63 $ 50 $ 47 Growth markets 296 281 297 284 Total $ 362 $ 343 $ 347 $ 331 Interest Average Interest Income (Dollars in millions) Recorded Income Recognized on For the three months ended March 31, 2016: Investment Recognized Cash Basis Major markets $ 58 $ 0 $ — Growth markets 296 0 — Total $ 354 $ 0 $ — Interest Average Interest Income (Dollars in millions) Recorded Income Recognized on For the three months ended March 31, 2015: Investment Recognized Cash Basis Major markets $ 52 $ 0 $ — Growth markets 315 0 — Total $ 367 $ 0 $ — Credit Quality Indicators The company’s credit quality indicators , which are based on rating agency data , publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Moody’s Investors Service credit ratings as shown below. The company uses information provided by Moody ’s , where available, as o ne of many inputs in its determination of customer credit ratings. The following tables present the gross recorded investment for each class of receivables, by credit quality indicator, at March 31, 2016 and December 31, 2015 . Receivables with a credi t quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators do not reflect mitigation actions that the company takes to transfer credit risk to third parties . Lease Receivables Loan Receivables (Dollars in millions) Major Growth Major Growth At March 31, 2016: Markets Markets Markets Markets Credit Rating: Aaa – Aa3 $ 514 $ 40 $ 850 $ 73 A1 – A3 1,230 138 2,035 254 Baa1 – Baa3 1,506 246 2,491 455 Ba1 – Ba2 1,240 385 2,051 712 Ba3 – B1 543 414 899 765 B2 – B3 391 245 648 454 Caa – D 37 99 61 183 Total $ 5,461 $ 1,566 $ 9,034 $ 2,897 At March 31, 2016 , the industries which made up Global Financing’s receivables portfolio consisted of: Financial (35 percent), Government (14 percent), Manufacturing (14 percent), Services (10 percent), Retail (8 percent), Communications (7 percent), Healthcare (7 percent) and Other (6 percent). Lease Receivables Loan Receivables (Dollars in millions) Major Growth Major Growth At December 31, 2015: Markets Markets Markets Markets Credit Rating: Aaa – Aa3 $ 538 $ 39 $ 949 $ 80 A1 – A3 1,324 162 2,338 336 Baa1 – Baa3 1,493 392 2,635 813 Ba1 – Ba2 1,214 352 2,143 732 Ba3 – B1 513 277 905 576 B2 – B3 403 215 711 447 Caa – D 33 87 59 181 Total $ 5,517 $ 1,524 $ 9,739 $ 3,165 At December 31, 2015 , the industries which made up Global Financing’s receivables portfolio consisted of: Financial (36 percent), Manufacturing (14 percent), Government (11 percent), Services (11 percent), Retail (9 percent), Communications (7 percent), Healthcare (6 percent) and Other (6 percent). Past Due Financing Receivables Fully <90 Days Recorded Total Reserved or Unbilled Total Investment (Dollars in millions) Past Due Financing Financing Financing > 90 Days and At March 31, 2016: > 90 days (1) Receivables Receivables Receivables Accruing (2) Major markets $ 7 $ 33 $ 5,420 $ 5,461 $ 128 Growth markets 26 182 1,358 1,566 64 Total lease receivables $ 33 $ 215 $ 6,779 $ 7,027 $ 192 Major markets $ 10 $ 36 $ 8,989 $ 9,034 $ 150 Growth markets 33 279 2,585 2,897 74 Total loan receivables $ 42 $ 315 $ 11,574 $ 11,931 $ 224 Total $ 76 $ 530 $ 18,353 $ 18,959 $ 416 (1) Only the portion of a financing receivable which is greater than 90 days past due, excluding amounts that are fully reserved. (2) At a contract level, which includes total billed and unbilled amounts for aged financing receivables greater than 90 days. Fully <90 Days Recorded Total Reserved or Unbilled Total Investment (Dollars in millions) Past Due Financing Financing Financing > 90 Days and At December 31, 2015*: > 90 days (1) Receivables Receivables Receivables Accruing (2) Major markets $ 5 $ 33 $ 5,479 $ 5,517 $ 108 Growth markets 30 140 1,355 1,524 60 Total lease receivables $ 35 $ 173 $ 6,834 $ 7,041 $ 168 Major markets $ 7 $ 35 $ 9,696 $ 9,739 $ 134 Growth markets 31 309 2,825 3,165 86 Total loan receivables $ 38 $ 344 $ 12,521 $ 12,904 $ 220 Total $ 73 $ 517 $ 19,355 $ 19,945 $ 388 (1) Only the portion of a financing receivable which is greater than 90 days past due, excluding amounts that are fully reserved. (2) At a contract level, which includes total billed and unbilled amounts for aged financing receivables greater than 90 days. * Reclassified to conform with 2016 presentation. Troubled Debt Restructurings The company did not have any troubled debt restructurings during the three months ended March 31, 2016 and for the year ended December 31, 2015 . |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Stock-Based Compensation: | |
Stock-Based Compensation: | 5. Stock-Based Compensation: Stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. The following table presents total stock-based compensation cost included in income from continuing operations (Dollars in millions) For the three months ended March 31: 2016 2015 Cost $ 21 $ 27 Selling, general and administrative 99 87 Research, development and engineering 13 14 Other (income) and expense* –– (1) Pre-tax stock-based compensation cost 133 127 Income tax benefits (43) (42) Total net stock-based compensation cost $ 90 $ 85 * Reflects the one-time effects related to divestitures. Pre-tax stock-based compensation cost for the three months ended March 31, 2016 increased $6 million compared to the corresponding period in the prior year. This was due to increases related to performance share units ($12 million), conversion of stock-based awards previously issued by acquired entities ($3 million) and stock options ($1 million), partially offset by decreases related to restricted stock units ($10 million). The amount of stock-based compensation cost included in the loss fr om discontinued operations, net of tax, was immaterial in both periods. As of March 31, 2016 , the total unrecognized compensation cost of $777 million related to non-vested awards was expected to be recognized over a weighted-average period of appr oximately 2.6 years. There was no significant capitalized stock-based compensation cost at March 31, 2016 and 2015 . |
Segments
Segments | 3 Months Ended |
Mar. 31, 2016 | |
Segments: | |
Segments: | 6. Segments: The table on page 27 reflect s 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. 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 2016, the company made a number of changes t o its organizational structure and management system consistent with its ongoing transformation to a cognitive solutions and cloud platform business. With these changes, the company has revis ed its reportable segments. The company continues to have five re portable segments as follows: T he Cognitive Solutions segment includes solutions units that address many of the company’s strategic areas, including analytics, commerce and security, several of the new initiatives around Watson, Watson Health, Wats on Internet of Things and Transaction Processing software. The Technology Services & Cloud Platforms segment includes the company’s cloud infrastructure and platform capabilities, the Global Technology Services business and Integration software. Operating systems software has been aligned with the underlying hardware platforms in the Systems segment. The Global Business Services and Global Financing segments remain unchanged. T he company also realigned a portion of its software support revenue, whic h was previously managed and reported in Integrated Technology Services within Global Technology Services, to the underlying software product areas. The following tables reflect these reclassifications for the prior-year period. 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 March 31, 2016: External revenue $ 3,979 $ 4,131 $ 8,424 $ 1,675 $ 410 $ 18,619 Internal revenue 668 113 165 212 486 1,645 Total revenue $ 4,647 $ 4,245 $ 8,589 $ 1,888 $ 896 $ 20,264 Pre-tax income/(loss) from continuing operations $ 1,013 $ 190 $ 258 $ (10) $ 386 $ 1,837 Revenue year-to-year change (0.8) % (4.6) % (1.5) % (18.4) % (14.5) % (4.5) % Pre-tax income year-to-year change (33.7) % (67.7) % (77.2) % nm (25.0) % (54.3) % Pre-tax income margin 21.8 % 4.5 % 3.0 % (0.5) % 43.1 % 9.1 % For the three months ended March 31, 2015*: External revenue $ 4,047 $ 4,318 $ 8,554 $ 2,142 $ 461 $ 19,523 Internal revenue 635 131 166 173 586 1,690 Total revenue $ 4,682 $ 4,449 $ 8,720 $ 2,314 $ 1,048 $ 21,213 Pre-tax income from continuing operations $ 1,528 $ 588 $ 1,131 $ 261 $ 515 $ 4,023 Pre-tax income margin 32.6 % 13.2 % 13.0 % 11.3 % 49.2 % 19.0 % * Reclassified to conform with 2016 presentation. nm - not meaningful Reconciliations to IBM as Reported: (Dollars in millions) For the three months ended March 31: 2016 2015* Revenue: Total reportable segments $ 20,264 $ 21,213 Eliminations of internal transactions (1,645) (1,690) Other revenue 66 67 Total consolidated revenue $ 18,684 $ 19,590 Pre-tax income from continuing operations: Total reportable segments $ 1,837 $ 4,023 Amortization of acquired intangible assets (211) (170) Acquisition-related (charges)/income 27 0 Non-operating retirement-related (costs)/income (142) (442) Eliminations of internal transactions (355) (363) Unallocated corporate amounts (122) (48) Total pre-tax income from continuing operations $ 1,034 $ 3,001 * Reclassified to conform with 2016 presentation. |
Equity Activity
Equity Activity | 3 Months Ended |
Mar. 31, 2016 | |
Equity Activity: | |
Equity Activity: | 7. Equity Activity: Reclassifications and Taxes Related to Items of Other Comprehensive Income (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended March 31, 2016: Amount Benefit Amount Other comprehensive income/(loss): Foreign currency translation adjustments $ 239 $ 266 $ 505 Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period $ (36) $ 14 $ (22) Reclassification of (gains)/losses to other (income) and expense 37 (14) 23 Total net changes related to available-for-sale securities $ 1 $ 0 $ 0 Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ (265) $ 91 $ (174) Reclassification of (gains)/losses to: Cost of sales (3) 0 (3) SG&A expense (3) 0 (3) Other (income) and expense (87) 33 (53) Interest expense 2 (1) 1 Total unrealized gains/(losses) on cash flow hedges $ (356) $ 124 $ (232) Retirement-related benefit plans (1) : Net (losses)/gains arising during the period $ (147) $ 53 $ (94) Curtailments and settlements 5 (2) 3 Amortization of prior service (credits)/costs (25) 9 (16) Amortization of net (gains)/losses 690 (248) 442 Total retirement-related benefit plans $ 522 $ (187) $ 335 Other comprehensive income/(loss) $ 406 $ 202 $ 608 (1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, "Retirement-Related Benefits," for additional information.) Reclassifications and Taxes Related to Items of Other Comprehensive Income (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended March 31, 2015: Amount Benefit Amount Other comprehensive income/(loss): Foreign currency translation adjustments $ (452) $ (266) $ (718) Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period $ 32 $ (12) $ 20 Reclassification of (gains)/losses to other (income) and expense 0 0 0 Total net changes related to available-for-sale securities $ 32 $ (12) $ 20 Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ 619 $ (218) $ 401 Reclassification of (gains)/losses to: Cost of sales (50) 15 (35) SG&A expense (40) 11 (28) Other (income) and expense (160) 61 (98) Interest expense 0 0 0 Total unrealized gains/(losses) on cash flow hedges $ 370 $ (131) $ 239 Retirement-related benefit plans (1) : Prior service costs/(credits) $ 5 $ (2) $ 3 Net (losses)/gains arising during the period (77) 26 (52) Curtailments and settlements 4 (1) 3 Amortization of prior service (credits)/costs (26) 9 (17) Amortization of net (gains)/losses 835 (280) 555 Total retirement-related benefit plans $ 740 $ (248) $ 492 Other comprehensive income/(loss) $ 690 $ (657) $ 33 (1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, "Retirement-Related Benefits," for additional information.) Accumulated Other Comprehensive Income/(Loss) (net of tax) Net Change Net Unrealized Net Unrealized Foreign Retirement- Gains/(Losses) Accumulated Gains/(Losses) Currency Related on Available- Other on Cash Flow Translation Benefit For-Sale Comprehensive (Dollars in Millions) Hedges Adjustments* Plans Securities Income/(Loss) January 1, 2016 $ 100 $ (3,463) $ (26,248) $ 5 $ (29,607) Other comprehensive income before reclassifications (174) 505 (91) (22) 218 Amount reclassified from accumulated other comprehensive income (58) 0 426 23 391 Total change for the period (232) 505 335 0 608 March 31, 2016 $ 133 $ (2,958) $ (25,913) $ 5 $ (28,998) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. Net Change Net Unrealized Net Unrealized Foreign Retirement- Gains/(Losses) Accumulated Gains/(Losses) Currency Related on Available- Other on Cash Flow Translation Benefit For-Sale Comprehensive (Dollars in Millions) Hedges Adjustments* Plans Securities Income/(Loss) January 1, 2015 $ 392 $ (1,742) $ (26,509) $ (15) $ (27,875) Other comprehensive income before reclassifications 401 (718) (46) 20 (343) Amount reclassified from accumulated other comprehensive income (162) 0 538 0 376 Total change for the period 239 (718) 492 20 33 March 31, 2015 $ 631 $ (2,461) $ (26,017) $ 5 $ (27,842) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. |
Retirement-Related Benefits
Retirement-Related Benefits | 3 Months Ended |
Mar. 31, 2016 | |
Retirement-Related Benefits: | |
Retirement-Related Benefits: | 8. Retirement-Related Benefits: The company offers defined benefit pension plans, defined contribution pension plans, as well as nonpension postretirement plans primarily consisting of retiree medical benefits. The following table s provide the pre-tax cost for all retirement-related plans Yr. to Yr. (Dollars in millions) Percent For the three months ended March 31: 2016 2015 Change Retirement-related plans – cost Defined benefit and contribution pension plans – cost $ 439 $ 749 (41.4) % Nonpension postretirement plans – cost 60 71 (15.9) Total $ 499 $ 820 (39.2) % The following table s provide the components of the cost/(income) for the company’s pension plans Cost/(Income) of Pension Plans (Dollars in millions) U.S. Plans Non-U.S. Plans For the three months ended March 31: 2016 2015 2016 2015 Service cost $ — $ — $ 104 $ 108 Interest cost 513 508 262 271 Expected return on plan assets (922) (989) (470) (483) Amortization of prior service costs/(credits) 3 2 (25) (25) Recognized actuarial losses 333 415 347 401 Curtailments and settlements — — 5 4 Multi-employer plans/other costs — — 18 248 Total net periodic pension (income)/cost of defined benefit plans (74) (64) 241 524 Cost of defined contribution plans 165 173 106 115 Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings $ 91 $ 109 $ 348 $ 640 On March 24, 2014, the Supreme Court of Spain issued a ruling against IBM Spain in litigation involving its defined benefit and defined contribution plans. As a result of the ruling, the company recorded pre-tax retirement-related obligations of $ 2 33 million in 2015 ($ 230 million in the first quarter of 201 5) in selling, general and administrative expense in the Consolidated Statement of Earnings. These obligations are reflected in "Non-U.S. Plans - Multi-employer plans/other costs" in the table abo ve. In March 2016, the company initiated a change to the investment strategy of its U.S. defined benefit plan. T he 2016 targe t asset allocation was modified by reducing equity securities from 34 percent to 21 percent, other investments from 10 per cent to 9 percent and increasing debt securities from 56 percent to 70 percent of total plan assets. T his change is designed to reduce the risk associated with the potential negative impact that equity markets might have on the funded status of the U.S. de fined benefit plan. The change is expected to reduce the 201 7 expected long-term rate of return on assets from 7.00 percent to approximately 6.25 percent. See note S, “Retirement-Related Benefits,” on page 135 in the company’s 2015 Annual Report for additi onal information regarding the company’s investment strategy. In 2016 , the company expects to contribute approximately $ 500 million to its non-U.S. defined benefit and multi-employer plans, the largest of which will be contributed to the defined benefit pension plans in the UK and Japan. This amount represents the legally mandated minimum contribution. Total net contributions to the non-U.S. plans in the first three months of 2016 were $ 107 million , of which $ 65 million was in cash and $ 42 million in U.S. Treasury securities . The contribution of U.S. Treasury securities is considered a non-cash transaction in the Consolidated Statement of Cash Flows. The following tables provide the components of the cost/(income) for the company's nonpension postretirement plans. Cost of Nonpension Postretirement Plans (Dollars in millions) U.S. Plan Non-U.S. Plans For the three months ended March 31: 2016 2015 2016 2015 Service cost $ 5 $ 6 $ 1 $ 2 Interest cost 41 41 10 14 Expected return on plan assets — 0 (1) (2) Amortization of prior service costs/(credits) (2) (2) (1) (1) Recognized actuarial losses 5 11 2 3 Total nonpension postretirement plan cost recognized in Consolidated Statement of Earnings $ 49 $ 56 $ 11 $ 15 T he company contributed $ 100 million in U.S. Treasury securities and $ 126 million in cash to the U.S. nonpension postretirement benefit plan during the first quarter ended March 31, 2016 and 2015, respectively. The contribution of U.S. Treasury securities is considered a non-cash transaction in the Consolidated S tatement of Cash Flows. |
Acquisitions_Divestitures
Acquisitions/Divestitures | 3 Months Ended |
Mar. 31, 2016 | |
Acquisitions/Divestitures: | |
Acquisitions/Divestitures: | 9 . Acquisitions/Divestitures: Acquisitions: During the three months ended March 31, 2016 , the company completed six acquisitions at an aggregate cost of $ 2,642 million. The Weather Company (TWC) – On January 29, 2016, the company completed the acquisition of TWC’s B2B, mobile and cloud-based web-properties, weather.com, Weather Underground, The Weather Company brand and WSI, its global business-to-business brand , for cash co nsideration of $2,284 million. The cable television segmen t was not acquired by IBM, but will license weather forecast data and analytics from IBM under a long-term contract. TWC was a privately held business. Goodwill of $1,723 million has been assigned to the Cognitive Solutions segment. At the acquisition date , it was expected that none of the goodwill would be deductible for tax purposes. The overall weighted-average useful life of the identified intangible assets acquired is 6.9 years. Other Acquisitions – The Technology Services & Cloud Platform s segment co mpleted acquisitions of two businesses in the first quarter: Ustream , Inc. ( Ustream ), a privately held business, and AT&T’s application and hosting services business. Global Business Services (GBS) completed acquisitions of three privately held businesses in the first quarter: Resource/ Ammirati , ecx.io and Optevia . Each acquisition is expected to enhance the company’s portfolio of prod uct and services capabilities. Ustream provides cloud-based video streaming to enterprise s and broadcasters. Resource/ Ammirati is a leading U.S. based digital marketing and creative agency, addressing the ri sing demand from businesses seeking to reinvent themselves for the digital economy. Ecx.io will enhance IBM Interactive Experience (IBM iX ) with new digital marketing, commerce and platform skills to accelerate cli ents’ digital transformations. Optevia is a Software - as - a S ervice systems integrator specializing in CRM solutions for public sector organizations. The acquisition of AT&T’s application and hosting services bu siness is expected to strengthen the company’s cloud portfolio . Purchase price consideration for all acquisitions as reflected in the following table, was paid primarily in cash . All acquisitions are reported in the Consolidated Statement of Cash Flows n et of acquired cash and cash e q uivalents. The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of March 31, 2016 The Amortization Weather Other (Dollars in millions) Life (in yrs.) Company Acquisitions Current assets $ 76 $ 31 Fixed assets/noncurrent assets 123 68 Intangible assets: Goodwill N/A 1,723 192 Completed technology 2-7 160 24 Client relationships 3-7 313 135 Patents/trademarks 2-7 349 4 Total assets acquired 2,744 455 Current liabilities (88) (21) Noncurrent liabilities (372) (35) Total liabilities assumed (460) (57) Bargain purchase gain — (40) * Total purchase price $ 2,284 $ 358 N/A - not applicable * Bargain purchase gain relating to AT&T's application and hosting services business was recognized in selling, general and administrative expense in the Consolidated Statement of Earnings. This gain was excluded from the company's operating (non-GAAP) earnings. T he acquisitions were accounted for as business combinations using the acquisition method, and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity w ere recorded at their estimated fair values at the date of acquisition. The primary items that generated the goodwill are the value of the synergies between the acquired businesses and IBM and the acquired assembled workforce, neither of which qualify as an a mortizable intangible asset. For the “Other Acquisitions”, the overall weighted-average life of the identified amortizable intangible assets acquired is 6.2 years. These identified intangible assets will be amortized on a straight-line basis over their useful lives. Goodwill of $91 million was assigned to the Technology Services & Cloud Platform s segment and goodwill of $101 million was assigned to the GBS segment. It is expected that 40 percent of the goodwill will be deductible for tax purposes. On March 31, 2016, the company announced its intent to acquire Bluewolf Group LLC ( Bluewolf ) , a globally recognized leader in cloud consulting and implementation services. Bluewolf will extend the company’s analytics, experience design and industry consulting leadership with one of the world’s leading Salesforce consulting practices to deliver differentiated, consumer-grade experiences via the cloud. The transaction is expected to close in the second quarter of 2016 and the business will be integra ted within the GBS segment. On April 6, 2016, the company announced that it had acquired Resilient Systems Inc. (Resilient), a provider o f incident response solutions. Resilient’s technology automates and orchestrates the many processes needed when dealing with cyber incidents , from breaches to lost devices. The business will be integrated within the Cognitive Solutions segment. On April 8, 2016, the company announced that it had acquired Truven Health Analytics ( Truven ), a leading provider of healthcare analytics solutions, for cash consideration of $2.6 billion. Truven has developed proprietary analytic methods and assembled analytic content assets, creating extensive national healthcare utilization, performance, quality, and cost data. T h e business will be integrated within the Cognitive Solutions segment. On April 19 , 2016, the company announced that it had acquire d Aperto , a digital agency with headquarters in Berlin, Germany. Aperto will join the IBM iX team. IBM iX provides clients a unique fusion of services spanning strategy, analytics and systems integration for scalable digital, commerce, mobile and wearable platforms. T he business will be integrated within the GBS segment. At the date of issuance of the financial statements, the initial purchase accounting for the Resilient , Truven and Aperto transactions was not complete. Divestitures: Microelectronics – On October 20, 2014, IBM and GLOBALFOUNDRIES announced a definitive agreement in which GLOBALFOUNDRIES would acquire the company’s Microelectronics business, including existing semiconductor manufacturing assets and operations in East Fishkill, NY and Essex Junction, VT. The commercial OEM business acquired by GLOBALFOUNDRIES includes custom logic and specialty foundry, manufacturing and related operations. The transaction closed on July 1, 2015. The transaction includes a 10-year exclusive manufacturing sourcing agreement in which GLOBALFOUN DRIES will provide server processor semiconductor technology for use in IBM Systems. The agreement provides the company with capacity and market-based pricing for current semiconductor nodes in production and progression to nodes in the future for both dev elopment and production needs. As part of the transaction, the company will provide GLOBALFOUNDRIES with certain transition services, including IT, supply chain, packaging and test services and lab services. The initial term for these transition services i s one to three years, with GLOBALFOUNDRIES having the ability to renew. In the third quarter of 2014, the company recorded a pre-tax charge of $4.7 billion related to the sale of the Microelectronics disposal group, which was part of the Systems reportab le segment. The pre-tax charge reflected the fair value less the estimated cost of selling the disposal group including an impairment to the semiconductor long-lived assets of $2.4 billion, $1.5 billion representing the cash consideration expected to be tr ansferred to GLOBALFOUNDRIES and $0.8 billion of other related costs. Additional pre-tax charges of $116 million were recorded during 2015 related to the disposal, and a pre-tax credit of $1 million was recorded during the first three months of 2016. The c umulative pre-tax charge was $4.8 billion as of March 31, 2016. Additional charges may be recorded in future periods. All assets and liabilities of the business, classified as held for sale at June 30, 2015, were transferred at closing. The compan y transferred $515 million of net cash to GLOBALFOUNDRIES in the third quarter of 2015. This amount included $750 million of cash consideration, adjusted by the amount of working capital due from GLOBALFOUNDRIES and other miscellaneous items. The remaining cash consideration will be transferred over two years. Reporting the related assets and liabilities initially as held for sale at September 30, 2014 was based on meeting all of the criteria for such reporting in the applicable accounting guidance. While the company met certain criteria for held for sale reporting in prior periods, it did not meet all of the criteria until September 30, 2014. In addition, at September 30, 2014, the company concluded that the Microelectronics business met the criteri a for discontinued operations reporting. The disposal group constitutes a component under accounting guidance. The continuing cash inflows and outflows with the discontinued component are related to the manufacturing sourcing arrangement and the transition , packaging and test services. These cash flows are not direct cash flows as they are not significant and the company will have no significant continuing involvement. Summarized financial information for discontinued operations is shown in the table belo w . Three Months Ended March 31, (Dollars in millions) 2016 2015 Total revenue $ — $ 339 Income/(loss) from discontinued operations $ (5) $ (105) Gain/(loss) on disposal, before tax 1 (14) Total loss from discontinued operations, before income taxes $ (5) $ (119) Provision/(benefit) for income taxes (2) (31) Loss from discontinued operations, net of tax $ (3) $ (88) Industry Standard Server – On January 23, 2014, IBM and Lenovo Group Limited (Lenovo) announced a definitive agreement in which Lenovo would acquire the company’s industry standard server portfolio (System x) for an adjusted purchase price of $2.1 billion, consisting of approximately $1.8 billion in cash, with the balance in Lenovo common stock. The stock represented less than 5 percent equity ownership in Lenovo. The company would sell to Lenovo its System x, BladeCenter and Flex System blade serve rs and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations. IBM and Lenovo entered into a strategic relationship which included a global OEM and reseller agreeme nt for sales of IBM’s industry-leading entry and midrange Storwize disk storage systems, tape storage systems, General Parallel File System software, SmartCloud Entry offering, and elements of IBM’s system software, including Systems Director and Platform Computing solutions. Effective with the initial closing of the transaction, Lenovo assumed related customer service and maintenance operations. IBM will continue to provide maintenance delivery on Lenovo’s behalf for an extended period of time. In addition , as part of the transaction agreement, the company will provide Lenovo with certain transition services, including IT and supply chain services. The initial term for these transition services ranges from less than one year to three years. Lenovo can renew certain services for an additional year. The initial closing was completed on October 1, 2014. A subsequent closing occurred in most other countries in which there was a large business footprint on December 31, 2014. T he remaining countries closed on March 31, 2015. An assessment of the ongoing contractual terms of the transaction resulted in the recognition of a pre-tax gain of $63 million in 2015 and $29 million in the first quarter of 2016. Overall, the company expects to recognize a total pre- tax gain on the sale of approximately $1.6 billion , which does not include associated costs related to transition and performance-based costs. Net of these charges, the pre-tax gain was approximately $1.3 billion, of which the cumulative gain recorded as of March 31, 2016 is $ 1.2 billion . The balance of the gain is expected to be recognized in 2019 upon conclusion of the maintenance agreement. Customer C are – On September 10, 2013, IBM and SYNNEX announced a definitive agreement in which SYNNEX would acquire the company’s worldwide customer care business process outsourcing services business for $501 million, consisting of approximately $430 million in cash, net of balance sheet adjustments, and $71 million in SYNNEX common stock, which represented less than 5 percent equity ownersh ip in SYNNEX. As part of the transaction, SYNNEX entered into a multi-year agreement with the company, and Concentrix , SYNNEX’s outsourcing business, became an IBM strategic business partner for global customer care business process outsourcing services. The initial closing was completed on January 31, 2014, with subsequent closings occurring during 2014. For the full year of 2014, the company recorded a pre-tax gain of $202 million related to this transaction. In the second quarter of 201 5, resolution of the final balance sheet adjustments was concluded. An assessment of the ongoing contractual terms of the transaction resulted in the recognition of a pre-tax gain of $7 million in 2015. Through March 31, 2016, the cumulative pre-tax gain attributed to this transaction was $209 million. Others ‒ In the first quarter of 2016, the company completed four software product-related divestitures. T he financial terms related to these transactions were not material. Overall, the company recorded a pre-tax gain of $36 million related to these transactions in the first three months of 2016. |
Intangible Assets Including Goo
Intangible Assets Including Goodwill | 3 Months Ended |
Mar. 31, 2016 | |
Intangible Assets Including Goodwill: | |
Intangible Assets Including Goodwill: | 10. Intangible Assets Including Goodwill: The following table details the company’s intangible asset balances by major asset class: At March 31, 2016 (Dollars in millions) Gross Carrying Accumulated Net Carrying Intangible asset class Amount Amortization Amount Capitalized software $ 1,465 $ (593) $ 872 Client relationships 2,297 (987) 1,310 Completed technology 3,121 (1,486) 1,635 Patents/trademarks 683 (160) 523 Other* 44 (11) 33 Total $ 7,610 $ (3,237) $ 4,373 * Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems. At December 31, 2015 (Dollars in millions) Gross Carrying Accumulated Net Carrying Intangible asset class Amount Amortization Amount Capitalized software $ 1,348 $ (581) $ 767 Client relationships 1,856 (927) 929 Completed technology 2,960 (1,397) 1,563 Patents/trademarks 335 (142) 193 Other* 44 (10) 35 Total $ 6,543 $ (3,057) $ 3,487 * Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. The net carrying amount of intangible assets increased $ 886 million during the first quarter of 2016 , primarily due to intangible asset additions resulting from acquisitions, partially offset by amortization. The aggregate intangible amortization expense was $347 million and $298 million for the quarters ended March 31, 2016 and 2015 , respectively. In addition, in the f irst three months of 2016 , the company retired $ 163 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount. The amortization expense for each of the five succeeding year s relating to intangible assets currently recorded in the Consolidated Statement of Financial Position is estimated to be the following at March 31, 2016 : Capitalized Acquired (Dollars in millions) Software Intangibles Total 2016 (for Q2-Q4) $ 365 $ 674 $ 1,039 2017 340 792 1,132 2018 160 645 805 2019 8 484 492 2020 — 384 384 The change in the goodwill balances by reportable segment, for the three months ended March 31, 2016 and for the year ended December 31, 2015 are as follows: Foreign Currency Purchase Translation (Dollars in millions) Balance Goodwill Price And Other Balance Segment 1/1/2016* Additions Adjustments Divestitures Adjustments** 3/31/16 Cognitive Solutions $ 15,621 $ 1,723 $ 1 $ (12) $ 199 $ 17,533 Global Business Services 4,396 101 1 (1) 72 4,569 Technology Services & Cloud Platforms 10,156 91 1 (5) 115 10,358 Systems 1,848 — 1 — 12 1,861 Total $ 32,021 $ 1,915 $ 4 $ (17) $ 398 $ 34,322 * Reclassified to conform with 2016 presentation. ** Primarily driven by foreign currency translation. Foreign Currency Purchase Translation (Dollars in millions) Balance Goodwill Price And Other Balance Segment 1/1/2015* Additions* Adjustments* Divestitures* Adjustments* ** 12/31/15* Cognitive Solutions $ 15,156 $ 1,020 $ (2) $ (18) $ (535) $ 15,621 Global Business Services 4,555 74 0 (1) (232) 4,396 Technology Services & Cloud Platforms 9,373 1,087 (1) (7) (296) 10,156 Systems 1,472 410 0 — (33) 1,848 Total $ 30,556 $ 2,590 $ (3) $ (26) $ (1,096) $ 32,021 * Reclassified to conform with 2016 presentation. ** Primarily driven by foreign currency translation. In January 2016, the company made a number of changes to its organizational structure and management system consistent with the ongoing transformation to a cognitive solutions and cloud platform business. With these changes, the company revised its reportable segments. Goodwill was reallocated to the new reporting segments, and as a result, an impairment assessment was performed. There were no goodwill impairment losses recorded during the first three months of 2016 or the full year of 2015 and the company has no accumulated impairment losses . For further information regarding the segment change, refer to note 6, “Segments”. Purchase price adjustments recorded in the first three months of 2016 and full year 2015 we re related to acquisitions that were completed on or prior to December 31, 201 5 or December 31, 20 14 , respectively, and were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available . Purchase price adjustments of $4 million were recorded in the first th r ee months of 2016 related to various asset and liability adjustments . |
Borrowings
Borrowings | 3 Months Ended |
Mar. 31, 2016 | |
Borrowings | |
Borrowings | 11. Borrowings : Short-Term Debt At March 31, At December 31, (Dollars in millions) 2016 2015 Commercial paper $ — $ 600 Short-term loans 302 590 Long-term debt – current maturities 5,000 5,271 Total $ 5,303 $ 6,461 The weighted-average interest rate for commercial paper at December 31, 2015 was 0.4 percent . The weighted-average interest rate for short-term loans was 8.6 percent and 5.2 percent at March 31, 2016 and December 31, 2015 , respectively. Long-Term Debt Pre-Swap Borrowing Balance Balance (Dollars in millions) Maturities 3/31/2016 12/31/2015 U.S. dollar notes and debentures (average interest rate at March 31, 2016): 3.00% 2016–2017 $ 8,239 $ 9,351 3.17% 2018–2019 8,826 7,591 1.71% 2020–2021 4,940 3,717 2.35% 2022 1,901 1,900 3.38% 2023 1,500 1,500 3.63% 2024 2,000 2,000 7.00% 2025 600 600 3.45% 2026 1,350 — 6.22% 2027 469 469 6.50% 2028 313 313 5.88% 2032 600 600 8.00% 2038 83 83 5.60% 2039 745 745 4.00% 2042 1,107 1,107 7.00% 2045 27 27 4.70% 2046 650 — 7.13% 2096 316 316 $ 33,667 $ 30,319 Other currencies (average interest rate at March 31, 2016, in parentheses): \ Euros (1.6%) 2016–2028 $ 7,691 $ 4,892 Pound sterling (2.7%) 2017–2022 1,514 1,555 Japanese yen (0.4%) 2017–2022 1,262 1,180 Swiss francs (6.3%) 2020 9 9 Canadian (2.2%) 2017 386 360 Other (13.6%) 2016–2020 658 506 $ 45,188 $ 38,820 Less: net unamortized discount 861 838 Less: net unamortized debt issuance cost 95 74 Add: fair value adjustment* 1,022 790 $ 45,254 $ 38,699 Less: current maturities 5,000 5,271 Total $ 40,254 $ 33,428 * T he portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated State ment of Financial Position as an amount equal to the sum of the debt’s carrying value plus a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates. The c ompany’s indenture governing its debt securities and its various credit facilities each contain significant covenants which obligate the comp any to promptly pay principal and interest, limit the aggregate amount of secured indebtedness and sale and leaseback transactions to 10 percent of the company’s consolidated net tangible assets, and restrict the company’s ability to merge or consolidate u nless certain conditions are met. The credit facilities also include a covenant on the company’s consolidated net interest expense ratio, which cannot be less than 2.20 to 1.0 , as well as a cross default provision with respect to other defaulted indebtedne ss of at least $ 500 million. The company is in compliance with all of its significant debt covenants and provides periodic certifications to its lenders. The failure to comply with its debt covenants could constitute an event of default with respec t to the debt to which such provisions apply. If certain events of default were to occur, the principal and interest on the debt to which such event of default applied would become immediately due and payable. Pre-swap annual c o ntractual maturities of long-term debt outstanding at March 31, 2016 , are as follows: (Dollars in millions) Total 2016 (for Q2-Q4) $ 3,198 2017 6,798 2018 4,777 2019 5,271 2020 4,873 2021 and beyond 20,272 Total $ 45,188 Interest on Debt (Dollars in millions) For the three months ended March 31: 2016 2015 Cost of financing $ 138 $ 140 Interest expense 157 108 Net investment derivative activity (10) 0 Interest capitalized 1 (2) Total interest paid and accrued $ 286 $ 245 |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Contingencies: | |
Contingencies: | 12. Contingencies : As a company with a substantial employee population and with clients in more than 175 countries, IBM is involved, either as plaintiff or defendant, in a variety of ongoing claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business. The company is a leader in the information technology industry and, as such, has been and will continue to be subject to claims challenging its IP rights and assoc iated products and offerings, including claims of copyright and patent infringement and violations of trade secrets and other IP rights. In addition, the company enforces its own IP against infringement, through license negotiations, lawsuits or otherwise. Also, as is typical for companies of IBM’s scope and scale, the company is party to actions and proceedings in various jurisdictions involving a wide range of labor and employment issues (including matters related to contested employment decisions, countr y-specific labor and employment laws, and the company’s pension, retirement and other benefit plans), as well as actions with respect to contracts, product liability, securities, foreign operations, competition law and environmental matters. These actions may be commenced by a number of different parties, including competitors, clients, current or former employees, government and regulatory agencies, stockholders and representatives of the locations in which the company does business. Some of the actions to which the company is party may involve particularly complex technical issues, and some actions may raise novel questions under the laws of the various jurisdictions in which these matters arise. The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable t hat a liability has been incurred and the amount of the loss can be reasonably estimated. Any recorded liabilities, including any changes to such liabilities for the quarter ended March 31, 2016 were not material to the Consolidated Financial Statements. In accordance with the relevant accounting guidance, the company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer and employee relations considerations. With respect to cer tain of the claims, suits, investigations and proceedings discussed herein, the company believes at this time that the likelihood of any material loss is remote, given, for example, the procedural status, court rulings, and/or the strength of the company’s defenses in those matters. With respect to the remaining claims, suits, investigations and proceedings discussed in this Note, except as specifically discussed herein, the company is unable to provide estimates of reasonably possible losses or range of lo sses, including losses in excess of amounts accrued, if any, for the following reasons. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of these matters. It is the company’s exp erience that damage amounts claimed in litigation against it are unreliable and unrelated to possible outcomes, and as such are not meaningful indicators of the company’s potential liability. Further, the company is unable to provide such an estimate due t o a number of other factors with respect to these claims, suits, investigations and proceedings, including considerations of the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. The company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate), to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter. Whether any losses, damages or remedies finally determined in any claim, suit, investigation or proceeding could reasonably have a material effect on the company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including: the timing and amount of such losses or damages; the structure and type of any such remedies; the significance of the impact any such losses, damages or remedies may have in the Consolidated Financial Statements; and the unique facts and circum stances of the particular matter that may give rise to additional factors. While the company will continue to defend itself vigorously, it is possible that the company’s business, financial condition, results of operations or cash flows could be affected i n any particular period by the resolution of one or more of these matters. The following is a summary of the more significant legal matters involving the company. The company is a defendant in an action filed on March 6, 2003 in state court in Salt Lake City, Utah by the SCO Group (SCO v. IBM). The company removed the case to Federal Court in Utah. Plaintiff is an alleged successor in interest to some of AT&T’s UNIX IP rights, and alleges copyright infringement, unfair competition, inte rference with contract and breach of contract with regard to the company’s distribution of AIX and Dynix and contribution of code to Linux and the company has asserted counterclaims. On September 14, 2007, plaintiff filed for bankruptcy protection, and all proceedings in this case were stayed. The court in another suit, the SCO Group, Inc. v. Novell, Inc., held a trial in March 2010. The jury found that Novell is the owner of UNIX and UnixWare copyrights; the judge subsequently ruled that SCO is obligated t o recognize Novell’s waiver of SCO’s claims against IBM and Sequent for breach of UNIX license agreements. On August 30, 2011, the Tenth Circuit Court of Appeals affirmed the district court’s ruling and denied SCO’s appeal of this matter. In June 2013, the Federal Court in Utah granted SCO’s motion to reopen the SCO v. IBM case. In February 2016, the Federal Court ruled in favor of IBM on all of SCO’s remaining claims, and in March 2016, SCO filed a notice of appeal to the Tenth Circuit Court of Appeals. On May 13, 2010, IBM and the State of Indiana (acting on behalf of the Indiana Family and Social Services Administration) sued one another in a dispute over a 2006 contract regarding the modernization of social service program processing in Indiana. Aft er six weeks of trial, on July 18, 2012, the Indiana Superior Court in Marion County rejected the State’s claims in their entirety and awarded IBM $52 million plus interest and costs. On February 13, 2014, the Indiana Court of Appeals reversed portions of the trial judge’s findings, found IBM in material breach, and ordered the case remanded to the trial judge to determine the State's damages, if any. The Indiana Court of Appeals also affirmed approximately $50 million of the trial court's award of damages to IBM. On March 22, 2016, the Indiana Supreme Court affirmed the outcome of the Indiana Court of Appeals and remanded the case to the Indiana Superior Court. On April 16, 2014, Iusacell SA de C.V. ( Iusacell ) sued IBM, claiming that IBM made fraudulent m isrepresentations that induced Iusacell to enter into an agreement with IBM Mexico. Iusacell claims damages for lost profits. Iusacell’s complaint relates to a contractual dispute in Mexico, which is the subject of a pending arbitration proceeding in Mexic o initiated by IBM Mexico against Iusacell for breach of the underlying agreement. On November 14, 2014, the District Court in the Southern District of New York granted IBM's motion to stay Iusacell's action against the company pending the arbitration in Mexico between Iusacell and IBM Mexico. IBM United Kingdom Limited (IBM UK) initiated legal proceedings in May 2010 before the High Court in London against the IBM UK Pensions Trust (the UK Trust) and two representative beneficiaries of the UK Trust mem bership. IBM UK is seeking a declaration that it acted lawfully both in notifying the Trustee of the UK Trust that it was closing its UK defined benefit plans to future accruals for most participants and in implementing the company’s new retirement policy. In April 2014, the High Court acknowledged that the changes made to its UK defined benefit plans were within IBM’s discretion, but ruled that IBM breached its implied duty of good faith both in implementing these changes and in the manner in which it cons ulted with employees. Proceedings to determine remedies were held in July 2014, and in February 2015 the High Court held that for IBM to make changes to accruals under the plan would require a new consultation of the participants, but other changes (includ ing to early retirement policy) would not require such consultation. IBM UK has appealed both the breach and remedies judgments. If the appeal is unsuccessful, the Court’s rulings would require IBM to reverse the changes made to the UK defined benefit plan s retroactive to their effective dates. This could result in an estimated non-operating one-time pre-tax charge of approximately $250 million, plus ongoing defined benefit related accruals. In addition, IBM UK is a defendant in approximately 290 individua l actions brought since early 2010 by participants of the defined benefits plans who left IBM UK. These actions, which allege constructive dismissal and age discrimination, are pending before the Employment Tribunal in Southampton UK. In March 2011 , the company announced that it had agreed to settle a civil enforcement action with the Securities and Exchange Commission (SEC) relating to alleged violations of the Foreign Corrupt Practices Act of 1977 (FCPA). On July 25, 2013, the court approved that 2011 settlement and required that for a two-year period IBM make reports to the SEC and the court on certain matters, including those relating to compliance with the FCPA. The two-year period expired in July 2015. In early 2012, IBM notified the SEC of an investigation by the Polish Central Anti-Corruption Bureau involving allegations of illegal activity by a former IBM Poland employee in connection with sales to the Polish government. IBM is cooperating with the SEC and Polish authorities in this matter. In April 2013, IBM learned that the U.S. Department of Justice (DOJ) is also investigating allegations related to the Poland matter, as well as allegations relating to transactions in Argentina, Bangladesh and Ukraine. The DOJ is also seeking information r egarding the company's global FCPA compliance program and its public sector business. The company is cooperating with the DOJ in this matter. In March 2015, putative class action litigation was commenced in the United States District Court for the Southern District of New York related to the company's October 2014 announcement that it was divesting its global commercial semiconductor technology business. The company and three of its officers are named as defendants. Plaintiffs allege that defendants violated Sections 20(a) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In May 2015, a related putative class action was also commenced in the United States District Court for the Southern District of New York based on the same underlying facts, alleging violations of the Employee Retirement Income Security Act. The company, management’s Retirement Plans Committee, and three current or former IBM executives are named as defendants. In August 2015, IBM learned that the SEC is conducting an investigation relating to revenue recognition with respect to the accounting treatment of certain transactions in the U.S., UK and Irelan d. The company is cooperating with the SEC in this matter. The company is party to, or otherwise involved in, proceedings brought by U.S. federal or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability A ct (CERCLA), known as “Superfund,” or laws similar to CERCLA. Such statutes require potentially responsible parties to participate in remediation activities regardless of fault or ownership of sites. The company is also conducting environmental investigati ons, assessments or remediations at or in the vicinity of several current or former operating sites globally pursuant to permits, administrative orders or agreements with country, state or local environmental agencies, and is involved in lawsuits and claim s concerning certain current or former operating sites. The company is also subject to ongoing tax examinations and governmental assessments in various jurisdictions. Along with many other U.S. companies doing business in Brazil, the company is involved in various challenges with Brazilian tax authorities regarding non-income tax assessments and non-income tax litigation matters. The total potential amount related to these matters for all applicable years is approximately $520 million. The company believe s it will prevail on these matters and that this amount is not a meaningful indicator of li ability. |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2016 | |
Commitments: | |
Commitments: | 13. Commitments: The company’s extended lines of credit to third-party entities include unused amounts of $6 ,014 million and $5,477 million at March 31, 2016 and December 31, 2015 , respectively. A portion of these amounts was available to the company’s business partners to support their working capital needs. In addition, the company has committed to provide future financing to its clients in connection with client purchase agreements for approximately $2,069 million and $2,097 million at March 31, 2016 and December 31, 2015 , respectively. The company has applied the guidance requiring a guarantor to disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s performance is remote. The following is a descriptio n of arrangements in which the company is the guarantor. The company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party with respect to certain matters. Typically, these obligations arise in the context of contracts entered into by the company, under which the company customarily agrees to hold the party harmless against losses arising from a breach of representations and covenants related to such matters as title to the assets sold, certain inte llectual property (IP) rights, specified environmental matters, third-party performance of nonfinancial contractual obligations and certain income taxes. In each of these circumstances, payment by the company is conditioned on the other party making a clai m pursuant to the procedures specified in the particular contract, the procedures of which typically allow the company to challenge the other party’s claims. While typically indemnification provisions do not include a contractual maximum on the company’s p ayment, the company’s obligations under these agreements may be limited in terms of time and/or nature of claim, and in some instances, the company may have recourse against third parties for certain payments made by the company. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments ma de by the company under these agreements have not had a material effect on the company’s business, financial condition or results of operations. In addition, the company guarantees certain loans and financial commitments. The maximum potential fut ure payment under these financial guarantees was $32 million and $34 million at March 31, 2016 and December 31, 2015 , respectively. The fair value of the guarantees recognized in the Consolidated Statement of Financial Position is not material. Change s in the company’s warranty liability for standard warranties and deferred income for extended warranty contracts are presented in the following tables. Standard Warranty Liability (Dollars in millions) 2016 2015 Balance at January 1 $ 181 $ 197 Current period accruals 27 35 Accrual adjustments to reflect actual experience (2) 10 Charges incurred (41) (51) Balance at March 31 $ 164 $ 192 Extended Warranty Liability (Dollars in millions) 2016 2015 Aggregate deferred revenue at January 1 $ 538 $ 536 Revenue deferred for new extended warranty contracts 49 45 Amortization of deferred revenue (66) (63) Other * 9 (15) Aggregate deferred revenue at March 31 $ 531 $ 503 Current portion $ 247 $ 245 Noncurrent portion $ 284 $ 258 * Other primarily consists of foreign currency translation adjustments. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events: | |
Subsequent Events: | 14. Subsequent Events : On April 26, 2016 , the company announced that the Board of Directors approved a quarterly dividend of $ 1 .40 per common share. The dividend is payable June 10 , 201 6 to shareholders of record on May 10, 201 6. The dividend declaration represents an increase of $0.10 per common share, which is 8 percent higher than the prior quarterly dividend of $1.30 per common share. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Basis of Presentation: | |
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 sta tement of the company's results of operations, financial position and cash flows. T he preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, r evenue, 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, action s 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. Refer to the company's 201 5 Annual Report on page s 64 to 67 for a discussion of the company's critical accounting estimates. 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 2015 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. Ce rtain prior year amounts have been reclassified to conform to the current year presentation. This is annotated where applicabl e. |
Fair Value Measurements | Fair Value Measurements Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the company is required t o classify certain assets and liabilities based on the following fair value hierarchy: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date; Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3—Unobservable inputs for the asset or liability. The guidance requires the use of observable market data if such data is avail able without undue cost and effort. When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items as Level 1. If quoted market prices are not available, fair value is based up on internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value dr iver that is significant to the valuation. The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument. In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calcula ted using the methodologies described below for several parameters that market participants would consider in determining fair value: Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument. Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The metho dology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market. As an example, the fair value of derivatives is derived utiliz ing a discounted cash flow model that uses observable market inputs such as known notional value amounts, yield curves, spot and forward exchange rates as well as discount rates. These inputs relate to liquid, heavily traded currencies with active markets which are available for the full term of the derivative. Certain financial assets are measured at fair value on a nonrecurring basis. These assets include equity method investments that are recognized at fair value at the measurement date to the ex tent that they are deemed to be other-than-temporarily impaired. Certain assets that are measured at fair value on a recurring basis can be subject to nonrecurring fair value measurements. These assets include available-for-sale equity investments that are deemed to be other-than-temporarily impaired. In the event of an other-than-temporary impairment of a financial investment, fair value is measured using a model described above. Non-financial assets such as property, plant and equipment, land, goo dwill and intangible assets are also subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for nonfinancial assets depend on the type of asset. Accounting guidance permits the measurement of eligible financial assets, financial liabilities and firm commitments at fair value, on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. This election is irrevocable. The company has not applied the fair value option to any eligible assets or liabilities. |
Fair Value of Financial Instruments | Short-Term Receivables and Payables Notes and other accounts receivable and other investments are financial assets with carrying values that approximate fair value. Accounts payable, other accrued expenses and short-term debt (excluding the current portion of long-term debt) are financial liabilities with carrying values that approximate fair value. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. Loans and Long-term Receivables Fair values are based on discounted future ca sh flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. Long-Term Debt Fair value of publicly-traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy. |
Debt and Marketable Equity Securities | The compa ny’s cash equivalents and current debt securities are considered available-for-sale and recorded at fair value, which is not materially different from carrying value, in the Consolidated Statement of Financial Position. |
Derivative Financial Instruments | The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other fina ncial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchan ge rate fluctuations. As a result of the use of derivative instruments, the company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the c ompany has a policy of only entering into contracts with carefully selected major financial institutions based upon their overall credit profile. The company’s established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. The right of set-off that exists under certain of these arrangements enables the legal entities of the company subject to the arrangeme nt to net amounts due to and from the counterparty reducing the maximum loss from credit risk in the event of counterparty default. The company is also a party to collateral security arrangements with most of its major derivative counterparties. Th ese arrangements require the company to hold or post collateral (cash or U.S. Treasury securities) when the derivative fair values exceed contractually established thresholds. Posting thresholds can be fixed or can vary based on credit default swap pricing or credit ratings received from the major credit agencies. Full collateralization of these agreements would be required in the event that the company’s credit rating falls below investment grade or if its credit default swap spread exceeds 250 basis points, as applicable, pursuant to the terms of the collateral security arrangements. In the Consolidated Statement of Financial Position, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments. The company restricts the use of cash collateral received to rehypothecation , and therefore reports it in prepaid expenses and other current assets in the Consolidated Statement of Financial Position. The company may employ derivative instruments to hedge the volatility in stockholders’ equity resulting from changes in currency exchange rates of significant foreign su bsidiaries of the company with respect to the U.S. dollar. These instruments, designated as net investment hedges, expose the company to liquidity risk as the derivatives have an immediate cash flow impact upon maturity which is not offset by a cash flow f rom the translation of the underlying hedged equity. The company monitors this cash loss potential on an ongoing basis and may discontinue some of these hedging relationships by de-designating or terminating the derivative instrument in order to manage the liquidity risk. Although not designated as accounting hedges, the company may utilize derivatives to offset the changes in the fair value of the de-designated instruments from the date of de-designation until maturity. In its hedging programs, th e company uses forward contracts, futures contracts, interest-rate swaps, cross-currency swaps, and options depending upon the underlying exposure. The company is not a party to leveraged derivative instruments. The company issues debt in the global capital markets to fund its operations and financing business . Access to cost-ef fective financing can result in interest rate mismatches with the underlying assets. To manage these mismatches and to reduce overall interest cost, the company uses interest-rate swaps to convert specific fixed-rate debt issuances into variable-rate debt (i.e., fair value hedges) and to convert specific variable-rate debt issuances into fixed-rate debt (i.e., cash flow hedges). The company is exposed to interest rate volatility on futur e debt issuances. To manage this risk, the company may use forward starting interest-rate swaps to lock in the rate on the interest payments related to the forecasted debt issuance. These swaps are accounted for as cash flow hedges. A large portion of the company’s foreign currency denominated debt portfolio is designated as a hedge of net investment in foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates in the functional currency of major foreign subsidiaries with respect to the U.S. dollar. The company also uses cross-currency swaps and foreign exchange forward contracts for this risk management purpose. The company’s operations generate significant nonfunctional currency, third-party vendor payments and intercompany payments for royalties and goods and services among the company’s non-U.S. subsidiaries and with the parent company. In anticipation of these foreign currency cash flows and in view of t he volatility of the currency markets, the company selectively employs foreign exchange forward contracts to manage its currency risk. These forward contracts are accounted for as cash flow hedges. The maximum length of time over which the company has hedg ed its exposure to the variability in future cash flows is four years. The company is exposed to exchange rate volatility on foreign currency denominated debt. To manage this risk, the company employs cross-currency swaps to convert fixed-rate foreign currency denominated debt to fixed-rate debt denominated in the functional currency of the borrowing entity. These swaps are accounted for as cash flow hedges. The maximum length of time over which the company has hedged its exposure to the variability in future cash flows is approximately nine years. The company uses i ts Global Treasury Centers to manage the cash of its subsidiaries. These centers principally use currency swaps to convert cash flows in a cost-effective manner. In addition, the company uses foreign exchange forward contracts to economically hedge, on a n et basis, the foreign currency exposure of a portion of the company’s nonfunctional currency assets and liabilities. The terms of these forward and swap contracts are generally less than one year. The changes in the fair values of these contracts and of th e underlying hedged exposures are generally offsetting and are recorded in other (income) and expense in the Consolidated Statement of Earnings. The company is exposed to market price changes in certain broad market indices and in the company’s own stock primarily related to certain obl igations to employees. Changes in the overall value of these employee compensation obligations are recorded in selling, general and administrative (SG&A) expense in the Consolidated Statement of Earnings. Although not designated as accounting hedges, the c ompany utilizes derivatives, including equity swaps and futures, to economically hedge the exposures related to its employee compensation obligations. The derivatives are linked to the total return on certain broad market indices or the total return on the company’s common stock, and are recorded at fair value with gains or losses also reported in SG&A expense in the Consolidated Statement of Earnings. The company may hold warrants to purchase shares of common stock in connection with various investments that are deemed derivatives because they cont ain net share or net cash settlement provisions. The company records the changes in the fair value of these warrants in other (income) and expense in the Consolidated Statement of Earnings. The company is exposed to a potential loss if a client fails to pay amounts due under contractual terms. The company may utilize credit default swaps to economically hedge its credit exposures. The swaps are recorded at fair value with gains and losses reported in other (income) and expense in the Consolidated Statement of Earnings. The company is exposed to market volatility on certain investment securities. The company may utilize options or forwards to economically hedge its market exposure. The d erivatives are recorded at fair value with gains and losses reported in other (income) and expense in the Consolidated Statement of Earnings. |
Finacing Receivables | The company determines its allowance for credit losses based on two portfolio segments : lease receivables and loan receivables , and further segments the portfolio into two classes: major markets a nd growth markets. When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For individually evaluated receivables, the company determines the expected cash flow for the receivable and calculates an estimate of the potential loss and the probability of loss. For those accounts in which the loss is probable, the company records a specific reserve. In addition, the company records an unallocated reserve that is determined by applying a reserve rate to its differ ent portfolios, excluding accounts that have been specifically reserved. This reserve rate is based upon credit rating, probability of default, term, characteristics (lease/loan) and loss history. |
Impaired Loans and Credit Quality Indicators | The company considers any loan with an individually evaluated reserve as an impaired loan. Depending on the level of impairment, loans will also be placed on non-accrual status. The company’s credit quality indicators , which are based on rating agency data , publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Moody’s Investors Service credit ratings as shown below. The company uses information provided by Moody ’s , where available, as o ne of many inputs in its determination of customer credit ratings. Receivables with a credi t quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators do not reflect mitigation actions that the company takes to transfer credit risk to third parties . |
Stock-Based Compensation | Stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. |
Segments | Performance measurement is based on operating 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. |
Acquisitions | All acquisitions are reported in the Consolidated Statement of Cash Flows n et of acquired cash and cash e q uivalents. T he acquisitions were accounted for as business combinations using the acquisition method, and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity w ere recorded at their estimated fair values at the date of acquisition. The primary items that generated the goodwill are the value of the synergies between the acquired businesses and IBM and the acquired assembled workforce, neither of which qualify as an a mortizable intangible asset. These identified intangible assets will be amortized on a straight-line basis over their useful lives. |
Commitments and Contingencies | The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable t hat a liability has been incurred and the amount of the loss can be reasonably estimated. In accordance with the relevant accounting guidance, the company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer and employee relations considerations. With respect to cer tain of the claims, suits, investigations and proceedings discussed herein, the company believes at this time that the likelihood of any material loss is remote, given, for example, the procedural status, court rulings, and/or the strength of the company’s defenses in those matters. With respect to the remaining claims, suits, investigations and proceedings discussed in this Note, except as specifically discussed herein, the company is unable to provide estimates of reasonably possible losses or range of lo sses, including losses in excess of amounts accrued, if any, for the following reasons. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of these matters. It is the company’s exp erience that damage amounts claimed in litigation against it are unreliable and unrelated to possible outcomes, and as such are not meaningful indicators of the company’s potential liability. Further, the company is unable to provide such an estimate due t o a number of other factors with respect to these claims, suits, investigations and proceedings, including considerations of the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. The company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate), to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter. The company has applied the guidance requiring a guarantor to disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s performance is remote. |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Financial Instruments: | |
Financial assets and financial liabilities measured at fair value on a recurring basis | (Dollars in millions) At March 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ 5,784 $ — $ 5,784 Commercial paper — 325 — 325 Money market funds 3,076 — — 3,076 U.S. government securities — 1,300 — 1,300 Canadian government securities — 463 — 463 Other securities — 162 — 162 Total 3,076 8,034 — 11,109 (6) Debt securities - current (2) — 514 — 514 (6) Debt securities - noncurrent (3) 1 7 — 8 Available-for-sale equity investments (3) 9 — — 9 Derivative assets (4) Interest rate contracts — 876 — 876 Foreign exchange contracts — 206 — 206 Equity contracts — 48 — 48 Total — 1,129 — 1,129 (7) Total assets $ 3,086 $ 9,685 $ — $ 12,770 (7) Liabilities: Derivative liabilities (5) Foreign exchange contracts $ — $ 460 $ — $ 460 Equity contracts — 1 — 1 Interest rate contracts — 0 — 0 Total liabilities $ — $ 461 $ — $ 461 (7) (1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. (2) U.S. government securities, time deposits and certificates of deposit reported as marketable securities in the Consolidated Statement of Financial Position. (3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. (4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in t he Consolidated Statement of Financial Position at March 31, 2016 were $165 million and $964 million, respectively. (5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Statement of Financial Position at March 31, 2016 were $443 million and $18 million, respectively. (6) Available-for-sale securities with carrying values that approximate fair value. (7) If derivative exposures cover ed by a qualifying master netting agreement had been netted in the Consolidated Statement of Financial Position, the total derivative asset and liability positions each would have been reduced by $270 million. (Dollars in millions) At December 31, 2015 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ 2,856 $ — $ 2,856 Money market funds 2,069 — — 2,069 Other securities — 18 — 18 Total 2,069 2,874 — 4,943 (6) Debt securities - current (2) — 506 — 506 (6) Debt securities - noncurrent (3) 1 6 — 8 Trading security investments (3) 28 — — 28 Available-for-sale equity investments (3) 192 — — 192 Derivative assets (4) Interest rate contracts — 656 — 656 Foreign exchange contracts — 332 — 332 Equity contracts — 6 — 6 Total — 994 — 994 (7) Total assets $ 2,290 $ 4,381 $ — $ 6,671 (7) Liabilities: Derivative liabilities (5) Foreign exchange contracts $ — $ 164 $ — $ 164 Equity contracts — 19 — 19 Interest rate contracts — 3 — 3 Total liabilities $ — $ 186 $ — $ 186 (7) (1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. (2) Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of Financial Position. (3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. (4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated S tatement of Financial Position at December 31, 2015 were $292 million and $702 million, respectively. (5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consoli dated Statement of Financial Position at December 31, 2015 were $164 million and $22 million, respectively. (6) Available-for-sale securities with carrying values that approximate fair value. (7) If derivative exposures covered by a qualifying master n etting agreement had been netted in the Consolidated Statement of Financial Position, the total derivative asset and liability positions each would have been reduced by $139 million. |
Noncurrent debt and marketable equity securities available-for-sale and recorded at fair value | Gross Gross (Dollars in millions) Adjusted Unrealized Unrealized Fair At March 31, 2016: Cost Gains Losses Value Debt securities – noncurrent (1) $ 5 $ 3 $ — $ 8 Available-for-sale equity investments (1) $ 1 $ 8 $ 0 $ 9 (1) Included within investments and sundry assets in the Consolidated Statement of Financial Position. Gross Gross (Dollars in millions) Adjusted Unrealized Unrealized Fair At December 31, 2015: Cost Gains Losses Value Debt securities – noncurrent (1) $ 5 $ 3 $ — $ 8 Available-for-sale equity investments (1) $ 186 $ 6 $ 0 $ 192 (1) Included within investments and sundry assets in the Consolidated Statement of Financial Position. |
Sales of debt and available-for-sale equity investments | (Dollars in millions) For the three months ended March 31: 2016 2015 Proceeds $ 148 $ 4 Gross realized gains (before taxes) — 0 Gross realized losses (before taxes) 37 0 |
Unrealized gains/(losses) on available-for-sale debt and equity securities | The after-tax net unrealized holding gains/(losses) on available-for-sale debt and marketable equity securities that have been included in other comprehensive income/(loss) for the period and the after-tax net (gains)/losses reclassified from accumulated other comprehensive income/(loss) to net income were as follows: (Dollars in millions) For the three months ended March 31: 2016 2015 Net unrealized gains/(losses) arising during the period $ (22) $ 20 Net unrealized (gains)/losses reclassified to net income* 23 0 * There were no writedowns for the three months ended March 31, 2016 and 2015, respectively. |
Fair Value of Derivative Instruments in the Consolidated Statement of Financial Position | Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position As of March 31, 2016 and December 31, 2015 (Dollars in millions) Fair Value of Derivative Assets Fair Value of Derivative Liabilities Balance Sheet Balance Sheet Classification 3/31/2016 12/31/2015 Classification 3/31/2016 12/31/2015 Designated as hedging instruments: Interest rate contracts: Prepaid expenses and Other accrued other current assets $ — $ — expenses and liabilities $ — $ — Investments and sundry assets 876 656 Other liabilities — 3 Foreign exchange Prepaid expenses and Other accrued contracts: other current assets 37 197 expenses and liabilities 363 70 Investments and sundry assets 47 5 Other liabilities 11 19 Fair value of derivative Fair value of derivative assets $ 960 $ 858 liabilities $ 374 $ 92 Not designated as hedging instruments: Foreign exchange Prepaid expenses and Other accrued contracts: other current assets $ 81 $ 90 expenses and liabilities $ 79 $ 75 Investments and sundry assets 41 40 Other liabilities 7 — Equity contracts: Prepaid expenses and Other accrued other current assets 48 6 expenses and liabilities 1 19 Investments and sundry assets — — Other liabilities — — Fair value of derivative Fair value of derivative assets $ 170 $ 136 liabilities $ 87 $ 94 Total debt designated as hedging instruments: Short-term debt N/A N/A $ 386 $ — Long-term debt N/A N/A $ 8,947 $ 7,945 Total $ 1,129 $ 994 $ 9,794 $ 8,131 N/A-not applicable |
Effect of Derivative Instruments in the Consolidated Statement of Earnings | The Effect of Derivative Instruments in the Consolidated Statement of Earnings For the three months ended March 31, 2016 and 2015 (Dollars in millions) Gain (Loss) Recognized in Earnings Consolidated Statement of Recognized on Attributable to Risk Earnings Line Item Derivatives(1) Being Hedged(2) For the three months ended March 31: 2016 2015 2016 2015 Derivative instruments in fair value hedges(5): Interest rate contracts Cost of financing $ 137 $ 97 $ (112) $ (66) Interest expense 147 74 (120) (51) Derivative instruments not designated as hedging instruments(1): Foreign exchange contracts Other (income) and expense 121 17 N/A N/A Interest rate contracts Other (income) and expense 0 (1) N/A N/A Equity contracts SG&A expense 21 24 N/A N/A Other (income) and expense (1) 0 N/A N/A Total $ 426 $ 211 $ (233) $ (118) (Dollars in millions) Gain (Loss) Recognized in Earnings and Other Comprehensive Income Consolidated (Ineffectiveness) and Effective Portion Statement of Effective Portion Reclassified Amounts Excluded from Recognized in OCI Earnings Line Item from AOCI Effectiveness Testing(3) For the three months ended March 31: 2016 2015 2016 2015 2016 2015 Derivative instruments in cash flow hedges: Interest rate contracts $ — $ — Interest expense $ (2) $ 0 $ — $ — Other (income) Foreign exchange (265) 619 and expense 87 160 1 0 contracts Cost of sales 3 50 — — SG&A expense 3 40 — — Instruments in net investment hedges(4): Foreign exchange contracts (693) 694 Interest expense — — 10 0 Total $ (959) $ 1,313 $ 91 $ 249 $ 11 $ 1 N/A-not applicable Note: OCI represents Other comprehensive income/(loss) in the Consolidated Statement of Comprehensive Income and AOCI represents Accumulated other comprehensive income/(loss) in the Consolidated Statement of Changes in Equity. The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. The amount includes basis adjustments to the carrying val ue of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. The amount of gain/(loss) recognized in income represents ineffectiveness on hedge relationships. Inst ruments in net investment hedges include der ivative and non-derivative instruments. For the three month period s ended March 31, 2016 and March 31, 2015 , fair value hedges resulted in gains of $2 million in ineffectiveness for both periods . |
Financing Receivables (Tables)
Financing Receivables (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Financing Receivables: | |
Financing receivables, net of allowances for credit losses, including residual values | At March 31, At December 31, (Dollars in millions) 2016 2015 Current: Net investment in sales-type and direct financing leases $ 3,145 $ 3,057 Commercial financing receivables 6,906 8,948 Client loan and installment payment receivables (loans) 6,596 7,015 Total $ 16,646 $ 19,020 Noncurrent: Net investment in sales-type and direct financing leases $ 4,350 $ 4,501 Client loan and installment payment receivables (loans) 4,915 5,512 Total $ 9,266 $ 10,013 |
Schedule of financing receivables and allowance for credit losses by portfolio segment | (Dollars in millions) Major Growth At March 31, 2016 Markets Markets Total Financing receivables: Lease receivables $ 5,461 $ 1,566 $ 7,027 Loan receivables 9,034 2,897 11,931 Ending balance $ 14,495 $ 4,463 $ 18,959 Collectively evaluated for impairment $ 14,404 $ 4,005 $ 18,409 Individually evaluated for impairment $ 92 $ 458 $ 550 Allowance for credit losses: Beginning balance at January 1, 2016 Lease receivables $ 25 $ 188 $ 213 Loan receivables 83 293 377 Total $ 109 $ 481 $ 590 Write-offs (1) (17) (19) Provision 6 74 80 Other 4 10 14 Ending balance at March 31, 2016 $ 118 $ 548 $ 666 Lease receivables $ 32 $ 214 $ 246 Loan receivables $ 86 $ 334 $ 420 Collectively evaluated for impairment $ 39 $ 105 $ 144 Individually evaluated for impairment $ 79 $ 443 $ 522 (Dollars in millions) Major Growth At December 31, 2015 Markets Markets Total Financing receivables: Lease receivables $ 5,517 $ 1,524 $ 7,041 Loan receivables 9,739 3,165 12,904 Ending balance $ 15,256 $ 4,689 $ 19,945 Collectively evaluated for impairment $ 15,180 $ 4,227 $ 19,406 Individually evaluated for impairment $ 76 $ 462 $ 539 Allowance for credit losses: Beginning balance at January 1, 2015 Lease receivables $ 32 $ 133 $ 165 Loan receivables 79 317 396 Total $ 111 $ 450 $ 561 Write-offs (14) (48) (62) Provision 20 122 141 Other (8) (43) (51) Ending balance at December 31, 2015 $ 109 $ 481 $ 590 Lease receivables $ 25 $ 188 $ 213 Loan receivables $ 83 $ 293 $ 377 Collectively evaluated for impairment $ 43 $ 36 $ 79 Individually evaluated for impairment $ 65 $ 445 $ 511 |
Schedule of recorded investment in financing receivables which are on Non-Accrual Status | At March 31, At December 31, (Dollars in millions) 2016 2015 Major markets $ 2 $ 2 Growth markets 49 63 Total lease receivables $ 52 $ 65 Major markets $ 15 $ 13 Growth markets 107 91 Total loan receivables $ 123 $ 104 Total receivables $ 174 $ 168 |
Schedule of impaired client loan receivables | At March 31, 2016 At December 31, 2015 Recorded Related Recorded Related (Dollars in millions) Investment Allowance Investment Allowance Major markets $ 66 $ 63 $ 50 $ 47 Growth markets 296 281 297 284 Total $ 362 $ 343 $ 347 $ 331 Interest Average Interest Income (Dollars in millions) Recorded Income Recognized on For the three months ended March 31, 2016: Investment Recognized Cash Basis Major markets $ 58 $ 0 $ — Growth markets 296 0 — Total $ 354 $ 0 $ — Interest Average Interest Income (Dollars in millions) Recorded Income Recognized on For the three months ended March 31, 2015: Investment Recognized Cash Basis Major markets $ 52 $ 0 $ — Growth markets 315 0 — Total $ 367 $ 0 $ — |
Schedule of gross recorded investment by credit quality indicator | Lease Receivables Loan Receivables (Dollars in millions) Major Growth Major Growth At March 31, 2016: Markets Markets Markets Markets Credit Rating: Aaa – Aa3 $ 514 $ 40 $ 850 $ 73 A1 – A3 1,230 138 2,035 254 Baa1 – Baa3 1,506 246 2,491 455 Ba1 – Ba2 1,240 385 2,051 712 Ba3 – B1 543 414 899 765 B2 – B3 391 245 648 454 Caa – D 37 99 61 183 Total $ 5,461 $ 1,566 $ 9,034 $ 2,897 Lease Receivables Loan Receivables (Dollars in millions) Major Growth Major Growth At December 31, 2015: Markets Markets Markets Markets Credit Rating: Aaa – Aa3 $ 538 $ 39 $ 949 $ 80 A1 – A3 1,324 162 2,338 336 Baa1 – Baa3 1,493 392 2,635 813 Ba1 – Ba2 1,214 352 2,143 732 Ba3 – B1 513 277 905 576 B2 – B3 403 215 711 447 Caa – D 33 87 59 181 Total $ 5,517 $ 1,524 $ 9,739 $ 3,165 |
Schedule of past due financing receivables | Fully <90 Days Recorded Total Reserved or Unbilled Total Investment (Dollars in millions) Past Due Financing Financing Financing > 90 Days and At March 31, 2016: > 90 days (1) Receivables Receivables Receivables Accruing (2) Major markets $ 7 $ 33 $ 5,420 $ 5,461 $ 128 Growth markets 26 182 1,358 1,566 64 Total lease receivables $ 33 $ 215 $ 6,779 $ 7,027 $ 192 Major markets $ 10 $ 36 $ 8,989 $ 9,034 $ 150 Growth markets 33 279 2,585 2,897 74 Total loan receivables $ 42 $ 315 $ 11,574 $ 11,931 $ 224 Total $ 76 $ 530 $ 18,353 $ 18,959 $ 416 (1) Only the portion of a financing receivable which is greater than 90 days past due, excluding amounts that are fully reserved. (2) At a contract level, which includes total billed and unbilled amounts for aged financing receivables greater than 90 days. Fully <90 Days Recorded Total Reserved or Unbilled Total Investment (Dollars in millions) Past Due Financing Financing Financing > 90 Days and At December 31, 2015*: > 90 days (1) Receivables Receivables Receivables Accruing (2) Major markets $ 5 $ 33 $ 5,479 $ 5,517 $ 108 Growth markets 30 140 1,355 1,524 60 Total lease receivables $ 35 $ 173 $ 6,834 $ 7,041 $ 168 Major markets $ 7 $ 35 $ 9,696 $ 9,739 $ 134 Growth markets 31 309 2,825 3,165 86 Total loan receivables $ 38 $ 344 $ 12,521 $ 12,904 $ 220 Total $ 73 $ 517 $ 19,355 $ 19,945 $ 388 (1) Only the portion of a financing receivable which is greater than 90 days past due, excluding amounts that are fully reserved. (2) At a contract level, which includes total billed and unbilled amounts for aged financing receivables greater than 90 days. * Reclassified to conform with 2016 presentation. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stock-Based Compensation: | |
Stock-based compensation cost included in income from continuing operations | (Dollars in millions) For the three months ended March 31: 2016 2015 Cost $ 21 $ 27 Selling, general and administrative 99 87 Research, development and engineering 13 14 Other (income) and expense* –– (1) Pre-tax stock-based compensation cost 133 127 Income tax benefits (43) (42) Total net stock-based compensation cost $ 90 $ 85 * Reflects the one-time effects related to divestitures. |
Segments (Tables)
Segments (Tables) | 3 Months Ended |
Mar. 31, 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 March 31, 2016: External revenue $ 3,979 $ 4,131 $ 8,424 $ 1,675 $ 410 $ 18,619 Internal revenue 668 113 165 212 486 1,645 Total revenue $ 4,647 $ 4,245 $ 8,589 $ 1,888 $ 896 $ 20,264 Pre-tax income/(loss) from continuing operations $ 1,013 $ 190 $ 258 $ (10) $ 386 $ 1,837 Revenue year-to-year change (0.8) % (4.6) % (1.5) % (18.4) % (14.5) % (4.5) % Pre-tax income year-to-year change (33.7) % (67.7) % (77.2) % nm (25.0) % (54.3) % Pre-tax income margin 21.8 % 4.5 % 3.0 % (0.5) % 43.1 % 9.1 % For the three months ended March 31, 2015*: External revenue $ 4,047 $ 4,318 $ 8,554 $ 2,142 $ 461 $ 19,523 Internal revenue 635 131 166 173 586 1,690 Total revenue $ 4,682 $ 4,449 $ 8,720 $ 2,314 $ 1,048 $ 21,213 Pre-tax income from continuing operations $ 1,528 $ 588 $ 1,131 $ 261 $ 515 $ 4,023 Pre-tax income margin 32.6 % 13.2 % 13.0 % 11.3 % 49.2 % 19.0 % * Reclassified to conform with 2016 presentation. nm - not meaningful |
Segment revenue and pre-tax income reconciliations to total IBM revenue and pre-tax income from continuing operations as reported | Reconciliations to IBM as Reported: (Dollars in millions) For the three months ended March 31: 2016 2015* Revenue: Total reportable segments $ 20,264 $ 21,213 Eliminations of internal transactions (1,645) (1,690) Other revenue 66 67 Total consolidated revenue $ 18,684 $ 19,590 Pre-tax income from continuing operations: Total reportable segments $ 1,837 $ 4,023 Amortization of acquired intangible assets (211) (170) Acquisition-related (charges)/income 27 0 Non-operating retirement-related (costs)/income (142) (442) Eliminations of internal transactions (355) (363) Unallocated corporate amounts (122) (48) Total pre-tax income from continuing operations $ 1,034 $ 3,001 * Reclassified to conform with 2016 presentation. |
Equity Activity (Tables)
Equity Activity (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Equity Activity: | |
Schedule of Reclassifications and Taxes Related to items of Other Comprehensive Income | Reclassifications and Taxes Related to Items of Other Comprehensive Income (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended March 31, 2016: Amount Benefit Amount Other comprehensive income/(loss): Foreign currency translation adjustments $ 239 $ 266 $ 505 Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period $ (36) $ 14 $ (22) Reclassification of (gains)/losses to other (income) and expense 37 (14) 23 Total net changes related to available-for-sale securities $ 1 $ 0 $ 0 Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ (265) $ 91 $ (174) Reclassification of (gains)/losses to: Cost of sales (3) 0 (3) SG&A expense (3) 0 (3) Other (income) and expense (87) 33 (53) Interest expense 2 (1) 1 Total unrealized gains/(losses) on cash flow hedges $ (356) $ 124 $ (232) Retirement-related benefit plans (1) : Net (losses)/gains arising during the period $ (147) $ 53 $ (94) Curtailments and settlements 5 (2) 3 Amortization of prior service (credits)/costs (25) 9 (16) Amortization of net (gains)/losses 690 (248) 442 Total retirement-related benefit plans $ 522 $ (187) $ 335 Other comprehensive income/(loss) $ 406 $ 202 $ 608 (1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, "Retirement-Related Benefits," for additional information.) Reclassifications and Taxes Related to Items of Other Comprehensive Income (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended March 31, 2015: Amount Benefit Amount Other comprehensive income/(loss): Foreign currency translation adjustments $ (452) $ (266) $ (718) Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period $ 32 $ (12) $ 20 Reclassification of (gains)/losses to other (income) and expense 0 0 0 Total net changes related to available-for-sale securities $ 32 $ (12) $ 20 Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ 619 $ (218) $ 401 Reclassification of (gains)/losses to: Cost of sales (50) 15 (35) SG&A expense (40) 11 (28) Other (income) and expense (160) 61 (98) Interest expense 0 0 0 Total unrealized gains/(losses) on cash flow hedges $ 370 $ (131) $ 239 Retirement-related benefit plans (1) : Prior service costs/(credits) $ 5 $ (2) $ 3 Net (losses)/gains arising during the period (77) 26 (52) Curtailments and settlements 4 (1) 3 Amortization of prior service (credits)/costs (26) 9 (17) Amortization of net (gains)/losses 835 (280) 555 Total retirement-related benefit plans $ 740 $ (248) $ 492 Other comprehensive income/(loss) $ 690 $ (657) $ 33 (1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, "Retirement-Related Benefits," for additional information.) |
Accumulated Other Comprehensive Income/(Loss) (net of tax) | Accumulated Other Comprehensive Income/(Loss) (net of tax) Net Change Net Unrealized Net Unrealized Foreign Retirement- Gains/(Losses) Accumulated Gains/(Losses) Currency Related on Available- Other on Cash Flow Translation Benefit For-Sale Comprehensive (Dollars in Millions) Hedges Adjustments* Plans Securities Income/(Loss) January 1, 2016 $ 100 $ (3,463) $ (26,248) $ 5 $ (29,607) Other comprehensive income before reclassifications (174) 505 (91) (22) 218 Amount reclassified from accumulated other comprehensive income (58) 0 426 23 391 Total change for the period (232) 505 335 0 608 March 31, 2016 $ 133 $ (2,958) $ (25,913) $ 5 $ (28,998) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. Net Change Net Unrealized Net Unrealized Foreign Retirement- Gains/(Losses) Accumulated Gains/(Losses) Currency Related on Available- Other on Cash Flow Translation Benefit For-Sale Comprehensive (Dollars in Millions) Hedges Adjustments* Plans Securities Income/(Loss) January 1, 2015 $ 392 $ (1,742) $ (26,509) $ (15) $ (27,875) Other comprehensive income before reclassifications 401 (718) (46) 20 (343) Amount reclassified from accumulated other comprehensive income (162) 0 538 0 376 Total change for the period 239 (718) 492 20 33 March 31, 2015 $ 631 $ (2,461) $ (26,017) $ 5 $ (27,842) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. |
Retirement-Related Benefits (Ta
Retirement-Related Benefits (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Defined Benefit Plans and Other Postretirement Benefit Plans | |
Retirement-related benefits net periodic (income)/cost in the Consolidated Statement of Earnings | Yr. to Yr. (Dollars in millions) Percent For the three months ended March 31: 2016 2015 Change Retirement-related plans – cost Defined benefit and contribution pension plans – cost $ 439 $ 749 (41.4) % Nonpension postretirement plans – cost 60 71 (15.9) Total $ 499 $ 820 (39.2) % |
Defined Benefit Pension Plans | |
Defined Benefit Plans and Other Postretirement Benefit Plans | |
Retirement-related benefits net periodic (income)/cost in the Consolidated Statement of Earnings | Cost/(Income) of Pension Plans (Dollars in millions) U.S. Plans Non-U.S. Plans For the three months ended March 31: 2016 2015 2016 2015 Service cost $ — $ — $ 104 $ 108 Interest cost 513 508 262 271 Expected return on plan assets (922) (989) (470) (483) Amortization of prior service costs/(credits) 3 2 (25) (25) Recognized actuarial losses 333 415 347 401 Curtailments and settlements — — 5 4 Multi-employer plans/other costs — — 18 248 Total net periodic pension (income)/cost of defined benefit plans (74) (64) 241 524 Cost of defined contribution plans 165 173 106 115 Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings $ 91 $ 109 $ 348 $ 640 |
Nonpension Postretirement Plans | |
Defined Benefit Plans and Other Postretirement Benefit Plans | |
Retirement-related benefits net periodic (income)/cost in the Consolidated Statement of Earnings | The following tables provide the components of the cost/(income) for the company's nonpension postretirement plans. Cost of Nonpension Postretirement Plans (Dollars in millions) U.S. Plan Non-U.S. Plans For the three months ended March 31: 2016 2015 2016 2015 Service cost $ 5 $ 6 $ 1 $ 2 Interest cost 41 41 10 14 Expected return on plan assets — 0 (1) (2) Amortization of prior service costs/(credits) (2) (2) (1) (1) Recognized actuarial losses 5 11 2 3 Total nonpension postretirement plan cost recognized in Consolidated Statement of Earnings $ 49 $ 56 $ 11 $ 15 |
Acquisitions_Divestitures (Tabl
Acquisitions/Divestitures (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Acquisitions/Divestitures: | |
Business acquisition, purchase price allocation | The Amortization Weather Other (Dollars in millions) Life (in yrs.) Company Acquisitions Current assets $ 76 $ 31 Fixed assets/noncurrent assets 123 68 Intangible assets: Goodwill N/A 1,723 192 Completed technology 2-7 160 24 Client relationships 3-7 313 135 Patents/trademarks 2-7 349 4 Total assets acquired 2,744 455 Current liabilities (88) (21) Noncurrent liabilities (372) (35) Total liabilities assumed (460) (57) Bargain purchase gain — (40) * Total purchase price $ 2,284 $ 358 N/A - not applicable * Bargain purchase gain relating to AT&T's application and hosting services business was recognized in selling, general and administrative expense in the Consolidated Statement of Earnings. This gain was excluded from the company's operating (non-GAAP) earnings. |
Discontinued operation, summarized financial information | Three Months Ended March 31, (Dollars in millions) 2016 2015 Total revenue $ — $ 339 Income/(loss) from discontinued operations $ (5) $ (105) Gain/(loss) on disposal, before tax 1 (14) Total loss from discontinued operations, before income taxes $ (5) $ (119) Provision/(benefit) for income taxes (2) (31) Loss from discontinued operations, net of tax $ (3) $ (88) |
Intangible Assets Including G31
Intangible Assets Including Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Intangible Assets Including Goodwill: | |
Intangible asset balances by major asset class | At March 31, 2016 (Dollars in millions) Gross Carrying Accumulated Net Carrying Intangible asset class Amount Amortization Amount Capitalized software $ 1,465 $ (593) $ 872 Client relationships 2,297 (987) 1,310 Completed technology 3,121 (1,486) 1,635 Patents/trademarks 683 (160) 523 Other* 44 (11) 33 Total $ 7,610 $ (3,237) $ 4,373 * Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems. At December 31, 2015 (Dollars in millions) Gross Carrying Accumulated Net Carrying Intangible asset class Amount Amortization Amount Capitalized software $ 1,348 $ (581) $ 767 Client relationships 1,856 (927) 929 Completed technology 2,960 (1,397) 1,563 Patents/trademarks 335 (142) 193 Other* 44 (10) 35 Total $ 6,543 $ (3,057) $ 3,487 * Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. |
Intangible assets, future amortization expense | Capitalized Acquired (Dollars in millions) Software Intangibles Total 2016 (for Q2-Q4) $ 365 $ 674 $ 1,039 2017 340 792 1,132 2018 160 645 805 2019 8 484 492 2020 — 384 384 |
Changes in goodwill balances by reportable segment | Foreign Currency Purchase Translation (Dollars in millions) Balance Goodwill Price And Other Balance Segment 1/1/2016* Additions Adjustments Divestitures Adjustments** 3/31/16 Cognitive Solutions $ 15,621 $ 1,723 $ 1 $ (12) $ 199 $ 17,533 Global Business Services 4,396 101 1 (1) 72 4,569 Technology Services & Cloud Platforms 10,156 91 1 (5) 115 10,358 Systems 1,848 — 1 — 12 1,861 Total $ 32,021 $ 1,915 $ 4 $ (17) $ 398 $ 34,322 * Reclassified to conform with 2016 presentation. ** Primarily driven by foreign currency translation. Foreign Currency Purchase Translation (Dollars in millions) Balance Goodwill Price And Other Balance Segment 1/1/2015* Additions* Adjustments* Divestitures* Adjustments* ** 12/31/15* Cognitive Solutions $ 15,156 $ 1,020 $ (2) $ (18) $ (535) $ 15,621 Global Business Services 4,555 74 0 (1) (232) 4,396 Technology Services & Cloud Platforms 9,373 1,087 (1) (7) (296) 10,156 Systems 1,472 410 0 — (33) 1,848 Total $ 30,556 $ 2,590 $ (3) $ (26) $ (1,096) $ 32,021 * Reclassified to conform with 2016 presentation. ** Primarily driven by foreign currency translation. |
Borrowings (Tables)
Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Borrowings | |
Short-Term Debt | At March 31, At December 31, (Dollars in millions) 2016 2015 Commercial paper $ — $ 600 Short-term loans 302 590 Long-term debt – current maturities 5,000 5,271 Total $ 5,303 $ 6,461 |
Long-Term Debt | Long-Term Debt Pre-Swap Borrowing Balance Balance (Dollars in millions) Maturities 3/31/2016 12/31/2015 U.S. dollar notes and debentures (average interest rate at March 31, 2016): 3.00% 2016–2017 $ 8,239 $ 9,351 3.17% 2018–2019 8,826 7,591 1.71% 2020–2021 4,940 3,717 2.35% 2022 1,901 1,900 3.38% 2023 1,500 1,500 3.63% 2024 2,000 2,000 7.00% 2025 600 600 3.45% 2026 1,350 — 6.22% 2027 469 469 6.50% 2028 313 313 5.88% 2032 600 600 8.00% 2038 83 83 5.60% 2039 745 745 4.00% 2042 1,107 1,107 7.00% 2045 27 27 4.70% 2046 650 — 7.13% 2096 316 316 $ 33,667 $ 30,319 Other currencies (average interest rate at March 31, 2016, in parentheses): \ Euros (1.6%) 2016–2028 $ 7,691 $ 4,892 Pound sterling (2.7%) 2017–2022 1,514 1,555 Japanese yen (0.4%) 2017–2022 1,262 1,180 Swiss francs (6.3%) 2020 9 9 Canadian (2.2%) 2017 386 360 Other (13.6%) 2016–2020 658 506 $ 45,188 $ 38,820 Less: net unamortized discount 861 838 Less: net unamortized debt issuance cost 95 74 Add: fair value adjustment* 1,022 790 $ 45,254 $ 38,699 Less: current maturities 5,000 5,271 Total $ 40,254 $ 33,428 * T he portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated State ment of Financial Position as an amount equal to the sum of the debt’s carrying value plus a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates. |
Pre-swap annual contractual maturities of long-term debt outstanding | (Dollars in millions) Total 2016 (for Q2-Q4) $ 3,198 2017 6,798 2018 4,777 2019 5,271 2020 4,873 2021 and beyond 20,272 Total $ 45,188 |
Interest on Debt | (Dollars in millions) For the three months ended March 31: 2016 2015 Cost of financing $ 138 $ 140 Interest expense 157 108 Net investment derivative activity (10) 0 Interest capitalized 1 (2) Total interest paid and accrued $ 286 $ 245 |
Commitments (Tables)
Commitments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Commitments: | |
Changes in warranty liabilities | Standard Warranty Liability (Dollars in millions) 2016 2015 Balance at January 1 $ 181 $ 197 Current period accruals 27 35 Accrual adjustments to reflect actual experience (2) 10 Charges incurred (41) (51) Balance at March 31 $ 164 $ 192 Extended Warranty Liability (Dollars in millions) 2016 2015 Aggregate deferred revenue at January 1 $ 538 $ 536 Revenue deferred for new extended warranty contracts 49 45 Amortization of deferred revenue (66) (63) Other * 9 (15) Aggregate deferred revenue at March 31 $ 531 $ 503 Current portion $ 247 $ 245 Noncurrent portion $ 284 $ 258 * Other primarily consists of foreign currency translation adjustments. |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Provision for/(benefit from) income taxes | $ (983) | $ 585 |
Effective tax rate (as a percent) | (95.10%) | |
Other (income) and expense | ||
Pre-tax impairment charge related to land, buildings and furniture and fixtures | $ 252 | |
Noncontrolling interest amounts, net of tax | $ 1.3 | $ 1.2 |
Accounting Changes (Details)
Accounting Changes (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Operating lease commitments | $ 6,400 | ||
Deferred tax assets, noncurrent | $ 4,809 | 4,822 | |
Debt issuance costs | 95 | 74 | |
Accounting Standards Update 2015-03 Interest-Imputation of Interest | |||
Debt issuance costs | $ 95 | $ 74 | |
Deferred Tax Assets | Accounting Standards Update 2015-17 - Balance Sheet Classification of Deferred Taxes | |||
Current deferred tax assets | $ 2,000 | ||
Other liabilities | Accounting Standards Update 2015-17 - Balance Sheet Classification of Deferred Taxes | |||
Current deferred tax liabilities | 19 | ||
Deferred tax assets, noncurrent | $ 178 |
Financial Instruments (Details
Financial Instruments (Details 1) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2016 | Dec. 31, 2015 | |
Financial Instruments: | |||
Impairments of non-financial assets | $ 0 | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Debt securities - noncurrent | $ 8 | $ 8 | |
Available-for-sale equity investments | 9 | 192 | |
Derivative assets | 1,129 | 994 | |
Potential reduction in net position of total derivative liabilities | 270 | 139 | |
Fair value assets, Level 2 to Level 1 transfer | 0 | 0 | |
Fair value assets, Level 1 to Level 2 transfer | 0 | 0 | |
Recurring | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 11,109 | 4,943 | |
Debt securities - current | 514 | 506 | |
Debt securities - noncurrent | 8 | 8 | |
Trading security investments | 28 | ||
Available-for-sale equity investments | 9 | 192 | |
Derivative assets | 1,129 | 994 | |
Total Assets | 12,770 | 6,671 | |
Total Liabilities | 461 | 186 | |
Potential reduction in net position of total derivative assets | 270 | 139 | |
Potential reduction in net position of total derivative liabilities | 270 | 139 | |
Recurring | Prepaid expenses and other current assets | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative assets | 165 | 292 | |
Recurring | Investments and sundry assets | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative assets | 964 | 702 | |
Recurring | Other accrued expenses and liabilities | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative liabilities | 443 | 164 | |
Recurring | Other liabilities | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative liabilities | 18 | 22 | |
Recurring | Interest rate contracts | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative assets | 876 | 656 | |
Derivative liabilities | 0 | 3 | |
Recurring | Foreign exchange contracts | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative assets | 206 | 332 | |
Derivative liabilities | 460 | 164 | |
Recurring | Equity contracts | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative assets | 48 | 6 | |
Derivative liabilities | 1 | 19 | |
Recurring | Time deposits and certificates of deposit | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 5,784 | 2,856 | |
Recurring | Commercial paper | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 325 | ||
Recurring | Money market funds | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 3,076 | 2,069 | |
Recurring | U.S. government securities | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 1,300 | ||
Recurring | Canadian government securities | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 463 | ||
Recurring | Other securities | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 162 | 18 | |
Recurring | Level 1 | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 3,076 | 2,069 | |
Debt securities - noncurrent | 1 | 1 | |
Trading security investments | 28 | ||
Available-for-sale equity investments | 9 | 192 | |
Total Assets | 3,086 | 2,290 | |
Recurring | Level 1 | Money market funds | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 3,076 | 2,069 | |
Recurring | Level 2 | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 8,034 | 2,874 | |
Debt securities - current | 514 | 506 | |
Debt securities - noncurrent | 7 | 6 | |
Derivative assets | 1,129 | 994 | |
Total Assets | 9,685 | 4,381 | |
Total Liabilities | 461 | 186 | |
Recurring | Level 2 | Interest rate contracts | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative assets | 876 | 656 | |
Derivative liabilities | 0 | 3 | |
Recurring | Level 2 | Foreign exchange contracts | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative assets | 206 | 332 | |
Derivative liabilities | 460 | 164 | |
Recurring | Level 2 | Equity contracts | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative assets | 48 | 6 | |
Derivative liabilities | 1 | 19 | |
Recurring | Level 2 | Time deposits and certificates of deposit | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 5,784 | 2,856 | |
Recurring | Level 2 | Commercial paper | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 325 | ||
Recurring | Level 2 | U.S. government securities | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 1,300 | ||
Recurring | Level 2 | Canadian government securities | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 463 | ||
Recurring | Level 2 | Other securities | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | $ 162 | $ 18 |
Financial Instruments (Detail37
Financial Instruments (Details 2) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Fair value of financial instruments, details: | |||
Carrying amount of long-term debt | $ 40,254 | $ 33,428 | |
Fair value of long-term debt | 42,980 | 35,220 | |
Debt and Marketable Equity Securities | |||
Debt securities - noncurrent, Adjusted Cost | 5 | 5 | |
Debt securities - noncurrent, Gross Unrealized Gains | 3 | 3 | |
Debt securities - noncurrent | 8 | 8 | |
Available-for-sale equity investments, Adjusted Cost | 1 | 186 | |
Available-for-sale equity investments, Gross Unrealized Gains | 8 | 6 | |
Available-for-sale equity investments, Gross Unrealized Losses | 0 | 0 | |
Available-for-sale equity investments | 9 | 192 | |
Sales of debt and available-for-sale equity investments | |||
Proceeds | 148 | $ 4 | |
Gross realized gains (before taxes) | 0 | ||
Gross realized losses (before taxes) | 37 | 0 | |
Unrealized holding gains/(losses) on available-for-sale debt and equity securities | |||
Net unrealized gains/(losses) arising during the period | (22) | 20 | |
Net unrealized (gains)/losses reclassified to net income | 23 | 0 | |
Writedowns included in net income for the period | $ 0 | $ 0 | |
Maximum contractual maturities of substantially all available-for-sale debt securities | 1 year | ||
Lenovo's common stock | |||
Debt and Marketable Equity Securities | |||
Available-for-sale equity investments, Adjusted Cost | 185 | ||
Other-than-temporary impairment loss | $ 86 | ||
Sales of debt and available-for-sale equity investments | |||
Gross realized losses (before taxes) | $ 37 |
Financial Instruments (Detail38
Financial Instruments (Details 3) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Financial Instruments: | ||
Fair value of derivative instruments under collateralized arrangements in a liability position | $ 166 | $ 28 |
Collateral posted on derivative instruments | 0 | 0 |
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Assets | 1,129 | 994 |
Fair value of total derivative liabilities and debt | $ 9,794 | 8,131 |
Maximum spread on credit default swap agreements before full collateralization is required | 2.50% | |
Liabilities included in master netting arrangements | $ 270 | 139 |
Obligation to return cash collateral | 131 | 90 |
Net exposure related to derivative assets recorded in the Statement of Financial Position | 657 | 726 |
Net exposure related to derivative liabilities recorded in the Statement of Financial Position | 191 | 47 |
Cash collateral rehypothecated | 0 | 0 |
U.S. Treasury securities | ||
Fair Values of Derivative Instruments | ||
Non-cash collateral received | 71 | 40 |
Designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Assets | 960 | 858 |
Fair value of total derivative instruments, Liabilities | 374 | 92 |
Derivative instruments not designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Assets | 170 | 136 |
Fair value of total derivative instruments, Liabilities | 87 | 94 |
Other receivables | ||
Fair Values of Derivative Instruments | ||
Cash collateral issued, derivatives | 0 | 0 |
Accounts payable | ||
Fair Values of Derivative Instruments | ||
Obligation to return cash collateral | 131 | 90 |
Prepaid expenses and other current assets | Foreign exchange contracts | Designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Assets | 37 | 197 |
Prepaid expenses and other current assets | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Assets | 81 | 90 |
Prepaid expenses and other current assets | Equity contracts | Derivative instruments not designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Assets | 48 | 6 |
Investments and sundry assets | Interest rate contracts | Designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Assets | 876 | 656 |
Investments and sundry assets | Foreign exchange contracts | Designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Assets | 47 | 5 |
Investments and sundry assets | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Assets | 41 | 40 |
Other accrued expenses and liabilities | Foreign exchange contracts | Designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Liabilities | 363 | 70 |
Other accrued expenses and liabilities | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Liabilities | 79 | 75 |
Other accrued expenses and liabilities | Equity contracts | Derivative instruments not designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Liabilities | 1 | 19 |
Other liabilities | Interest rate contracts | Designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Liabilities | 3 | |
Other liabilities | Foreign exchange contracts | Designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Liabilities | 11 | 19 |
Other liabilities | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ||
Fair Values of Derivative Instruments | ||
Fair value of total derivative instruments, Liabilities | 7 | |
Long term debt | Designated as hedging instruments | Net investment hedge | ||
Fair Values of Derivative Instruments | ||
Debt designated as hedging instrument | 8,947 | $ 7,945 |
Short term debt | Designated as hedging instruments | Net investment hedge | ||
Fair Values of Derivative Instruments | ||
Debt designated as hedging instrument | $ 386 |
Financial Instruments (Detail39
Financial Instruments (Details 4) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Warrants | ||
Derivative Instruments, Gain (Loss) | ||
Notional amount | $ 0 | $ 0 |
Derivative instruments in fair value and cash flow hedging relationships | Interest rate swaps | ||
Derivative Instruments, Gain (Loss) | ||
Notional amount | $ 7,300 | $ 7,300 |
Average remaining maturity | 7 years | 7 years 2 months |
Derivative instruments in cash flow hedging relationships | Interest rate swaps | ||
Derivative Instruments, Gain (Loss) | ||
Notional amount | $ 0 | $ 0 |
Derivative instruments in cash flow hedging relationships | Interest rate swaps | Maximum | ||
Derivative Instruments, Gain (Loss) | ||
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges of borrowings | 1 | 1 |
Gains (losses) expected to be reclassified to net income within the next 12 months | 1 | 1 |
Derivative instruments in cash flow hedging relationships | Foreign exchange forward contracts | ||
Derivative Instruments, Gain (Loss) | ||
Notional amount | $ 8,200 | $ 8,200 |
Average remaining maturity | 8 months 12 days | 8 months 12 days |
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges of borrowings | $ (193) | $ 147 |
Gains (losses) expected to be reclassified to net income within the next 12 months | $ (232) | 121 |
Maximum length of time hedged | 4 years | |
Derivative instruments in cash flow hedging relationships | Currency swaps | ||
Derivative Instruments, Gain (Loss) | ||
Notional amount | $ 1,400 | 0 |
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges of borrowings | (18) | (2) |
Gains (losses) expected to be reclassified to net income within the next 12 months | $ 19 | |
Maximum length of time hedged | 9 years | |
Derivative instruments in cash flow hedging relationships | Currency swaps | Maximum | ||
Derivative Instruments, Gain (Loss) | ||
Gains (losses) expected to be reclassified to net income within the next 12 months | (1) | |
Derivative instruments in net investment hedging relationships | ||
Derivative Instruments, Gain (Loss) | ||
Notional amount | $ 6,600 | $ 5,500 |
Average remaining maturity | 2 months 12 days | 2 months 12 days |
Derivative instruments not designated as hedging instruments | Foreign exchange forward and swap contracts | ||
Derivative Instruments, Gain (Loss) | ||
Notional amount | $ 9,700 | $ 11,700 |
Maximum length of time hedged | 1 year | |
Derivative instruments not designated as hedging instruments | Equity contracts | ||
Derivative Instruments, Gain (Loss) | ||
Notional amount | $ 1,100 | 1,200 |
Derivative instruments not designated as hedging instruments | Equity contracts | Maximum | ||
Derivative Instruments, Gain (Loss) | ||
Notional amount | 0 | 100 |
Derivative instruments not designated as hedging instruments | Credit default swaps | ||
Derivative Instruments, Gain (Loss) | ||
Notional amount | $ 0 | $ 0 |
Financial Instruments (Detail40
Financial Instruments (Details 5) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Derivative Instruments, Gain (Loss) | ||
Amount of gain (loss) recognized in income on derivatives | $ 426 | $ 211 |
Gain (loss) recognized in earnings attributable to risk being hedged | (233) | (118) |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI | (959) | 1,313 |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | 91 | 249 |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing | 11 | 1 |
Gains and (Losses) excluded from the assessment of hedge effectiveness for fair value hedges | 0 | 0 |
Gains and (Losses) associated with underlying exposure that did not occur or was not expected to occur for cash flow hedges | 0 | 0 |
Gain (loss) on fair value hedges ineffectiveness | 2 | 2 |
Foreign exchange contracts | Derivative instruments in cash flow hedging relationships | ||
Derivative Instruments, Gain (Loss) | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI | (265) | 619 |
Foreign exchange contracts | Derivative instruments in net investment hedging relationships | ||
Derivative Instruments, Gain (Loss) | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI | (693) | 694 |
Cost of financing | Interest rate contracts | Derivative instruments in fair value hedging relationships | ||
Derivative Instruments, Gain (Loss) | ||
Amount of gain (loss) recognized in income, recognized on derivative instruments in fair value hedges | 137 | 97 |
Gain (loss) recognized in earnings attributable to risk being hedged | (112) | (66) |
Interest expense | Interest rate contracts | Derivative instruments in fair value hedging relationships | ||
Derivative Instruments, Gain (Loss) | ||
Amount of gain (loss) recognized in income, recognized on derivative instruments in fair value hedges | 147 | 74 |
Gain (loss) recognized in earnings attributable to risk being hedged | (120) | (51) |
Interest expense | Interest rate contracts | Derivative instruments in cash flow hedging relationships | ||
Derivative Instruments, Gain (Loss) | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | (2) | 0 |
Interest expense | Foreign exchange contracts | Derivative instruments in net investment hedging relationships | ||
Derivative Instruments, Gain (Loss) | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing | 10 | 0 |
Other (income) and expense | Interest rate contracts | Derivative instruments not designated as hedging instruments | ||
Derivative Instruments, Gain (Loss) | ||
Amount of gain (loss) recognized in income on derivatives | 0 | (1) |
Other (income) and expense | Foreign exchange contracts | Derivative instruments in cash flow hedging relationships | ||
Derivative Instruments, Gain (Loss) | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | 87 | 160 |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing | 1 | 0 |
Other (income) and expense | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ||
Derivative Instruments, Gain (Loss) | ||
Amount of gain (loss) recognized in income on derivatives | 121 | 17 |
Other (income) and expense | Equity contracts | Derivative instruments not designated as hedging instruments | ||
Derivative Instruments, Gain (Loss) | ||
Amount of gain (loss) recognized in income on derivatives | (1) | 0 |
Cost of sales | Foreign exchange contracts | Derivative instruments in cash flow hedging relationships | ||
Derivative Instruments, Gain (Loss) | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | 3 | 50 |
SG&A expense | Foreign exchange contracts | Derivative instruments in cash flow hedging relationships | ||
Derivative Instruments, Gain (Loss) | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | 3 | 40 |
SG&A expense | Equity contracts | Derivative instruments not designated as hedging instruments | ||
Derivative Instruments, Gain (Loss) | ||
Amount of gain (loss) recognized in income on derivatives | $ 21 | $ 24 |
Financing Receivables (Details
Financing Receivables (Details 1) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Financing receivables: | |||
Financing receivables used as collateral for non-recourse borrowings | $ 600 | $ 545 | |
Financing receivables held for sale | 0 | 0 | |
Financing receivables, current | |||
Financing receivables, net, current | 16,646 | 19,020 | |
Financing receivables, noncurrent | |||
Financing receivables, net, noncurrent | 9,266 | 10,013 | |
Financing receivables | |||
Allowance for credit losses | 666 | 590 | $ 561 |
Net investment in sales-type and direct financing leases | |||
Financing receivables, current | |||
Financing receivables, net, current | 3,145 | 3,057 | |
Financing receivables, noncurrent | |||
Financing receivables, net, noncurrent | 4,350 | 4,501 | |
Financing receivables | |||
Sales-type and direct financing leases, unguaranteed residual value | 627 | 645 | |
Sales-type and direct financing leases, unearned income | 588 | 536 | |
Allowance for credit losses | $ 246 | 213 | |
Net investment in sales-type and direct financing leases | Financing receivable, lower range of payment terms | |||
Financing receivables | |||
Financing receivable, payment terms | 2 years | ||
Net investment in sales-type and direct financing leases | Financing receivable, upper range of payment terms | |||
Financing receivables | |||
Financing receivable, payment terms | 6 years | ||
Commercial financing receivables | |||
Financing receivables, current | |||
Financing receivables, net, current | $ 6,906 | 8,948 | |
Financing receivables | |||
Allowance for credit losses | $ 14 | 19 | |
Commercial financing receivables | Financing receivable, lower range of payment terms | |||
Financing receivables | |||
Financing receivable, payment terms | 30 days | ||
Commercial financing receivables | Financing receivable, upper range of payment terms | |||
Financing receivables | |||
Financing receivable, payment terms | 90 days | ||
Client loan and installment payment receivables (loans) | |||
Financing receivables, current | |||
Financing receivables, net, current | $ 6,596 | 7,015 | |
Financing receivables, noncurrent | |||
Financing receivables, net, noncurrent | 4,915 | 5,512 | |
Financing receivables | |||
Allowance for credit losses | $ 420 | $ 377 | |
Client loan and installment payment receivables (loans) | Financing receivable, upper range of payment terms | |||
Financing receivables | |||
Financing receivable, payment terms | 7 years |
Financing Receivables (Detail42
Financing Receivables (Details 2) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016USD ($)PortfolioSegmentClassOfFinancingReceivable | Dec. 31, 2015USD ($) | |
Financing Receivables | ||
Total Financing Receivables | $ 18,959 | $ 19,945 |
Collectively evaluated for impairment | 18,409 | 19,406 |
Individually evaluated for impairment | 550 | 539 |
Allowance for Credit Losses | ||
Allowance for credit losses, beginning balance | 590 | 561 |
Write-offs | (19) | (62) |
Provision | 80 | 141 |
Other | 14 | (51) |
Allowance for credit losses, ending balance | 666 | 590 |
Collectively evaluated for impairment | 144 | 79 |
Individually evaluated for impairment | $ 522 | 511 |
Number of portfolio segments | PortfolioSegment | 2 | |
Number of classes of financing receivable | ClassOfFinancingReceivable | 2 | |
Major Markets | ||
Financing Receivables | ||
Total Financing Receivables | $ 14,495 | 15,256 |
Collectively evaluated for impairment | 14,404 | 15,180 |
Individually evaluated for impairment | 92 | 76 |
Allowance for Credit Losses | ||
Allowance for credit losses, beginning balance | 109 | 111 |
Write-offs | (1) | (14) |
Provision | 6 | 20 |
Other | 4 | (8) |
Allowance for credit losses, ending balance | 118 | 109 |
Collectively evaluated for impairment | 39 | 43 |
Individually evaluated for impairment | 79 | 65 |
Growth Markets | ||
Financing Receivables | ||
Total Financing Receivables | 4,463 | 4,689 |
Collectively evaluated for impairment | 4,005 | 4,227 |
Individually evaluated for impairment | 458 | 462 |
Allowance for Credit Losses | ||
Allowance for credit losses, beginning balance | 481 | 450 |
Write-offs | (17) | (48) |
Provision | 74 | 122 |
Other | 10 | (43) |
Allowance for credit losses, ending balance | 548 | 481 |
Collectively evaluated for impairment | 105 | 36 |
Individually evaluated for impairment | 443 | 445 |
Lease receivables | ||
Financing Receivables | ||
Total Financing Receivables | 7,027 | 7,041 |
Allowance for Credit Losses | ||
Allowance for credit losses, beginning balance | 213 | 165 |
Allowance for credit losses, ending balance | 246 | 213 |
Lease receivables | Major Markets | ||
Financing Receivables | ||
Total Financing Receivables | 5,461 | 5,517 |
Allowance for Credit Losses | ||
Allowance for credit losses, beginning balance | 25 | 32 |
Allowance for credit losses, ending balance | 32 | 25 |
Lease receivables | Growth Markets | ||
Financing Receivables | ||
Total Financing Receivables | 1,566 | 1,524 |
Allowance for Credit Losses | ||
Allowance for credit losses, beginning balance | 188 | 133 |
Allowance for credit losses, ending balance | 214 | 188 |
Loan receivables | ||
Financing Receivables | ||
Total Financing Receivables | 11,931 | 12,904 |
Allowance for Credit Losses | ||
Allowance for credit losses, beginning balance | 377 | 396 |
Allowance for credit losses, ending balance | 420 | 377 |
Loan receivables | Major Markets | ||
Financing Receivables | ||
Total Financing Receivables | 9,034 | 9,739 |
Allowance for Credit Losses | ||
Allowance for credit losses, beginning balance | 83 | 79 |
Allowance for credit losses, ending balance | 86 | 83 |
Loan receivables | Growth Markets | ||
Financing Receivables | ||
Total Financing Receivables | 2,897 | 3,165 |
Allowance for Credit Losses | ||
Allowance for credit losses, beginning balance | 293 | 317 |
Allowance for credit losses, ending balance | $ 334 | $ 293 |
Financing Receivables (Detail43
Financing Receivables (Details 3) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Financing Receivables on Non-accrual Status | ||
Total Receivables | $ 174 | $ 168 |
Lease receivables | ||
Financing Receivables on Non-accrual Status | ||
Total Receivables | 52 | 65 |
Lease receivables | Major Markets | ||
Financing Receivables on Non-accrual Status | ||
Total Receivables | 2 | 2 |
Lease receivables | Growth Markets | ||
Financing Receivables on Non-accrual Status | ||
Total Receivables | 49 | 63 |
Loan receivables | ||
Financing Receivables on Non-accrual Status | ||
Total Receivables | 123 | 104 |
Loan receivables | Major Markets | ||
Financing Receivables on Non-accrual Status | ||
Total Receivables | 15 | 13 |
Loan receivables | Growth Markets | ||
Financing Receivables on Non-accrual Status | ||
Total Receivables | $ 107 | $ 91 |
Financing Receivables (Detail44
Financing Receivables (Details 4) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Impaired client loan receivables | |||
Recorded Investment | $ 362 | $ 347 | |
Related Allowance | 343 | 331 | |
Average Recorded Investment | 354 | $ 367 | |
Interest Income Recognized | 0 | 0 | |
Major Markets | |||
Impaired client loan receivables | |||
Recorded Investment | 66 | 50 | |
Related Allowance | 63 | 47 | |
Average Recorded Investment | 58 | 52 | |
Interest Income Recognized | 0 | 0 | |
Growth Markets | |||
Impaired client loan receivables | |||
Recorded Investment | 296 | 297 | |
Related Allowance | 281 | $ 284 | |
Average Recorded Investment | 296 | 315 | |
Interest Income Recognized | $ 0 | $ 0 |
Financing Receivables (Detail45
Financing Receivables (Details 5) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | $ 18,959 | $ 19,945 |
Major Markets | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 14,495 | 15,256 |
Growth Markets | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 4,463 | 4,689 |
Lease receivables | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 7,027 | 7,041 |
Lease receivables | Major Markets | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 5,461 | 5,517 |
Lease receivables | Major Markets | Aaa - Aa3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 514 | 538 |
Lease receivables | Major Markets | A1 - A3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 1,230 | 1,324 |
Lease receivables | Major Markets | Baa1 - Baa3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 1,506 | 1,493 |
Lease receivables | Major Markets | Ba1 - Ba2 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 1,240 | 1,214 |
Lease receivables | Major Markets | Ba3 - B1 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 543 | 513 |
Lease receivables | Major Markets | B2 - B3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 391 | 403 |
Lease receivables | Major Markets | Caa - D | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 37 | 33 |
Lease receivables | Growth Markets | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 1,566 | 1,524 |
Lease receivables | Growth Markets | Aaa - Aa3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 40 | 39 |
Lease receivables | Growth Markets | A1 - A3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 138 | 162 |
Lease receivables | Growth Markets | Baa1 - Baa3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 246 | 392 |
Lease receivables | Growth Markets | Ba1 - Ba2 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 385 | 352 |
Lease receivables | Growth Markets | Ba3 - B1 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 414 | 277 |
Lease receivables | Growth Markets | B2 - B3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 245 | 215 |
Lease receivables | Growth Markets | Caa - D | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 99 | 87 |
Loan receivables | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 11,931 | 12,904 |
Loan receivables | Major Markets | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 9,034 | 9,739 |
Loan receivables | Major Markets | Aaa - Aa3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 850 | 949 |
Loan receivables | Major Markets | A1 - A3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 2,035 | 2,338 |
Loan receivables | Major Markets | Baa1 - Baa3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 2,491 | 2,635 |
Loan receivables | Major Markets | Ba1 - Ba2 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 2,051 | 2,143 |
Loan receivables | Major Markets | Ba3 - B1 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 899 | 905 |
Loan receivables | Major Markets | B2 - B3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 648 | 711 |
Loan receivables | Major Markets | Caa - D | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 61 | 59 |
Loan receivables | Growth Markets | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 2,897 | 3,165 |
Loan receivables | Growth Markets | Aaa - Aa3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 73 | 80 |
Loan receivables | Growth Markets | A1 - A3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 254 | 336 |
Loan receivables | Growth Markets | Baa1 - Baa3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 455 | 813 |
Loan receivables | Growth Markets | Ba1 - Ba2 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 712 | 732 |
Loan receivables | Growth Markets | Ba3 - B1 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 765 | 576 |
Loan receivables | Growth Markets | B2 - B3 | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | 454 | 447 |
Loan receivables | Growth Markets | Caa - D | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ||
Total | $ 183 | $ 181 |
Financing Receivables (Detail46
Financing Receivables (Details 6) - Global Financing - Financing Receivable Portfolio | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Financial Industry | ||
Financing Receivables by Portfolio Segment | ||
Financing receivables (as a percent) | 35.00% | 36.00% |
Government Industry | ||
Financing Receivables by Portfolio Segment | ||
Financing receivables (as a percent) | 14.00% | 11.00% |
Manufacturing Industry | ||
Financing Receivables by Portfolio Segment | ||
Financing receivables (as a percent) | 14.00% | 14.00% |
Retail Industry | ||
Financing Receivables by Portfolio Segment | ||
Financing receivables (as a percent) | 8.00% | 9.00% |
Services Industry | ||
Financing Receivables by Portfolio Segment | ||
Financing receivables (as a percent) | 10.00% | 11.00% |
Healthcare Industry | ||
Financing Receivables by Portfolio Segment | ||
Financing receivables (as a percent) | 7.00% | 6.00% |
Communications Industry | ||
Financing Receivables by Portfolio Segment | ||
Financing receivables (as a percent) | 7.00% | 7.00% |
Other industries | ||
Financing Receivables by Portfolio Segment | ||
Financing receivables (as a percent) | 6.00% | 6.00% |
Financing Receivables (Detail47
Financing Receivables (Details 7) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Past Due Financing Receivable | ||
Fully reserved financing receivable | $ 530 | $ 517 |
Less than 90 Days or Unbilled Financing Receivables | 18,353 | 19,355 |
Total Financing Receivables | 18,959 | 19,945 |
Recorded Investment > 90 Days and Accruing | 416 | 388 |
Troubled debt restructurings of financing receivables | 0 | 0 |
Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Total Past Due > 90 days | 76 | 73 |
Major Markets | ||
Past Due Financing Receivable | ||
Total Financing Receivables | 14,495 | 15,256 |
Growth Markets | ||
Past Due Financing Receivable | ||
Total Financing Receivables | 4,463 | 4,689 |
Lease receivables | ||
Past Due Financing Receivable | ||
Fully reserved financing receivable | 215 | 173 |
Less than 90 Days or Unbilled Financing Receivables | 6,779 | 6,834 |
Total Financing Receivables | 7,027 | 7,041 |
Recorded Investment > 90 Days and Accruing | 192 | 168 |
Lease receivables | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Total Past Due > 90 days | 33 | 35 |
Lease receivables | Major Markets | ||
Past Due Financing Receivable | ||
Fully reserved financing receivable | 33 | 33 |
Less than 90 Days or Unbilled Financing Receivables | 5,420 | 5,479 |
Total Financing Receivables | 5,461 | 5,517 |
Recorded Investment > 90 Days and Accruing | 128 | 108 |
Lease receivables | Major Markets | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Total Past Due > 90 days | 7 | 5 |
Lease receivables | Growth Markets | ||
Past Due Financing Receivable | ||
Fully reserved financing receivable | 182 | 140 |
Less than 90 Days or Unbilled Financing Receivables | 1,358 | 1,355 |
Total Financing Receivables | 1,566 | 1,524 |
Recorded Investment > 90 Days and Accruing | 64 | 60 |
Lease receivables | Growth Markets | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Total Past Due > 90 days | 26 | 30 |
Loan receivables | ||
Past Due Financing Receivable | ||
Fully reserved financing receivable | 315 | 344 |
Less than 90 Days or Unbilled Financing Receivables | 11,574 | 12,521 |
Total Financing Receivables | 11,931 | 12,904 |
Recorded Investment > 90 Days and Accruing | 224 | 220 |
Loan receivables | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Total Past Due > 90 days | 42 | 38 |
Loan receivables | Major Markets | ||
Past Due Financing Receivable | ||
Fully reserved financing receivable | 36 | 35 |
Less than 90 Days or Unbilled Financing Receivables | 8,989 | 9,696 |
Total Financing Receivables | 9,034 | 9,739 |
Recorded Investment > 90 Days and Accruing | 150 | 134 |
Loan receivables | Major Markets | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Total Past Due > 90 days | 10 | 7 |
Loan receivables | Growth Markets | ||
Past Due Financing Receivable | ||
Fully reserved financing receivable | 279 | 309 |
Less than 90 Days or Unbilled Financing Receivables | 2,585 | 2,825 |
Total Financing Receivables | 2,897 | 3,165 |
Recorded Investment > 90 Days and Accruing | 74 | 86 |
Loan receivables | Growth Markets | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Total Past Due > 90 days | $ 33 | $ 31 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock-based compensation cost, allocation of recognized costs | ||
Pre-tax stock-based compensation cost increase (decrease) | $ 6 | |
Stock-based compensation cost, unrecognized, related to non-vested awards | $ 777 | |
Stock-based compensation cost, unrecognized, related to non-vested awards, weighted average period of recognition | 2 years 7 months | |
Capitalized stock-based compensation cost | $ 0 | $ 0 |
Continuing Operations | ||
Stock-based compensation cost, allocation of recognized costs | ||
Pre-tax stock-based compensation cost | 133 | 127 |
Income tax benefits | (43) | (42) |
Total net stock-based compensation cost | 90 | 85 |
Restricted Stock Units | ||
Stock-based compensation cost, allocation of recognized costs | ||
Pre-tax stock-based compensation cost increase (decrease) | (10) | |
Performance Share Units | ||
Stock-based compensation cost, allocation of recognized costs | ||
Pre-tax stock-based compensation cost increase (decrease) | 12 | |
Conversion of stock-based awards previously issued by acquired entities | ||
Stock-based compensation cost, allocation of recognized costs | ||
Pre-tax stock-based compensation cost increase (decrease) | 3 | |
Stock Options | ||
Stock-based compensation cost, allocation of recognized costs | ||
Pre-tax stock-based compensation cost increase (decrease) | 1 | |
Cost | Continuing Operations | ||
Stock-based compensation cost, allocation of recognized costs | ||
Pre-tax stock-based compensation cost | 21 | 27 |
Selling, general and administrative expense | Continuing Operations | ||
Stock-based compensation cost, allocation of recognized costs | ||
Pre-tax stock-based compensation cost | 99 | 87 |
Research, development and engineering | Continuing Operations | ||
Stock-based compensation cost, allocation of recognized costs | ||
Pre-tax stock-based compensation cost | $ 13 | 14 |
Other (income) and expense | Continuing Operations | ||
Stock-based compensation cost, allocation of recognized costs | ||
Pre-tax stock-based compensation cost (income) | $ (1) |
Segments (Details 1)
Segments (Details 1) $ in Millions | 3 Months Ended | |
Mar. 31, 2016USD ($)BusinessSegment | Mar. 31, 2015USD ($) | |
Segment Information | ||
Revenue | $ 18,684 | $ 19,590 |
Pre-tax income/(loss) from continuing operations | $ 1,034 | 3,001 |
Number of business segments (in segments) | BusinessSegment | 5 | |
Total Segments | ||
Segment Information | ||
Revenue | $ 18,619 | 19,523 |
Cognitive Solutions | ||
Segment Information | ||
Revenue | 3,979 | 4,047 |
Global Business Services | ||
Segment Information | ||
Revenue | 4,131 | 4,318 |
Technology Services & Cloud Platforms | ||
Segment Information | ||
Revenue | 8,424 | 8,554 |
Systems | ||
Segment Information | ||
Revenue | 1,675 | 2,142 |
Global Financing | ||
Segment Information | ||
Revenue | 410 | 461 |
Business Segments | Total Segments | ||
Segment Information | ||
Revenue | 20,264 | 21,213 |
Pre-tax income/(loss) from continuing operations | $ 1,837 | $ 4,023 |
Revenue year-to-year change (as a percent) | (4.50%) | |
Pre-tax income year-to-year change (as a percent) | (54.30%) | |
Pre-tax income margin (as a percent) | 9.10% | 19.00% |
Business Segments | Cognitive Solutions | ||
Segment Information | ||
Revenue | $ 4,647 | $ 4,682 |
Pre-tax income/(loss) from continuing operations | $ 1,013 | $ 1,528 |
Revenue year-to-year change (as a percent) | (0.80%) | |
Pre-tax income year-to-year change (as a percent) | (33.70%) | |
Pre-tax income margin (as a percent) | 21.80% | 32.60% |
Business Segments | Global Business Services | ||
Segment Information | ||
Revenue | $ 4,245 | $ 4,449 |
Pre-tax income/(loss) from continuing operations | $ 190 | $ 588 |
Revenue year-to-year change (as a percent) | (4.60%) | |
Pre-tax income year-to-year change (as a percent) | (67.70%) | |
Pre-tax income margin (as a percent) | 4.50% | 13.20% |
Business Segments | Technology Services & Cloud Platforms | ||
Segment Information | ||
Revenue | $ 8,589 | $ 8,720 |
Pre-tax income/(loss) from continuing operations | $ 258 | $ 1,131 |
Revenue year-to-year change (as a percent) | (1.50%) | |
Pre-tax income year-to-year change (as a percent) | (77.20%) | |
Pre-tax income margin (as a percent) | 3.00% | 13.00% |
Business Segments | Systems | ||
Segment Information | ||
Revenue | $ 1,888 | $ 2,314 |
Pre-tax income/(loss) from continuing operations | $ (10) | $ 261 |
Revenue year-to-year change (as a percent) | (18.40%) | |
Pre-tax income margin (as a percent) | (0.50%) | 11.30% |
Business Segments | Global Financing | ||
Segment Information | ||
Revenue | $ 896 | $ 1,048 |
Pre-tax income/(loss) from continuing operations | $ 386 | $ 515 |
Revenue year-to-year change (as a percent) | (14.50%) | |
Pre-tax income year-to-year change (as a percent) | (25.00%) | |
Pre-tax income margin (as a percent) | 43.10% | 49.20% |
Internal transactions | ||
Segment Information | ||
Pre-tax income/(loss) from continuing operations | $ (355) | $ (363) |
Internal transactions | Total Segments | ||
Segment Information | ||
Revenue | (1,645) | (1,690) |
Internal transactions | Cognitive Solutions | ||
Segment Information | ||
Revenue | (668) | (635) |
Internal transactions | Global Business Services | ||
Segment Information | ||
Revenue | (113) | (131) |
Internal transactions | Technology Services & Cloud Platforms | ||
Segment Information | ||
Revenue | (165) | (166) |
Internal transactions | Systems | ||
Segment Information | ||
Revenue | (212) | (173) |
Internal transactions | Global Financing | ||
Segment Information | ||
Revenue | $ (486) | $ (586) |
Segments (Revenue by segments)
Segments (Revenue by segments) (Details 2) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenue | ||
Revenue | $ 18,684 | $ 19,590 |
Total Segments | ||
Revenue | ||
Revenue | 18,619 | 19,523 |
Total reportable segments | Total Segments | ||
Revenue | ||
Revenue | 20,264 | 21,213 |
Eliminations of internal transactions | Total Segments | ||
Revenue | ||
Revenue | (1,645) | (1,690) |
Other revenue | ||
Revenue | ||
Revenue | $ 66 | $ 67 |
Segments (Segment reconciliatio
Segments (Segment reconciliations) (Details 3) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Pre-tax Income from continuing operations | ||
Income from continuing operations before income taxes | $ 1,034 | $ 3,001 |
Total reportable segments | Total Segments | ||
Pre-tax Income from continuing operations | ||
Income from continuing operations before income taxes | 1,837 | 4,023 |
Pre-tax reconciliations items | ||
Pre-tax Income from continuing operations | ||
Amortization of acquired intangible assets | (211) | (170) |
Acquisition-related (charges)/income | 27 | 0 |
Non-operating retirement-related (costs)/income | (142) | (442) |
Eliminations of internal transactions | ||
Pre-tax Income from continuing operations | ||
Income from continuing operations before income taxes | (355) | (363) |
Unallocated corporate amounts | ||
Pre-tax Income from continuing operations | ||
Income from continuing operations before income taxes | $ (122) | $ (48) |
Equity Activity (Details 1)
Equity Activity (Details 1) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Other comprehensive income/(loss), before tax: | ||
Foreign currency translation adjustments, before tax | $ 239 | $ (452) |
Net changes related to available-for-sale securities, before tax: | ||
Unrealized gains/(losses) arising during the period, before tax | (36) | 32 |
Reclassification of (gains)/losses to other (income) and expense, before tax | 37 | 0 |
Total net changes related to available-for-sale securities | 1 | 32 |
Unrealized gains/(losses) on cash flow hedges, before tax: | ||
Unrealized gains/(losses) arising during the period, before tax | (265) | 619 |
Reclassification of (gains)/losses to net income, before tax | (91) | (249) |
Total unrealized gains/(losses) on cash flow hedges | (356) | 370 |
Retirement-related benefit plans, before tax: | ||
Prior service costs/(credits), before tax | 5 | |
Net (losses)/gains arising during the period, before tax | (147) | (77) |
Curtailments and settlements, before taxes | 5 | 4 |
Amortization of prior service (credits)/costs, before tax | (25) | (26) |
Amortization of net (gains)/losses, before tax | 690 | 835 |
Total retirement-related benefit plans | 522 | 740 |
Other comprehensive income/(loss), before tax | 406 | 690 |
Other comprehensive income/(loss), tax: | ||
Foreign currency translation adjustments, tax | 266 | (266) |
Net changes related to available-for-sale securities, tax: | ||
Unrealized gains/(losses) arising during the period, tax | 14 | (12) |
Total net changes related to available-for-sale securities, tax | 0 | (12) |
Unrealized gains/(losses) on cash flow hedges, tax: | ||
Unrealized gains/(losses) arising during the period, tax | 91 | (218) |
Total unrealized gains/(losses) on cash flow hedges, tax | 124 | (131) |
Retirement-related benefit plans, tax: | ||
Prior service costs/(credits), tax | (2) | |
Net (losses)/gains arising during the period, tax | 53 | 26 |
Curtailments and settlements, tax | (2) | (1) |
Amortization of prior service (credits)/costs, tax | 9 | 9 |
Amortization of net (gains)/losses, tax | (248) | (280) |
Total retirement-related benefit plans, tax | (187) | (248) |
Other comprehensive income/(loss), tax | 202 | (657) |
Other comprehensive income/(loss), net of tax: | ||
Foreign currency translation adjustments, net of tax | 505 | (718) |
Net changes related to available-for-sale securities, net of tax: | ||
Unrealized gains/(losses) arising during the period, net of tax | (22) | 20 |
Reclassification of (gains)/losses to other (income) and expense, net of tax | 23 | 0 |
Total net changes related to available-for-sale securities, net of tax | 0 | 20 |
Unrealized gains/(losses) on cash flow hedges, net of tax: | ||
Unrealized gains/(losses) arising during the period, net of tax | (174) | 401 |
Total unrealized gains/(losses) on cash flow hedges, net of tax | (232) | 239 |
Retirement-related benefit plans, net of tax: | ||
Prior service costs/(credits), net of tax | 3 | |
Net (losses)/gains arising during the period, net of tax | (94) | (52) |
Curtailments and settlements, net of tax | 3 | 3 |
Amortization of prior service (credits)/costs, net of tax | (16) | (17) |
Amortization of net (gains)/losses, net of tax | 442 | 555 |
Total retirement-related benefit plans, net of tax | 335 | 492 |
Other comprehensive income/(loss) | 608 | 33 |
Cost of sales | ||
Unrealized gains/(losses) on cash flow hedges, before tax: | ||
Reclassification of (gains)/losses to net income, before tax | (3) | (50) |
Unrealized gains/(losses) on cash flow hedges, tax: | ||
Reclassification of (gains)/losses to net income, tax | 0 | 15 |
Unrealized gains/(losses) on cash flow hedges, net of tax: | ||
Reclassification of (gains)/losses to net income, net of tax | (3) | (35) |
SG&A expense | ||
Unrealized gains/(losses) on cash flow hedges, before tax: | ||
Reclassification of (gains)/losses to net income, before tax | (3) | (40) |
Unrealized gains/(losses) on cash flow hedges, tax: | ||
Reclassification of (gains)/losses to net income, tax | 0 | 11 |
Unrealized gains/(losses) on cash flow hedges, net of tax: | ||
Reclassification of (gains)/losses to net income, net of tax | (3) | (28) |
Other (income) and expense | ||
Net changes related to available-for-sale securities, before tax: | ||
Reclassification of (gains)/losses to other (income) and expense, before tax | 37 | 0 |
Unrealized gains/(losses) on cash flow hedges, before tax: | ||
Reclassification of (gains)/losses to net income, before tax | (87) | (160) |
Net changes related to available-for-sale securities, tax: | ||
Reclassification of (gains)/losses to other (income) and expense, tax | (14) | 0 |
Unrealized gains/(losses) on cash flow hedges, tax: | ||
Reclassification of (gains)/losses to net income, tax | 33 | 61 |
Net changes related to available-for-sale securities, net of tax: | ||
Reclassification of (gains)/losses to other (income) and expense, net of tax | 23 | 0 |
Unrealized gains/(losses) on cash flow hedges, net of tax: | ||
Reclassification of (gains)/losses to net income, net of tax | (53) | (98) |
Interest expense | ||
Unrealized gains/(losses) on cash flow hedges, before tax: | ||
Reclassification of (gains)/losses to net income, before tax | 2 | 0 |
Unrealized gains/(losses) on cash flow hedges, tax: | ||
Reclassification of (gains)/losses to net income, tax | (1) | 0 |
Unrealized gains/(losses) on cash flow hedges, net of tax: | ||
Reclassification of (gains)/losses to net income, net of tax | $ 1 | $ 0 |
Equity Activity (Details 2)
Equity Activity (Details 2) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss) Net of Tax | ||
Balance at the Beginning of the Period | $ (29,607) | $ (27,875) |
Other comprehensive income before reclassifications | 218 | (343) |
Amount reclassified from accumulated other comprehensive income | 391 | 376 |
Total change for the period | 608 | 33 |
Balance at the End of the Period | (28,998) | (27,842) |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | ||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ||
Balance at the Beginning of the Period | 100 | 392 |
Other comprehensive income before reclassifications | (174) | 401 |
Amount reclassified from accumulated other comprehensive income | (58) | (162) |
Total change for the period | (232) | 239 |
Balance at the End of the Period | 133 | 631 |
Foreign Currency Translation Adjustments | ||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ||
Balance at the Beginning of the Period | (3,463) | (1,742) |
Other comprehensive income before reclassifications | 505 | (718) |
Amount reclassified from accumulated other comprehensive income | 0 | 0 |
Total change for the period | 505 | (718) |
Balance at the End of the Period | (2,958) | (2,461) |
Net Change Retirement-Related Benefit Plans | ||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ||
Balance at the Beginning of the Period | (26,248) | (26,509) |
Other comprehensive income before reclassifications | (91) | (46) |
Amount reclassified from accumulated other comprehensive income | 426 | 538 |
Total change for the period | 335 | 492 |
Balance at the End of the Period | (25,913) | (26,017) |
Net Unrealized Gains/(Losses) on Available-For-Sale Securities | ||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ||
Balance at the Beginning of the Period | 5 | (15) |
Other comprehensive income before reclassifications | (22) | 20 |
Amount reclassified from accumulated other comprehensive income | 23 | 0 |
Total change for the period | 0 | 20 |
Balance at the End of the Period | $ 5 | $ 5 |
Retirement-Related Benefits (De
Retirement-Related Benefits (Details 1) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Retirement-Related Benefits: | ||
Defined benefit and contribution pension plans - cost | $ 439 | $ 749 |
Nonpension postretirement plans - cost | 60 | 71 |
Total | $ 499 | $ 820 |
Year-to-year percent change, defined benefit and contribution pension plans cost (as a percent) | (41.40%) | |
Year-to-year percent change, Nonpension postretirement plans cost (as a percent) | (15.90%) | |
Year-to-year percent change, total (as a percent) | (39.20%) |
Retirement-Related Benefits (55
Retirement-Related Benefits (Details 2) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Retirement-related plans cost | ||
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings | $ 439 | $ 749 |
U.S. Pension Plans | ||
Retirement-related plans cost | ||
Interest cost | 513 | 508 |
Expected return on plan assets | (922) | (989) |
Amortization of prior service costs/(credits) | 3 | 2 |
Recognized actuarial losses | 333 | 415 |
Total net periodic pension / nonpension (income)/cost of defined benefit plans | (74) | (64) |
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings | 91 | 109 |
Non-US Pension Plans | ||
Retirement-related plans cost | ||
Service cost | 104 | 108 |
Interest cost | 262 | 271 |
Expected return on plan assets | (470) | (483) |
Amortization of prior service costs/(credits) | (25) | (25) |
Recognized actuarial losses | 347 | 401 |
Curtailments and settlements | 5 | 4 |
Multi-employer plans/other costs | 18 | 248 |
Total net periodic pension / nonpension (income)/cost of defined benefit plans | 241 | 524 |
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings | 348 | 640 |
U.S. Defined Benefit Non Pension Postretirement Plans | ||
Retirement-related plans cost | ||
Service cost | 5 | 6 |
Interest cost | 41 | 41 |
Expected return on plan assets | 0 | |
Amortization of prior service costs/(credits) | (2) | (2) |
Recognized actuarial losses | 5 | 11 |
Total net periodic pension / nonpension (income)/cost of defined benefit plans | 49 | 56 |
Non-U.S. Defined Benefit Non Pension Postretirement Plans | ||
Retirement-related plans cost | ||
Service cost | 1 | 2 |
Interest cost | 10 | 14 |
Expected return on plan assets | (1) | (2) |
Amortization of prior service costs/(credits) | (1) | (1) |
Recognized actuarial losses | 2 | 3 |
Total net periodic pension / nonpension (income)/cost of defined benefit plans | $ 11 | $ 15 |
Retirement-Related Benefits (56
Retirement-Related Benefits (Details 3) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Defined Contribution Plan Disclosure | ||
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings, U.S. Plans | $ 91 | $ 109 |
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings, Non-U.S. Plans | 348 | 640 |
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings | 439 | 749 |
U.S. Defined Contribution Pension Plans | ||
Defined Contribution Plan Disclosure | ||
Cost of defined contribution plans | 165 | 173 |
Non-US Defined Contribution Pension Plans | ||
Defined Contribution Plan Disclosure | ||
Cost of defined contribution plans | $ 106 | $ 115 |
Retirement-Related Benefits (Na
Retirement-Related Benefits (Narrative) (Details 4) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Non-U.S. Defined Benefit and Multi-employer Plan | |||
Expected current year contributions to non-U.S. defined benefit plans | $ 500 | ||
Year-to-date contributions to non-U.S. defined benefit plans | 107 | ||
Non-U.S. Defined Benefit and Multi-employer Plan | U.S. Treasury securities | |||
Year-to-date contributions to non-U.S. defined benefit plans | 42 | ||
Non-U.S. Defined Benefit and Multi-employer Plan | Cash | |||
Year-to-date contributions to non-U.S. defined benefit plans | $ 65 | ||
U.S. Pension Plans | |||
Projected long-term rate of return on plan assets for the next fiscal year (as a percent) | 6.25% | 7.00% | |
U.S. Pension Plans | Equity securities | |||
Target allocation (as a percent) | 21.00% | 34.00% | |
U.S. Pension Plans | Debt securities | |||
Target allocation (as a percent) | 70.00% | 56.00% | |
U.S. Pension Plans | Other investments | |||
Target allocation (as a percent) | 9.00% | 10.00% | |
Non-US Pension Plans | |||
Multi-employer plans/other costs | $ 18 | $ 248 | |
Non-US Pension Plans | SG&A expense | Litigation in Spain regarding defined benefit and defined contribution plans | |||
Multi-employer plans/other costs | $ 230 | $ 233 | |
U.S. Defined Benefit Non Pension Postretirement Plans | U.S. Treasury securities | |||
Year-to-date contributions to non-U.S. defined benefit plans | 100 | ||
U.S. Defined Benefit Non Pension Postretirement Plans | Cash | |||
Year-to-date contributions to non-U.S. defined benefit plans | $ 126 |
Acquisitions_Divestitures (Narr
Acquisitions/Divestitures (Narratives) (Details 1) $ in Millions | Apr. 08, 2016USD ($) | Jan. 29, 2016USD ($) | Mar. 31, 2016USD ($)Acquisition | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Acquisitions: | |||||
Businesses acquired, number (in entities) | Acquisition | 6 | ||||
Businesses acquired, aggregate cost | $ 2,642 | ||||
Goodwill | 34,322 | $ 32,021 | $ 30,556 | ||
Technology Services & Cloud Platforms | |||||
Acquisitions: | |||||
Goodwill | 10,358 | 10,156 | 9,373 | ||
Global Business Services | |||||
Acquisitions: | |||||
Goodwill | 4,569 | 4,396 | 4,555 | ||
Cognitive Solutions | |||||
Acquisitions: | |||||
Goodwill | $ 17,533 | $ 15,621 | $ 15,156 | ||
Other Acquisitions | |||||
Acquisitions: | |||||
Acquired intangible asset, weighted average useful life | 6 years 2 months | ||||
Expected percent of goodwill deductible for tax purposes | 40.00% | ||||
Goodwill | $ 192 | ||||
Other Acquisitions | Technology Services & Cloud Platforms | |||||
Acquisitions: | |||||
Businesses acquired, number (in entities) | Acquisition | 2 | ||||
Goodwill | $ 91 | ||||
Other Acquisitions | Global Business Services | |||||
Acquisitions: | |||||
Businesses acquired, number (in entities) | Acquisition | 3 | ||||
Goodwill | $ 101 | ||||
The Weather Company | |||||
Acquisitions: | |||||
Acquired intangible asset, weighted average useful life | 6 years 11 months | ||||
Expected percent of goodwill deductible for tax purposes | 0.00% | ||||
Goodwill | $ 1,723 | ||||
Businesses acquired, cash consideration | $ 2,284 | ||||
The Weather Company | Cognitive Solutions | |||||
Acquisitions: | |||||
Goodwill | $ 1,723 | ||||
Truven Health Analytics | Subsequent event | |||||
Acquisitions: | |||||
Businesses acquired, cash consideration | $ 2,600 |
Acquisitions_Divestitures (Purc
Acquisitions/Divestitures (Purchase Price allocation) (Details 2) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Acquisitions: | |||
Goodwill | $ 34,322 | $ 32,021 | $ 30,556 |
Completed technology | Minimum | |||
Acquisitions: | |||
Acquired intangible asset, weighted average useful life | 2 years | ||
Completed technology | Maximum | |||
Acquisitions: | |||
Acquired intangible asset, weighted average useful life | 7 years | ||
Client relationships | Minimum | |||
Acquisitions: | |||
Acquired intangible asset, weighted average useful life | 3 years | ||
Client relationships | Maximum | |||
Acquisitions: | |||
Acquired intangible asset, weighted average useful life | 7 years | ||
Patents/trademarks | Minimum | |||
Acquisitions: | |||
Acquired intangible asset, weighted average useful life | 2 years | ||
Patents/trademarks | Maximum | |||
Acquisitions: | |||
Acquired intangible asset, weighted average useful life | 7 years | ||
Other Acquisitions | |||
Acquisitions: | |||
Current assets | $ 31 | ||
Fixed assets/noncurrent assets | 68 | ||
Goodwill | 192 | ||
Total assets acquired | 455 | ||
Current liabilities | (21) | ||
Noncurrent liabilities | (35) | ||
Total liabilities assumed | (57) | ||
Bargain purchase gain | (40) | ||
Total purchase price | $ 358 | ||
Acquired intangible asset, weighted average useful life | 6 years 2 months | ||
Other Acquisitions | Completed technology | |||
Acquisitions: | |||
Intangible assets | $ 24 | ||
Other Acquisitions | Client relationships | |||
Acquisitions: | |||
Intangible assets | 135 | ||
Other Acquisitions | Patents/trademarks | |||
Acquisitions: | |||
Intangible assets | 4 | ||
The Weather Company | |||
Acquisitions: | |||
Current assets | 76 | ||
Fixed assets/noncurrent assets | 123 | ||
Goodwill | 1,723 | ||
Total assets acquired | 2,744 | ||
Current liabilities | (88) | ||
Noncurrent liabilities | (372) | ||
Total liabilities assumed | (460) | ||
Total purchase price | $ 2,284 | ||
Acquired intangible asset, weighted average useful life | 6 years 11 months | ||
The Weather Company | Completed technology | |||
Acquisitions: | |||
Intangible assets | $ 160 | ||
The Weather Company | Client relationships | |||
Acquisitions: | |||
Intangible assets | 313 | ||
The Weather Company | Patents/trademarks | |||
Acquisitions: | |||
Intangible assets | $ 349 |
Acquisitions_Divestitures (Dive
Acquisitions/Divestitures (Divestitures) (Details 3) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Sep. 30, 2014 | Dec. 31, 2015 | |
Income Statement Disclosures | ||||
Loss from discontinued operations, net of tax | $ (3) | $ (88) | ||
Microelectronics business | Discontinued operations | ||||
Income Statement Disclosures | ||||
Total revenue | 339 | |||
Income/(loss) from discontinued operations | (5) | (105) | ||
Gain/(loss) on disposal, before tax | 1 | (14) | $ (4,700) | $ (116) |
Total loss from discontinued operations, before income taxes | (5) | (119) | ||
Provision/(benefit) for income taxes | (2) | (31) | ||
Loss from discontinued operations, net of tax | $ (3) | $ (88) |
Acquisitions_Divestitures (Di61
Acquisitions/Divestitures (Divestitures) (Details 4) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2016 | Sep. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2014 | Dec. 31, 2015 | |
Discontinued Operations | |||||
Impairment of long-lived asstes | $ 0 | ||||
Microelectronics business | Discontinued operations | |||||
Discontinued Operations | |||||
Description of continuing involvement after transaction | The transaction includes a 10-year exclusive manufacturing sourcing agreement in which GLOBALFOUNDRIES will provide server processor semiconductor technology for use in IBM Systems. The agreement provides the company with capacity and market-based pricing for current semiconductor nodes in production and progression to nodes in the future for both development and production needs. As part of the transaction, the company will provide GLOBALFOUNDRIES with certain transition services, including IT, supply chain, packaging and test services and lab services. The initial term for these transition services is one to three years, with GLOBALFOUNDRIES having the ability to renew. | ||||
Discontinued operation, period of exclusive manufacturing agreement after disposal | 10 years | ||||
Pre-tax charge (credit) related to sale | $ (1) | $ 14 | $ 4,700 | $ 116 | |
Impairment of long-lived asstes | 2,400 | ||||
Total cash consideration expected to be transferred to acquiring company | 1,500 | ||||
Other related costs | $ 800 | ||||
Cumulative pre-tax charge | $ 4,800 | ||||
Net cash transferred | $ 515 | ||||
Cash consideration payable at closing date | $ 750 | ||||
Period of time over which cash consideration is expected to be transferred | 2 years | ||||
Microelectronics business | Minimum | Discontinued operations | |||||
Discontinued Operations | |||||
Discontinued operation, period of continuing involvement after disposal | 1 year | ||||
Microelectronics business | Maximum | Discontinued operations | |||||
Discontinued Operations | |||||
Discontinued operation, period of continuing involvement after disposal | 3 years |
Acquisitions_Divestitures (Di62
Acquisitions/Divestitures (Divestitures) (Details 5) $ in Millions | Jan. 23, 2014USD ($) | Sep. 10, 2013USD ($) | Mar. 31, 2016USD ($)Divestiture | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Industry Standard x86 Server Portfolio | Disposal group disposed of by sale, not discontinued operations | |||||
Divestitures | |||||
Disposal group, not discontinued operation, period of renewal of continuing involvement after transition services completed | 1 year | ||||
Transaction price for sale of business | $ 2,100 | ||||
Approximate amount of transaction price received in cash | $ 1,800 | ||||
Pre-tax gain/(loss) on sale of business | $ 29 | $ 63 | |||
Pre-tax gain on sale of business, net of transition and performance-based costs | 1,300 | ||||
Cumulative gain on sale of business, net of transition and performance-based costs | 1,200 | ||||
Industry Standard x86 Server Portfolio | Estimated | Disposal group disposed of by sale, not discontinued operations | |||||
Divestitures | |||||
Pre-tax gain/(loss) on sale of business | $ 1,600 | ||||
Industry Standard x86 Server Portfolio | Maximum | Disposal group disposed of by sale, not discontinued operations | |||||
Divestitures | |||||
Disposal group, not discontinued operation, period of continuing involvement after disposal | 3 years | ||||
Equity Ownership percent acquired | 5.00% | ||||
Customer Care Business Process Outsourcing Services | Disposal group disposed of by sale, not discontinued operations | |||||
Divestitures | |||||
Transaction price for sale of business | $ 501 | ||||
Approximate amount of transaction price received in cash | 430 | ||||
Noncash consideration received on sale of business | $ 71 | ||||
Pre-tax gain/(loss) on sale of business | $ 7 | $ 202 | |||
Cumulative pre-tax gain/(loss) on sale of business | $ 209 | ||||
Customer Care Business Process Outsourcing Services | Maximum | Disposal group disposed of by sale, not discontinued operations | |||||
Divestitures | |||||
Equity Ownership percent acquired | 5.00% | ||||
Others | |||||
Divestitures | |||||
Pre-tax gain/(loss) on sale of business | $ 36 | ||||
Number of divestitures | Divestiture | 4 |
Intangible Assets Including G63
Intangible Assets Including Goodwill (Details 1) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Intangible Assets Including Goodwill: | ||
Net carrying amount increase/(decrease) | $ 886 | |
Intangible asset amortization expense | 347 | $ 298 |
Intangible assets retired and fully amortized | $ 163 |
Intangible Assets Including G64
Intangible Assets Including Goodwill (Details 2) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Intangible asset balances by major asset class: | ||
Gross Carrying Amount | $ 7,610 | $ 6,543 |
Accumulated Amortization | (3,237) | (3,057) |
Net Carrying Amount | 4,373 | 3,487 |
Capitalized software | ||
Intangible asset balances by major asset class: | ||
Gross Carrying Amount | 1,465 | 1,348 |
Accumulated Amortization | (593) | (581) |
Net Carrying Amount | 872 | 767 |
Client relationships | ||
Intangible asset balances by major asset class: | ||
Gross Carrying Amount | 2,297 | 1,856 |
Accumulated Amortization | (987) | (927) |
Net Carrying Amount | 1,310 | 929 |
Completed technology | ||
Intangible asset balances by major asset class: | ||
Gross Carrying Amount | 3,121 | 2,960 |
Accumulated Amortization | (1,486) | (1,397) |
Net Carrying Amount | 1,635 | 1,563 |
Patents/trademarks | ||
Intangible asset balances by major asset class: | ||
Gross Carrying Amount | 683 | 335 |
Accumulated Amortization | (160) | (142) |
Net Carrying Amount | 523 | 193 |
Other | ||
Intangible asset balances by major asset class: | ||
Gross Carrying Amount | 44 | 44 |
Accumulated Amortization | (11) | (10) |
Net Carrying Amount | $ 33 | $ 35 |
Intangible Assets Including G65
Intangible Assets Including Goodwill (Details 3) $ in Millions | Mar. 31, 2016USD ($) |
Future amortization expense, by year | |
2016 (for Q2-Q4) | $ 1,039 |
2,017 | 1,132 |
2,018 | 805 |
2,019 | 492 |
2,020 | 384 |
Capitalized Software | |
Future amortization expense, by year | |
2016 (for Q2-Q4) | 365 |
2,017 | 340 |
2,018 | 160 |
2,019 | 8 |
Acquired Intangibles | |
Future amortization expense, by year | |
2016 (for Q2-Q4) | 674 |
2,017 | 792 |
2,018 | 645 |
2,019 | 484 |
2,020 | $ 384 |
Intangible Assets Including G66
Intangible Assets Including Goodwill (Details 4) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Intangible Assets Including Goodwill: | ||
Goodwill accumulated impairment losses | $ 0 | $ 0 |
Goodwill impairment losses | 0 | 0 |
Changes in Goodwill Balances | ||
Beginning Balance | 32,021 | 30,556 |
Goodwill Additions | 1,915 | 2,590 |
Purchase Price Adjustments | 4 | (3) |
Divestitures | (17) | (26) |
Foreign Currency Translation and Other Adjustments | 398 | (1,096) |
Ending Balance | 34,322 | 32,021 |
Cognitive Solutions | ||
Changes in Goodwill Balances | ||
Beginning Balance | 15,621 | 15,156 |
Goodwill Additions | 1,723 | 1,020 |
Purchase Price Adjustments | 1 | (2) |
Divestitures | (12) | (18) |
Foreign Currency Translation and Other Adjustments | 199 | (535) |
Ending Balance | 17,533 | 15,621 |
Global Business Services | ||
Changes in Goodwill Balances | ||
Beginning Balance | 4,396 | 4,555 |
Goodwill Additions | 101 | 74 |
Purchase Price Adjustments | 1 | 0 |
Divestitures | (1) | (1) |
Foreign Currency Translation and Other Adjustments | 72 | (232) |
Ending Balance | 4,569 | 4,396 |
Technology Services & Cloud Platforms | ||
Changes in Goodwill Balances | ||
Beginning Balance | 10,156 | 9,373 |
Goodwill Additions | 91 | 1,087 |
Purchase Price Adjustments | 1 | (1) |
Divestitures | (5) | (7) |
Foreign Currency Translation and Other Adjustments | 115 | (296) |
Ending Balance | 10,358 | 10,156 |
Systems | ||
Changes in Goodwill Balances | ||
Beginning Balance | 1,848 | 1,472 |
Goodwill Additions | 410 | |
Purchase Price Adjustments | 1 | 0 |
Foreign Currency Translation and Other Adjustments | 12 | (33) |
Ending Balance | $ 1,861 | $ 1,848 |
Borrowings (Short-Term Debt) (D
Borrowings (Short-Term Debt) (Details 1) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Borrowings | ||
Commercial paper | $ 600 | |
Short-term loans | $ 302 | 590 |
Long-term debt - current maturities | 5,000 | 5,271 |
Short Term Debt | 5,303 | $ 6,461 |
Default provision on credit facility | $ 500 | |
Debt Disclosure | ||
Limit based on Net Tangible Assets | 10.00% | |
Net interest expense ratio | 2.2 | |
Commercial paper | ||
Debt Disclosure | ||
Weighted-average interest rates for short-term loans (as a percent) | 0.40% | |
Short-term loans | ||
Debt Disclosure | ||
Weighted-average interest rates for short-term loans (as a percent) | 8.60% | 5.20% |
Borrowings (Pre-Swap Borrowing)
Borrowings (Pre-Swap Borrowing) (Details 2) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 45,188 | $ 38,820 |
Less: net unamortized discount | 861 | 838 |
Less: unamortized debt issuance costs | 95 | 74 |
Add: fair value adjustment | 1,022 | 790 |
Long-Term Debt, including current portion | 45,254 | 38,699 |
Less: current maturities | 5,000 | 5,271 |
Total long-term debt (excluding current portion) | 40,254 | 33,428 |
U.S. dollar notes and debentures | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 33,667 | 30,319 |
3.00% Notes and Debentures, maturing in 2016-2017 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 8,239 | 9,351 |
Debt instrument, stated interest rate percentage (as a percent) | 3.00% | |
3.17% Notes and Debentures, maturing in 2018-2019 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 8,826 | 7,591 |
Debt instrument, stated interest rate percentage (as a percent) | 3.17% | |
1.71% Notes and Debentures, maturing in 2020-2021 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 4,940 | 3,717 |
Debt instrument, stated interest rate percentage (as a percent) | 1.71% | |
2.35% Notes and Debentures, maturing in 2022 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 1,901 | 1,900 |
Debt instrument, stated interest rate percentage (as a percent) | 2.35% | |
3.38% Notes and Debentures, maturing in 2023 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 1,500 | 1,500 |
Debt instrument, stated interest rate percentage (as a percent) | 3.38% | |
3.63% Notes and Debentures, maturing in 2024 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 2,000 | 2,000 |
Debt instrument, stated interest rate percentage (as a percent) | 3.63% | |
7.00% Notes and Debentures, maturing in 2025 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 600 | 600 |
Debt instrument, stated interest rate percentage (as a percent) | 7.00% | |
3.45% Notes and Debentures, maturing in 2026 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 1,350 | |
Debt instrument, stated interest rate percentage (as a percent) | 3.45% | |
6.22% Notes and Debentures, maturing in 2027 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 469 | 469 |
Debt instrument, stated interest rate percentage (as a percent) | 6.22% | |
6.50% Notes and Debentures, maturing in 2028 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 313 | 313 |
Debt instrument, stated interest rate percentage (as a percent) | 6.50% | |
5.88% Notes and Debentures, maturing in 2032 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 600 | 600 |
Debt instrument, stated interest rate percentage (as a percent) | 5.88% | |
8.00% Notes and Debentures, maturing in 2038 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 83 | 83 |
Debt instrument, stated interest rate percentage (as a percent) | 8.00% | |
5.60% Notes and Debentures, maturing in 2039 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 745 | 745 |
Debt instrument, stated interest rate percentage (as a percent) | 5.60% | |
4.00% Notes and Debentures, maturing in 2042 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 1,107 | 1,107 |
Debt instrument, stated interest rate percentage (as a percent) | 4.00% | |
7.00% Notes and Debentures, maturing in 2045 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 27 | 27 |
Debt instrument, stated interest rate percentage (as a percent) | 7.00% | |
4.70% Notes and Debentures, maturing in 2046 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 650 | |
Debt instrument, stated interest rate percentage (as a percent) | 4.70% | |
7.13% Notes and Debentures, maturing in 2096 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 316 | 316 |
Debt instrument, stated interest rate percentage (as a percent) | 7.13% | |
1.6% Euros maturing in 2016 - 2028 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 7,691 | 4,892 |
Debt instrument, stated interest rate percentage (as a percent) | 1.60% | |
2.7% Pound sterling maturing in 2017 - 2022 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 1,514 | 1,555 |
Debt instrument, stated interest rate percentage (as a percent) | 2.70% | |
0.4% Japanese yen maturing in 2017-2022 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 1,262 | 1,180 |
Debt instrument, stated interest rate percentage (as a percent) | 0.40% | |
6.3% Swiss francs maturing in 2020 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 9 | 9 |
Debt instrument, stated interest rate percentage (as a percent) | 6.30% | |
2.2% Canadian Maturing 2017 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 386 | 360 |
Debt instrument, stated interest rate percentage (as a percent) | 2.20% | |
13.6% Other maturing in 2016-2020 | ||
Debt Disclosure | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $ 658 | $ 506 |
Debt instrument, stated interest rate percentage (as a percent) | 13.60% |
Borrowings (Details 3)
Borrowings (Details 3) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Borrowings | ||
Long-Term Debt, including current portion | $ 45,254 | $ 38,699 |
Less: current maturities | 5,000 | 5,271 |
Total long-term debt (excluding current portion) | $ 40,254 | $ 33,428 |
Borrowings (Pre-Swap Maturities
Borrowings (Pre-Swap Maturities) (Details 4) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Pre-swap annual contractual maturities of long-term debt outstanding | ||
2016 (for Q2-Q4) | $ 3,198 | |
2,017 | 6,798 | |
2,018 | 4,777 | |
2,019 | 5,271 | |
2,020 | 4,873 | |
2021 and beyond | 20,272 | |
Total | $ 45,188 | $ 38,820 |
Borrowings (Interest on Debt) (
Borrowings (Interest on Debt) (Details 5) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Interest on Debt | ||
Cost of financing | $ 138 | $ 140 |
Interest expense | 157 | 108 |
Net investment derivative activity | (10) | 0 |
Interest capitalized | 1 | (2) |
Total interest paid and accrued | $ 286 | $ 245 |
Contingencies (Details)
Contingencies (Details) $ in Millions | Jul. 25, 2013 | Jul. 18, 2012USD ($) | May. 31, 2015Defendant | Mar. 31, 2015Defendant | Feb. 13, 2014USD ($) | May. 31, 2010Defendant | Mar. 31, 2016USD ($)CountryClaim |
Loss Contingencies | |||||||
Clients presence in number of countries | Country | 175 | ||||||
Foreign Tax Authority | Brazil | |||||||
Loss Contingencies | |||||||
Loss contingency, estimate of possible loss | $ | $ 520 | ||||||
Litigation Case In United States District Court regarding divesting Microelectronics business | |||||||
Loss Contingencies | |||||||
Number of defendants | Defendant | 3 | ||||||
Litigation Case In United States District Court regarding divesting Microelectronics business, alleging violations of the Employee Retirement Income Security Act | |||||||
Loss Contingencies | |||||||
Number of defendants | Defendant | 3 | ||||||
IBM United Kingdom Limited | Litigation in United Kingdom regarding defined benefit plans | |||||||
Loss Contingencies | |||||||
Loss contingency, estimate of possible loss | $ | $ 250 | ||||||
Number of representative beneficiaries of the UK Trust membership | Defendant | 2 | ||||||
IBM UK Defined Benefit Plan Participants | IBM United Kingdom Limited | |||||||
Loss Contingencies | |||||||
Claims pending | Claim | 290 | ||||||
Civil enforcement action with the SEC | |||||||
Loss Contingencies | |||||||
Period for which reports are to be submitted to SEC and court on certain matters, including those relating to compliance with the FCPA | 2 years | ||||||
State of Indiana | Pending Litigation | |||||||
Loss Contingencies | |||||||
Amount of settlement to be (paid)/received | $ | $ 52 | $ 50 | |||||
Duration Of Trial | 42 days |
Commitments (Details 1)
Commitments (Details 1) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Movement in standard warranty liability | |||
Beginning Balance | $ 181 | $ 197 | |
Current period accruals | 27 | 35 | |
Accrual adjustments to reflect actual experience | (2) | 10 | |
Charges incurred | (41) | (51) | |
Ending Balance | 164 | $ 192 | |
Extended lines of credit | |||
Commitments, guarantees: | |||
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients | 6,014 | $ 5,477 | |
Financing for client purchase agreements | |||
Commitments, guarantees: | |||
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients | 2,069 | 2,097 | |
Financial guarantees | |||
Commitments, guarantees: | |||
Guarantor obligations, maximum exposure | $ 32 | $ 34 |
Commitments (Details 2)
Commitments (Details 2) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Deferred revenue: | |||
Current portion | $ 12,609 | $ 11,021 | |
Noncurrent portion | 3,662 | $ 3,771 | |
Extended Warranty Liability | |||
Movement in extended warranty liability | |||
Aggregate deferred revenue, beginning balance | 538 | $ 536 | |
Revenue deferred for new extended warranty contracts | 49 | 45 | |
Amortization of deferred revenue | (66) | (63) | |
Other | 9 | (15) | |
Aggregate deferred revenue, ending balance | 531 | 503 | |
Deferred revenue: | |||
Current portion | 247 | 245 | |
Noncurrent portion | $ 284 | $ 258 |
Commitments (Calculations) (Det
Commitments (Calculations) (Details 3) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Deferred Revenue [Abstract] | ||
Current portion | $ 12,609 | $ 11,021 |
Noncurrent portion | $ 3,662 | $ 3,771 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | 1 Months Ended | 3 Months Ended | |
Apr. 26, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | |
Subsequent events: | |||
Dividend declared (in dollars per share) | $ 1.3 | ||
Dividend declared, date | Apr. 26, 2016 | ||
Dividend payable, date | Jun. 10, 2016 | ||
Shareholders of record, date | May 10, 2016 | ||
Subsequent event | |||
Subsequent events: | |||
Dividend declared (in dollars per share) | $ 1.4 | ||
Dividend per share increase (in dollars per share) | $ 0.1 | ||
Dividend per share increase (as a percent) | 8.00% |