Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 10, 2020 | Jun. 30, 2019 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity File Number | 1-2360 | ||
Entity Registrant Name | INTERNATIONAL BUSINESS MACHINES CORPORATION | ||
Entity Incorporation, State or Country Code | NY | ||
Entity Tax Identification Number | 13-0871985 | ||
Entity Address, Address Line One | One New Orchard Road | ||
Entity Address, City or Town | Armonk | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 10504 | ||
City Area Code | 914 | ||
Local Phone Number | 499-1900 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Central Index Key | 0000051143 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 888,408,023 | ||
Entity Public Float | $ 122.1 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
New York Stock Exchange | Common Stock | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Capital stock, par value $.20 per share | ||
Trading Symbol | IBM | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 2.750% Notes due 2020 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 2.750% Notes due 2020 | ||
Trading Symbol | IBM 20B | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.875% Notes due 2020 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.875% Notes due 2020 | ||
Trading Symbol | IBM 20A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.500% Notes due 2021 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.500% Notes due 2021 | ||
Trading Symbol | IBM 21B | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 2.625% Notes due 2022 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 2.625% Notes due 2022 | ||
Trading Symbol | IBM 22A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.25% Notes due 2023 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.25% Notes due 2023 | ||
Trading Symbol | IBM 23A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.375% Notes due 2023 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.375% Notes due 2023 | ||
Trading Symbol | IBM 23B | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.125% Notes due 2024 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.125% Notes due 2024 | ||
Trading Symbol | IBM 24A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 2.875% Notes due 2025 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 2.875% Notes due 2025 | ||
Trading Symbol | IBM 25A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.950% Notes due 2025 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.950% Notes due 2025 | ||
Trading Symbol | IBM 25B | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.875% Notes due 2025 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.875% Notes due 2025 | ||
Trading Symbol | IBM 25C | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.300% Notes due 2026 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.300% Notes due 2026 | ||
Trading Symbol | IBM 26B | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.250% Notes due 2027 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.250% Notes due 2027 | ||
Trading Symbol | IBM 27B | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.300% Notes due 2028 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.300% Notes due 2028 | ||
Trading Symbol | IBM 28B | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.750% Notes due 2028 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.750% Notes due 2028 | ||
Trading Symbol | IBM 28A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.500% Notes due 2029 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.500% Notes due 2029 | ||
Trading Symbol | IBM 29 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.750% Notes due 2031 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.750% Notes due 2031 | ||
Trading Symbol | IBM 31 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.650% Notes due 2032 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.650% Notes due 2032 | ||
Trading Symbol | IBM 32A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.200% Notes due 2040 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.200% Notes due 2040 | ||
Trading Symbol | IBM 40 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 7.00% Debentures due 2025 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 7.00% Debentures due 2025 | ||
Trading Symbol | IBM 25 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 6.22% Debentures due 2027 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 6.22% Debentures due 2027 | ||
Trading Symbol | IBM 27 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 6.50% Debentures due 2028 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 6.50% Debentures due 2028 | ||
Trading Symbol | IBM 28 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 7.00% Debentures due 2045 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 7.00% Debentures due 2045 | ||
Trading Symbol | IBM 45 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 7.125% Debentures due 2096 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 7.125% Debentures due 2096 | ||
Trading Symbol | IBM 96 | ||
Security Exchange Name | NYSE | ||
Chicago Stock Exchange | Common Stock | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Capital stock, par value $.20 per share | ||
Trading Symbol | IBM | ||
Security Exchange Name | CHX |
Consolidated Income Statement
Consolidated Income Statement - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue (Note C) | $ 77,147 | $ 79,591 | $ 79,139 |
Cost | 40,659 | 42,655 | 42,196 |
Gross profit | 36,488 | 36,936 | 36,943 |
Expense and other (income) | |||
Selling, general and administrative | 20,604 | 19,366 | 19,680 |
Research, development and engineering (Note F) | 5,989 | 5,379 | 5,590 |
Intellectual property and custom development income | (648) | (1,026) | (1,466) |
Other (income) and expense | (968) | 1,152 | 1,125 |
Interest expense (Notes P&T) | 1,344 | 723 | 615 |
Total expense and other (income) | 26,322 | 25,594 | 25,543 |
Income from continuing operations before income taxes | 10,166 | 11,342 | 11,400 |
Provision for income taxes (Note G) | 731 | 2,619 | 5,642 |
Income from continuing operations | 9,435 | 8,723 | 5,758 |
Income/(loss) from discontinued operations, net of tax | (4) | 5 | (5) |
Net income | $ 9,431 | $ 8,728 | $ 5,753 |
Assuming dilution | |||
Continuing operations (in dollars per share) (Note H) | $ 10.57 | $ 9.51 | $ 6.14 |
Discontinued operations (in dollars per share) (Note H) | (0.01) | 0.01 | 0 |
Total (in dollars per share) (Note H) | 10.56 | 9.52 | 6.14 |
Basic | |||
Continuing operations (in dollars per share) (Note H) | 10.63 | 9.56 | 6.17 |
Discontinued operations (in dollars per share) (Note H) | 0 | 0.01 | 0 |
Total (in dollars per share) (Note H) | $ 10.63 | $ 9.57 | $ 6.17 |
Weighted-average number of common shares outstanding | |||
Assuming dilution (in shares) | 892,813,376 | 916,315,714 | 937,385,625 |
Basic (in shares) | 887,235,105 | 912,048,072 | 932,828,295 |
Services | |||
Revenue (Note C) | $ 47,493 | $ 49,257 | $ 48,652 |
Cost | 32,491 | 33,687 | 33,399 |
Sales | |||
Revenue (Note C) | 28,252 | 28,735 | 28,772 |
Cost | 7,263 | 7,835 | 7,587 |
Financing | |||
Revenue (Note C) | 1,402 | 1,599 | 1,715 |
Cost | $ 904 | $ 1,132 | $ 1,210 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statement of Comprehensive Income | |||
Net income | $ 9,431 | $ 8,728 | $ 5,753 |
Other comprehensive income/(loss), before tax | |||
Foreign currency translation adjustments (Note S) | (39) | (730) | 152 |
Net changes related to available-for-sale securities (Note S) | |||
Unrealized gains/(losses) arising during the period | 1 | (2) | 1 |
Reclassification of (gains)/losses to net income | 1 | ||
Total net changes related to available-for-sale securities | 1 | (2) | 2 |
Unrealized gains/(losses) on cash flow hedges (Note S) | |||
Unrealized gains/(losses) arising during the period | (689) | (136) | (58) |
Reclassification of (gains)/losses to net income | 75 | 449 | (363) |
Total unrealized gains/(losses) on cash flow hedges | (614) | 313 | (421) |
Retirement-related benefit plans (Note S) | |||
Prior service costs/(credits) | (73) | (182) | 0 |
Net (losses)/gains arising during the period | (120) | (2,517) | 682 |
Curtailments and settlements | 41 | 11 | 19 |
Amortization of prior service (credits)/costs | (9) | (73) | (88) |
Amortization of net (gains)/losses | 1,843 | 2,966 | 2,889 |
Total retirement-related benefit plans | 1,681 | 204 | 3,502 |
Other comprehensive income/(loss), before tax (Note S) | 1,029 | (215) | 3,235 |
Income tax (expense)/benefit related to items of other comprehensive income (Note S) | (136) | (262) | (429) |
Other comprehensive income/(loss) (Note S) | 893 | (476) | 2,806 |
Total comprehensive income | $ 10,324 | $ 8,252 | $ 8,559 |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 8,172 | $ 11,379 |
Restricted cash | 141 | 225 |
Marketable securities (Note I) | 696 | 618 |
Notes and accounts receivable-trade (net of allowances of $299 in 2019 and $309 in 2018) | 7,870 | 7,432 |
Short-term financing receivables (net of allowances of $188 in 2019 and $244 in 2018) (Note K) | 14,192 | 22,388 |
Other accounts receivable (net of allowances of $33 in 2019 and $38 in 2018) | 1,733 | 743 |
Inventory (Note J) | 1,619 | 1,682 |
Deferred costs (Note C) | 1,896 | 2,300 |
Prepaid expenses and other current assets | 2,101 | 2,378 |
Total current assets | 38,420 | 49,146 |
Property, plant and equipment (Note L) | 32,028 | 32,460 |
Less: Accumulated depreciation (Note L) | 22,018 | 21,668 |
Property, plant and equipment - net (Note L) | 10,010 | 10,792 |
Operating right-of-use assets - net (Note M) | 4,996 | |
Long-term financing receivables (net of allowances of $33 in 2019 and $48 in 2018) (Note K) | 8,712 | 9,148 |
Prepaid pension assets (Note V) | 6,865 | 4,666 |
Deferred costs (Note C) | 2,472 | 2,676 |
Deferred taxes (Note G) | 5,182 | 5,216 |
Goodwill (Note N) | 58,222 | 36,265 |
Intangible assets - net (Note N) | 15,235 | 3,087 |
Investments and sundry assets (Note O) | 2,074 | 2,386 |
Total assets | 152,186 | 123,382 |
Current liabilities | ||
Taxes (Note G) | 2,839 | 3,046 |
Short-term debt (Notes I&P) | 8,797 | 10,207 |
Accounts payable | 4,896 | 6,558 |
Compensation and benefits | 3,406 | 3,310 |
Deferred income | 12,026 | 11,165 |
Operating lease liabilities (Note M) | 1,380 | |
Other accrued expenses and liabilities | 4,357 | 3,941 |
Total current liabilities | 37,701 | 38,227 |
Long-term debt (Notes I&P) | 54,102 | 35,605 |
Retirement and nonpension postretirement benefit obligations (Note V) | 17,142 | 17,002 |
Deferred income | 3,851 | 3,445 |
Operating lease liabilities (Note M) | 3,879 | |
Other liabilities (Note Q) | 14,526 | 12,174 |
Total liabilities | 131,202 | 106,452 |
Commitments and Contingencies (Note R) | ||
IBM stockholders' equity | ||
Common stock, par value $.20 per share, and additional paid-in capital; Shares authorized: 4,687,500,000; Shares issued (2019-2,237,996,975; 2018-2,233,427,058) | 55,895 | 55,151 |
Retained earnings | 162,954 | 159,206 |
Treasury stock, at cost (shares: 2019-1,350,886,521; 2018-1,340,947,648) | (169,413) | (168,071) |
Accumulated other comprehensive income/(loss) | (28,597) | (29,490) |
Total IBM stockholders' equity | 20,841 | 16,796 |
Noncontrolling interests (Note A) | 144 | 134 |
Total equity | 20,985 | 16,929 |
Total liabilities and equity | $ 152,186 | $ 123,382 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Consolidated Balance Sheet | ||
Notes and accounts receivable - trade, allowances | $ 299 | $ 309 |
Short-term financing receivables, allowances | 188 | 244 |
Other accounts receivable, allowances | 33 | 38 |
Long-term financing receivables, allowances | $ 33 | $ 48 |
Common stock, Par value (in dollars per share) | $ 0.20 | $ 0.20 |
Common stock, Shares authorized (in shares) | 4,687,500,000 | 4,687,500,000 |
Common stock, Shares issued (in shares) | 2,237,996,975 | 2,233,427,058 |
Treasury stock, Shares (in shares) | 1,350,886,521 | 1,340,947,648 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | |||
Net income | $ 9,431 | $ 8,728 | $ 5,753 |
Adjustments to reconcile net income to cash provided by operating activities | |||
Depreciation | 4,209 | 3,127 | 3,021 |
Amortization of intangibles | 1,850 | 1,353 | 1,520 |
Stock-based compensation | 679 | 510 | 534 |
Deferred taxes | (1,527) | 853 | (931) |
Net (gain)/loss on asset sales and other | (1,096) | 123 | 14 |
Change in operating assets and liabilities, net of acquisitions/divestitures | |||
Receivables (including financing receivables) | 502 | 1,006 | 1,297 |
Retirement related | 301 | 1,368 | 1,014 |
Inventory | 67 | (127) | 18 |
Other assets/other liabilities | 858 | (1,819) | 4,437 |
Accounts payable | (503) | 126 | 47 |
Net cash provided by operating activities | 14,770 | 15,247 | 16,724 |
Cash flows from investing activities | |||
Payments for property, plant and equipment | (2,286) | (3,395) | (3,229) |
Proceeds from disposition of property, plant and equipment | 537 | 248 | 460 |
Investment in software | (621) | (569) | (544) |
Purchases of marketable securities and other investments | (3,693) | (7,041) | (4,949) |
Proceeds from disposition of marketable securities and other investments | 3,961 | 6,487 | 3,910 |
Non-operating finance receivables - net | 6,720 | (503) | (2,028) |
Acquisition of businesses, net of cash acquired | (32,630) | (139) | (496) |
Divestiture of businesses, net of cash transferred | 1,076 | (205) | |
Net cash provided by/(used in) investing activities | (26,936) | (4,913) | (7,081) |
Cash flows from financing activities | |||
Proceeds from new debt | 31,825 | 6,891 | 9,643 |
Payments to settle debt | (12,944) | (8,533) | (6,816) |
Short-term borrowings/(repayments) less than 90 days - net | (2,597) | 1,341 | 620 |
Common stock repurchases | (1,361) | (4,443) | (4,340) |
Common stock repurchases for tax withholdings | (272) | (171) | (193) |
Financing - other | 99 | 111 | 175 |
Cash dividends paid | (5,707) | (5,666) | (5,506) |
Net cash provided by/(used in) financing activities | 9,042 | (10,469) | (6,418) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (167) | (495) | 937 |
Net change in cash, cash equivalents and restricted cash | (3,290) | (630) | 4,161 |
Cash, cash equivalents and restricted cash at beginning of period | 11,604 | 12,234 | 8,073 |
Cash, cash equivalents and restricted cash at end of period | 8,314 | 11,604 | 12,234 |
Supplemental data | |||
Income taxes paid - net of refunds received | 2,091 | 1,745 | 1,597 |
Interest paid on debt | $ 1,685 | $ 1,423 | $ 1,208 |
Consolidated Statement of Equit
Consolidated Statement of Equity - USD ($) $ in Millions | Total IBM Stockholders' Equity | Common Stock and Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income/(Loss) | Non-Controlling Interests | Total |
Balance at the Beginning of the Period at Dec. 31, 2016 | $ 18,246 | $ 53,935 | $ 152,759 | $ (159,050) | $ (29,398) | $ 146 | $ 18,392 |
Equity | |||||||
Cumulative effect of change in accounting principle | Accounting Standards Update 2016-16, Intra-Entity Transfers of Assets Other Than Inventory | 102 | 102 | 102 | ||||
Net income plus other comprehensive income/(loss) | |||||||
Net income | 5,753 | 5,753 | 5,753 | ||||
Other comprehensive income/(loss) | 2,806 | 2,806 | 2,806 | ||||
Total comprehensive income/(loss) | 8,559 | 8,559 | |||||
Cash dividends paid - common stock ($6.43, $6.21 and $5.90 per share for 2019, 2018 and 2017, respectively) | (5,506) | (5,506) | (5,506) | ||||
Common stock issued under employee plans (Shares - 4,569,917, 3,998,245 and 4,311,998 for 2019, 2018 and 2017, respectively) | 631 | 631 | 631 | ||||
Purchases (Shares - 2,000,704, 1,173,416 and 1,226,080) and sales (Shares - 2,041,347, 424,589 and 463,083) of treasury stock under employee plans - net, for 2019, 2018 and 2017, respectively | (116) | 18 | (134) | (116) | |||
Other treasury shares purchased, not retired (Shares - 9,979,516, 32,949,233 and 27,237,179 for 2019, 2018 and 2017, respectively) | (4,323) | (4,323) | (4,323) | ||||
Changes in other equity | 0 | 0 | 0 | ||||
Changes in noncontrolling interests | (15) | (15) | |||||
Balance at the End of the Period at Dec. 31, 2017 | 17,594 | 54,566 | 153,126 | (163,507) | (26,592) | 131 | 17,725 |
Equity | |||||||
Cumulative effect of change in accounting principle | Accounting Standards Update 2014-09, Revenue from Contracts with Customers | 580 | 580 | 580 | ||||
Cumulative effect of change in accounting principle | Accounting Standards Updates 2016-01 (Financial Instruments), 2017-12 (Hedging) and 2018-02 (Stranded Tax Effects) | 2,422 | (2,422) | |||||
Net income plus other comprehensive income/(loss) | |||||||
Net income | 8,728 | 8,728 | 8,728 | ||||
Other comprehensive income/(loss) | (476) | (476) | (476) | ||||
Total comprehensive income/(loss) | 8,252 | 8,252 | |||||
Cash dividends paid - common stock ($6.43, $6.21 and $5.90 per share for 2019, 2018 and 2017, respectively) | (5,666) | (5,666) | (5,666) | ||||
Common stock issued under employee plans (Shares - 4,569,917, 3,998,245 and 4,311,998 for 2019, 2018 and 2017, respectively) | 585 | 585 | 585 | ||||
Purchases (Shares - 2,000,704, 1,173,416 and 1,226,080) and sales (Shares - 2,041,347, 424,589 and 463,083) of treasury stock under employee plans - net, for 2019, 2018 and 2017, respectively | (103) | 15 | (117) | (103) | |||
Other treasury shares purchased, not retired (Shares - 9,979,516, 32,949,233 and 27,237,179 for 2019, 2018 and 2017, respectively) | (4,447) | (4,447) | (4,447) | ||||
Changes in other equity | 0 | 0 | 0 | 0 | |||
Changes in noncontrolling interests | 3 | 3 | |||||
Balance at the End of the Period at Dec. 31, 2018 | 16,796 | 55,151 | 159,206 | (168,071) | (29,490) | 134 | 16,929 |
Net income plus other comprehensive income/(loss) | |||||||
Net income | 9,431 | 9,431 | 9,431 | ||||
Other comprehensive income/(loss) | 893 | 893 | 893 | ||||
Total comprehensive income/(loss) | 10,324 | 10,324 | |||||
Cash dividends paid - common stock ($6.43, $6.21 and $5.90 per share for 2019, 2018 and 2017, respectively) | (5,707) | (5,707) | (5,707) | ||||
Common stock issued under employee plans (Shares - 4,569,917, 3,998,245 and 4,311,998 for 2019, 2018 and 2017, respectively) | 745 | 745 | 745 | ||||
Purchases (Shares - 2,000,704, 1,173,416 and 1,226,080) and sales (Shares - 2,041,347, 424,589 and 463,083) of treasury stock under employee plans - net, for 2019, 2018 and 2017, respectively | 19 | 30 | (11) | 19 | |||
Other treasury shares purchased, not retired (Shares - 9,979,516, 32,949,233 and 27,237,179 for 2019, 2018 and 2017, respectively) | (1,331) | (1,331) | (1,331) | ||||
Changes in other equity | (5) | (5) | (5) | ||||
Changes in noncontrolling interests | 10 | 10 | |||||
Balance at the End of the Period at Dec. 31, 2019 | $ 20,841 | $ 55,895 | $ 162,954 | $ (169,413) | $ (28,597) | $ 144 | $ 20,985 |
Consolidated Statement of Equ_2
Consolidated Statement of Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statement of Equity | |||
Cash dividend per common share | $ 6.43 | $ 6.21 | $ 5.90 |
Common stock issued under employee plans (in shares) | 4,569,917 | 3,998,245 | 4,311,998 |
Purchases of treasury stock under employee plans (in shares) | 2,000,704 | 1,173,416 | 1,226,080 |
Sales of treasury stock under employee plans (in shares) | 2,041,347 | 424,589 | 463,083 |
Other treasury shares purchased, not retired (in shares) | 9,979,516 | 32,949,233 | 27,237,179 |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Significant Accounting Policies | |
Significant Accounting Policies | NOTE A. SIGNIFICANT ACCOUNTING POLICIES 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). Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior year amounts have been reclassified to conform to the current year presentation. Specifically, revenues and related costs for post-contract support (PCS) provided for perpetual (one-time charge) software licenses were reclassified from Services Revenue to Sales Revenue and Services Cost to Sales Cost within the Consolidated Income Statement. The company reclassified $2.1 billion within revenue and $0.4 billion within cost for each of the years ended December 31, 2018 and 2017. This reclassification had no impact on total revenue, total cost, net income, financial position or cash flows for any periods presented. Other immaterial reclassifications have been annotated where applicable. On July 9, 2019, the company completed the acquisition of all the outstanding shares of Red Hat, Inc. (Red Hat). Refer to note E, “Acquisitions & Divestitures,” and note N, “Intangible Assets Including Goodwill,” for additional information on the impacts to the consolidated financial results at and for the year ended December 31, 2019. In the first quarter of 2019, 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 Consolidated Financial Statements. Refer to note D, “Segments,” for additional information on the company’s reportable segments. The periods presented in this Annual Report are reported on a comparable basis. The impact of the Tax Cuts and Jobs Act (U.S. tax reform) resulted in a charge to tax expense of $0.1 billion, $2.0 billion and $5.5 billion, for the years ended December 31, 2019, 2018 and 2017, respectively. Refer to note G, “Taxes,” for additional information. Noncontrolling interest amounts of $25 million, $17 million and $17 million, net of tax, for the years ended December 31, 2019, 2018 and 2017, respectively, are included as a reduction within other (income) and expense in the Consolidated Income Statement. Principles of Consolidation The Consolidated Financial Statements include the accounts of IBM and its controlled subsidiaries, which are primarily majority owned. Any noncontrolling interest in the equity of a subsidiary is reported as a component of total equity in the Consolidated Balance Sheet. Net income and losses attributable to the noncontrolling interest is reported as described above in the Consolidated Income Statement. The accounts of variable interest entities (VIEs) are included in the Consolidated Financial Statements, if required. Investments in business entities in which the company does not have control but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method and the company’s proportionate share of income or loss is recorded in other (income) and expense. The accounting policy for other investments in equity securities is described within the “Marketable Securities” section of this note. Equity investments in non-publicly traded entities lacking controlling financial interest or significant influence are primarily measured at cost, net of impairment, if any. All intercompany transactions and accounts have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts that are reported in the Consolidated Financial Statements and accompanying disclosures. Estimates are made for the following, among others: revenue, costs to complete service contracts, income taxes, pension assumptions, valuation of assets including goodwill and intangible assets, loss contingencies, allowance for credit losses and other matters. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may be different from these estimates. Revenue Effective January 1, 2018, the company adopted the new accounting standard related to the recognition of revenue in contracts with customers under the modified retrospective transition method. This method was applied to contracts that were not complete as of the date of initial application. The impact related to adopting the new standard was not material. Certain changes resulting from adopting the new standard, such as terminology differences, impacted the company’s description of its significant accounting policies compared to 2017. For further information regarding the adoption of the new standard, see note B, “Accounting Changes,” and note C, “Revenue Recognition.” The company accounts for a contract with a client when it has written approval, the contract is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection. Revenue is recognized when, or as, control of a promised product or service transfers to a client, in an amount that reflects the consideration to which the company expects to be entitled in exchange for transferring those products or services. If the consideration promised in a contract includes a variable amount, the company estimates the amount to which it expects to be entitled using either the expected value or most likely amount method. The company’s contracts may include terms ​ that could cause variability in the transaction price, including, for example, rebates, volume discounts, service-level penalties, and performance bonuses or other forms of contingent revenue. The company only includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The company may not be able to reliably estimate contingent revenue in certain long-term arrangements due to uncertainties that are not expected to be resolved for a long period of time or when the company’s experience with similar types of contracts is limited. The company’s arrangements infrequently include contingent revenue. Changes in estimates of variable consideration are included in note C, “Revenue Recognition.” The company’s standard billing terms are that payment is due upon receipt of invoice, payable within 30 days. Invoices are generally issued as control transfers and/or as services are rendered. Additionally, in determining the transaction price, the company adjusts the promised amount of consideration for the effects of the time value of money if the billing terms are not standard and the timing of payments agreed to by the parties to the contract provide the client or the company with a significant benefit of financing, in which case the contract contains a significant financing component. As a practical expedient, the company does not account for significant financing components if the period between when the company transfers the promised product or service to the client and when the client pays for that product or service will be one year or less. Most arrangements that contain a financing component are financed through the company’s Global Financing business and include explicit financing terms. The company may include subcontractor services or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from sales of third-party vendor products or services is recorded net of costs when the company is acting as an agent between the client and the vendor, and gross when the company is the principal for the transaction. To determine whether the company is an agent or principal, the company considers whether it obtains control of the products or services before they are transferred to the customer. In making this evaluation, several factors are considered, most notably whether the company has primary responsibility for fulfillment to the client, as well as inventory risk and pricing discretion. The company recognizes revenue on sales to solution providers, resellers and distributors (herein referred to as resellers) when the reseller has economic substance apart from the company and the reseller is considered the principal for the transaction with the end-user client. The company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. In addition to the aforementioned general policies, the following are the specific revenue recognition policies for arrangements with multiple performance obligations and for each major category of revenue. Arrangements with Multiple Performance Obligations The company’s global capabilities as a cognitive solutions and cloud platform company include services, software, hardware and related financing. The company enters into revenue arrangements that may consist of any combination of these products and services based on the needs of its clients. The company continues to develop new products and offerings and continuously reinvent its platforms and delivery methods, including through the use of cloud and as-a-Service models. These are not separate businesses; they are offerings across the segments that address market opportunities in analytics, data, cloud and security. Revenue from these offerings follows the specific revenue recognition policies for arrangements with multiple performance obligations and for each major category of revenue, depending on the type of offering, which are comprised of services, hardware and/or software. To the extent that a product or service in multiple performance obligation arrangements is subject to other specific accounting guidance, such as leasing guidance, that product or service is accounted for in accordance with such specific guidance. For all other products or services in these arrangements, the company determines if the products or services are distinct and allocates the consideration to each distinct performance obligation on a relative standalone selling price basis. When products and services are not distinct, the company determines an appropriate measure of progress based on the nature of its overall promise for the single performance obligation. The revenue policies in the Services, Hardware and/or Software sections below are then applied to each performance obligation, as applicable. Services The company’s primary services offerings include infrastructure and cloud services, including outsourcing, and other managed services; application management services; global process services (GPS); maintenance and support; and consulting, including the design and development of complex IT systems to a client’s specifications (e.g., design and build). Many of these services can be delivered entirely or partially through cloud or as-a-Service delivery models. The company’s services are provided on a time-and-material basis, as a fixed-price contract or as a fixed-price per measure of output contract and the contract terms range from less than one year to over 10 years. ​ In services arrangements, the company typically satisfies the performance obligation and recognizes revenue over time. In design and build arrangements, the performance obligation is satisfied over time either because the client controls the asset as it is created (e.g., when the asset is built at the customer site) or because the company’s performance does not create an asset with an alternative use and the company has an enforceable right to payment plus a reasonable profit for performance completed to date. In most other services arrangements, the performance obligation is satisfied over time because the client simultaneously receives and consumes the benefits provided as the company performs the services. In outsourcing, other managed services, application management, GPS and other cloud-based services arrangements, the company determines whether the services performed during the initial phases of the arrangement, such as setup activities, are distinct. In most cases, the arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The company applies a measure of progress (typically time-based) to any fixed consideration and allocates variable consideration to the distinct periods of service based on usage. As a result, revenue is generally recognized over the period the services are provided on a usage basis. This results in revenue recognition that corresponds with the value to the client of the services transferred to date relative to the remaining services promised. Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred. Revenue from as-a-Service type contracts, such as Infrastructure-as-a-Service, is recognized either on a straight-line basis or on a usage basis, depending on the terms of the arrangement (such as whether the company is standing ready to perform or whether the contract has usage-based metrics). If an as-a-Service contract includes setup activities, those promises in the arrangement are evaluated to determine if they are distinct. Revenue related to maintenance and support services and extended warranty is recognized on a straight-line basis over the period of performance because the company is standing ready to provide services. In design and build contracts, revenue is recognized based on progress toward completion of the performance obligation using a cost-to-cost measure of progress. Revenue is recognized based on the labor costs incurred to date as a percentage of the total estimated labor costs to fulfill the contract. Due to the nature of the work performed in these arrangements, the estimation of cost at completion is complex, subject to many variables and requires significant judgment. Key factors reviewed by the company to estimate costs to complete each contract are future labor and product costs and expected productivity efficiencies. Changes in original estimates are reflected in revenue on a cumulative catch-up basis in the period in which the circumstances that gave rise to the revision become known by the company. Refer to note C, “Revenue Recognition,” for the amount of revenue recognized in the reporting period on a cumulative catch-up basis (i.e., from performance obligations satisfied, or partially satisfied, in previous periods). The company performs ongoing profitability analyses of its design and build services contracts accounted for using a cost-to-cost measure of progress in order to determine whether the latest estimates of revenues, costs and profits require updating. If at any time these estimates indicate that the contract will be unprofitable, the entire estimated loss for the remainder of the contract is recorded immediately. For other types of services contracts, any losses are recorded as incurred. In some services contracts, the company bills the client prior to recognizing revenue from performing the services. Deferred income of $5,106 million and $5,424 million at December 31, 2019 and 2018, respectively, is included in the Consolidated Balance Sheet. In other services contracts, the company performs the services prior to billing the client. When the company performs services prior to billing the client in design and build contracts, the right to consideration is typically subject to milestone completion or client acceptance and the unbilled accounts receivable is classified as a contract asset. At December 31, 2019 and 2018, contract assets for services contracts of $424 million and $421 million, respectively, are included in prepaid expenses and other current assets in the Consolidated Balance Sheet. The remaining amount of unbilled accounts receivable of $1,071 million and $1,075 million at December 31, 2019 and 2018, respectively, is included in notes and accounts receivable trade in the Consolidated Balance Sheet. Billings usually occur in the month after the company performs the services or in accordance with specific contractual provisions. Hardware The company’s hardware offerings include the sale or lease of system servers and storage solutions. The capabilities of these products can also be delivered through as-a-Service or cloud delivery models, such as Storage-as-a-Service. The company also offers installation services for its more complex hardware products. Hardware offerings are often sold with distinct maintenance services, described in the Services section above. Revenue from hardware sales is recognized when control has transferred to the customer which typically occurs when the hardware has been shipped to the client, risk of loss has transferred to the client and the company has a present right to payment for the hardware. In limited circumstances when a hardware sale includes client acceptance provisions, revenue is recognized either when client acceptance has been obtained, client acceptance provisions have lapsed, or the company has objective evidence that the criteria specified in the client acceptance provisions have been satisfied. Revenue from hardware sales-type leases is recognized at the beginning of the lease term. Revenue from rentals and operating leases is recognized on a straight-line basis over the term of the rental or lease. ​ Revenue from as-a-Service arrangements is recognized either on a straight-line basis or on a usage basis as described in the Services section above. Installation services are accounted for as distinct performance obligations with revenue recognized as the services are performed. Shipping and handling activities that occur after the client has obtained control of a product are accounted for as an activity to fulfill the promise to transfer the product rather than as an additional promised service and, therefore, no revenue is deferred and recognized over the shipping period. Software The company’s software offerings include cognitive applications, which contains many of the company’s strategic areas including analytics, data and security; cloud and data platforms, which contains the company’s distributed middleware and data platform software, including Red Hat; transaction processing platforms, which primarily supports mission-critical systems for clients; and, operating systems software, which provides operating systems for IBM Z and Power Systems hardware. These offerings primarily include proprietary software and, in some cases, open source software, and many can be delivered entirely or partially through as-a-Service or cloud delivery models, while others are delivered as on-premise software licenses. Revenue from proprietary perpetual (one-time charge) license software is recognized at a point in time at the inception of the arrangement when control transfers to the client, if the software license is distinct from the PCS offered by the company. In limited circumstances, when the software requires continuous updates to provide the intended functionality, the software license and PCS are not distinct and revenue for the single performance obligation is recognized over time as the PCS is provided. This is only applicable to certain security software perpetual licenses offered by the company. Revenue from proprietary term license software is recognized at a point in time for the committed term of the contract (which is typically one month due to client termination rights), unless consideration depends on client usage, in which case revenue is recognized when the usage occurs. Clients may contract to convert their existing IBM term license software into perpetual license software plus PCS. When proprietary term license software is converted to perpetual license software, the consideration becomes fixed with no cancellability and, therefore, revenue for the perpetual license is recognized upon conversion, consistent with the accounting for other perpetual licenses, as described above. PCS revenue is recognized as described below. The company also has open source software offerings. Since open source software is offered under an open source licensing model and therefore, the license is available for free, the standalone selling price is zero. As such, when the license is sold with PCS or other products and services, no consideration is allocated to the license when it is a distinct performance obligation and therefore no revenue is recognized when control of the license transfers to the client. Revenue is recognized over the PCS period. In certain cases, open source software is bundled with proprietary software and, if the open source software is not considered distinct, the software bundle (e.g., Cloud Pak) is accounted for under a proprietary software model. Revenue from PCS is recognized over the contract term on a straight-line basis because the company is providing a service of standing ready to provide support, when-and-if needed, and is providing unspecified software upgrades on a when-and-if available basis over the contract term. Revenue from software hosting or Software-as-a-Service arrangements is recognized either on a straight-line basis or on a usage basis as described in the Services section above. In software hosting arrangements, the rights provided to the client (e.g., ownership of a license, contract termination provisions and the feasibility of the client to operate the software) are considered in determining whether the arrangement includes a license. In arrangements that include a software license, the associated revenue is recognized in accordance with the software license recognition policy above rather than over time as a service. Financing Financing income attributable to sales-type leases, direct financing leases and loans is recognized on the accrual basis using the effective interest method. Operating lease income is recognized on a straight-line basis over the term of the lease. Standalone Selling Price The company allocates the transaction price to each performance obligation on a relative standalone selling price basis. The standalone selling price (SSP) is the price at which the company would sell a promised product or service separately to a client. In most cases, the company is able to establish SSP based on the observable prices of products or services sold separately in comparable circumstances to similar clients. The company typically establishes SSP ranges for its products and services which are reassessed on a periodic basis or when facts and circumstances change. In certain instances, the company may not be able to establish a SSP range based on observable prices and the company estimates SSP. The company estimates SSP by considering multiple factors including, but not limited to, overall market conditions, including geographic or regional specific factors, competitive positioning, competitor actions, internal costs, profit objectives and pricing practices. Additionally, in certain circumstances, the company may estimate SSP for a product or service by applying the residual approach. This approach is most commonly used when certain perpetual software licenses are only sold bundled with one year of PCS and a price has not been established for the software. Estimating SSP is a formal process that includes review and approval by the company’s management. Services Costs Recurring operating costs for services contracts are recognized as incurred. For fixed-price design and build contracts, the costs of external hardware and software accounted for under the cost-to-cost measure of progress are deferred and recognized based on the labor costs incurred to date (i.e., the measure of progress), as a percentage of the total estimated labor costs to fulfill the contract as control transfers over time for these performance obligations. Certain eligible, nonrecurring costs (i.e., setup costs) incurred in the initial phases of outsourcing contracts and other cloud-based services contracts, including Software-as-a-Service arrangements, are capitalized when the costs relate directly to the contract, the costs generate or ​ enhance resources of the company that will be used in satisfying the performance obligation in the future, and the costs are expected to be recovered. These costs consist of transition and setup costs related to the installation of systems and processes and other deferred fulfillment costs, including, for example, prepaid assets used in services contracts (i.e., prepaid software or prepaid maintenance). Capitalized costs are amortized on a straight-line basis over the expected period of benefit, which includes anticipated contract renewals or extensions, consistent with the transfer to the client of the services to which the asset relates. Additionally, fixed assets associated with these contracts are capitalized and depreciated on a straight-line basis over the expected useful life of the asset. If an asset is contract specific, then the depreciation period is the shorter of the useful life of the asset or the contract term. Amounts paid to clients in excess of the fair value of acquired assets used in outsourcing arrangements are deferred and amortized on a straight-line basis as a reduction of revenue over the expected period of benefit. The company performs periodic reviews to assess the recoverability of deferred contract transition and setup costs. If the carrying amount is deemed not recoverable, an impairment loss is recognized. Refer to note C, “Revenue Recognition,” for the amount of deferred costs to fulfill a contract at December 31, 2019 and 2018. In situations in which an outsourcing contract is terminated, the terms of the contract may require the client to reimburse the company for the recovery of unbilled accounts receivable, unamortized deferred costs incurred to purchase specific assets utilized in the delivery of services and to pay any additional costs incurred by the company to transition the services. Software Costs Costs that are related to the conceptual formulation and design of licensed software programs are expensed as incurred to research, development and engineering expense; costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. Capitalized amounts are amortized on a straight-line basis over periods ranging up to three years and are recorded in software cost within cost of sales. The company performs periodic reviews to ensure that unamortized program costs remain recoverable from future revenue. Costs to support or service licensed programs are charged to software cost within cost of sales as incurred. The company capitalizes certain costs that are incurred to purchase or develop internal-use software. Internal-use software programs also include software used by the company to deliver Software-as-a-Service when the client does not receive a license to the software and the company has no substantive plans to market the software externally. Capitalized costs are amortized on a straight-line basis over periods ranging up to three years and are recorded in selling, general and administrative expense or cost of sales, depending on whether the software is used by the company in revenue generating transactions. Additionally, the company may capitalize certain types of implementation costs and amortize them over the term of the arrangement when the company is a customer in a cloud-computing arrangement. Incremental Costs of Obtaining a Contract Incremental costs of obtaining a contract (e.g., sales commissions) are capitalized and amortized on a straight-line basis over the expected customer relationship period if the company expects to recover those costs. Prior to January 1, 2018, the company expensed these costs as incurred. The expected customer relationship period is determined based on the average customer relationship period, including expected renewals, for each offering type and ranges from three Product Warranties The company offers warranties for its hardware products that generally range up to three years, with the majority being either one Revenue from extended warranty contracts is initially recorded as deferred income and subsequently recognized on a straight-line basis over the delivery period because the company is providing a service of standing ready to provide services over such term. Refer to note R, “Commitments & Contingencies,” for additional information. Shipping and Handling Costs related to shipping and handling are recognized as incurred and included in cost in the Consolidated Income Statement. ​ Expense and Other Income Selling, General and Administrative Selling, general and administrative (SG&A) expense is charged to income as incurred, except for certain sales commissions, which are capitalized and amortized as of January 1, 2018. For further information regarding capitalizing sales commissions, see “Incremental Costs of Obtaining a Contract” above. Expenses of promoting and selling products and services are classified as selling expense and, in addition to sales commissions, include such items as compensation, advertising and travel. General and administrative expense includes such items as compensation, legal costs, office supplies, non-income taxes, insurance and office rental. In addition, general and administrative expense includes other operating items such as an allowance for credit losses, workforce rebalancing charges for contractually obligated payments to employees terminated in the ongoing course of business, acquisition costs related to business combinations, amortization of certain intangible assets and environmental remediation costs. Advertising and Promotional Expense The company expenses advertising and promotional costs as incurred. Cooperative advertising reimbursements from vendors are recorded net of advertising and promotional expense in the period in which the related advertising and promotional expense is incurred. Advertising and promotional expense, which includes media, agency and promotional expense, was $1,647 million, $1,466 million and $1,445 million in 2019, 2018 and 2017, respectively, and is recorded in SG&A expense in the Consolidated Income Statement. Research, Development and Engineering Research, development and engineering (RD&E) costs are expensed as incurred. Software costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. Intellectual Property and Custom Development Income The company licenses and sells the rights to certain of its intellectual property (IP) including internally developed patents, trade secrets and technological know-how. Certain IP transactions to third parties are licensing/royalty-based and others are transaction-based sales/other transfers. Income from licensing arrangements is recognized at the inception of the license term if the nature of the company’s promise is to provide a right to use the company’s intellectual property as it exists at that point in time (i.e., the license is functional intellectual property) and control has transferred to the client. Income is recognized over time if the nature of the company’s promise is to provide a right to access the company’s intellectual property throughout the license period (i.e., the license is symbolic intellectual property), such as a trademark license. Licensing arrangements include IP partnerships whereby a business partner licenses source code from the company and becomes responsible for developing, maintaining and enhancing the product. The company retains its customers and go-to-market capability and any royalty cost due to the partner is recognized in cost of sales. The IP partner has the rights to market the product and its derivative works under its own brand and remits royalty to the company on those sales, which are recorded |
Accounting Changes
Accounting Changes | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Changes | |
Accounting Changes | NOTE B. ACCOUNTING CHANGES New Standards to be Implemented Simplifying the Accounting for Income Taxes Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Simplifying the Test for Goodwill Impairment Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Financial Instruments–Credit Losses Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Standards Implemented Disclosure Requirements Changes for Fair Value Measurements and Defined Benefit Plans Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Leases Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters million ​ Cloud Computing Implementation Costs Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Reclassification of Certain Tax Effects from AOCI Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Hedge Accounting Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Financial Instruments–Recognition and Measurement Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Revenue Recognition–Contracts with Customers Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters ​ impact to net deferred taxes and retained earnings of $56 million Share-Based Payments Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Recognition | |
Revenue Recognition | NOTE C. REVENUE RECOGNITION Disaggregation of Revenue The following tables provide details of revenue by major products/services offerings and by geography. Revenue by Major Products/Service Offerings ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 Cognitive Applications ​ $ 5,765 ​ $ 5,633 * Cloud & Data Platforms ​ 9,499 ​ 8,603 * Transaction Processing Platforms ​ ​ 7,936 ​ ​ 7,974 * Total Cloud & Cognitive Software ​ $ 23,200 ​ $ 22,209 * Consulting ​ $ 7,993 ​ $ 7,705 ​ Application Management ​ ​ 7,646 ​ ​ 7,852 ​ Global Process Services ​ 995 ​ 1,037 * Total Global Business Services ​ $ 16,634 ​ $ 16,595 * Infrastructure & Cloud Services ​ $ 20,736 ​ $ 22,185 * Technology Support Services ​ 6,625 ​ 6,961 ​ Total Global Technology Services ​ $ 27,361 ​ $ 29,146 * Systems Hardware ​ $ 5,918 ​ $ 6,363 ​ Operating Systems Software ​ ​ 1,686 ​ ​ 1,671 ​ Total Systems ​ $ 7,604 ​ $ 8,034 ​ Global Financing** ​ $ 1,400 ​ $ 1,590 ​ Other ​ $ 948 ​ $ 2,018 * Total Revenue ​ $ 77,147 ​ $ 79,591 ​ * Recast to conform to 2019 presentation. ** Contains lease and loan/working capital financing arrangements which are not subject to the guidance on revenue from contracts with customers. Revenue by Geography ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ For the year ended December 31: 2019 2018 Americas ​ $ 36,274 ​ $ 36,994 Europe/Middle East/Africa ​ 24,443 ​ 25,491 Asia Pacific ​ 16,430 ​ 17,106 Total ​ $ 77,147 ​ $ 79,591 ​ Remaining Performance Obligations The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not ​ include contracts that have an original duration of one year or less. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustments for revenue that has not materialized and adjustments for currency. At December 31, 2019, the aggregate amount of the transaction price allocated to RPO related to customer contracts that are unsatisfied or partially unsatisfied was $126 billion. Approximately 60 percent of the amount was expected to be recognized as revenue in the subsequent two years, approximately 35 percent in the subsequent three Revenue Recognized for Performance Obligations Satisfied (or Partially Satisfied) in Prior Periods For the year ended December 31, 2019, revenue was reduced by $50 million for performance obligations satisfied (or partially satisfied) in previous periods mainly due to changes in estimates on contracts with cost-to-cost measures of progress. Refer to note A, “Significant Accounting Policies,” for additional information on these contracts and estimates of costs to complete. Reconciliation of Contract Balances The following table provides information about notes and accounts receivable trade, contract assets and deferred income balances. ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ At December 31: 2019 2018 Notes and accounts receivable—trade (net of allowances of $299 in 2019 and $309 in 2018) ​ $ 7,870 ​ $ 7,432 Contract assets (1) ​ 492 ​ 470 Deferred income (current) ​ 12,026 ​ 11,165 Deferred income (noncurrent) ​ 3,851 ​ 3,445 (1) Included within prepaid expenses and other current assets in the Consolidated Balance Sheet. The amount of revenue recognized during the year ended December 31, 2019 that was included within the deferred income balance at December 31, 2018 was $9.5 billion and primarily related to services and software. Deferred Costs ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ At December 31: ​ 2019 2018 Capitalized costs to obtain a contract ​ $ 609 ​ $ 717 Deferred costs to fulfill a contract ​ ​ Deferred setup costs ​ 1,939 ​ 2,085 Other deferred fulfillment costs ​ 1,820 ​ 2,173 Total deferred costs (1) ​ $ 4,368 ​ $ 4,975 (1) Of the total deferred costs, $1,896 million was current and $2,472 million was noncurrent at December 31, 2019 and $2,300 million was current and $2,676 million was noncurrent at December 31, 2018. The amount of total deferred costs amortized during the year ended December 31, 2019 was $3,836 million and there were no |
Segments
Segments | 12 Months Ended |
Dec. 31, 2019 | |
Segments | |
Segments | NOTE D. SEGMENTS In the first quarter of 2019, the company made a number of changes to its organizational structure and management system that brought cloud and cognitive software under one organization to more effectively address evolving client needs and to prepare for the acquisition of Red Hat. With these changes, the company revised its reportable segments, but did not impact its Consolidated Financial Statements. The segments represent components of the company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker (the chief executive officer) in determining how to allocate resources and evaluate performance. The segments are determined based on several factors, including client base, homogeneity of products, technology, delivery channels and similar economic characteristics. ​ The company’s segments are as follows: ​ ​ ​ ​ ​ ​ 2018 Segments Changes (+/-) 2019 Segments Cognitive Solutions + Integration Software Cloud & Cognitive Software ​ + Security Services ​ ​ ​ - Divested Select Software* ​ ​ ​ + Red Hat (post closing) ​ ​ ​ ​ ​ ​ ​ Global Business Services - Divested Mortgage Servicing* Global Business Services ​ ​ ​ ​ ​ Technology Services & Cloud Platforms - Security Services Global Technology Services ​ ​ - Integration Software ​ ​ ​ ​ ​ ​ ​ Systems Systems ​ ​ ​ ​ ​ Global Financing Global Financing ​ ​ ​ ​ ​ Other + Divested Mortgage Servicing* Other** ​ ​ + Divested Select Software* ​ ​ * IBM completed the sale of its mortgage servicing business on February 28, 2019, and completed the sales of select software products (for all countries) and marketing and platform commerce offerings (in the U.S.) on June 30, 2019. Refer to note E, “Acquisitions & Divestitures,” for additional information. ** These divested businesses are reported in Other, as it allows for a better representation of the ongoing performance of the reportable segments. Segment revenue and pre-tax income include transactions between the segments that are intended to reflect an arm’s-length, market-based transfer price. Systems that are used by Global Technology Services in outsourcing arrangements are primarily sourced internally from the Systems segment, and software is primarily sourced internally through the Cloud & Cognitive Software and Systems segments. For providing IT services that are used internally, Global Technology Services and Global Business Services recover cost, as well as a reasonable fee, that is intended to reflect the arm’s-length value of providing the services. They enter into arm’s-length loans at prices equivalent to market rates with Global Financing to facilitate the acquisition of equipment and software used in services engagements. All internal transaction prices are reviewed annually, and reset if appropriate. The company utilizes globally integrated support organizations to realize economies of scale and efficient use of resources. As a result, a considerable amount of expense is shared by all of the segments. This shared expense includes sales coverage, certain marketing functions and support functions such as Accounting, Treasury, Procurement, Legal, Human Resources and Billing and Collections. Where practical, shared expenses are allocated based on measurable drivers of expense, e.g., headcount. When a clear and measurable driver cannot be identified, shared expenses are allocated on a financial basis that is consistent with the company’s management system, e.g., advertising expense is allocated based on the gross profits of the segments. A portion of the shared expenses, which are recorded in net income, are not allocated to the segments. These expenses are associated with the elimination of internal transactions and other miscellaneous items. The following tables reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company and have been recast for the prior-year periods due to the company’s January 2019 segment changes. Performance measurement is based on 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. ​ Management System Segment View ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cloud & Global Global ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) Cognitive Business Technology ​ ​ ​ Global Total ​ For the year ended December 31: Software Services Services Systems Financing Segments ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ External revenue $ 23,200 ​ $ 16,634 ​ $ 27,361 ​ $ 7,604 ​ $ 1,400 ​ $ 76,199 ​ Internal revenue ​ ​ 2,827 ​ ​ 278 ​ ​ 1,157 ​ ​ 726 ​ ​ 1,232 ​ ​ 6,220 ​ Total revenue $ 26,027 ​ $ 16,911 ​ $ 28,518 ​ $ 8,330 ​ $ 2,632 ​ $ 82,419 ​ Pre-tax income from continuing operations $ 7,952 ​ $ 1,666 ​ $ 1,645 ​ $ 701 ​ $ 1,055 ​ $ 13,019 ​ Revenue year-to-year change ​ ​ 2.5 % ​ (0.1) % ​ (5.0) % ​ (5.9) % ​ (17.8) % ​ (2.3) % Pre-tax income year-to-year change ​ ​ (10.5) % ​ 2.2 % ​ (7.6) % ​ (22.4) % ​ (22.5) % ​ (10.6) % Pre-tax income margin ​ ​ 30.6 % ​ 9.9 % ​ 5.8 % ​ 8.4 % ​ 40.1 % ​ 15.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ External revenue $ 22,209 * $ 16,595 * $ 29,146 * $ 8,034 ​ $ 1,590 ​ $ 77,573 * Internal revenue ​ ​ 3,190 * ​ 326 ​ ​ 872 * ​ 815 ​ ​ 1,610 ​ ​ 6,813 * Total revenue $ 25,399 * $ 16,921 * $ 30,018 * $ 8,848 ​ $ 3,200 ​ $ 84,386 * Pre-tax income from continuing operations $ 8,882 * $ 1,629 * $ 1,781 * $ 904 ​ $ 1,361 ​ $ 14,557 * Revenue year-to-year change ​ ​ 2.0 %* ​ 2.9 %* ​ 0.5 %* ​ (1.1) % ​ 1.0 % ​ 1.3 %* Pre-tax income year-to-year change ​ ​ 10.1 %* ​ 25.0 %* ​ (32.0) %* ​ (19.9) % ​ 6.5 % ​ 1.1 %* Pre-tax income margin ​ ​ 35.0 %* ​ 9.6 %* ​ 5.9 %* ​ 10.2 % ​ 42.5 % ​ 17.3 %* ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ External revenue $ 21,751 * $ 16,073 * $ 29,213 * $ 8,194 ​ $ 1,696 ​ $ 76,927 * Internal revenue ​ ​ 3,159 * ​ 363 ​ ​ 657 ​ ​ 750 ​ ​ 1,471 ​ ​ 6,401 * Total revenue $ 24,910 * $ 16,436 * $ 29,870 * $ 8,945 ​ $ 3,168 ​ $ 83,329 * Pre-tax income from continuing operations $ 8,068 * $ 1,303 * $ 2,618 * $ 1,128 ​ $ 1,278 ​ $ 14,396 * Revenue year-to-year change ​ ​ 2.0 %* ​ (1.9) %* ​ (3.6) %* ​ 5.7 % ​ (9.3) % ​ (0.9) %* Pre-tax income year-to-year change ​ ​ 7.3 %* ​ (18.4) %* ​ (13.2) %* ​ 21.9 % ​ (22.8) % ​ (2.2) %* Pre-tax income margin ​ ​ 32.4 %* ​ 7.9 %* ​ 8.8 %* ​ 12.6 % ​ 40.3 % ​ 17.3 %* * Recast to conform to 2019 presentation. Reconciliations of IBM as Reported ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ For the year ended December 31: ​ 2019 ​ 2018 ​ 2017 ​ Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total reportable segments ​ $ 82,419 ​ $ 84,386 * $ 83,329 * Other—divested businesses ​ ​ 786 ​ ​ 1,810 * ​ 2,041 * Other revenue ​ ​ 162 ​ ​ 207 ​ ​ 171 ​ Elimination of internal transactions ​ ​ (6,220) ​ ​ (6,813) * ​ (6,401) * Total IBM consolidated revenue ​ $ 77,147 ​ $ 79,591 ​ $ 79,139 ​ * Recast to conform to 2019 presentation. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 Pre-tax income from continuing operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total reportable segments ​ $ 13,019 ​ $ 14,557 * $ 14,396 * Amortization of acquired intangible assets ​ ​ (1,298) ​ ​ (809) ​ ​ (945) ​ Acquisition-related charges ​ ​ (423) ​ ​ (16) ​ ​ (52) ​ Non-operating retirement - related (costs)/income ​ ​ (615) ​ ​ (1,572) ​ ​ (1,341) ​ Elimination of internal transactions ​ ​ (290) ​ ​ (725) * ​ (742) * Other—divested businesses ​ ​ 390 ​ ​ 292 * ​ 468 * Unallocated corporate amounts ​ ​ (617) ​ ​ (385) ​ ​ (385) ​ Total pre-tax income from continuing operations ​ $ 10,166 ​ $ 11,342 ​ $ 11,400 ​ * Recast to conform to 2019 presentation. ​ Immaterial Items Investment in Equity Alliances and Equity Alliances Gains/(Losses) The investments in equity alliances and the resulting gains and (losses) from these investments that are attributable to the segments did not have a material effect on the financial position or the financial results of the segments. Segment Assets and Other Items Cloud & Cognitive Software assets are mainly goodwill, acquired intangible assets and accounts receivable. Global Business Services assets are primarily goodwill and accounts receivable. Global Technology Services assets are primarily goodwill, plant, property and equipment, including the assets associated with the outsourcing business, accounts receivable and acquired intangible assets. Systems assets are primarily goodwill, manufacturing inventory, and plant, property and equipment. Global Financing assets are primarily financing receivables, cash and marketable securities, and fixed assets under operating leases. To ensure the efficient use of the company’s space and equipment, several segments may share leased or owned plant, property and equipment assets. Where assets are shared, landlord ownership of the assets is assigned to one segment and is not allocated to each user segment. This is consistent with the company’s management system and is reflected accordingly in the table below. In those cases, there will not be a precise correlation between segment pre-tax income and segment assets. Depreciation expense and capital expenditures that are reported by each segment also are consistent with the landlord ownership basis of asset assignment. Global Financing amounts for interest income and interest expense reflect the interest income and interest expense associated with the Global Financing business, including the intercompany financing activities discussed on page 33, as well as the income from investment in cash and marketable securities. Management System Segment View ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cloud & Global Global ​ ​ ​ ($ in millions) ​ Cognitive ​ Business ​ Technology ​ ​ ​ Global ​ Total ​ For the year ended December 31: ​ Software ​ Services ​ Services ​ Systems ​ Financing ​ Segments ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ $ 58,453 ​ $ 10,039 ​ $ 22,436 ​ $ 4,590 ​ $ 29,568 ​ $ 125,087 ​ Depreciation/amortization of intangibles** ​ ​ 1,107 ​ ​ 149 ​ ​ 2,601 ​ ​ 350 ​ ​ 186 ​ ​ 4,392 ​ Capital expenditures/investments in intangibles ​ ​ 515 ​ ​ 48 ​ ​ 1,575 ​ ​ 305 ​ ​ 57 ​ ​ 2,501 ​ Interest income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,490 ​ ​ 1,490 ​ Interest expense ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 512 ​ ​ 512 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ $ 28,713 * $ 8,360 * $ 17,624 * $ 4,030 ​ $ 41,320 ​ $ 100,047 * Depreciation/amortization of intangibles** ​ ​ 1,058 * ​ 100 * ​ 2,359 * ​ 315 ​ ​ 229 ​ ​ 4,063 * Capital expenditures/investments in intangibles ​ ​ 469 * ​ 57 * ​ 2,569 * ​ 241 ​ ​ 274 ​ ​ 3,610 * Interest income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,647 ​ ​ 1,647 ​ Interest expense ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 515 ​ ​ 515 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ $ 29,650 * $ 8,647 * $ 17,577 * $ 3,898 ​ $ 41,096 ​ $ 100,868 * Depreciation/amortization of intangibles** ​ ​ 1,185 * ​ 99 * ​ 2,209 * ​ 341 ​ ​ 267 ​ ​ 4,101 * Capital expenditures/investments in intangibles ​ ​ 467 * ​ 46 * ​ 2,193 * ​ 189 ​ ​ 364 ​ ​ 3,259 * Interest income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,527 ​ ​ 1,527 ​ Interest expense ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 381 ​ ​ 381 ​ * Recast to conform to 2019 presentation. ** Segment pre-tax income from continuing operations does not include the amortization of intangible assets. ​ Reconciliations of IBM as Reported ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ At December 31: ​ 2019 ​ 2018 ​ 2017 ​ Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total reportable segments ​ $ 125,087 ​ $ 100,047 * $ 100,868 * Elimination of internal transactions ​ ​ (4,317) ​ ​ (7,143) ​ ​ (6,272) ​ Other—divested businesses ​ ​ 1,894 ​ ​ 2,575 * ​ 2,285 * Unallocated amounts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and marketable securities ​ ​ 7,308 ​ ​ 10,393 ​ ​ 10,162 ​ Notes and accounts receivable ​ ​ 3,298 ​ ​ 1,597 ​ ​ 2,554 ​ Deferred tax assets ​ ​ 4,995 ​ ​ 5,089 ​ ​ 4,746 ​ Plant, other property and equipment ​ ​ 2,334 ​ ​ 2,463 ​ ​ 2,659 ​ Operating right-of-use assets** ​ ​ 3,530 ​ ​ — ​ ​ — ​ Pension assets ​ ​ 6,865 ​ ​ 4,666 ​ ​ 4,643 ​ Other ​ ​ 1,194 ​ ​ 3,695 ​ ​ 3,712 ​ Total IBM consolidated assets ​ $ 152,186 ​ $ 123,382 ​ $ 125,356 ​ * Recast to conform to 2019 presentation. ** Reflects the adoption of the FASB guidance on leases in 2019. Major Clients No single client represented 10 percent or more of the company’s total revenue in 2019, 2018 or 2017. Geographic Information The following provides information for those countries that are 10 percent or more of the specific category Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ For the year ended December 31: ​ 2019 ​ 2018 ​ 2017 United States ​ $ 28,395 ​ $ 29,078 ​ $ 29,759 Japan ​ ​ 8,681 ​ ​ 8,489 ​ ​ 8,239 Other countries ​ ​ 40,071 ​ ​ 42,024 ​ ​ 41,141 Total IBM consolidated revenue ​ $ 77,147 ​ $ 79,591 ​ $ 79,139 * Revenues are attributed to countries based on the location of the client. Plant and Other Property–Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ At December 31: 2019 2018 2017 United States ​ $ 4,485 ​ $ 4,585 ​ $ 4,670 Other countries ​ ​ 5,294 ​ ​ 5,774 ​ ​ 5,985 Total ​ $ 9,778 ​ $ 10,359 ​ $ 10,655 ​ Operating Right-of-Use Assets–Net* ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ At December 31: ​ 2019 ​ 2018 ​ 2017 United States ​ $ 1,386 ​ $ — ​ $ — Japan ​ ​ 659 ​ ​ — ​ ​ — Other countries ​ ​ 2,951 ​ ​ — ​ ​ — Total ​ $ 4,996 ​ $ — ​ $ — * Reflects the adoption of the FASB guidance on leases in 2019. Revenue by Classes of Similar Products or Services The following table presents external revenue for similar classes of products or services within the company’s reportable segments. Client solutions often include IBM software and systems and other suppliers’ products if the client solution requires it. For each of the segments that include services, Software-as-a-Service, consulting, education, training and other product-related services are included as services. For each of these segments, software includes product license charges and ongoing subscriptions. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 Cloud & Cognitive Software* ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Software ​ $ 18,712 ​ $ 17,970 ** $ 17,681 ** Services ​ ​ 4,321 ​ ​ 4,082 ** ​ 3,920 ** Systems ​ ​ 166 ​ ​ 156 ​ ​ 150 ​ Global Business Services* ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Services ​ $ 16,363 ​ $ 16,238 ** $ 15,728 ** Software ​ ​ 156 ​ ​ 151 ** ​ 179 ** Systems ​ ​ 115 ​ ​ 206 ​ ​ 165 ​ Global Technology Services* ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Services ​ $ 20,768 ​ $ 22,222 ** $ 21,913 ** Maintenance ​ ​ 5,183 ​ ​ 5,484 ​ ​ 5,783 ​ Systems ​ ​ 1,072 ​ ​ 1,069 ​ ​ 1,207 ​ Software ​ ​ 338 ​ ​ 371 ** ​ 310 ** Systems ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Servers ​ $ 3,746 ​ $ 3,996 ​ $ 3,993 ​ Storage ​ ​ 1,920 ​ ​ 2,114 ​ ​ 2,243 ​ Software ​ ​ 1,528 ​ ​ 1,499 ** ​ 1,520 ** Services ​ ​ 410 ​ ​ 425 ** ​ 438 ** Global Financing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financing ​ $ 1,120 ​ $ 1,223 ​ $ 1,167 ​ Used equipment sales ​ ​ 281 ​ ​ 366 ​ ​ 530 ​ * Recast to conform to 2019 presentation. ** Reclassified to conform to 2019 presentation. Refer to “Basis of Presentation” in note A, “Significant Accounting Policies,” for additional information. |
Acquisitions & Divestitures
Acquisitions & Divestitures | 12 Months Ended |
Dec. 31, 2019 | |
Acquisitions & Divestitures | |
Acquisitions & Divestitures | NOTE E. ACQUISITIONS & DIVESTITURES Acquisitions The company accounts for business combinations using the acquisition method, and accordingly, the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree are recorded at their acquisition date fair values. Significant judgments and use of estimates are required when performing valuations. For example, the company uses judgments when estimating the fair value of intangible assets using a discounted cash flow model, which involves the use of significant estimates and assumptions with respect to revenue growth rates, the customer attrition rate and discount rates. Purchase price consideration for all acquisitions was paid primarily in cash. All acquisitions, except otherwise stated were for 100 percent of the acquired business and are reported in the Consolidated Statement of Cash Flows, net of acquired cash and cash equivalents. ​ 2019 In 2019, the company completed one acquisition at an aggregate cost of $35 billion. Red Hat– On the acquisition date, Red Hat shareholders received $190 per share in cash, representing a total equity value of approximately $34 billion. The company funded the transaction through a combination of cash on hand and proceeds from debt issuances. Refer to note P, “Borrowings,” for additional details on the financing of the transaction. The following table reflects the breakdown of total consideration: ​ ​ ​ ​ ​ ($ in millions) Total Cash paid for outstanding Red Hat common stock ​ $ 33,769 Cash paid for Red Hat equity awards ​ ​ 24 Cash paid to settle warrants ​ ​ 1,008 Cash consideration ​ $ 34,801 Fair value of stock-based compensation awards attributable to pre-combination services ​ ​ 174 Stock issued to holders of vested performance share units ​ ​ 45 Settlement of pre-existing relationships ​ ​ 60 Total consideration ​ $ 35,080 ​ The following table reflects the purchase price and the resulting purchase price allocation as of December 31, 2019. The net purchase price adjustments recorded in the fourth-quarter 2019 were related to deferred tax assets and liabilities. ​ ​ ​ ​ ​ ​ ​ ​ Amortization Allocated ($ in millions) ​ Life (in Years) ​ Amount Current assets* ​ ​ ​ $ 3,186 Property, plant and equipment/noncurrent assets ​ ​ ​ ​ 939 Intangible assets ​ ​ ​ ​ ​ Goodwill ​ N/A ​ ​ 23,125 Client relationships ​ 10 ​ ​ 7,215 Completed technology ​ 9 ​ ​ 4,571 Trademarks ​ 20 ​ ​ 1,686 Total assets acquired ​ ​ ​ $ 40,722 Current liabilities** ​ ​ ​ ​ 1,378 Noncurrent liabilities ​ ​ ​ ​ 4,265 Total liabilities assumed ​ ​ ​ $ 5,642 Total purchase price ​ ​ ​ $ 35,080 * Includes $2.2 billion of cash and cash equivalents. ** Includes $485 million of short-term debt related to the convertible notes acquired from Red Hat that were recognized at their fair value on the acquisition date, which was fully settled as of October 1, 2019. N/A-Not applicable The goodwill generated is primarily attributable to the assembled workforce of Red Hat and the increased synergies expected to be achieved from the integration of Red Hat products into the company’s various integrated solutions neither of which qualify as an amortizable intangible asset. The overall weighted-average useful life of the identified amortizable intangible assets acquired was 10.9 years. These identified intangible assets will be amortized on a straight-line basis over their useful lives, which approximates the pattern that the assets’ economic benefits are expected to be consumed over time. The following table presents the goodwill allocated to the segments as of December 31, 2019. ​ ​ ​ ​ ​ ($ in billions) Goodwill Segment ​ Allocated Cloud & Cognitive Software ​ $ 18.5 Global Technology Services ​ ​ 3.1 Global Business Services ​ ​ 1.1 Systems ​ ​ 0.4 Total ​ $ 23.1 * It is expected that approximately seven percent of the goodwill will be deductible for tax purposes. The valuation of the assets acquired and liabilities assumed is subject to revision. If additional information becomes available, the company may further revise the purchase price allocation as soon as practical, but no later than one year from Red Hat’s acquisition date. Any such revisions or changes may be material. The primary area of the purchase price allocation that is subject to revision relates to certain tax matters. The company recognized acquisition-related costs, such as legal and advisory fees, of $189 million within SG&A in the Consolidated Income Statement for the year ended December 31, 2019. This included $55 million of amortized costs related to bridge term loan facility fees. In addition, the company recognized compensation expense related to employee retention plans for the period beginning on the acquisition date through December 31, 2019 in the Consolidated Income Statement as follows: ​ ​ ​ ​ ​ ($ in millions) Compensation Line Item ​ Expense Cost ​ $ 20 Selling, general and administrative expense ​ ​ 124 Research, development and engineering expense ​ ​ 86 Total ​ $ 230 * The remaining compensation expense of approximately $185 million associated with the retention plans will be recognized over the remaining requisite service periods, which range from six months to three years from the acquisition date. ​ The acquisition of Red Hat settled a pre-existing vendor/customer relationship in which the company had historically paid in advance for purchases of Red Hat products. Because the terms of the agreements were determined to approximate fair value at the acquisition date, the company did not recognize any gain or loss separately from the acquisition, and $60 million was transferred on the acquisition date as a part of the fair value consideration. The Consolidated Income Statement includes revenue and a pre-tax loss attributable to Red Hat since the date of acquisition for the year ended December 31, 2019 of $945 million and $1,658 million, respectively. The pre-tax loss was primarily driven by the deferred revenue fair value adjustment, retention expenses, intangible asset amortization and deal fees. The pre-tax loss excludes interest expense. The table below presents the supplemental consolidated financial results of the company on an unaudited pro forma basis, as if the acquisition had been consummated on January 1, 2018 through the periods shown below. The primary adjustments reflected in the pro forma results relate to: (1) the debt used to fund the acquisition, (2) changes driven by acquisition accounting, including amortization of intangible assets and the deferred revenue fair value adjustment, (3) employee retention plans, (4) elimination of intercompany transactions between IBM and Red Hat, and (5) the presentation of acquisition-related costs. Acquisition-related costs are non-recurring in nature and the pro forma net income amounts shown below include $374 million of these costs. The unaudited pro forma financial information presented below does not purport to represent the actual results of operations that IBM and Red Hat would have achieved had the companies been combined during the periods presented and is not intended to project the future results of operations that the combined company may achieve after the acquisition. Historical fiscal periods are not aligned under this presentation. The unaudited pro forma financial information does not reflect any potential cost savings, operating efficiencies, long-term debt pay down estimates, suspension of IBM’s share repurchase program, financial synergies or other strategic benefits that may be realized as a result of the acquisition and also does not reflect any restructuring costs to achieve those benefits. ​ (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ For the year ended December 31: ​ 2019 ​ 2018 Revenue ​ $ 79,628 ​ $ 81,360 Net income ​ $ 9,723 ​ $ 5,702 ​ 2018 In 2018, the company completed two acquisitions at an aggregate cost of $49 million. One acquisition was completed by the Cloud & Cognitive Software segment and one acquisition by the Global Business Services segment. These acquisitions did not have a material impact on the Consolidated Financial Statements. 2017 In 2017, the company completed five acquisitions for an aggregate cost of $134 million. ​ The Global Technology Services segment completed acquisitions of three businesses: in the first quarter, Agile 3 Solutions, LLC, a privately held business; in the third quarter, the cloud and managed hosting services business from a large U.S. telecommunications company, and Cloudigo Ltd., a privately held business. The Cloud & Cognitive Software segment completed the acquisition of one privately held business: in the second quarter, XCC Web Content & Custom Apps Extension from TIMETOACT Software & Consulting GmbH. Global Business Services completed the acquisition of one privately held business: in the fourth quarter, Vivant Digital. ​ The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of December 31, 2017. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization ​ Total ($ in millions) ​ Life (in Years) ​ Acquisitions Current assets ​ ​ ​ $ 18 Fixed assets/noncurrent assets ​ ​ ​ ​ 69 Intangible assets ​ ​ ​ ​ ​ Goodwill ​ N/A ​ ​ 16 Completed technology ​ 5 ​ ​ 9 Client relationships ​ 5–7 ​ ​ 64 Patents/trademarks ​ 1–5 ​ ​ 1 Total assets acquired ​ ​ ​ $ 177 Current liabilities ​ ​ ​ ​ (9) Noncurrent liabilities ​ ​ ​ ​ (34) Total liabilities assumed ​ ​ ​ $ (43) Total purchase price ​ ​ ​ $ 134 ​ N/A—Not applicable The overall weighted-average life of the identified amortizable intangible assets acquired was 6.6 years. These identified intangible assets are amortized on a straight-line basis over their useful lives. Goodwill of $13 million and $3 million was assigned to the Global Technology Services segment and the Cloud & Cognitive Software segment, respectively. It was expected that approximately 50 percent of the goodwill will be deductible for tax purposes. ​ Divestitures 2019 Select IBM Software Products – On December 6, 2018, IBM and HCL Technologies Limited (HCL) announced a definitive agreement, in which HCL would acquire select standalone Cloud & Cognitive Software products for $1,775 million, inclusive of $150 million of contingent consideration. The transaction included commercial software, intellectual property and services offerings. In addition, the transaction includes transition services for IT and other services. The transaction closed on June 30, 2019. The company received cash of $812 million at closing and $40 million of the contingent consideration in the third quarter of 2019. The company expects to receive an additional $813 million (net of any additional contingent consideration) within 12 months of closing. The outstanding contingent consideration is expected to be earned within 24 months of the closing. IBM will remit payment to HCL predominantly for servicing certain customer contracts until such contracts are terminated or entitlements are assumed by HCL. Cash of $174 million was remitted in the fourth quarter of 2019 related to deferred revenue that existed prior to closing. IBM expects to remit an additional $325 million of cash to HCL by the end of 2021. The company recognized pre-tax gains on the sale of $556 million at closing and $72 million in the third quarter of 2019. The total pre-tax gain on the transaction for the year ended December 31, 2019 was $626 million. The total gain on sale may change in the future due to contingent consideration or changes in other transaction estimates, however, material changes are not expected. Select IBM Marketing Platform and Commerce Offerings– The company recognized an immaterial pre-tax gain on the sale on June 30, 2019. The amount of the pre-tax gain for the remaining countries will not be determinable until the valuation of the final balance sheet transferred is completed, however, it is not expected to be material. The above two divested businesses are reported in Other–divested businesses. Refer to note D, “Segments” for additional information. IBM Risk Analytics and Regulatory Offerings – IBM Sales Performance Management Offerings– In addition to the above, the company completed three divestitures reported in the Global Financing segment, the Global Business Services segment and the Other–divested businesses. The financial terms related to each of these transactions were not material. The pre-tax gain recognized on the divestitures above was recorded in other (income) and expense in the Consolidated Income Statement. 2018 and 2017 The company had no divestitures in 2018. The company completed five divestitures in 2017, four of which were reported in the Cloud & Cognitive Software segment and one was a research-related divestiture. The financial terms related to these transactions were not material. Overall, the company recognized a pre-tax gain of $31 million related to these transactions in 2017. |
Research, Development & Enginee
Research, Development & Engineering | 12 Months Ended |
Dec. 31, 2019 | |
Research, Development & Engineering | |
Research, Development & Engineering | NOTE F. RESEARCH, DEVELOPMENT & ENGINEERING RD&E expense was $5,989 million in 2019, $5,379 million in 2018 and $5,590 million in 2017. The company incurred total expense of $5,657 million, $5,027 million and $5,170 million in 2019, 2018 and 2017, respectively, for scientific research and the application of scientific advances to the development of new and improved products and their uses, as well as services and their application. Within these amounts, software-related expense was $3,541 million, $3,050 million and $3,145 million in 2019, 2018 and 2017, respectively. Expense for product-related engineering was $334 million, $352 million and $420 million in 2019, 2018 and 2017, respectively. ​ |
Taxes
Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Taxes | |
Taxes | NOTE G. TAXES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 Income from continuing operations before income taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. operations ​ $ (315) ​ $ 627 ​ $ 560 Non-U.S. operations ​ ​ 10,481 ​ ​ 10,715 ​ ​ 10,840 Total income from continuing operations before income taxes ​ $ 10,166 ​ $ 11,342 ​ $ 11,400 ​ The income from continuing operations provision for income taxes by geographic operations was as follows: ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 U.S. operations ​ $ (408) ​ $ 1,199 ​ $ 2,923 Non-U.S. operations ​ ​ 1,139 ​ ​ 1,420 ​ ​ 2,719 Total continuing operations provision for income taxes ​ $ 731 ​ $ 2,619 ​ $ 5,642 ​ The components of the income from continuing operations provision for income taxes by taxing jurisdiction were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 U.S. federal ​ ​ ​ ​ ​ ​ ​ ​ ​ Current ​ $ 331 ​ $ (342) ​ $ 2,388 Deferred ​ ​ (839) ​ ​ 1,377 ​ ​ 77 ​ ​ $ (508) ​ $ 1,035 ​ $ 2,465 U.S. state and local ​ ​ ​ ​ ​ ​ ​ ​ ​ Current ​ $ (85) ​ $ 127 ​ $ 55 Deferred ​ ​ (82) ​ ​ (292) ​ ​ 28 ​ ​ $ (167) ​ $ (165) ​ $ 83 Non-U.S. ​ ​ ​ ​ ​ ​ ​ ​ ​ Current ​ $ 1,829 ​ $ 2,135 ​ $ 3,891 Deferred ​ ​ (423) ​ ​ (386) ​ ​ (797) ​ ​ $ 1,406 ​ $ 1,749 ​ $ 3,094 Total continuing operations provision for income taxes ​ $ 731 ​ $ 2,619 ​ $ 5,642 Discontinued operations provision for/(benefit from) income taxes ​ ​ (1) ​ ​ 2 ​ ​ (3) Provision for social security, real estate, personal property and other taxes ​ ​ 3,304 ​ ​ 3,322 ​ ​ 3,434 Total taxes included in net income ​ $ 4,034 ​ $ 5,943 ​ $ 9,073 ​ A reconciliation of the statutory U.S. federal tax rate to the company’s effective tax rate from continuing operations was as follows: ​ For the year ended December 31: 2019 2018 2017 Statutory rate ​ 21 % 21 % 35 % Enactment of U.S. tax reform ​ 1 ​ 18 ​ 48 ​ Tax differential on foreign income ​ (11) ​ (9) * (26) ​ Intra-entity transfers ​ 0 ​ 0 ​ (5) ​ Domestic incentives ​ (2) ​ (3) * (2) ​ State and local ​ (1) ​ (1) ​ 1 ​ Other ​ (1) ​ (3) ​ (2) ​ Effective rate ​ 7 % 23 % 49 % * Reclassified to conform to 2019 presentation. Percentages rounded for disclosure purposes. The significant components reflected within the tax rate reconciliation labeled “Tax differential on foreign income” include the effects of foreign subsidiaries’ earnings taxed at rates other than the U.S. statutory rate, foreign export incentives, U.S. taxes on foreign income and any net impacts of intercompany transactions. These items also reflect audit settlements or changes in the amount of unrecognized tax benefits associated with each of these items. On December 22, 2017, the U.S. Tax Cuts and Jobs Act was enacted. U.S. tax reform introduced many changes, including lowering the U.S. corporate tax rate to 21 percent, changes in incentives, provisions to prevent U.S. base erosion and significant changes in the taxation of international income, including provisions which allow for the repatriation of foreign earnings without U.S. tax. The enactment of U.S. tax reform resulted in charges to tax expense of $0.1 billion, $2.0 billion and $5.5 billion for the years ended December 31, 2019, 2018 and 2017, respectively. The charge in 2017 was the result of the one-time U.S. transition tax and any foreign tax costs on undistributed foreign earnings, as well as the remeasurement of deferred tax balances to the new U.S. federal tax rate. In 2018, the charge was primarily attributable to the company’s election to include GILTI in measuring deferred taxes, plus refinements to the one-time U.S. transition tax and foreign tax costs on undistributed foreign earnings. The charge in 2019 was related to additional tax reform guidance issued by the U.S. Treasury in January 2019. ​ The 2019 continuing operations effective tax rate decreased 15.9 points from 2018 driven by: a decrease in charges related to U.S. tax reform (16.5 points) and a charge in 2018 from intercompany payments (3.4 points). These benefits were partially offset by a lower benefit year to year from audit activity (4.4 points). The effect of tax law changes on deferred tax assets and liabilities did not have a material impact on the company’s 2019 effective tax rate. Deferred Tax Assets ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ At December 31: 2019 2018 ​ Retirement benefits ​ $ 3,766 ​ $ 3,620 ​ Leases* ​ ​ 1,729 ​ ​ 103 ** Share-based and other compensation ​ ​ 637 ​ ​ 636 ​ Domestic tax loss/credit carryforwards ​ ​ 1,259 ​ ​ 964 ​ Deferred income ​ ​ 600 ​ ​ 674 ​ Foreign tax loss/credit carryforwards ​ ​ 836 ​ ​ 903 ​ Bad debt, inventory and warranty reserves ​ ​ 298 ​ ​ 348 ​ Depreciation ​ ​ 253 ​ ​ 231 ​ Accruals ​ ​ 368 ​ ​ 336 ​ Intangible assets ​ ​ 592 ​ ​ 620 ​ Capitalized research and development ​ ​ 722 ​ ​ — ​ Other ​ ​ 1,438 ​ ​ 1,398 Gross deferred tax assets ​ ​ 12,498 ​ ​ 9,833 ​ Less: valuation allowance ​ ​ 608 ​ ​ 915 ​ Net deferred tax assets ​ $ 11,890 ​ $ 8,918 ​ ​ Deferred Tax Liabilities ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ At December 31: 2019 2018 ​ Goodwill and intangible assets+ ​ $ 3,111 ​ $ 1,200 ​ GILTI deferred taxes ​ ​ 1,908 ​ ​ 1,927 ​ Leases and right-of-use assets* ​ ​ 2,216 ​ ​ 580 ​ Depreciation ​ ​ 728 ​ ​ 719 ​ Retirement benefits ​ ​ 1,002 ​ ​ 455 ​ Software development costs+ ​ ​ 1,075 ​ ​ 292 ​ Deferred transition costs ​ ​ 233 ​ ​ 233 ​ Undistributed foreign earnings ​ ​ 725 ​ ​ 981 ​ Other ​ ​ 940 ​ ​ 1,011 ​ Gross deferred tax liabilities ​ $ 11,938 ​ $ 7,398 ​ * Reflects the adoption of the FASB guidance on leases. ** Previously included in Other. + ​ For financial reporting purposes, the company had foreign and domestic loss carryforwards, the tax effect of which was $504 million, including a tax only capital loss in a subsidiary, as well as foreign and domestic credit carryforwards of $1,591 million. Substantially all of these carryforwards are available for at least two years and the majority are available for 10 years or more. The valuation allowances as of December 31, 2019, 2018 and 2017 were $608 million, $915 million and $1,004 million, respectively. The amounts principally apply to certain foreign and domestic loss carryforwards and credits. In the opinion of management, it is more likely than not that these assets will not be realized. However, to the extent that tax benefits related to these carryforwards are realized in the future, the reduction in the valuation allowance will reduce income tax expense. The amount of unrecognized tax benefits at December 31, 2019 increased by $387 million in 2019 to $7,146 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows: ​ ​ ​ ​ ($ in millions) 2019 2018 2017 Balance at January 1 ​ $ 6,759 ​ $ 7,031 ​ $ 3,740 Additions based on tax positions related to the current year ​ ​ 816 ​ ​ 394 ​ ​ 3,029 Additions for tax positions of prior years ​ ​ 779 ​ ​ 1,201 ​ ​ 803 Reductions for tax positions of prior years (including impacts due to a lapse of statute) ​ ​ (922) ​ ​ (1,686) ​ ​ (367) Settlements ​ ​ (286) ​ ​ (181) ​ ​ (174) Balance at December 31 ​ $ 7,146 ​ $ 6,759 ​ $ 7,031 ​ The additions to unrecognized tax benefits related to the current and prior years were primarily attributable to U.S. federal and state tax matters, as well as non-U.S. tax matters, including transfer pricing, credits and incentives. The settlements and reductions to unrecognized tax benefits for tax positions of prior years were primarily attributable to U.S. federal and state tax matters, non-U.S. audits and impacts due to lapse of statute of limitations. The unrecognized tax benefits at December 31, 2019 of $7,146 million can be reduced by $584 million associated with timing adjustments, U.S. tax credits, potential transfer pricing adjustments and state income taxes. The net amount of $6,562 million, if recognized, would favorably affect the company’s effective tax rate. The net amounts at December 31, 2018 and 2017 were $6,041 million and $6,064 million, respectively. Interest and penalties related to income tax liabilities are included in income tax expense. During the year ended December 31, 2019, the company recognized $13 million in interest expense and penalties; in 2018, the company recognized a net benefit of $14 million in interest expense and penalties; and, in 2017, the company recognized $174 million in interest expense and penalties. The company had $819 million for the payment of interest and penalties accrued at December 31, 2019, and had $680 million accrued at December 31, 2018. ​ Within the next 12 months, the company believes it is reasonably possible that the total amount of unrecognized tax benefits associated with certain positions may be reduced. The potential decrease in the amount of unrecognized tax benefits is associated with the anticipated resolution of various U.S. state and non-U.S. audits. The company estimates that the unrecognized tax benefits at December 31, 2019 could be reduced by $236 million. The company’s U.S. income tax returns for 2013 and 2014 continue to be examined by the IRS with specific focus on certain cross-border transactions in 2013. Although the IRS could propose additional adjustments related to these transactions, the company believes it is adequately reserved on these matters. In the third quarter of 2018, the U.S. Internal Revenue Service commenced its audit of the company’s U.S. tax returns for 2015 and 2016. The company anticipates that this audit will be completed in 2021. With respect to major U.S. state and foreign taxing jurisdictions, the company is generally no longer subject to tax examinations for years prior to 2014. The company is no longer subject to income tax examination of its U.S. federal tax return for years prior to 2013. The open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as it relates to the amount and/or timing of income, deductions and tax credits. Although the outcome of tax audits is always uncertain, the company believes that adequate amounts of tax, interest and penalties have been provided for any adjustments that are expected to result for these years. The company is involved in a number of income tax-related matters in India challenging tax assessments issued by the India Tax Authorities. As of December 31, 2019, the company had recorded $729 million as prepaid income taxes in India. A significant portion of this balance represents cash tax deposits paid over time to protect the company’s right to appeal various income tax assessments made by the India Tax Authorities. Although the outcome of tax audits is always uncertain, the company believes that adequate amounts of tax, interest and penalties have been provided for any adjustments that are expected to result for these years. Within consolidated retained earnings at December 31, 2019 were undistributed after-tax earnings from certain non-U.S. subsidiaries that were not indefinitely reinvested. At December 31, 2019, the company had a deferred tax liability of $725 million for the estimated taxes associated with the repatriation of these earnings. Undistributed earnings of approximately $650 million and other outside basis differences in foreign subsidiaries were indefinitely reinvested in foreign operations. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested earnings and outside basis differences was not practicable. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share | |
Earnings Per Share | NOTE H. EARNINGS PER SHARE The following table presents the computation of basic and diluted earnings per share of common stock. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions except per share amounts) ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 Weighted-average number of shares on which earnings per share calculations are based ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ 887,235,105 ​ ​ 912,048,072 ​ ​ 932,828,295 Add—incremental shares under stock-based compensation plans ​ ​ 4,199,440 ​ ​ 2,786,316 ​ ​ 3,094,373 Add—incremental shares associated with contingently issuable shares ​ ​ 1,378,831 ​ ​ 1,481,326 ​ ​ 1,462,957 Assuming dilution ​ ​ 892,813,376 ​ ​ 916,315,714 ​ ​ 937,385,625 Income from continuing operations ​ $ 9,435 ​ $ 8,723 ​ $ 5,758 Income/(loss) from discontinued operations, net of tax ​ ​ (4) ​ ​ 5 ​ ​ (5) Net income on which basic earnings per share is calculated ​ $ 9,431 ​ $ 8,728 ​ $ 5,753 Income from continuing operations ​ $ 9,435 ​ $ 8,723 ​ $ 5,758 Net income applicable to contingently issuable shares ​ ​ 0 ​ ​ (6) ​ ​ (2) Income from continuing operations on which diluted earnings per share is calculated ​ $ 9,435 ​ $ 8,718 ​ $ 5,756 Income/(loss) from discontinued operations, net of tax, on which basic and diluted earnings per share is calculated ​ ​ (4) ​ ​ 5 ​ ​ (5) Net income on which diluted earnings per share is calculated ​ $ 9,431 ​ $ 8,722 ​ $ 5,752 Earnings/(loss) per share of common stock ​ ​ ​ ​ ​ ​ ​ ​ ​ Assuming dilution ​ ​ ​ ​ ​ ​ ​ ​ ​ Continuing operations ​ $ 10.57 ​ $ 9.51 ​ $ 6.14 Discontinued operations ​ ​ (0.01) ​ ​ 0.01 ​ ​ 0.00 Total ​ $ 10.56 ​ $ 9.52 ​ $ 6.14 Basic ​ ​ ​ ​ ​ ​ ​ ​ ​ Continuing operations ​ $ 10.63 ​ $ 9.56 ​ $ 6.17 Discontinued operations ​ ​ 0.00 ​ ​ 0.01 ​ ​ 0.00 Total ​ $ 10.63 ​ $ 9.57 ​ $ 6.17 ​ ​ Weighted-average stock options to purchase 855,679 common shares in 2019, 576,776 common shares in 2018 and 209,294 common shares in 2017 were outstanding, but were not included in the computation of diluted earnings per share because the exercise price of the options was greater than the average market price of the common shares for the full year, and therefore, the effect would have been antidilutive. |
Financial Assets & Liabilities
Financial Assets & Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Financial Assets & Liabilities | |
Financial Assets & Liabilities | NOTE I. FINANCIAL ASSETS & LIABILITIES Fair Value Measurements Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents the company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at December 31, 2019 and 2018. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Hierarchy ​ 2019 ​ 2018 At December 31: Level Assets (7) Liabilities (8) Assets (7) Liabilities (8) Cash equivalents (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time deposits and certificates of deposit (4) ​ 2 ​ $ 4,392 ​ $ — ​ $ 7,679 ​ $ — Money market funds ​ 1 ​ ​ 427 ​ ​ — ​ ​ 25 ​ ​ — Total cash equivalents ​ ​ ​ $ 4,819 ​ $ — ​ $ 7,704 ​ $ — Equity investments (2) ​ 1 ​ ​ 0 ​ ​ — ​ ​ 0 ​ ​ — Debt securities – current (3)(4) ​ 2 ​ ​ 696 ​ ​ — ​ ​ 618 ​ ​ — Debt securities – noncurrent (2)(4) ​ 2 ​ ​ 65 ​ ​ — ​ ​ — ​ ​ — Derivatives designated as hedging instruments (5) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate contracts ​ 2 ​ ​ 56 ​ ​ — ​ ​ 220 ​ ​ 80 Foreign exchange contracts ​ 2 ​ ​ 175 ​ ​ 635 ​ ​ 483 ​ ​ 239 Derivatives not designated as hedging instruments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange contracts ​ 2 ​ ​ 10 ​ ​ 33 ​ ​ 26 ​ ​ 13 Equity contracts (6) ​ 1,2 ​ ​ 1 ​ ​ 4 ​ ​ 2 ​ ​ 51 Total ​ ​ ​ $ 5,823 ​ $ 673 ​ $ 9,053 ​ $ 383 (1) Included within cash and cash equivalents in the Consolidated Balance Sheet. (2) Included within investments and sundry assets in the Consolidated Balance Sheet. (3) Included within marketable securities in the Consolidated Balance Sheet. (4) Available-for-sale debt securities with carrying values that approximate fair value. The contractual maturities are substantially one year or less. (5) Excludes $7,324 million and $6,261 million at December 31, 2019 and 2018, respectively, of debt designated as hedging instruments that are reported at carrying value. (6) Level 1 includes immaterial amounts related to equity futures contracts. (7) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Balance Sheet at December 31, 2019 were $149 million and $94 million, respectively, and at December 31, 2018 were $385 million and $347 million, respectively. (8) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Balance Sheet at December 31, 2019 were $167 million and $506 million, respectively, and at December 31, 2018 were $177 million and $206 million, respectively. ​ 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 and including short-term finance lease liabilities) 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, except for short-term debt which would be classified as Level 2. Loans and Long-Term Receivables Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At December 31, 2019 and 2018, the difference between the carrying amount and estimated fair value for loans and 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 (including long-term finance lease liabilities) 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 $54,102 million and $35,605 million, and the estimated fair value was $58,431 million and $36,599 million at December 31, 2019 and 2018, respectively. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2019 | |
Inventory | |
Inventory | NOTE J. INVENTORY ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ At December 31: ​ 2019 ​ 2018 Finished goods ​ $ 220 ​ $ 266 Work in process and raw materials ​ 1,399 ​ 1,415 Total ​ $ 1,619 ​ $ 1,682 ​ |
Financing Receivables
Financing Receivables | 12 Months Ended |
Dec. 31, 2019 | |
Financing Receivables | |
Financing Receivables | NOTE K. FINANCING RECEIVABLES Financing receivables primarily consist of client loan and installment payment receivables (loans), investment in sales-type and direct financing leases, and commercial financing receivables. Client loan and installment payment receivables (loans) 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 loans and installment payment financing contracts are priced independently at competitive market rates. Investment in sales-type and direct financing leases relates principally to the company’s Systems products and are for terms ranging generally from two 30 Beginning in the second quarter of 2019 and continuing throughout the year, the company wound down the portion of its commercial financing operations which provides short-term working capital solutions for OEM information technology suppliers, distributors and resellers, which has resulted in a significant reduction of commercial financing receivables. This wind down is consistent with IBM’s capital allocation strategy and high-value focus. IBM Global Financing will continue to provide differentiated end-to-end financing solutions, including commercial financing in support of IBM partner relationships. A summary of the components of the company’s financing receivables is presented as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment in ​ Client Loan and ​ ​ ​ Sales-Type and ​ Commercial ​ Installment Payment ​ ​ ​ ($ in millions) ​ Direct Financing ​ Financing ​ Receivables/ ​ ​ ​ At December 31, 2019: ​ Leases ​ Receivables ​ (Loans) ​ Total Financing receivables, gross ​ $ 6,077 ​ $ 3,836 ​ $ 13,592 ​ $ 23,504 Unearned income ​ (509) ​ (4) ​ (570) ​ (1,083) Recorded investment ​ $ 5,567 ​ $ 3,831 ​ $ 13,022 ​ $ 22,421 Allowance for credit losses ​ (72) ​ (11) ​ (138) ​ (221) Unguaranteed residual value ​ 652 ​ — ​ — ​ 652 Guaranteed residual value ​ 53 ​ — ​ — ​ 53 Total financing receivables, net ​ $ 6,199 ​ $ 3,820 ​ $ 12,884 ​ $ 22,904 Current portion ​ $ 2,334 ​ $ 3,820 ​ $ 8,037 ​ $ 14,192 Noncurrent portion ​ $ 3,865 ​ $ — ​ $ 4,847 ​ $ 8,712 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment in ​ Client Loan and ​ ​ ​ Sales-Type and ​ Commercial ​ Installment Payment ​ ​ ​ ($ in millions) ​ Direct Financing ​ Financing ​ Receivables/ ​ ​ ​ At December 31, 2018: ​ Leases ​ Receivables ​ (Loans) ​ Total Financing receivables, gross ​ $ 6,846 ​ $ 11,889 ​ $ 13,614 ​ $ 32,348 Unearned income ​ (526) ​ (37) ​ (632) ​ (1,195) Recorded investment ​ $ 6,320 ​ $ 11,852 ​ $ 12,981 ​ $ 31,153 Allowance for credit losses ​ (99) ​ (13) ​ (179) ​ (292) Unguaranteed residual value ​ 589 ​ — ​ — ​ 589 Guaranteed residual value ​ 85 ​ — ​ — ​ 85 Total financing receivables, net ​ $ 6,895 ​ $ 11,838 ​ $ 12,802 ​ $ 31,536 Current portion ​ $ 2,834 ​ $ 11,838 ​ $ 7,716 ​ $ 22,388 Noncurrent portion ​ $ 4,061 ​ $ — ​ $ 5,086 ​ $ 9,148 ​ The company utilizes certain of its financing receivables as collateral for nonrecourse borrowings. Financing receivables pledged as collateral for borrowings were $1,062 million and $710 million at December 31, 2019 and 2018, respectively. These borrowings are included in note P, “Borrowings.” The company did not Financing Receivables by Portfolio Segment The following tables present the recorded investment by portfolio segment and by class, excluding commercial financing receivables and other miscellaneous financing receivables at December 31, 2019 and 2018. Commercial financing receivables are excluded from the presentation of financing receivables by portfolio segment, as they are short term in nature and the current estimated risk of loss and resulting impact to the company’s financing results are not material. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ At December 31, 2019: ​ Americas ​ EMEA ​ Asia Pacific ​ Total Recorded investment: ​ ​ ​ ​ Lease receivables ​ $ 3,419 ​ $ 1,186 ​ $ 963 ​ $ 5,567 Loan receivables ​ 6,726 ​ 3,901 ​ 2,395 ​ 13,022 Ending balance ​ $ 10,144 ​ $ 5,087 ​ $ 3,359 ​ $ 18,590 Recorded investment, collectively evaluated for impairment ​ $ 10,032 ​ $ 5,040 ​ $ 3,326 ​ $ 18,399 Recorded investment, individually evaluated for impairment ​ $ 112 ​ $ 47 ​ $ 32 ​ $ 191 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses ​ ​ ​ ​ Beginning balance at January 1, 2019 ​ ​ ​ ​ Lease receivables ​ $ 53 ​ $ 22 ​ $ 24 ​ $ 99 Loan receivables ​ 105 ​ 43 ​ 32 ​ 179 Total ​ $ 158 ​ $ 65 ​ $ 56 ​ $ 279 Write-offs ​ ​ (42) ​ ​ (3) ​ ​ (18) ​ ​ (63) Recoveries ​ 1 ​ 0 ​ 1 ​ 2 Provision ​ 5 ​ (7) ​ (3) ​ (5) Other* ​ (1) ​ 0 ​ (1) ​ (2) Ending balance at December 31, 2019 ​ $ 120 ​ $ 54 ​ $ 36 ​ $ 210 Lease receivables ​ $ 33 ​ $ 23 ​ $ 16 ​ $ 72 Loan receivables ​ $ 88 ​ $ 31 ​ $ 20 ​ $ 138 Related allowance, collectively evaluated for impairment ​ $ 25 ​ $ 11 ​ $ 4 ​ $ 39 Related allowance, individually evaluated for impairment ​ $ 96 ​ $ 43 ​ $ 32 ​ $ 171 * Primarily represents translation adjustments. ​ Write-offs of lease receivables and loan receivables were $16 million and $47 million, respectively, for the year ended December 31, 2019. Provisions for credit losses recorded for lease receivables and loan receivables were a release of $6 million and an addition of $2 million, respectively, for the year ended December 31, 2019. The average recorded investment of impaired leases and loans for Americas, EMEA and Asia Pacific was $138 million, $49 million and $45 million, respectively, for the year ended December 31, 2019. Both interest income recognized, and interest income recognized on a cash basis on impaired leases and loans were immaterial for the year ended December 31, 2019. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ At December 31, 2018: ​ Americas ​ EMEA ​ Asia Pacific ​ Total Recorded investment: ​ ​ ​ ​ Lease receivables ​ $ 3,827 ​ $ 1,341 ​ $ 1,152 ​ $ 6,320 Loan receivables ​ 6,817 ​ 3,675 2,489 ​ 12,981 Ending balance ​ $ 10,644 ​ $ 5,016 ​ $ 3,641 ​ $ 19,301 Recorded investment, collectively evaluated for impairment ​ $ 10,498 ​ $ 4,964 ​ $ 3,590 ​ $ 19,052 Recorded investment, individually evaluated for impairment ​ $ 146 ​ $ 52 ​ $ 51 ​ $ 249 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses ​ ​ ​ ​ Beginning balance at January 1, 2018 ​ ​ ​ ​ Lease receivables ​ $ 63 ​ $ 9 ​ $ 31 ​ $ 103 Loan receivables ​ 108 ​ 52 ​ 51 ​ 211 Total ​ $ 172 ​ $ 61 ​ $ 82 ​ $ 314 Write-offs ​ ​ (10) ​ ​ (2) ​ ​ (23) ​ ​ (35) Recoveries ​ 0 ​ 0 ​ 2 ​ 2 Provision ​ 7 ​ 9 ​ 0 ​ 16 Other* ​ (11) ​ (3) ​ (4) ​ (19) Ending balance at December 31, 2018 ​ $ 158 ​ $ 65 ​ $ 56 ​ $ 279 Lease receivables ​ $ 53 ​ $ 22 ​ $ 24 ​ $ 99 Loan receivables ​ $ 105 ​ $ 43 ​ $ 32 ​ $ 179 Related allowance, collectively evaluated for impairment ​ $ 39 ​ $ 16 ​ $ 5 ​ $ 59 Related allowance, individually evaluated for impairment ​ $ 119 ​ $ 49 ​ $ 51 ​ $ 219 * Primarily represents translation adjustments. Write-offs of lease receivables and loan receivables were $15 million and $20 million, respectively, for the year ended December 31, 2018. Provisions for credit losses recorded for lease receivables and loan receivables were $14 million and $2 million, respectively, for the year ended December 31, 2018. The average recorded investment of impaired leases and loans for Americas, EMEA and Asia Pacific was $138 million, $55 million and $73 million, respectively, for the year ended December 31, 2018. Both interest income recognized, and interest income recognized on a cash basis on impaired leases and loans were immaterial for the year ended December 31, 2018. When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For the company’s policy on determining allowances for credit losses, refer to note A, “Significant Accounting Policies.” ​ Past Due Financing Receivables The company considers a client’s financing receivable balance past due when any installment is aged over 90 days. The following tables present summary information about the recorded investment in lease and loan financing receivables, including recorded investments aged over 90 days and still accruing, billed invoices aged over 90 days and recorded investment not accruing. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded Billed Recorded ​ ​ Total ​ Recorded ​ Investment ​ Invoices ​ Investment ($ in millions) ​ Recorded ​ Investment ​ >90 Days and ​ >90 Days and ​ Not At December 31, 2019: ​ Investment ​ >90 Days (1) ​ Accruing (1) ​ Accruing ​ Accruing (2) Americas ​ $ 3,419 ​ $ 187 ​ $ 147 ​ $ 11 ​ $ 41 EMEA ​ 1,186 ​ 28 ​ 13 ​ 2 ​ 17 Asia Pacific ​ 963 ​ 19 ​ 7 ​ 1 ​ 11 Total lease receivables ​ $ 5,567 ​ $ 234 ​ $ 168 ​ $ 14 ​ $ 69 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ $ 6,726 ​ $ 127 ​ $ 71 ​ $ 11 ​ $ 72 EMEA ​ 3,901 ​ 77 ​ 8 ​ 3 ​ 72 Asia Pacific ​ 2,395 ​ 26 ​ 6 ​ 2 ​ 21 Total loan receivables ​ $ 13,022 ​ $ 231 ​ $ 85 ​ $ 15 ​ $ 166 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 18,590 ​ $ 465 ​ $ 253 ​ $ 29 ​ $ 235 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded Billed Recorded ​ ​ Total ​ Recorded ​ Investment ​ Invoices ​ Investment ($ in millions) ​ Recorded ​ Investment ​ >90 Days and ​ >90 Days and ​ Not At December 31, 2018: ​ Investment ​ >90 Days (1) ​ Accruing (1) ​ Accruing ​ Accruing (3) Americas ​ $ 3,827 ​ $ 310 ​ $ 256 ​ $ 19 ​ $ 57 EMEA ​ 1,341 ​ 25 ​ 9 ​ 1 ​ 16 Asia Pacific ​ 1,152 ​ 49 ​ 27 ​ 3 ​ 24 Total lease receivables ​ $ 6,320 ​ $ 385 ​ $ 292 ​ $ 24 ​ $ 97 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ $ 6,817 ​ $ 259 ​ $ 166 ​ $ 24 ​ $ 99 EMEA ​ 3,675 ​ 98 ​ 25 ​ 3 ​ 73 Asia Pacific ​ 2,489 ​ 40 ​ 11 ​ 1 ​ 31 Total loan receivables ​ $ 12,981 ​ $ 397 ​ $ 202 ​ $ 29 ​ $ 203 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 19,301 ​ $ 782 ​ $ 494 ​ $ 52 ​ $ 300 (1) At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days. (2) Of the recorded investment not accruing, $191 million is individually evaluated for impairment with a related allowance of $171 million. (3) Of the recorded investment not accruing, $249 million is individually evaluated for impairment with a related allowance of $219 million. Credit Quality Indicators The company’s credit quality indicators, which are based on rating agency data, publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Moody’s Investors Service credit ratings as shown below. The company uses information provided by Moody’s, where available, as one of many inputs in its determination of customer credit ratings. The following tables present the recorded investment net of allowance for credit losses for each class of receivables, by credit quality indicator, at December 31, 2019 and 2018. Receivables with a credit quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators do not reflect mitigation actions that the company takes to transfer credit risk to third parties. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Lease Receivables ​ Loan Receivables At December 31, 2019: Americas EMEA Asia Pacific Americas EMEA Asia Pacific Credit rating ​ ​ ​ ​ ​ ​ Aaa—Aa3 ​ $ 465 ​ $ 54 ​ $ 43 ​ $ 1,028 ​ $ 193 ​ $ 189 A1—A3 ​ 750 ​ ​ 181 ​ ​ 454 ​ ​ 1,186 ​ ​ 395 ​ ​ 892 Baa1—Baa3 ​ 955 ​ ​ 409 ​ ​ 147 ​ ​ 1,882 ​ ​ 1,527 ​ ​ 619 Ba1—Ba2 ​ 746 ​ ​ 326 ​ ​ 154 ​ ​ 1,513 ​ ​ 921 ​ ​ 388 Ba3—B1 ​ 215 ​ ​ 140 ​ ​ 101 ​ ​ 471 ​ ​ 564 ​ ​ 205 B2—B3 ​ 242 ​ ​ 50 ​ ​ 47 ​ ​ 522 ​ ​ 253 ​ ​ 72 Caa—D ​ 13 ​ ​ 2 ​ ​ 2 ​ ​ 36 ​ ​ 18 ​ ​ 10 Total ​ $ 3,385 ​ $ 1,162 ​ $ 947 ​ $ 6,638 ​ $ 3,871 ​ $ 2,376 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Lease Receivables ​ Loan Receivables At December 31, 2018: Americas EMEA Asia Pacific Americas EMEA Asia Pacific Credit rating ​ ​ ​ ​ ​ ​ Aaa—Aa3 ​ $ 593 ​ $ 45 ​ $ 85 ​ $ 1,055 ​ $ 125 ​ $ 185 A1—A3 ​ 678 ​ ​ 158 ​ ​ 413 ​ ​ 1,206 ​ ​ 436 ​ ​ 901 Baa1—Baa3 ​ 892 ​ ​ 417 ​ ​ 297 ​ ​ 1,587 ​ ​ 1,148 ​ ​ 648 Ba1—Ba2 ​ 852 ​ ​ 426 ​ ​ 191 ​ ​ 1,516 ​ ​ 1,175 ​ ​ 417 Ba3—B1 ​ 433 ​ ​ 171 ​ ​ 84 ​ ​ 770 ​ ​ 472 ​ ​ 184 B2—B3 ​ 299 ​ ​ 90 ​ ​ 50 ​ ​ 531 ​ ​ 249 ​ ​ 109 Caa—D ​ 26 ​ ​ 10 ​ ​ 7 ​ ​ 47 ​ ​ 28 ​ ​ 15 Total ​ $ 3,774 ​ $ 1,319 ​ $ 1,128 ​ $ 6,712 ​ $ 3,633 ​ $ 2,457 ​ Troubled Debt Restructurings The company did not |
Property, Plant & Equipment
Property, Plant & Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant & Equipment | |
Property, Plant & Equipment | NOTE L. PROPERTY, PLANT & EQUIPMENT ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ At December 31: ​ 2019 ​ 2018 Land and land improvements ​ $ 365 ​ $ 448 Buildings and building and leasehold improvements ​ ​ 9,364 ​ ​ 9,640 Information technology equipment ​ ​ 18,054 ​ ​ 17,468 Production, engineering, office and other equipment ​ ​ 3,721 ​ ​ 4,081 Plant and other property—gross ​ ​ 31,504 ​ ​ 31,636 Less: Accumulated depreciation ​ ​ 21,726 ​ ​ 21,276 Plant and other property—net ​ ​ 9,778 ​ ​ 10,359 Rental machines ​ ​ 523 ​ ​ 824 Less: Accumulated depreciation ​ ​ 292 ​ ​ 392 Rental machines—net ​ ​ 232 ​ ​ 433 Total—net ​ $ 10,010 ​ $ 10,792 ​ |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Leases | NOTE M. LEASES Accounting for Leases as a Lessee The following tables presents the various components of lease costs: ​ ​ ​ ​ ​ ($ in millions) ​ ​ For the year ended December 31: 2019 Finance lease cost ​ $ 30 Operating lease cost ​ 1,645 Short-term lease cost ​ 38 Variable lease cost ​ 534 Sublease income ​ (24) Total lease cost ​ $ 2,223 ​ The company recorded net gains on sale and leaseback transactions of $41 million for the year ended December 31, 2019. ​ The following table presents supplemental information relating to the cash flows arising from lease transactions. Cash payments related to variable lease costs and short-term leases are not included in the measurement of operating and finance lease liabilities, and, as such, are excluded from the amounts below. ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ For the year ended December 31: 2019 ​ Cash paid for amounts included in the measurement of lease liabilities ​ ​ Operating cash outflows from finance leases ​ $ 8 ​ Financing cash outflows from finance leases ​ ​ 22 ​ Operating cash outflows from operating leases ​ ​ 1,541 ​ ROU assets obtained in exchange for new finance lease liabilities ​ ​ 209 * ROU assets obtained in exchange for new operating lease liabilities ​ ​ 6,481 * * Includes opening balance additions as a result of the adoption of the new lease guidance effective January 1, 2019. The post adoption addition of leases for the year ended December 31, 2019 was $1,679 million for operating leases and immaterial for finance leases. The following table presents the weighted-average lease term and discount rate for finance and operating leases. ​ ​ ​ ​ ​ At December 31: 2019 ​ Finance leases ​ ​ ​ Weighted-average remaining lease term ​ 4.8 yrs. Weighted-average discount rate 1.62 % Operating leases ​ ​ ​ Weighted-average remaining lease term 5.4 yrs. Weighted-average discount rate 3.03 % ​ The following table presents a maturity analysis of expected undiscounted cash flows for operating and finance leases on an annual basis for the next five years and thereafter. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Imputed ​ ​ ($ in millions) ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ 2024 ​ Thereafter ​ Interest* ​ Total** Finance leases ​ $ 62 ​ $ 59 ​ $ 48 ​ $ 31 ​ $ 12 ​ $ 46 ​ $ (54) ​ $ 204 Operating leases ​ ​ 1,486 ​ ​ 1,198 ​ ​ 928 ​ ​ 673 ​ ​ 514 ​ ​ 806 ​ ​ (346) ​ ​ 5,259 * Imputed interest represents the difference between undiscounted cash flows and discounted cash flows. ** The company entered into lease agreements for certain facilities and equipment with payments totaling approximately $181 million that have not yet commenced as of December 31, 2019, and therefore are not included in this table. ​ At December 31, 2019, the total amount of finance leases recognized in the Consolidated Balance Sheet for ROU assets in property, plant and equipment was $187 million and lease liabilities in short-term debt and long-term debt was $52 million and $151 million, respectively. Prior to the adoption of the new lease guidance on January 1, 2019, ROU assets and lease liabilities for operating leases were not recognized in the Consolidated Balance Sheet. The company elected the practical expedient to not provide comparable presentation in the Consolidated Balance Sheet for periods prior to adoption. Rental expense, including amounts charged to inventory and fixed assets, and excluding amounts previously reserved, were $1,944 million and $1,821 million for the years ended December 31, 2018 and 2017, respectively. The following table, which was included in the company’s 2018 Annual Report, depicts gross minimum rental commitments under noncancelable leases, amounts related to vacant space associated with workforce transformation, sublease income commitments and capital lease commitments. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beyond ($ in millions) ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ 2023 Operating lease commitments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross minimum rental commitments (including vacant space below) ​ $ 1,581 ​ $ 1,233 ​ $ 914 ​ $ 640 ​ $ 445 ​ $ 815 Vacant space ​ ​ 29 ​ ​ 23 ​ ​ 14 ​ ​ 9 ​ ​ 5 ​ ​ 8 Sublease income commitments ​ ​ 11 ​ ​ 7 ​ ​ 5 ​ ​ 4 ​ ​ 4 ​ ​ 2 Capital lease commitments ​ ​ 3 ​ ​ 3 ​ ​ 3 ​ ​ 3 ​ ​ 2 ​ ​ 28 ​ The difference between the company’s total lease commitments as reported at December 31, 2018 compared to the January 1, 2019 ROU asset balance in the Consolidated Balance Sheet is primarily due to the required use of a discount factor (imputed interest) under the new lease guidance and certain amounts that are not included in the ROU assets under the new lease guidance (e.g. tenant incentives and vacant space). Accounting for Leases as a Lessor The following table presents amounts included in the Consolidated Income Statement related to lessor activity: ​ ​ ​ ​ ​ ($ in millions) ​ ​ For the year ended December 31: 2019 Lease income–sales-type and direct financing leases ​ ​ ​ Sales-type lease selling price ​ $ 1,509 Less: Carrying value of underlying assets excluding unguaranteed residual value ​ 591 Gross profit ​ 918 Interest income on lease receivables ​ 303 Total sales-type and direct financing lease income ​ ​ 1,221 Lease income–operating leases ​ 324 Variable lease income ​ 56 Total lease income ​ $ 1,601 ​ ​ Sales-Type and Direct Financing Leases At December 31, 2019, the unguaranteed residual value of sales-type and direct financing leases was $652 million. For further information on the company’s net investment in leases, including guaranteed and unguaranteed residual values, refer to note K, “Financing Receivables.” For the years ended December 31, 2019 and 2018, impairment of residual values was immaterial. The following table presents a maturity analysis of the lease payments due to IBM on sales-type and direct financing leases over the next five years and thereafter, as well as a reconciliation of the undiscounted cash flows to the financing receivables recognized in the Consolidated Balance Sheet at December 31, 2019: ​ ​ ​ ​ ​ ​ ($ in millions) Total ​ 2020 ​ $ 2,632 ​ 2021 ​ 1,921 ​ 2022 ​ 1,053 ​ 2023 ​ 382 ​ 2024 ​ 82 ​ Thereafter ​ 7 ​ Total undiscounted cash flows ​ $ 6,077 ​ Present value of lease payments (recognized as financing receivables) ​ 5,567 * Difference between undiscounted cash flows and discounted cash flows ​ $ (509) ​ * The present value of the lease payments will not equal the financing receivables balances in the Consolidated Balance Sheet, due to certain items including IDCs, allowance for credit losses and residual values, which are included in the financing receivable balance, but are not included in the future lease payments. Operating Leases The following table presents a maturity analysis of the undiscounted lease payments due to IBM on operating leases over the next five years and thereafter, at December 31, 2019: ​ ​ ​ ​ ​ ($ in millions) Total 2020 ​ $ 145 2021 ​ 35 2022 ​ 4 2023 ​ 0 2024 ​ 0 Thereafter ​ — Total undiscounted cash flows ​ $ 184 ​ There were no material impairment losses incurred for equipment provided to clients under an operating lease for the year ended December 31, 2019. At December 31, 2019, the unguaranteed residual value of operating leases was $81 million. ​ |
Intangible Assets Including Goo
Intangible Assets Including Goodwill | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets Including Goodwill | |
Intangible Assets Including Goodwill | NOTE N. INTANGIBLE ASSETS INCLUDING GOODWILL Intangible Assets The following table presents the company’s intangible asset balances by major asset class. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Gross Carrying ​ Accumulated ​ Net Carrying At December 31, 2019:* ​ Amount ​ Amortization ​ Amount Intangible asset class ​ ​ ​ ​ ​ ​ Capitalized software ​ $ 1,749 ​ $ (743) ​ $ 1,006 Client relationships ​ 8,921 ​ (1,433) ​ 7,488 Completed technology ​ 6,261 ​ (1,400) ​ 4,861 Patents/trademarks ​ 2,301 ​ (445) ​ 1,856 Other** ​ 56 ​ (31) ​ 24 Total ​ $ 19,287 ​ $ (4,052) ​ $ 15,235 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Gross Carrying Accumulated Net Carrying At December 31, 2018: Amount ​ Amortization ​ Amount Intangible asset class ​ ​ ​ ​ ​ ​ ​ ​ ​ Capitalized software ​ $ 1,568 ​ $ (629) ​ $ 939 Client relationships ​ 2,068 ​ (1,123) ​ 945 Completed technology ​ 2,156 ​ (1,296) ​ 860 Patents/trademarks ​ 641 ​ (330) ​ 311 Other** ​ 56 ​ (23) ​ 32 Total ​ $ 6,489 ​ $ (3,402) ​ $ 3,087 * Amounts as of December 31, 2019 include a decrease of $42 million in net intangible asset balances due to foreign currency translation. There was no foreign currency impact on net intangible assets for the year ended December 31, 2018. ** Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. The net carrying amount of intangible assets increased $12,147 million during the year ended December 31, 2019, primarily due to the acquisition of Red Hat and additions resulting from capitalized software, partially offset by intangible asset amortization. Intangible assets of $13,472 million generated from the acquisition of Red Hat were allocated to the segments as follows: ​ ​ ​ ​ ​ ($ in millions) Intangible Assets Segment Allocated* Cloud & Cognitive Software ​ $ 10,729 Global Technology Services ​ 1,819 Global Business Services ​ 617 Systems ​ 306 Total ​ $ 13,472 * For additional information on the acquisition of Red Hat, refer to note E, “Acquisitions & Divestitures.” There was no impairment of intangible assets recorded in 2019 and 2018. The aggregate intangible amortization expense was $1,850 million and $1,353 million for the years ended December 31, 2019 and 2018, respectively. In addition, in 2019 and 2018, respectively, the company retired $946 million and $1,469 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount. In 2019, the company divested select intangible assets with a gross carrying amount of $335 million and $260 million of accumulated amortization. The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet is estimated to be the following at December 31, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capitalized Acquired ​ ($ in millions) ​ Software ​ Intangibles ​ Total 2020 ​ $ 529 ​ $ 1,855 ​ $ 2,384 2021 ​ 352 ​ 1,747 ​ 2,099 2022 ​ ​ 123 ​ 1,684 ​ 1,808 2023 ​ ​ 1 ​ 1,371 ​ 1,372 2024 ​ ​ 0 ​ 1,322 ​ 1,322 Thereafter ​ ​ — ​ ​ 6,250 ​ ​ 6,250 ​ ​ Goodwill The changes in the goodwill balances by reportable segment, for the years ended December 31, 2019 and 2018, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ ​ ​ ​ Balance ​ ​ ​ Purchase ​ ​ ​ Translation ​ Balance ($ in millions) ​ January 1, ​ Goodwill ​ Price ​ ​ ​ and Other ​ December 31, Segment 2019 Additions Adjustments Divestitures Adjustments 2019 Cloud & Cognitive Software ​ $ 24,594 ​ $ 18,399 ​ $ 133 ​ $ (131) ​ $ 41 ​ $ 43,037 Global Business Services ​ ​ 4,711 ​ ​ 1,059 ​ ​ 1 ​ ​ (1) ​ ​ 5 ​ ​ 5,775 Global Technology Services ​ ​ 3,988 ​ ​ 3,119 ​ ​ — ​ ​ — ​ ​ 34 ​ ​ 7,141 Systems ​ ​ 1,847 ​ ​ 525 ​ ​ (110) ​ ​ — ​ ​ 7 ​ ​ 2,270 Other—divested businesses ​ ​ 1,126 ​ ​ — ​ ​ — ​ ​ (1,126) ​ ​ — ​ ​ — Total ​ $ 36,265 ​ $ 23,102 ​ $ 24 ​ $ (1,257) ​ $ 87 ​ $ 58,222 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ ​ ​ ​ Balance ​ ​ ​ Purchase ​ ​ ​ Translation ​ Balance ($ in millions) ​ January 1, ​ Goodwill ​ Price ​ ​ ​ and Other ​ December 31, Segment 2018 Additions Adjustments Divestitures Adjustments 2018 Cloud & Cognitive Software* ​ $ 24,973 ​ $ 9 ​ $ 0 ​ $ (1) ​ $ (388) ​ $ 24,594 Global Business Services* ​ ​ 4,782 ​ ​ 24 ​ ​ (3) ​ ​ — ​ ​ (92) ​ ​ 4,711 Global Technology Services* ​ ​ 4,044 ​ ​ — ​ ​ 0 ​ ​ — ​ ​ (56) ​ ​ 3,988 Systems ​ ​ 1,862 ​ ​ — ​ ​ 0 ​ ​ — ​ ​ (15) ​ ​ 1,847 Other—divested businesses* ​ ​ 1,127 ​ ​ 1 ​ ​ 0 ​ ​ 0 ​ ​ (2) ​ ​ 1,126 Total ​ $ 36,788 ​ $ 34 ​ $ (3) ​ $ (1) ​ $ (553) ​ $ 36,265 * Recast to conform to 2019 presentation. ** Primarily driven by foreign currency translation. Goodwill additions recorded during 2019 were related to the acquisition of Red Hat in the third quarter of 2019. For additional information on this transaction and related purchase price adjustments, refer to note E, “Acquisitions & Divestitures.” There were no goodwill impairment losses recorded during 2019 or 2018 and the company has no accumulated impairment losses. Purchase price adjustments recorded in 2019 and 2018 were related to acquisitions that were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. Net purchase price adjustments recorded in 2019 and 2018 were not material. |
Investments & Sundry Assets
Investments & Sundry Assets | 12 Months Ended |
Dec. 31, 2019 | |
Investments & Sundry Assets | |
Investments & Sundry Assets | NOTE O. INVESTMENTS & SUNDRY ASSETS ​ ​ ​ ($ in millions) At December 31: 2019 2018 Derivatives—noncurrent ​ $ 94 ​ $ 347 Alliance investments ​ ​ ​ ​ ​ ​ Equity method ​ ​ 184 ​ ​ 192 Non-equity method ​ ​ 38 ​ ​ 34 Long-term deposits ​ ​ 242 ​ ​ 268 Other receivables ​ ​ 276 ​ ​ 359 Employee benefit-related ​ ​ 253 ​ ​ 263 Prepaid income taxes ​ ​ 664 ​ ​ 626 Other assets ​ ​ 321 ​ ​ 296 Total ​ $ 2,074 ​ $ 2,386 ​ |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2019 | |
Borrowings | |
Borrowings | NOTE P. BORROWINGS Short-Term Debt ​ ​ ​ ($ in millions) At December 31: 2019 2018 Commercial paper ​ $ 304 ​ $ 2,995 Short-term loans ​ ​ 971 ​ ​ 161 Long-term debt—current maturities ​ ​ 7,522 ​ ​ 7,051 Total ​ $ 8,797 ​ $ 10,207 ​ The weighted-average interest rate for commercial paper at December 31, 2019 and 2018 was 1.6 percent and 2.5 percent, respectively. The weighted-average interest rates for short-term loans were 6.1 percent and 4.3 percent at December 31, 2019 and 2018, respectively. ​ Long-Term Debt Pre-Swap Borrowing ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ At December 31: Maturities 2019 2018* U.S. dollar debt (weighted-average interest rate at December 31, 2019):** ​ ​ ​ ​ ​ ​ ​ ​ 3.0% ​ 2019 ​ $ — ​ $ 5,465 2.3% ​ 2020 ​ ​ 4,326 ​ ​ 4,344 2.5% ​ 2021 ​ ​ 8,498 ​ ​ 5,529 2.6% ​ 2022 ​ ​ 6,289 ​ ​ 3,529 3.3% ​ 2023 ​ ​ 2,388 ​ ​ 2,428 3.3% ​ 2024 ​ ​ 5,045 ​ ​ 2,037 6.7% ​ 2025 ​ ​ 636 ​ ​ 600 3.3% ​ 2026 ​ ​ 4,350 ​ ​ 1,350 4.7% ​ 2027 ​ ​ 969 ​ ​ 969 6.5% ​ 2028 ​ ​ 313 ​ ​ 313 3.5% ​ 2029 ​ ​ 3,250 ​ ​ — 5.9% ​ 2032 ​ ​ 600 ​ ​ 600 8.0% ​ 2038 ​ ​ 83 ​ ​ 83 4.5% ​ 2039 ​ ​ 2,745 ​ ​ 745 4.0% ​ 2042 ​ ​ 1,107 ​ ​ 1,107 7.0% ​ 2045 ​ ​ 27 ​ ​ 27 4.7% ​ 2046 ​ ​ 650 ​ ​ 650 4.3% ​ 2049 ​ ​ 3,000 ​ ​ — 7.1% ​ 2096 ​ ​ 316 ​ ​ 316 ​ ​ ​ ​ $ 44,594 ​ $ 30,091 Other currencies (weighted-average interest rate at December 31, 2019, in parentheses):** ​ ​ ​ ​ ​ ​ ​ ​ Euro (1.3%) ​ 2020–2031 ​ $ 14,306 ​ $ 10,011 Pound sterling (2.7%) ​ 2020–2022 ​ ​ 1,390 ​ ​ 1,338 Japanese yen (0.3%) ​ 2022–2026 ​ ​ 1,339 ​ ​ 1,325 Other (6.1%) ​ 2020–2022 ​ ​ 375 ​ ​ 390 ​ ​ ​ ​ $ 62,003 ​ $ 43,155 Finance lease obligations (2.0%) ​ 2020–2030 ​ ​ 204 ​ ​ 41 ​ ​ ​ ​ $ 62,207 ​ $ 43,196 Less: net unamortized discount ​ ​ ​ ​ 881 ​ ​ 802 Less: net unamortized debt issuance costs ​ ​ ​ ​ 142 ​ ​ 76 Add: fair value adjustment+ ​ ​ ​ ​ 440 ​ ​ 337 ​ ​ ​ ​ $ 61,624 ​ $ 42,656 Less: current maturities ​ ​ ​ ​ 7,522 ​ ​ 7,051 Total ​ ​ ​ $ 54,102 ​ $ 35,605 * Reclassified to conform to 2019 presentation. ** Includes notes, debentures, bank loans and secured borrowings. + The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Balance Sheet as an amount equal to the sum of the debt’s carrying value and a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates. The company’s indenture governing its debt securities and its various credit facilities each contain significant covenants which obligate the company 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 unless 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 indebtedness 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 respect 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. On May 15, 2019, the company issued an aggregate of $20 billion of indebtedness in the following eight tranches: $1.5 billion of 2-year 2-year 3-year 5-year 7-year 10-year 20-year 30-year Additionally, the long-term debt table above includes Euro bonds that were issued in the first quarter of 2019 to partially finance the acquisition of Red Hat upon closing. Post-Swap Borrowing (Long-Term Debt, Including Current Portion) ​ ​ ​ ​ ​ ​ 2019 ​ 2018 ($ in millions) ​ ​ ​ Weighted-Average ​ ​ ​ Weighted-Average ​ For the year ended December 31: Amount Interest Rate Amount Interest Rate ​ Fixed-rate debt ​ $ 52,169 ​ 2.9 % $ 28,770 ​ 2.7 % Floating-rate debt* ​ ​ 9,455 ​ 2.2 % ​ 13,886 ​ 3.0 % Total ​ $ 61,624 ​ ​ ​ $ 42,656 ​ ​ ​ * Includes $2,975 million in 2019 and $7,563 million in 2018 of notional interest rate swaps that effectively convert fixed-rate long-term debt into floating-rate debt. Refer to note T, “Derivative Financial Instruments,” for additional information. Pre-swap annual contractual obligations of long-term debt outstanding at December 31, 2019, are as follows: ​ ($ in millions) Total 2020 ​ $ 7,526 2021 ​ ​ 9,826 2022 ​ ​ 7,175 2023 ​ ​ 5,374 2024 ​ ​ 6,305 Thereafter ​ ​ 26,000 Total ​ $ 62,207 ​ Interest on Debt ​ ​ ​ ​ ($ in millions) For the year ended December 31: 2019 2018 2017 Cost of financing ​ $ 608 ​ $ 757 ​ $ 658 Interest expense ​ ​ 1,344 ​ ​ 723 ​ ​ 615 Interest capitalized ​ ​ 5 ​ ​ 3 ​ ​ 5 Total interest paid and accrued ​ $ 1,957 ​ $ 1,482 ​ $ 1,278 ​ Refer to the related discussion in note D, “Segments,” for total interest expense of the Global Financing segment. Refer to note T, “Derivative Financial Instruments,” for a discussion of the use of foreign currency denominated debt designated as a hedge of net investment, as well as a discussion of the use of currency and interest rate swaps in the company’s debt risk management program. ​ Lines of Credit On July 18, 2019, the company extended the maturity date of its existing $10.25 billion Five-Year Three-Year 364-Day 364-Day 364-Day Three-Year Five-Year 364-Day Three-Year 364-Day Three-Year Five-Year 364-Day Three-Year Interest rates on borrowings under the Credit Agreements will be based on prevailing market interest rates, as further described in the Credit Agreements. The Credit Agreements contain customary representations and warranties, covenants, events of default, and indemnification provisions. The company believes that circumstances that might give rise to breach of these covenants or an event of default, as specified in the Credit Agreements, are remote. The company also has other committed lines of credit in some of the geographies which are not significant in the aggregate. Interest rates and other terms of borrowing under these lines of credit vary from country to country, depending on local market conditions. As of December 31, 2019, there were no borrowings by the company, or its subsidiaries, under these credit facilities. |
Other Liabilities
Other Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Other Liabilities | |
Other Liabilities | NOTE Q. OTHER LIABILITIES ​ ​ ​ ($ in millions) At December 31: 2019 2018 Income tax reserves ​ $ 5,118 ​ $ 4,195 Excess 401(k) Plus Plan ​ ​ 1,521 ​ ​ 1,380 Disability benefits ​ ​ 478 ​ ​ 507 Derivative liabilities ​ ​ 506 ​ ​ 206 Workforce reductions ​ ​ 725 ​ ​ 736 Deferred taxes* ​ ​ 5,230 ​ ​ 3,696 Other taxes payable ​ ​ 42 ​ ​ 40 Environmental accruals ​ ​ 254 ​ ​ 244 Warranty accruals ​ ​ 45 ​ ​ 76 Asset retirement obligations ​ ​ 94 ​ ​ 111 Acquisition related ​ ​ 9 ​ ​ 13 Divestiture related ​ ​ 65 ​ ​ 173 Other ​ ​ 439 ​ ​ 796 Total ​ $ 14,526 ​ $ 12,174 * The increase in the balance at December 31, 2019 was primarily related to the acquisition of Red Hat. In response to changing business needs, the company periodically takes workforce reduction actions to improve productivity, cost competitiveness and to rebalance skills. The noncurrent contractually obligated future payments associated with these activities are reflected in the workforce reductions caption in the previous table. The noncurrent liabilities are workforce accruals related to terminated employees who are no longer working for the company who were granted annual payments to supplement their incomes in certain countries. Depending on the individual country’s legal requirements, these required payments will continue until the former employee begins receiving pension benefits or passes away. The total amounts accrued for workforce reductions, including amounts classified as current in the Consolidated Balance Sheet were $950 million and $941 million at December 31, 2019 and 2018, respectively. The company employs extensive internal environmental protection programs that primarily are preventive in nature. The company also participates in environmental assessments and cleanups at a number of locations, including operating facilities, previously owned facilities and Superfund sites. The company’s maximum exposure for all environmental liabilities cannot be estimated and no amounts have been recorded for non-ARO environmental liabilities that are not probable or estimable. The total amounts accrued for non-ARO environmental liabilities, including amounts classified as current in the Consolidated Balance Sheet, that do not reflect actual or anticipated insurance recoveries, were $270 million and $255 million at December 31, 2019 and 2018, respectively. Estimated environmental costs ​ are not expected to materially affect the consolidated financial position or consolidated results of the company’s operations in future periods. However, estimates of future costs are subject to change due to protracted cleanup periods and changing environmental remediation regulations. As of December 31, 2019, the company was unable to estimate the range of settlement dates and the related probabilities for certain asbestos remediation AROs. These conditional AROs are primarily related to the encapsulated structural fireproofing that is not subject to abatement unless the buildings are demolished and non-encapsulated asbestos that the company would remediate only if it performed major renovations of certain existing buildings. Because these conditional obligations have indeterminate settlement dates, the company could not develop a reasonable estimate of their fair values. The company will continue to assess its ability to estimate fair values at each future reporting date. The related liability will be recognized once sufficient additional information becomes available. The total amounts accrued for ARO liabilities, including amounts classified as current in the Consolidated Balance Sheet were $150 million and $146 million at December 31, 2019 and 2018, respectively. |
Commitments & Contingencies
Commitments & Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments & Contingencies | |
Commitments & Contingencies | NOTE R. COMMITMENTS & CONTINGENCIES Commitments The company’s extended lines of credit to third-party entities include unused amounts of $1.8 billion and $7.4 billion at December 31, 2019 and 2018, respectively. A portion of these amounts was available to the company’s business partners to support their working capital needs. The decrease reflects the company’s wind-down of its OEM IT commercial financing operations. In addition, the company has committed to provide future financing to its clients in connection with client purchase agreements for $6.3 billion and $4.4 billion at December 31, 2019 and 2018, 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 description 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 other party harmless against losses arising from a breach of representations and covenants related to such matters as title to assets sold, certain 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 claim 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 payment, 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 made 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 future payment under these financial guarantees was $20 million and $26 million at December 31, 2019 and 2018, respectively. The fair value of the guarantees recognized in the Consolidated Balance Sheet was immaterial. Changes in the company’s warranty liability for standard warranties, which are included in other accrued expenses and liabilities and other liabilities in the Consolidated Balance Sheet and in deferred income for extended warranty contracts, are presented in the following tables: Standard Warranty Liability ​ ​ ($ in millions) 2019 2018 Balance at January 1 ​ $ 118 ​ $ 152 Current period accruals ​ ​ 111 ​ ​ 121 Accrual adjustments to reflect experience ​ ​ (1) ​ ​ (32) Charges incurred ​ ​ (115) ​ ​ (123) Balance at December 31 ​ $ 113 ​ $ 118 ​ Extended Warranty Liability (Deferred Income) ​ ​ ($ in millions) 2019 2018 Balance at January 1 ​ $ 533 ​ $ 566 Revenue deferred for new extended warranty contracts ​ ​ 198 ​ ​ 220 Amortization of deferred revenue ​ ​ (253) ​ ​ (240) Other* ​ ​ (2) ​ ​ (13) Balance at December 31 ​ $ 477 ​ $ 533 Current portion ​ $ 227 ​ $ 271 Noncurrent portion ​ $ 250 ​ $ 262 * Other consists primarily of foreign currency translation adjustments. 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 associated 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, country-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 that 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 years ended December 31, 2019, 2018 and 2017 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 certain 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 losses, 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 experience 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 to 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 circumstances 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 in 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, interference 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 to 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 SCO appealed. On October 30, 2017, the Tenth Circuit Court of Appeals affirmed the dismissal of all but one of SCO’s remaining claims, which was remanded to the Federal Court in Utah. ​ On March 9, 2017, the Commonwealth of Pennsylvania’s Department of Labor and Industry sued IBM in Pennsylvania state court regarding a 2006 contract for the development of a custom software system to manage the Commonwealth’s unemployment insurance benefits programs. The matter is pending in a Pennsylvania court. In December 2017, CIS General Insurance Limited (CISGIL) sued IBM UK regarding a contract entered into by IBM UK and CISGIL in 2015 to implement and operate an IT insurance platform. The contract was terminated by IBM UK in July 2017 for non-payment by CISGIL. CISGIL alleges wrongful termination, breach of contract and breach of warranty. The matter is pending in the London High Court with trial beginning in January 2020. In May 2015, a putative class action 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, alleging violations of the Employee Retirement Income Security Act (ERISA). Management’s Retirement Plans Committee and three current or former IBM executives are named as defendants. On September 29, 2017, the Court granted the defendants’ motion to dismiss the first amended complaint. On December 10, 2018, the Second Circuit Court of Appeals reversed the District Court order. On January 14, 2020, the Supreme Court of the United States vacated the decision and remanded the case to the Second Circuit. 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 Act (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 investigations, 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 claims 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 all these matters for all applicable years is approximately $925 million. The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability. |
Equity Activity
Equity Activity | 12 Months Ended |
Dec. 31, 2019 | |
Equity Activity | |
Equity Activity | NOTE S. EQUITY ACTIVITY The authorized capital stock of IBM consists of 4,687,500,000 shares of common stock with a $.20 per share par value, of which 887,110,455 shares were outstanding at December 31, 2019, and 150,000,000 shares of preferred stock with a $.01 per share par value, none of which were outstanding at December 31, 2019. Stock Repurchases The Board of Directors authorizes the company to repurchase IBM common stock. The company repurchased 9,979,516 common shares at a cost of $1,331 million, 32,949,233 common shares at a cost of $4,447 million, and 27,237,179 common shares at a cost of $4,323 million in 2019, 2018 and 2017, respectively. These amounts reflect transactions executed through December 31 of each year. Actual cash disbursements for repurchased shares may differ due to varying settlement dates for these transactions. At December 31, 2019, $2,008 million of Board common stock repurchase authorization was available. The company suspended its share repurchase program effective with the close of the Red Hat acquisition on July 9, 2019, in order to focus on reducing debt related to the acquisition. Other Stock Transactions The company issued the following shares of common stock as part of its stock-based compensation plans and employees stock purchase plan: 4,569,917 shares in 2019, 3,998,245 shares in 2018, and 4,311,998 shares in 2017. The company issued 2,041,347 treasury shares in 2019, 424,589 treasury shares in 2018 and 463,083 treasury shares in 2017, as a result of restricted stock unit releases and exercises of stock options by employees of certain acquired businesses and by non-U.S. employees. Also, as part of the company’s stock-based compensation plans, 2,000,704 common shares at a cost of $272 million, 1,173,416 common shares at a cost of $171 million, and 1,226,080 common shares at a cost of $193 million in 2019, 2018 and 2017, respectively, were remitted by employees to the company in order to satisfy minimum statutory tax withholding requirements. These amounts are included in the treasury stock balance in the Consolidated Balance Sheet and the Consolidated Statement of Equity. ​ Reclassifications and Taxes Related to Items of Other Comprehensive Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Before Tax ​ Tax (Expense)/ ​ Net of Tax For the year ended December 31, 2019: Amount Benefit Amount Other comprehensive income/(loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ $ (39) ​ $ 29 ​ $ (10) Net changes related to available-for-sale securities ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains/(losses) arising during the period ​ $ 1 ​ $ 0 ​ $ 1 Reclassification of (gains)/losses to other (income) and expense ​ ​ — ​ ​ — ​ ​ — Total net changes related to available-for-sale securities ​ $ 1 ​ $ 0 ​ $ 1 Unrealized gains/(losses) on cash flow hedges ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains/(losses) arising during the period ​ $ (689) ​ $ 167 ​ $ (522) Reclassification of (gains)/losses to: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of services ​ ​ (68) ​ ​ 17 ​ ​ (50) Cost of sales ​ ​ (51) ​ ​ 15 ​ ​ (37) Cost of financing ​ ​ 89 ​ ​ (22) ​ ​ 67 SG&A expense ​ ​ (53) ​ ​ 14 ​ ​ (39) Other (income) and expense ​ ​ (39) ​ ​ 10 ​ ​ (29) Interest expense ​ ​ 197 ​ ​ (50) ​ ​ 148 Total unrealized gains/(losses) on cash flow hedges ​ $ (614) ​ $ 151 ​ $ (463) Retirement-related benefit plans  ​ ​ ​ ​ ​ ​ ​ ​ ​ Prior service costs/(credits) ​ $ (73) ​ $ 10 ​ $ (63) Net (losses)/gains arising during the period ​ ​ (120) ​ ​ 52 ​ ​ (68) Curtailments and settlements ​ ​ 41 ​ ​ (12) ​ ​ 29 Amortization of prior service (credits)/costs ​ ​ (9) ​ ​ 5 ​ ​ (4) Amortization of net (gains)/losses ​ ​ 1,843 ​ ​ (371) ​ ​ 1,471 Total retirement-related benefit plans ​ $ 1,681 ​ $ (316) ​ $ 1,365 Other comprehensive income/(loss) ​ $ 1,029 ​ $ (136) ​ $ 893 (1) These AOCI components are included in the computation of net periodic pension cost. Refer to note V, “Retirement-Related Benefits,” for additional information. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Before Tax ​ Tax (Expense)/ ​ Net of Tax For the year ended December 31, 2018: Amount Benefit Amount Other comprehensive income/(loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ $ (730) ​ $ (172) ​ $ (902) Net changes related to available-for-sale securities ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains/(losses) arising during the period ​ $ (2) ​ $ 1 ​ $ (1) Reclassification of (gains)/losses to other (income) and expense ​ ​ — ​ ​ — ​ ​ — Total net changes related to available-for-sale securities ​ $ (2) ​ $ 1 ​ $ (1) Unrealized gains/(losses) on cash flow hedges ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains/(losses) arising during the period ​ $ (136) ​ $ 43 ​ $ (93) Reclassification of (gains)/losses to: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of services ​ ​ (30) ​ ​ 8 ​ ​ (22) Cost of sales ​ ​ (8) ​ ​ 3 ​ ​ (5) Cost of financing ​ ​ 75 ​ ​ (19) ​ ​ 56 SG&A expense ​ ​ 0 ​ ​ 0 ​ ​ 0 Other (income) and expense ​ ​ 341 ​ ​ (86) ​ ​ 255 Interest expense ​ ​ 71 ​ ​ (18) ​ ​ 53 Total unrealized gains/(losses) on cash flow hedges ​ $ 313 ​ $ (69) ​ $ 244 Retirement-related benefit plans  ​ ​ ​ ​ ​ ​ ​ ​ ​ Prior service costs/(credits) ​ $ (182) ​ $ 31 ​ $ (151) Net (losses)/gains arising during the period ​ ​ (2,517) ​ ​ 576 ​ ​ (1,941) Curtailments and settlements ​ ​ 11 ​ ​ (2) ​ ​ 9 Amortization of prior service (credits)/costs ​ ​ (73) ​ ​ 5 ​ ​ (68) Amortization of net (gains)/losses ​ ​ 2,966 ​ ​ (632) ​ ​ 2,334 Total retirement-related benefit plans ​ $ 204 ​ $ (21) ​ $ 184 Other comprehensive income/(loss) ​ $ (215) ​ $ (262) ​ $ (476) (1) These AOCI components are included in the computation of net periodic pension cost. Refer to note V, “Retirement-Related Benefits,” for additional information. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Before Tax ​ Tax (Expense)/ ​ Net of Tax For the year ended December 31, 2017: Amount Benefit Amount Other comprehensive income/(loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ $ 152 ​ $ 617 ​ $ 769 Net changes related to available-for-sale securities ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains/(losses) arising during the period ​ $ 1 ​ $ (1) ​ $ 0 Reclassification of (gains)/losses to other (income) and expense ​ ​ 1 ​ ​ 0 ​ ​ 1 Total net changes related to available-for-sale securities ​ $ 2 ​ $ (1) ​ $ 1 Unrealized gains/(losses) on cash flow hedges ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains/(losses) arising during the period ​ $ (58) ​ $ 0 ​ $ (58) Reclassification of (gains)/losses to: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of services ​ ​ (70) ​ ​ 27 ​ ​ (43) Cost of sales ​ ​ (3) ​ ​ 1 ​ ​ (3) Cost of financing ​ ​ 23 ​ ​ (9) ​ ​ 14 SG&A expense ​ ​ (11) ​ ​ 3 ​ ​ (9) Other (income) and expense ​ ​ (324) ​ ​ 124 ​ ​ (199) Interest expense ​ ​ 22 ​ ​ (8) ​ ​ 13 Total unrealized gains/(losses) on cash flow hedges ​ $ (421) ​ $ 137 ​ $ (284) Retirement-related benefit plans  ​ ​ ​ ​ ​ ​ ​ ​ ​ Prior service costs/(credits) ​ $ 0 ​ $ 0 ​ $ 0 Net (losses)/gains arising during the period ​ ​ 682 ​ ​ (201) ​ ​ 481 Curtailments and settlements ​ ​ 19 ​ ​ (5) ​ ​ 14 Amortization of prior service (credits)/costs ​ ​ (88) ​ ​ 29 ​ ​ (58) Amortization of net (gains)/losses ​ ​ 2,889 ​ ​ (1,006) ​ ​ 1,883 Total retirement-related benefit plans ​ $ 3,502 ​ $ (1,182) ​ $ 2,320 Other comprehensive income/(loss) ​ $ 3,235 ​ $ (429) ​ $ 2,806 (1) These AOCI components are included in the computation of net periodic pension cost. Refer to note V, “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 ($ in millions) Hedges Adjustments Plans Securities Income/(Loss) December 31, 2016 ​ $ 319 ​ $ (3,603) ​ $ (26,116) ​ $ 2 ​ $ (29,398) Other comprehensive income before reclassifications ​ ​ (58) ​ ​ 769 ​ ​ 495 ​ ​ 0 ​ ​ 1,206 Amount reclassified from accumulated other comprehensive income ​ ​ (226) ​ ​ 0 ​ ​ 1,825 ​ ​ 1 ​ ​ 1,599 Total change for the period ​ ​ (284) ​ ​ 769 ​ ​ 2,320 ​ ​ 1 ​ ​ 2,806 December 31, 2017 ​ ​ 35 ​ ​ (2,834) ​ ​ (23,796) ​ ​ 3 ​ ​ (26,592) Cumulative effect of a change in accounting principle** ​ ​ 5 ​ ​ 46 ​ ​ (2,471) ​ ​ (2) ​ ​ (2,422) Other comprehensive income before reclassifications ​ ​ (93) ​ ​ (902) ​ ​ (2,092) ​ ​ (1) ​ ​ (3,089) Amount reclassified from accumulated other comprehensive income ​ ​ 337 ​ ​ — ​ ​ 2,276 ​ ​ — ​ ​ 2,612 Total change for the period ​ ​ 244 ​ ​ (902) ​ ​ 184 ​ ​ (1) ​ ​ (476) December 31, 2018 ​ ​ 284 ​ ​ (3,690) ​ ​ (26,083) ​ ​ 0 ​ ​ (29,490) Other comprehensive income before reclassifications ​ ​ (522) ​ ​ (10) ​ ​ (131) ​ ​ 1 ​ ​ (663) Amount reclassified from accumulated other comprehensive income ​ ​ 59 ​ ​ — ​ ​ 1,496 ​ ​ — ​ ​ 1,556 Total change for the period ​ ​ (463) ​ ​ (10) ​ ​ 1,365 ​ ​ 1 ​ ​ 893 December 31, 2019 ​ $ (179) ​ $ (3,700) ​ $ (24,718) ​ $ 0 ​ $ (28,597) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. ** Reflects the adoption of the FASB guidance on stranded tax effects, hedging and financial instruments. Refer to note B, “Accounting Changes,” for additional information. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | NOTE T. 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 financial 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 exchange rate fluctuations. In the Consolidated Balance Sheet, 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 amount recognized in other receivables for the right to reclaim cash collateral was $26 million at December 31, 2019 and no amount was recognized at December 31, 2018. No amount was recognized in accounts payable for the obligation to return cash collateral at December 31, 2019 and $70 million was recognized at December 31, 2018. The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in restricted cash in the Consolidated Balance Sheet. No amount was rehypothecated at December 31, 2019 and 2018. Additionally, if derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated Balance Sheet at December 31, 2019 2018 In its hedging programs, the company may use forward contracts, futures contracts, interest-rate swaps, cross-currency swaps, equity swaps, and options depending upon the underlying exposure. The company is not a party to leveraged derivative instruments. A brief description of the major hedging 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-effective financing can result in interest rate mismatches with the underlying assets. To manage these mismatches and to reduce overall interest cost, the company may use 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 December 31, 2019 and 2018, the total notional amount of the company’s interest-rate swaps was $3.0 billion and $7.6 billion, respectively. The weighted-average remaining maturity of these instruments at December 31, 2019 and 2018 was approximately 2.2 years and 3.5 years, respectively. These interest-rate contracts were accounted for as fair value hedges. The company did not Forecasted Debt Issuance The company is exposed to interest rate volatility on future debt issuances. To manage this risk, the company may use instruments such as forward starting interest-rate swaps to lock in the rate on the interest payments related to the forecasted debt issuances. On May 15, 2019, the company issued an aggregate of $20 billion of indebtedness (see note P, “Borrowings,” for additional information). Following the receipt of the net proceeds from this debt offering, the company terminated $5.5 billion of forward starting interest-rate swaps. These instruments were designated and accounted for as cash flow hedges for a portion of this issuance and hedged exposure to the variability in future cash flows over a maximum of 30 years. These swaps were the only instruments outstanding under this program at December 31, 2018, and there were no instruments outstanding at December 31, 2019. In connection with cash flow hedges of forecasted interest payments related to the company’s borrowings, the company recorded net losses of $192 million and net losses of $35 million (before taxes) at December 31, 2019 and 2018, respectively, in AOCI. The company estimates that $18 million (before taxes) of the deferred net losses on derivatives in AOCI at December 31, 2019 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated 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 December 31, 2019 and 2018, the total notional amount of derivative instruments designated as net investment hedges was $7.9 billion and $6.4 billion, respectively. At December 31, 2019 and 2018, the weighted-average remaining maturity of these instruments was approximately 0.1 years and 0.2 years, respectively. 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 company. In anticipation of these foreign currency cash flows and in view of the 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 hedged its exposure to the variability in future cash flows is four years. At December 31, 2019 and 2018, the total notional amount of forward contracts designated as cash flow hedges of forecasted royalty and cost transactions was $9.7 billion and $9.8 billion, respectively. At December 31, 2019 and 2018, the weighted-average remaining maturity of these instruments was approximately 0.8 years at both periods. ​ At December 31, 2019 and 2018, in connection with cash flow hedges of anticipated royalties and cost transactions, the company recorded net gains of $145 million and net gains of $342 million (before taxes), respectively, in AOCI. The company estimates that $72 million (before taxes) of deferred net gains on derivatives in AOCI at December 31, 2019 will 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 12 years. At December 31, 2019 and 2018, the total notional amount of cross-currency swaps designated as cash flow hedges of foreign currency denominated debt was $8.2 billion and $6.5 billion, respectively. At December 31, 2019 and 2018, in connection with cash flow hedges of foreign currency denominated borrowings, the company recorded net losses of $185 million and net gains of $75 million (before taxes), respectively, in AOCI. The company estimates that $166 million (before taxes) of deferred net gains on derivatives in AOCI at December 31, 2019 will 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 its 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 net 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 the underlying hedged exposures are generally offsetting and are recorded in other (income) and expense in the Consolidated Income Statement. At December 31, 2019 and 2018, the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $7.1 billion and $5.2 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 obligations to employees. Changes in the overall value of these employee compensation obligations are recorded in SG&A expense in the Consolidated Income Statement. Although not designated as accounting hedges, the company 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 Income Statement. At December 31, 2019 and 2018, the total notional amount of derivative instruments in economic hedges of these compensation obligations was $1.3 billion and $1.2 billion, respectively. Cumulative Basis Adjustments for Fair Value Hedges At December 31, 2019 and 2018, the following amounts were recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges: ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ At December 31: 2019 2018 Short-term debt: ​ ​ ​ ​ ​ ​ ​ Carrying amount of the hedged item ​ $ — ​ $ (1,878) ​ Cumulative hedging adjustments included in the carrying amount—assets/(liabilities) ​ ​ — ​ ​ (4) (1) Long-term debt: ​ ​ ​ ​ ​ ​ ​ Carrying amount of the hedged item ​ ​ (3,411) ​ ​ (6,004) ​ Cumulative hedging adjustments included in the carrying amount— assets/(liabilities) ​ ​ (440) (2) ​ (333) (2) (1) Includes ($6) million of hedging adjustments on discontinued hedging relationships at December 31, 2018. (2) Includes ($404) million and ($213) million of hedging adjustments on discontinued hedging relationships at December 31, 2019 and 2018, respectively. The Effect of Derivative Instruments in the Consolidated Income Statement The total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value hedges, cash flow hedges, net investment hedges and derivatives not designated as hedging instruments are recorded and the total effect of hedge activity on these income and expense line items are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gains/(Losses) of ($ in millions) ​ Total ​ Total Hedge Activity For the year ended December 31: 2019 2018 2019 2018 Cost of services ​ $ 32,491 ​ $ 33,687 * $ 68 ​ $ 30 Cost of sales ​ ​ 7,263 ​ ​ 7,835 * ​ 51 ​ ​ 8 Cost of financing ​ ​ 904 ​ ​ 1,132 ​ ​ (42) ​ ​ (6) SG&A expense ​ ​ 20,604 ​ ​ 19,366 ​ ​ 267 ​ ​ (116) Other (income) and expense ​ ​ (968) ​ ​ 1,152 ​ ​ (15) ​ ​ (434) Interest expense ​ ​ 1,344 ​ ​ 723 ​ ​ (93) ​ ​ (6) * Reclassified to conform to 2019 presentation. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain/(Loss) Recognized in Consolidated Income Statement ​ ​ Consolidated ​ Recognized on ​ Attributable to Risk ($ in millions) ​ Income Statement ​ Derivatives ​ Being Hedged (2) For the year ended December 31: Line Item 2019 2018 2017 2019 2018 2017 Derivative instruments in fair value hedges (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate contracts ​ Cost of financing ​ $ 44 ​ $ (61) ​ $ 1 ​ $ (32) ​ $ 97 ​ $ 74 ​ ​ Interest expense ​ ​ 98 ​ ​ (58) ​ ​ 1 ​ ​ (71) ​ ​ 92 ​ ​ 69 Derivative instruments not designated as hedging instruments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange contracts ​ Other (income) and expense ​ ​ (53) ​ ​ (93) ​ ​ 16 ​ ​ N/A ​ ​ N/A ​ ​ N/A Equity contracts ​ SG&A expense ​ ​ 214 ​ ​ (116) ​ ​ 135 ​ ​ N/A ​ ​ N/A ​ ​ N/A Total ​ ​ ​ $ 302 ​ $ (327) ​ $ 153 ​ $ (103) ​ $ 189 ​ $ 144 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain/(Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income ($ in millions) ​ ​ ​ Consolidated ​ Reclassified ​ Amounts Excluded from For the year ended ​ Recognized in OCI ​ Income Statement ​ from AOCI ​ Effectiveness Testing (3) December 31: 2019 2018 2017 Line Item 2019 2018 2017 2019 2018 2017 Derivative instruments in cash flow hedges ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate contracts ​ $ (168) ​ $ (35) ​ $ — ​ Cost of financing ​ $ (3) ​ $  — ​ $ — ​ $ — ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ (8) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Foreign exchange contracts ​ ​ (521) ​ ​ (101) ​ ​ (58) ​ Cost of services ​ ​ 68 ​ ​ 30 ​ ​ 70 ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales ​ ​ 51 ​ ​ 8 ​ ​ 3 ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of financing ​ ​ (86) ​ ​ (75) ​ ​ (23) ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SG&A expense ​ ​ 53 ​ ​ 0 ​ ​ 11 ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (income and expense) ​ ​ 39 ​ ​ (341) ​ ​ 324 ​ ​ — ​ ​ — ​ ​ 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ (190) ​ ​ (71) ​ ​ (22) ​ ​ — ​ ​ — ​ ​ — Instruments in net investment hedges (4) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange contracts ​ ​ (95) ​ ​ 686 ​ ​ (1,607) ​ Cost of financing ​ ​ — ​ ​ — ​ ​ — ​ ​ 35 ​ ​ 33 ​ ​ 23 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ — ​ ​ — ​ ​ — ​ ​ 77 ​ ​ 31 ​ ​ 21 Total ​ $ (784) ​ $ 549 ​ $ (1,665) ​ ​ ​ $ (75) ​ $ (449) ​ $ 363 ​ $ 112 ​ $ 64 ​ $ 45 Gain or loss amounts and presentation for 2017 are not conformed to the new hedge accounting guidance that the company adopted in 2018. Refer to note B, “Accounting Changes,” for further information. (1) 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. (2) The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. (3) The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing in net income each period. (4) Instruments in net investment hedges include derivative and non-derivative instruments. N/A–Not applicable For the years ending December 31, 2019, 2018 and 2017, there were no cash flow hedges not |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | NOTE U. STOCK-BASED COMPENSATION The following table presents total stock-based compensation cost included in income from continuing operations. ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 Cost ​ $ 100 ​ $ 82 ​ $ 91 Selling, general and administrative ​ ​ 453 ​ ​ 361 ​ ​ 384 Research, development and engineering ​ ​ 126 ​ ​ 67 ​ ​ 59 Pre-tax stock-based compensation cost ​ ​ 679 ​ ​ 510 ​ ​ 534 Income tax benefits ​ ​ (155) ​ ​ (116) ​ ​ (131) Net stock-based compensation cost ​ $ 524 ​ $ 393 ​ $ 403 ​ Total unrecognized compensation cost related to non-vested awards at December 31, 2019 was $1.2 billion and is expected to be recognized over a weighted-average period of approximately 2.5 years. Capitalized stock-based compensation cost was not material at December 31, 2019, 2018 and 2017. Incentive Awards Stock-based incentive awards are provided to employees under the terms of the company’s long-term performance plans (the Plans). The Plans are administered by the Executive Compensation and Management Resources Committee of the Board of Directors. Awards available under the Plans principally include restricted stock units, performance share units, stock options or any combination thereof. There were 273 million shares originally authorized to be awarded under the company's existing Plans and 66 million shares granted under previous plans that, if and when those awards were cancelled, could be reissued under the existing Plans. At December 31, 2019, 94 million unused shares were available to be granted. Stock Awards Stock awards are made in the form of Restricted Stock Units (RSUs), including Retention Restricted Stock Units (RRSUs), or Performance Share Units (PSUs). The following table summarizes RSU and PSU activity under the Plans during the years ended December 31, 2019, 2018 and 2017. ​ ​ ​ ​ ​ ​ ​ ​ RSUs ​ PSUs ​ ​ ​ Weighted-Average ​ ​ Weighted-Average ​ ​ Grant Price Number of Units Grant Price Number of Units ​ Balance at January 1, 2017 ​ $ 147 ​ 8,899,092 ​ $ 155 ​ 2,874,758 ​ Awards granted ​ ​ 137 ​ 3,540,949 ​ ​ 137 ​ 824,875 ​ Awards released ​ ​ 153 ​ (3,032,531) ​ ​ 175 ​ (293,236) ​ Awards canceled/forfeited/performance adjusted ​ ​ 147 ​ (852,247) ​ ​ 170 ​ (757,084) * Balance at December 31, 2017 ​ $ 141 ​ 8,555,263 ​ $ 144 ​ 2,649,313 ** Awards granted ​ ​ 121 ​ 4,806,790 ​ ​ 130 ​ 909,140 ​ Awards released ​ ​ 148 ​ (2,579,962) ​ ​ 152 ​ (666,244) ​ Awards canceled/forfeited/performance adjusted ​ ​ 139 ​ (979,387) ​ ​ 147 ​ (472,514) * Balance at December 31, 2018 ​ $ 130 ​ 9,802,704 ​ $ 136 ​ 2,419,695 ** Awards granted ​ ​ 119 ​ 5,650,861 ​ ​ 117 ​ 1,395,534 ​ Awards released ​ ​ 136 ​ (3,145,016) ​ ​ 140 ​ (846,672) ​ Awards canceled/forfeited/performance adjusted ​ ​ 128 ​ (981,921) ​ ​ 131 ​ (112,107) * Balance at December 31, 2019 ​ $ 123 ​ 11,326,628 ​ $ 126 ​ 2,856,450 ** * Includes adjustments of (8,544), (328,120) and (623,245) PSUs for 2019, 2018 and 2017, respectively, because final performance metrics were above or below specified targets. ** Represents the number of shares expected to be issued based on achievement of grant date performance targets. The actual number of shares issued will depend on final performance against specified targets over the vesting period. ​ The total fair value of RSUs and PSUs granted and vested during the years ended December 31, 2019, 2018 and 2017 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 RSUs ​ ​ ​ ​ ​ ​ ​ ​ ​ Granted ​ $ 674 ​ $ 583 ​ $ 484 Vested ​ ​ 428 ​ ​ 381 ​ ​ 463 PSUs ​ ​ ​ ​ ​ ​ ​ ​ ​ Granted ​ $ 164 ​ $ 118 ​ $ 113 Vested ​ ​ 118 ​ ​ 101 ​ ​ 51 ​ As of December 31, 2019, there was $1.1 billion of unrecognized compensation cost related to non-vested RSUs, which will be recognized on a straight-line basis over the remaining weighted-average contractual term of approximately 2.5 years. In connection with vesting and release of RSUs and PSUs, the tax benefits realized by the company for the years ended December 31, 2019, 2018 and 2017 were $131 million, $117 million and $180 million, respectively. Stock Options In 2016, the company made one grant of 1.5 million premium-priced stock options. The option award was granted with a three-year cliff vesting period and a 10-year The company has not forfeited or canceled The company settles employee stock option exercises primarily with newly issued common shares and, occasionally, with treasury shares. Total treasury shares held at December 31, 2019 and 2018 were approximately 1,351 million and 1,341 million shares, respectively. Acquisitions In connection with the acquisition of Red Hat, the company issued and assumed 6.4 million stock awards with a fair value of $845 million. A share conversion ratio of 1.35 was applied to convert Red Hat’s outstanding equity awards for Red Hat’s common stock into IBM stock awards. At December 31, 2019, there were 4.6 million of these stock awards outstanding with a weighted-average grant price of $140 per share. In connection with various other acquisition transactions, there was an additional 0.1 million stock options outstanding at December 31, 2019, as a result of the company’s conversion of stock-based awards previously granted by acquired entities. The weighted-average exercise price of these awards was $43 per share. IBM Employees Stock Purchase Plan The company maintains a non-compensatory Employees Stock Purchase Plan (ESPP). The ESPP enables eligible participants to purchase shares of IBM common stock at a 5 percent discount off the average market price on the day of purchase through payroll deductions of up to 10 percent of eligible compensation. Eligible compensation includes any compensation received by the employee during the year. The ESPP provides for semi-annual offering periods during which shares may be purchased and continues as long as shares remain available under the ESPP, unless terminated earlier at the discretion of the Board of Directors. Individual ESPP participants are restricted from purchasing more than $25,000 of common stock in one calendar year or 1,000 shares in an offering period. Employees purchased approximately 1.0 million shares under the ESPP during each year ended December 31, 2019, 2018 and 2017. Cash dividends declared and paid by the company on its common stock also include cash dividends on the company stock purchased through the ESPP. Dividends are paid on full and fractional shares and can be reinvested. The company stock purchased through the ESPP is considered outstanding and is included in the weighted-average outstanding shares for purposes of computing basic and diluted earnings per share. Approximately 18.8 million shares were available for purchase under the ESPP at December 31, 2019. |
Retirement-Related Benefits
Retirement-Related Benefits | 12 Months Ended |
Dec. 31, 2019 | |
Retirement-Related Benefits | |
Retirement-Related Benefits | NOTE V. RETIREMENT-RELATED BENEFITS Description of Plans IBM sponsors the following retirement-related plans/benefits: ​ Plan Eligibility Funding Benefit Calculation Other U.S. Defined Benefit (DB) Pension Plans Qualified Personal Pension Plan (PPP) U.S. regular, full-time and part-time employees hired prior to January 1, 2005 Company contributes to irrevocable trust fund, held for sole benefit of participants and beneficiaries Vary based on the participant: Five-year , final pay formula based on salary, years of service, mortality and other participant-specific factors Cash balance formula based on percentage of employees’ annual salary, as well as an interest crediting rate Benefit accruals ceased December 31, 2007 Excess Personal Pension Plan (PPP) Unfunded, provides benefits in excess of IRS limitations for qualified plans Supplemental Executive Retention Plan (Retention Plan) Eligible U.S. executives Unfunded Based on average earnings, years of service and age at termination of employment U.S. Defined Contribution (DC) Plans (1) 401(k) Plus U.S. regular, full-time and part-time employees All contributions are made in cash and invested in accordance with participants’ investment elections Dollar-for-dollar match, generally 5 or 6 percent of eligible compensation and automatic matching of 1, 2 or 4 percent of eligible compensation, depending on date of hire Employees generally receive contributions after one year of service Excess 401(k) Plus U.S. employees whose eligible compensation is expected to exceed IRS compensation limit for qualified plans Unfunded, non-qualified amounts deferred are record-keeping (notional) accounts and are not held in trust for the participants, but may be invested in accordance with participants’ investment elections (under the 401 (k) Plus Plan options) Company match and automatic contributions (at the same rate under 401(k) Plus Plan) on eligible compensation deferred and on compensation earned in excess of the IRC pay limit. The percentage varies depending on eligibility and years of service Employees generally receive contributions after one year of service. Amounts deferred into the Plan, including company contributions, are recorded as liabilities U.S. Nonpension Postretirement Benefit Plan Nonpension Postretirement Plan Medical and dental benefits for eligible U.S. retirees and eligible dependents, as well as life insurance for eligible U.S. retirees Company contributes to irrevocable trust fund, held for the sole benefit of participants and beneficiaries Varies based on plan design formulas and eligibility requirements Since January 1, 2004, new hires are not eligible for these benefits Non-U.S. Plans DB or DC Eligible regular employees in certain non-U.S. subsidiaries or branches Company deposits funds under various fiduciary-type arrangements, purchases annuities under group contracts or provides reserves for these plans Based either on years of service and the employee’s compensation (generally during a fixed number of years immediately before retirement) or on annual credits In certain countries, benefit accruals have ceased and/or have been closed to new hires as of various dates Nonpension Postretirement Plan Medical and dental benefits for eligible non-U.S. retirees and eligible dependents, as well as life insurance for certain eligible non-U.S. retirees Primarily unfunded except for a few select countries where the company contributes to irrevocable trust funds, held for the sole benefit of participants and beneficiaries Varies based on plan design formulas and eligibility requirements by country Most non-U.S. retirees are covered by local government sponsored and administered programs ​ (1) Matching and automatic contributions are made once at the end of the year for employees that are employed as of December 15 of the plan year. Contributions may be made for certain types of separations that occur prior to December 15. ​ Plan Financial Information Summary of Financial Information The following table presents a summary of the total retirement-related benefits net periodic (income)/cost recorded in the Consolidated Income Statement. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ U.S. Plans ​ Non-U.S. Plans ​ Total For the year ended December 31: 2019 2018 2017 2019 2018 2017 2019 2018 2017 Defined benefit pension plans $ (153) $ 542 $ 237 $ 955 $ 1,284 $ 1,315 $ 803 $ 1,827 $ 1,552 Retention Plan ​ ​ 11 ​ ​ 17 ​ ​ 16 ​ ​ — ​ ​ — ​ ​ — ​ ​ 11 ​ ​ 17 ​ ​ 16 Total defined benefit pension plans (income)/cost $ (142) $ 559 $ 253 $ 955 $ 1,284 $ 1,315 $ 813 $ 1,843 $ 1,568 IBM 401(k) Plus Plan and non-U.S. plans $ 588 $ 588 $ 616 $ 427 $ 412 $ 404 $ 1,015 $ 1,000 $ 1,020 Excess 401(k) ​ ​ 26 ​ ​ 24 ​ ​ 26 ​ ​ — ​ ​ — ​ ​ — ​ ​ 26 ​ ​ 24 ​ ​ 26 Total defined contribution plans cost $ 613 $ 612 $ 643 $ 427 $ 412 $ 404 $ 1,040 $ 1,024 $ 1,046 Nonpension postretirement benefit plans cost $ 154 $ 147 $ 180 $ 65 $ 51 $ 62 $ 219 $ 198 $ 242 Total retirement-related benefits net periodic cost $ 624 $ 1,319 $ 1,076 $ 1,448 $ 1,747 $ 1,781 $ 2,072 $ 3,066 $ 2,857 ​ The following table presents a summary of the total PBO for defined benefit pension plans, APBO for nonpension postretirement benefit plans, fair value of plan assets and the associated funded status recorded in the Consolidated Balance Sheet. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Benefit Obligations ​ Fair Value of Plan Assets ​ Funded Status* At December 31: 2019 2018 2019 2018 2019 2018 U.S. Plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Overfunded plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Qualified PPP $ 48,471 $ 46,145 $ 51,784 $ 48,213 $ 3,313 $ 2,069 Underfunded plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Excess PPP $ 1,473 $ 1,395 $ — $ — $ (1,473) $ (1,395) Retention Plan ​ ​ 288 ​ ​ 273 ​ ​ — ​ ​ — ​ ​ (288) ​ ​ (273) Nonpension postretirement benefit plan ​ ​ 3,857 ​ ​ 3,912 ​ ​ 3 ​ ​ 29 ​ ​ (3,854) ​ ​ (3,882) Total underfunded U.S. plans $ 5,618 $ 5,579 $ 3 $ 29 $ (5,615) $ (5,550) Non-U.S. Plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Overfunded plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Qualified defined benefit pension plans** $ 18,371 $ 17,379 $ 21,921 $ 19,975 $ 3,550 $ 2,597 Nonpension postretirement benefit plans ​ ​ 19 ​ ​ 0 ​ ​ 21 ​ ​ 0 ​ ​ 2 ​ ​ 0 Total overfunded non-U.S. plans $ 18,390 $ 17,379 $ 21,942 $ 19,975 $ 3,552 $ 2,597 Underfunded plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Qualified defined benefit pension plans** $ 23,222 $ 22,139 $ 18,398 $ 16,783 $ (4,824) $ (5,356) Nonqualified defined benefit pension plans ​ ​ 6,731 ​ ​ 6,252 ​ ​ — ​ ​ — ​ ​ (6,731) ​ ​ (6,252) Nonpension postretirement benefit plans ​ ​ 828 ​ ​ 704 ​ ​ 44 ​ ​ 65 ​ ​ (785) ​ ​ (640) Total underfunded non-U.S. plans $ 30,782 $ 29,095 $ 18,442 $ 16,848 $ (12,340) $ (12,248) Total overfunded plans $ 66,861 $ 63,524 $ 73,726 $ 68,190 $ 6,865 $ 4,666 Total underfunded plans $ 36,399 $ 34,675 $ 18,445 $ 16,877 $ (17,955) $ (17,798) * Funded status is recognized in the Consolidated Balance Statement as follows: Asset amounts as prepaid pension assets; (Liability) amounts as compensation and benefits (current liability) and retirement and nonpension postretirement benefit obligations (noncurrent liability). ** Non-U.S. qualified plans represent plans funded outside of the U.S. Non-U.S. nonqualified plans are unfunded. ​ At December 31, 2019, the company’s qualified defined benefit pension plans worldwide were 102 percent funded compared to the benefit obligations, with the U.S. Qualified PPP 107 percent funded. Overall, including nonqualified plans, the company’s defined benefit pension plans worldwide were 93 percent funded. Defined Benefit Pension and Nonpension Postretirement Benefit Plan Financial Information ​ The following tables through page 129 represent financial information for the company’s retirement-related benefit plans, excluding defined contribution plans. The defined benefit pension plans under U.S. Plans consists of the Qualified PPP, the Excess PPP and the Retention Plan. The defined benefit pension plans and the nonpension postretirement benefit plans under non-U.S. Plans consists of all plans sponsored by the company’s subsidiaries. The nonpension postretirement benefit plan under U.S. Plan consists of only the U.S. Nonpension Postretirement Benefit Plan. The following tables present the components of net periodic (income)/cost of the retirement-related benefit plans recognized in the Consolidated Income Statement, excluding defined contribution plans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined Benefit Pension Plans ($ in millions) ​ U.S. Plans ​ Non-U.S. Plans For the year ended December 31: 2019 2018 2017 2019 2018 2017 Service cost $ — $ — $ — $ 370 $ 413 $ 410 Interest cost 1 ​ ​ 1,882 ​ ​ 1,719 ​ ​ 1,913 ​ ​ 847 ​ ​ 830 ​ ​ 837 Expected return on plan assets 1 ​ ​ (2,599) ​ ​ (2,701) ​ ​ (3,014) ​ ​ (1,588) ​ ​ (1,342) ​ ​ (1,325) Amortization of transition assets ( 1 ​ ​ — ​ ​ — ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ 0 Amortization of prior service costs/(credits) 1 ​ ​ 16 ​ ​ 16 ​ ​ 16 ​ ​ (23) ​ ​ (83) ​ ​ (97) Recognized actuarial losses 1 ​ ​ 559 ​ ​ 1,525 ​ ​ 1,337 ​ ​ 1,249 ​ ​ 1,401 ​ ​ 1,507 Curtailments and settlements ( 1 ​ ​ — ​ ​ — ​ ​ — ​ ​ 41 ​ ​ 11 ​ ​ 19 Multi-employer plans ​ ​ — ​ ​ — ​ ​ — ​ ​ 32 ​ ​ 38 ​ ​ 40 Other costs/(credits) ( 2 ​ ​ — ​ ​ — ​ ​ — ​ ​ 28 ​ ​ 16 ​ ​ (76) Total net periodic (income)/cost $ (142) $ 559 $ 253 $ 955 $ 1,284 $ 1,315 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonpension Postretirement Benefit Plans ($ in millions) ​ U.S. Plan ​ Non-U.S. Plans For the year ended December 31: 2019 2018 2017 2019 2018 2017 Service cost $ 10 $ 13 $ 14 $ 5 $ 5 $ 6 Interest cost 1 ​ ​ 145 ​ ​ 132 ​ ​ 154 ​ ​ 55 ​ ​ 45 ​ ​ 57 Expected return on plan assets 1 ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ (5) ​ ​ (6) ​ ​ (7) Amortization of transition assets ( 1 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 0 ​ ​ 0 Amortization of prior service costs/(credits) 1 ​ ​ (2) ​ ​ (7) ​ ​ (7) ​ ​ 0 ​ ​ 0 ​ ​ 0 Recognized actuarial losses 1 ​ ​ 1 ​ ​ 10 ​ ​ 20 ​ ​ 10 ​ ​ 6 ​ ​ 7 Curtailments and settlements ( 1 ​ ​ — ​ ​ — ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ 0 Total net periodic cost $ 154 $ 147 $ 180 $ 65 $ 51 $ 62 (1) These components of net periodic pension costs are included in other (income) and expense in the Consolidated Income Statement. (2) The non-U.S. defined benefit pension plans amount in 2017 includes a gain of $91 million related to IBM UK pension litigation. For the U.S. Qualified PPP, beginning in 2019, substantially all participants are considered inactive. The amortization period of unrecognized actuarial losses was changed to the average remaining life expectancy of inactive plan participants, which was 18 years as of December 31, 2018. As a result, there was a reduction to 2019 amortization expense of approximately $900 million. There was no impact to the funded status, retiree benefit payments or funding requirements. ​ The following table presents the changes in benefit obligations and plan assets of the company’s retirement-related benefit plans, excluding DC plans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined Benefit Pension Plans ​ Nonpension Postretirement Benefit Plans ​ ​ U.S. Plans ​ Non-U.S. Plans ​ U.S. Plan ​ Non-U.S. Plans ($ in millions) 2019 2018 2019 2018 2019 2018 2019 2018 Change in benefit obligation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Benefit obligation at January 1 $ 47,812 $ 52,444 $ 45,770 $ 49,111 $ 3,912 $ 4,184 $ 705 $ 732 Service cost ​ ​ — ​ ​ — ​ ​ 370 ​ ​ 413 ​ ​ 10 ​ ​ 13 ​ ​ 5 ​ ​ 5 Interest cost ​ ​ 1,882 ​ ​ 1,719 ​ ​ 847 ​ ​ 830 ​ ​ 145 ​ ​ 132 ​ ​ 55 ​ ​ 45 Plan participants’ contributions ​ ​ — ​ ​ — ​ ​ 23 ​ ​ 25 ​ ​ 57 ​ ​ 59 ​ ​ — ​ ​ — Acquisitions/divestitures, net ​ ​ — ​ ​ — ​ ​ (32) ​ ​ (27) ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ 0 Actuarial losses/(gains) ​ ​ 4,040 ​ ​ (2,743) ​ ​ 3,467 ​ ​ (240) ​ ​ 148 ​ ​ (71) ​ ​ 141 ​ ​ 43 Benefits paid from trust ​ ​ (3,378) ​ ​ (3,484) ​ ​ (1,902) ​ ​ (1,976) ​ ​ (389) ​ ​ (383) ​ ​ (6) ​ ​ (7) Direct benefit payments ​ ​ (124) ​ ​ (124) ​ ​ (403) ​ ​ (390) ​ ​ (6) ​ ​ (22) ​ ​ (27) ​ ​ (31) Foreign exchange impact ​ ​ — ​ ​ — ​ ​ 134 ​ ​ (2,012) ​ ​ — ​ ​ — ​ ​ (1) ​ ​ (86) Amendments/curtailments/settlements/other ​ ​ — ​ ​ — ​ ​ 50 ​ ​ 34 ​ ​ (21) ​ ​ — ​ ​ (23) ​ ​ 3 Benefit obligation at December 31 $ 50,232 $ 47,812 $ 48,324 $ 45,770 $ 3,857 $ 3,912 $ 848 $ 705 Change in plan assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of plan assets at January 1 $ 48,213 $ 52,694 $ 36,758 $ 40,798 $ 29 $ 18 $ 65 $ 70 Actual return on plan assets ​ ​ 6,949 ​ ​ (997) ​ ​ 4,896 ​ ​ (610) ​ ​ 1 ​ ​ 1 ​ ​ 7 ​ ​ 12 Employer contributions ​ ​ — ​ ​ — ​ ​ 243 ​ ​ 325 ​ ​ 304 ​ ​ 335 ​ ​ — ​ ​ 0 Acquisitions/divestitures, net ​ ​ — ​ ​ — ​ ​ (25) ​ ​ (22) ​ ​ — ​ ​ 0 ​ ​ — ​ ​ 0 Plan participants’ contributions ​ ​ — ​ ​ — ​ ​ 23 ​ ​ 25 ​ ​ 57 ​ ​ 59 ​ ​ — ​ ​ 0 Benefits paid from trust ​ ​ (3,378) ​ ​ (3,484) ​ ​ (1,902) ​ ​ (1,976) ​ ​ (389) ​ ​ (383) ​ ​ (6) ​ ​ (7) Foreign exchange impact ​ ​ — ​ ​ — ​ ​ 333 ​ ​ (1,754) ​ ​ — ​ ​ — ​ ​ (1) ​ ​ (10) Amendments/curtailments/settlements/other ​ ​ — ​ ​ — ​ ​ (7) ​ ​ (28) ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ 0 Fair value of plan assets at December 31 $ 51,784 $ 48,213 $ 40,319 $ 36,758 $ 3 $ 29 $ 65 $ 65 Funded status at December 31 $ 1,551 $ 401 $ (8,005) $ (9,012) $ (3,854) $ (3,882) $ (783) $ (640) Accumulated benefit obligation* $ 50,232 $ 47,812 $ 47,645 $ 45,161 ​ ​ N/A ​ ​ N/A ​ ​ N/A ​ ​ N/A * Represents the benefit obligation assuming no future participant compensation increases. N/A–Not applicable ​ The following table presents the net funded status recognized in the Consolidated Balance Sheet. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined Benefit Pension Plans ​ Nonpension Postretirement Benefit Plans ($ in millions) ​ U.S. Plans ​ Non-U.S. Plans ​ U.S. Plan ​ Non-U.S. Plans At December 31: 2019 2018 2019 2018 2019 2018 2019 2018 Prepaid pension assets $ 3,313 $ 2,069 $ 3,550 $ 2,597 $ 0 $ 0 $ 2 $ 0 Current liabilities—compensation and benefits ​ ​ (120) ​ ​ (120) ​ ​ (313) ​ ​ (302) ​ ​ (346) ​ ​ (340) ​ ​ (33) ​ ​ (36) Noncurrent liabilities—retirement and nonpension postretirement benefit obligations ​ ​ (1,641) ​ ​ (1,548) ​ ​ (11,242) ​ ​ (11,306) ​ ​ (3,507) ​ ​ (3,542) ​ ​ (752) ​ ​ (605) Funded status—net $ 1,551 $ 401 $ (8,005) $ (9,012) $ (3,854) $ (3,882) $ (783) $ (640) ​ The following table presents the pre-tax net loss and prior service costs/(credits) and transition (assets)/liabilities recognized in OCI and the changes in the pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in AOCI for the retirement-related benefit plans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined Benefit Pension Plans ​ Nonpension Postretirement Benefit Plans ​ ​ U.S. Plans ​ Non-U.S. Plans ​ U.S. Plan ​ Non-U.S. Plans ($ in millions) 2019 2018 2019 2018 2019 2018 2019 2018 Net loss at January 1 $ 17,476 $ 18,045 $ 18,452 $ 18,275 $ 405 $ 486 $ 172 $ 145 Current period loss/(gain) ​ ​ (309) ​ ​ 956 ​ ​ 109 ​ ​ 1,590 ​ ​ 147 ​ ​ (72) ​ ​ 125 ​ ​ 33 Curtailments and settlements ​ ​ — ​ ​ — ​ ​ (41) ​ ​ (11) ​ ​ — ​ ​ — ​ ​ 0 ​ ​ 0 Amortization of net loss included in net periodic (income)/cost ​ ​ (559) ​ ​ (1,525) ​ ​ (1,249) ​ ​ (1,401) ​ ​ (1) ​ ​ (10) ​ ​ (10) ​ ​ (6) Net loss at December 31 $ 16,608 $ 17,476 $ 17,272 $ 18,452 $ 551 $ 405 $ 287 $ 172 Prior service costs/(credits) at January 1 $ 57 $ 74 $ 172 $ (90) $ 52 $ 45 $ 4 $ 3 Current period prior service costs/(credits) ​ ​ — ​ ​ — ​ ​ 102 ​ ​ 181 ​ ​ (21) ​ ​ — ​ ​ (8) ​ ​ 1 Curtailments, settlements and other ​ ​ — ​ ​ — ​ ​ — ​ ​ 0 ​ ​ — ​ ​ — ​ ​ — ​ ​ 0 Amortization of prior service (costs)/credits included in net periodic (income)/cost ​ ​ (16) ​ ​ (16) ​ ​ 23 ​ ​ 83 ​ ​ 2 ​ ​ 7 ​ ​ 0 ​ ​ 0 Prior service costs/(credits) at December 31 $ 41 $ 57 $ 297 $ 172 $ 34 $ 52 $ (4) $ 4 Transition (assets)/liabilities at January 1 $ — $ — $ 0 $ 0 $ — $ — $ 0 $ 0 Amortization of transition assets/(liabilities) included in net periodic (income)/cost ​ ​ — ​ ​ — ​ ​ 0 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 0 Transition (assets)/liabilities at December 31 $ — $ — $ 0 $ 0 $ — $ — $ 0 $ 0 Total loss recognized in accumulated other comprehensive income/(loss) $ 16,648 $ 17,533 $ 17,569 $ 18,624 $ 585 $ 457 $ 283 $ 176 * Refer to note S, “Equity Activity,” for the total change in AOCI, and the Consolidated Statement of Comprehensive Income for the components of net periodic (income)/cost, including the related tax effects, recognized in OCI for the retirement-related benefit plans. ​ On October 26, 2018, the High Court in London in the case of Lloyds Pension Group Trustees Limited v Lloyds Bank PLC, confirmed that the UK defined benefit pension plans are required to equalize pension benefits to take into account unequal guaranteed minimum pension benefits accrued during the period 1990-1997. As a result of this court decision, IBM recorded an increase of $125 million to the PBO for the IBM UK defined benefit plan, which represents approximately 1 percent of the UK PBO. This amount was recorded as prior service cost in OCI for the year ended December 31, 2018. Assumptions Used to Determine Plan Financial Information Underlying both the measurement of benefit obligations and net periodic (income)/cost are actuarial valuations. These valuations use participant-specific information such as salary, age and years of service, as well as certain assumptions, the most significant of which include estimates of discount rates, expected return on plan assets, rate of compensation increases, interest crediting rates and mortality rates. The company evaluates these assumptions, at a minimum, annually, and makes changes as necessary. The following tables present the assumptions used to measure the net periodic (income)/cost and the year-end benefit obligations for retirement-related benefit plans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined Benefit Pension Plans ​ ​ U.S. Plans ​ Non-U.S. Plans ​ 2019 2018 2017 2019 2018 2017 ​ Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Discount rate 4.10 % 3.40 % 3.80 % 1.85 % 1.76 % 1.80 % Expected long-term returns on plan assets 5.25 % 5.25 % 5.75 % 4.38 % 3.62 % 3.77 % Rate of compensation increase N/A N/A N/A 2.18 % 2.41 % 2.45 % Interest crediting rate ​ 3.60 % 2.30 % 1.60 % 0.30 % 0.30 % 0.59 % Weighted-average assumptions used to measure benefit obligations at December 31 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Discount rate 3.10 % 4.10 % 3.40 % 1.19 % 1.85 % 1.76 % Rate of compensation increase N/A N/A N/A 2.60 % 2.18 % 2.41 % Interest crediting rate ​ 2.70 % 3.60 % 2.30 % 0.28 % 0.30 % 0.30 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonpension Postretirement Benefit Plans ​ ​ U.S. Plan ​ Non-U.S. Plans ​ 2019 2018 2017 2019 2018 2017 ​ Weighted-average assumptions used to measure net periodic cost for the year ended December 31 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Discount rate 3.90 % 3.30 % 3.60 % 7.48 % 7.28 % 8.26 % Expected long-term returns on plan assets N/A N/A N/A ​ 8.64 % 8.91 % 10.47 % Interest crediting rate ​ 3.60 % 2.30 % 1.60 % N/A ​ N/A ​ N/A ​ Weighted-average assumptions used to measure benefit obligations at December 31 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Discount rate 2.80 % 3.90 % 3.30 % 4.98 % 7.48 % 7.28 % Interest crediting rate ​ 2.70 % 3.60 % 2.30 % N/A ​ N/A ​ N/A ​ ​ N/A–Not applicable ​ ​ ​ Item Description of Assumptions ​ Discount Rate ​ Changes in discount rate assumptions impact net periodic (income)/cost and the PBO. ​ For the U.S. and certain non-U.S. countries, a portfolio of high-quality corporate bonds is used to construct a yield curve. Cash flows from the company’s expected benefit obligation payments are matched to the yield curve to derive the discount rates. ​ In other non-U.S. countries where the markets for high-quality long-term bonds are not as well developed, a portfolio of long-term government bonds is used as a base, and a credit spread is added to simulate corporate bond yields at these maturities in the jurisdiction of each plan. This is the benchmark for developing the respective discount rates. ​ ​ ​ Expected Long-Term Returns on Plan Assets ​ Represents the expected long-term returns on plan assets based on the calculated market-related value of plan assets and considers long-term expectations for future returns and the investment policies and strategies discussed on page 132. These rates of return are developed and tested for reasonableness against historical returns by the company. ​ The use of expected returns may result in pension income that is greater or less than the actual return of those plan assets in a given year. Over time, however, the expected long-term returns are designed to approximate the actual long-term returns, and therefore result in a pattern of income or loss recognition that more closely matches the pattern of the services provided by the employees. ​ The difference between actual and expected returns is recognized as a component of net loss or gain in AOCI, which is amortized as a component of net periodic (income)/cost over the service lives or life expectancy of the plan participants, depending on the plan, provided such amounts exceed certain thresholds provided by accounting standards. The market-related value of plan assets recognizes changes in the fair value of plan assets systematically over a five-year period in the expected return on plan assets line in net periodic (income)/cost. ​ The projected long-term rate of return on plan assets for 2020 is 4.5% for U.S. and 3.4% for non-U.S. DB Plans. ​ ​ ​ Rate of Compensation Increases and Mortality Assumptions ​ Compensation rate increases are determined based on the company’s long-term plans for such increases.These rate increases are not applicable to the U.S. DB pension plans as benefit accruals ceased December 31, 2007. ​ Mortality assumptions are based on life expectancy and death rates for different types of participants and are periodically updated based on actual experience. ​ ​ ​ Interest Crediting Rate ​ Benefits for certain participants in the PPP are calculated using a cash balance formula. An assumption underlying this formula is an interest crediting rate, which impacts both net periodic (income)/cost and the PBO. This provides the basis for projecting the expected interest rate that plan participants will earn on the benefits that they are expected to receive in the following year and is based on the average from August to October of the one-year U.S. Treasury Constant Maturity yield plus one percent. ​ ​ ​ Healthcare Cost Trend Rate ​ ​ For nonpension postretirement benefit plans, the company reviews external data and its own historical trends for healthcare costs to determine the healthcare cost trend rates. The healthcare cost trend rate has an insignificant effect on plan costs or the benefit obligation due to the terms of the plan which limit the company’s obligation to the participants. ​ The company’s U.S. healthcare cost trend rate assumption for 2020 is 6.50 percent. The company assumes that trend rate will decrease to 5.0 percent over the next six years . ​ ​ ​ The following tables present the increase/(decrease) in net periodic income and benefit obligations as a result of changes in plan assumptions. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Net Periodic Income For the year ended December 31: 2019 2018 2017 Discount rate (U.S. DB pension plans) $ 307 $ (124) $ (64) Expected long-term return on plan assets (U.S. DB pension plans) ​ ​ — ​ ​ (256) ​ ​ (656) Interest crediting rate (PPP) ​ ​ (59) ​ ​ (25) ​ ​ (14) ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Benefit Obligations At December 31: 2019 2018 Discount rate impact ​ ​ ​ ​ ​ ​ PBO (U.S. DB pension plans) ​ $ 4,385 ​ $ (3,239) APBO (U.S. nonpension plans) ​ 252 ​ (153) Benefit obligations (all plans) ​ ​ 8,932 ​ ​ (4,032) Mortality assumptions impact ​ ​ ​ ​ ​ PBO (U.S. DB and nonpension plans) ​ ​ (186) ​ 27 ​ ​ Plan Assets Retirement-related benefit plan assets are recognized and measured at fair value. Because of the inherent uncertainty of valuations, these fair value measurements may not necessarily reflect the amounts the company could realize in current market transactions. Investment Policies and Strategies The investment objectives of the Qualified PPP portfolio are designed to generate returns that will enable the plan to meet its future obligations. The precise amount for which these obligations will be settled depends on future events, including the retirement dates and life expectancy of the plans’ participants. The obligations are estimated using actuarial assumptions, based on the current economic environment and other pertinent factors described previously on page 131. The Qualified PPP portfolio’s investment strategy balances the requirement to generate returns, using potentially higher yielding assets such as equity securities, with the need to control risk in the portfolio with less volatile assets, such as fixed-income securities. Risks include, among others, inflation, volatility in equity values and changes in interest rates that could cause the plan to become underfunded, thereby increasing its dependence on contributions from the company. To mitigate any potential concentration risk, careful consideration is given to balancing the portfolio among industry sectors, companies and geographies, taking into account interest rate sensitivity, dependence on economic growth, currency and other factors that affect investment returns. There were no significant changes to investment strategy made in 2019 and none are planned for 2020. The Qualified PPP portfolio’s target allocation is 12 percent equity securities, 80 percent fixed-income securities, 4 percent real estate and 4 percent other investments. The assets are managed by professional investment firms and investment professionals who are employees of the company. They are bound by investment mandates determined by the company’s management and are measured against specific benchmarks. Among these managers, consideration is given, but not limited to, balancing security concentration, issuer concentration, investment style and reliance on particular active and passive investment strategies. Market liquidity risks are tightly controlled, with $4,043 million of the Qualified PPP portfolio as of December 31, 2019 invested in private market assets consisting of private equities and private real estate investments, which are less liquid than publicly traded securities. In addition, the Qualified PPP portfolio had $1,347 million in commitments for future investments in private markets to be made over a number of years. These commitments are expected to be funded from plan assets. Derivatives are used as an effective means to achieve investment objectives and/or as a component of the plan’s risk management strategy. The primary reasons for the use of derivatives are fixed income management, including duration, interest rate management and credit exposure, cash equitization and to manage currency strategies. Outside the U.S., the investment objectives are similar to those described previously, subject to local regulations. The weighted-average target allocation for the non-U.S. plans is 20 percent equity securities, 71 percent fixed-income securities, 3 percent real estate and 6 percent other investments, which is consistent with the allocation decisions made by the company’s management. In some countries, a higher percentage allocation to fixed income is required to manage solvency and funding risks. In others, the responsibility for managing the investments typically lies with a board that may include up to 50 percent of members elected by employees and retirees. This can result in slight differences compared with the strategies previously described. Generally, these non-U.S. plans do not invest in illiquid assets and their use of derivatives is consistent with the U.S. plan and mainly for currency hedging, interest rate risk management, credit exposure and alternative investment strategies. The company’s nonpension postretirement benefit plans are underfunded or unfunded. For some plans, the company maintains a nominal, highly liquid trust fund balance to ensure timely benefit payments. ​ Defined Benefit Pension Plan Assets The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2019. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Plan ​ Non-U.S. Plans ($ in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity securities (1) $ 1,943 $ — $ — $ 1,943 $ 2,209 $ 0 $ — $ 2,209 Equity mutual funds (2) ​ ​ 85 ​ ​ — ​ ​ — ​ ​ 85 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Fixed income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government and related (3) ​ ​ — ​ ​ 21,134 ​ ​ — ​ ​ 21,134 ​ ​ — ​ ​ 10,288 ​ ​ 2 ​ ​ 10,290 Corporate bonds (4) ​ ​ — ​ ​ 16,666 ​ ​ 518 ​ ​ 17,185 ​ ​ — ​ ​ 2,124 ​ ​ — ​ ​ 2,124 Mortgage and asset-backed securities ​ ​ — ​ ​ 630 ​ ​ — ​ ​ 630 ​ ​ — ​ ​ 19 ​ ​ — ​ ​ 19 Fixed income mutual funds (5) ​ ​ 386 ​ ​ — ​ ​ — ​ ​ 386 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Insurance contracts ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,862 ​ ​ — ​ ​ 1,862 Cash and short-term investments (6) ​ ​ 54 ​ ​ 848 ​ ​ — ​ ​ 903 ​ ​ 204 ​ ​ 644 ​ ​ — ​ ​ 849 Real estate ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 328 ​ ​ 328 Derivatives (7) ​ ​ 0 ​ ​ 6 ​ ​ — ​ ​ 6 ​ ​ 18 ​ ​ 969 ​ ​ — ​ ​ 987 Other mutual funds (8) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 25 ​ ​ 0 ​ ​ — ​ ​ 25 Subtotal ​ ​ 2,469 ​ ​ 39,284 ​ ​ 518 ​ ​ 42,271 ​ ​ 2,456 ​ ​ 15,907 ​ ​ 330 ​ ​ 18,693 Investments measured at net asset value using the NAV practical expedient (9) ​ ​ — ​ ​ — ​ ​ — ​ ​ 9,519 ​ ​ — ​ ​ — ​ ​ — ​ ​ 21,653 Other (10) ​ ​ — ​ ​ — ​ ​ — ​ ​ (6) ​ ​ — ​ ​ — ​ ​ — ​ ​ (26) Fair value of plan assets $ 2,469 $ 39,284 $ 518 $ 51,784 $ 2,456 $ 15,907 $ 330 $ 40,319 (1) Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $2 million, representing 0.004 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $10 million, representing 0.02 percent of the non-U.S. Plans assets. (2) Invests in predominantly equity securities. (3) Includes debt issued by national, state and local governments and agencies. (4) The U.S. Plan includes IBM corporate bonds of $37 million representing 0.07 percent of the U.S. Plan assets. Non-U.S. Plans include IBM corporate bonds of $8 million representing 0.02 percent of the non-U.S. Plans assets. (5) Invests predominantly in fixed income securities. (6) Includes cash, cash equivalents and short-term marketable securities. (7) Includes interest rate derivatives, forwards, exchange traded and other over-the-counter derivatives. (8) Invests in both equity and fixed-income securities. (9) Investments measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient, including commingled funds, hedge funds, private equity and real estate partnerships. (10) Represents net unsettled transactions, relating primarily to purchases and sales of plan assets. ​ The U.S. nonpension postretirement benefit plan assets of $3 million were invested primarily in cash equivalents, categorized as Level 1 in the fair value hierarchy. The non-U.S. nonpension postretirement benefit plan assets of $65 million, primarily in Brazil, and, to a lesser extent, in Mexico and South Africa, were invested primarily in government and related fixed-income securities and corporate bonds, categorized as Level 2 in the fair value hierarchy. ​ The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2018. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Plan ​ Non-U.S. Plans ($ in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity securities (1) $ 1,538 $ — $ — $ 1,538 $ 2,333 $ — $ 0 $ 2,333 Equity mutual funds (2) ​ ​ 65 ​ ​ — ​ ​ — ​ ​ 65 ​ ​ 18 ​ ​ 5 ​ ​ — ​ ​ 23 Fixed income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government and related (3) ​ ​ — ​ ​ 19,661 ​ ​ — ​ ​ 19,661 ​ ​ 20 ​ ​ 8,951 ​ ​ 2 ​ ​ 8,973 C |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events | |
Subsequent Events | NOTE W. SUBSEQUENT EVENTS On January 28, 2020, the company announced that the Board of Directors approved a quarterly dividend of $1.62 per common share. The dividend is payable March 10, 2020 to shareholders of record on February 10, 2020. ​ On January 30, 2020, the company announced that Arvind Krishna has been elected Chief Executive Officer and a member of the IBM Board of Directors, effective April 6, 2020. Mr. Krishna is presently IBM Senior Vice President for Cloud & Cognitive Software. Jim Whitehurst, IBM Senior Vice President and CEO of Red Hat, will become IBM President, also effective April 6, 2020. Virginia M. Rometty will continue as IBM Executive Chairman through year-end 2020. ​ On February 3, 2020, the company announced that it elected to redeem on March 6, 2020 $2.9 billion of outstanding fixed-rate debt due in 2021. The notes are expected to be redeemed at a price equal to 100 percent of the $2.9 billion aggregate principal plus a make-whole premium and accrued interest. The company expects to incur a loss of approximately $41 million upon redemption which will be recorded in other (income) and expense in the Consolidated Income Statement. ​ On February 11, 2020, the company issued $4.1 billion of Euro fixed-rate notes in multiple tranches with maturities ranging from 8 |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | 12 Months Ended |
Dec. 31, 2019 | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | SCHEDULE II INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the Years Ended December 31: (Dollars in Millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Description Balance at Beginning of Period Additions/ (Deductions) Write-offs Other Balance at End of Period Allowance For Credit Losses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ —Current ​ $ 591 ​ $ 99 ​ $ (174) ​ $ 5 ​ $ 521 —Noncurrent ​ $ 48 ​ $ (10) ​ $ (4) ​ $ (1) ​ $ 33 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ —Current ​ $ 594 ​ $ 69 ​ $ (62) ​ $ (11) ​ $ 591 —Noncurrent ​ $ 74 ​ $ (3) ​ $ (2) ​ $ (20) ​ $ 48 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ —Current ​ $ 675 ​ $ 65 ​ $ (157) ​ $ 11 ​ $ 594 —Noncurrent ​ $ 101 ​ $ (10) ​ $ (42) ​ $ 26 ​ $ 74 Allowance For Inventory Losses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 ​ $ 530 ​ $ 115 ​ $ (166) ​ $ 11 ​ $ 490 2018 ​ $ 574 ​ $ 136 ​ $ (162) ​ $ (19) ​ $ 530 2017 ​ $ 525 ​ $ 164 ​ $ (139) ​ $ 23 ​ $ 574 Revenue Based Provisions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 ​ $ 500 ​ $ 823 ​ $ (830) ​ $ 5 ​ $ 498 2018 ​ $ 451 ​ $ 897 * $ (828) * $ (20) * $ 500 2017 ​ $ 481 ​ $ 1,006 * $ (1,056) * $ 20 * $ 451 * Reclassifed to conform to 2019 presentation. Additions/(Deductions) to the allowances represent changes in estimates of unrecoverable amounts in receivables and inventory and are recorded to expense and cost accounts, respectively. Amounts are written-off when they are deemed unrecoverable by the company. Additions/(Deductions) to Revenue Based Provisions represent changes in estimated reductions to revenue, primarily as a result of revenue-related programs, including customer and business partner ​ ​ ​ |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Significant Accounting Policies | |
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). Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior year amounts have been reclassified to conform to the current year presentation. Specifically, revenues and related costs for post-contract support (PCS) provided for perpetual (one-time charge) software licenses were reclassified from Services Revenue to Sales Revenue and Services Cost to Sales Cost within the Consolidated Income Statement. The company reclassified $2.1 billion within revenue and $0.4 billion within cost for each of the years ended December 31, 2018 and 2017. This reclassification had no impact on total revenue, total cost, net income, financial position or cash flows for any periods presented. Other immaterial reclassifications have been annotated where applicable. On July 9, 2019, the company completed the acquisition of all the outstanding shares of Red Hat, Inc. (Red Hat). Refer to note E, “Acquisitions & Divestitures,” and note N, “Intangible Assets Including Goodwill,” for additional information on the impacts to the consolidated financial results at and for the year ended December 31, 2019. In the first quarter of 2019, 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 Consolidated Financial Statements. Refer to note D, “Segments,” for additional information on the company’s reportable segments. The periods presented in this Annual Report are reported on a comparable basis. The impact of the Tax Cuts and Jobs Act (U.S. tax reform) resulted in a charge to tax expense of $0.1 billion, $2.0 billion and $5.5 billion, for the years ended December 31, 2019, 2018 and 2017, respectively. Refer to note G, “Taxes,” for additional information. Noncontrolling interest amounts of $25 million, $17 million and $17 million, net of tax, for the years ended December 31, 2019, 2018 and 2017, respectively, are included as a reduction within other (income) and expense in the Consolidated Income Statement. |
Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of IBM and its controlled subsidiaries, which are primarily majority owned. Any noncontrolling interest in the equity of a subsidiary is reported as a component of total equity in the Consolidated Balance Sheet. Net income and losses attributable to the noncontrolling interest is reported as described above in the Consolidated Income Statement. The accounts of variable interest entities (VIEs) are included in the Consolidated Financial Statements, if required. Investments in business entities in which the company does not have control but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method and the company’s proportionate share of income or loss is recorded in other (income) and expense. The accounting policy for other investments in equity securities is described within the “Marketable Securities” section of this note. Equity investments in non-publicly traded entities lacking controlling financial interest or significant influence are primarily measured at cost, net of impairment, if any. All intercompany transactions and accounts have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts that are reported in the Consolidated Financial Statements and accompanying disclosures. Estimates are made for the following, among others: revenue, costs to complete service contracts, income taxes, pension assumptions, valuation of assets including goodwill and intangible assets, loss contingencies, allowance for credit losses and other matters. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may be different from these estimates. |
Revenues | Revenue Effective January 1, 2018, the company adopted the new accounting standard related to the recognition of revenue in contracts with customers under the modified retrospective transition method. This method was applied to contracts that were not complete as of the date of initial application. The impact related to adopting the new standard was not material. Certain changes resulting from adopting the new standard, such as terminology differences, impacted the company’s description of its significant accounting policies compared to 2017. For further information regarding the adoption of the new standard, see note B, “Accounting Changes,” and note C, “Revenue Recognition.” The company accounts for a contract with a client when it has written approval, the contract is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection. Revenue is recognized when, or as, control of a promised product or service transfers to a client, in an amount that reflects the consideration to which the company expects to be entitled in exchange for transferring those products or services. If the consideration promised in a contract includes a variable amount, the company estimates the amount to which it expects to be entitled using either the expected value or most likely amount method. The company’s contracts may include terms ​ that could cause variability in the transaction price, including, for example, rebates, volume discounts, service-level penalties, and performance bonuses or other forms of contingent revenue. The company only includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The company may not be able to reliably estimate contingent revenue in certain long-term arrangements due to uncertainties that are not expected to be resolved for a long period of time or when the company’s experience with similar types of contracts is limited. The company’s arrangements infrequently include contingent revenue. Changes in estimates of variable consideration are included in note C, “Revenue Recognition.” The company’s standard billing terms are that payment is due upon receipt of invoice, payable within 30 days. Invoices are generally issued as control transfers and/or as services are rendered. Additionally, in determining the transaction price, the company adjusts the promised amount of consideration for the effects of the time value of money if the billing terms are not standard and the timing of payments agreed to by the parties to the contract provide the client or the company with a significant benefit of financing, in which case the contract contains a significant financing component. As a practical expedient, the company does not account for significant financing components if the period between when the company transfers the promised product or service to the client and when the client pays for that product or service will be one year or less. Most arrangements that contain a financing component are financed through the company’s Global Financing business and include explicit financing terms. The company may include subcontractor services or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from sales of third-party vendor products or services is recorded net of costs when the company is acting as an agent between the client and the vendor, and gross when the company is the principal for the transaction. To determine whether the company is an agent or principal, the company considers whether it obtains control of the products or services before they are transferred to the customer. In making this evaluation, several factors are considered, most notably whether the company has primary responsibility for fulfillment to the client, as well as inventory risk and pricing discretion. The company recognizes revenue on sales to solution providers, resellers and distributors (herein referred to as resellers) when the reseller has economic substance apart from the company and the reseller is considered the principal for the transaction with the end-user client. The company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. In addition to the aforementioned general policies, the following are the specific revenue recognition policies for arrangements with multiple performance obligations and for each major category of revenue. Arrangements with Multiple Performance Obligations The company’s global capabilities as a cognitive solutions and cloud platform company include services, software, hardware and related financing. The company enters into revenue arrangements that may consist of any combination of these products and services based on the needs of its clients. The company continues to develop new products and offerings and continuously reinvent its platforms and delivery methods, including through the use of cloud and as-a-Service models. These are not separate businesses; they are offerings across the segments that address market opportunities in analytics, data, cloud and security. Revenue from these offerings follows the specific revenue recognition policies for arrangements with multiple performance obligations and for each major category of revenue, depending on the type of offering, which are comprised of services, hardware and/or software. To the extent that a product or service in multiple performance obligation arrangements is subject to other specific accounting guidance, such as leasing guidance, that product or service is accounted for in accordance with such specific guidance. For all other products or services in these arrangements, the company determines if the products or services are distinct and allocates the consideration to each distinct performance obligation on a relative standalone selling price basis. When products and services are not distinct, the company determines an appropriate measure of progress based on the nature of its overall promise for the single performance obligation. The revenue policies in the Services, Hardware and/or Software sections below are then applied to each performance obligation, as applicable. Services The company’s primary services offerings include infrastructure and cloud services, including outsourcing, and other managed services; application management services; global process services (GPS); maintenance and support; and consulting, including the design and development of complex IT systems to a client’s specifications (e.g., design and build). Many of these services can be delivered entirely or partially through cloud or as-a-Service delivery models. The company’s services are provided on a time-and-material basis, as a fixed-price contract or as a fixed-price per measure of output contract and the contract terms range from less than one year to over 10 years. ​ In services arrangements, the company typically satisfies the performance obligation and recognizes revenue over time. In design and build arrangements, the performance obligation is satisfied over time either because the client controls the asset as it is created (e.g., when the asset is built at the customer site) or because the company’s performance does not create an asset with an alternative use and the company has an enforceable right to payment plus a reasonable profit for performance completed to date. In most other services arrangements, the performance obligation is satisfied over time because the client simultaneously receives and consumes the benefits provided as the company performs the services. In outsourcing, other managed services, application management, GPS and other cloud-based services arrangements, the company determines whether the services performed during the initial phases of the arrangement, such as setup activities, are distinct. In most cases, the arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The company applies a measure of progress (typically time-based) to any fixed consideration and allocates variable consideration to the distinct periods of service based on usage. As a result, revenue is generally recognized over the period the services are provided on a usage basis. This results in revenue recognition that corresponds with the value to the client of the services transferred to date relative to the remaining services promised. Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred. Revenue from as-a-Service type contracts, such as Infrastructure-as-a-Service, is recognized either on a straight-line basis or on a usage basis, depending on the terms of the arrangement (such as whether the company is standing ready to perform or whether the contract has usage-based metrics). If an as-a-Service contract includes setup activities, those promises in the arrangement are evaluated to determine if they are distinct. Revenue related to maintenance and support services and extended warranty is recognized on a straight-line basis over the period of performance because the company is standing ready to provide services. In design and build contracts, revenue is recognized based on progress toward completion of the performance obligation using a cost-to-cost measure of progress. Revenue is recognized based on the labor costs incurred to date as a percentage of the total estimated labor costs to fulfill the contract. Due to the nature of the work performed in these arrangements, the estimation of cost at completion is complex, subject to many variables and requires significant judgment. Key factors reviewed by the company to estimate costs to complete each contract are future labor and product costs and expected productivity efficiencies. Changes in original estimates are reflected in revenue on a cumulative catch-up basis in the period in which the circumstances that gave rise to the revision become known by the company. Refer to note C, “Revenue Recognition,” for the amount of revenue recognized in the reporting period on a cumulative catch-up basis (i.e., from performance obligations satisfied, or partially satisfied, in previous periods). The company performs ongoing profitability analyses of its design and build services contracts accounted for using a cost-to-cost measure of progress in order to determine whether the latest estimates of revenues, costs and profits require updating. If at any time these estimates indicate that the contract will be unprofitable, the entire estimated loss for the remainder of the contract is recorded immediately. For other types of services contracts, any losses are recorded as incurred. In some services contracts, the company bills the client prior to recognizing revenue from performing the services. Deferred income of $5,106 million and $5,424 million at December 31, 2019 and 2018, respectively, is included in the Consolidated Balance Sheet. In other services contracts, the company performs the services prior to billing the client. When the company performs services prior to billing the client in design and build contracts, the right to consideration is typically subject to milestone completion or client acceptance and the unbilled accounts receivable is classified as a contract asset. At December 31, 2019 and 2018, contract assets for services contracts of $424 million and $421 million, respectively, are included in prepaid expenses and other current assets in the Consolidated Balance Sheet. The remaining amount of unbilled accounts receivable of $1,071 million and $1,075 million at December 31, 2019 and 2018, respectively, is included in notes and accounts receivable trade in the Consolidated Balance Sheet. Billings usually occur in the month after the company performs the services or in accordance with specific contractual provisions. Hardware The company’s hardware offerings include the sale or lease of system servers and storage solutions. The capabilities of these products can also be delivered through as-a-Service or cloud delivery models, such as Storage-as-a-Service. The company also offers installation services for its more complex hardware products. Hardware offerings are often sold with distinct maintenance services, described in the Services section above. Revenue from hardware sales is recognized when control has transferred to the customer which typically occurs when the hardware has been shipped to the client, risk of loss has transferred to the client and the company has a present right to payment for the hardware. In limited circumstances when a hardware sale includes client acceptance provisions, revenue is recognized either when client acceptance has been obtained, client acceptance provisions have lapsed, or the company has objective evidence that the criteria specified in the client acceptance provisions have been satisfied. Revenue from hardware sales-type leases is recognized at the beginning of the lease term. Revenue from rentals and operating leases is recognized on a straight-line basis over the term of the rental or lease. ​ Revenue from as-a-Service arrangements is recognized either on a straight-line basis or on a usage basis as described in the Services section above. Installation services are accounted for as distinct performance obligations with revenue recognized as the services are performed. Shipping and handling activities that occur after the client has obtained control of a product are accounted for as an activity to fulfill the promise to transfer the product rather than as an additional promised service and, therefore, no revenue is deferred and recognized over the shipping period. Software The company’s software offerings include cognitive applications, which contains many of the company’s strategic areas including analytics, data and security; cloud and data platforms, which contains the company’s distributed middleware and data platform software, including Red Hat; transaction processing platforms, which primarily supports mission-critical systems for clients; and, operating systems software, which provides operating systems for IBM Z and Power Systems hardware. These offerings primarily include proprietary software and, in some cases, open source software, and many can be delivered entirely or partially through as-a-Service or cloud delivery models, while others are delivered as on-premise software licenses. Revenue from proprietary perpetual (one-time charge) license software is recognized at a point in time at the inception of the arrangement when control transfers to the client, if the software license is distinct from the PCS offered by the company. In limited circumstances, when the software requires continuous updates to provide the intended functionality, the software license and PCS are not distinct and revenue for the single performance obligation is recognized over time as the PCS is provided. This is only applicable to certain security software perpetual licenses offered by the company. Revenue from proprietary term license software is recognized at a point in time for the committed term of the contract (which is typically one month due to client termination rights), unless consideration depends on client usage, in which case revenue is recognized when the usage occurs. Clients may contract to convert their existing IBM term license software into perpetual license software plus PCS. When proprietary term license software is converted to perpetual license software, the consideration becomes fixed with no cancellability and, therefore, revenue for the perpetual license is recognized upon conversion, consistent with the accounting for other perpetual licenses, as described above. PCS revenue is recognized as described below. The company also has open source software offerings. Since open source software is offered under an open source licensing model and therefore, the license is available for free, the standalone selling price is zero. As such, when the license is sold with PCS or other products and services, no consideration is allocated to the license when it is a distinct performance obligation and therefore no revenue is recognized when control of the license transfers to the client. Revenue is recognized over the PCS period. In certain cases, open source software is bundled with proprietary software and, if the open source software is not considered distinct, the software bundle (e.g., Cloud Pak) is accounted for under a proprietary software model. Revenue from PCS is recognized over the contract term on a straight-line basis because the company is providing a service of standing ready to provide support, when-and-if needed, and is providing unspecified software upgrades on a when-and-if available basis over the contract term. Revenue from software hosting or Software-as-a-Service arrangements is recognized either on a straight-line basis or on a usage basis as described in the Services section above. In software hosting arrangements, the rights provided to the client (e.g., ownership of a license, contract termination provisions and the feasibility of the client to operate the software) are considered in determining whether the arrangement includes a license. In arrangements that include a software license, the associated revenue is recognized in accordance with the software license recognition policy above rather than over time as a service. Financing Financing income attributable to sales-type leases, direct financing leases and loans is recognized on the accrual basis using the effective interest method. Operating lease income is recognized on a straight-line basis over the term of the lease. Standalone Selling Price The company allocates the transaction price to each performance obligation on a relative standalone selling price basis. The standalone selling price (SSP) is the price at which the company would sell a promised product or service separately to a client. In most cases, the company is able to establish SSP based on the observable prices of products or services sold separately in comparable circumstances to similar clients. The company typically establishes SSP ranges for its products and services which are reassessed on a periodic basis or when facts and circumstances change. In certain instances, the company may not be able to establish a SSP range based on observable prices and the company estimates SSP. The company estimates SSP by considering multiple factors including, but not limited to, overall market conditions, including geographic or regional specific factors, competitive positioning, competitor actions, internal costs, profit objectives and pricing practices. Additionally, in certain circumstances, the company may estimate SSP for a product or service by applying the residual approach. This approach is most commonly used when certain perpetual software licenses are only sold bundled with one year of PCS and a price has not been established for the software. Estimating SSP is a formal process that includes review and approval by the company’s management. |
Costs, Warranties, Shipping and Handling | Services Costs Recurring operating costs for services contracts are recognized as incurred. For fixed-price design and build contracts, the costs of external hardware and software accounted for under the cost-to-cost measure of progress are deferred and recognized based on the labor costs incurred to date (i.e., the measure of progress), as a percentage of the total estimated labor costs to fulfill the contract as control transfers over time for these performance obligations. Certain eligible, nonrecurring costs (i.e., setup costs) incurred in the initial phases of outsourcing contracts and other cloud-based services contracts, including Software-as-a-Service arrangements, are capitalized when the costs relate directly to the contract, the costs generate or ​ enhance resources of the company that will be used in satisfying the performance obligation in the future, and the costs are expected to be recovered. These costs consist of transition and setup costs related to the installation of systems and processes and other deferred fulfillment costs, including, for example, prepaid assets used in services contracts (i.e., prepaid software or prepaid maintenance). Capitalized costs are amortized on a straight-line basis over the expected period of benefit, which includes anticipated contract renewals or extensions, consistent with the transfer to the client of the services to which the asset relates. Additionally, fixed assets associated with these contracts are capitalized and depreciated on a straight-line basis over the expected useful life of the asset. If an asset is contract specific, then the depreciation period is the shorter of the useful life of the asset or the contract term. Amounts paid to clients in excess of the fair value of acquired assets used in outsourcing arrangements are deferred and amortized on a straight-line basis as a reduction of revenue over the expected period of benefit. The company performs periodic reviews to assess the recoverability of deferred contract transition and setup costs. If the carrying amount is deemed not recoverable, an impairment loss is recognized. Refer to note C, “Revenue Recognition,” for the amount of deferred costs to fulfill a contract at December 31, 2019 and 2018. In situations in which an outsourcing contract is terminated, the terms of the contract may require the client to reimburse the company for the recovery of unbilled accounts receivable, unamortized deferred costs incurred to purchase specific assets utilized in the delivery of services and to pay any additional costs incurred by the company to transition the services. Software Costs Costs that are related to the conceptual formulation and design of licensed software programs are expensed as incurred to research, development and engineering expense; costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. Capitalized amounts are amortized on a straight-line basis over periods ranging up to three years and are recorded in software cost within cost of sales. The company performs periodic reviews to ensure that unamortized program costs remain recoverable from future revenue. Costs to support or service licensed programs are charged to software cost within cost of sales as incurred. The company capitalizes certain costs that are incurred to purchase or develop internal-use software. Internal-use software programs also include software used by the company to deliver Software-as-a-Service when the client does not receive a license to the software and the company has no substantive plans to market the software externally. Capitalized costs are amortized on a straight-line basis over periods ranging up to three years and are recorded in selling, general and administrative expense or cost of sales, depending on whether the software is used by the company in revenue generating transactions. Additionally, the company may capitalize certain types of implementation costs and amortize them over the term of the arrangement when the company is a customer in a cloud-computing arrangement. Incremental Costs of Obtaining a Contract Incremental costs of obtaining a contract (e.g., sales commissions) are capitalized and amortized on a straight-line basis over the expected customer relationship period if the company expects to recover those costs. Prior to January 1, 2018, the company expensed these costs as incurred. The expected customer relationship period is determined based on the average customer relationship period, including expected renewals, for each offering type and ranges from three Product Warranties The company offers warranties for its hardware products that generally range up to three years, with the majority being either one Revenue from extended warranty contracts is initially recorded as deferred income and subsequently recognized on a straight-line basis over the delivery period because the company is providing a service of standing ready to provide services over such term. Refer to note R, “Commitments & Contingencies,” for additional information. Shipping and Handling Costs related to shipping and handling are recognized as incurred and included in cost in the Consolidated Income Statement. |
Selling, General and Administrative | Selling, General and Administrative Selling, general and administrative (SG&A) expense is charged to income as incurred, except for certain sales commissions, which are capitalized and amortized as of January 1, 2018. For further information regarding capitalizing sales commissions, see “Incremental Costs of Obtaining a Contract” above. Expenses of promoting and selling products and services are classified as selling expense and, in addition to sales commissions, include such items as compensation, advertising and travel. General and administrative expense includes such items as compensation, legal costs, office supplies, non-income taxes, insurance and office rental. In addition, general and administrative expense includes other operating items such as an allowance for credit losses, workforce rebalancing charges for contractually obligated payments to employees terminated in the ongoing course of business, acquisition costs related to business combinations, amortization of certain intangible assets and environmental remediation costs. |
Advertising and Promotional Expense | Advertising and Promotional Expense The company expenses advertising and promotional costs as incurred. Cooperative advertising reimbursements from vendors are recorded net of advertising and promotional expense in the period in which the related advertising and promotional expense is incurred. Advertising and promotional expense, which includes media, agency and promotional expense, was $1,647 million, $1,466 million and $1,445 million in 2019, 2018 and 2017, respectively, and is recorded in SG&A expense in the Consolidated Income Statement. |
Research, Development and Engineering | Research, Development and Engineering Research, development and engineering (RD&E) costs are expensed as incurred. Software costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. |
Intellectual Property and Custom Development Income | Intellectual Property and Custom Development Income The company licenses and sells the rights to certain of its intellectual property (IP) including internally developed patents, trade secrets and technological know-how. Certain IP transactions to third parties are licensing/royalty-based and others are transaction-based sales/other transfers. Income from licensing arrangements is recognized at the inception of the license term if the nature of the company’s promise is to provide a right to use the company’s intellectual property as it exists at that point in time (i.e., the license is functional intellectual property) and control has transferred to the client. Income is recognized over time if the nature of the company’s promise is to provide a right to access the company’s intellectual property throughout the license period (i.e., the license is symbolic intellectual property), such as a trademark license. Licensing arrangements include IP partnerships whereby a business partner licenses source code from the company and becomes responsible for developing, maintaining and enhancing the product. The company retains its customers and go-to-market capability and any royalty cost due to the partner is recognized in cost of sales. The IP partner has the rights to market the product and its derivative works under its own brand and remits royalty to the company on those sales, which are recorded as royalty-based fees. Depending on the nature of the transaction, an IP partnership would be accounted for as a divestiture if the company concludes the transaction meets the definition of a business. Income from royalty-based fee arrangements is recognized at the later of when the subsequent sale or usage occurs or the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). The company also enters into cross-licensing arrangements of patents, and income from these arrangements is recognized when control transfers to the customer. In addition, the company earns income from certain custom development projects with strategic technology partners and specific clients. The company records the income from these projects over time as the company satisfies the performance obligation if the fee is nonrefundable and is not dependent upon the ultimate success of the project. |
Other (Income) and Expense | Other (Income) and Expense Other (income) and expense includes interest income (other than from Global Financing external transactions), gains and losses on certain derivative instruments, gains and losses from securities and other investments, gains and losses from certain real estate transactions, foreign currency transaction gains and losses, gains and losses from the sale of businesses, other than reported as discontinued operations, and amounts related to accretion of asset retirement obligations. Other (income) and expense also includes certain components of retirement-related costs, including interest costs, expected return on plan assets, amortization of prior service costs (credits), curtailments and settlements and other net periodic pension/post-retirement benefit costs. |
Business Combinations and Intangible Assets Including Goodwill | Business Combinations and Intangible Assets Including Goodwill The company accounts for business combinations using the acquisition method and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree are recorded at their acquisition date fair values. Goodwill represents the excess of the purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. The primary drivers that generate goodwill are the value of synergies between the acquired entities and the company and the acquired assembled workforce, neither of which qualifies as a separately identifiable intangible asset. Goodwill recorded in an acquisition is assigned to applicable reporting units based on expected revenues or expected cash flows. Identifiable intangible assets with finite lives are amortized over their useful lives. Amortization of completed technology is recorded in cost, and amortization of all other intangible assets is recorded in SG&A expense. Acquisition-related costs, including advisory, legal, accounting, valuation and pre-close and other costs, are typically expensed in the periods in which the costs are incurred and are recorded in SG&A expense. The results of operations of acquired businesses are included in the Consolidated Financial Statements from the acquisition date. |
Impairment | Impairment Long-lived assets, other than goodwill, are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The impairment test is based on undiscounted cash flows and, if impaired, the asset is written down to fair value based on either discounted cash flows or appraised values. Goodwill is tested for impairment at least annually, in the fourth quarter and whenever changes in circumstances indicate an impairment may exist. The goodwill impairment test is performed at the reporting unit level, which is generally at the level of or one level below an operating segment. |
Depreciation and Amortization | Depreciation and Amortization Property, plant and equipment are carried at cost and depreciated over their estimated useful lives using the straight-line method. The estimated useful lives of certain depreciable assets are as follows: buildings, 30 10 2 As noted within the “Software Costs” section of this note, capitalized software costs are amortized on a straight-line basis over periods ranging up to 3 years. Other intangible assets are amortized over periods between 1 |
Environmental | Environmental The cost of internal environmental protection programs that are preventative in nature are expensed as incurred. When a cleanup program becomes likely, and it is probable that the company will incur cleanup costs and those costs can be reasonably estimated, the company accrues remediation costs for known environmental liabilities. |
Asset Retirement Obligations | Asset Retirement Obligations Asset retirement obligations (ARO) are legal obligations associated with the retirement of long-lived assets and the liability is initially recorded at fair value. The related asset retirement costs are capitalized by increasing the carrying amount of the related assets by the same amount as the liability. Asset retirement costs are subsequently depreciated over the useful lives of the related assets. Subsequent to initial recognition, the company records period-to-period changes in the ARO liability resulting from the passage of time in interest expense and revisions to either the timing or the amount of the original expected cash flows to the related assets. |
Defined Benefit Pension and Nonpension Postretirement Benefit Plans, Defined Contribution Plans | Defined Benefit Pension and Nonpension Postretirement Benefit Plans The funded status of the company’s defined benefit pension plans and nonpension postretirement benefit plans (retirement-related benefit plans) is recognized in the Consolidated Balance Sheet. The funded status is measured as the difference between the fair value of plan assets and the benefit obligation at December 31, the measurement date. For defined benefit pension plans, the benefit obligation is the projected benefit obligation (PBO), which represents the actuarial present value of benefits expected to be paid upon retirement based on employee services already rendered and estimated future compensation levels. For the nonpension postretirement benefit plans, the benefit obligation is the accumulated postretirement benefit obligation (APBO), which represents the actuarial present value of postretirement benefits attributed to employee services already rendered. The fair value of plan assets represents the current market value of assets held in an irrevocable trust fund, held for the sole benefit of participants, which are invested by the trust fund. Overfunded plans, with the fair value of plan assets exceeding the benefit obligation, are aggregated and recorded as a prepaid pension asset equal to this excess. Underfunded plans, with the benefit obligation exceeding the fair value of plan assets, are aggregated and recorded as a retirement and nonpension postretirement benefit obligation equal to this excess. The current portion of the retirement and nonpension post-retirement benefit obligations represents the actuarial present value of benefits payable in the next 12 months exceeding the fair value of plan assets, measured on a plan-by-plan basis. This obligation is recorded in compensation and benefits in the Consolidated Balance Sheet. Net periodic pension and nonpension postretirement benefit cost/(income) is recorded in the Consolidated Income Statement and includes service cost, interest cost, expected return on plan assets, amortization of prior service costs/(credits) and (gains)/losses previously recognized as a component of other comprehensive income/(loss) (OCI) and amortization of the net transition asset remaining in accumulated other comprehensive income/(loss) (AOCI). The service cost component of net benefit cost is recorded in Cost, SG&A and RD&E in the Consolidated Income Statement (unless eligible for capitalization) based on the employees’ respective functions. The other components of net benefit cost are presented separately from service cost within other (income) and expense in the Consolidated Income Statement. Refer to note B, “Accounting Changes,” for additional information on the presentation change relating to pension costs beginning on January 1, 2018. (Gains)/losses and prior service costs/(credits) are recognized as a component of OCI in the Consolidated Statement of Comprehensive Income as they arise. Those (gains)/losses and prior service costs/(credits) are subsequently recognized as a component of net periodic cost/(income) pursuant to the recognition and amortization provisions of applicable accounting guidance. (Gains)/losses arise as a result of differences between actual experience and assumptions or as a result of changes in actuarial assumptions. Prior service costs/(credits) represent the cost of benefit changes attributable to prior service granted in plan amendments. ​ The measurement of benefit obligations and net periodic cost/(income) is based on estimates and assumptions approved by the company’s management. These valuations reflect the terms of the plans and use participant-specific information such as compensation, age and years of service, as well as certain assumptions, including estimates of discount rates, expected return on plan assets, rate of compensation increases, interest crediting rates and mortality rates. Defined Contribution Plans The company’s contribution for defined contribution plans is recorded when the employee renders service to the company. The charge is recorded in Cost, SG&A and RD&E in the Consolidated Income Statement based on the employees’ respective functions. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation represents the cost related to stock-based awards granted to employees. The company measures stock-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost on a straight-line basis (net of estimated forfeitures) over the employee requisite service period. The company grants its employees Restricted Stock Units (RSUs), including Retention Restricted Stock Units (RRSUs); Performance Share Units (PSUs); and periodically grants stock options. RSUs are stock awards granted to employees that entitle the holder to shares of common stock as the award vests, typically over a one Dividend equivalents are not paid on the stock awards described above. The company records deferred tax assets for awards that result in deductions on the company’s income tax returns, based on the amount of compensation cost recognized and the relevant statutory tax rates. The differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the income tax return are recorded as a benefit or expense to the provision for income taxes in the Consolidated Income Statement. |
Income Taxes | Income Taxes Income tax expense is based on reported income before income taxes. Deferred income taxes reflect the tax effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. These deferred taxes are measured by applying currently enacted tax laws. Valuation allowances are recognized to reduce deferred tax assets to the amount that will more likely than not be realized. In assessing the need for a valuation allowance, management considers all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies/actions. When the company changes its determination as to the amount of deferred tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to income tax expense in the period in which such determination is made. The company recognizes additional tax liabilities when the company believes that certain positions may not be fully sustained upon review by tax authorities. Benefits from tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. The noncurrent portion of tax liabilities is included in other liabilities in the Consolidated Balance Sheet. To the extent that new information becomes available which causes the company to change its judgment regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. U.S. tax reform introduced Global Intangible Low-Taxed Income (GILTI), which subjects a U.S. shareholder to current tax on income earned by certain foreign subsidiaries. Beginning in 2018, the company elected to include GILTI in measuring deferred taxes. |
Translation of Non-U.S. Currency Amounts | Translation of Non-U.S. Currency Amounts Assets and liabilities of non-U.S. subsidiaries that have a local functional currency are translated to U.S. dollars at year-end exchange rates. Translation adjustments are recorded in OCI. Income and expense items are translated at weighted-average rates of exchange prevailing during the year. Inventory, property, plant and equipment net and other non-monetary assets and liabilities of non-U.S. subsidiaries and branches that operate in U.S. dollars are translated at the approximate exchange rates prevailing when the company acquired the assets or liabilities. All other assets and liabilities denominated in a currency other than U.S. dollars are translated at year-end exchange rates with the transaction gain or loss recognized in other (income) and expense. Income and expense items are translated at the weighted-average rates of exchange prevailing during the year. These translation gains and losses are included in net income for the period in which exchange rates change. |
Derivative Financial Instruments | Derivative Financial Instruments The company uses derivative financial instruments primarily to manage foreign currency and interest rate risk, and to a lesser extent, equity and credit risk. The company does not use derivative financial instruments for trading or speculative purposes. Derivatives that qualify for hedge accounting can be designated as either cash flow hedges, net investment hedges, or fair value hedges. The company may enter into derivative contracts that economically hedge certain of its risks, even when hedge accounting does not apply, or the company elects not to apply hedge accounting. Derivatives are recognized in the Consolidated Balance Sheet at fair value on a gross basis as either assets or liabilities and classified as current or noncurrent based upon whether the maturity of the instrument is less than or greater than 12 months. Changes in the fair value of derivatives designated as a cash flow hedge are recorded, net of applicable taxes, in OCI and subsequently reclassified into the same income statement line as the hedged exposure when the underlying hedged item is recognized in earnings. Effectiveness for net investment hedging derivatives is measured on a spot-to-spot basis. Changes in the fair value of highly effective net investment hedging derivatives and other non-derivative financial instruments designated as net investment hedges are recorded as foreign currency translation adjustments in AOCI. Changes in the fair value of the portion of a net investment hedging derivative excluded from the assessment of effectiveness are recorded in interest expense and cost of financing. Changes in the fair value of interest rate derivatives designated as a fair value hedge and the offsetting changes in the fair value of the underlying hedged exposure are recorded in interest expense and cost of financing. Changes in the fair value of derivatives not designated as hedges are reported in earnings primarily in other (income) and expense. See note T, “Derivative Financial Instruments,” for further information. The cash flows associated with derivatives designated as fair value and cash flow hedges are reported in cash flows from operating activities in the Consolidated Statement of Cash Flows. Cash flows from derivatives designated as net investment hedges and derivatives not designated as hedges are reported in cash flows from investing activities in the Consolidated Statement of Cash Flows. Cash flows from derivatives designated as hedges of foreign currency denominated debt directly associated with the settlement of the principal are reported in payments to settle debt in cash flows from financing activities in the Consolidated Statement of Cash Flows. |
Financial Instruments and Fair Value Measurement | Financial Instruments In determining the fair value of its financial instruments, the company uses a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. See note I, “Financial Assets & Liabilities,” for further information. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized. Fair Value Measurement Fair value is defined 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. The company classifies 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. 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 upon 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 driver 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” calculated 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 methodology 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. 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 debt securities that are deemed to be other-than-temporarily impaired. In the event of an other-than-temporary impairment of a debt security, fair value is measured using a model described above. Certain nonfinancial assets such as property, plant and equipment, land, goodwill 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. There were no material impairments of nonfinancial assets for the years ended December 31, 2019, 2018 and 2017. |
Cash Equivalents | Cash Equivalents All highly liquid investments with maturities of three months or less at the date of purchase are considered to be cash equivalents. |
Marketable Securities | Marketable Securities Effective January 1, 2018, with the adoption of the new FASB guidance on recognition, measurement, presentation and disclosure of financial instruments, the company measures equity investments at fair value with changes recognized in net income. Debt securities included in current assets represent securities that are expected to be realized in cash within one year of the balance sheet date. Long-term debt securities and alliance equity securities are included in investments and sundry assets. Debt securities are considered available for sale and are reported at fair value with unrealized gains and losses, net of applicable taxes, in OCI. The realized gains and losses on available-for-sale debt securities are included in other (income) and expense in the Consolidated Income Statement. Realized gains and losses are calculated based on the specific identification method. In determining whether an other-than-temporary decline in market value has occurred, the company considers the duration that, and extent to which, the fair value of the investment is below its cost, the financial condition and near-term prospects of the issuer or underlying collateral of a security; and the company’s intent and ability to retain the security in order to allow for an anticipated recovery in fair value. Other-than-temporary declines in fair value from amortized cost for available-for-sale debt securities that the company intends to sell or would more likely than not be required to sell before the expected recovery of the amortized cost basis are charged to other (income) and expense in the period in which the loss occurs. For debt securities that the company has no intent to sell and believes that it more likely than not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in other (income) and expense, while the remaining loss is recognized in OCI. |
Inventory | Inventory Raw materials, work in process and finished goods are stated at the lower of average cost or net realizable value. |
Notes and Accounts Receivable-Trade and Contract Assets | Notes and Accounts Receivable—Trade and Contract Assets The company classifies the right to consideration in exchange for products or services transferred to a client as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional as compared to a contract asset which is a right to consideration that is conditional upon factors other than the passage of time. The majority of the company’s contract assets represent unbilled amounts related to design and build services contracts when the cost-to-cost method of revenue recognition is utilized, revenue recognized exceeds the amount billed to the client, and the right to consideration is subject to milestone completion or client acceptance. Contract assets are generally classified as current and are recorded on a net basis with deferred income (i.e., contract liabilities) at the contract level. |
Factored Receivables | Factored Receivables The company enters into various factoring agreements with third-party financial institutions to sell certain of its receivables (includes notes and accounts receivable–trade, financing receivables and other accounts receivables) under nonrecourse agreements. Accounts receivable sales arrangements are utilized in the normal course of business as part of the company’s cash and liquidity management. Facilities primarily in the U.S., Canada and several countries in Europe enable the company to sell certain accounts receivable, without recourse, to third parties in order to manage credit, collection, concentration and currency risk. These transactions are accounted for as a reduction in receivables and are considered sold when accounting criteria for a sale is met. The proceeds from these arrangements are reflected as cash provided by operating activities in the Consolidated Statement of Cash Flows. The gross amounts factored (the gross proceeds) under these programs (primarily relating to notes and accounts receivable–trade) for the year ended December 31, 2019 were $2.1 billion compared to $2.2 billion for the year ended December 31, 2018. Within the accounts receivables sold and derecognized from the Consolidated Balance Sheet, $0.5 billion and $0.9 billion remained uncollected from customers at December 31, 2019 and 2018, respectively. The fees and the net gains and losses associated with the transfer of receivables were not |
Financing Receivables | Financing Receivables Financing receivables include sales-type leases, direct financing leases, commercial financing receivables and client loan and installment payment receivables (loans). Leases are accounted for in accordance with lease accounting standards. Loan receivables, which are generally unsecured, are primarily for software and services. Loans are financial assets which are recorded at amortized cost, which approximates fair value. Commercial financing receivables are carried at amortized cost, which approximates fair value. These receivables are for working capital financing to suppliers, distributors and resellers of IBM and OEM IT products and services. |
Allowance for Credit Losses and Other Credit-Related Policies | Allowance for Credit Losses Receivables are recorded concurrent with billing and shipment of a product and/or delivery of a service to customers. A reasonable estimate of probable credit losses on the value of customer receivables is recognized by establishing an allowance for credit losses. An allowance for contract assets, if needed, and uncollectible trade receivables is estimated based on a combination of write-off history, aging analysis and any specific, known troubled accounts. The company determines its allowances for credit losses on financing receivables based on two portfolio segments: lease receivables and loan receivables. The company further segments the portfolio into three classes: Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific. When calculating the allowances, the company considers its ability to mitigate a potential loss by repossessing leased equipment and by considering the current fair market value of any other collateral. The value of the equipment is the net realizable value. The allowance for credit losses for sales-type and direct financing leases, installment payment plan receivables and customer loans includes an assessment of the entire balance of the lease or loan, including amounts not yet due. The methodologies that the company uses to calculate its receivables reserves, which are applied consistently to its different portfolios, are as follows: ​ Individually Evaluated– Collectively Evaluated– Other Credit-Related Policies Past Due– Non-Accrual– Impaired Loans– Write-Off– |
Leases | Leases The company conducts business as both a lessee and a lessor. In its ordinary course of business, the company enters into leases as a lessee for property, plant and equipment. The company is also the lessor of certain equipment, mainly through its Global Financing segment. When procuring goods or services, or upon entering into a contract with its clients, the company determines whether an arrangement contains a lease at its inception. As part of that evaluation, the company considers whether there is an implicitly or explicitly identified asset in the arrangement and whether the company, as the lessee, or the client, if the company is the lessor, has the right to control the use of that asset. |
Accounting for Leases as a Lessee | Accounting for Leases as a Lessee Effective January 1, 2019, when the company is the lessee, all leases with a term of more than 12 months are recognized as right-of-use (ROU) assets and associated lease liabilities in the Consolidated Balance Sheet. The lease liabilities are measured at the lease commencement date and determined using the present value of the lease payments not yet paid and the company’s incremental borrowing rate, which approximates the rate at which the company would borrow on a secured basis in the country where the lease was executed. The interest rate implicit in the lease is generally not determinable in transactions where the company is the lessee. The ROU asset equals the lease liability adjusted for any initial direct costs (IDCs), prepaid rent and lease incentives. The company’s variable lease payments generally relate to payments tied to various indexes, non-lease components and payments above a contractual minimum fixed amount. Operating leases are included in operating right-of-use assets – net, current operating lease liabilities and operating lease liabilities in the Consolidated Balance Sheet. Finance leases are included in property, plant and equipment, short-term debt and long-term debt in the Consolidated Balance Sheet. The lease term includes options to extend or terminate the lease when it is reasonably certain that the company will exercise that option. The company made a policy election to not recognize leases with a lease term of 12 months or less in the Consolidated Balance Sheet. For all asset classes, the company has elected the lessee practical expedient to combine lease and non-lease components (e.g., maintenance services) and account for the combined unit as a single lease component. A significant portion of the company’s lease portfolio is real estate, which are mainly accounted for as operating leases, and are primarily used for corporate offices and data centers. The average term of the real estate leases is approximately five years. The company also has equipment leases, such as IT equipment and vehicles, which have lease terms that range from two |
Accounting for Leases as a Lessor | Accounting for Leases as a Lessor The company typically enters into leases as an alternative means of realizing value from equipment that it would otherwise sell. Assets under lease include new and used IBM equipment and certain OEM products. IBM equipment generally consists of IBM Z, Power Systems and Storage Systems products. ​ Lease payments due to IBM are typically fixed and paid in equal installments over the lease term. The majority of the company’s leases do not contain variable payments that are dependent on an index or a rate. Variable lease payments that do not depend on an index or a rate (e.g., property taxes), that are paid directly by the company and are reimbursed by the client, are recorded as revenue, along with the related cost, in the period in which collection of these payments is probable. Payments that are made directly by the client to a third party, including certain property taxes and insurance, are not considered part of variable payments and therefore are not recorded by the company. The company has made a policy election to exclude from consideration in contracts all collections from sales and other similar taxes. The company’s payment terms for leases are typically unconditional. Therefore, in an instance when the client requests to terminate the lease prior to the end of the lease term, the client would typically be required to pay the remaining lease payments in full. At the end of the lease term, the company allows the client to either return the equipment, purchase the equipment at the then-current fair market value or at a pre-stated purchase price or renew the lease based on mutually agreed upon terms. When lease arrangements include multiple performance obligations, the company allocates the consideration in the contract between the lease components and the non-lease components on a relative standalone selling price basis. Sales-Type and Direct Financing Leases For sales-type or direct financing lease, the carrying amount of the asset is derecognized from inventory and a net investment in the lease is recorded. For a sales-type lease, the net investment in the lease is measured at commencement date as the sum of the lease receivable and the estimated residual value of the equipment less unearned income and allowance for credit losses. Any selling profit or loss arising from a sales-type lease is recorded at lease commencement. Selling profit or loss is presented on a gross basis when the company enters into a lease to realize value from a product that it would otherwise sell in its ordinary course of business, whereas in transactions where the company enters into a lease for the purpose of generating revenue by providing financing, the selling profit or loss is presented on a net basis. Under a sales-type lease, initial direct costs are expensed at lease commencement. Over the term of the lease, the company recognizes finance income on the net investment in the lease and any variable lease payments, which are not included in the net investment in the lease. For a direct financing lease, the net investment in the lease is measured similarly to a sales-type lease, however, the net investment in the lease is reduced by any selling profit. In a direct financing lease, the selling profit and initial direct costs are deferred at commencement and recognized over the lease term. The company rarely enters into direct financing leases. The estimated residual value represents the estimated fair value of the equipment under lease at the end of the lease. Estimating residual value is a risk unique to financing activities, and management of this risk is dependent upon the ability to accurately project future equipment values. The company has insight into product plans and cycles for both the IBM and OEM IT products under lease. The company estimates the future fair value of leased equipment by using historical models, analyzing the current market for new and used equipment and obtaining forward-looking product information such as marketing plans and technology innovations. The company optimizes the recovery of residual values by extending lease arrangements with, or selling leased equipment to existing clients. The company has historically managed residual value risk both through insight into its own product cycles and monitoring of OEM IT product announcements. The company periodically reassesses the realizable value of its lease residual values. Anticipated decreases in specific future residual values that are considered to be other-than-temporary are recognized immediately upon identification and are recorded as an adjustment to the residual value estimate. For sales-type and direct financing leases, this reduction lowers the recorded net investment and is recognized as a loss charged to finance income in the period in which the estimate is changed, as well as an adjustment to unearned income to reduce future-period financing income. Operating Leases Equipment provided to clients under an operating lease is carried at cost within property, plant and equipment in the Consolidated Balance Sheet and depreciated over the lease term using the straight-line method, generally ranging from one At commencement of an operating lease, IDCs are deferred. As lease payments are made, the company records sales revenue over the lease term. IDCs are amortized over the lease term on the same basis as lease income is recorded. Assets under operating leases are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The impairment test is based on undiscounted cash flows, and, if impaired, the asset is written down to fair value based on either discounted cash flows or appraised values. |
Common Stock | Common Stock Common stock refers to the $.20 par value per share capital stock as designated in the company’s Certificate of Incorporation. Treasury stock is accounted for using the cost method. When treasury stock is reissued, the value is computed and recorded using a weighted-average basis. |
Earnings Per Share of Common Stock | Earnings Per Share of Common Stock Earnings per share (EPS) is computed using the two-class method, which determines EPS for each class of common stock and participating securities according to dividends and dividend equivalents and their respective participation rights in undistributed earnings. Basic EPS of common stock is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS of common stock is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock awards, convertible notes and stock options. |
Accounting Changes | New Standards to be Implemented Simplifying the Accounting for Income Taxes Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Simplifying the Test for Goodwill Impairment Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Financial Instruments–Credit Losses Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Standards Implemented Disclosure Requirements Changes for Fair Value Measurements and Defined Benefit Plans Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Leases Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters million ​ Cloud Computing Implementation Costs Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Reclassification of Certain Tax Effects from AOCI Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Hedge Accounting Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Financial Instruments–Recognition and Measurement Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters Revenue Recognition–Contracts with Customers Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters ​ impact to net deferred taxes and retained earnings of $56 million Share-Based Payments Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other Significant Matters |
Remaining Performance Obligations | Remaining Performance Obligations The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not ​ include contracts that have an original duration of one year or less. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustments for revenue that has not materialized and adjustments for currency. |
Segments | The segments represent components of the company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker (the chief executive officer) in determining how to allocate resources and evaluate performance. The segments are determined based on several factors, including client base, homogeneity of products, technology, delivery channels and similar economic characteristics. |
Segment Revenue and Pre-tax Income | Segment revenue and pre-tax income include transactions between the segments that are intended to reflect an arm’s-length, market-based transfer price. Systems that are used by Global Technology Services in outsourcing arrangements are primarily sourced internally from the Systems segment, and software is primarily sourced internally through the Cloud & Cognitive Software and Systems segments. For providing IT services that are used internally, Global Technology Services and Global Business Services recover cost, as well as a reasonable fee, that is intended to reflect the arm’s-length value of providing the services. They enter into arm’s-length loans at prices equivalent to market rates with Global Financing to facilitate the acquisition of equipment and software used in services engagements. All internal transaction prices are reviewed annually, and reset if appropriate. The company utilizes globally integrated support organizations to realize economies of scale and efficient use of resources. As a result, a considerable amount of expense is shared by all of the segments. This shared expense includes sales coverage, certain marketing functions and support functions such as Accounting, Treasury, Procurement, Legal, Human Resources and Billing and Collections. Where practical, shared expenses are allocated based on measurable drivers of expense, e.g., headcount. When a clear and measurable driver cannot be identified, shared expenses are allocated on a financial basis that is consistent with the company’s management system, e.g., advertising expense is allocated based on the gross profits of the segments. A portion of the shared expenses, which are recorded in net income, are not allocated to the segments. These expenses are associated with the elimination of internal transactions and other miscellaneous items. The following tables reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company and have been recast for the prior-year periods due to the company’s January 2019 segment changes. Performance measurement is based on 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. |
Segment Assets and Other Items | To ensure the efficient use of the company’s space and equipment, several segments may share leased or owned plant, property and equipment assets. Where assets are shared, landlord ownership of the assets is assigned to one segment and is not allocated to each user segment. This is consistent with the company’s management system and is reflected accordingly in the table below. In those cases, there will not be a precise correlation between segment pre-tax income and segment assets. Depreciation expense and capital expenditures that are reported by each segment also are consistent with the landlord ownership basis of asset assignment. Global Financing amounts for interest income and interest expense reflect the interest income and interest expense associated with the Global Financing business, including the intercompany financing activities discussed on page 33, as well as the income from investment in cash and marketable securities. |
Acquisitions | Acquisitions The company accounts for business combinations using the acquisition method, and accordingly, the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree are recorded at their acquisition date fair values. Significant judgments and use of estimates are required when performing valuations. For example, the company uses judgments when estimating the fair value of intangible assets using a discounted cash flow model, which involves the use of significant estimates and assumptions with respect to revenue growth rates, the customer attrition rate and discount rates. Purchase price consideration for all acquisitions was paid primarily in cash. All acquisitions, except otherwise stated were for 100 percent of the acquired business and are reported in the Consolidated Statement of Cash Flows, net of acquired cash and cash equivalents. |
Financial Assets and Liabilities Not Measured At Fair Value | 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 and including short-term finance lease liabilities) 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, except for short-term debt which would be classified as Level 2. Loans and Long-Term Receivables Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At December 31, 2019 and 2018, the difference between the carrying amount and estimated fair value for loans and 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 (including long-term finance lease liabilities) 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 $54,102 million and $35,605 million, and the estimated fair value was $58,431 million and $36,599 million at December 31, 2019 and 2018, 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. |
Cash Payments Lease Costs | Cash payments related to variable lease costs and short-term leases are not included in the measurement of operating and finance lease liabilities |
Commitments | 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. |
Contingencies | The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that 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 years ended December 31, 2019, 2018 and 2017 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 certain 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 losses, 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 experience 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 to 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. |
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 financial 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 exchange rate fluctuations. |
Offsetting Derivatives | In the Consolidated Balance Sheet, 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. |
Derivatives, Methods of Accounting, Hedge Effectiveness | (3) The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing in net income each period. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue | |
Schedule of disaggregation of revenue | ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 Cognitive Applications ​ $ 5,765 ​ $ 5,633 * Cloud & Data Platforms ​ 9,499 ​ 8,603 * Transaction Processing Platforms ​ ​ 7,936 ​ ​ 7,974 * Total Cloud & Cognitive Software ​ $ 23,200 ​ $ 22,209 * Consulting ​ $ 7,993 ​ $ 7,705 ​ Application Management ​ ​ 7,646 ​ ​ 7,852 ​ Global Process Services ​ 995 ​ 1,037 * Total Global Business Services ​ $ 16,634 ​ $ 16,595 * Infrastructure & Cloud Services ​ $ 20,736 ​ $ 22,185 * Technology Support Services ​ 6,625 ​ 6,961 ​ Total Global Technology Services ​ $ 27,361 ​ $ 29,146 * Systems Hardware ​ $ 5,918 ​ $ 6,363 ​ Operating Systems Software ​ ​ 1,686 ​ ​ 1,671 ​ Total Systems ​ $ 7,604 ​ $ 8,034 ​ Global Financing** ​ $ 1,400 ​ $ 1,590 ​ Other ​ $ 948 ​ $ 2,018 * Total Revenue ​ $ 77,147 ​ $ 79,591 ​ * Recast to conform to 2019 presentation. ** Contains lease and loan/working capital financing arrangements which are not subject to the guidance on revenue from contracts with customers. |
Schedule of disaggregation of revenue by geography | ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ For the year ended December 31: 2019 2018 Americas ​ $ 36,274 ​ $ 36,994 Europe/Middle East/Africa ​ 24,443 ​ 25,491 Asia Pacific ​ 16,430 ​ 17,106 Total ​ $ 77,147 ​ $ 79,591 |
Schedule of reconciliation of contract balances | ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ At December 31: 2019 2018 Notes and accounts receivable—trade (net of allowances of $299 in 2019 and $309 in 2018) ​ $ 7,870 ​ $ 7,432 Contract assets (1) ​ 492 ​ 470 Deferred income (current) ​ 12,026 ​ 11,165 Deferred income (noncurrent) ​ 3,851 ​ 3,445 (1) Included within prepaid expenses and other current assets in the Consolidated Balance Sheet. |
Schedule of deferred contract costs | ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ At December 31: ​ 2019 2018 Capitalized costs to obtain a contract ​ $ 609 ​ $ 717 Deferred costs to fulfill a contract ​ ​ Deferred setup costs ​ 1,939 ​ 2,085 Other deferred fulfillment costs ​ 1,820 ​ 2,173 Total deferred costs (1) ​ $ 4,368 ​ $ 4,975 (1) Of the total deferred costs, $1,896 million was current and $2,472 million was noncurrent at December 31, 2019 and $2,300 million was current and $2,676 million was noncurrent at December 31, 2018. |
Segments (Tables)
Segments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segments | |
Revenue and Pre-tax Income by Segment | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cloud & Global Global ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) Cognitive Business Technology ​ ​ ​ Global Total ​ For the year ended December 31: Software Services Services Systems Financing Segments ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ External revenue $ 23,200 ​ $ 16,634 ​ $ 27,361 ​ $ 7,604 ​ $ 1,400 ​ $ 76,199 ​ Internal revenue ​ ​ 2,827 ​ ​ 278 ​ ​ 1,157 ​ ​ 726 ​ ​ 1,232 ​ ​ 6,220 ​ Total revenue $ 26,027 ​ $ 16,911 ​ $ 28,518 ​ $ 8,330 ​ $ 2,632 ​ $ 82,419 ​ Pre-tax income from continuing operations $ 7,952 ​ $ 1,666 ​ $ 1,645 ​ $ 701 ​ $ 1,055 ​ $ 13,019 ​ Revenue year-to-year change ​ ​ 2.5 % ​ (0.1) % ​ (5.0) % ​ (5.9) % ​ (17.8) % ​ (2.3) % Pre-tax income year-to-year change ​ ​ (10.5) % ​ 2.2 % ​ (7.6) % ​ (22.4) % ​ (22.5) % ​ (10.6) % Pre-tax income margin ​ ​ 30.6 % ​ 9.9 % ​ 5.8 % ​ 8.4 % ​ 40.1 % ​ 15.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ External revenue $ 22,209 * $ 16,595 * $ 29,146 * $ 8,034 ​ $ 1,590 ​ $ 77,573 * Internal revenue ​ ​ 3,190 * ​ 326 ​ ​ 872 * ​ 815 ​ ​ 1,610 ​ ​ 6,813 * Total revenue $ 25,399 * $ 16,921 * $ 30,018 * $ 8,848 ​ $ 3,200 ​ $ 84,386 * Pre-tax income from continuing operations $ 8,882 * $ 1,629 * $ 1,781 * $ 904 ​ $ 1,361 ​ $ 14,557 * Revenue year-to-year change ​ ​ 2.0 %* ​ 2.9 %* ​ 0.5 %* ​ (1.1) % ​ 1.0 % ​ 1.3 %* Pre-tax income year-to-year change ​ ​ 10.1 %* ​ 25.0 %* ​ (32.0) %* ​ (19.9) % ​ 6.5 % ​ 1.1 %* Pre-tax income margin ​ ​ 35.0 %* ​ 9.6 %* ​ 5.9 %* ​ 10.2 % ​ 42.5 % ​ 17.3 %* ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ External revenue $ 21,751 * $ 16,073 * $ 29,213 * $ 8,194 ​ $ 1,696 ​ $ 76,927 * Internal revenue ​ ​ 3,159 * ​ 363 ​ ​ 657 ​ ​ 750 ​ ​ 1,471 ​ ​ 6,401 * Total revenue $ 24,910 * $ 16,436 * $ 29,870 * $ 8,945 ​ $ 3,168 ​ $ 83,329 * Pre-tax income from continuing operations $ 8,068 * $ 1,303 * $ 2,618 * $ 1,128 ​ $ 1,278 ​ $ 14,396 * Revenue year-to-year change ​ ​ 2.0 %* ​ (1.9) %* ​ (3.6) %* ​ 5.7 % ​ (9.3) % ​ (0.9) %* Pre-tax income year-to-year change ​ ​ 7.3 %* ​ (18.4) %* ​ (13.2) %* ​ 21.9 % ​ (22.8) % ​ (2.2) %* Pre-tax income margin ​ ​ 32.4 %* ​ 7.9 %* ​ 8.8 %* ​ 12.6 % ​ 40.3 % ​ 17.3 %* * Recast to conform to 2019 presentation. |
Reconciliation of segment revenue and pre-tax income to IBM as reported | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ For the year ended December 31: ​ 2019 ​ 2018 ​ 2017 ​ Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total reportable segments ​ $ 82,419 ​ $ 84,386 * $ 83,329 * Other—divested businesses ​ ​ 786 ​ ​ 1,810 * ​ 2,041 * Other revenue ​ ​ 162 ​ ​ 207 ​ ​ 171 ​ Elimination of internal transactions ​ ​ (6,220) ​ ​ (6,813) * ​ (6,401) * Total IBM consolidated revenue ​ $ 77,147 ​ $ 79,591 ​ $ 79,139 ​ * Recast to conform to 2019 presentation. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 Pre-tax income from continuing operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total reportable segments ​ $ 13,019 ​ $ 14,557 * $ 14,396 * Amortization of acquired intangible assets ​ ​ (1,298) ​ ​ (809) ​ ​ (945) ​ Acquisition-related charges ​ ​ (423) ​ ​ (16) ​ ​ (52) ​ Non-operating retirement - related (costs)/income ​ ​ (615) ​ ​ (1,572) ​ ​ (1,341) ​ Elimination of internal transactions ​ ​ (290) ​ ​ (725) * ​ (742) * Other—divested businesses ​ ​ 390 ​ ​ 292 * ​ 468 * Unallocated corporate amounts ​ ​ (617) ​ ​ (385) ​ ​ (385) ​ Total pre-tax income from continuing operations ​ $ 10,166 ​ $ 11,342 ​ $ 11,400 ​ * Recast to conform to 2019 presentation. |
Assets and Other Items by segment | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cloud & Global Global ​ ​ ​ ($ in millions) ​ Cognitive ​ Business ​ Technology ​ ​ ​ Global ​ Total ​ For the year ended December 31: ​ Software ​ Services ​ Services ​ Systems ​ Financing ​ Segments ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ $ 58,453 ​ $ 10,039 ​ $ 22,436 ​ $ 4,590 ​ $ 29,568 ​ $ 125,087 ​ Depreciation/amortization of intangibles** ​ ​ 1,107 ​ ​ 149 ​ ​ 2,601 ​ ​ 350 ​ ​ 186 ​ ​ 4,392 ​ Capital expenditures/investments in intangibles ​ ​ 515 ​ ​ 48 ​ ​ 1,575 ​ ​ 305 ​ ​ 57 ​ ​ 2,501 ​ Interest income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,490 ​ ​ 1,490 ​ Interest expense ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 512 ​ ​ 512 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ $ 28,713 * $ 8,360 * $ 17,624 * $ 4,030 ​ $ 41,320 ​ $ 100,047 * Depreciation/amortization of intangibles** ​ ​ 1,058 * ​ 100 * ​ 2,359 * ​ 315 ​ ​ 229 ​ ​ 4,063 * Capital expenditures/investments in intangibles ​ ​ 469 * ​ 57 * ​ 2,569 * ​ 241 ​ ​ 274 ​ ​ 3,610 * Interest income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,647 ​ ​ 1,647 ​ Interest expense ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 515 ​ ​ 515 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ $ 29,650 * $ 8,647 * $ 17,577 * $ 3,898 ​ $ 41,096 ​ $ 100,868 * Depreciation/amortization of intangibles** ​ ​ 1,185 * ​ 99 * ​ 2,209 * ​ 341 ​ ​ 267 ​ ​ 4,101 * Capital expenditures/investments in intangibles ​ ​ 467 * ​ 46 * ​ 2,193 * ​ 189 ​ ​ 364 ​ ​ 3,259 * Interest income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,527 ​ ​ 1,527 ​ Interest expense ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 381 ​ ​ 381 ​ * Recast to conform to 2019 presentation. ** Segment pre-tax income from continuing operations does not include the amortization of intangible assets. |
Reconciliation of assets to IBM as reported | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ At December 31: ​ 2019 ​ 2018 ​ 2017 ​ Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total reportable segments ​ $ 125,087 ​ $ 100,047 * $ 100,868 * Elimination of internal transactions ​ ​ (4,317) ​ ​ (7,143) ​ ​ (6,272) ​ Other—divested businesses ​ ​ 1,894 ​ ​ 2,575 * ​ 2,285 * Unallocated amounts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and marketable securities ​ ​ 7,308 ​ ​ 10,393 ​ ​ 10,162 ​ Notes and accounts receivable ​ ​ 3,298 ​ ​ 1,597 ​ ​ 2,554 ​ Deferred tax assets ​ ​ 4,995 ​ ​ 5,089 ​ ​ 4,746 ​ Plant, other property and equipment ​ ​ 2,334 ​ ​ 2,463 ​ ​ 2,659 ​ Operating right-of-use assets** ​ ​ 3,530 ​ ​ — ​ ​ — ​ Pension assets ​ ​ 6,865 ​ ​ 4,666 ​ ​ 4,643 ​ Other ​ ​ 1,194 ​ ​ 3,695 ​ ​ 3,712 ​ Total IBM consolidated assets ​ $ 152,186 ​ $ 123,382 ​ $ 125,356 ​ * Recast to conform to 2019 presentation. ** Reflects the adoption of the FASB guidance on leases in 2019. |
Geographic Information | The following provides information for those countries that are 10 percent or more of the specific category Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ For the year ended December 31: ​ 2019 ​ 2018 ​ 2017 United States ​ $ 28,395 ​ $ 29,078 ​ $ 29,759 Japan ​ ​ 8,681 ​ ​ 8,489 ​ ​ 8,239 Other countries ​ ​ 40,071 ​ ​ 42,024 ​ ​ 41,141 Total IBM consolidated revenue ​ $ 77,147 ​ $ 79,591 ​ $ 79,139 * Revenues are attributed to countries based on the location of the client. Plant and Other Property–Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ At December 31: 2019 2018 2017 United States ​ $ 4,485 ​ $ 4,585 ​ $ 4,670 Other countries ​ ​ 5,294 ​ ​ 5,774 ​ ​ 5,985 Total ​ $ 9,778 ​ $ 10,359 ​ $ 10,655 ​ Operating Right-of-Use Assets–Net* ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ At December 31: ​ 2019 ​ 2018 ​ 2017 United States ​ $ 1,386 ​ $ — ​ $ — Japan ​ ​ 659 ​ ​ — ​ ​ — Other countries ​ ​ 2,951 ​ ​ — ​ ​ — Total ​ $ 4,996 ​ $ — ​ $ — * Reflects the adoption of the FASB guidance on leases in 2019. |
Revenue by Classes of Similar Products or Services | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 Cloud & Cognitive Software* ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Software ​ $ 18,712 ​ $ 17,970 ** $ 17,681 ** Services ​ ​ 4,321 ​ ​ 4,082 ** ​ 3,920 ** Systems ​ ​ 166 ​ ​ 156 ​ ​ 150 ​ Global Business Services* ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Services ​ $ 16,363 ​ $ 16,238 ** $ 15,728 ** Software ​ ​ 156 ​ ​ 151 ** ​ 179 ** Systems ​ ​ 115 ​ ​ 206 ​ ​ 165 ​ Global Technology Services* ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Services ​ $ 20,768 ​ $ 22,222 ** $ 21,913 ** Maintenance ​ ​ 5,183 ​ ​ 5,484 ​ ​ 5,783 ​ Systems ​ ​ 1,072 ​ ​ 1,069 ​ ​ 1,207 ​ Software ​ ​ 338 ​ ​ 371 ** ​ 310 ** Systems ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Servers ​ $ 3,746 ​ $ 3,996 ​ $ 3,993 ​ Storage ​ ​ 1,920 ​ ​ 2,114 ​ ​ 2,243 ​ Software ​ ​ 1,528 ​ ​ 1,499 ** ​ 1,520 ** Services ​ ​ 410 ​ ​ 425 ** ​ 438 ** Global Financing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financing ​ $ 1,120 ​ $ 1,223 ​ $ 1,167 ​ Used equipment sales ​ ​ 281 ​ ​ 366 ​ ​ 530 ​ * Recast to conform to 2019 presentation. ** Reclassified to conform to 2019 presentation. Refer to “Basis of Presentation” in note A, “Significant Accounting Policies,” for additional information. |
Acquisitions & Divestitures (Ta
Acquisitions & Divestitures (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Acquisitions/Divestitures | |
Business acquisition, goodwill segment allocation | ​ ​ ​ ​ ​ ($ in billions) Goodwill Segment ​ Allocated Cloud & Cognitive Software ​ $ 18.5 Global Technology Services ​ ​ 3.1 Global Business Services ​ ​ 1.1 Systems ​ ​ 0.4 Total ​ $ 23.1 * It is expected that approximately seven percent of the goodwill will be deductible for tax purposes. |
Business acquisition, recognized compensation expense | ​ ​ ​ ​ ​ ($ in millions) Compensation Line Item ​ Expense Cost ​ $ 20 Selling, general and administrative expense ​ ​ 124 Research, development and engineering expense ​ ​ 86 Total ​ $ 230 * The remaining compensation expense of approximately $185 million associated with the retention plans will be recognized over the remaining requisite service periods, which range from six months to three years from the acquisition date. |
Business acquisition, pro forma information | ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ For the year ended December 31: ​ 2019 ​ 2018 Revenue ​ $ 79,628 ​ $ 81,360 Net income ​ $ 9,723 ​ $ 5,702 |
Red Hat, Inc. | |
Acquisitions/Divestitures | |
Business acquisition, total consideration | ​ ​ ​ ​ ​ ($ in millions) Total Cash paid for outstanding Red Hat common stock ​ $ 33,769 Cash paid for Red Hat equity awards ​ ​ 24 Cash paid to settle warrants ​ ​ 1,008 Cash consideration ​ $ 34,801 Fair value of stock-based compensation awards attributable to pre-combination services ​ ​ 174 Stock issued to holders of vested performance share units ​ ​ 45 Settlement of pre-existing relationships ​ ​ 60 Total consideration ​ $ 35,080 |
Business acquisition, purchase price allocation | ​ ​ ​ ​ ​ ​ ​ ​ Amortization Allocated ($ in millions) ​ Life (in Years) ​ Amount Current assets* ​ ​ ​ $ 3,186 Property, plant and equipment/noncurrent assets ​ ​ ​ ​ 939 Intangible assets ​ ​ ​ ​ ​ Goodwill ​ N/A ​ ​ 23,125 Client relationships ​ 10 ​ ​ 7,215 Completed technology ​ 9 ​ ​ 4,571 Trademarks ​ 20 ​ ​ 1,686 Total assets acquired ​ ​ ​ $ 40,722 Current liabilities** ​ ​ ​ ​ 1,378 Noncurrent liabilities ​ ​ ​ ​ 4,265 Total liabilities assumed ​ ​ ​ $ 5,642 Total purchase price ​ ​ ​ $ 35,080 * Includes $2.2 billion of cash and cash equivalents. ** Includes $485 million of short-term debt related to the convertible notes acquired from Red Hat that were recognized at their fair value on the acquisition date, which was fully settled as of October 1, 2019. N/A-Not applicable |
2017 Acquisitions | |
Acquisitions/Divestitures | |
Business acquisition, purchase price allocation | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization ​ Total ($ in millions) ​ Life (in Years) ​ Acquisitions Current assets ​ ​ ​ $ 18 Fixed assets/noncurrent assets ​ ​ ​ ​ 69 Intangible assets ​ ​ ​ ​ ​ Goodwill ​ N/A ​ ​ 16 Completed technology ​ 5 ​ ​ 9 Client relationships ​ 5–7 ​ ​ 64 Patents/trademarks ​ 1–5 ​ ​ 1 Total assets acquired ​ ​ ​ $ 177 Current liabilities ​ ​ ​ ​ (9) Noncurrent liabilities ​ ​ ​ ​ (34) Total liabilities assumed ​ ​ ​ $ (43) Total purchase price ​ ​ ​ $ 134 ​ N/A—Not applicable |
Taxes (Tables)
Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Taxes | |
Income before income taxes | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 Income from continuing operations before income taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. operations ​ $ (315) ​ $ 627 ​ $ 560 Non-U.S. operations ​ ​ 10,481 ​ ​ 10,715 ​ ​ 10,840 Total income from continuing operations before income taxes ​ $ 10,166 ​ $ 11,342 ​ $ 11,400 |
Components of the provision for income taxes by geographic operations and taxing jurisdiction | ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 U.S. operations ​ $ (408) ​ $ 1,199 ​ $ 2,923 Non-U.S. operations ​ ​ 1,139 ​ ​ 1,420 ​ ​ 2,719 Total continuing operations provision for income taxes ​ $ 731 ​ $ 2,619 ​ $ 5,642 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 U.S. federal ​ ​ ​ ​ ​ ​ ​ ​ ​ Current ​ $ 331 ​ $ (342) ​ $ 2,388 Deferred ​ ​ (839) ​ ​ 1,377 ​ ​ 77 ​ ​ $ (508) ​ $ 1,035 ​ $ 2,465 U.S. state and local ​ ​ ​ ​ ​ ​ ​ ​ ​ Current ​ $ (85) ​ $ 127 ​ $ 55 Deferred ​ ​ (82) ​ ​ (292) ​ ​ 28 ​ ​ $ (167) ​ $ (165) ​ $ 83 Non-U.S. ​ ​ ​ ​ ​ ​ ​ ​ ​ Current ​ $ 1,829 ​ $ 2,135 ​ $ 3,891 Deferred ​ ​ (423) ​ ​ (386) ​ ​ (797) ​ ​ $ 1,406 ​ $ 1,749 ​ $ 3,094 Total continuing operations provision for income taxes ​ $ 731 ​ $ 2,619 ​ $ 5,642 Discontinued operations provision for/(benefit from) income taxes ​ ​ (1) ​ ​ 2 ​ ​ (3) Provision for social security, real estate, personal property and other taxes ​ ​ 3,304 ​ ​ 3,322 ​ ​ 3,434 Total taxes included in net income ​ $ 4,034 ​ $ 5,943 ​ $ 9,073 |
Effective income tax rate reconciliation | ​ For the year ended December 31: 2019 2018 2017 Statutory rate ​ 21 % 21 % 35 % Enactment of U.S. tax reform ​ 1 ​ 18 ​ 48 ​ Tax differential on foreign income ​ (11) ​ (9) * (26) ​ Intra-entity transfers ​ 0 ​ 0 ​ (5) ​ Domestic incentives ​ (2) ​ (3) * (2) ​ State and local ​ (1) ​ (1) ​ 1 ​ Other ​ (1) ​ (3) ​ (2) ​ Effective rate ​ 7 % 23 % 49 % * Reclassified to conform to 2019 presentation. Percentages rounded for disclosure purposes. |
Components of deferred tax assets and liabilities | Deferred Tax Assets ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ At December 31: 2019 2018 ​ Retirement benefits ​ $ 3,766 ​ $ 3,620 ​ Leases* ​ ​ 1,729 ​ ​ 103 ** Share-based and other compensation ​ ​ 637 ​ ​ 636 ​ Domestic tax loss/credit carryforwards ​ ​ 1,259 ​ ​ 964 ​ Deferred income ​ ​ 600 ​ ​ 674 ​ Foreign tax loss/credit carryforwards ​ ​ 836 ​ ​ 903 ​ Bad debt, inventory and warranty reserves ​ ​ 298 ​ ​ 348 ​ Depreciation ​ ​ 253 ​ ​ 231 ​ Accruals ​ ​ 368 ​ ​ 336 ​ Intangible assets ​ ​ 592 ​ ​ 620 ​ Capitalized research and development ​ ​ 722 ​ ​ — ​ Other ​ ​ 1,438 ​ ​ 1,398 Gross deferred tax assets ​ ​ 12,498 ​ ​ 9,833 ​ Less: valuation allowance ​ ​ 608 ​ ​ 915 ​ Net deferred tax assets ​ $ 11,890 ​ $ 8,918 ​ ​ Deferred Tax Liabilities ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ At December 31: 2019 2018 ​ Goodwill and intangible assets+ ​ $ 3,111 ​ $ 1,200 ​ GILTI deferred taxes ​ ​ 1,908 ​ ​ 1,927 ​ Leases and right-of-use assets* ​ ​ 2,216 ​ ​ 580 ​ Depreciation ​ ​ 728 ​ ​ 719 ​ Retirement benefits ​ ​ 1,002 ​ ​ 455 ​ Software development costs+ ​ ​ 1,075 ​ ​ 292 ​ Deferred transition costs ​ ​ 233 ​ ​ 233 ​ Undistributed foreign earnings ​ ​ 725 ​ ​ 981 ​ Other ​ ​ 940 ​ ​ 1,011 ​ Gross deferred tax liabilities ​ $ 11,938 ​ $ 7,398 ​ * Reflects the adoption of the FASB guidance on leases. ** Previously included in Other. + |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | ​ ​ ​ ​ ($ in millions) 2019 2018 2017 Balance at January 1 ​ $ 6,759 ​ $ 7,031 ​ $ 3,740 Additions based on tax positions related to the current year ​ ​ 816 ​ ​ 394 ​ ​ 3,029 Additions for tax positions of prior years ​ ​ 779 ​ ​ 1,201 ​ ​ 803 Reductions for tax positions of prior years (including impacts due to a lapse of statute) ​ ​ (922) ​ ​ (1,686) ​ ​ (367) Settlements ​ ​ (286) ​ ​ (181) ​ ​ (174) Balance at December 31 ​ $ 7,146 ​ $ 6,759 ​ $ 7,031 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share | |
Computation of basic and diluted earnings per share | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions except per share amounts) ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 Weighted-average number of shares on which earnings per share calculations are based ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ 887,235,105 ​ ​ 912,048,072 ​ ​ 932,828,295 Add—incremental shares under stock-based compensation plans ​ ​ 4,199,440 ​ ​ 2,786,316 ​ ​ 3,094,373 Add—incremental shares associated with contingently issuable shares ​ ​ 1,378,831 ​ ​ 1,481,326 ​ ​ 1,462,957 Assuming dilution ​ ​ 892,813,376 ​ ​ 916,315,714 ​ ​ 937,385,625 Income from continuing operations ​ $ 9,435 ​ $ 8,723 ​ $ 5,758 Income/(loss) from discontinued operations, net of tax ​ ​ (4) ​ ​ 5 ​ ​ (5) Net income on which basic earnings per share is calculated ​ $ 9,431 ​ $ 8,728 ​ $ 5,753 Income from continuing operations ​ $ 9,435 ​ $ 8,723 ​ $ 5,758 Net income applicable to contingently issuable shares ​ ​ 0 ​ ​ (6) ​ ​ (2) Income from continuing operations on which diluted earnings per share is calculated ​ $ 9,435 ​ $ 8,718 ​ $ 5,756 Income/(loss) from discontinued operations, net of tax, on which basic and diluted earnings per share is calculated ​ ​ (4) ​ ​ 5 ​ ​ (5) Net income on which diluted earnings per share is calculated ​ $ 9,431 ​ $ 8,722 ​ $ 5,752 Earnings/(loss) per share of common stock ​ ​ ​ ​ ​ ​ ​ ​ ​ Assuming dilution ​ ​ ​ ​ ​ ​ ​ ​ ​ Continuing operations ​ $ 10.57 ​ $ 9.51 ​ $ 6.14 Discontinued operations ​ ​ (0.01) ​ ​ 0.01 ​ ​ 0.00 Total ​ $ 10.56 ​ $ 9.52 ​ $ 6.14 Basic ​ ​ ​ ​ ​ ​ ​ ​ ​ Continuing operations ​ $ 10.63 ​ $ 9.56 ​ $ 6.17 Discontinued operations ​ ​ 0.00 ​ ​ 0.01 ​ ​ 0.00 Total ​ $ 10.63 ​ $ 9.57 ​ $ 6.17 |
Financial Assets & Liabilities
Financial Assets & Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Financial Assets & Liabilities | |
Financial assets and financial liabilities measured at fair value on a recurring basis | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Hierarchy ​ 2019 ​ 2018 At December 31: Level Assets (7) Liabilities (8) Assets (7) Liabilities (8) Cash equivalents (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time deposits and certificates of deposit (4) ​ 2 ​ $ 4,392 ​ $ — ​ $ 7,679 ​ $ — Money market funds ​ 1 ​ ​ 427 ​ ​ — ​ ​ 25 ​ ​ — Total cash equivalents ​ ​ ​ $ 4,819 ​ $ — ​ $ 7,704 ​ $ — Equity investments (2) ​ 1 ​ ​ 0 ​ ​ — ​ ​ 0 ​ ​ — Debt securities – current (3)(4) ​ 2 ​ ​ 696 ​ ​ — ​ ​ 618 ​ ​ — Debt securities – noncurrent (2)(4) ​ 2 ​ ​ 65 ​ ​ — ​ ​ — ​ ​ — Derivatives designated as hedging instruments (5) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate contracts ​ 2 ​ ​ 56 ​ ​ — ​ ​ 220 ​ ​ 80 Foreign exchange contracts ​ 2 ​ ​ 175 ​ ​ 635 ​ ​ 483 ​ ​ 239 Derivatives not designated as hedging instruments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange contracts ​ 2 ​ ​ 10 ​ ​ 33 ​ ​ 26 ​ ​ 13 Equity contracts (6) ​ 1,2 ​ ​ 1 ​ ​ 4 ​ ​ 2 ​ ​ 51 Total ​ ​ ​ $ 5,823 ​ $ 673 ​ $ 9,053 ​ $ 383 (1) Included within cash and cash equivalents in the Consolidated Balance Sheet. (2) Included within investments and sundry assets in the Consolidated Balance Sheet. (3) Included within marketable securities in the Consolidated Balance Sheet. (4) Available-for-sale debt securities with carrying values that approximate fair value. The contractual maturities are substantially one year or less. (5) Excludes $7,324 million and $6,261 million at December 31, 2019 and 2018, respectively, of debt designated as hedging instruments that are reported at carrying value. (6) Level 1 includes immaterial amounts related to equity futures contracts. (7) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Balance Sheet at December 31, 2019 were $149 million and $94 million, respectively, and at December 31, 2018 were $385 million and $347 million, respectively. (8) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Balance Sheet at December 31, 2019 were $167 million and $506 million, respectively, and at December 31, 2018 were $177 million and $206 million, respectively. |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory | |
Inventory | ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ At December 31: ​ 2019 ​ 2018 Finished goods ​ $ 220 ​ $ 266 Work in process and raw materials ​ 1,399 ​ 1,415 Total ​ $ 1,619 ​ $ 1,682 |
Financing Receivables (Tables)
Financing Receivables (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Financing Receivables | |
Summary of the components of financing receivables | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment in ​ Client Loan and ​ ​ ​ Sales-Type and ​ Commercial ​ Installment Payment ​ ​ ​ ($ in millions) ​ Direct Financing ​ Financing ​ Receivables/ ​ ​ ​ At December 31, 2019: ​ Leases ​ Receivables ​ (Loans) ​ Total Financing receivables, gross ​ $ 6,077 ​ $ 3,836 ​ $ 13,592 ​ $ 23,504 Unearned income ​ (509) ​ (4) ​ (570) ​ (1,083) Recorded investment ​ $ 5,567 ​ $ 3,831 ​ $ 13,022 ​ $ 22,421 Allowance for credit losses ​ (72) ​ (11) ​ (138) ​ (221) Unguaranteed residual value ​ 652 ​ — ​ — ​ 652 Guaranteed residual value ​ 53 ​ — ​ — ​ 53 Total financing receivables, net ​ $ 6,199 ​ $ 3,820 ​ $ 12,884 ​ $ 22,904 Current portion ​ $ 2,334 ​ $ 3,820 ​ $ 8,037 ​ $ 14,192 Noncurrent portion ​ $ 3,865 ​ $ — ​ $ 4,847 ​ $ 8,712 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment in ​ Client Loan and ​ ​ ​ Sales-Type and ​ Commercial ​ Installment Payment ​ ​ ​ ($ in millions) ​ Direct Financing ​ Financing ​ Receivables/ ​ ​ ​ At December 31, 2018: ​ Leases ​ Receivables ​ (Loans) ​ Total Financing receivables, gross ​ $ 6,846 ​ $ 11,889 ​ $ 13,614 ​ $ 32,348 Unearned income ​ (526) ​ (37) ​ (632) ​ (1,195) Recorded investment ​ $ 6,320 ​ $ 11,852 ​ $ 12,981 ​ $ 31,153 Allowance for credit losses ​ (99) ​ (13) ​ (179) ​ (292) Unguaranteed residual value ​ 589 ​ — ​ — ​ 589 Guaranteed residual value ​ 85 ​ — ​ — ​ 85 Total financing receivables, net ​ $ 6,895 ​ $ 11,838 ​ $ 12,802 ​ $ 31,536 Current portion ​ $ 2,834 ​ $ 11,838 ​ $ 7,716 ​ $ 22,388 Noncurrent portion ​ $ 4,061 ​ $ — ​ $ 5,086 ​ $ 9,148 |
Schedule of financing receivables and allowance for credit losses by portfolio segment | ($ in millions) ($ in millions) |
Schedule of past due financing receivables | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded Billed Recorded ​ ​ Total ​ Recorded ​ Investment ​ Invoices ​ Investment ($ in millions) ​ Recorded ​ Investment ​ >90 Days and ​ >90 Days and ​ Not At December 31, 2019: ​ Investment ​ >90 Days (1) ​ Accruing (1) ​ Accruing ​ Accruing (2) Americas ​ $ 3,419 ​ $ 187 ​ $ 147 ​ $ 11 ​ $ 41 EMEA ​ 1,186 ​ 28 ​ 13 ​ 2 ​ 17 Asia Pacific ​ 963 ​ 19 ​ 7 ​ 1 ​ 11 Total lease receivables ​ $ 5,567 ​ $ 234 ​ $ 168 ​ $ 14 ​ $ 69 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ $ 6,726 ​ $ 127 ​ $ 71 ​ $ 11 ​ $ 72 EMEA ​ 3,901 ​ 77 ​ 8 ​ 3 ​ 72 Asia Pacific ​ 2,395 ​ 26 ​ 6 ​ 2 ​ 21 Total loan receivables ​ $ 13,022 ​ $ 231 ​ $ 85 ​ $ 15 ​ $ 166 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 18,590 ​ $ 465 ​ $ 253 ​ $ 29 ​ $ 235 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded Billed Recorded ​ ​ Total ​ Recorded ​ Investment ​ Invoices ​ Investment ($ in millions) ​ Recorded ​ Investment ​ >90 Days and ​ >90 Days and ​ Not At December 31, 2018: ​ Investment ​ >90 Days (1) ​ Accruing (1) ​ Accruing ​ Accruing (3) Americas ​ $ 3,827 ​ $ 310 ​ $ 256 ​ $ 19 ​ $ 57 EMEA ​ 1,341 ​ 25 ​ 9 ​ 1 ​ 16 Asia Pacific ​ 1,152 ​ 49 ​ 27 ​ 3 ​ 24 Total lease receivables ​ $ 6,320 ​ $ 385 ​ $ 292 ​ $ 24 ​ $ 97 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ $ 6,817 ​ $ 259 ​ $ 166 ​ $ 24 ​ $ 99 EMEA ​ 3,675 ​ 98 ​ 25 ​ 3 ​ 73 Asia Pacific ​ 2,489 ​ 40 ​ 11 ​ 1 ​ 31 Total loan receivables ​ $ 12,981 ​ $ 397 ​ $ 202 ​ $ 29 ​ $ 203 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 19,301 ​ $ 782 ​ $ 494 ​ $ 52 ​ $ 300 (1) At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days. (2) Of the recorded investment not accruing, $191 million is individually evaluated for impairment with a related allowance of $171 million. (3) Of the recorded investment not accruing, $249 million is individually evaluated for impairment with a related allowance of $219 million. |
Schedule of net recorded investment by credit quality indicator | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Lease Receivables ​ Loan Receivables At December 31, 2019: Americas EMEA Asia Pacific Americas EMEA Asia Pacific Credit rating ​ ​ ​ ​ ​ ​ Aaa—Aa3 ​ $ 465 ​ $ 54 ​ $ 43 ​ $ 1,028 ​ $ 193 ​ $ 189 A1—A3 ​ 750 ​ ​ 181 ​ ​ 454 ​ ​ 1,186 ​ ​ 395 ​ ​ 892 Baa1—Baa3 ​ 955 ​ ​ 409 ​ ​ 147 ​ ​ 1,882 ​ ​ 1,527 ​ ​ 619 Ba1—Ba2 ​ 746 ​ ​ 326 ​ ​ 154 ​ ​ 1,513 ​ ​ 921 ​ ​ 388 Ba3—B1 ​ 215 ​ ​ 140 ​ ​ 101 ​ ​ 471 ​ ​ 564 ​ ​ 205 B2—B3 ​ 242 ​ ​ 50 ​ ​ 47 ​ ​ 522 ​ ​ 253 ​ ​ 72 Caa—D ​ 13 ​ ​ 2 ​ ​ 2 ​ ​ 36 ​ ​ 18 ​ ​ 10 Total ​ $ 3,385 ​ $ 1,162 ​ $ 947 ​ $ 6,638 ​ $ 3,871 ​ $ 2,376 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Lease Receivables ​ Loan Receivables At December 31, 2018: Americas EMEA Asia Pacific Americas EMEA Asia Pacific Credit rating ​ ​ ​ ​ ​ ​ Aaa—Aa3 ​ $ 593 ​ $ 45 ​ $ 85 ​ $ 1,055 ​ $ 125 ​ $ 185 A1—A3 ​ 678 ​ ​ 158 ​ ​ 413 ​ ​ 1,206 ​ ​ 436 ​ ​ 901 Baa1—Baa3 ​ 892 ​ ​ 417 ​ ​ 297 ​ ​ 1,587 ​ ​ 1,148 ​ ​ 648 Ba1—Ba2 ​ 852 ​ ​ 426 ​ ​ 191 ​ ​ 1,516 ​ ​ 1,175 ​ ​ 417 Ba3—B1 ​ 433 ​ ​ 171 ​ ​ 84 ​ ​ 770 ​ ​ 472 ​ ​ 184 B2—B3 ​ 299 ​ ​ 90 ​ ​ 50 ​ ​ 531 ​ ​ 249 ​ ​ 109 Caa—D ​ 26 ​ ​ 10 ​ ​ 7 ​ ​ 47 ​ ​ 28 ​ ​ 15 Total ​ $ 3,774 ​ $ 1,319 ​ $ 1,128 ​ $ 6,712 ​ $ 3,633 ​ $ 2,457 |
Property, Plant & Equipment (Ta
Property, Plant & Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant & Equipment | |
Property, Plant & Equipment | ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ At December 31: ​ 2019 ​ 2018 Land and land improvements ​ $ 365 ​ $ 448 Buildings and building and leasehold improvements ​ ​ 9,364 ​ ​ 9,640 Information technology equipment ​ ​ 18,054 ​ ​ 17,468 Production, engineering, office and other equipment ​ ​ 3,721 ​ ​ 4,081 Plant and other property—gross ​ ​ 31,504 ​ ​ 31,636 Less: Accumulated depreciation ​ ​ 21,726 ​ ​ 21,276 Plant and other property—net ​ ​ 9,778 ​ ​ 10,359 Rental machines ​ ​ 523 ​ ​ 824 Less: Accumulated depreciation ​ ​ 292 ​ ​ 392 Rental machines—net ​ ​ 232 ​ ​ 433 Total—net ​ $ 10,010 ​ $ 10,792 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Schedule of various components of lease costs | ​ ​ ​ ​ ​ ($ in millions) ​ ​ For the year ended December 31: 2019 Finance lease cost ​ $ 30 Operating lease cost ​ 1,645 Short-term lease cost ​ 38 Variable lease cost ​ 534 Sublease income ​ (24) Total lease cost ​ $ 2,223 |
Schedule of supplemental information relating to the cash flows arising from lease transactions | ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ For the year ended December 31: 2019 ​ Cash paid for amounts included in the measurement of lease liabilities ​ ​ Operating cash outflows from finance leases ​ $ 8 ​ Financing cash outflows from finance leases ​ ​ 22 ​ Operating cash outflows from operating leases ​ ​ 1,541 ​ ROU assets obtained in exchange for new finance lease liabilities ​ ​ 209 * ROU assets obtained in exchange for new operating lease liabilities ​ ​ 6,481 * * Includes opening balance additions as a result of the adoption of the new lease guidance effective January 1, 2019. The post adoption addition of leases for the year ended December 31, 2019 was $1,679 million for operating leases and immaterial for finance leases. |
Schedule of weighted-average lease terms and discount rates | ​ ​ ​ ​ ​ At December 31: 2019 ​ Finance leases ​ ​ ​ Weighted-average remaining lease term ​ 4.8 yrs. Weighted-average discount rate 1.62 % Operating leases ​ ​ ​ Weighted-average remaining lease term 5.4 yrs. Weighted-average discount rate 3.03 % |
Schedule of expected undiscounted cash out flows for operating and finance leases | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Imputed ​ ​ ($ in millions) ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ 2024 ​ Thereafter ​ Interest* ​ Total** Finance leases ​ $ 62 ​ $ 59 ​ $ 48 ​ $ 31 ​ $ 12 ​ $ 46 ​ $ (54) ​ $ 204 Operating leases ​ ​ 1,486 ​ ​ 1,198 ​ ​ 928 ​ ​ 673 ​ ​ 514 ​ ​ 806 ​ ​ (346) ​ ​ 5,259 * Imputed interest represents the difference between undiscounted cash flows and discounted cash flows. ** The company entered into lease agreements for certain facilities and equipment with payments totaling approximately $181 million that have not yet commenced as of December 31, 2019, and therefore are not included in this table. |
Operating lease commitments | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beyond ($ in millions) ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ 2023 Operating lease commitments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross minimum rental commitments (including vacant space below) ​ $ 1,581 ​ $ 1,233 ​ $ 914 ​ $ 640 ​ $ 445 ​ $ 815 Vacant space ​ ​ 29 ​ ​ 23 ​ ​ 14 ​ ​ 9 ​ ​ 5 ​ ​ 8 Sublease income commitments ​ ​ 11 ​ ​ 7 ​ ​ 5 ​ ​ 4 ​ ​ 4 ​ ​ 2 Capital lease commitments ​ ​ 3 ​ ​ 3 ​ ​ 3 ​ ​ 3 ​ ​ 2 ​ ​ 28 |
Capital lease commitments | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beyond ($ in millions) ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ 2023 Operating lease commitments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross minimum rental commitments (including vacant space below) ​ $ 1,581 ​ $ 1,233 ​ $ 914 ​ $ 640 ​ $ 445 ​ $ 815 Vacant space ​ ​ 29 ​ ​ 23 ​ ​ 14 ​ ​ 9 ​ ​ 5 ​ ​ 8 Sublease income commitments ​ ​ 11 ​ ​ 7 ​ ​ 5 ​ ​ 4 ​ ​ 4 ​ ​ 2 Capital lease commitments ​ ​ 3 ​ ​ 3 ​ ​ 3 ​ ​ 3 ​ ​ 2 ​ ​ 28 ​ |
Schedule of amounts included in the Consolidated Statement of Earnings related to lessor activity | ​ ​ ​ ​ ​ ($ in millions) ​ ​ For the year ended December 31: 2019 Lease income–sales-type and direct financing leases ​ ​ ​ Sales-type lease selling price ​ $ 1,509 Less: Carrying value of underlying assets excluding unguaranteed residual value ​ 591 Gross profit ​ 918 Interest income on lease receivables ​ 303 Total sales-type and direct financing lease income ​ ​ 1,221 Lease income–operating leases ​ 324 Variable lease income ​ 56 Total lease income ​ $ 1,601 |
Schedule of maturity analysis of the lease payments due to IBM on sales-type and direct financing leases | ​ ​ ​ ​ ​ ​ ($ in millions) Total ​ 2020 ​ $ 2,632 ​ 2021 ​ 1,921 ​ 2022 ​ 1,053 ​ 2023 ​ 382 ​ 2024 ​ 82 ​ Thereafter ​ 7 ​ Total undiscounted cash flows ​ $ 6,077 ​ Present value of lease payments (recognized as financing receivables) ​ 5,567 * Difference between undiscounted cash flows and discounted cash flows ​ $ (509) ​ * The present value of the lease payments will not equal the financing receivables balances in the Consolidated Balance Sheet, due to certain items including IDCs, allowance for credit losses and residual values, which are included in the financing receivable balance, but are not included in the future lease payments. |
Schedule of maturity analysis of the undiscounted lease payments due to IBM on operating leases | ​ ​ ​ ​ ​ ($ in millions) Total 2020 ​ $ 145 2021 ​ 35 2022 ​ 4 2023 ​ 0 2024 ​ 0 Thereafter ​ — Total undiscounted cash flows ​ $ 184 |
Intangible Assets Including G_2
Intangible Assets Including Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets Including Goodwill | |
Intangible asset balances by major asset class | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Gross Carrying ​ Accumulated ​ Net Carrying At December 31, 2019:* ​ Amount ​ Amortization ​ Amount Intangible asset class ​ ​ ​ ​ ​ ​ Capitalized software ​ $ 1,749 ​ $ (743) ​ $ 1,006 Client relationships ​ 8,921 ​ (1,433) ​ 7,488 Completed technology ​ 6,261 ​ (1,400) ​ 4,861 Patents/trademarks ​ 2,301 ​ (445) ​ 1,856 Other** ​ 56 ​ (31) ​ 24 Total ​ $ 19,287 ​ $ (4,052) ​ $ 15,235 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Gross Carrying Accumulated Net Carrying At December 31, 2018: Amount ​ Amortization ​ Amount Intangible asset class ​ ​ ​ ​ ​ ​ ​ ​ ​ Capitalized software ​ $ 1,568 ​ $ (629) ​ $ 939 Client relationships ​ 2,068 ​ (1,123) ​ 945 Completed technology ​ 2,156 ​ (1,296) ​ 860 Patents/trademarks ​ 641 ​ (330) ​ 311 Other** ​ 56 ​ (23) ​ 32 Total ​ $ 6,489 ​ $ (3,402) ​ $ 3,087 * Amounts as of December 31, 2019 include a decrease of $42 million in net intangible asset balances due to foreign currency translation. There was no foreign currency impact on net intangible assets for the year ended December 31, 2018. ** Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. |
Intangible assets acquired as allocated | ($ in millions) |
Intangible assets, future amortization expense | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capitalized Acquired ​ ($ in millions) ​ Software ​ Intangibles ​ Total 2020 ​ $ 529 ​ $ 1,855 ​ $ 2,384 2021 ​ 352 ​ 1,747 ​ 2,099 2022 ​ ​ 123 ​ 1,684 ​ 1,808 2023 ​ ​ 1 ​ 1,371 ​ 1,372 2024 ​ ​ 0 ​ 1,322 ​ 1,322 Thereafter ​ ​ — ​ ​ 6,250 ​ ​ 6,250 |
Changes in goodwill balances by reportable segment | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ ​ ​ ​ Balance ​ ​ ​ Purchase ​ ​ ​ Translation ​ Balance ($ in millions) ​ January 1, ​ Goodwill ​ Price ​ ​ ​ and Other ​ December 31, Segment 2019 Additions Adjustments Divestitures Adjustments 2019 Cloud & Cognitive Software ​ $ 24,594 ​ $ 18,399 ​ $ 133 ​ $ (131) ​ $ 41 ​ $ 43,037 Global Business Services ​ ​ 4,711 ​ ​ 1,059 ​ ​ 1 ​ ​ (1) ​ ​ 5 ​ ​ 5,775 Global Technology Services ​ ​ 3,988 ​ ​ 3,119 ​ ​ — ​ ​ — ​ ​ 34 ​ ​ 7,141 Systems ​ ​ 1,847 ​ ​ 525 ​ ​ (110) ​ ​ — ​ ​ 7 ​ ​ 2,270 Other—divested businesses ​ ​ 1,126 ​ ​ — ​ ​ — ​ ​ (1,126) ​ ​ — ​ ​ — Total ​ $ 36,265 ​ $ 23,102 ​ $ 24 ​ $ (1,257) ​ $ 87 ​ $ 58,222 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ ​ ​ ​ Balance ​ ​ ​ Purchase ​ ​ ​ Translation ​ Balance ($ in millions) ​ January 1, ​ Goodwill ​ Price ​ ​ ​ and Other ​ December 31, Segment 2018 Additions Adjustments Divestitures Adjustments 2018 Cloud & Cognitive Software* ​ $ 24,973 ​ $ 9 ​ $ 0 ​ $ (1) ​ $ (388) ​ $ 24,594 Global Business Services* ​ ​ 4,782 ​ ​ 24 ​ ​ (3) ​ ​ — ​ ​ (92) ​ ​ 4,711 Global Technology Services* ​ ​ 4,044 ​ ​ — ​ ​ 0 ​ ​ — ​ ​ (56) ​ ​ 3,988 Systems ​ ​ 1,862 ​ ​ — ​ ​ 0 ​ ​ — ​ ​ (15) ​ ​ 1,847 Other—divested businesses* ​ ​ 1,127 ​ ​ 1 ​ ​ 0 ​ ​ 0 ​ ​ (2) ​ ​ 1,126 Total ​ $ 36,788 ​ $ 34 ​ $ (3) ​ $ (1) ​ $ (553) ​ $ 36,265 * Recast to conform to 2019 presentation. ** Primarily driven by foreign currency translation. |
Investments & Sundry Assets (Ta
Investments & Sundry Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investments & Sundry Assets | |
Investments & Sundry Assets | ​ ​ ​ ($ in millions) At December 31: 2019 2018 Derivatives—noncurrent ​ $ 94 ​ $ 347 Alliance investments ​ ​ ​ ​ ​ ​ Equity method ​ ​ 184 ​ ​ 192 Non-equity method ​ ​ 38 ​ ​ 34 Long-term deposits ​ ​ 242 ​ ​ 268 Other receivables ​ ​ 276 ​ ​ 359 Employee benefit-related ​ ​ 253 ​ ​ 263 Prepaid income taxes ​ ​ 664 ​ ​ 626 Other assets ​ ​ 321 ​ ​ 296 Total ​ $ 2,074 ​ $ 2,386 |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Borrowings | |
Short-Term Debt | ​ ​ ​ ($ in millions) At December 31: 2019 2018 Commercial paper ​ $ 304 ​ $ 2,995 Short-term loans ​ ​ 971 ​ ​ 161 Long-term debt—current maturities ​ ​ 7,522 ​ ​ 7,051 Total ​ $ 8,797 ​ $ 10,207 |
Long-Term Debt | ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ At December 31: Maturities 2019 2018* U.S. dollar debt (weighted-average interest rate at December 31, 2019):** ​ ​ ​ ​ ​ ​ ​ ​ 3.0% ​ 2019 ​ $ — ​ $ 5,465 2.3% ​ 2020 ​ ​ 4,326 ​ ​ 4,344 2.5% ​ 2021 ​ ​ 8,498 ​ ​ 5,529 2.6% ​ 2022 ​ ​ 6,289 ​ ​ 3,529 3.3% ​ 2023 ​ ​ 2,388 ​ ​ 2,428 3.3% ​ 2024 ​ ​ 5,045 ​ ​ 2,037 6.7% ​ 2025 ​ ​ 636 ​ ​ 600 3.3% ​ 2026 ​ ​ 4,350 ​ ​ 1,350 4.7% ​ 2027 ​ ​ 969 ​ ​ 969 6.5% ​ 2028 ​ ​ 313 ​ ​ 313 3.5% ​ 2029 ​ ​ 3,250 ​ ​ — 5.9% ​ 2032 ​ ​ 600 ​ ​ 600 8.0% ​ 2038 ​ ​ 83 ​ ​ 83 4.5% ​ 2039 ​ ​ 2,745 ​ ​ 745 4.0% ​ 2042 ​ ​ 1,107 ​ ​ 1,107 7.0% ​ 2045 ​ ​ 27 ​ ​ 27 4.7% ​ 2046 ​ ​ 650 ​ ​ 650 4.3% ​ 2049 ​ ​ 3,000 ​ ​ — 7.1% ​ 2096 ​ ​ 316 ​ ​ 316 ​ ​ ​ ​ $ 44,594 ​ $ 30,091 Other currencies (weighted-average interest rate at December 31, 2019, in parentheses):** ​ ​ ​ ​ ​ ​ ​ ​ Euro (1.3%) ​ 2020–2031 ​ $ 14,306 ​ $ 10,011 Pound sterling (2.7%) ​ 2020–2022 ​ ​ 1,390 ​ ​ 1,338 Japanese yen (0.3%) ​ 2022–2026 ​ ​ 1,339 ​ ​ 1,325 Other (6.1%) ​ 2020–2022 ​ ​ 375 ​ ​ 390 ​ ​ ​ ​ $ 62,003 ​ $ 43,155 Finance lease obligations (2.0%) ​ 2020–2030 ​ ​ 204 ​ ​ 41 ​ ​ ​ ​ $ 62,207 ​ $ 43,196 Less: net unamortized discount ​ ​ ​ ​ 881 ​ ​ 802 Less: net unamortized debt issuance costs ​ ​ ​ ​ 142 ​ ​ 76 Add: fair value adjustment+ ​ ​ ​ ​ 440 ​ ​ 337 ​ ​ ​ ​ $ 61,624 ​ $ 42,656 Less: current maturities ​ ​ ​ ​ 7,522 ​ ​ 7,051 Total ​ ​ ​ $ 54,102 ​ $ 35,605 * Reclassified to conform to 2019 presentation. ** Includes notes, debentures, bank loans and secured borrowings. + The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Balance Sheet as an amount equal to the sum of the debt’s carrying value and a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates. |
Post-Swap Borrowing (Long-Term Debt, Including Current Portion) | ​ ​ ​ ​ ​ ​ 2019 ​ 2018 ($ in millions) ​ ​ ​ Weighted-Average ​ ​ ​ Weighted-Average ​ For the year ended December 31: Amount Interest Rate Amount Interest Rate ​ Fixed-rate debt ​ $ 52,169 ​ 2.9 % $ 28,770 ​ 2.7 % Floating-rate debt* ​ ​ 9,455 ​ 2.2 % ​ 13,886 ​ 3.0 % Total ​ $ 61,624 ​ ​ ​ $ 42,656 ​ ​ ​ |
Pre-swap annual contractual obligations of long-term debt outstanding | Pre-swap annual contractual obligations of long-term debt outstanding at December 31, 2019, are as follows: ​ ($ in millions) Total 2020 ​ $ 7,526 2021 ​ ​ 9,826 2022 ​ ​ 7,175 2023 ​ ​ 5,374 2024 ​ ​ 6,305 Thereafter ​ ​ 26,000 Total ​ $ 62,207 |
Interest on Debt | ​ ​ ​ ​ ($ in millions) For the year ended December 31: 2019 2018 2017 Cost of financing ​ $ 608 ​ $ 757 ​ $ 658 Interest expense ​ ​ 1,344 ​ ​ 723 ​ ​ 615 Interest capitalized ​ ​ 5 ​ ​ 3 ​ ​ 5 Total interest paid and accrued ​ $ 1,957 ​ $ 1,482 ​ $ 1,278 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Liabilities | |
Other Liabilities | ​ ​ ​ ($ in millions) At December 31: 2019 2018 Income tax reserves ​ $ 5,118 ​ $ 4,195 Excess 401(k) Plus Plan ​ ​ 1,521 ​ ​ 1,380 Disability benefits ​ ​ 478 ​ ​ 507 Derivative liabilities ​ ​ 506 ​ ​ 206 Workforce reductions ​ ​ 725 ​ ​ 736 Deferred taxes* ​ ​ 5,230 ​ ​ 3,696 Other taxes payable ​ ​ 42 ​ ​ 40 Environmental accruals ​ ​ 254 ​ ​ 244 Warranty accruals ​ ​ 45 ​ ​ 76 Asset retirement obligations ​ ​ 94 ​ ​ 111 Acquisition related ​ ​ 9 ​ ​ 13 Divestiture related ​ ​ 65 ​ ​ 173 Other ​ ​ 439 ​ ​ 796 Total ​ $ 14,526 ​ $ 12,174 * The increase in the balance at December 31, 2019 was primarily related to the acquisition of Red Hat. |
Commitments & Contingencies (Ta
Commitments & Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments & Contingencies | |
Changes in warranty liabilities | Standard Warranty Liability ​ ​ ($ in millions) 2019 2018 Balance at January 1 ​ $ 118 ​ $ 152 Current period accruals ​ ​ 111 ​ ​ 121 Accrual adjustments to reflect experience ​ ​ (1) ​ ​ (32) Charges incurred ​ ​ (115) ​ ​ (123) Balance at December 31 ​ $ 113 ​ $ 118 ​ Extended Warranty Liability (Deferred Income) ​ ​ ($ in millions) 2019 2018 Balance at January 1 ​ $ 533 ​ $ 566 Revenue deferred for new extended warranty contracts ​ ​ 198 ​ ​ 220 Amortization of deferred revenue ​ ​ (253) ​ ​ (240) Other* ​ ​ (2) ​ ​ (13) Balance at December 31 ​ $ 477 ​ $ 533 Current portion ​ $ 227 ​ $ 271 Noncurrent portion ​ $ 250 ​ $ 262 * Other consists primarily of foreign currency translation adjustments. |
Equity Activity (Tables)
Equity Activity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity Activity | |
Reclassifications and taxes related to items of other comprehensive income | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Before Tax ​ Tax (Expense)/ ​ Net of Tax For the year ended December 31, 2019: Amount Benefit Amount Other comprehensive income/(loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ $ (39) ​ $ 29 ​ $ (10) Net changes related to available-for-sale securities ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains/(losses) arising during the period ​ $ 1 ​ $ 0 ​ $ 1 Reclassification of (gains)/losses to other (income) and expense ​ ​ — ​ ​ — ​ ​ — Total net changes related to available-for-sale securities ​ $ 1 ​ $ 0 ​ $ 1 Unrealized gains/(losses) on cash flow hedges ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains/(losses) arising during the period ​ $ (689) ​ $ 167 ​ $ (522) Reclassification of (gains)/losses to: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of services ​ ​ (68) ​ ​ 17 ​ ​ (50) Cost of sales ​ ​ (51) ​ ​ 15 ​ ​ (37) Cost of financing ​ ​ 89 ​ ​ (22) ​ ​ 67 SG&A expense ​ ​ (53) ​ ​ 14 ​ ​ (39) Other (income) and expense ​ ​ (39) ​ ​ 10 ​ ​ (29) Interest expense ​ ​ 197 ​ ​ (50) ​ ​ 148 Total unrealized gains/(losses) on cash flow hedges ​ $ (614) ​ $ 151 ​ $ (463) Retirement-related benefit plans  ​ ​ ​ ​ ​ ​ ​ ​ ​ Prior service costs/(credits) ​ $ (73) ​ $ 10 ​ $ (63) Net (losses)/gains arising during the period ​ ​ (120) ​ ​ 52 ​ ​ (68) Curtailments and settlements ​ ​ 41 ​ ​ (12) ​ ​ 29 Amortization of prior service (credits)/costs ​ ​ (9) ​ ​ 5 ​ ​ (4) Amortization of net (gains)/losses ​ ​ 1,843 ​ ​ (371) ​ ​ 1,471 Total retirement-related benefit plans ​ $ 1,681 ​ $ (316) ​ $ 1,365 Other comprehensive income/(loss) ​ $ 1,029 ​ $ (136) ​ $ 893 (1) These AOCI components are included in the computation of net periodic pension cost. Refer to note V, “Retirement-Related Benefits,” for additional information. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Before Tax ​ Tax (Expense)/ ​ Net of Tax For the year ended December 31, 2018: Amount Benefit Amount Other comprehensive income/(loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ $ (730) ​ $ (172) ​ $ (902) Net changes related to available-for-sale securities ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains/(losses) arising during the period ​ $ (2) ​ $ 1 ​ $ (1) Reclassification of (gains)/losses to other (income) and expense ​ ​ — ​ ​ — ​ ​ — Total net changes related to available-for-sale securities ​ $ (2) ​ $ 1 ​ $ (1) Unrealized gains/(losses) on cash flow hedges ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains/(losses) arising during the period ​ $ (136) ​ $ 43 ​ $ (93) Reclassification of (gains)/losses to: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of services ​ ​ (30) ​ ​ 8 ​ ​ (22) Cost of sales ​ ​ (8) ​ ​ 3 ​ ​ (5) Cost of financing ​ ​ 75 ​ ​ (19) ​ ​ 56 SG&A expense ​ ​ 0 ​ ​ 0 ​ ​ 0 Other (income) and expense ​ ​ 341 ​ ​ (86) ​ ​ 255 Interest expense ​ ​ 71 ​ ​ (18) ​ ​ 53 Total unrealized gains/(losses) on cash flow hedges ​ $ 313 ​ $ (69) ​ $ 244 Retirement-related benefit plans  ​ ​ ​ ​ ​ ​ ​ ​ ​ Prior service costs/(credits) ​ $ (182) ​ $ 31 ​ $ (151) Net (losses)/gains arising during the period ​ ​ (2,517) ​ ​ 576 ​ ​ (1,941) Curtailments and settlements ​ ​ 11 ​ ​ (2) ​ ​ 9 Amortization of prior service (credits)/costs ​ ​ (73) ​ ​ 5 ​ ​ (68) Amortization of net (gains)/losses ​ ​ 2,966 ​ ​ (632) ​ ​ 2,334 Total retirement-related benefit plans ​ $ 204 ​ $ (21) ​ $ 184 Other comprehensive income/(loss) ​ $ (215) ​ $ (262) ​ $ (476) (1) These AOCI components are included in the computation of net periodic pension cost. Refer to note V, “Retirement-Related Benefits,” for additional information. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Before Tax ​ Tax (Expense)/ ​ Net of Tax For the year ended December 31, 2017: Amount Benefit Amount Other comprehensive income/(loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ $ 152 ​ $ 617 ​ $ 769 Net changes related to available-for-sale securities ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains/(losses) arising during the period ​ $ 1 ​ $ (1) ​ $ 0 Reclassification of (gains)/losses to other (income) and expense ​ ​ 1 ​ ​ 0 ​ ​ 1 Total net changes related to available-for-sale securities ​ $ 2 ​ $ (1) ​ $ 1 Unrealized gains/(losses) on cash flow hedges ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains/(losses) arising during the period ​ $ (58) ​ $ 0 ​ $ (58) Reclassification of (gains)/losses to: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of services ​ ​ (70) ​ ​ 27 ​ ​ (43) Cost of sales ​ ​ (3) ​ ​ 1 ​ ​ (3) Cost of financing ​ ​ 23 ​ ​ (9) ​ ​ 14 SG&A expense ​ ​ (11) ​ ​ 3 ​ ​ (9) Other (income) and expense ​ ​ (324) ​ ​ 124 ​ ​ (199) Interest expense ​ ​ 22 ​ ​ (8) ​ ​ 13 Total unrealized gains/(losses) on cash flow hedges ​ $ (421) ​ $ 137 ​ $ (284) Retirement-related benefit plans  ​ ​ ​ ​ ​ ​ ​ ​ ​ Prior service costs/(credits) ​ $ 0 ​ $ 0 ​ $ 0 Net (losses)/gains arising during the period ​ ​ 682 ​ ​ (201) ​ ​ 481 Curtailments and settlements ​ ​ 19 ​ ​ (5) ​ ​ 14 Amortization of prior service (credits)/costs ​ ​ (88) ​ ​ 29 ​ ​ (58) Amortization of net (gains)/losses ​ ​ 2,889 ​ ​ (1,006) ​ ​ 1,883 Total retirement-related benefit plans ​ $ 3,502 ​ $ (1,182) ​ $ 2,320 Other comprehensive income/(loss) ​ $ 3,235 ​ $ (429) ​ $ 2,806 (1) These AOCI components are included in the computation of net periodic pension cost. Refer to note V, “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 ($ in millions) Hedges Adjustments Plans Securities Income/(Loss) December 31, 2016 ​ $ 319 ​ $ (3,603) ​ $ (26,116) ​ $ 2 ​ $ (29,398) Other comprehensive income before reclassifications ​ ​ (58) ​ ​ 769 ​ ​ 495 ​ ​ 0 ​ ​ 1,206 Amount reclassified from accumulated other comprehensive income ​ ​ (226) ​ ​ 0 ​ ​ 1,825 ​ ​ 1 ​ ​ 1,599 Total change for the period ​ ​ (284) ​ ​ 769 ​ ​ 2,320 ​ ​ 1 ​ ​ 2,806 December 31, 2017 ​ ​ 35 ​ ​ (2,834) ​ ​ (23,796) ​ ​ 3 ​ ​ (26,592) Cumulative effect of a change in accounting principle** ​ ​ 5 ​ ​ 46 ​ ​ (2,471) ​ ​ (2) ​ ​ (2,422) Other comprehensive income before reclassifications ​ ​ (93) ​ ​ (902) ​ ​ (2,092) ​ ​ (1) ​ ​ (3,089) Amount reclassified from accumulated other comprehensive income ​ ​ 337 ​ ​ — ​ ​ 2,276 ​ ​ — ​ ​ 2,612 Total change for the period ​ ​ 244 ​ ​ (902) ​ ​ 184 ​ ​ (1) ​ ​ (476) December 31, 2018 ​ ​ 284 ​ ​ (3,690) ​ ​ (26,083) ​ ​ 0 ​ ​ (29,490) Other comprehensive income before reclassifications ​ ​ (522) ​ ​ (10) ​ ​ (131) ​ ​ 1 ​ ​ (663) Amount reclassified from accumulated other comprehensive income ​ ​ 59 ​ ​ — ​ ​ 1,496 ​ ​ — ​ ​ 1,556 Total change for the period ​ ​ (463) ​ ​ (10) ​ ​ 1,365 ​ ​ 1 ​ ​ 893 December 31, 2019 ​ $ (179) ​ $ (3,700) ​ $ (24,718) ​ $ 0 ​ $ (28,597) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. ** Reflects the adoption of the FASB guidance on stranded tax effects, hedging and financial instruments. Refer to note B, “Accounting Changes,” for additional information. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Financial Instruments | |
Amounts related to cumulative basis adjustments for fair value hedges | ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ At December 31: 2019 2018 Short-term debt: ​ ​ ​ ​ ​ ​ ​ Carrying amount of the hedged item ​ $ — ​ $ (1,878) ​ Cumulative hedging adjustments included in the carrying amount—assets/(liabilities) ​ ​ — ​ ​ (4) (1) Long-term debt: ​ ​ ​ ​ ​ ​ ​ Carrying amount of the hedged item ​ ​ (3,411) ​ ​ (6,004) ​ Cumulative hedging adjustments included in the carrying amount— assets/(liabilities) ​ ​ (440) (2) ​ (333) (2) (1) Includes ($6) million of hedging adjustments on discontinued hedging relationships at December 31, 2018. (2) Includes ($404) million and ($213) million of hedging adjustments on discontinued hedging relationships at December 31, 2019 and 2018, respectively. |
Effect of derivative instruments in the consolidated income statement | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gains/(Losses) of ($ in millions) ​ Total ​ Total Hedge Activity For the year ended December 31: 2019 2018 2019 2018 Cost of services ​ $ 32,491 ​ $ 33,687 * $ 68 ​ $ 30 Cost of sales ​ ​ 7,263 ​ ​ 7,835 * ​ 51 ​ ​ 8 Cost of financing ​ ​ 904 ​ ​ 1,132 ​ ​ (42) ​ ​ (6) SG&A expense ​ ​ 20,604 ​ ​ 19,366 ​ ​ 267 ​ ​ (116) Other (income) and expense ​ ​ (968) ​ ​ 1,152 ​ ​ (15) ​ ​ (434) Interest expense ​ ​ 1,344 ​ ​ 723 ​ ​ (93) ​ ​ (6) * Reclassified to conform to 2019 presentation. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain/(Loss) Recognized in Consolidated Income Statement ​ ​ Consolidated ​ Recognized on ​ Attributable to Risk ($ in millions) ​ Income Statement ​ Derivatives ​ Being Hedged (2) For the year ended December 31: Line Item 2019 2018 2017 2019 2018 2017 Derivative instruments in fair value hedges (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate contracts ​ Cost of financing ​ $ 44 ​ $ (61) ​ $ 1 ​ $ (32) ​ $ 97 ​ $ 74 ​ ​ Interest expense ​ ​ 98 ​ ​ (58) ​ ​ 1 ​ ​ (71) ​ ​ 92 ​ ​ 69 Derivative instruments not designated as hedging instruments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange contracts ​ Other (income) and expense ​ ​ (53) ​ ​ (93) ​ ​ 16 ​ ​ N/A ​ ​ N/A ​ ​ N/A Equity contracts ​ SG&A expense ​ ​ 214 ​ ​ (116) ​ ​ 135 ​ ​ N/A ​ ​ N/A ​ ​ N/A Total ​ ​ ​ $ 302 ​ $ (327) ​ $ 153 ​ $ (103) ​ $ 189 ​ $ 144 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain/(Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income ($ in millions) ​ ​ ​ Consolidated ​ Reclassified ​ Amounts Excluded from For the year ended ​ Recognized in OCI ​ Income Statement ​ from AOCI ​ Effectiveness Testing (3) December 31: 2019 2018 2017 Line Item 2019 2018 2017 2019 2018 2017 Derivative instruments in cash flow hedges ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate contracts ​ $ (168) ​ $ (35) ​ $ — ​ Cost of financing ​ $ (3) ​ $  — ​ $ — ​ $ — ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ (8) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Foreign exchange contracts ​ ​ (521) ​ ​ (101) ​ ​ (58) ​ Cost of services ​ ​ 68 ​ ​ 30 ​ ​ 70 ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales ​ ​ 51 ​ ​ 8 ​ ​ 3 ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of financing ​ ​ (86) ​ ​ (75) ​ ​ (23) ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SG&A expense ​ ​ 53 ​ ​ 0 ​ ​ 11 ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (income and expense) ​ ​ 39 ​ ​ (341) ​ ​ 324 ​ ​ — ​ ​ — ​ ​ 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ (190) ​ ​ (71) ​ ​ (22) ​ ​ — ​ ​ — ​ ​ — Instruments in net investment hedges (4) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange contracts ​ ​ (95) ​ ​ 686 ​ ​ (1,607) ​ Cost of financing ​ ​ — ​ ​ — ​ ​ — ​ ​ 35 ​ ​ 33 ​ ​ 23 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ — ​ ​ — ​ ​ — ​ ​ 77 ​ ​ 31 ​ ​ 21 Total ​ $ (784) ​ $ 549 ​ $ (1,665) ​ ​ ​ $ (75) ​ $ (449) ​ $ 363 ​ $ 112 ​ $ 64 ​ $ 45 Gain or loss amounts and presentation for 2017 are not conformed to the new hedge accounting guidance that the company adopted in 2018. Refer to note B, “Accounting Changes,” for further information. (1) 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. (2) The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. (3) The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing in net income each period. (4) Instruments in net investment hedges include derivative and non-derivative instruments. N/A–Not applicable |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock-Based Compensation | |
Stock-based compensation cost included in income from continuing operations | ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 Cost ​ $ 100 ​ $ 82 ​ $ 91 Selling, general and administrative ​ ​ 453 ​ ​ 361 ​ ​ 384 Research, development and engineering ​ ​ 126 ​ ​ 67 ​ ​ 59 Pre-tax stock-based compensation cost ​ ​ 679 ​ ​ 510 ​ ​ 534 Income tax benefits ​ ​ (155) ​ ​ (116) ​ ​ (131) Net stock-based compensation cost ​ $ 524 ​ $ 393 ​ $ 403 |
Summary of Restricted Stock Units activity | ​ ​ ​ ​ ​ ​ ​ ​ RSUs ​ PSUs ​ ​ ​ Weighted-Average ​ ​ Weighted-Average ​ ​ Grant Price Number of Units Grant Price Number of Units ​ Balance at January 1, 2017 ​ $ 147 ​ 8,899,092 ​ $ 155 ​ 2,874,758 ​ Awards granted ​ ​ 137 ​ 3,540,949 ​ ​ 137 ​ 824,875 ​ Awards released ​ ​ 153 ​ (3,032,531) ​ ​ 175 ​ (293,236) ​ Awards canceled/forfeited/performance adjusted ​ ​ 147 ​ (852,247) ​ ​ 170 ​ (757,084) * Balance at December 31, 2017 ​ $ 141 ​ 8,555,263 ​ $ 144 ​ 2,649,313 ** Awards granted ​ ​ 121 ​ 4,806,790 ​ ​ 130 ​ 909,140 ​ Awards released ​ ​ 148 ​ (2,579,962) ​ ​ 152 ​ (666,244) ​ Awards canceled/forfeited/performance adjusted ​ ​ 139 ​ (979,387) ​ ​ 147 ​ (472,514) * Balance at December 31, 2018 ​ $ 130 ​ 9,802,704 ​ $ 136 ​ 2,419,695 ** Awards granted ​ ​ 119 ​ 5,650,861 ​ ​ 117 ​ 1,395,534 ​ Awards released ​ ​ 136 ​ (3,145,016) ​ ​ 140 ​ (846,672) ​ Awards canceled/forfeited/performance adjusted ​ ​ 128 ​ (981,921) ​ ​ 131 ​ (112,107) * Balance at December 31, 2019 ​ $ 123 ​ 11,326,628 ​ $ 126 ​ 2,856,450 ** * Includes adjustments of (8,544), (328,120) and (623,245) PSUs for 2019, 2018 and 2017, respectively, because final performance metrics were above or below specified targets. ** Represents the number of shares expected to be issued based on achievement of grant date performance targets. The actual number of shares issued will depend on final performance against specified targets over the vesting period. |
Summary of Performance Share Units activity | ​ ​ ​ ​ ​ ​ ​ ​ RSUs ​ PSUs ​ ​ ​ Weighted-Average ​ ​ Weighted-Average ​ ​ Grant Price Number of Units Grant Price Number of Units ​ Balance at January 1, 2017 ​ $ 147 ​ 8,899,092 ​ $ 155 ​ 2,874,758 ​ Awards granted ​ ​ 137 ​ 3,540,949 ​ ​ 137 ​ 824,875 ​ Awards released ​ ​ 153 ​ (3,032,531) ​ ​ 175 ​ (293,236) ​ Awards canceled/forfeited/performance adjusted ​ ​ 147 ​ (852,247) ​ ​ 170 ​ (757,084) * Balance at December 31, 2017 ​ $ 141 ​ 8,555,263 ​ $ 144 ​ 2,649,313 ** Awards granted ​ ​ 121 ​ 4,806,790 ​ ​ 130 ​ 909,140 ​ Awards released ​ ​ 148 ​ (2,579,962) ​ ​ 152 ​ (666,244) ​ Awards canceled/forfeited/performance adjusted ​ ​ 139 ​ (979,387) ​ ​ 147 ​ (472,514) * Balance at December 31, 2018 ​ $ 130 ​ 9,802,704 ​ $ 136 ​ 2,419,695 ** Awards granted ​ ​ 119 ​ 5,650,861 ​ ​ 117 ​ 1,395,534 ​ Awards released ​ ​ 136 ​ (3,145,016) ​ ​ 140 ​ (846,672) ​ Awards canceled/forfeited/performance adjusted ​ ​ 128 ​ (981,921) ​ ​ 131 ​ (112,107) * Balance at December 31, 2019 ​ $ 123 ​ 11,326,628 ​ $ 126 ​ 2,856,450 ** * Includes adjustments of (8,544), (328,120) and (623,245) PSUs for 2019, 2018 and 2017, respectively, because final performance metrics were above or below specified targets. ** Represents the number of shares expected to be issued based on achievement of grant date performance targets. The actual number of shares issued will depend on final performance against specified targets over the vesting period. |
Summary of total fair value of RSUs and PSUs granted and vested | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ For the year ended December 31: 2019 2018 2017 RSUs ​ ​ ​ ​ ​ ​ ​ ​ ​ Granted ​ $ 674 ​ $ 583 ​ $ 484 Vested ​ ​ 428 ​ ​ 381 ​ ​ 463 PSUs ​ ​ ​ ​ ​ ​ ​ ​ ​ Granted ​ $ 164 ​ $ 118 ​ $ 113 Vested ​ ​ 118 ​ ​ 101 ​ ​ 51 |
Retirement-Related Benefits (Ta
Retirement-Related Benefits (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Retirement-Related Benefits | |
Summary of total retirement-related benefits net periodic (income)/cost in the Consolidated Income Statement | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ U.S. Plans ​ Non-U.S. Plans ​ Total For the year ended December 31: 2019 2018 2017 2019 2018 2017 2019 2018 2017 Defined benefit pension plans $ (153) $ 542 $ 237 $ 955 $ 1,284 $ 1,315 $ 803 $ 1,827 $ 1,552 Retention Plan ​ ​ 11 ​ ​ 17 ​ ​ 16 ​ ​ — ​ ​ — ​ ​ — ​ ​ 11 ​ ​ 17 ​ ​ 16 Total defined benefit pension plans (income)/cost $ (142) $ 559 $ 253 $ 955 $ 1,284 $ 1,315 $ 813 $ 1,843 $ 1,568 IBM 401(k) Plus Plan and non-U.S. plans $ 588 $ 588 $ 616 $ 427 $ 412 $ 404 $ 1,015 $ 1,000 $ 1,020 Excess 401(k) ​ ​ 26 ​ ​ 24 ​ ​ 26 ​ ​ — ​ ​ — ​ ​ — ​ ​ 26 ​ ​ 24 ​ ​ 26 Total defined contribution plans cost $ 613 $ 612 $ 643 $ 427 $ 412 $ 404 $ 1,040 $ 1,024 $ 1,046 Nonpension postretirement benefit plans cost $ 154 $ 147 $ 180 $ 65 $ 51 $ 62 $ 219 $ 198 $ 242 Total retirement-related benefits net periodic cost $ 624 $ 1,319 $ 1,076 $ 1,448 $ 1,747 $ 1,781 $ 2,072 $ 3,066 $ 2,857 |
Summary of the total PBO for defined benefit plans, APBO for nonpension postretirement benefit plans, fair value of plan assets and associated funded status | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Benefit Obligations ​ Fair Value of Plan Assets ​ Funded Status* At December 31: 2019 2018 2019 2018 2019 2018 U.S. Plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Overfunded plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Qualified PPP $ 48,471 $ 46,145 $ 51,784 $ 48,213 $ 3,313 $ 2,069 Underfunded plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Excess PPP $ 1,473 $ 1,395 $ — $ — $ (1,473) $ (1,395) Retention Plan ​ ​ 288 ​ ​ 273 ​ ​ — ​ ​ — ​ ​ (288) ​ ​ (273) Nonpension postretirement benefit plan ​ ​ 3,857 ​ ​ 3,912 ​ ​ 3 ​ ​ 29 ​ ​ (3,854) ​ ​ (3,882) Total underfunded U.S. plans $ 5,618 $ 5,579 $ 3 $ 29 $ (5,615) $ (5,550) Non-U.S. Plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Overfunded plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Qualified defined benefit pension plans** $ 18,371 $ 17,379 $ 21,921 $ 19,975 $ 3,550 $ 2,597 Nonpension postretirement benefit plans ​ ​ 19 ​ ​ 0 ​ ​ 21 ​ ​ 0 ​ ​ 2 ​ ​ 0 Total overfunded non-U.S. plans $ 18,390 $ 17,379 $ 21,942 $ 19,975 $ 3,552 $ 2,597 Underfunded plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Qualified defined benefit pension plans** $ 23,222 $ 22,139 $ 18,398 $ 16,783 $ (4,824) $ (5,356) Nonqualified defined benefit pension plans ​ ​ 6,731 ​ ​ 6,252 ​ ​ — ​ ​ — ​ ​ (6,731) ​ ​ (6,252) Nonpension postretirement benefit plans ​ ​ 828 ​ ​ 704 ​ ​ 44 ​ ​ 65 ​ ​ (785) ​ ​ (640) Total underfunded non-U.S. plans $ 30,782 $ 29,095 $ 18,442 $ 16,848 $ (12,340) $ (12,248) Total overfunded plans $ 66,861 $ 63,524 $ 73,726 $ 68,190 $ 6,865 $ 4,666 Total underfunded plans $ 36,399 $ 34,675 $ 18,445 $ 16,877 $ (17,955) $ (17,798) * Funded status is recognized in the Consolidated Balance Statement as follows: Asset amounts as prepaid pension assets; (Liability) amounts as compensation and benefits (current liability) and retirement and nonpension postretirement benefit obligations (noncurrent liability). ** Non-U.S. qualified plans represent plans funded outside of the U.S. Non-U.S. nonqualified plans are unfunded. |
Components of net periodic (income)/cost of the company's retirement-related benefit plans | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined Benefit Pension Plans ($ in millions) ​ U.S. Plans ​ Non-U.S. Plans For the year ended December 31: 2019 2018 2017 2019 2018 2017 Service cost $ — $ — $ — $ 370 $ 413 $ 410 Interest cost 1 ​ ​ 1,882 ​ ​ 1,719 ​ ​ 1,913 ​ ​ 847 ​ ​ 830 ​ ​ 837 Expected return on plan assets 1 ​ ​ (2,599) ​ ​ (2,701) ​ ​ (3,014) ​ ​ (1,588) ​ ​ (1,342) ​ ​ (1,325) Amortization of transition assets ( 1 ​ ​ — ​ ​ — ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ 0 Amortization of prior service costs/(credits) 1 ​ ​ 16 ​ ​ 16 ​ ​ 16 ​ ​ (23) ​ ​ (83) ​ ​ (97) Recognized actuarial losses 1 ​ ​ 559 ​ ​ 1,525 ​ ​ 1,337 ​ ​ 1,249 ​ ​ 1,401 ​ ​ 1,507 Curtailments and settlements ( 1 ​ ​ — ​ ​ — ​ ​ — ​ ​ 41 ​ ​ 11 ​ ​ 19 Multi-employer plans ​ ​ — ​ ​ — ​ ​ — ​ ​ 32 ​ ​ 38 ​ ​ 40 Other costs/(credits) ( 2 ​ ​ — ​ ​ — ​ ​ — ​ ​ 28 ​ ​ 16 ​ ​ (76) Total net periodic (income)/cost $ (142) $ 559 $ 253 $ 955 $ 1,284 $ 1,315 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonpension Postretirement Benefit Plans ($ in millions) ​ U.S. Plan ​ Non-U.S. Plans For the year ended December 31: 2019 2018 2017 2019 2018 2017 Service cost $ 10 $ 13 $ 14 $ 5 $ 5 $ 6 Interest cost 1 ​ ​ 145 ​ ​ 132 ​ ​ 154 ​ ​ 55 ​ ​ 45 ​ ​ 57 Expected return on plan assets 1 ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ (5) ​ ​ (6) ​ ​ (7) Amortization of transition assets ( 1 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 0 ​ ​ 0 Amortization of prior service costs/(credits) 1 ​ ​ (2) ​ ​ (7) ​ ​ (7) ​ ​ 0 ​ ​ 0 ​ ​ 0 Recognized actuarial losses 1 ​ ​ 1 ​ ​ 10 ​ ​ 20 ​ ​ 10 ​ ​ 6 ​ ​ 7 Curtailments and settlements ( 1 ​ ​ — ​ ​ — ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ 0 Total net periodic cost $ 154 $ 147 $ 180 $ 65 $ 51 $ 62 (1) These components of net periodic pension costs are included in other (income) and expense in the Consolidated Income Statement. (2) The non-U.S. defined benefit pension plans amount in 2017 includes a gain of $91 million related to IBM UK pension litigation. |
Changes in benefit obligations | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined Benefit Pension Plans ​ Nonpension Postretirement Benefit Plans ​ ​ U.S. Plans ​ Non-U.S. Plans ​ U.S. Plan ​ Non-U.S. Plans ($ in millions) 2019 2018 2019 2018 2019 2018 2019 2018 Change in benefit obligation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Benefit obligation at January 1 $ 47,812 $ 52,444 $ 45,770 $ 49,111 $ 3,912 $ 4,184 $ 705 $ 732 Service cost ​ ​ — ​ ​ — ​ ​ 370 ​ ​ 413 ​ ​ 10 ​ ​ 13 ​ ​ 5 ​ ​ 5 Interest cost ​ ​ 1,882 ​ ​ 1,719 ​ ​ 847 ​ ​ 830 ​ ​ 145 ​ ​ 132 ​ ​ 55 ​ ​ 45 Plan participants’ contributions ​ ​ — ​ ​ — ​ ​ 23 ​ ​ 25 ​ ​ 57 ​ ​ 59 ​ ​ — ​ ​ — Acquisitions/divestitures, net ​ ​ — ​ ​ — ​ ​ (32) ​ ​ (27) ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ 0 Actuarial losses/(gains) ​ ​ 4,040 ​ ​ (2,743) ​ ​ 3,467 ​ ​ (240) ​ ​ 148 ​ ​ (71) ​ ​ 141 ​ ​ 43 Benefits paid from trust ​ ​ (3,378) ​ ​ (3,484) ​ ​ (1,902) ​ ​ (1,976) ​ ​ (389) ​ ​ (383) ​ ​ (6) ​ ​ (7) Direct benefit payments ​ ​ (124) ​ ​ (124) ​ ​ (403) ​ ​ (390) ​ ​ (6) ​ ​ (22) ​ ​ (27) ​ ​ (31) Foreign exchange impact ​ ​ — ​ ​ — ​ ​ 134 ​ ​ (2,012) ​ ​ — ​ ​ — ​ ​ (1) ​ ​ (86) Amendments/curtailments/settlements/other ​ ​ — ​ ​ — ​ ​ 50 ​ ​ 34 ​ ​ (21) ​ ​ — ​ ​ (23) ​ ​ 3 Benefit obligation at December 31 $ 50,232 $ 47,812 $ 48,324 $ 45,770 $ 3,857 $ 3,912 $ 848 $ 705 Change in plan assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of plan assets at January 1 $ 48,213 $ 52,694 $ 36,758 $ 40,798 $ 29 $ 18 $ 65 $ 70 Actual return on plan assets ​ ​ 6,949 ​ ​ (997) ​ ​ 4,896 ​ ​ (610) ​ ​ 1 ​ ​ 1 ​ ​ 7 ​ ​ 12 Employer contributions ​ ​ — ​ ​ — ​ ​ 243 ​ ​ 325 ​ ​ 304 ​ ​ 335 ​ ​ — ​ ​ 0 Acquisitions/divestitures, net ​ ​ — ​ ​ — ​ ​ (25) ​ ​ (22) ​ ​ — ​ ​ 0 ​ ​ — ​ ​ 0 Plan participants’ contributions ​ ​ — ​ ​ — ​ ​ 23 ​ ​ 25 ​ ​ 57 ​ ​ 59 ​ ​ — ​ ​ 0 Benefits paid from trust ​ ​ (3,378) ​ ​ (3,484) ​ ​ (1,902) ​ ​ (1,976) ​ ​ (389) ​ ​ (383) ​ ​ (6) ​ ​ (7) Foreign exchange impact ​ ​ — ​ ​ — ​ ​ 333 ​ ​ (1,754) ​ ​ — ​ ​ — ​ ​ (1) ​ ​ (10) Amendments/curtailments/settlements/other ​ ​ — ​ ​ — ​ ​ (7) ​ ​ (28) ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ 0 Fair value of plan assets at December 31 $ 51,784 $ 48,213 $ 40,319 $ 36,758 $ 3 $ 29 $ 65 $ 65 Funded status at December 31 $ 1,551 $ 401 $ (8,005) $ (9,012) $ (3,854) $ (3,882) $ (783) $ (640) Accumulated benefit obligation* $ 50,232 $ 47,812 $ 47,645 $ 45,161 ​ ​ N/A ​ ​ N/A ​ ​ N/A ​ ​ N/A * Represents the benefit obligation assuming no future participant compensation increases. N/A–Not applicable |
Changes in plan assets | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined Benefit Pension Plans ​ Nonpension Postretirement Benefit Plans ​ ​ U.S. Plans ​ Non-U.S. Plans ​ U.S. Plan ​ Non-U.S. Plans ($ in millions) 2019 2018 2019 2018 2019 2018 2019 2018 Change in benefit obligation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Benefit obligation at January 1 $ 47,812 $ 52,444 $ 45,770 $ 49,111 $ 3,912 $ 4,184 $ 705 $ 732 Service cost ​ ​ — ​ ​ — ​ ​ 370 ​ ​ 413 ​ ​ 10 ​ ​ 13 ​ ​ 5 ​ ​ 5 Interest cost ​ ​ 1,882 ​ ​ 1,719 ​ ​ 847 ​ ​ 830 ​ ​ 145 ​ ​ 132 ​ ​ 55 ​ ​ 45 Plan participants’ contributions ​ ​ — ​ ​ — ​ ​ 23 ​ ​ 25 ​ ​ 57 ​ ​ 59 ​ ​ — ​ ​ — Acquisitions/divestitures, net ​ ​ — ​ ​ — ​ ​ (32) ​ ​ (27) ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ 0 Actuarial losses/(gains) ​ ​ 4,040 ​ ​ (2,743) ​ ​ 3,467 ​ ​ (240) ​ ​ 148 ​ ​ (71) ​ ​ 141 ​ ​ 43 Benefits paid from trust ​ ​ (3,378) ​ ​ (3,484) ​ ​ (1,902) ​ ​ (1,976) ​ ​ (389) ​ ​ (383) ​ ​ (6) ​ ​ (7) Direct benefit payments ​ ​ (124) ​ ​ (124) ​ ​ (403) ​ ​ (390) ​ ​ (6) ​ ​ (22) ​ ​ (27) ​ ​ (31) Foreign exchange impact ​ ​ — ​ ​ — ​ ​ 134 ​ ​ (2,012) ​ ​ — ​ ​ — ​ ​ (1) ​ ​ (86) Amendments/curtailments/settlements/other ​ ​ — ​ ​ — ​ ​ 50 ​ ​ 34 ​ ​ (21) ​ ​ — ​ ​ (23) ​ ​ 3 Benefit obligation at December 31 $ 50,232 $ 47,812 $ 48,324 $ 45,770 $ 3,857 $ 3,912 $ 848 $ 705 Change in plan assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of plan assets at January 1 $ 48,213 $ 52,694 $ 36,758 $ 40,798 $ 29 $ 18 $ 65 $ 70 Actual return on plan assets ​ ​ 6,949 ​ ​ (997) ​ ​ 4,896 ​ ​ (610) ​ ​ 1 ​ ​ 1 ​ ​ 7 ​ ​ 12 Employer contributions ​ ​ — ​ ​ — ​ ​ 243 ​ ​ 325 ​ ​ 304 ​ ​ 335 ​ ​ — ​ ​ 0 Acquisitions/divestitures, net ​ ​ — ​ ​ — ​ ​ (25) ​ ​ (22) ​ ​ — ​ ​ 0 ​ ​ — ​ ​ 0 Plan participants’ contributions ​ ​ — ​ ​ — ​ ​ 23 ​ ​ 25 ​ ​ 57 ​ ​ 59 ​ ​ — ​ ​ 0 Benefits paid from trust ​ ​ (3,378) ​ ​ (3,484) ​ ​ (1,902) ​ ​ (1,976) ​ ​ (389) ​ ​ (383) ​ ​ (6) ​ ​ (7) Foreign exchange impact ​ ​ — ​ ​ — ​ ​ 333 ​ ​ (1,754) ​ ​ — ​ ​ — ​ ​ (1) ​ ​ (10) Amendments/curtailments/settlements/other ​ ​ — ​ ​ — ​ ​ (7) ​ ​ (28) ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ 0 Fair value of plan assets at December 31 $ 51,784 $ 48,213 $ 40,319 $ 36,758 $ 3 $ 29 $ 65 $ 65 Funded status at December 31 $ 1,551 $ 401 $ (8,005) $ (9,012) $ (3,854) $ (3,882) $ (783) $ (640) Accumulated benefit obligation* $ 50,232 $ 47,812 $ 47,645 $ 45,161 ​ ​ N/A ​ ​ N/A ​ ​ N/A ​ ​ N/A * Represents the benefit obligation assuming no future participant compensation increases. N/A–Not applicable |
Accumulated benefit obligation | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined Benefit Pension Plans ​ Nonpension Postretirement Benefit Plans ​ ​ U.S. Plans ​ Non-U.S. Plans ​ U.S. Plan ​ Non-U.S. Plans ($ in millions) 2019 2018 2019 2018 2019 2018 2019 2018 Change in benefit obligation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Benefit obligation at January 1 $ 47,812 $ 52,444 $ 45,770 $ 49,111 $ 3,912 $ 4,184 $ 705 $ 732 Service cost ​ ​ — ​ ​ — ​ ​ 370 ​ ​ 413 ​ ​ 10 ​ ​ 13 ​ ​ 5 ​ ​ 5 Interest cost ​ ​ 1,882 ​ ​ 1,719 ​ ​ 847 ​ ​ 830 ​ ​ 145 ​ ​ 132 ​ ​ 55 ​ ​ 45 Plan participants’ contributions ​ ​ — ​ ​ — ​ ​ 23 ​ ​ 25 ​ ​ 57 ​ ​ 59 ​ ​ — ​ ​ — Acquisitions/divestitures, net ​ ​ — ​ ​ — ​ ​ (32) ​ ​ (27) ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ 0 Actuarial losses/(gains) ​ ​ 4,040 ​ ​ (2,743) ​ ​ 3,467 ​ ​ (240) ​ ​ 148 ​ ​ (71) ​ ​ 141 ​ ​ 43 Benefits paid from trust ​ ​ (3,378) ​ ​ (3,484) ​ ​ (1,902) ​ ​ (1,976) ​ ​ (389) ​ ​ (383) ​ ​ (6) ​ ​ (7) Direct benefit payments ​ ​ (124) ​ ​ (124) ​ ​ (403) ​ ​ (390) ​ ​ (6) ​ ​ (22) ​ ​ (27) ​ ​ (31) Foreign exchange impact ​ ​ — ​ ​ — ​ ​ 134 ​ ​ (2,012) ​ ​ — ​ ​ — ​ ​ (1) ​ ​ (86) Amendments/curtailments/settlements/other ​ ​ — ​ ​ — ​ ​ 50 ​ ​ 34 ​ ​ (21) ​ ​ — ​ ​ (23) ​ ​ 3 Benefit obligation at December 31 $ 50,232 $ 47,812 $ 48,324 $ 45,770 $ 3,857 $ 3,912 $ 848 $ 705 Change in plan assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of plan assets at January 1 $ 48,213 $ 52,694 $ 36,758 $ 40,798 $ 29 $ 18 $ 65 $ 70 Actual return on plan assets ​ ​ 6,949 ​ ​ (997) ​ ​ 4,896 ​ ​ (610) ​ ​ 1 ​ ​ 1 ​ ​ 7 ​ ​ 12 Employer contributions ​ ​ — ​ ​ — ​ ​ 243 ​ ​ 325 ​ ​ 304 ​ ​ 335 ​ ​ — ​ ​ 0 Acquisitions/divestitures, net ​ ​ — ​ ​ — ​ ​ (25) ​ ​ (22) ​ ​ — ​ ​ 0 ​ ​ — ​ ​ 0 Plan participants’ contributions ​ ​ — ​ ​ — ​ ​ 23 ​ ​ 25 ​ ​ 57 ​ ​ 59 ​ ​ — ​ ​ 0 Benefits paid from trust ​ ​ (3,378) ​ ​ (3,484) ​ ​ (1,902) ​ ​ (1,976) ​ ​ (389) ​ ​ (383) ​ ​ (6) ​ ​ (7) Foreign exchange impact ​ ​ — ​ ​ — ​ ​ 333 ​ ​ (1,754) ​ ​ — ​ ​ — ​ ​ (1) ​ ​ (10) Amendments/curtailments/settlements/other ​ ​ — ​ ​ — ​ ​ (7) ​ ​ (28) ​ ​ — ​ ​ 0 ​ ​ 0 ​ ​ 0 Fair value of plan assets at December 31 $ 51,784 $ 48,213 $ 40,319 $ 36,758 $ 3 $ 29 $ 65 $ 65 Funded status at December 31 $ 1,551 $ 401 $ (8,005) $ (9,012) $ (3,854) $ (3,882) $ (783) $ (640) Accumulated benefit obligation* $ 50,232 $ 47,812 $ 47,645 $ 45,161 ​ ​ N/A ​ ​ N/A ​ ​ N/A ​ ​ N/A * Represents the benefit obligation assuming no future participant compensation increases. N/A–Not applicable |
Net funded status | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined Benefit Pension Plans ​ Nonpension Postretirement Benefit Plans ($ in millions) ​ U.S. Plans ​ Non-U.S. Plans ​ U.S. Plan ​ Non-U.S. Plans At December 31: 2019 2018 2019 2018 2019 2018 2019 2018 Prepaid pension assets $ 3,313 $ 2,069 $ 3,550 $ 2,597 $ 0 $ 0 $ 2 $ 0 Current liabilities—compensation and benefits ​ ​ (120) ​ ​ (120) ​ ​ (313) ​ ​ (302) ​ ​ (346) ​ ​ (340) ​ ​ (33) ​ ​ (36) Noncurrent liabilities—retirement and nonpension postretirement benefit obligations ​ ​ (1,641) ​ ​ (1,548) ​ ​ (11,242) ​ ​ (11,306) ​ ​ (3,507) ​ ​ (3,542) ​ ​ (752) ​ ​ (605) Funded status—net $ 1,551 $ 401 $ (8,005) $ (9,012) $ (3,854) $ (3,882) $ (783) $ (640) |
Pre-tax net loss and prior service costs/(credits) and transition (assets)/liabilities recognized in OCI and changes in pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in AOCI | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined Benefit Pension Plans ​ Nonpension Postretirement Benefit Plans ​ ​ U.S. Plans ​ Non-U.S. Plans ​ U.S. Plan ​ Non-U.S. Plans ($ in millions) 2019 2018 2019 2018 2019 2018 2019 2018 Net loss at January 1 $ 17,476 $ 18,045 $ 18,452 $ 18,275 $ 405 $ 486 $ 172 $ 145 Current period loss/(gain) ​ ​ (309) ​ ​ 956 ​ ​ 109 ​ ​ 1,590 ​ ​ 147 ​ ​ (72) ​ ​ 125 ​ ​ 33 Curtailments and settlements ​ ​ — ​ ​ — ​ ​ (41) ​ ​ (11) ​ ​ — ​ ​ — ​ ​ 0 ​ ​ 0 Amortization of net loss included in net periodic (income)/cost ​ ​ (559) ​ ​ (1,525) ​ ​ (1,249) ​ ​ (1,401) ​ ​ (1) ​ ​ (10) ​ ​ (10) ​ ​ (6) Net loss at December 31 $ 16,608 $ 17,476 $ 17,272 $ 18,452 $ 551 $ 405 $ 287 $ 172 Prior service costs/(credits) at January 1 $ 57 $ 74 $ 172 $ (90) $ 52 $ 45 $ 4 $ 3 Current period prior service costs/(credits) ​ ​ — ​ ​ — ​ ​ 102 ​ ​ 181 ​ ​ (21) ​ ​ — ​ ​ (8) ​ ​ 1 Curtailments, settlements and other ​ ​ — ​ ​ — ​ ​ — ​ ​ 0 ​ ​ — ​ ​ — ​ ​ — ​ ​ 0 Amortization of prior service (costs)/credits included in net periodic (income)/cost ​ ​ (16) ​ ​ (16) ​ ​ 23 ​ ​ 83 ​ ​ 2 ​ ​ 7 ​ ​ 0 ​ ​ 0 Prior service costs/(credits) at December 31 $ 41 $ 57 $ 297 $ 172 $ 34 $ 52 $ (4) $ 4 Transition (assets)/liabilities at January 1 $ — $ — $ 0 $ 0 $ — $ — $ 0 $ 0 Amortization of transition assets/(liabilities) included in net periodic (income)/cost ​ ​ — ​ ​ — ​ ​ 0 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 0 Transition (assets)/liabilities at December 31 $ — $ — $ 0 $ 0 $ — $ — $ 0 $ 0 Total loss recognized in accumulated other comprehensive income/(loss) $ 16,648 $ 17,533 $ 17,569 $ 18,624 $ 585 $ 457 $ 283 $ 176 * Refer to note S, “Equity Activity,” for the total change in AOCI, and the Consolidated Statement of Comprehensive Income for the components of net periodic (income)/cost, including the related tax effects, recognized in OCI for the retirement-related benefit plans. |
Assumptions used to measure the net periodic (income)/cost and year-end benefit obligations | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined Benefit Pension Plans ​ ​ U.S. Plans ​ Non-U.S. Plans ​ 2019 2018 2017 2019 2018 2017 ​ Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Discount rate 4.10 % 3.40 % 3.80 % 1.85 % 1.76 % 1.80 % Expected long-term returns on plan assets 5.25 % 5.25 % 5.75 % 4.38 % 3.62 % 3.77 % Rate of compensation increase N/A N/A N/A 2.18 % 2.41 % 2.45 % Interest crediting rate ​ 3.60 % 2.30 % 1.60 % 0.30 % 0.30 % 0.59 % Weighted-average assumptions used to measure benefit obligations at December 31 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Discount rate 3.10 % 4.10 % 3.40 % 1.19 % 1.85 % 1.76 % Rate of compensation increase N/A N/A N/A 2.60 % 2.18 % 2.41 % Interest crediting rate ​ 2.70 % 3.60 % 2.30 % 0.28 % 0.30 % 0.30 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonpension Postretirement Benefit Plans ​ ​ U.S. Plan ​ Non-U.S. Plans ​ 2019 2018 2017 2019 2018 2017 ​ Weighted-average assumptions used to measure net periodic cost for the year ended December 31 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Discount rate 3.90 % 3.30 % 3.60 % 7.48 % 7.28 % 8.26 % Expected long-term returns on plan assets N/A N/A N/A ​ 8.64 % 8.91 % 10.47 % Interest crediting rate ​ 3.60 % 2.30 % 1.60 % N/A ​ N/A ​ N/A ​ Weighted-average assumptions used to measure benefit obligations at December 31 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Discount rate 2.80 % 3.90 % 3.30 % 4.98 % 7.48 % 7.28 % Interest crediting rate ​ 2.70 % 3.60 % 2.30 % N/A ​ N/A ​ N/A ​ ​ N/A–Not applicable ​ |
Changes in net periodic income and benefit obligations from changes in plan assumptions. | The following tables present the increase/(decrease) in net periodic income and benefit obligations as a result of changes in plan assumptions. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Net Periodic Income For the year ended December 31: 2019 2018 2017 Discount rate (U.S. DB pension plans) $ 307 $ (124) $ (64) Expected long-term return on plan assets (U.S. DB pension plans) ​ ​ — ​ ​ (256) ​ ​ (656) Interest crediting rate (PPP) ​ ​ (59) ​ ​ (25) ​ ​ (14) ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Benefit Obligations At December 31: 2019 2018 Discount rate impact ​ ​ ​ ​ ​ ​ PBO (U.S. DB pension plans) ​ $ 4,385 ​ $ (3,239) APBO (U.S. nonpension plans) ​ 252 ​ (153) Benefit obligations (all plans) ​ ​ 8,932 ​ ​ (4,032) Mortality assumptions impact ​ ​ ​ ​ ​ PBO (U.S. DB and nonpension plans) ​ ​ (186) ​ 27 |
Defined benefit pension plans' asset classes and their associated fair value | The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2019. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Plan ​ Non-U.S. Plans ($ in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity securities (1) $ 1,943 $ — $ — $ 1,943 $ 2,209 $ 0 $ — $ 2,209 Equity mutual funds (2) ​ ​ 85 ​ ​ — ​ ​ — ​ ​ 85 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Fixed income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government and related (3) ​ ​ — ​ ​ 21,134 ​ ​ — ​ ​ 21,134 ​ ​ — ​ ​ 10,288 ​ ​ 2 ​ ​ 10,290 Corporate bonds (4) ​ ​ — ​ ​ 16,666 ​ ​ 518 ​ ​ 17,185 ​ ​ — ​ ​ 2,124 ​ ​ — ​ ​ 2,124 Mortgage and asset-backed securities ​ ​ — ​ ​ 630 ​ ​ — ​ ​ 630 ​ ​ — ​ ​ 19 ​ ​ — ​ ​ 19 Fixed income mutual funds (5) ​ ​ 386 ​ ​ — ​ ​ — ​ ​ 386 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Insurance contracts ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,862 ​ ​ — ​ ​ 1,862 Cash and short-term investments (6) ​ ​ 54 ​ ​ 848 ​ ​ — ​ ​ 903 ​ ​ 204 ​ ​ 644 ​ ​ — ​ ​ 849 Real estate ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 328 ​ ​ 328 Derivatives (7) ​ ​ 0 ​ ​ 6 ​ ​ — ​ ​ 6 ​ ​ 18 ​ ​ 969 ​ ​ — ​ ​ 987 Other mutual funds (8) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 25 ​ ​ 0 ​ ​ — ​ ​ 25 Subtotal ​ ​ 2,469 ​ ​ 39,284 ​ ​ 518 ​ ​ 42,271 ​ ​ 2,456 ​ ​ 15,907 ​ ​ 330 ​ ​ 18,693 Investments measured at net asset value using the NAV practical expedient (9) ​ ​ — ​ ​ — ​ ​ — ​ ​ 9,519 ​ ​ — ​ ​ — ​ ​ — ​ ​ 21,653 Other (10) ​ ​ — ​ ​ — ​ ​ — ​ ​ (6) ​ ​ — ​ ​ — ​ ​ — ​ ​ (26) Fair value of plan assets $ 2,469 $ 39,284 $ 518 $ 51,784 $ 2,456 $ 15,907 $ 330 $ 40,319 (1) Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $2 million, representing 0.004 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $10 million, representing 0.02 percent of the non-U.S. Plans assets. (2) Invests in predominantly equity securities. (3) Includes debt issued by national, state and local governments and agencies. (4) The U.S. Plan includes IBM corporate bonds of $37 million representing 0.07 percent of the U.S. Plan assets. Non-U.S. Plans include IBM corporate bonds of $8 million representing 0.02 percent of the non-U.S. Plans assets. (5) Invests predominantly in fixed income securities. (6) Includes cash, cash equivalents and short-term marketable securities. (7) Includes interest rate derivatives, forwards, exchange traded and other over-the-counter derivatives. (8) Invests in both equity and fixed-income securities. (9) Investments measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient, including commingled funds, hedge funds, private equity and real estate partnerships. (10) Represents net unsettled transactions, relating primarily to purchases and sales of plan assets. ​ The U.S. nonpension postretirement benefit plan assets of $3 million were invested primarily in cash equivalents, categorized as Level 1 in the fair value hierarchy. The non-U.S. nonpension postretirement benefit plan assets of $65 million, primarily in Brazil, and, to a lesser extent, in Mexico and South Africa, were invested primarily in government and related fixed-income securities and corporate bonds, categorized as Level 2 in the fair value hierarchy. ​ The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2018. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Plan ​ Non-U.S. Plans ($ in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity securities (1) $ 1,538 $ — $ — $ 1,538 $ 2,333 $ — $ 0 $ 2,333 Equity mutual funds (2) ​ ​ 65 ​ ​ — ​ ​ — ​ ​ 65 ​ ​ 18 ​ ​ 5 ​ ​ — ​ ​ 23 Fixed income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government and related (3) ​ ​ — ​ ​ 19,661 ​ ​ — ​ ​ 19,661 ​ ​ 20 ​ ​ 8,951 ​ ​ 2 ​ ​ 8,973 Corporate bonds (4) ​ ​ — ​ ​ 15,849 ​ ​ 359 ​ ​ 16,208 ​ ​ — ​ ​ 1,865 ​ ​ 0 ​ ​ 1,865 Mortgage and asset-backed securities ​ ​ — ​ ​ 635 ​ ​ 4 ​ ​ 640 ​ ​ — ​ ​ 6 ​ ​ — ​ ​ 6 Fixed income mutual funds (5) ​ ​ 421 ​ ​ — ​ ​ — ​ ​ 421 ​ ​ 11 ​ ​ — ​ ​ — ​ ​ 11 Insurance contracts ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,308 ​ ​ — ​ ​ 1,308 Cash and short-term investments (6) ​ ​ 55 ​ ​ 1,020 ​ ​ — ​ ​ 1,075 ​ ​ 322 ​ ​ 431 ​ ​ — ​ ​ 753 Real estate ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 339 ​ ​ 339 Derivatives (7) ​ ​ 3 ​ ​ (1) ​ ​ — ​ ​ 2 ​ ​ 24 ​ ​ 606 ​ ​ — ​ ​ 630 Other mutual funds (8) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 24 ​ ​ — ​ ​ — ​ ​ 24 Subtotal ​ ​ 2,081 ​ ​ 37,164 ​ ​ 363 ​ ​ 39,608 ​ ​ 2,753 ​ ​ 13,172 ​ ​ 341 ​ ​ 16,266 Investments measured at net asset value using the NAV practical expedient (9) ​ ​ — ​ ​ — ​ ​ — ​ ​ 8,835 ​ ​ — ​ ​ — ​ ​ — ​ ​ 20,525 Other (10) ​ ​ — ​ ​ — ​ ​ — ​ ​ (230) ​ ​ — ​ ​ — ​ ​ — ​ ​ (32) Fair value of plan assets $ 2,081 $ 37,164 $ 363 $ 48,213 $ 2,753 $ 13,172 $ 341 $ 36,758 (1) Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $2 million, representing 0.004 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $10 million, representing 0.03 percent of the non-U.S. Plans assets. (2) Invests in predominantly equity securities. (3) Includes debt issued by national, state and local governments and agencies. (4) The U.S. Plan does not include any IBM corporate bonds. Non-U.S. Plans include IBM corporate bonds of $3 million representing 0.007 percent of the non-U.S. Plans assets. (5) Invests in predominantly fixed-income securities. (6) Includes cash and cash equivalents and short-term marketable securities. (7) Includes interest rate derivatives, forwards, exchange traded and other over-the-counter derivatives. (8) Invests in both equity and fixed-income securities. (9) Investments measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient, including commingled funds, hedge funds, private equity and real estate partnerships. (10) Represents net unsettled transactions, relating primarily to purchases and sales of plan assets. ​ |
Reconciliation of the beginning and ending balances of Level 3 assets | The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2019 and 2018 for the U.S. Plan. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage ​ ​ ​ ​ ​ ​ ​ and Asset- ​ ​ ​ ​ ​ Corporate ​ Backed ​ ​ ​ ($ in millions) Bonds Securities Total Balance at January 1, 2019 $ 359 $ 4 $ 363 Return on assets held at end of year ​ ​ 40 ​ ​ — ​ ​ 40 Return on assets sold during the year ​ ​ 1 ​ ​ 0 ​ ​ 1 Purchases, sales and settlements, net ​ ​ 105 ​ ​ 0 ​ ​ 105 Transfers, net ​ ​ 13 ​ ​ (4) ​ ​ 9 Balance at December 31, 2019 $ 518 $ — $ 518 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage ​ ​ ​ ​ ​ ​ ​ and Asset- ​ ​ ​ ​ ​ Corporate ​ Backed ​ ​ ​ ($ in millions) Bonds Securities Total Balance at January 1, 2018 $ 372 $ 4 $ 376 Return on assets held at end of year ​ ​ (23) ​ ​ 0 ​ ​ (23) Return on assets sold during the year ​ ​ 0 ​ ​ 0 ​ ​ 0 Purchases, sales and settlements, net ​ ​ 10 ​ ​ 0 ​ ​ 10 Transfers, net ​ ​ — ​ ​ 0 ​ ​ 0 Balance at December 31, 2018 $ 359 $ 4 $ 363 ​ The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2019 and 2018 for the non-U.S. Plans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government Private ​ ​ ($ in millions) and Related Real Estate Total Balance at January 1, 2019 $ 2 $ 339 $ 341 Return on assets held at end of year ​ ​ 0 ​ ​ (11) ​ ​ (11) Return on assets sold during the year ​ ​ 0 ​ ​ 4 ​ ​ 4 Purchases, sales and settlements, net ​ ​ (1) ​ ​ (17) ​ ​ (18) Transfers, net ​ ​ — ​ ​ — ​ ​ — Foreign exchange impact ​ ​ 0 ​ ​ 13 ​ ​ 13 Balance at December 31, 2019 $ 2 $ 328 $ 330 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government Private ​ ​ ($ in millions) and Related Real Estate Total Balance at January 1, 2018 $ 8 $ 356 $ 365 Return on assets held at end of year ​ ​ 0 ​ ​ 8 ​ ​ 8 Return on assets sold during the year ​ ​ (1) ​ ​ (2) ​ ​ (2) Purchases, sales and settlements, net ​ ​ (3) ​ ​ (3) ​ ​ (6) Transfers, net ​ ​ (2) ​ ​ — ​ ​ (2) Foreign exchange impact ​ ​ 0 ​ ​ (21) ​ ​ (21) Balance at December 31, 2018 $ 2 $ 339 $ 341 |
Schedule of contributions and direct benefit payments | ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ ​ ​ ​ ​ ​ For the years ended December 31: 2019 2018 Non-U.S. DB plans $ 243 $ 325 Nonpension postretirement benefit plans ​ ​ 304 ​ ​ 335 Multi-employer plans ​ ​ 32 ​ ​ 38 DC plans ​ ​ 1,040 ​ ​ 1,024 Direct benefit payments ​ ​ 559 ​ ​ 567 Total ​ $ 2,177 ​ $ 2,288 |
Total expected benefit payments | Defined Benefit Pension Plan Expected Payments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Qualified ​ Nonqualified ​ Qualified ​ Nonqualified ​ Expected ​ ​ U.S. Plan ​ U.S. Plans ​ Non-U.S. Plans ​ Non-U.S. Plans ​ Benefit ($ in millions) Payments Payments Payments Payments Payments 2020 $ 3,533 $ 122 $ 1,937 $ 320 $ 5,913 2021 ​ ​ 3,523 ​ ​ 122 ​ ​ 1,951 ​ ​ 317 ​ ​ 5,912 2022 ​ ​ 3,494 ​ ​ 122 ​ ​ 1,990 ​ ​ 327 ​ ​ 5,932 2023 ​ ​ 3,441 ​ ​ 120 ​ ​ 2,012 ​ ​ 336 ​ ​ 5,909 2024 ​ ​ 3,394 ​ ​ 119 ​ ​ 2,030 ​ ​ 345 ​ ​ 5,887 2025—2029 ​ ​ 15,680 ​ ​ 557 ​ ​ 10,015 ​ ​ 1,864 ​ ​ 28,115 Nonpension Postretirement Benefit Plan Expected Payments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ Qualified ​ Nonqualified ​ Expected ​ ​ U.S. Plan ​ Non-U.S. Plans ​ Non-U.S. Plans ​ Benefit ($ in millions) Payments Payments Payments Payments 2020 $ 354 $ 19 $ 23 $ 395 2021 ​ ​ 381 ​ ​ 20 ​ ​ 23 ​ ​ 424 2022 ​ ​ 388 ​ ​ 21 ​ ​ 23 ​ ​ 432 2023 ​ ​ 379 ​ ​ 23 ​ ​ 23 ​ ​ 425 2024 ​ ​ 359 ​ ​ 24 ​ ​ 24 ​ ​ 407 2025—2029 ​ ​ 1,449 ​ ​ 146 ​ ​ 116 ​ ​ 1,712 |
Defined benefit pension plans with accumulated benefit obligations (ABO) in excess of plan assets | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 ​ 2018 ($ in millions) Benefit Plan Benefit Plan At December 31: Obligation Assets Obligation Assets Plans with PBO in excess of plan assets $ 31,714 $ 18,398 $ 30,059 $ 16,783 Plans with ABO in excess of plan assets ​ ​ 30,882 ​ ​ 18,127 ​ ​ 29,312 ​ ​ 16,522 Plans with plan assets in excess of PBO ​ ​ 66,842 ​ ​ 73,705 ​ ​ 63,524 ​ ​ 68,190 |
Schedule of nonpension postretirement benefit plan with APBO in excess of plan assets | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 ​ 2018 ($ in millions) Benefit Plan Benefit Plan At December 31: ​ Obligation ​ Assets ​ Obligation ​ Assets Plans with APBO in excess of plan assets $ 4,685 $ 47 $ 4,616 $ 94 Plans with plan assets in excess of APBO ​ ​ 19 ​ ​ 21 ​ ​ — ​ ​ — |
Significant Accounting Polici_3
Significant Accounting Policies - Basis of Presentation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | $ 77,147 | $ 79,591 | $ 79,139 |
Cost of Revenue | 40,659 | 42,655 | 42,196 |
Measurement period adjustments recognized related to U.S. tax reform | 100 | 2,000 | 5,500 |
Other (income) and expense | |||
Noncontrolling interest amounts, net of tax | 25 | 17 | 17 |
Services | |||
Revenues | 47,493 | 49,257 | 48,652 |
Cost of Revenue | 32,491 | 33,687 | 33,399 |
Sales | |||
Revenues | 28,252 | 28,735 | 28,772 |
Cost of Revenue | $ 7,263 | 7,835 | 7,587 |
Adjustments for adoption of guidance | Sales | |||
Revenues | 2,100 | 2,100 | |
Cost of Revenue | $ 400 | $ 400 |
Significant Accounting Polici_4
Significant Accounting Policies - Billing and Financing Components (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue | |
Payment due period from receipt of invoice, per standard billing terms | 30 days |
Practical expedient, financing components | true |
Significant Accounting Polici_5
Significant Accounting Policies - Revenue Recognition for Major Categories of Revenue (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Unbilled services accounts receivable included in notes and accounts receivable - trade | $ 1,071 | $ 1,075 |
Services | ||
Disaggregation of Revenue [Line Items] | ||
Deferred income | 5,106 | 5,424 |
Contract assets | $ 424 | $ 421 |
Services | Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Contract term, high end of range | 10 years | |
Services | Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Contract term, low end of range | 1 year | |
Shipping and handling | ||
Disaggregation of Revenue [Line Items] | ||
Deferred income | $ 0 | |
Term License Software | ||
Disaggregation of Revenue [Line Items] | ||
Committed contract term | 1 month | |
Open Source Software | ||
Disaggregation of Revenue [Line Items] | ||
Standalone selling price | $ 0 | |
Allocation of consideration to open source software license | 0 | |
Revenue recognized when control is transferred to client | $ 0 |
Significant Accounting Polici_6
Significant Accounting Policies - Software Costs (Details) - Capitalized software - Maximum | 12 Months Ended |
Dec. 31, 2019 | |
Intangible assets | |
Amortization period | 3 years |
Cost of sales | |
Intangible assets | |
Amortization period | 3 years |
SG&A expense | |
Intangible assets | |
Amortization period | 3 years |
Significant Accounting Polici_7
Significant Accounting Policies - Incremental Costs of Obtaining a Contract (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Incremental Costs of Obtaining a Contract | |
Practical expedient, incremental costs of obtaining a contract | true |
Minimum | |
Incremental Costs of Obtaining a Contract | |
Capitalized costs to obtain contract, expected customer relationship period as amortization period | 3 years |
Maximum | |
Incremental Costs of Obtaining a Contract | |
Capitalized costs to obtain contract, expected customer relationship period as amortization period | 6 years |
Significant Accounting Polici_8
Significant Accounting Policies - Product Warranties (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Minimum | |
Product Warranties | |
Product warranty term | 1 year |
Maximum | |
Product Warranties | |
Product warranty term | 3 years |
Significant Accounting Polici_9
Significant Accounting Policies - Advertising and Promotional Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Significant Accounting Policies | |||
Advertising and promotional expense | $ 1,647 | $ 1,466 | $ 1,445 |
Significant Accounting Polic_10
Significant Accounting Policies - Depreciation (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Buildings | Minimum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 30 years |
Buildings | Maximum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 50 years |
Building equipment | Minimum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 10 years |
Building equipment | Maximum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 20 years |
Land improvements | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 20 years |
Production, engineering, office and other equipment | Minimum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 2 years |
Production, engineering, office and other equipment | Maximum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 20 years |
Information technology equipment | Minimum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 1 year 6 months |
Information technology equipment | Maximum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 5 years |
Leasehold improvements | Maximum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 25 years |
Significant Accounting Polic_11
Significant Accounting Policies - Amortization (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Capitalized software | Maximum | |
Intangible assets | |
Amortization period | 3 years |
Other intangible assets | Minimum | |
Intangible assets | |
Amortization period | 1 year |
Other intangible assets | Maximum | |
Intangible assets | |
Amortization period | 20 years |
Significant Accounting Polic_12
Significant Accounting Policies - Stock-Based Compensation (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Performance Share Units | |
Stock-Based Compensation | |
Vesting period | 3 years |
Minimum | Restricted Stock Units | |
Stock-Based Compensation | |
Vesting period | 1 year |
Maximum | Restricted Stock Units | |
Stock-Based Compensation | |
Vesting period | 5 years |
Significant Accounting Polic_13
Significant Accounting Policies - Factored Receivables (Details) - USD ($) $ in Billions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Significant Accounting Policies | ||
Gross proceeds from factored receivables | $ 2.1 | $ 2.2 |
Accounts receivable sold and derecognized that remain uncollected from customers | 0.5 | 0.9 |
Net gains and losses associated with the transfer of receivables |
Significant Accounting Polic_14
Significant Accounting Policies - Financing Receivables (Details) - Total Lease Receivable and Loan Receivable Portfolio Segments | 12 Months Ended |
Dec. 31, 2019itemsegment | |
Financing receivables | |
Number of portfolio segments | segment | 2 |
Number of classes of financing receivable | item | 3 |
Period after which financing receivables become past due | 90 days |
Significant Accounting Polic_15
Significant Accounting Policies - Leases (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Existence of Option to Extend [true false] | true |
Lessee, Operating Lease, Existence of Option to Terminate [true false] | true |
Lease, Practical Expedient, Lessor Single Lease Component [true false] | true |
Real estate | Weighted-Average | |
Lessee, Lease, Description [Line Items] | |
Lease terms (in years) | 5 years |
Equipment leases | Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease terms (in years) | 2 years |
Equipment leases | Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease terms (in years) | 5 years |
Rental Machines | Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 1 year |
Rental Machines | Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 4 years |
Significant Accounting Polic_16
Significant Accounting Policies - Common Stock (Details) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Significant Accounting Policies | ||
Common stock, Par value (in dollars per share) | $ 0.20 | $ 0.20 |
Accounting Changes - Credit Los
Accounting Changes - Credit Losses (Details) - USD ($) $ in Millions | Jan. 01, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Accounting Changes | |||
Deferred tax assets | $ 5,182 | $ 5,216 | |
Retained earnings | $ 162,954 | $ 159,206 | |
Subsequent event | Accounting Standards Update 2016-13 | Adjustments for adoption of guidance | |||
Accounting Changes | |||
Deferred tax assets | $ (15) | ||
Retained earnings | (65) | ||
Subsequent event | Accounting Standards Update 2016-13 | Adjustments for adoption of guidance | Accounts receivable - trade | |||
Accounting Changes | |||
Allowance for credit losses | 15 | ||
Subsequent event | Accounting Standards Update 2016-13 | Adjustments for adoption of guidance | Financing receivables | |||
Accounting Changes | |||
Allowance for credit losses | 35 | ||
Subsequent event | Accounting Standards Update 2016-13 | Adjustments for adoption of guidance | Other liabilities | |||
Accounting Changes | |||
Allowance for credit losses | $ 30 |
Accounting Changes - Leases, Ta
Accounting Changes - Leases, Tax Reform, Net Benefit Costs (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Leases | ||||
Package of practical expedients | true | |||
Operating right-of-use assets | $ 4,996 | $ 4,800 | ||
Financing right-of-use assets | 200 | |||
Operating lease liabilities | 5,259 | 5,100 | ||
Finance lease obligations | 204 | $ 200 | $ 41 | |
Reclassification from AOCI to retained earnings for stranded tax effects of U.S. tax reform | $ 2,400 | |||
Lease receivables | ||||
Leases | ||||
Lease receivables reclassified to loan receivables | (386) | |||
Loan receivables | ||||
Leases | ||||
Lease receivables reclassified to loan receivables | $ 386 |
Accounting Changes - Revenue Re
Accounting Changes - Revenue Recognition (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2019 |
Accounting Changes | ||||
Deferred costs | $ 4,975 | $ 4,975 | $ 4,368 | |
Deferred tax assets | 5,216 | 5,216 | 5,182 | |
Liability for taxes | 3,046 | 3,046 | $ 2,839 | |
Accounting Standards Update 2014-09, Revenue from Contracts with Customers | ||||
Accounting Changes | ||||
Cumulative-effect net change in retained earnings | 580 | |||
Accounting Standards Update 2014-09, Revenue from Contracts with Customers | Adjustments from Prior GAAP | ||||
Accounting Changes | ||||
Net contract assets | $ 557 | |||
Deferred costs | 737 | |||
Deferred income | 29 | |||
Deferred tax assets | (184) | |||
Liability for taxes | (56) | (56) | ||
Cumulative-effect net change in retained earnings | $ 524 | $ 56 | $ 580 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue by Major Products/Service Offerings (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue by Major Products/Service Offerings | |||
Total Revenue | $ 77,147 | $ 79,591 | $ 79,139 |
External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Total Revenue | 76,199 | 77,573 | 76,927 |
Other | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 948 | 2,018 | |
Cloud & Cognitive Software | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 23,200 | 22,209 | |
Total Revenue | 23,200 | 22,209 | 21,751 |
Global Business Services | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 16,634 | 16,595 | |
Total Revenue | 16,634 | 16,595 | 16,073 |
Global Technology Services | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 27,361 | 29,146 | |
Total Revenue | 27,361 | 29,146 | 29,213 |
Systems | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 7,604 | 8,034 | |
Total Revenue | 7,604 | 8,034 | 8,194 |
Global Financing | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 1,400 | 1,590 | |
Total Revenue | 1,400 | 1,590 | $ 1,696 |
Cognitive Applications | Cloud & Cognitive Software | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 5,765 | 5,633 | |
Cloud & Data Platforms | Cloud & Cognitive Software | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 9,499 | 8,603 | |
Transaction Processing Platforms | Cloud & Cognitive Software | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 7,936 | 7,974 | |
Consulting | Global Business Services | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 7,993 | 7,705 | |
Application Management | Global Business Services | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 7,646 | 7,852 | |
Global Process Services | Global Business Services | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 995 | 1,037 | |
Infrastructure & Cloud Services | Global Technology Services | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 20,736 | 22,185 | |
Technology Support Services | Global Technology Services | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 6,625 | 6,961 | |
Systems Hardware | Systems | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 5,918 | 6,363 | |
Operating Systems Software | Systems | External Revenue | |||
Revenue by Major Products/Service Offerings | |||
Revenue | $ 1,686 | $ 1,671 |
Revenue Recognition - Disaggr_2
Revenue Recognition - Disaggregation of Revenue by Geography (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue by Geography | |||
Revenues | $ 77,147 | $ 79,591 | $ 79,139 |
Americas | |||
Revenue by Geography | |||
Revenues | 36,274 | 36,994 | |
EMEA | |||
Revenue by Geography | |||
Revenues | 24,443 | 25,491 | |
Asia Pacific | |||
Revenue by Geography | |||
Revenues | $ 16,430 | $ 17,106 |
Revenue Recognition - Remaining
Revenue Recognition - Remaining Performance Obligations (Details) $ in Billions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Revenue Recognition | |
Practical expedient, remaining performance obligations | true |
Remaining performance obligations related to customer contracts that are unsatisfied or partially unsatisfied | $ 126 |
Revenue Recognition - Remaini_2
Revenue Recognition - Remaining Performance Obligations, Expected Timing of Satisfaction (Details) | Dec. 31, 2019 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Remaining Performance Obligations | |
Percentage of remaining performance obligation expected to be recognized | 60.00% |
Duration of expected recognition period for remaining performance obligation | 2 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Remaining Performance Obligations | |
Percentage of remaining performance obligation expected to be recognized | 35.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | Maximum | |
Remaining Performance Obligations | |
Duration of expected recognition period for remaining performance obligation | 5 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | Minimum | |
Remaining Performance Obligations | |
Duration of expected recognition period for remaining performance obligation | 3 years |
Revenue Recognition - Performan
Revenue Recognition - Performance Obligations Satisfied or Partially Satisfied in Prior Periods (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Revenue Recognition | |
Impact to revenue from performance obligations satisfied (or partially satisfied) in previous periods | $ (50) |
Revenue Recognition - Reconcili
Revenue Recognition - Reconciliation of Contract Balances (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of Contract Balances | ||
Notes and accounts receivable-trade (net of allowances of $299 in 2019 and $309 in 2018) | $ 7,870 | $ 7,432 |
Notes and accounts receivable - trade, allowances | 299 | 309 |
Contract assets | 492 | 470 |
Deferred income (current) | 12,026 | 11,165 |
Deferred income (noncurrent) | 3,851 | $ 3,445 |
Revenue recognized that was included in deferred income at the beginning of the period | $ 9,500 |
Revenue Recognition - Deferred
Revenue Recognition - Deferred Contract Costs (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Deferred Contract Costs | ||
Deferred contract costs | $ 4,368 | $ 4,975 |
Deferred contract costs, current | 1,896 | 2,300 |
Deferred contract costs, noncurrent | 2,472 | 2,676 |
Amortization of deferred contract costs | 3,836 | |
Impairment of deferred contract costs | ||
Costs to obtain a contract | ||
Deferred Contract Costs | ||
Deferred contract costs | 609 | 717 |
Deferred setup costs | ||
Deferred Contract Costs | ||
Deferred contract costs | 1,939 | 2,085 |
Other deferred fulfillment costs | ||
Deferred Contract Costs | ||
Deferred contract costs | $ 1,820 | $ 2,173 |
Segments - Results of Continuin
Segments - Results of Continuing Operations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Information | |||
Revenue | $ 77,147 | $ 79,591 | $ 79,139 |
Pre-tax income from continuing operations | 10,166 | 11,342 | 11,400 |
External Revenue | |||
Segment Information | |||
Revenue | 76,199 | 77,573 | 76,927 |
External Revenue | Cloud & Cognitive Software | |||
Segment Information | |||
Revenue | 23,200 | 22,209 | 21,751 |
External Revenue | Global Business Services | |||
Segment Information | |||
Revenue | 16,634 | 16,595 | 16,073 |
External Revenue | Global Technology Services | |||
Segment Information | |||
Revenue | 27,361 | 29,146 | 29,213 |
External Revenue | Systems | |||
Segment Information | |||
Revenue | 7,604 | 8,034 | 8,194 |
External Revenue | Global Financing | |||
Segment Information | |||
Revenue | 1,400 | 1,590 | 1,696 |
Internal transactions | |||
Segment Information | |||
Revenue | (6,220) | (6,813) | (6,401) |
Pre-tax income from continuing operations | (290) | (725) | (742) |
Internal transactions | Cloud & Cognitive Software | |||
Segment Information | |||
Revenue | (2,827) | (3,190) | (3,159) |
Internal transactions | Global Business Services | |||
Segment Information | |||
Revenue | (278) | (326) | (363) |
Internal transactions | Global Technology Services | |||
Segment Information | |||
Revenue | (1,157) | (872) | (657) |
Internal transactions | Systems | |||
Segment Information | |||
Revenue | (726) | (815) | (750) |
Internal transactions | Global Financing | |||
Segment Information | |||
Revenue | (1,232) | (1,610) | (1,471) |
Business Segments | |||
Segment Information | |||
Revenue | 82,419 | 84,386 | 83,329 |
Pre-tax income from continuing operations | $ 13,019 | $ 14,557 | $ 14,396 |
Revenue year-to-year change (as a percent) | (2.30%) | 1.30% | (0.90%) |
Pre-tax income year-to-year change (as a percent) | (10.60%) | 1.10% | (2.20%) |
Pre-tax income margin (as a percent) | 15.80% | 17.30% | 17.30% |
Business Segments | Cloud & Cognitive Software | |||
Segment Information | |||
Revenue | $ 26,027 | $ 25,399 | $ 24,910 |
Pre-tax income from continuing operations | $ 7,952 | $ 8,882 | $ 8,068 |
Revenue year-to-year change (as a percent) | 2.50% | 2.00% | 2.00% |
Pre-tax income year-to-year change (as a percent) | (10.50%) | 10.10% | 7.30% |
Pre-tax income margin (as a percent) | 30.60% | 35.00% | 32.40% |
Business Segments | Global Business Services | |||
Segment Information | |||
Revenue | $ 16,911 | $ 16,921 | $ 16,436 |
Pre-tax income from continuing operations | $ 1,666 | $ 1,629 | $ 1,303 |
Revenue year-to-year change (as a percent) | (0.10%) | 2.90% | (1.90%) |
Pre-tax income year-to-year change (as a percent) | 2.20% | 25.00% | (18.40%) |
Pre-tax income margin (as a percent) | 9.90% | 9.60% | 7.90% |
Business Segments | Global Technology Services | |||
Segment Information | |||
Revenue | $ 28,518 | $ 30,018 | $ 29,870 |
Pre-tax income from continuing operations | $ 1,645 | $ 1,781 | $ 2,618 |
Revenue year-to-year change (as a percent) | (5.00%) | 0.50% | (3.60%) |
Pre-tax income year-to-year change (as a percent) | (7.60%) | (32.00%) | (13.20%) |
Pre-tax income margin (as a percent) | 5.80% | 5.90% | 8.80% |
Business Segments | Systems | |||
Segment Information | |||
Revenue | $ 8,330 | $ 8,848 | $ 8,945 |
Pre-tax income from continuing operations | $ 701 | $ 904 | $ 1,128 |
Revenue year-to-year change (as a percent) | (5.90%) | (1.10%) | 5.70% |
Pre-tax income year-to-year change (as a percent) | (22.40%) | (19.90%) | 21.90% |
Pre-tax income margin (as a percent) | 8.40% | 10.20% | 12.60% |
Business Segments | Global Financing | |||
Segment Information | |||
Revenue | $ 2,632 | $ 3,200 | $ 3,168 |
Pre-tax income from continuing operations | $ 1,055 | $ 1,361 | $ 1,278 |
Revenue year-to-year change (as a percent) | (17.80%) | 1.00% | (9.30%) |
Pre-tax income year-to-year change (as a percent) | (22.50%) | 6.50% | (22.80%) |
Pre-tax income margin (as a percent) | 40.10% | 42.50% | 40.30% |
Segments - Revenue Reconciliati
Segments - Revenue Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue | |||
Revenue | $ 77,147 | $ 79,591 | $ 79,139 |
Business Segments | |||
Revenue | |||
Revenue | 82,419 | 84,386 | 83,329 |
Other | |||
Revenue | |||
Other - divested businesses | 786 | 1,810 | 2,041 |
Other revenue | 162 | 207 | 171 |
Internal transactions | |||
Revenue | |||
Revenue | $ (6,220) | $ (6,813) | $ (6,401) |
Segments - Pre-Tax Income Recon
Segments - Pre-Tax Income Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Pre-tax income from continuing operations | |||
Amortization of acquired intangible assets | $ (1,298) | $ (809) | $ (945) |
Acquisition-related charges | (423) | (16) | (52) |
Non-operating retirement-related (costs)/income | (615) | (1,572) | (1,341) |
Other - divested businesses | 390 | 292 | 468 |
Income from continuing operations before income taxes | 10,166 | 11,342 | 11,400 |
Business Segments | |||
Pre-tax income from continuing operations | |||
Income from continuing operations before income taxes | 13,019 | 14,557 | 14,396 |
Internal transactions | |||
Pre-tax income from continuing operations | |||
Income from continuing operations before income taxes | (290) | (725) | (742) |
Unallocated corporate amounts | |||
Pre-tax income from continuing operations | |||
Income from continuing operations before income taxes | $ (617) | $ (385) | $ (385) |
Segments - Assets and Other Ite
Segments - Assets and Other Items (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Segment Information | |||
Number of business segments to which assets are assigned when ownership is shared between several segments | segment | 1 | ||
Assets | $ 152,186 | $ 123,382 | $ 125,356 |
Interest expense | 1,344 | 723 | 615 |
Business Segments | |||
Segment Information | |||
Assets | 125,087 | 100,047 | 100,868 |
Depreciation/amortization of intangibles | 4,392 | 4,063 | 4,101 |
Capital expenditures/investments in intangibles | 2,501 | 3,610 | 3,259 |
Interest income | 1,490 | 1,647 | 1,527 |
Interest expense | 512 | 515 | 381 |
Business Segments | Cloud & Cognitive Software | |||
Segment Information | |||
Assets | 58,453 | 28,713 | 29,650 |
Depreciation/amortization of intangibles | 1,107 | 1,058 | 1,185 |
Capital expenditures/investments in intangibles | 515 | 469 | 467 |
Business Segments | Global Business Services | |||
Segment Information | |||
Assets | 10,039 | 8,360 | 8,647 |
Depreciation/amortization of intangibles | 149 | 100 | 99 |
Capital expenditures/investments in intangibles | 48 | 57 | 46 |
Business Segments | Global Technology Services | |||
Segment Information | |||
Assets | 22,436 | 17,624 | 17,577 |
Depreciation/amortization of intangibles | 2,601 | 2,359 | 2,209 |
Capital expenditures/investments in intangibles | 1,575 | 2,569 | 2,193 |
Business Segments | Systems | |||
Segment Information | |||
Assets | 4,590 | 4,030 | 3,898 |
Depreciation/amortization of intangibles | 350 | 315 | 341 |
Capital expenditures/investments in intangibles | 305 | 241 | 189 |
Business Segments | Global Financing | |||
Segment Information | |||
Assets | 29,568 | 41,320 | 41,096 |
Depreciation/amortization of intangibles | 186 | 229 | 267 |
Capital expenditures/investments in intangibles | 57 | 274 | 364 |
Interest income | 1,490 | 1,647 | 1,527 |
Interest expense | $ 512 | $ 515 | $ 381 |
Segments - Asset Reconciliation
Segments - Asset Reconciliation (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Assets | ||||
Assets | $ 152,186 | $ 123,382 | $ 125,356 | |
Deferred tax assets | 5,182 | 5,216 | ||
Plant, other property and equipment | 10,010 | 10,792 | ||
Operating right-of-use assets | 4,996 | $ 4,800 | ||
Pension assets | 6,865 | 4,666 | ||
Business Segments | ||||
Assets | ||||
Assets | 125,087 | 100,047 | 100,868 | |
Internal transactions | ||||
Assets | ||||
Assets | (4,317) | (7,143) | (6,272) | |
Other | ||||
Assets | ||||
Assets | 1,894 | 2,575 | 2,285 | |
Unallocated amounts | ||||
Assets | ||||
Cash and marketable securities | 7,308 | 10,393 | 10,162 | |
Notes and accounts receivable | 3,298 | 1,597 | 2,554 | |
Deferred tax assets | 4,995 | 5,089 | 4,746 | |
Plant, other property and equipment | 2,334 | 2,463 | 2,659 | |
Operating right-of-use assets | 3,530 | |||
Pension assets | 6,865 | 4,666 | 4,643 | |
Other | $ 1,194 | $ 3,695 | $ 3,712 |
Segments - Geographic Informati
Segments - Geographic Information (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2019USD ($)customer | Dec. 31, 2018USD ($)customer | Dec. 31, 2017USD ($)customer | Jan. 01, 2019USD ($) | |
Segment Information | ||||
Revenue | $ 77,147 | $ 79,591 | $ 79,139 | |
Net property, plant and equipment | 10,010 | 10,792 | ||
Operating right-of-use assets | 4,996 | $ 4,800 | ||
Plant and other property | ||||
Segment Information | ||||
Net property, plant and equipment | $ 9,778 | $ 10,359 | $ 10,655 | |
Revenue | Major Client | ||||
Segment Information | ||||
Number of clients representing 10% or more of the company's total revenue | customer | 0 | 0 | 0 | |
U.S. | Revenue | Geographic Information | ||||
Segment Information | ||||
Revenue | $ 28,395 | $ 29,078 | $ 29,759 | |
U.S. | Revenue | Geographic Information | Minimum | ||||
Segment Information | ||||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% | |
U.S. | Plant and Other Property - Net | Geographic Information | Minimum | ||||
Segment Information | ||||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% | |
U.S. | Plant and Other Property - Net | Geographic Information | Plant and other property | ||||
Segment Information | ||||
Net property, plant and equipment | $ 4,485 | $ 4,585 | $ 4,670 | |
U.S. | Operating Right-Of-Use Assets - Net | Geographic Information | ||||
Segment Information | ||||
Operating right-of-use assets | $ 1,386 | |||
U.S. | Operating Right-Of-Use Assets - Net | Geographic Information | Minimum | ||||
Segment Information | ||||
Concentration Risk, Percentage | 10.00% | |||
Japan | Revenue | Geographic Information | ||||
Segment Information | ||||
Revenue | $ 8,681 | $ 8,489 | $ 8,239 | |
Japan | Revenue | Geographic Information | Minimum | ||||
Segment Information | ||||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% | |
Japan | Operating Right-Of-Use Assets - Net | Geographic Information | ||||
Segment Information | ||||
Operating right-of-use assets | $ 659 | |||
Japan | Operating Right-Of-Use Assets - Net | Geographic Information | Minimum | ||||
Segment Information | ||||
Concentration Risk, Percentage | 10.00% | |||
Other Countries | Revenue | Geographic Information | ||||
Segment Information | ||||
Revenue | $ 40,071 | $ 42,024 | $ 41,141 | |
Other Countries | Revenue | Geographic Information | Minimum | ||||
Segment Information | ||||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% | |
Other Countries | Plant and Other Property - Net | Geographic Information | Minimum | ||||
Segment Information | ||||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% | |
Other Countries | Operating Right-Of-Use Assets - Net | Geographic Information | ||||
Segment Information | ||||
Operating right-of-use assets | $ 2,951 | |||
Other Countries | Operating Right-Of-Use Assets - Net | Geographic Information | Minimum | ||||
Segment Information | ||||
Concentration Risk, Percentage | 10.00% | |||
Non-U.S. | Plant and Other Property - Net | Geographic Information | Plant and other property | ||||
Segment Information | ||||
Net property, plant and equipment | $ 5,294 | $ 5,774 | $ 5,985 |
Segments - Revenue by Product o
Segments - Revenue by Product or Service (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue by Classes of Similar Products or Services | |||
Revenue | $ 77,147 | $ 79,591 | $ 79,139 |
Cloud & Cognitive Software | Software | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 18,712 | 17,970 | 17,681 |
Cloud & Cognitive Software | Services | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 4,321 | 4,082 | 3,920 |
Cloud & Cognitive Software | Systems | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 166 | 156 | 150 |
Global Business Services | Software | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 156 | 151 | 179 |
Global Business Services | Services | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 16,363 | 16,238 | 15,728 |
Global Business Services | Systems | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 115 | 206 | 165 |
Global Technology Services | Software | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 338 | 371 | 310 |
Global Technology Services | Services | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 20,768 | 22,222 | 21,913 |
Global Technology Services | Maintenance | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 5,183 | 5,484 | 5,783 |
Global Technology Services | Systems | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 1,072 | 1,069 | 1,207 |
Systems | Servers | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 3,746 | 3,996 | 3,993 |
Systems | Storage | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 1,920 | 2,114 | 2,243 |
Systems | Software | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 1,528 | 1,499 | 1,520 |
Systems | Services | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 410 | 425 | 438 |
Global Financing | Financing | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 1,120 | 1,223 | 1,167 |
Global Financing | Used equipment sales | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | $ 281 | $ 366 | $ 530 |
Acquisitions & Divestitures, Bu
Acquisitions & Divestitures, Businesses Acquired, 2019 (Details) $ / shares in Units, $ in Billions | Jul. 09, 2019USD ($)$ / shares | Dec. 31, 2019USD ($)entity |
Acquisitions | ||
Percentage of business acquired (as a percent) | 100.00% | |
2019 Acquisitions | ||
Acquisitions | ||
Number of acquisitions | entity | 1 | |
Aggregate acquisitions cost | $ 35 | |
Red Hat, Inc. | ||
Acquisitions | ||
Cash paid to acquiree shareholders (in dollars per share) | $ / shares | $ 190 | |
Aggregate acquisitions cost | $ 34 |
Acquisitions & Divestitures - 2
Acquisitions & Divestitures - 2019 Consideration (Details) - Red Hat, Inc. $ in Millions | Jul. 09, 2019USD ($) |
Acquisitions | |
Cash paid for outstanding Red Hat common stock | $ 33,769 |
Cash paid for Red Hat equity awards | 24 |
Cash paid to settle warrants | 1,008 |
Cash consideration | 34,801 |
Fair value of stock-based compensation awards attributable to pre-combination services | 174 |
Stock issued to holders of vested performance share units | 45 |
Settlement of pre-existing relationships | 60 |
Total consideration | $ 35,080 |
Acquisitions & Divestitures -_2
Acquisitions & Divestitures - 2019 Purchase Price Allocation (Details) - USD ($) $ in Millions | Jul. 09, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Acquisitions | ||||
Goodwill (Note N) | $ 58,222 | $ 36,265 | $ 36,788 | |
Red Hat, Inc. | ||||
Acquisitions | ||||
Current assets | $ 3,186 | |||
Property, plant, and equipment/noncurrent assets | 939 | |||
Goodwill (Note N) | 23,125 | $ 23,100 | ||
Total assets acquired | 40,722 | |||
Current liabilities | 1,378 | |||
Noncurrent liabilities | 4,265 | |||
Total liabilities assumed | 5,642 | |||
Total purchase price | $ 35,080 | |||
Acquired intangible asset, weighted average useful life | 10 years 10 months 24 days | |||
Cash and cash equivalents | $ 2,200 | |||
Short-term debt | 485 | |||
Red Hat, Inc. | Completed technology | ||||
Acquisitions | ||||
Intangible assets | $ 4,571 | |||
Acquired intangible asset, weighted average useful life | 9 years | |||
Red Hat, Inc. | Client relationships | ||||
Acquisitions | ||||
Intangible assets | $ 7,215 | |||
Acquired intangible asset, weighted average useful life | 10 years | |||
Red Hat, Inc. | Trademarks | ||||
Acquisitions | ||||
Intangible assets | $ 1,686 | |||
Acquired intangible asset, weighted average useful life | 20 years |
Acquisitions & Divestitures - B
Acquisitions & Divestitures - Businesses Acquired, 2019, Goodwill and Compensation Expense (Details) - USD ($) $ in Millions | Jul. 09, 2019 | Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Acquisitions | |||||
Goodwill | $ 58,222 | $ 58,222 | $ 36,265 | $ 36,788 | |
Red Hat, Inc. | |||||
Acquisitions | |||||
Acquired intangible asset, weighted average useful life | 10 years 10 months 24 days | ||||
Goodwill | $ 23,125 | 23,100 | $ 23,100 | ||
Expected percent of goodwill deductible for tax purposes | 7.00% | ||||
Compensation expense | 230 | ||||
Remaining compensation expense | 185 | $ 185 | |||
Settlement of pre-existing relationships | $ 60 | ||||
Revenue since date of acquisition | 945 | ||||
Pre-tax income since date of acquisition | (1,658) | ||||
Red Hat, Inc. | Cost of sales | |||||
Acquisitions | |||||
Compensation expense | 20 | ||||
Red Hat, Inc. | SG&A expense | |||||
Acquisitions | |||||
Acquisition costs | $ 189 | ||||
Compensation expense | 124 | ||||
Red Hat, Inc. | Research, development and engineering | |||||
Acquisitions | |||||
Compensation expense | 86 | ||||
Red Hat, Inc. | Maximum | |||||
Acquisitions | |||||
Remaining compensation expense recognition period | 3 years | ||||
Red Hat, Inc. | Minimum | |||||
Acquisitions | |||||
Remaining compensation expense recognition period | 6 months | ||||
Red Hat, Inc. | 364-Day Bridge Facility | SG&A expense | |||||
Acquisitions | |||||
Amortized costs | $ 55 | ||||
Cloud & Cognitive Software | Red Hat, Inc. | |||||
Acquisitions | |||||
Goodwill | 18,500 | 18,500 | |||
Global Technology Services | Red Hat, Inc. | |||||
Acquisitions | |||||
Goodwill | 3,100 | 3,100 | |||
Global Business Services | Red Hat, Inc. | |||||
Acquisitions | |||||
Goodwill | 1,100 | 1,100 | |||
Systems | Red Hat, Inc. | |||||
Acquisitions | |||||
Goodwill | $ 400 | $ 400 |
Acquisitions & Divestitures -_3
Acquisitions & Divestitures - 2019, Pro forma information (Details) - Red Hat, Inc. - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Acquisitions | ||
Proforma acquisition related costs | $ 374 | |
Revenue | 79,628 | $ 81,360 |
Net income | $ 9,723 | $ 5,702 |
Acquisitions & Divestitures -_4
Acquisitions & Divestitures - Businesses Acquired, 2018 (Details) - 2018 Acquisitions $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($)entity | |
Business Acquisition [Line Items] | |
Number of acquisitions | 2 |
Aggregate acquisitions cost | $ | $ 49 |
Cloud & Cognitive Software | |
Business Acquisition [Line Items] | |
Number of acquisitions | 1 |
Global Business Services | |
Business Acquisition [Line Items] | |
Number of acquisitions | 1 |
Acquisitions & Divestitures -_5
Acquisitions & Divestitures - Businesses Acquired, 2017 (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017USD ($)entity | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Acquisitions | |||
Goodwill | $ 36,788 | $ 58,222 | $ 36,265 |
2017 Acquisitions | |||
Acquisitions | |||
Number of acquisitions | entity | 5 | ||
Aggregate acquisitions cost | $ 134 | ||
Goodwill | $ 16 | ||
Expected percent of goodwill deductible for tax purposes | 50.00% | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 6 years 7 months 6 days | ||
2017 Acquisitions | Global Technology Services | |||
Acquisitions | |||
Goodwill | $ 13 | ||
2017 Acquisitions | Cloud & Cognitive Software | |||
Acquisitions | |||
Goodwill | $ 3 |
Acquisitions & Divestitures -_6
Acquisitions & Divestitures - 2017 Purchase Price Allocation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Acquisitions | |||
Goodwill | $ 36,788 | $ 58,222 | $ 36,265 |
2017 Acquisitions | |||
Acquisitions | |||
Current assets | 18 | ||
Fixed assets/non-current assets | 69 | ||
Goodwill | 16 | ||
Total assets acquired | 177 | ||
Current liabilities | (9) | ||
Noncurrent liabilities | (34) | ||
Total liabilities assumed | (43) | ||
Total purchase price | $ 134 | ||
Acquired intangible asset, weighted average useful life | 6 years 7 months 6 days | ||
2017 Acquisitions | Completed technology | |||
Acquisitions | |||
Intangible assets | $ 9 | ||
Acquired intangible asset, weighted average useful life | 5 years | ||
2017 Acquisitions | Client relationships | |||
Acquisitions | |||
Intangible assets | $ 64 | ||
2017 Acquisitions | Client relationships | Minimum | |||
Acquisitions | |||
Acquired intangible asset, weighted average useful life | 5 years | ||
2017 Acquisitions | Client relationships | Maximum | |||
Acquisitions | |||
Acquired intangible asset, weighted average useful life | 7 years | ||
2017 Acquisitions | Patents/trademarks | |||
Acquisitions | |||
Intangible assets | $ 1 | ||
2017 Acquisitions | Patents/trademarks | Minimum | |||
Acquisitions | |||
Acquired intangible asset, weighted average useful life | 1 year | ||
2017 Acquisitions | Patents/trademarks | Maximum | |||
Acquisitions | |||
Acquired intangible asset, weighted average useful life | 5 years |
Acquisitions & Divestitures - D
Acquisitions & Divestitures - Divestitures, 2019 (Details) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($)entity | Dec. 31, 2018item | Dec. 31, 2017USD ($)item | |
Divestitures | ||||||
Number of divestitures | item | 0 | 5 | ||||
Select Standalone Cloud and Cognitive Software Products | ||||||
Divestitures | ||||||
Consideration | $ 1,775 | |||||
Contingent consideration included in total | 150 | |||||
Cash consideration received | 812 | |||||
Contingent consideration received | $ 40 | |||||
Remaining consideration to be received | 813 | |||||
Pre-tax gain on sale of business | $ 72 | 556 | $ 626 | |||
Cash remitted | $ 174 | |||||
Cash expected to be remitted | $ 325 | |||||
Period after closing for receipt of remaining consideration | 12 months | |||||
Period to receive outstanding contingent consideration | 24 months | |||||
Select Marketing Platform and Commerce Offerings | ||||||
Divestitures | ||||||
Period for subsequent closing | 12 months | |||||
Select Marketing Platform and Commerce Offerings | U.S. | ||||||
Divestitures | ||||||
Cash consideration received | $ 240 | |||||
Remaining consideration to be received | $ 150 | |||||
Period after closing for receipt of remaining consideration | 36 months | |||||
Sales Performance Management Offerings | ||||||
Divestitures | ||||||
Cash consideration received | 230 | |||||
Pre-tax gain on sale of business | $ 136 | |||||
Cloud & Cognitive Software | ||||||
Divestitures | ||||||
Number of divestitures | item | 4 | |||||
Research related divestiture | ||||||
Divestitures | ||||||
Number of divestitures | item | 1 | |||||
Others | ||||||
Divestitures | ||||||
Pre-tax gain on sale of business | $ 31 | |||||
Number of divestitures | entity | 2 | |||||
Select Global Financing, Global Business Services and Other-divested | ||||||
Divestitures | ||||||
Number of divestitures | entity | 3 |
Research, Development & Engin_2
Research, Development & Engineering (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Research, Development & Engineering | |||
RD&E expense | $ 5,989 | $ 5,379 | $ 5,590 |
Scientific research, application of scientific advances, services and application | 5,657 | 5,027 | 5,170 |
Software-related expenses | 3,541 | 3,050 | 3,145 |
Product-related engineering expenses | $ 334 | $ 352 | $ 420 |
Taxes - Income before Income Ta
Taxes - Income before Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Taxes | |||
U.S. operations | $ (315) | $ 627 | $ 560 |
Non-U.S. operations | 10,481 | 10,715 | 10,840 |
Income from continuing operations before income taxes | $ 10,166 | $ 11,342 | $ 11,400 |
Taxes - Provision by Geographic
Taxes - Provision by Geographic Operations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Taxes | |||
Total continuing operations provision for income taxes | $ 731 | $ 2,619 | $ 5,642 |
U.S. | |||
Taxes | |||
Total continuing operations provision for income taxes | (408) | 1,199 | 2,923 |
Non-U.S. | |||
Taxes | |||
Total continuing operations provision for income taxes | $ 1,139 | $ 1,420 | $ 2,719 |
Taxes - Provision by Taxing Jur
Taxes - Provision by Taxing Jurisdiction (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
U.S. federal | |||
Current | $ 331 | $ (342) | $ 2,388 |
Deferred | (839) | 1,377 | 77 |
Total | (508) | 1,035 | 2,465 |
U.S. state and local | |||
Current | (85) | 127 | 55 |
Deferred | (82) | (292) | 28 |
Total | (167) | (165) | 83 |
Non-U.S. | |||
Current | 1,829 | 2,135 | 3,891 |
Deferred | (423) | (386) | (797) |
Total | 1,406 | 1,749 | 3,094 |
Total continuing operations provision for income taxes | 731 | 2,619 | 5,642 |
Discontinued operations provision for/(benefit from) income taxes | (1) | 2 | (3) |
Provision for social security, real estate, personal property and other taxes | 3,304 | 3,322 | 3,434 |
Total taxes included in net income | $ 4,034 | $ 5,943 | $ 9,073 |
Taxes - Tax Rate Reconciliation
Taxes - Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of the statutory U.S. federal tax rate to the company's effective tax rate from continuing operations | |||
Statutory rate | 21.00% | 21.00% | 35.00% |
Enactment of U.S. tax reform | 1.00% | 18.00% | 48.00% |
Tax differential on foreign income | (11.00%) | (9.00%) | (26.00%) |
Intra-entity transfers | 0.00% | 0.00% | (5.00%) |
Domestic incentives | (2.00%) | (3.00%) | (2.00%) |
State and local | (1.00%) | (1.00%) | 1.00% |
Other | (1.00%) | (3.00%) | (2.00%) |
Effective rate | 7.00% | 23.00% | 49.00% |
Taxes - Tax Rate Reconciliati_2
Taxes - Tax Rate Reconciliation Narrative (Details) - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Effective income tax rate reconciliation, additional disclosures | |||
U.S. corporate tax rate | 21.00% | 21.00% | 35.00% |
Measurement period adjustments recognized related to U.S. tax reform | $ 0.1 | $ 2 | $ 5.5 |
Annual increase (decrease) in effective income tax rate | (15.90%) | ||
Decrease related to U.S. tax reform | (16.50%) | ||
Decrease related to intercompany payments | (3.40%) | ||
Increase related to domestic and foreign audit activity | 4.40% |
Taxes - Deferred Taxes (Details
Taxes - Deferred Taxes (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred Tax Assets | |||
Retirement benefits | $ 3,766 | $ 3,620 | |
Leases | 1,729 | 103 | |
Share-based and other compensation | 637 | 636 | |
Domestic tax loss/credit carryforwards | 1,259 | 964 | |
Deferred income | 600 | 674 | |
Foreign tax loss/credit carryforwards | 836 | 903 | |
Bad debt, inventory and warranty reserves | 298 | 348 | |
Depreciation | 253 | 231 | |
Accruals | 368 | 336 | |
Intangible assets | 592 | 620 | |
Capitalized research and development | 722 | ||
Other | 1,438 | 1,398 | |
Gross deferred tax assets | 12,498 | 9,833 | |
Less: valuation allowance | 608 | 915 | $ 1,004 |
Net deferred tax assets | 11,890 | 8,918 | |
Deferred Tax Liabilities | |||
Goodwill and intangible assets | 3,111 | 1,200 | |
GILTI deferred taxes | 1,908 | 1,927 | |
Leases and right of use assets | 2,216 | 580 | |
Depreciation | 728 | 719 | |
Retirement benefits | 1,002 | 455 | |
Software development costs | 1,075 | 292 | |
Deferred transition costs | 233 | 233 | |
Undistributed foreign earnings | 725 | 981 | |
Other | 940 | 1,011 | |
Gross deferred tax liabilities | $ 11,938 | $ 7,398 |
Taxes - Carryforwards (Details)
Taxes - Carryforwards (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Loss and tax credit carryforwards | |
Tax effect of foreign and domestic loss carryforwards | $ 504 |
Foreign and domestic tax credit carryforwards | $ 1,591 |
Minimum | |
Loss and tax credit carryforwards | |
Period for which substantially all loss and tax credit carryforwards are available | 2 years |
Period for which the majority of loss and tax credit carryforwards are available | 10 years |
Taxes - Unrecognized Tax Benefi
Taxes - Unrecognized Tax Benefits Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Taxes | |||
Increase (decrease) in amount of unrecognized tax benefits | $ 387 | ||
Reconciliation of the beginning and ending amount of unrecognized tax benefits | |||
Balance at January 1 | 6,759 | $ 7,031 | $ 3,740 |
Additions based on tax positions related to the current year | 816 | 394 | 3,029 |
Additions for tax positions of prior years | 779 | 1,201 | 803 |
Reductions for tax positions of prior years (including impacts due to a lapse of statute) | (922) | (1,686) | (367) |
Settlements | (286) | (181) | (174) |
Balance at December 31 | $ 7,146 | $ 6,759 | $ 7,031 |
Taxes - Unrecognized Tax Bene_2
Taxes - Unrecognized Tax Benefits Additional Disclosures (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Taxes | ||||
Unrecognized tax benefits | $ 7,146 | $ 6,759 | $ 7,031 | $ 3,740 |
Offsetting tax benefits associated with timing adjustments, U.S. tax credits, potential transfer pricing adjustments, and state income taxes | 584 | |||
Net unrecognized tax benefit amount that, if recognized, would favorably affect the company's effective tax rate | 6,562 | 6,041 | 6,064 | |
Interest expense and penalties, net (benefit)/charge recognized | 13 | (14) | $ 174 | |
Interest and penalties accrued | 819 | $ 680 | ||
Reasonably possible reduction in unrecognized tax benefits within the next 12 months | $ 236 |
Taxes - Income Tax Assessments
Taxes - Income Tax Assessments (Details) $ in Millions | Dec. 31, 2019USD ($) |
India Tax Authorities | |
Income tax examination | |
Prepaid income taxes | $ 729 |
Taxes - Undistributed Foreign E
Taxes - Undistributed Foreign Earnings (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Taxes | ||
Deferred tax liability for undistributed foreign earnings not indefinitely reinvested | $ 725 | $ 981 |
Undistributed earnings of foreign subsidiaries indefinitely reinvested in foreign operations | $ 650 |
Earnings Per Share - Computatio
Earnings Per Share - Computation (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted-average number of shares on which earnings per share calculations are based | |||
Weighted-average shares outstanding during period (in shares) | 887,235,105 | 912,048,072 | 932,828,295 |
Add - Incremental shares under stock-based compensation plans (in shares) | 4,199,440 | 2,786,316 | 3,094,373 |
Add - Incremental shares associated with contingently issuable shares (in shares) | 1,378,831 | 1,481,326 | 1,462,957 |
Assuming dilution (in shares) | 892,813,376 | 916,315,714 | 937,385,625 |
Net income on which basic earnings per share is calculated | |||
Income from continuing operations | $ 9,435 | $ 8,723 | $ 5,758 |
Income/(loss) from discontinued operations, net of tax | (4) | 5 | (5) |
Net income on which basic earnings per share is calculated | 9,431 | 8,728 | 5,753 |
Net income on which diluted earnings per share is calculated | |||
Income from continuing operations | 9,435 | 8,723 | 5,758 |
Net income applicable to contingently issuable shares | 0 | (6) | (2) |
Income from continuing operations on which diluted earnings per share is calculated | 9,435 | 8,718 | 5,756 |
Income/(loss) from discontinued operations, net of tax, on which basic and diluted earnings per share is calculated | (4) | 5 | (5) |
Net income on which diluted earnings per share is calculated | $ 9,431 | $ 8,722 | $ 5,752 |
Assuming dilution | |||
Continuing operations (in dollars per share) (Note H) | $ 10.57 | $ 9.51 | $ 6.14 |
Discontinued operations (in dollars per share) | (0.01) | 0.01 | 0 |
Total (in dollars per share) (Note H) | 10.56 | 9.52 | 6.14 |
Basic | |||
Continuing operations (in dollars per share) (Note H) | 10.63 | 9.56 | 6.17 |
Discontinued operations (in dollars per share) | 0 | 0.01 | 0 |
Total (in dollars per share) (Note H) | $ 10.63 | $ 9.57 | $ 6.17 |
Earnings Per Share - Antidiluti
Earnings Per Share - Antidilutive Stock Options (Details) - shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Options | |||
Antidilutive stock options | |||
Outstanding stock options not included in the computation of diluted earnings per share (in shares) | 855,679 | 576,776 | 209,294 |
Financial Assets & Liabilitie_2
Financial Assets & Liabilities - Fair Value Measurements (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Debt securities - current | $ 696 | $ 618 |
Potential reduction in net position of total derivative assets | 194 | 267 |
Potential reduction in net position of total derivative liabilities | 194 | 267 |
Recurring | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Cash equivalents | 4,819 | 7,704 |
Total assets | 5,823 | 9,053 |
Total liabilities | 673 | 383 |
Recurring | Prepaid expenses and other current assets | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivative assets | 149 | 385 |
Recurring | Investments and sundry assets | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivative assets | 94 | 347 |
Recurring | Other accrued expenses and liabilities | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivative liabilities | 167 | 177 |
Recurring | Other liabilities | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivative liabilities | 506 | 206 |
Recurring | Level 1 | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Equity investments | 0 | 0 |
Recurring | Level 1 | Money market funds | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Cash equivalents | 427 | 25 |
Recurring | Level 2 | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Debt securities - current | 696 | 618 |
Debt securities - noncurrent | 65 | |
Recurring | Level 2 | Interest rate contracts | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivatives designated as hedging - Assets | 56 | 220 |
Derivatives designated as hedging - Liabilities | 80 | |
Recurring | Level 2 | Foreign exchange contracts | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivatives designated as hedging - Assets | 175 | 483 |
Derivatives designated as hedging - Liabilities | 635 | 239 |
Derivatives not designated as hedging - Assets | 10 | 26 |
Derivatives not designated as hedging - Liabilities | 33 | 13 |
Recurring | Level 2 | Equity contracts | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivatives not designated as hedging - Assets | 1 | 2 |
Derivatives not designated as hedging - Liabilities | 4 | 51 |
Recurring | Level 2 | Time deposits and certificates of deposit | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Cash equivalents | 4,392 | 7,679 |
Recurring | Debt | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Debt as hedging instruments at carrying value | $ 7,324 | $ 6,261 |
Financial Assets & Liabilitie_3
Financial Assets & Liabilities - Not Measured at Fair Value (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Long-Term Debt | ||
Total long-term debt (excluding current portion) | $ 54,102 | $ 35,605 |
Fair value of long-term debt | $ 58,431 | $ 36,599 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory | ||
Finished goods | $ 220 | $ 266 |
Work in process and raw materials | 1,399 | 1,415 |
Total | $ 1,619 | $ 1,682 |
Financing Receivables - Payment
Financing Receivables - Payment Terms (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Lease receivables | Minimum | |
Financing receivables | |
Financing receivable, payment terms | 2 years |
Lease receivables | Maximum | |
Financing receivables | |
Financing receivable, payment terms | 6 years |
Commercial financing receivables | Minimum | |
Financing receivables | |
Financing receivable, payment terms | 30 days |
Commercial financing receivables | Maximum | |
Financing receivables | |
Financing receivable, payment terms | 90 days |
Loan receivables | Maximum | |
Financing receivables | |
Financing receivable, payment terms | 7 years |
Financing Receivables - Compone
Financing Receivables - Components of Financing Receivables (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Components of the company's financing receivables | |||
Financing receivables, gross | $ 23,504 | $ 32,348 | |
Unearned income | (1,083) | (1,195) | |
Recorded Investment | 22,421 | 31,153 | |
Allowance for credit losses | (221) | (292) | |
Unguaranteed residual value | 652 | 589 | |
Guaranteed residual value | 53 | 85 | |
Total financing receivables, net | 22,904 | 31,536 | |
Current portion | 14,192 | 22,388 | |
Noncurrent portion | 8,712 | 9,148 | |
Financing receivables pledged as collateral for borrowings | 1,062 | 710 | |
Financing receivables held for sale | 0 | 0 | |
Lease receivables | |||
Components of the company's financing receivables | |||
Financing receivables, gross | 6,077 | 6,846 | |
Unearned income | (509) | (526) | |
Recorded Investment | 5,567 | 6,320 | |
Allowance for credit losses | (72) | (99) | $ (103) |
Unguaranteed residual value | 652 | 589 | |
Guaranteed residual value | 53 | 85 | |
Total financing receivables, net | 6,199 | 6,895 | |
Current portion | 2,334 | 2,834 | |
Noncurrent portion | 3,865 | 4,061 | |
Commercial financing receivables | |||
Components of the company's financing receivables | |||
Financing receivables, gross | 3,836 | 11,889 | |
Unearned income | (4) | (37) | |
Recorded Investment | 3,831 | 11,852 | |
Allowance for credit losses | (11) | (13) | |
Total financing receivables, net | 3,820 | 11,838 | |
Current portion | 3,820 | 11,838 | |
Loan receivables | |||
Components of the company's financing receivables | |||
Financing receivables, gross | 13,592 | 13,614 | |
Unearned income | (570) | (632) | |
Recorded Investment | 13,022 | 12,981 | |
Allowance for credit losses | (138) | (179) | $ (211) |
Total financing receivables, net | 12,884 | 12,802 | |
Current portion | 8,037 | 7,716 | |
Noncurrent portion | $ 4,847 | $ 5,086 |
Financing Receivables - By Port
Financing Receivables - By Portfolio Segment (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2019USD ($)itemsegment | Dec. 31, 2018USD ($) | |
Financing receivables | ||
Recorded investment | $ 22,421 | $ 31,153 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 292 | |
Allowance for credit losses, ending balance | $ 221 | 292 |
Total Lease Receivable and Loan Receivable Portfolio Segments | ||
Financing receivables | ||
Number of portfolio segments | segment | 2 | |
Number of classes of financing receivable | item | 3 | |
Recorded investment | $ 18,590 | 19,301 |
Recorded investment collectively evaluated for impairment | 18,399 | 19,052 |
Recorded investment individually evaluated for impairment | 191 | 249 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 279 | 314 |
Write-offs | (63) | (35) |
Recoveries | 2 | 2 |
Provision | (5) | 16 |
Other | (2) | (19) |
Allowance for credit losses, ending balance | 210 | 279 |
Related allowance, collectively evaluated for impairment | 39 | 59 |
Related allowance, individually evaluated for impairment | 171 | 219 |
Total Lease Receivable and Loan Receivable Portfolio Segments | Americas | ||
Financing receivables | ||
Recorded investment | 10,144 | 10,644 |
Recorded investment collectively evaluated for impairment | 10,032 | 10,498 |
Recorded investment individually evaluated for impairment | 112 | 146 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 158 | 172 |
Write-offs | (42) | (10) |
Recoveries | 1 | 0 |
Provision | 5 | 7 |
Other | (1) | (11) |
Allowance for credit losses, ending balance | 120 | 158 |
Related allowance, collectively evaluated for impairment | 25 | 39 |
Related allowance, individually evaluated for impairment | 96 | 119 |
Average recorded investment of impaired leases and loans | 138 | 138 |
Total Lease Receivable and Loan Receivable Portfolio Segments | EMEA | ||
Financing receivables | ||
Recorded investment | 5,087 | 5,016 |
Recorded investment collectively evaluated for impairment | 5,040 | 4,964 |
Recorded investment individually evaluated for impairment | 47 | 52 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 65 | 61 |
Write-offs | (3) | (2) |
Recoveries | 0 | 0 |
Provision | (7) | 9 |
Other | 0 | (3) |
Allowance for credit losses, ending balance | 54 | 65 |
Related allowance, collectively evaluated for impairment | 11 | 16 |
Related allowance, individually evaluated for impairment | 43 | 49 |
Average recorded investment of impaired leases and loans | 49 | 55 |
Total Lease Receivable and Loan Receivable Portfolio Segments | Asia Pacific | ||
Financing receivables | ||
Recorded investment | 3,359 | 3,641 |
Recorded investment collectively evaluated for impairment | 3,326 | 3,590 |
Recorded investment individually evaluated for impairment | 32 | 51 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 56 | 82 |
Write-offs | (18) | (23) |
Recoveries | 1 | 2 |
Provision | (3) | 0 |
Other | (1) | (4) |
Allowance for credit losses, ending balance | 36 | 56 |
Related allowance, collectively evaluated for impairment | 4 | 5 |
Related allowance, individually evaluated for impairment | 32 | 51 |
Average recorded investment of impaired leases and loans | 45 | 73 |
Lease receivables | ||
Financing receivables | ||
Recorded investment | 5,567 | 6,320 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 99 | 103 |
Write-offs | (16) | (15) |
Provision | 6 | 14 |
Allowance for credit losses, ending balance | 72 | 99 |
Lease receivables | Americas | ||
Financing receivables | ||
Recorded investment | 3,419 | 3,827 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 53 | 63 |
Allowance for credit losses, ending balance | 33 | 53 |
Lease receivables | EMEA | ||
Financing receivables | ||
Recorded investment | 1,186 | 1,341 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 22 | 9 |
Allowance for credit losses, ending balance | 23 | 22 |
Lease receivables | Asia Pacific | ||
Financing receivables | ||
Recorded investment | 963 | 1,152 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 24 | 31 |
Allowance for credit losses, ending balance | 16 | 24 |
Loan receivables | ||
Financing receivables | ||
Recorded investment | 13,022 | 12,981 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 179 | 211 |
Write-offs | (47) | (20) |
Provision | 2 | 2 |
Allowance for credit losses, ending balance | 138 | 179 |
Loan receivables | Americas | ||
Financing receivables | ||
Recorded investment | 6,726 | 6,817 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 105 | 108 |
Allowance for credit losses, ending balance | 88 | 105 |
Loan receivables | EMEA | ||
Financing receivables | ||
Recorded investment | 3,901 | 3,675 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 43 | 52 |
Allowance for credit losses, ending balance | 31 | 43 |
Loan receivables | Asia Pacific | ||
Financing receivables | ||
Recorded investment | 2,395 | 2,489 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 32 | 51 |
Allowance for credit losses, ending balance | $ 20 | $ 32 |
Financing Receivables - Past Du
Financing Receivables - Past Due (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Past Due Financing Receivable | ||
Total Recorded Investment | $ 22,421 | $ 31,153 |
Total Lease Receivable and Loan Receivable Portfolio Segments | ||
Past Due Financing Receivable | ||
Total Recorded Investment | 18,590 | 19,301 |
Recorded Investment Not Accruing | 235 | 300 |
Recorded investment, impaired financing receivables with related allowance | 191 | 249 |
Impaired financing receivables, related allowance | 171 | 219 |
Total Lease Receivable and Loan Receivable Portfolio Segments | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Recorded Investment > 90 Days | 465 | 782 |
Recorded Investment > 90 Days and Accruing | 253 | 494 |
Billed Invoices > 90 Days and Accruing | 29 | 52 |
Total Lease Receivable and Loan Receivable Portfolio Segments | Americas | ||
Past Due Financing Receivable | ||
Total Recorded Investment | 10,144 | 10,644 |
Total Lease Receivable and Loan Receivable Portfolio Segments | EMEA | ||
Past Due Financing Receivable | ||
Total Recorded Investment | 5,087 | 5,016 |
Total Lease Receivable and Loan Receivable Portfolio Segments | Asia Pacific | ||
Past Due Financing Receivable | ||
Total Recorded Investment | 3,359 | 3,641 |
Lease receivables | ||
Past Due Financing Receivable | ||
Total Recorded Investment | 5,567 | 6,320 |
Recorded Investment Not Accruing | 69 | 97 |
Lease receivables | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Recorded Investment > 90 Days | 234 | 385 |
Recorded Investment > 90 Days and Accruing | 168 | 292 |
Billed Invoices > 90 Days and Accruing | 14 | 24 |
Lease receivables | Americas | ||
Past Due Financing Receivable | ||
Total Recorded Investment | 3,419 | 3,827 |
Recorded Investment Not Accruing | 41 | 57 |
Lease receivables | Americas | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Recorded Investment > 90 Days | 187 | 310 |
Recorded Investment > 90 Days and Accruing | 147 | 256 |
Billed Invoices > 90 Days and Accruing | 11 | 19 |
Lease receivables | EMEA | ||
Past Due Financing Receivable | ||
Total Recorded Investment | 1,186 | 1,341 |
Recorded Investment Not Accruing | 17 | 16 |
Lease receivables | EMEA | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Recorded Investment > 90 Days | 28 | 25 |
Recorded Investment > 90 Days and Accruing | 13 | 9 |
Billed Invoices > 90 Days and Accruing | 2 | 1 |
Lease receivables | Asia Pacific | ||
Past Due Financing Receivable | ||
Total Recorded Investment | 963 | 1,152 |
Recorded Investment Not Accruing | 11 | 24 |
Lease receivables | Asia Pacific | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Recorded Investment > 90 Days | 19 | 49 |
Recorded Investment > 90 Days and Accruing | 7 | 27 |
Billed Invoices > 90 Days and Accruing | 1 | 3 |
Loan receivables | ||
Past Due Financing Receivable | ||
Total Recorded Investment | 13,022 | 12,981 |
Recorded Investment Not Accruing | 166 | 203 |
Loan receivables | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Recorded Investment > 90 Days | 231 | 397 |
Recorded Investment > 90 Days and Accruing | 85 | 202 |
Billed Invoices > 90 Days and Accruing | 15 | 29 |
Loan receivables | Americas | ||
Past Due Financing Receivable | ||
Total Recorded Investment | 6,726 | 6,817 |
Recorded Investment Not Accruing | 72 | 99 |
Loan receivables | Americas | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Recorded Investment > 90 Days | 127 | 259 |
Recorded Investment > 90 Days and Accruing | 71 | 166 |
Billed Invoices > 90 Days and Accruing | 11 | 24 |
Loan receivables | EMEA | ||
Past Due Financing Receivable | ||
Total Recorded Investment | 3,901 | 3,675 |
Recorded Investment Not Accruing | 72 | 73 |
Loan receivables | EMEA | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Recorded Investment > 90 Days | 77 | 98 |
Recorded Investment > 90 Days and Accruing | 8 | 25 |
Billed Invoices > 90 Days and Accruing | 3 | 3 |
Loan receivables | Asia Pacific | ||
Past Due Financing Receivable | ||
Total Recorded Investment | 2,395 | 2,489 |
Recorded Investment Not Accruing | 21 | 31 |
Loan receivables | Asia Pacific | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Recorded Investment > 90 Days | 26 | 40 |
Recorded Investment > 90 Days and Accruing | 6 | 11 |
Billed Invoices > 90 Days and Accruing | $ 2 | $ 1 |
Financing Receivables - Credit
Financing Receivables - Credit Quality Indicators (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Net recorded investment for each class of receivables, by credit quality indicator | ||
Troubled debt restructurings of financing receivables | ||
Lease receivables | Americas | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 3,385 | 3,774 |
Lease receivables | Americas | Aaa - Aa3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 465 | 593 |
Lease receivables | Americas | A1 - A3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 750 | 678 |
Lease receivables | Americas | Baa1 - Baa3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 955 | 892 |
Lease receivables | Americas | Ba1 - Ba2 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 746 | 852 |
Lease receivables | Americas | Ba3 - B1 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 215 | 433 |
Lease receivables | Americas | B2 - B3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 242 | 299 |
Lease receivables | Americas | Caa - D | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 13 | 26 |
Lease receivables | EMEA | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 1,162 | 1,319 |
Lease receivables | EMEA | Aaa - Aa3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 54 | 45 |
Lease receivables | EMEA | A1 - A3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 181 | 158 |
Lease receivables | EMEA | Baa1 - Baa3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 409 | 417 |
Lease receivables | EMEA | Ba1 - Ba2 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 326 | 426 |
Lease receivables | EMEA | Ba3 - B1 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 140 | 171 |
Lease receivables | EMEA | B2 - B3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 50 | 90 |
Lease receivables | EMEA | Caa - D | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 2 | 10 |
Lease receivables | Asia Pacific | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 947 | 1,128 |
Lease receivables | Asia Pacific | Aaa - Aa3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 43 | 85 |
Lease receivables | Asia Pacific | A1 - A3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 454 | 413 |
Lease receivables | Asia Pacific | Baa1 - Baa3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 147 | 297 |
Lease receivables | Asia Pacific | Ba1 - Ba2 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 154 | 191 |
Lease receivables | Asia Pacific | Ba3 - B1 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 101 | 84 |
Lease receivables | Asia Pacific | B2 - B3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 47 | 50 |
Lease receivables | Asia Pacific | Caa - D | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 2 | 7 |
Loan receivables | Americas | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 6,638 | 6,712 |
Loan receivables | Americas | Aaa - Aa3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 1,028 | 1,055 |
Loan receivables | Americas | A1 - A3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 1,186 | 1,206 |
Loan receivables | Americas | Baa1 - Baa3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 1,882 | 1,587 |
Loan receivables | Americas | Ba1 - Ba2 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 1,513 | 1,516 |
Loan receivables | Americas | Ba3 - B1 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 471 | 770 |
Loan receivables | Americas | B2 - B3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 522 | 531 |
Loan receivables | Americas | Caa - D | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 36 | 47 |
Loan receivables | EMEA | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 3,871 | 3,633 |
Loan receivables | EMEA | Aaa - Aa3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 193 | 125 |
Loan receivables | EMEA | A1 - A3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 395 | 436 |
Loan receivables | EMEA | Baa1 - Baa3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 1,527 | 1,148 |
Loan receivables | EMEA | Ba1 - Ba2 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 921 | 1,175 |
Loan receivables | EMEA | Ba3 - B1 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 564 | 472 |
Loan receivables | EMEA | B2 - B3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 253 | 249 |
Loan receivables | EMEA | Caa - D | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 18 | 28 |
Loan receivables | Asia Pacific | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 2,376 | 2,457 |
Loan receivables | Asia Pacific | Aaa - Aa3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 189 | 185 |
Loan receivables | Asia Pacific | A1 - A3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 892 | 901 |
Loan receivables | Asia Pacific | Baa1 - Baa3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 619 | 648 |
Loan receivables | Asia Pacific | Ba1 - Ba2 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 388 | 417 |
Loan receivables | Asia Pacific | Ba3 - B1 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 205 | 184 |
Loan receivables | Asia Pacific | B2 - B3 | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | 72 | 109 |
Loan receivables | Asia Pacific | Caa - D | ||
Net recorded investment for each class of receivables, by credit quality indicator | ||
Financing receivables, net recorded investment | $ 10 | $ 15 |
Property, Plant & Equipment (De
Property, Plant & Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | $ 32,028 | $ 32,460 | |
Less: Accumulated depreciation | 22,018 | 21,668 | |
Net property, plant and equipment | 10,010 | 10,792 | |
Plant and other property | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | 31,504 | 31,636 | |
Less: Accumulated depreciation | 21,726 | 21,276 | |
Net property, plant and equipment | 9,778 | 10,359 | $ 10,655 |
Land and land improvements | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | 365 | 448 | |
Buildings and building and leasehold improvements | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | 9,364 | 9,640 | |
Information technology equipment | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | 18,054 | 17,468 | |
Production, engineering, office and other equipment | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | 3,721 | 4,081 | |
Rental Machines | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | 523 | 824 | |
Less: Accumulated depreciation | 292 | 392 | |
Net property, plant and equipment | $ 232 | $ 433 |
Leases - Components of Lease Co
Leases - Components of Lease Costs (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Components of lease cost | |
Finance lease cost | $ 30 |
Operating lease cost | 1,645 |
Short-term lease cost | 38 |
Variable lease cost | 534 |
Sublease income | (24) |
Total lease cost | 2,223 |
Gains on sale and leaseback transactions, net | $ 41 |
Leases - Cash Flow From Lease T
Leases - Cash Flow From Lease Transactions (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities | |
Operating cash outflows from finance leases | $ 8 |
Financing cash outflows from finance leases | 22 |
Operating cash outflows from operating leases | 1,541 |
ROU assets obtained in exchange for new finance lease liabilities | 209 |
ROU assets obtained in exchange for new operating lease liabilities | 6,481 |
ROU assets obtained in exchange for new finance lease liabilities - post adoption | |
ROU assets obtained in exchange for new operating lease liabilities - post adoption | $ 1,679 |
Leases - Weighted-average Lease
Leases - Weighted-average Lease Terms and Discount Rates (Details) | Dec. 31, 2019 |
Leases | |
Weighted-average remaining lease term - finance leases | 4 years 9 months 18 days |
Weighted-average discount rate - finance leases | 1.62% |
Weighted-average remaining lease term - operating leases | 5 years 4 months 24 days |
Weighted-average discount rate - operating leases | 3.03% |
Leases - Maturity Analysis of U
Leases - Maturity Analysis of Undiscounted Cash Out Flows (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Finance leases | |||
2020 | $ 62 | ||
2021 | 59 | ||
2022 | 48 | ||
2023 | 31 | ||
2024 | 12 | ||
Thereafter | 46 | ||
Imputed Interest | (54) | ||
Finance lease obligations | 204 | $ 200 | $ 41 |
Operating leases | |||
2020 | 1,486 | ||
2021 | 1,198 | ||
2022 | 928 | ||
2023 | 673 | ||
2024 | 514 | ||
Thereafter | 806 | ||
Imputed Interest | (346) | ||
Operating lease liabilities | 5,259 | $ 5,100 | |
Amount of leases not yet commenced | $ 181 |
Leases - ROU Assets and Lease L
Leases - ROU Assets and Lease Liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 | Jan. 01, 2019 | |
Lessee, Lease, Description [Line Items] | ||||
ROU assets | $ 200 | |||
Lease liabilities | $ 41 | $ 204 | $ 200 | |
Rental expense | $ 1,944 | $ 1,821 | ||
Property, plant and equipment | ||||
Lessee, Lease, Description [Line Items] | ||||
ROU assets | 187 | |||
Short-term debt | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease liabilities | 52 | |||
Long-term debt | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease liabilities | $ 151 |
Leases - Gross Minimum Rental C
Leases - Gross Minimum Rental Commitments (Details) $ in Millions | Dec. 31, 2018USD ($) |
Operating lease commitments | |
Gross minimum rental commitments (including vacant space below) for 2019 | $ 1,581 |
Gross minimum rental commitments (including vacant space below) for 2020 | 1,233 |
Gross minimum rental commitments (including vacant space below) for 2021 | 914 |
Gross minimum rental commitments (including vacant space below) for 2022 | 640 |
Gross minimum rental commitments (including vacant space below) for 2023 | 445 |
Gross minimum rental commitments (including vacant space below) beyond 2023 | 815 |
Vacant space for 2019 | 29 |
Vacant space for 2020 | 23 |
Vacant space for 2021 | 14 |
Vacant space for 2022 | 9 |
Vacant space for 2023 | 5 |
Vacant space beyond 2023 | 8 |
Sublease income commitments for 2019 | 11 |
Sublease income commitments for 2020 | 7 |
Sublease income commitments for 2021 | 5 |
Sublease income commitments for 2022 | 4 |
Sublease income commitments for 2023 | 4 |
Sublease income commitments beyond 2023 | 2 |
Capital lease commitments | |
Capital lease commitments for 2019 | 3 |
Capital lease commitments for 2020 | 3 |
Capital lease commitments for 2021 | 3 |
Capital lease commitments for 2022 | 3 |
Capital lease commitments for 2023 | 2 |
Capital lease commitments beyond 2023 | $ 28 |
Leases - Lease Amounts Included
Leases - Lease Amounts Included in Consolidated Statement of Earnings (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lease income - sales-type and direct financing leases | |
Sales-type lease selling price | $ 1,509 |
Less: Carrying value of underlying assets, excluding unguaranteed residual value | 591 |
Gross profit | 918 |
Interest income on lease receivables | 303 |
Total sales-type and direct financing lease income | 1,221 |
Lease income - operating leases | 324 |
Variable lease income | 56 |
Total lease income | $ 1,601 |
Leases - Maturity Analysis of L
Leases - Maturity Analysis of Lease Payments Due on Sales-type and Direct Financing Leases (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Leases | ||
Unguaranteed residual value of sales-type and direct financing leases | $ 652 | $ 589 |
Maturity analysis of the lease payments due on sales-type and direct financing leases | ||
2020 | 2,632 | |
2021 | 1,921 | |
2022 | 1,053 | |
2023 | 382 | |
2024 | 82 | |
Thereafter | 7 | |
Total undiscounted cash flows | 6,077 | |
Present value of lease payments (recognized as financing receivables) | 5,567 | |
Difference between undiscounted cash flows and discounted cash flows | $ (509) |
Leases - Maturity Analysis of_2
Leases - Maturity Analysis of Undiscounted Lease Payments on Operating Leases (Details) $ in Millions | Dec. 31, 2019USD ($) |
Operating leases | |
Unguaranteed residual value for operating leases | $ 81 |
Maturity analysis of the undiscounted lease payments | |
2020 | 145 |
2021 | 35 |
2022 | 4 |
2023 | 0 |
2024 | 0 |
Total undiscounted cash flows | $ 184 |
Rental Machines | Minimum | |
Operating leases | |
Lease term | 1 year |
Rental Machines | Maximum | |
Operating leases | |
Lease term | 4 years |
Intangible Assets Including G_3
Intangible Assets Including Goodwill - Intangible Assets by Class (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible asset balances by major asset class | ||
Gross Carrying Amount | $ 19,287 | $ 6,489 |
Accumulated Amortization | (4,052) | (3,402) |
Net Carrying Amount | 15,235 | 3,087 |
Amount of foreign currency translation decrease | (42) | 0 |
Capitalized software | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 1,749 | 1,568 |
Accumulated Amortization | (743) | (629) |
Net Carrying Amount | 1,006 | 939 |
Client relationships | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 8,921 | 2,068 |
Accumulated Amortization | (1,433) | (1,123) |
Net Carrying Amount | 7,488 | 945 |
Completed technology | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 6,261 | 2,156 |
Accumulated Amortization | (1,400) | (1,296) |
Net Carrying Amount | 4,861 | 860 |
Patents/trademarks | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 2,301 | 641 |
Accumulated Amortization | (445) | (330) |
Net Carrying Amount | 1,856 | 311 |
Other intangible assets | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 56 | 56 |
Accumulated Amortization | (31) | (23) |
Net Carrying Amount | $ 24 | $ 32 |
Intangible Assets Including G_4
Intangible Assets Including Goodwill - Intangible Assets Activity (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible assets | ||
Intangible assets, increase (decrease) | $ 12,147 | |
Impairment of intangible assets | 0 | $ 0 |
Intangible asset amortization expense | 1,850 | 1,353 |
Retirement of fully amortized intangible assets | 946 | $ 1,469 |
Divested businesses | ||
Intangible assets | ||
Intangible assets, increase (decrease) | (335) | |
Accumulated amortization, increase (decrease) | (260) | |
Red Hat, Inc. | ||
Intangible assets | ||
Intangible assets acquired | 13,472 | |
Red Hat, Inc. | Cloud & Cognitive Software | ||
Intangible assets | ||
Intangible assets acquired | 10,729 | |
Red Hat, Inc. | Global Technology Services | ||
Intangible assets | ||
Intangible assets acquired | 1,819 | |
Red Hat, Inc. | Global Business Services | ||
Intangible assets | ||
Intangible assets acquired | 617 | |
Red Hat, Inc. | Systems | ||
Intangible assets | ||
Intangible assets acquired | $ 306 |
Intangible Assets Including G_5
Intangible Assets Including Goodwill - Future Amortization (Details) $ in Millions | Dec. 31, 2019USD ($) |
Future amortization expense, by year | |
2020 | $ 2,384 |
2021 | 2,099 |
2022 | 1,808 |
2023 | 1,372 |
2024 | 1,322 |
Thereafter | 6,250 |
Capitalized software | |
Future amortization expense, by year | |
2020 | 529 |
2021 | 352 |
2022 | 123 |
2023 | 1 |
2024 | 0 |
Acquired intangibles | |
Future amortization expense, by year | |
2020 | 1,855 |
2021 | 1,747 |
2022 | 1,684 |
2023 | 1,371 |
2024 | 1,322 |
Thereafter | $ 6,250 |
Intangible Assets Including G_6
Intangible Assets Including Goodwill - Goodwill by Segment (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Changes in Goodwill Balances | ||
Beginning Balance | $ 36,265 | $ 36,788 |
Goodwill Additions | 23,102 | 34 |
Purchase Price Adjustments | 24 | (3) |
Divestitures | (1,257) | (1) |
Foreign Currency Translation and Other Adjustments | 87 | (553) |
Ending Balance | 58,222 | 36,265 |
Goodwill impairment losses | 0 | 0 |
Goodwill accumulated impairment losses | 0 | 0 |
Business Segments | Cloud & Cognitive Software | ||
Changes in Goodwill Balances | ||
Beginning Balance | 24,594 | 24,973 |
Goodwill Additions | 18,399 | 9 |
Purchase Price Adjustments | 133 | 0 |
Divestitures | (131) | (1) |
Foreign Currency Translation and Other Adjustments | 41 | (388) |
Ending Balance | 43,037 | 24,594 |
Business Segments | Global Business Services | ||
Changes in Goodwill Balances | ||
Beginning Balance | 4,711 | 4,782 |
Goodwill Additions | 1,059 | 24 |
Purchase Price Adjustments | 1 | (3) |
Divestitures | (1) | |
Foreign Currency Translation and Other Adjustments | 5 | (92) |
Ending Balance | 5,775 | 4,711 |
Business Segments | Global Technology Services | ||
Changes in Goodwill Balances | ||
Beginning Balance | 3,988 | 4,044 |
Goodwill Additions | 3,119 | |
Purchase Price Adjustments | 0 | |
Foreign Currency Translation and Other Adjustments | 34 | (56) |
Ending Balance | 7,141 | 3,988 |
Business Segments | Systems | ||
Changes in Goodwill Balances | ||
Beginning Balance | 1,847 | 1,862 |
Goodwill Additions | 525 | |
Purchase Price Adjustments | (110) | 0 |
Foreign Currency Translation and Other Adjustments | 7 | (15) |
Ending Balance | 2,270 | 1,847 |
Other | Divested businesses | ||
Changes in Goodwill Balances | ||
Beginning Balance | 1,126 | 1,127 |
Goodwill Additions | 1 | |
Purchase Price Adjustments | 0 | |
Divestitures | $ (1,126) | 0 |
Foreign Currency Translation and Other Adjustments | (2) | |
Ending Balance | $ 1,126 |
Investments & Sundry Assets (De
Investments & Sundry Assets (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Investments & Sundry Assets | ||
Derivatives - noncurrent | $ 94 | $ 347 |
Alliance investments - equity method | 184 | 192 |
Alliance investments - non-equity method | 38 | 34 |
Long-term deposits | 242 | 268 |
Other receivables | 276 | 359 |
Employee benefit-related | 253 | 263 |
Prepaid income taxes | 664 | 626 |
Other assets | 321 | 296 |
Total | $ 2,074 | $ 2,386 |
Borrowings - Short-Term Debt (D
Borrowings - Short-Term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Short-term debt disclosures | ||
Commercial paper | $ 304 | $ 2,995 |
Short-term loans | 971 | 161 |
Long-term debt - current maturities | 7,522 | 7,051 |
Short-term Debt, Total | $ 8,797 | $ 10,207 |
Commercial paper | ||
Short-term debt disclosures | ||
Weighted-average interest rates for short-term debt (as a percent) | 1.60% | 2.50% |
Short-term loans | ||
Short-term debt disclosures | ||
Weighted-average interest rates for short-term debt (as a percent) | 6.10% | 4.30% |
Borrowings - Long-Term Debt, Co
Borrowings - Long-Term Debt, Components (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Borrowings | |||
Long-term debt excluding finance lease obligations | $ 62,003 | $ 43,155 | |
Finance lease obligations | 204 | $ 200 | 41 |
Long-term debt, gross | 62,207 | 43,196 | |
Less: net unamortized discount | 881 | 802 | |
Less: net unamortized debt issuance cost | 142 | 76 | |
Add: fair value adjustment | 440 | 337 | |
Total | 61,624 | 42,656 | |
Less: current maturities | 7,522 | 7,051 | |
Total long-term debt (excluding current portion) | $ 54,102 | 35,605 | |
Finance lease obligations, interest rate | 2.00% | ||
U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 44,594 | 30,091 | |
Euros | |||
Borrowings | |||
Long-term debt excluding finance lease obligations | $ 14,306 | 10,011 | |
Debt instrument, weighted-average interest rate (as a percent) | 1.30% | ||
Pound sterling | |||
Borrowings | |||
Long-term debt excluding finance lease obligations | $ 1,390 | 1,338 | |
Debt instrument, weighted-average interest rate (as a percent) | 2.70% | ||
Japanese yen | |||
Borrowings | |||
Long-term debt excluding finance lease obligations | $ 1,339 | 1,325 | |
Debt instrument, weighted-average interest rate (as a percent) | 0.30% | ||
Other | |||
Borrowings | |||
Long-term debt excluding finance lease obligations | $ 375 | 390 | |
Debt instrument, weighted-average interest rate (as a percent) | 6.10% | ||
Maturing 2019 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | 5,465 | ||
Debt instrument, weighted-average interest rate (as a percent) | 3.00% | ||
Maturing 2020 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 4,326 | 4,344 | |
Debt instrument, weighted-average interest rate (as a percent) | 2.30% | ||
Maturing 2021 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 8,498 | 5,529 | |
Debt instrument, weighted-average interest rate (as a percent) | 2.50% | ||
Maturing 2022 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 6,289 | 3,529 | |
Debt instrument, weighted-average interest rate (as a percent) | 2.60% | ||
Maturing 2023 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 2,388 | 2,428 | |
Debt instrument, weighted-average interest rate (as a percent) | 3.30% | ||
Maturing 2024 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 5,045 | 2,037 | |
Debt instrument, weighted-average interest rate (as a percent) | 3.30% | ||
Maturing 2025 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 636 | 600 | |
Debt instrument, weighted-average interest rate (as a percent) | 6.70% | ||
Maturing 2026 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 4,350 | 1,350 | |
Debt instrument, weighted-average interest rate (as a percent) | 3.30% | ||
Maturing 2027 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 969 | 969 | |
Debt instrument, weighted-average interest rate (as a percent) | 4.70% | ||
Maturing 2028 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 313 | 313 | |
Debt instrument, weighted-average interest rate (as a percent) | 6.50% | ||
Maturing 2029 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 3,250 | ||
Debt instrument, weighted-average interest rate (as a percent) | 3.50% | ||
Maturing 2032 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 600 | 600 | |
Debt instrument, weighted-average interest rate (as a percent) | 5.90% | ||
Maturing 2038 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 83 | 83 | |
Debt instrument, weighted-average interest rate (as a percent) | 8.00% | ||
Maturing 2039 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 2,745 | 745 | |
Debt instrument, weighted-average interest rate (as a percent) | 4.50% | ||
Maturing 2042 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 1,107 | 1,107 | |
Debt instrument, weighted-average interest rate (as a percent) | 4.00% | ||
Maturing 2045 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 27 | 27 | |
Debt instrument, weighted-average interest rate (as a percent) | 7.00% | ||
Maturing 2046 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 650 | 650 | |
Debt instrument, weighted-average interest rate (as a percent) | 4.70% | ||
Maturing 2049 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 3,000 | ||
Debt instrument, weighted-average interest rate (as a percent) | 4.30% | ||
Maturing 2096 | U.S. dollars | |||
Borrowings | |||
Long-term debt, gross | $ 316 | $ 316 | |
Debt instrument, weighted-average interest rate (as a percent) | 7.10% |
Borrowings - Long-Term Debt, _2
Borrowings - Long-Term Debt, Covenants (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Borrowings | |
Limit based on net tangible assets | 10.00% |
Credit Facilities | |
Borrowings | |
Minimum net interest expense ratio | 2.20 |
Default provision on credit facility | $ 500 |
Borrowings - Long-Term Debt, De
Borrowings - Long-Term Debt, Debt Issued (Details) $ in Millions | May 15, 2019USD ($)tranche |
Long-term Debt Instrument | |
Lines of Credit | |
Aggregate amount of debt issued | $ 20,000 |
Number of tranches of facility | tranche | 8 |
Tranche One | |
Lines of Credit | |
Credit facility term | 2 years |
Aggregate amount of debt issued | $ 1,500 |
Tranche One | 3 month LIBOR | |
Lines of Credit | |
Basis points | 0.40% |
Tranche Two | |
Lines of Credit | |
Credit facility term | 2 years |
Aggregate amount of debt issued | $ 1,500 |
Coupon rate (as a percent) | 2.80% |
Tranche Three | |
Lines of Credit | |
Credit facility term | 3 years |
Aggregate amount of debt issued | $ 2,750 |
Coupon rate (as a percent) | 2.85% |
Tranche Four | |
Lines of Credit | |
Credit facility term | 5 years |
Aggregate amount of debt issued | $ 3,000 |
Coupon rate (as a percent) | 3.00% |
Tranche Five | |
Lines of Credit | |
Credit facility term | 7 years |
Aggregate amount of debt issued | $ 3,000 |
Coupon rate (as a percent) | 3.30% |
Tranche Six | |
Lines of Credit | |
Credit facility term | 10 years |
Aggregate amount of debt issued | $ 3,250 |
Coupon rate (as a percent) | 3.50% |
Tranche Seven | |
Lines of Credit | |
Credit facility term | 20 years |
Aggregate amount of debt issued | $ 2,000 |
Coupon rate (as a percent) | 4.15% |
Tranche Eight | |
Lines of Credit | |
Credit facility term | 30 years |
Aggregate amount of debt issued | $ 3,000 |
Coupon rate (as a percent) | 4.25% |
Borrowings - Post-Swap Borrowin
Borrowings - Post-Swap Borrowing (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Borrowings | ||
Fixed-rate debt, Amount | $ 52,169 | $ 28,770 |
Floating-rate debt, Amount | 9,455 | 13,886 |
Total | $ 61,624 | $ 42,656 |
Fixed-rate debt, Weighted-average Interest Rate (as a percent) | 2.90% | 2.70% |
Floating-rate debt, Weighted-average Interest Rate (as a percent) | 2.20% | 3.00% |
Interest rate swaps | ||
Borrowings | ||
Notional amount | $ 2,975 | $ 7,563 |
Interest rate swaps | Derivative instruments in fair value hedges | ||
Borrowings | ||
Notional amount | $ 3,000 | $ 7,600 |
Borrowings - Pre-Swap Obligatio
Borrowings - Pre-Swap Obligations (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Pre-swap annual contractual obligations of long-term debt outstanding | ||
2020 | $ 7,526 | |
2021 | 9,826 | |
2022 | 7,175 | |
2023 | 5,374 | |
2024 | 6,305 | |
Thereafter | 26,000 | |
Total | $ 62,207 | $ 43,196 |
Borrowings - Interest on Debt (
Borrowings - Interest on Debt (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Interest on Debt | |||
Interest capitalized | $ 5 | $ 3 | $ 5 |
Total interest paid and accrued | 1,957 | 1,482 | 1,278 |
Cost of financing | |||
Interest on Debt | |||
Interest paid | 608 | 757 | 658 |
Interest expense | |||
Interest on Debt | |||
Interest paid | $ 1,344 | $ 723 | $ 615 |
Borrowings - Lines of Credit (D
Borrowings - Lines of Credit (Details) - Credit Facilities - USD ($) $ in Millions | Jul. 18, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Lines of Credit | ||||
Borrowings outstanding | $ 0 | |||
Five-Year Credit Agreement | ||||
Lines of Credit | ||||
Amount of credit facility | $ 10,250 | $ 10,250 | ||
Credit facility term | 5 years | 5 years | ||
Extended maturity period | 1 year | |||
Credit agreement maturity date | Jul. 20, 2024 | |||
Expenses related to the credit facility | $ 7.4 | $ 6.7 | $ 6.1 | |
Maximum additional amount of commitments under the credit agreement | $ 1,750 | $ 1,750 | ||
364-Day Credit Agreement, 2018 | ||||
Lines of Credit | ||||
Amount of credit facility | $ 2,500 | |||
Credit facility term | 364 days | |||
364-Day Credit Agreement, 2019 | ||||
Lines of Credit | ||||
Amount of credit facility | $ 2,500 | |||
Credit facility term | 364 days | |||
364-Day Credit Agreement | ||||
Lines of Credit | ||||
Credit facility term | 364 days | 364 days | ||
Three-Year Credit Agreement | ||||
Lines of Credit | ||||
Amount of credit facility | $ 2,500 | |||
Credit facility term | 3 years | 3 years | ||
Extended maturity period | 1 year | |||
Credit agreement maturity date | Jul. 20, 2022 | |||
364-Day Credit Agreement and Three-Year Credit Agreement | ||||
Lines of Credit | ||||
Amount of credit facility | $ 5,000 | |||
Expenses related to the credit facility | $ 2.3 | $ 2.1 | $ 2.8 |
Other Liabilities - Components
Other Liabilities - Components (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Other Liabilities | ||
Income tax reserves | $ 5,118 | $ 4,195 |
Excess 401(k) Plus Plan | 1,521 | 1,380 |
Disability benefits | 478 | 507 |
Derivative liabilities | 506 | 206 |
Workforce reductions | 725 | 736 |
Deferred taxes | 5,230 | 3,696 |
Other taxes payable | 42 | 40 |
Environmental accruals | 254 | 244 |
Warranty accruals | 45 | 76 |
Asset retirement obligations | 94 | 111 |
Acquisition related | 9 | 13 |
Divestiture related | 65 | 173 |
Other | 439 | 796 |
Total | $ 14,526 | $ 12,174 |
Other Liabilities - Workforce R
Other Liabilities - Workforce Reduction and Environmental Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Other Liabilities | ||
Total amounts accrued for workforce reductions | $ 950 | $ 941 |
Total amounts accrued for non-ARO environmental liabilities | 270 | 255 |
Total amounts accrued for ARO liabilities | $ 150 | $ 146 |
Commitments & Contingencies - E
Commitments & Contingencies - Extensions of Credit (Details) - USD ($) $ in Billions | Dec. 31, 2019 | Dec. 31, 2018 |
Extended lines of credit | ||
Commitments, guarantees: | ||
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients | $ 1.8 | $ 7.4 |
Financing for client purchase agreements | ||
Commitments, guarantees: | ||
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients | $ 6.3 | $ 4.4 |
Commitments & Contingencies - F
Commitments & Contingencies - Financial Guarantees (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Financial guarantees | ||
Guarantor obligations | ||
Guarantor obligations, maximum exposure | $ 20 | $ 26 |
Commitments & Contingencies - S
Commitments & Contingencies - Standard Warranty Liability (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Movement in standard warranty liability | ||
Beginning Balance | $ 118 | $ 152 |
Current period accruals | 111 | 121 |
Accrual adjustments to reflect experience | (1) | (32) |
Charges incurred | (115) | (123) |
Ending Balance | $ 113 | $ 118 |
Commitments & Contingencies -_2
Commitments & Contingencies - Extended Warranty Liability (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Movement in deferred income | ||
Amortization of deferred revenue | $ (9,500) | |
Current portion | 12,026 | $ 11,165 |
Noncurrent portion | 3,851 | 3,445 |
Extended Warranty | ||
Movement in deferred income | ||
Beginning Balance | 533 | 566 |
Revenue deferred for new extended warranty contracts | 198 | 220 |
Amortization of deferred revenue | (253) | (240) |
Other | (2) | (13) |
Ending Balance | 477 | 533 |
Current portion | 227 | 271 |
Noncurrent portion | $ 250 | $ 262 |
Commitments & Contingencies - C
Commitments & Contingencies - Contingencies (Details) $ in Millions | 1 Months Ended | 12 Months Ended | |
May 31, 2015defendant | Dec. 31, 2019USD ($)country | Oct. 30, 2017claim | |
Brazil Tax Matters | |||
Loss Contingencies | |||
Damages sought, value | $ | $ 925 | ||
SCO v. IBM | |||
Loss Contingencies | |||
Number of remaining claims | claim | 1 | ||
Litigation Case In United States District Court regarding divesting Microelectronics business, alleging violations of the Employee Retirement Income Security Act | |||
Loss Contingencies | |||
Number of officers or executives named as defendants | defendant | 3 | ||
Minimum | |||
Loss Contingencies | |||
Clients' presence in number of countries | country | 175 |
Equity Activity - Stock Repurch
Equity Activity - Stock Repurchases and Other Transactions (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Equity Activity | |||
Common stock, shares authorized (in shares) | 4,687,500,000 | 4,687,500,000 | |
Common stock, par value (in dollars per share) | $ 0.20 | $ 0.20 | |
Common stock, outstanding (in shares) | 887,110,455 | ||
Preferred stock, shares authorized (in shares) | 150,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | ||
Preferred stock, shares outstanding (in shares) | 0 | ||
Common stock repurchased (in shares) | 9,979,516 | 32,949,233 | 27,237,179 |
Common stock repurchased, value | $ 1,331 | $ 4,447 | $ 4,323 |
Common stock repurchase authorization available, value | $ 2,008 | ||
Common stock issued under employee plans (in shares) | 4,569,917 | 3,998,245 | 4,311,998 |
Issue of treasury shares as a result of RSU releases and stock option exercises (in shares) | 2,041,347 | 424,589 | 463,083 |
Common stock remitted by employees in order to satisfy tax withholding requirements (in shares) | 2,000,704 | 1,173,416 | 1,226,080 |
Value of common shares remitted by employees in order to satisfy tax withholding requirements | $ 272 | $ 171 | $ 193 |
Equity Activity - Reclassificat
Equity Activity - Reclassifications and Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | $ 40,659 | $ 42,655 | $ 42,196 |
SG&A expense | 20,604 | 19,366 | 19,680 |
Other (income) and expense | (968) | 1,152 | 1,125 |
Interest expense | 1,344 | 723 | 615 |
Provision for/(benefit from) income taxes | 731 | 2,619 | 5,642 |
Net (income) loss | (9,431) | (8,728) | (5,753) |
Other comprehensive income/(loss) | 893 | (476) | 2,806 |
Services | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | 32,491 | 33,687 | 33,399 |
Sales | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | 7,263 | 7,835 | 7,587 |
Financing | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | 904 | 1,132 | 1,210 |
Accumulated Other Comprehensive Income/(Loss) | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Unrealized gains/(losses) arising during the period, Net of Tax Amount | (663) | (3,089) | 1,206 |
Reclassification/amortization, Net of Tax Amount | 1,556 | 2,612 | 1,599 |
Other comprehensive income/(loss), Before Tax Amount | 1,029 | (215) | 3,235 |
Other comprehensive income/(loss), Tax (Expense)/Benefit | (136) | (262) | (429) |
Other comprehensive income/(loss) | 893 | (476) | 2,806 |
Foreign Currency Translation Adjustments | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Unrealized gains/(losses) arising during the period, Net of Tax Amount | (10) | (902) | 769 |
Reclassification/amortization, Net of Tax Amount | 0 | ||
Other comprehensive income/(loss), Before Tax Amount | (39) | (730) | 152 |
Other comprehensive income/(loss), Tax (Expense)/Benefit | 29 | (172) | 617 |
Other comprehensive income/(loss) | (10) | (902) | 769 |
Net Unrealized Gains/(Losses) on Available-For-Sale Securities | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Unrealized gains/(losses) arising during the period, Before Tax Amount | 1 | (2) | 1 |
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | 0 | 1 | (1) |
Unrealized gains/(losses) arising during the period, Net of Tax Amount | 1 | (1) | 0 |
Reclassification/amortization, Net of Tax Amount | 1 | ||
Other comprehensive income/(loss), Before Tax Amount | 1 | (2) | 2 |
Other comprehensive income/(loss), Tax (Expense)/Benefit | 0 | 1 | (1) |
Other comprehensive income/(loss) | 1 | (1) | 1 |
Net Unrealized Gains/(Losses) on Available-For-Sale Securities | Reclassifications | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Reclassification/amortization, Before Tax Amount | 1 | ||
Reclassification/amortization, Tax (Expense)/Benefit | 0 | ||
Reclassification/amortization, Net of Tax Amount | 1 | ||
Net Unrealized Gains/(Losses) on Cash Flow Hedges | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Unrealized gains/(losses) arising during the period, Before Tax Amount | (689) | (136) | (58) |
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | 167 | 43 | 0 |
Unrealized gains/(losses) arising during the period, Net of Tax Amount | (522) | (93) | (58) |
Reclassification/amortization, Net of Tax Amount | 59 | 337 | (226) |
Other comprehensive income/(loss), Before Tax Amount | (614) | 313 | (421) |
Other comprehensive income/(loss), Tax (Expense)/Benefit | 151 | (69) | 137 |
Other comprehensive income/(loss) | (463) | 244 | (284) |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
SG&A expense | (53) | 0 | (11) |
Other (income) and expense | (39) | 341 | (324) |
Interest expense | 197 | 71 | 22 |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Services | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | (68) | (30) | (70) |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Sales | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | (51) | (8) | (3) |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Financing | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | 89 | 75 | 23 |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Cost of services | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Provision for/(benefit from) income taxes | 17 | 8 | 27 |
Net (income) loss | (50) | (22) | (43) |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Cost of sales | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Provision for/(benefit from) income taxes | 15 | 3 | 1 |
Net (income) loss | (37) | (5) | (3) |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Cost of financing | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Provision for/(benefit from) income taxes | (22) | (19) | (9) |
Net (income) loss | 67 | 56 | 14 |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | SG&A expense | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Provision for/(benefit from) income taxes | 14 | 0 | 3 |
Net (income) loss | (39) | 0 | (9) |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Other (income) and expense | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Provision for/(benefit from) income taxes | 10 | (86) | 124 |
Net (income) loss | (29) | 255 | (199) |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Interest expense | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Provision for/(benefit from) income taxes | (50) | (18) | (8) |
Net (income) loss | 148 | 53 | 13 |
Net Change Retirement-Related Benefit Plans | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Unrealized gains/(losses) arising during the period, Net of Tax Amount | (131) | (2,092) | 495 |
Reclassification/amortization, Net of Tax Amount | 1,496 | 2,276 | 1,825 |
Other comprehensive income/(loss), Before Tax Amount | 1,681 | 204 | 3,502 |
Other comprehensive income/(loss), Tax (Expense)/Benefit | (316) | (21) | (1,182) |
Other comprehensive income/(loss) | 1,365 | 184 | 2,320 |
Retirement-Related Benefit Plans, Prior Service Costs/(Credits) | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Unrealized gains/(losses) arising during the period, Before Tax Amount | (73) | (182) | 0 |
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | 10 | 31 | 0 |
Unrealized gains/(losses) arising during the period, Net of Tax Amount | (63) | (151) | 0 |
Reclassification/amortization, Before Tax Amount | (9) | (73) | (88) |
Reclassification/amortization, Tax (Expense)/Benefit | 5 | 5 | 29 |
Reclassification/amortization, Net of Tax Amount | (4) | (68) | (58) |
Retirement-Related Benefit Plans, Net Gains/(Losses) | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Unrealized gains/(losses) arising during the period, Before Tax Amount | (120) | (2,517) | 682 |
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | 52 | 576 | (201) |
Unrealized gains/(losses) arising during the period, Net of Tax Amount | (68) | (1,941) | 481 |
Reclassification/amortization, Before Tax Amount | 1,843 | 2,966 | 2,889 |
Reclassification/amortization, Tax (Expense)/Benefit | (371) | (632) | (1,006) |
Reclassification/amortization, Net of Tax Amount | 1,471 | 2,334 | 1,883 |
Retirement-Related Benefit Plans, Curtailments and Settlements | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Unrealized gains/(losses) arising during the period, Before Tax Amount | 41 | 11 | 19 |
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | (12) | (2) | (5) |
Unrealized gains/(losses) arising during the period, Net of Tax Amount | $ 29 | $ 9 | $ 14 |
Equity Activity - AOCI Rollforw
Equity Activity - AOCI Rollforward (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Balance at the Beginning of the Period | $ 16,929 | $ 17,725 | $ 18,392 |
Other comprehensive income/(loss) | 893 | (476) | 2,806 |
Balance at the End of the Period | 20,985 | 16,929 | 17,725 |
Accumulated Other Comprehensive Income/(Loss) | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Balance at the Beginning of the Period | (29,490) | (26,592) | (29,398) |
Other comprehensive income before reclassifications | (663) | (3,089) | 1,206 |
Amount reclassified from accumulated other comprehensive income | 1,556 | 2,612 | 1,599 |
Other comprehensive income/(loss) | 893 | (476) | 2,806 |
Balance at the End of the Period | (28,597) | (29,490) | (26,592) |
Accumulated Other Comprehensive Income/(Loss) | Accounting Standards Updates 2016-01 (Financial Instruments), 2017-12 (Hedging) and 2018-02 (Stranded Tax Effects) | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Cumulative effect of a change in accounting principle | (2,422) | ||
Net Unrealized Gains/(Losses) on Cash Flow Hedges | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Balance at the Beginning of the Period | 284 | 35 | 319 |
Other comprehensive income before reclassifications | (522) | (93) | (58) |
Amount reclassified from accumulated other comprehensive income | 59 | 337 | (226) |
Other comprehensive income/(loss) | (463) | 244 | (284) |
Balance at the End of the Period | (179) | 284 | 35 |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Accounting Standards Updates 2016-01 (Financial Instruments), 2017-12 (Hedging) and 2018-02 (Stranded Tax Effects) | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Cumulative effect of a change in accounting principle | 5 | ||
Foreign Currency Translation Adjustments | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Balance at the Beginning of the Period | (3,690) | (2,834) | (3,603) |
Other comprehensive income before reclassifications | (10) | (902) | 769 |
Amount reclassified from accumulated other comprehensive income | 0 | ||
Other comprehensive income/(loss) | (10) | (902) | 769 |
Balance at the End of the Period | (3,700) | (3,690) | (2,834) |
Foreign Currency Translation Adjustments | Accounting Standards Updates 2016-01 (Financial Instruments), 2017-12 (Hedging) and 2018-02 (Stranded Tax Effects) | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Cumulative effect of a change in accounting principle | 46 | ||
Net Change Retirement-Related Benefit Plans | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Balance at the Beginning of the Period | (26,083) | (23,796) | (26,116) |
Other comprehensive income before reclassifications | (131) | (2,092) | 495 |
Amount reclassified from accumulated other comprehensive income | 1,496 | 2,276 | 1,825 |
Other comprehensive income/(loss) | 1,365 | 184 | 2,320 |
Balance at the End of the Period | (24,718) | (26,083) | (23,796) |
Net Change Retirement-Related Benefit Plans | Accounting Standards Updates 2016-01 (Financial Instruments), 2017-12 (Hedging) and 2018-02 (Stranded Tax Effects) | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Cumulative effect of a change in accounting principle | (2,471) | ||
Net Unrealized Gains/(Losses) on Available-For-Sale Securities | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Balance at the Beginning of the Period | 0 | 3 | 2 |
Other comprehensive income before reclassifications | 1 | (1) | 0 |
Amount reclassified from accumulated other comprehensive income | 1 | ||
Other comprehensive income/(loss) | 1 | (1) | 1 |
Balance at the End of the Period | $ 0 | 0 | $ 3 |
Net Unrealized Gains/(Losses) on Available-For-Sale Securities | Accounting Standards Updates 2016-01 (Financial Instruments), 2017-12 (Hedging) and 2018-02 (Stranded Tax Effects) | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Cumulative effect of a change in accounting principle | $ (2) |
Derivative Financial Instrume_3
Derivative Financial Instruments - Offsetting (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Derivative Financial Instruments | ||
Potential reduction in net position of total derivative assets | $ 194 | $ 267 |
Potential reduction in net position of total derivative liabilities | 194 | 267 |
Cash collateral rehypothecated | 0 | 0 |
Other receivables | ||
Derivative Financial Instruments | ||
Right to reclaim cash collateral | 26 | 0 |
Accounts payable | ||
Derivative Financial Instruments | ||
Obligation to return cash collateral | $ 0 | $ 70 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Hedging Programs (Details) $ in Millions | May 15, 2019USD ($) | Dec. 31, 2019USD ($)instrument | Dec. 31, 2018USD ($) |
Instruments in net investment hedges | |||
Derivative Financial Instruments | |||
Notional amount | $ 7,900 | $ 6,400 | |
Average remaining maturity | 1 month 6 days | 2 months 12 days | |
Interest rate swaps | |||
Derivative Financial Instruments | |||
Notional amount | $ 2,975 | $ 7,563 | |
Interest rate swaps | Derivative instruments in fair value hedges | |||
Derivative Financial Instruments | |||
Notional amount | $ 3,000 | $ 7,600 | |
Average remaining maturity | 2 years 2 months 12 days | 3 years 6 months | |
Interest rate swaps | Derivative instruments in cash flow hedges | |||
Derivative Financial Instruments | |||
Notional amount | $ 0 | $ 0 | |
Foreign exchange contracts | Not designated as hedging instruments - economic hedges | |||
Derivative Financial Instruments | |||
Notional amount | $ 7,100 | 5,200 | |
Foreign exchange contracts | Not designated as hedging instruments - economic hedges | Maximum | |||
Derivative Financial Instruments | |||
Term of contract | 1 year | ||
Foreign exchange forward contracts | Derivative instruments in cash flow hedges | |||
Derivative Financial Instruments | |||
Maximum length of time hedged | 4 years | ||
Notional amount | $ 9,700 | $ 9,800 | |
Average remaining maturity | 9 months 18 days | 9 months 18 days | |
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges | $ 145 | $ 342 | |
Gains (losses) expected to be reclassified to net income within the next 12 months | $ 72 | ||
Cross-currency swaps | Derivative instruments in cash flow hedges | |||
Derivative Financial Instruments | |||
Maximum length of time hedged | 12 years | ||
Notional amount | $ 8,200 | 6,500 | |
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges | (185) | 75 | |
Gains (losses) expected to be reclassified to net income within the next 12 months | $ 166 | ||
Forward-starting interest rate swaps | Derivative instruments in cash flow hedges | |||
Derivative Financial Instruments | |||
Maximum length of time hedged | 30 years | ||
Amount of terminated derivative | $ 5,500 | ||
Number of derivative instruments outstanding | instrument | 0 | ||
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges | $ (192) | (35) | |
Gains (losses) expected to be reclassified to net income within the next 12 months | (18) | ||
Equity contracts hedging employee compensation obligations | Not designated as hedging instruments - economic hedges | |||
Derivative Financial Instruments | |||
Notional amount | $ 1,300 | $ 1,200 | |
Long-term Debt Instrument | |||
Derivative Financial Instruments | |||
Aggregate amount of debt issued | $ 20,000 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Cumulative Basis Adjustments for Fair Value Hedges (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Short-term debt | ||
Amounts recorded in the Consolidated Statement of Financial Position related to cumulative basis adjustments for fair value hedges | ||
Carrying amount of the hedged item | $ (1,878) | |
Cumulative hedging adjustments included in the carrying amount-assets/(liabilities) | (4) | |
Hedging adjustments on discontinued hedging relationships | (6) | |
Long-term debt | ||
Amounts recorded in the Consolidated Statement of Financial Position related to cumulative basis adjustments for fair value hedges | ||
Carrying amount of the hedged item | $ (3,411) | (6,004) |
Cumulative hedging adjustments included in the carrying amount-assets/(liabilities) | (440) | (333) |
Hedging adjustments on discontinued hedging relationships | $ (404) | $ (213) |
Derivative Financial Instrume_6
Derivative Financial Instruments - Effect of Hedge Activity on Income and Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative Instruments, Gain (Loss) | |||
Cost | $ 40,659 | $ 42,655 | $ 42,196 |
SG&A expense | 20,604 | 19,366 | 19,680 |
Other (income) and expense | (968) | 1,152 | 1,125 |
Interest expense | 1,344 | 723 | 615 |
Cost of services | |||
Derivative Instruments, Gain (Loss) | |||
Gains/(losses) of total hedge activity | 68 | 30 | |
Cost of sales | |||
Derivative Instruments, Gain (Loss) | |||
Gains/(losses) of total hedge activity | 51 | 8 | |
Cost of financing | |||
Derivative Instruments, Gain (Loss) | |||
Gains/(losses) of total hedge activity | (42) | (6) | |
SG&A expense | |||
Derivative Instruments, Gain (Loss) | |||
Gains/(losses) of total hedge activity | 267 | (116) | |
Other (income) and expense | |||
Derivative Instruments, Gain (Loss) | |||
Gains/(losses) of total hedge activity | (15) | (434) | |
Interest expense | |||
Derivative Instruments, Gain (Loss) | |||
Gains/(losses) of total hedge activity | (93) | (6) | |
Services | |||
Derivative Instruments, Gain (Loss) | |||
Cost | 32,491 | 33,687 | 33,399 |
Sales | |||
Derivative Instruments, Gain (Loss) | |||
Cost | 7,263 | 7,835 | 7,587 |
Financing | |||
Derivative Instruments, Gain (Loss) | |||
Cost | $ 904 | $ 1,132 | $ 1,210 |
Derivative Financial Instrume_7
Derivative Financial Instruments - Gains and Losses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative Instruments, Gain (Loss) | |||
Gain (loss) recognized in earnings on derivatives | $ 302 | $ (327) | $ 153 |
Gain (loss) recognized in earnings attributable to risk being hedged | (103) | 189 | 144 |
Cash flow hedges and net investment hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI | (784) | 549 | (1,665) |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (75) | (449) | 363 |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing | 112 | 64 | 45 |
Interest rate contracts | Derivative instruments in cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI | (168) | (35) | |
Foreign exchange contracts | Derivative instruments in cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI | (521) | (101) | (58) |
Foreign exchange contracts | Instruments in net investment hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI | (95) | 686 | (1,607) |
Cost of services | Foreign exchange contracts | Derivative instruments in cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | 68 | 30 | 70 |
Cost of sales | Foreign exchange contracts | Derivative instruments in cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | 51 | 8 | 3 |
Cost of financing | Interest rate contracts | Derivative instruments in fair value hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (loss) recognized in earnings on derivatives | 44 | (61) | 1 |
Gain (loss) recognized in earnings attributable to risk being hedged | (32) | 97 | 74 |
Cost of financing | Interest rate contracts | Derivative instruments in cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (3) | ||
Cost of financing | Foreign exchange contracts | Derivative instruments in cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (86) | (75) | (23) |
Cost of financing | Foreign exchange contracts | Instruments in net investment hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing | 35 | 33 | 23 |
SG&A expense | Foreign exchange contracts | Derivative instruments in cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | 53 | 0 | 11 |
SG&A expense | Equity contracts | Not designated as hedging instruments - economic hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (loss) recognized in earnings on derivatives | 214 | (116) | 135 |
Other (income) and expense | Foreign exchange contracts | Derivative instruments in cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | 39 | (341) | 324 |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing | 1 | ||
Other (income) and expense | Foreign exchange contracts | Not designated as hedging instruments - economic hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (loss) recognized in earnings on derivatives | (53) | (93) | 16 |
Interest expense | Interest rate contracts | Derivative instruments in fair value hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (loss) recognized in earnings on derivatives | 98 | (58) | 1 |
Gain (loss) recognized in earnings attributable to risk being hedged | (71) | 92 | 69 |
Interest expense | Interest rate contracts | Derivative instruments in cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (8) | ||
Interest expense | Foreign exchange contracts | Derivative instruments in cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (190) | (71) | (22) |
Interest expense | Foreign exchange contracts | Instruments in net investment hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing | $ 77 | $ 31 | $ 21 |
Derivative Financial Instrume_8
Derivative Financial Instruments - Other Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative Financial Instruments | |||
Gains (losses) excluded from the assessment of hedge effectiveness for fair value hedges | |||
Gains (losses) excluded from the assessment of hedge effectiveness for cash flow hedges | |||
Gains (losses) associated with underlying exposure that did not occur or was not expected to occur for cash flow hedges |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock-based compensation cost, allocation of recognized costs | |||
Pre-tax stock-based compensation cost | $ 679 | $ 510 | $ 534 |
Income tax benefits | (155) | (116) | (131) |
Net stock-based compensation cost | 524 | 393 | 403 |
Unrecognized compensation cost related to non-vested awards | $ 1,200 | ||
Unrecognized compensation cost related to non-vested awards, weighted average period of recognition | 2 years 6 months | ||
Cost | |||
Stock-based compensation cost, allocation of recognized costs | |||
Pre-tax stock-based compensation cost | $ 100 | 82 | 91 |
SG&A expense | |||
Stock-based compensation cost, allocation of recognized costs | |||
Pre-tax stock-based compensation cost | 453 | 361 | 384 |
Research, development and engineering | |||
Stock-based compensation cost, allocation of recognized costs | |||
Pre-tax stock-based compensation cost | $ 126 | $ 67 | $ 59 |
Stock-Based Compensation - Ince
Stock-Based Compensation - Incentive Awards (Details) - Long-term performance plans shares in Millions | 12 Months Ended |
Dec. 31, 2019shares | |
Stock-Based Compensation | |
Shares authorized under existing stock based compensation plans (in shares) | 273 |
Additional shares considered authorized under previous stock based compensation plans (in shares) | 66 |
Unused shares available to be granted (in shares) | 94 |
Stock-Based Compensation - RSU
Stock-Based Compensation - RSU and PSU Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Restricted Stock Units | |||
Weighted Average Grant Price | |||
Beginning balance (in dollars per share) | $ 130 | $ 141 | $ 147 |
Granted (in dollars per share) | 119 | 121 | 137 |
Released (in dollars per share) | 136 | 148 | 153 |
Canceled/forfeited/performance adjusted (in dollars per share) | 128 | 139 | 147 |
Ending balance (in dollars per share) | $ 123 | $ 130 | $ 141 |
Number of Units | |||
Beginning balance (in shares) | 9,802,704 | 8,555,263 | 8,899,092 |
Granted (in shares) | 5,650,861 | 4,806,790 | 3,540,949 |
Released (in shares) | (3,145,016) | (2,579,962) | (3,032,531) |
Canceled/forfeited/performance adjusted (in shares) | (981,921) | (979,387) | (852,247) |
Ending balance (in shares) | 11,326,628 | 9,802,704 | 8,555,263 |
Performance Share Units | |||
Weighted Average Grant Price | |||
Beginning balance (in dollars per share) | $ 136 | $ 144 | $ 155 |
Granted (in dollars per share) | 117 | 130 | 137 |
Released (in dollars per share) | 140 | 152 | 175 |
Canceled/forfeited/performance adjusted (in dollars per share) | 131 | 147 | 170 |
Ending balance (in dollars per share) | $ 126 | $ 136 | $ 144 |
Number of Units | |||
Beginning balance (in shares) | 2,419,695 | 2,649,313 | 2,874,758 |
Granted (in shares) | 1,395,534 | 909,140 | 824,875 |
Performance adjustments (in shares) | (8,544) | (328,120) | (623,245) |
Released (in shares) | (846,672) | (666,244) | (293,236) |
Canceled/forfeited/performance adjusted (in shares) | (112,107) | (472,514) | (757,084) |
Ending balance (in shares) | 2,856,450 | 2,419,695 | 2,649,313 |
Stock-Based Compensation - RSUs
Stock-Based Compensation - RSUs and PSUs, Other Disclosures (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock-Based Compensation | |||
Unrecognized compensation cost related to non-vested awards | $ 1,200 | ||
RSUs and PSUs | |||
Stock-Based Compensation | |||
Tax benefits realized in connection with vesting and release of awards | 131 | $ 117 | $ 180 |
Restricted Stock Units | |||
Stock-Based Compensation | |||
Fair value of stock units granted | 674 | 583 | 484 |
Fair value of stock units vested | 428 | 381 | 463 |
Unrecognized compensation cost related to non-vested awards | $ 1,100 | ||
Restricted Stock Units | Weighted-Average | |||
Stock-Based Compensation | |||
Vesting period | 2 years 6 months | ||
Performance Share Units | |||
Stock-Based Compensation | |||
Vesting period | 3 years | ||
Fair value of stock units granted | $ 164 | 118 | 113 |
Fair value of stock units vested | $ 118 | $ 101 | $ 51 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2018shares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($)Optionshares | |
Stock options | ||||
Treasury stock, Shares (in shares) | shares | 1,350,886,521 | 1,340,947,648 | ||
Stock Options | ||||
Stock options | ||||
Total intrinsic value of options exercised | $ | $ 7 | |||
Cash received from employees as a result of employee stock option exercises | $ | 11 | |||
Tax benefit from exercise of stock based awards | $ | $ 2 | |||
Number of Shares under Option | ||||
Options granted (in shares) | shares | 0 | 0 | 0 | |
Options exercised (in shares) | shares | 0 | 0 | ||
Options forfeited or canceled (in shares) | shares | 0 | 0 | ||
Stock Options | Granted in 2016 | ||||
Stock options | ||||
Vesting period | 3 years | |||
Contractual term | 10 years | |||
Total compensation cost to be recognized for stock options | $ | $ 12 | |||
Number of options grant | Option | 1 | |||
Number of Shares under Option | ||||
Options granted (in shares) | shares | 1,500,000 | |||
Exercise Price Range $129 and $154 | Stock Options | ||||
Stock options | ||||
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 129 | |||
Exercise price, upper range limit (in dollars per share) | $ / shares | 154 | |||
Options outstanding, weighted average exercise price (in dollars per share) | $ / shares | $ 140 | |||
Options outstanding, total intrinsic value | $ | $ 1.9 | |||
Options outstanding, weighted average remaining contractual life | 6 years 1 month 6 days |
Stock-Based Compensation - Acqu
Stock-Based Compensation - Acquisitions (Details) $ / shares in Units, $ in Millions | Jul. 09, 2019USD ($)shares | Dec. 31, 2019$ / sharesshares | Dec. 31, 2018shares | Dec. 31, 2017shares |
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock awards outstanding (in shares) | 0 | 0 | 0 | |
Red Hat, Inc. | Stock Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock awards issued in connection with the acquisition (in shares) | 6,400,000 | |||
Stock awards issued in connection with the acquisition | $ | $ 845 | |||
Share conversion ratio | 1.35 | |||
Stock awards outstanding (in shares) | 4,600,000 | |||
Stock awards weighted-average grant price (in dollars per share) | $ / shares | $ 140 | |||
Various other acquisition transactions | Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Additional stock options outstanding in connection with acquisitions (in shares) | 100,000 | |||
Additional options outstanding, weighted-average exercise price (in dollars per share) | $ / shares | $ 43 |
Stock-Based Compensation - ESPP
Stock-Based Compensation - ESPP (Details) - Employee Stock Purchase Plan - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock-Based Compensation | |||
Discount on purchase of common stock (as a percent) | 5.00% | ||
Maximum percentage of payroll deductions on eligible compensation | 10.00% | ||
Maximum stock purchases by employees, value | $ 25,000 | ||
Maximum stock purchases by employees (in shares) | 1,000 | ||
Shares purchased by employees under the ESPP (in shares) | 1,000,000 | 1,000,000 | 1,000,000 |
Shares available for purchase (in shares) | 18,800,000 |
Retirement-Related Benefits - D
Retirement-Related Benefits - Defined Benefit Plans (Details) | 12 Months Ended |
Dec. 31, 2019 | |
U.S. | Pension Plans | Personal Pension Plan (PPP) | |
Defined Benefit Plans | |
Period used in final pay formula that determines benefits | 5 years |
Retirement-Related Benefits -_2
Retirement-Related Benefits - Defined Contribution Plans (Details) - U.S. | 12 Months Ended |
Dec. 31, 2019 | |
IBM 401(k) Plus Plan | |
Defined Contribution Plans | |
Employer's automatic contribution as a percentage of eligible compensation, lowest level defined | 1.00% |
Employer's automatic contribution as a percentage of eligible compensation, second level defined | 2.00% |
Employer's automatic contribution as a percentage of eligible compensation, highest level defined | 4.00% |
Service period after which employees receive automatic and matching contributions | 1 year |
Nonqualified Plans | IBM Excess 401(k) Plus Plan | |
Defined Contribution Plans | |
Service period after which employees receive automatic and matching contributions | 1 year |
Pension Plans | Qualified Plans | IBM 401(k) Plus Plan | |
Defined Contribution Plans | |
Maximum percentage, dollar-for-dollar match by entity to employee contribution of eligible compensation for employees | 6.00% |
Maximum percentage, dollar-for-dollar match by entity to employee contribution of eligible compensation for employees | 5.00% |
Retirement-Related Benefits - A
Retirement-Related Benefits - All Retirement Plans Cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | $ 1,040 | $ 1,024 | $ 1,046 |
Total | 2,072 | 3,066 | 2,857 |
Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 813 | 1,843 | 1,568 |
Nonpension Postretirement Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 219 | 198 | 242 |
U.S. | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | 613 | 612 | 643 |
Total | 624 | 1,319 | 1,076 |
U.S. | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | (142) | 559 | 253 |
U.S. | Nonpension Postretirement Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 154 | 147 | 180 |
Non-U.S. | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | 427 | 412 | 404 |
Total | 1,448 | 1,747 | 1,781 |
Non-U.S. | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 955 | 1,284 | 1,315 |
Non-U.S. | Nonpension Postretirement Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 65 | 51 | 62 |
Personal Pension Plan (PPP) and Non-U.S. Defined Benefit Pension Plans | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 803 | 1,827 | 1,552 |
Personal Pension Plan (PPP) | U.S. | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | (153) | 542 | 237 |
Retention Plan | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 11 | 17 | 16 |
Retention Plan | U.S. | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 11 | 17 | 16 |
IBM 401(k) Plus Plan and Non-U.S. Defined Contribution Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | 1,015 | 1,000 | 1,020 |
IBM 401(k) Plus Plan and Non-U.S. Defined Contribution Plans | Non-U.S. | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | 427 | 412 | 404 |
IBM 401(k) Plus Plan | U.S. | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | 588 | 588 | 616 |
IBM Excess 401(k) Plus Plan | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | 26 | 24 | 26 |
IBM Excess 401(k) Plus Plan | U.S. | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | $ 26 | $ 24 | $ 26 |
Retirement-Related Benefits - P
Retirement-Related Benefits - PBO, APBO, FV of Plan Assets, Funded Status (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Overfunded plans | |||
Funded status of plan | |||
Benefit Obligations | $ 66,861 | $ 63,524 | |
Fair Value of Plan Assets | 73,726 | 68,190 | |
Funded Status | 6,865 | 4,666 | |
Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 36,399 | 34,675 | |
Fair Value of Plan Assets | 18,445 | 16,877 | |
Funded Status | $ (17,955) | (17,798) | |
Pension Plans | |||
Funded status of plan | |||
Percentage of plan funded | 93.00% | ||
Pension Plans | Qualified Plans | |||
Funded status of plan | |||
Percentage of plan funded | 102.00% | ||
U.S. | Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | $ 5,618 | 5,579 | |
Fair Value of Plan Assets | 3 | 29 | |
Funded Status | (5,615) | (5,550) | |
U.S. | Pension Plans | |||
Funded status of plan | |||
Benefit Obligations | 50,232 | 47,812 | $ 52,444 |
Fair Value of Plan Assets | 51,784 | 48,213 | 52,694 |
Funded Status | 1,551 | 401 | |
U.S. | Pension Plans | Underfunded plans | Personal Pension Plan (PPP) | |||
Funded status of plan | |||
Benefit Obligations | 1,473 | 1,395 | |
Funded Status | $ (1,473) | (1,395) | |
Defined benefit plan, funding status | us-gaap:UnfundedPlanMember | ||
U.S. | Pension Plans | Underfunded plans | Retention Plan | |||
Funded status of plan | |||
Benefit Obligations | $ 288 | 273 | |
Funded Status | $ (288) | (273) | |
Defined benefit plan, funding status | us-gaap:UnfundedPlanMember | ||
U.S. | Pension Plans | Qualified Plans | Personal Pension Plan (PPP) | |||
Funded status of plan | |||
Fair Value of Plan Assets | $ 51,784 | 48,213 | |
Percentage of plan funded | 107.00% | ||
U.S. | Pension Plans | Qualified Plans | Overfunded plans | Personal Pension Plan (PPP) | |||
Funded status of plan | |||
Benefit Obligations | $ 48,471 | 46,145 | |
Fair Value of Plan Assets | 51,784 | 48,213 | |
Funded Status | 3,313 | 2,069 | |
U.S. | Nonpension Postretirement Plans | |||
Funded status of plan | |||
Benefit Obligations | 3,857 | 3,912 | 4,184 |
Fair Value of Plan Assets | 3 | 29 | 18 |
Funded Status | (3,854) | (3,882) | |
U.S. | Nonpension Postretirement Plans | Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 3,857 | 3,912 | |
Fair Value of Plan Assets | 3 | 29 | |
Funded Status | (3,854) | (3,882) | |
Non-U.S. | Overfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 18,390 | 17,379 | |
Fair Value of Plan Assets | 21,942 | 19,975 | |
Funded Status | 3,552 | 2,597 | |
Non-U.S. | Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 30,782 | 29,095 | |
Fair Value of Plan Assets | 18,442 | 16,848 | |
Funded Status | (12,340) | (12,248) | |
Non-U.S. | Pension Plans | |||
Funded status of plan | |||
Benefit Obligations | 48,324 | 45,770 | 49,111 |
Fair Value of Plan Assets | 40,319 | 36,758 | 40,798 |
Funded Status | (8,005) | (9,012) | |
Non-U.S. | Pension Plans | Qualified Plans | Overfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 18,371 | 17,379 | |
Fair Value of Plan Assets | 21,921 | 19,975 | |
Funded Status | 3,550 | 2,597 | |
Non-U.S. | Pension Plans | Qualified Plans | Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 23,222 | 22,139 | |
Fair Value of Plan Assets | 18,398 | 16,783 | |
Funded Status | (4,824) | (5,356) | |
Non-U.S. | Pension Plans | Nonqualified Plans | Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 6,731 | 6,252 | |
Funded Status | (6,731) | (6,252) | |
Non-U.S. | Nonpension Postretirement Plans | |||
Funded status of plan | |||
Benefit Obligations | 848 | 705 | 732 |
Fair Value of Plan Assets | 65 | 65 | $ 70 |
Funded Status | (783) | (640) | |
Non-U.S. | Nonpension Postretirement Plans | Overfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 19 | 0 | |
Fair Value of Plan Assets | 21 | 0 | |
Funded Status | 2 | 0 | |
Non-U.S. | Nonpension Postretirement Plans | Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 828 | 704 | |
Fair Value of Plan Assets | 44 | 65 | |
Funded Status | $ (785) | $ (640) |
Retirement-Related Benefits - N
Retirement-Related Benefits - Net Periodic Cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Pension Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Total net periodic pension / nonpension (income)/cost of defined benefit plans | $ 813 | $ 1,843 | $ 1,568 |
Nonpension Postretirement Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Total net periodic pension / nonpension (income)/cost of defined benefit plans | 219 | 198 | 242 |
U.S. | Pension Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Interest cost | $ 1,882 | $ 1,719 | $ 1,913 |
Interest cost - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Expected return on plan assets | $ (2,599) | $ (2,701) | $ (3,014) |
Expected return on plan assets - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Amortization of prior service costs/(credits) | $ 16 | $ 16 | $ 16 |
Amortization of prior service costs/(credits) - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Recognized actuarial losses | $ 559 | $ 1,525 | $ 1,337 |
Recognized actuarial losses - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Total net periodic pension / nonpension (income)/cost of defined benefit plans | $ (142) | $ 559 | $ 253 |
U.S. | Nonpension Postretirement Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Service cost | 10 | 13 | 14 |
Interest cost | $ 145 | $ 132 | $ 154 |
Interest cost - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Expected return on plan assets | $ 0 | $ 0 | |
Expected return on plan assets - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | |
Amortization of prior service costs/(credits) | $ (2) | $ (7) | $ (7) |
Amortization of prior service costs/(credits) - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Recognized actuarial losses | $ 1 | $ 10 | $ 20 |
Recognized actuarial losses - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Total net periodic pension / nonpension (income)/cost of defined benefit plans | $ 154 | $ 147 | $ 180 |
U.S. | Personal Pension Plan (PPP) | Pension Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Total net periodic pension / nonpension (income)/cost of defined benefit plans | (153) | $ 542 | 237 |
U.S. | Personal Pension Plan (PPP) | Pension Plans | Qualified Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Average remaining life expectancy of inactive plan participants | 18 years | ||
Reduction to amortization expense as a result of change | 900 | ||
Non-U.S. | Pension Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Service cost | 370 | $ 413 | 410 |
Interest cost | $ 847 | $ 830 | $ 837 |
Interest cost - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Expected return on plan assets | $ (1,588) | $ (1,342) | $ (1,325) |
Expected return on plan assets - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Amortization of transition assets | $ 0 | $ 0 | $ 0 |
Amortization of transition assets - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Amortization of prior service costs/(credits) | $ (23) | $ (83) | $ (97) |
Amortization of prior service costs/(credits) - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Recognized actuarial losses | $ 1,249 | $ 1,401 | $ 1,507 |
Recognized actuarial losses - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Curtailments and settlements | $ 41 | $ 11 | $ 19 |
Curtailments and settlements - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Multi-employer plans | $ 32 | $ 38 | $ 40 |
Other costs/(credits) | $ 28 | $ 16 | $ (76) |
Other costs - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Total net periodic pension / nonpension (income)/cost of defined benefit plans | $ 955 | $ 1,284 | $ 1,315 |
Non-U.S. | Pension Plans | Litigation in United Kingdom regarding defined benefit plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Other costs/(credits) | (91) | ||
Non-U.S. | Nonpension Postretirement Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Service cost | 5 | 5 | 6 |
Interest cost | $ 55 | $ 45 | $ 57 |
Interest cost - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Expected return on plan assets | $ (5) | $ (6) | $ (7) |
Expected return on plan assets - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Amortization of transition assets | $ 0 | $ 0 | |
Amortization of transition assets - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | |
Amortization of prior service costs/(credits) | $ 0 | $ 0 | $ 0 |
Amortization of prior service costs/(credits) - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Recognized actuarial losses | $ 10 | $ 6 | $ 7 |
Recognized actuarial losses - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Curtailments and settlements | $ 0 | $ 0 | $ 0 |
Curtailments and settlements - income statement location | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense | ibm:OtherIncomeAndExpense |
Total net periodic pension / nonpension (income)/cost of defined benefit plans | $ 65 | $ 51 | $ 62 |
Retirement-Related Benefits - C
Retirement-Related Benefits - Changes in Benefit Obligation and Plan Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Pension Plans | U.S. | |||
Changes in benefit obligation | |||
Benefit obligation, balance at beginning of period | $ 47,812 | $ 52,444 | |
Interest cost | 1,882 | 1,719 | $ 1,913 |
Actuarial losses/(gains) | 4,040 | (2,743) | |
Benefits paid from trust | (3,378) | (3,484) | |
Direct benefit payments | (124) | (124) | |
Benefit obligation, balance at end of period | 50,232 | 47,812 | 52,444 |
Change in plan assets | |||
Fair value of plan assets, balance at beginning of period | 48,213 | 52,694 | |
Actual return on plan assets | 6,949 | (997) | |
Benefits paid from trust | (3,378) | (3,484) | |
Fair value of plan assets, balance at end of period | 51,784 | 48,213 | 52,694 |
Funded status | 1,551 | 401 | |
Accumulated benefit obligation | 50,232 | 47,812 | |
Pension Plans | Non-U.S. | |||
Changes in benefit obligation | |||
Benefit obligation, balance at beginning of period | 45,770 | 49,111 | |
Service cost | 370 | 413 | 410 |
Interest cost | 847 | 830 | 837 |
Plan participants' contributions | 23 | 25 | |
Acquisitions/divestitures, net | (32) | (27) | |
Actuarial losses/(gains) | 3,467 | (240) | |
Benefits paid from trust | (1,902) | (1,976) | |
Direct benefit payments | (403) | (390) | |
Foreign exchange impact | 134 | (2,012) | |
Amendments/curtailments/settlements/other | 50 | 34 | |
Benefit obligation, balance at end of period | 48,324 | 45,770 | 49,111 |
Change in plan assets | |||
Fair value of plan assets, balance at beginning of period | 36,758 | 40,798 | |
Actual return on plan assets | 4,896 | (610) | |
Employer contributions | 243 | 325 | |
Acquisitions/divestitures, net | (25) | (22) | |
Plan participant's contributions | 23 | 25 | |
Benefits paid from trust | (1,902) | (1,976) | |
Foreign exchange impact | 333 | (1,754) | |
Amendments/curtailments/settlements/other | (7) | (28) | |
Fair value of plan assets, balance at end of period | 40,319 | 36,758 | 40,798 |
Funded status | (8,005) | (9,012) | |
Accumulated benefit obligation | 47,645 | 45,161 | |
Nonpension Postretirement Plans | U.S. | |||
Changes in benefit obligation | |||
Benefit obligation, balance at beginning of period | 3,912 | 4,184 | |
Service cost | 10 | 13 | 14 |
Interest cost | 145 | 132 | 154 |
Plan participants' contributions | 57 | 59 | |
Acquisitions/divestitures, net | 0 | ||
Actuarial losses/(gains) | 148 | (71) | |
Benefits paid from trust | (389) | (383) | |
Direct benefit payments | (6) | (22) | |
Amendments/curtailments/settlements/other | (21) | ||
Benefit obligation, balance at end of period | 3,857 | 3,912 | 4,184 |
Change in plan assets | |||
Fair value of plan assets, balance at beginning of period | 29 | 18 | |
Actual return on plan assets | 1 | 1 | |
Employer contributions | 304 | 335 | |
Acquisitions/divestitures, net | 0 | ||
Plan participant's contributions | 57 | 59 | |
Benefits paid from trust | (389) | (383) | |
Amendments/curtailments/settlements/other | 0 | ||
Fair value of plan assets, balance at end of period | 3 | 29 | 18 |
Funded status | (3,854) | (3,882) | |
Nonpension Postretirement Plans | Non-U.S. | |||
Changes in benefit obligation | |||
Benefit obligation, balance at beginning of period | 705 | 732 | |
Service cost | 5 | 5 | 6 |
Interest cost | 55 | 45 | 57 |
Acquisitions/divestitures, net | 0 | 0 | |
Actuarial losses/(gains) | 141 | 43 | |
Benefits paid from trust | (6) | (7) | |
Direct benefit payments | (27) | (31) | |
Foreign exchange impact | (1) | (86) | |
Amendments/curtailments/settlements/other | (23) | 3 | |
Benefit obligation, balance at end of period | 848 | 705 | 732 |
Change in plan assets | |||
Fair value of plan assets, balance at beginning of period | 65 | 70 | |
Actual return on plan assets | 7 | 12 | |
Employer contributions | 0 | ||
Acquisitions/divestitures, net | 0 | ||
Plan participant's contributions | 0 | ||
Benefits paid from trust | (6) | (7) | |
Foreign exchange impact | (1) | (10) | |
Amendments/curtailments/settlements/other | 0 | 0 | |
Fair value of plan assets, balance at end of period | 65 | 65 | $ 70 |
Funded status | $ (783) | $ (640) |
Retirement-Related Benefits -_3
Retirement-Related Benefits - Net Funded Status (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Net funded status recognized in the Consolidated Statement of Financial Position | ||
Prepaid pension assets | $ 6,865 | $ 4,666 |
Current liabilities - compensation and benefits | (3,406) | (3,310) |
Noncurrent liabilities - retirement and nonpension postretirement benefit obligations | (17,142) | (17,002) |
Pension Plans | U.S. | ||
Net funded status recognized in the Consolidated Statement of Financial Position | ||
Prepaid pension assets | 3,313 | 2,069 |
Current liabilities - compensation and benefits | (120) | (120) |
Noncurrent liabilities - retirement and nonpension postretirement benefit obligations | (1,641) | (1,548) |
Funded Status-net | 1,551 | 401 |
Pension Plans | Non-U.S. | ||
Net funded status recognized in the Consolidated Statement of Financial Position | ||
Prepaid pension assets | 3,550 | 2,597 |
Current liabilities - compensation and benefits | (313) | (302) |
Noncurrent liabilities - retirement and nonpension postretirement benefit obligations | (11,242) | (11,306) |
Funded Status-net | (8,005) | (9,012) |
Nonpension Postretirement Plans | U.S. | ||
Net funded status recognized in the Consolidated Statement of Financial Position | ||
Prepaid pension assets | 0 | 0 |
Current liabilities - compensation and benefits | (346) | (340) |
Noncurrent liabilities - retirement and nonpension postretirement benefit obligations | (3,507) | (3,542) |
Funded Status-net | (3,854) | (3,882) |
Nonpension Postretirement Plans | Non-U.S. | ||
Net funded status recognized in the Consolidated Statement of Financial Position | ||
Prepaid pension assets | 2 | 0 |
Current liabilities - compensation and benefits | (33) | (36) |
Noncurrent liabilities - retirement and nonpension postretirement benefit obligations | (752) | (605) |
Funded Status-net | $ (783) | $ (640) |
Retirement-Related Benefits - O
Retirement-Related Benefits - OCI and AOCI (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Changes in AOCI for retirement-related benefits | |||
Current period loss/(gain) | $ 120 | $ 2,517 | $ (682) |
Curtailments and settlements | (41) | (11) | (19) |
Amortization of net loss included in net periodic (income)/cost | (1,843) | (2,966) | (2,889) |
Current period prior service costs/(credits) | 73 | 182 | 0 |
Amortization of prior service (costs)/credits included in net periodic (income)/cost | 9 | 73 | 88 |
Pension Plans | U.S. | |||
Changes in AOCI for retirement-related benefits | |||
Net loss at beginning of period | 17,476 | 18,045 | |
Current period loss/(gain) | (309) | 956 | |
Amortization of net loss included in net periodic (income)/cost | (559) | (1,525) | |
Net loss at end of period | 16,608 | 17,476 | 18,045 |
Prior service costs/(credits) at beginning of period | 57 | 74 | |
Amortization of prior service (costs)/credits included in net periodic (income)/cost | (16) | (16) | |
Prior service costs/(credits) at end of period | 41 | 57 | 74 |
Total loss recognized in accumulated other comprehensive income/(loss) | 16,648 | 17,533 | |
Pension Plans | Non-U.S. | |||
Changes in AOCI for retirement-related benefits | |||
Net loss at beginning of period | 18,452 | 18,275 | |
Current period loss/(gain) | 109 | 1,590 | |
Curtailments and settlements | (41) | (11) | |
Amortization of net loss included in net periodic (income)/cost | (1,249) | (1,401) | |
Net loss at end of period | 17,272 | 18,452 | 18,275 |
Prior service costs/(credits) at beginning of period | 172 | (90) | |
Current period prior service costs/(credits) | 102 | 181 | |
Curtailments, settlements and other | 0 | ||
Amortization of prior service (costs)/credits included in net periodic (income)/cost | 23 | 83 | |
Prior service costs/(credits) at end of period | 297 | 172 | (90) |
Transition (assets)/liabilities at beginning of period | 0 | 0 | |
Amortization of transition assets/(liabilities) included in net periodic (income)/cost | 0 | ||
Transition (assets)/liabilities at end of period | 0 | 0 | 0 |
Total loss recognized in accumulated other comprehensive income/(loss) | 17,569 | 18,624 | |
Nonpension Postretirement Plans | U.S. | |||
Changes in AOCI for retirement-related benefits | |||
Net loss at beginning of period | 405 | 486 | |
Current period loss/(gain) | 147 | (72) | |
Amortization of net loss included in net periodic (income)/cost | (1) | (10) | |
Net loss at end of period | 551 | 405 | 486 |
Prior service costs/(credits) at beginning of period | 52 | 45 | |
Current period prior service costs/(credits) | (21) | ||
Amortization of prior service (costs)/credits included in net periodic (income)/cost | 2 | 7 | |
Prior service costs/(credits) at end of period | 34 | 52 | 45 |
Total loss recognized in accumulated other comprehensive income/(loss) | 585 | 457 | |
Nonpension Postretirement Plans | Non-U.S. | |||
Changes in AOCI for retirement-related benefits | |||
Net loss at beginning of period | 172 | 145 | |
Current period loss/(gain) | 125 | 33 | |
Curtailments and settlements | 0 | 0 | |
Amortization of net loss included in net periodic (income)/cost | (10) | (6) | |
Net loss at end of period | 287 | 172 | 145 |
Prior service costs/(credits) at beginning of period | 4 | 3 | |
Current period prior service costs/(credits) | (8) | 1 | |
Curtailments, settlements and other | 0 | ||
Amortization of prior service (costs)/credits included in net periodic (income)/cost | 0 | 0 | |
Prior service costs/(credits) at end of period | (4) | 4 | 3 |
Transition (assets)/liabilities at beginning of period | 0 | 0 | |
Amortization of transition assets/(liabilities) included in net periodic (income)/cost | 0 | ||
Transition (assets)/liabilities at end of period | 0 | 0 | $ 0 |
Total loss recognized in accumulated other comprehensive income/(loss) | $ 283 | 176 | |
Lloyds Pension Group Trustees v Lloyds Bank | Pension Plans | UK | |||
Changes in AOCI for retirement-related benefits | |||
Current period prior service costs/(credits) | $ 125 | ||
Increase in PBO recorded as prior service cost, as percentage of total PBO | 1.00% |
Retirement-Related Benefits -_4
Retirement-Related Benefits - Assumptions (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Discount Rate | ||||
Discount rate (U.S. DB pension plans) | $ 307 | $ (124) | $ (64) | |
Benefit obligations (all plans) | 8,932 | (4,032) | ||
Expected Long-Term Returns on Plan Assets | ||||
Expected long-term return on plan assets (U.S. DB pension plans) | (256) | (656) | ||
Interest Crediting Rate | ||||
Interest crediting rate (PPP) | $ (59) | $ (25) | $ (14) | |
Pension Plans | ||||
Expected Long-Term Returns on Plan Assets | ||||
Period over which changes in fair value of plan assets recognized | 5 years | |||
Pension Plans | U.S. | ||||
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ||||
Discount rate | 4.10% | 3.40% | 3.80% | |
Expected long-term returns on plan assets | 5.25% | 5.25% | 5.75% | |
Interest crediting rate | 3.60% | 2.30% | 1.60% | |
Weighted-average assumptions used to measure benefit obligations at December 31 | ||||
Discount rate | 3.10% | 4.10% | 3.40% | |
Interest crediting rate | 2.70% | 3.60% | 2.30% | |
Discount Rate | ||||
PBO, Discount rate impact | $ 4,385 | $ (3,239) | ||
Pension Plans | U.S. | Expected | ||||
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ||||
Expected long-term returns on plan assets | 4.50% | |||
Pension Plans | U.S. | Personal Pension Plan (PPP) | ||||
Interest Crediting Rate | ||||
Period of interest rate added to average interest from August to October | 1 year | |||
Percentage interest rate added to average interest from August to October of the one-year U.S. Treasury Constant Maturity yield for computation of interest crediting rate (as a percent) | 1.00% | |||
Pension Plans | Non-U.S. | ||||
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ||||
Discount rate | 1.85% | 1.76% | 1.80% | |
Expected long-term returns on plan assets | 4.38% | 3.62% | 3.77% | |
Rate of compensation increase | 2.18% | 2.41% | 2.45% | |
Interest crediting rate | 0.30% | 0.30% | 0.59% | |
Weighted-average assumptions used to measure benefit obligations at December 31 | ||||
Discount rate | 1.19% | 1.85% | 1.76% | |
Rate of compensation increase | 2.60% | 2.18% | 2.41% | |
Interest crediting rate | 0.28% | 0.30% | 0.30% | |
Pension Plans | Non-U.S. | Expected | ||||
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ||||
Expected long-term returns on plan assets | 3.40% | |||
Nonpension Postretirement Plans | U.S. | ||||
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ||||
Discount rate | 3.90% | 3.30% | 3.60% | |
Interest crediting rate | 3.60% | 2.30% | 1.60% | |
Weighted-average assumptions used to measure benefit obligations at December 31 | ||||
Discount rate | 2.80% | 3.90% | 3.30% | |
Interest crediting rate | 2.70% | 3.60% | 2.30% | |
Discount Rate | ||||
APBO, Discount rate impact | $ 252 | $ (153) | ||
Nonpension Postretirement Plans | Non-U.S. | ||||
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ||||
Discount rate | 7.48% | 7.28% | 8.26% | |
Expected long-term returns on plan assets | 8.64% | 8.91% | 10.47% | |
Weighted-average assumptions used to measure benefit obligations at December 31 | ||||
Discount rate | 4.98% | 7.48% | 7.28% | |
Retiree Health Benefits | ||||
Healthcare Cost Trend Rate | ||||
Health care cost trend rate assumed for next fiscal year | 6.50% | |||
Ultimate healthcare cost trend rate | 5.00% | |||
Period for ultimate trend rate | 6 years | |||
U.S. DB and nonpension plans | U.S. | ||||
Rate of Compensation Increases and Mortality Rate | ||||
PBO, Mortality assumptions impact | $ (186) | $ 27 |
Retirement-Related Benefits - I
Retirement-Related Benefits - Investment Strategy (Details) - Pension Plans - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
U.S. | |||
Investment Policies And Strategies | |||
Fair Value of plan assets | $ 51,784 | $ 48,213 | $ 52,694 |
U.S. | Personal Pension Plan (PPP) | Qualified Plans | |||
Investment Policies And Strategies | |||
Fair Value of plan assets | $ 51,784 | 48,213 | |
U.S. | Personal Pension Plan (PPP) | Qualified Plans | Equity securities | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 12.00% | ||
U.S. | Personal Pension Plan (PPP) | Qualified Plans | Fixed-income securities | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 80.00% | ||
U.S. | Personal Pension Plan (PPP) | Qualified Plans | Real estate | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 4.00% | ||
U.S. | Personal Pension Plan (PPP) | Qualified Plans | Other investments | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 4.00% | ||
U.S. | Personal Pension Plan (PPP) | Qualified Plans | Private equities and private real estate investments | |||
Investment Policies And Strategies | |||
Fair Value of plan assets | $ 4,043 | ||
Commitments for future investments in private markets | 1,347 | ||
Non-U.S. | |||
Investment Policies And Strategies | |||
Fair Value of plan assets | $ 40,319 | $ 36,758 | $ 40,798 |
Non-U.S. | Maximum | |||
Investment Policies And Strategies | |||
Percentage of board members, elected by employees and retirees for managing investments (as a percent) | 50.00% | ||
Non-U.S. | Equity securities | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 20.00% | ||
Non-U.S. | Fixed-income securities | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 71.00% | ||
Non-U.S. | Real estate | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 3.00% | ||
Non-U.S. | Other investments | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 6.00% |
Retirement-Related Benefits -_5
Retirement-Related Benefits - Plan Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Pension Plans | U.S. | |||
Retirement-Related Benefits | |||
Fair value of plan assets | $ 51,784 | $ 48,213 | $ 52,694 |
Pension Plans | U.S. | Corporate bonds | |||
Retirement-Related Benefits | |||
Value of IBM securities included in plan assets | $ 37 | ||
Percentage of IBM securities included in plan assets | 0.07% | ||
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | |||
Retirement-Related Benefits | |||
Subtotal | $ 42,271 | 39,608 | |
Investments measured at net asset value using the NAV expedient | 9,519 | 8,835 | |
Other | (6) | (230) | |
Fair value of plan assets | 51,784 | 48,213 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Equity securities | |||
Retirement-Related Benefits | |||
Subtotal | 1,943 | 1,538 | |
Value of IBM securities included in plan assets | $ 2 | $ 2 | |
Percentage of IBM securities included in plan assets | 0.004% | 0.004% | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Equity mutual funds | |||
Retirement-Related Benefits | |||
Subtotal | $ 85 | $ 65 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Government and related | |||
Retirement-Related Benefits | |||
Subtotal | 21,134 | 19,661 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Corporate bonds | |||
Retirement-Related Benefits | |||
Subtotal | 17,185 | 16,208 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Mortgage and asset-backed securities | |||
Retirement-Related Benefits | |||
Subtotal | 630 | 640 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Fixed income mutual funds | |||
Retirement-Related Benefits | |||
Subtotal | 386 | 421 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Cash and short-term investments | |||
Retirement-Related Benefits | |||
Subtotal | 903 | 1,075 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Derivatives | |||
Retirement-Related Benefits | |||
Subtotal | 6 | 2 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 1 | |||
Retirement-Related Benefits | |||
Subtotal | 2,469 | 2,081 | |
Fair value of plan assets | 2,469 | 2,081 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 1 | Equity securities | |||
Retirement-Related Benefits | |||
Subtotal | 1,943 | 1,538 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 1 | Equity mutual funds | |||
Retirement-Related Benefits | |||
Subtotal | 85 | 65 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 1 | Fixed income mutual funds | |||
Retirement-Related Benefits | |||
Subtotal | 386 | 421 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 1 | Cash and short-term investments | |||
Retirement-Related Benefits | |||
Subtotal | 54 | 55 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 1 | Derivatives | |||
Retirement-Related Benefits | |||
Subtotal | 0 | 3 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 2 | |||
Retirement-Related Benefits | |||
Subtotal | 39,284 | 37,164 | |
Fair value of plan assets | 39,284 | 37,164 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 2 | Government and related | |||
Retirement-Related Benefits | |||
Subtotal | 21,134 | 19,661 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 2 | Corporate bonds | |||
Retirement-Related Benefits | |||
Subtotal | 16,666 | 15,849 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 2 | Mortgage and asset-backed securities | |||
Retirement-Related Benefits | |||
Subtotal | 630 | 635 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 2 | Cash and short-term investments | |||
Retirement-Related Benefits | |||
Subtotal | 848 | 1,020 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 2 | Derivatives | |||
Retirement-Related Benefits | |||
Subtotal | 6 | (1) | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 3 | |||
Retirement-Related Benefits | |||
Subtotal | 518 | 363 | |
Fair value of plan assets | 518 | 363 | 376 |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 3 | Corporate bonds | |||
Retirement-Related Benefits | |||
Subtotal | 518 | 359 | |
Fair value of plan assets | 518 | 359 | 372 |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 3 | Mortgage and asset-backed securities | |||
Retirement-Related Benefits | |||
Subtotal | 4 | ||
Fair value of plan assets | 4 | 4 | |
Pension Plans | Non-U.S. | |||
Retirement-Related Benefits | |||
Subtotal | 18,693 | 16,266 | |
Investments measured at net asset value using the NAV expedient | 21,653 | 20,525 | |
Other | (26) | (32) | |
Fair value of plan assets | 40,319 | 36,758 | 40,798 |
Pension Plans | Non-U.S. | Equity securities | |||
Retirement-Related Benefits | |||
Subtotal | 2,209 | 2,333 | |
Value of IBM securities included in plan assets | $ 10 | $ 10 | |
Percentage of IBM securities included in plan assets | 0.02% | 0.03% | |
Pension Plans | Non-U.S. | Equity mutual funds | |||
Retirement-Related Benefits | |||
Subtotal | $ 23 | ||
Pension Plans | Non-U.S. | Government and related | |||
Retirement-Related Benefits | |||
Subtotal | $ 10,290 | 8,973 | |
Pension Plans | Non-U.S. | Corporate bonds | |||
Retirement-Related Benefits | |||
Subtotal | 2,124 | 1,865 | |
Value of IBM securities included in plan assets | $ 8 | $ 3 | |
Percentage of IBM securities included in plan assets | 0.02% | 0.007% | |
Pension Plans | Non-U.S. | Mortgage and asset-backed securities | |||
Retirement-Related Benefits | |||
Subtotal | $ 19 | $ 6 | |
Pension Plans | Non-U.S. | Fixed income mutual funds | |||
Retirement-Related Benefits | |||
Subtotal | 11 | ||
Pension Plans | Non-U.S. | Insurance contracts | |||
Retirement-Related Benefits | |||
Subtotal | 1,862 | 1,308 | |
Pension Plans | Non-U.S. | Cash and short-term investments | |||
Retirement-Related Benefits | |||
Subtotal | 849 | 753 | |
Pension Plans | Non-U.S. | Real estate | |||
Retirement-Related Benefits | |||
Subtotal | 328 | 339 | |
Pension Plans | Non-U.S. | Derivatives | |||
Retirement-Related Benefits | |||
Subtotal | 987 | 630 | |
Pension Plans | Non-U.S. | Other mutual funds | |||
Retirement-Related Benefits | |||
Subtotal | 25 | 24 | |
Pension Plans | Non-U.S. | Level 1 | |||
Retirement-Related Benefits | |||
Subtotal | 2,456 | 2,753 | |
Fair value of plan assets | 2,456 | 2,753 | |
Pension Plans | Non-U.S. | Level 1 | Equity securities | |||
Retirement-Related Benefits | |||
Subtotal | 2,209 | 2,333 | |
Pension Plans | Non-U.S. | Level 1 | Equity mutual funds | |||
Retirement-Related Benefits | |||
Subtotal | 18 | ||
Pension Plans | Non-U.S. | Level 1 | Government and related | |||
Retirement-Related Benefits | |||
Subtotal | 20 | ||
Pension Plans | Non-U.S. | Level 1 | Fixed income mutual funds | |||
Retirement-Related Benefits | |||
Subtotal | 11 | ||
Pension Plans | Non-U.S. | Level 1 | Cash and short-term investments | |||
Retirement-Related Benefits | |||
Subtotal | 204 | 322 | |
Pension Plans | Non-U.S. | Level 1 | Derivatives | |||
Retirement-Related Benefits | |||
Subtotal | 18 | 24 | |
Pension Plans | Non-U.S. | Level 1 | Other mutual funds | |||
Retirement-Related Benefits | |||
Subtotal | 25 | 24 | |
Pension Plans | Non-U.S. | Level 2 | |||
Retirement-Related Benefits | |||
Subtotal | 15,907 | 13,172 | |
Fair value of plan assets | 15,907 | 13,172 | |
Pension Plans | Non-U.S. | Level 2 | Equity securities | |||
Retirement-Related Benefits | |||
Subtotal | 0 | ||
Pension Plans | Non-U.S. | Level 2 | Equity mutual funds | |||
Retirement-Related Benefits | |||
Subtotal | 5 | ||
Pension Plans | Non-U.S. | Level 2 | Government and related | |||
Retirement-Related Benefits | |||
Subtotal | 10,288 | 8,951 | |
Pension Plans | Non-U.S. | Level 2 | Corporate bonds | |||
Retirement-Related Benefits | |||
Subtotal | 2,124 | 1,865 | |
Pension Plans | Non-U.S. | Level 2 | Mortgage and asset-backed securities | |||
Retirement-Related Benefits | |||
Subtotal | 19 | 6 | |
Pension Plans | Non-U.S. | Level 2 | Insurance contracts | |||
Retirement-Related Benefits | |||
Subtotal | 1,862 | 1,308 | |
Pension Plans | Non-U.S. | Level 2 | Cash and short-term investments | |||
Retirement-Related Benefits | |||
Subtotal | 644 | 431 | |
Pension Plans | Non-U.S. | Level 2 | Derivatives | |||
Retirement-Related Benefits | |||
Subtotal | 969 | 606 | |
Pension Plans | Non-U.S. | Level 2 | Other mutual funds | |||
Retirement-Related Benefits | |||
Subtotal | 0 | ||
Pension Plans | Non-U.S. | Level 3 | |||
Retirement-Related Benefits | |||
Subtotal | 330 | 341 | |
Fair value of plan assets | 330 | 341 | 365 |
Pension Plans | Non-U.S. | Level 3 | Equity securities | |||
Retirement-Related Benefits | |||
Subtotal | 0 | ||
Pension Plans | Non-U.S. | Level 3 | Government and related | |||
Retirement-Related Benefits | |||
Subtotal | 2 | 2 | |
Fair value of plan assets | 2 | 2 | 8 |
Pension Plans | Non-U.S. | Level 3 | Corporate bonds | |||
Retirement-Related Benefits | |||
Subtotal | 0 | ||
Pension Plans | Non-U.S. | Level 3 | Real estate | |||
Retirement-Related Benefits | |||
Subtotal | 328 | 339 | |
Fair value of plan assets | 328 | 339 | 356 |
Nonpension Postretirement Plans | U.S. | |||
Retirement-Related Benefits | |||
Fair value of plan assets | 3 | 29 | 18 |
Nonpension Postretirement Plans | Non-U.S. | |||
Retirement-Related Benefits | |||
Fair value of plan assets | $ 65 | $ 65 | $ 70 |
Retirement-Related Benefits - L
Retirement-Related Benefits - Level 3 Reconciliation (Details) - Pension Plans - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
U.S. | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | $ 48,213 | $ 52,694 |
Fair value of plan assets, balance at end of period | 51,784 | 48,213 |
U.S. | Personal Pension Plan (PPP) | Qualified Plans | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 48,213 | |
Fair value of plan assets, balance at end of period | 51,784 | 48,213 |
Non-U.S. | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 36,758 | 40,798 |
Foreign exchange impact | 333 | (1,754) |
Fair value of plan assets, balance at end of period | 40,319 | 36,758 |
Level 3 | U.S. | Personal Pension Plan (PPP) | Qualified Plans | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 363 | 376 |
Return on assets held at end of year | 40 | (23) |
Return on assets sold during the year | 1 | 0 |
Purchases, sales and settlements, net | 105 | 10 |
Transfers, net | 9 | 0 |
Fair value of plan assets, balance at end of period | 518 | 363 |
Level 3 | U.S. | Personal Pension Plan (PPP) | Qualified Plans | Corporate bonds | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 359 | 372 |
Return on assets held at end of year | 40 | (23) |
Return on assets sold during the year | 1 | 0 |
Purchases, sales and settlements, net | 105 | 10 |
Transfers, net | 13 | |
Fair value of plan assets, balance at end of period | 518 | 359 |
Level 3 | U.S. | Personal Pension Plan (PPP) | Qualified Plans | Mortgage and asset-backed securities | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 4 | 4 |
Return on assets held at end of year | 0 | |
Return on assets sold during the year | 0 | 0 |
Purchases, sales and settlements, net | 0 | 0 |
Transfers, net | (4) | 0 |
Fair value of plan assets, balance at end of period | 4 | |
Level 3 | Non-U.S. | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 341 | 365 |
Return on assets held at end of year | (11) | 8 |
Return on assets sold during the year | 4 | (2) |
Purchases, sales and settlements, net | (18) | (6) |
Transfers, net | (2) | |
Foreign exchange impact | 13 | (21) |
Fair value of plan assets, balance at end of period | 330 | 341 |
Level 3 | Non-U.S. | Government and related | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 2 | 8 |
Return on assets held at end of year | 0 | 0 |
Return on assets sold during the year | 0 | (1) |
Purchases, sales and settlements, net | (1) | (3) |
Transfers, net | (2) | |
Foreign exchange impact | 0 | 0 |
Fair value of plan assets, balance at end of period | 2 | 2 |
Level 3 | Non-U.S. | Real estate | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 339 | 356 |
Return on assets held at end of year | (11) | 8 |
Return on assets sold during the year | 4 | (2) |
Purchases, sales and settlements, net | (17) | (3) |
Foreign exchange impact | 13 | (21) |
Fair value of plan assets, balance at end of period | $ 328 | $ 339 |
Retirement-Related Benefits -_6
Retirement-Related Benefits - Contributions and Direct Benefit Payments (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Total | $ 2,177 | $ 2,288 |
Contributions by employer - Noncash | 635 | 598 |
Multi-employer Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total | 32 | 38 |
Non-U.S. DB plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total | 243 | 325 |
Nonpension Postretirement Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total | 304 | 335 |
DC plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total | 1,040 | 1,024 |
Direct Benefit Payments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total | $ 559 | $ 567 |
Retirement-Related Benefits -_7
Retirement-Related Benefits - Contributions, Defined Benefit Pension Plans (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Pension Contributions | ||
Contributions by employer - Noncash | $ 635 | $ 598 |
Pension Plans, Including Multi-employer Plans | Non-U.S. | ||
Pension Contributions | ||
Estimated cash contributions to the defined benefit plans in next fiscal year | $ 300 |
Retirement-Related Benefits - E
Retirement-Related Benefits - Expected Benefit Payments (Details) $ in Millions | Dec. 31, 2019USD ($) |
Pension Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2020 | $ 5,913 |
Expected benefit payments, 2021 | 5,912 |
Expected benefit payments, 2022 | 5,932 |
Expected benefit payments, 2023 | 5,909 |
Expected benefit payments, 2024 | 5,887 |
Expected benefit payments, 2025-2029 | 28,115 |
Nonpension Postretirement Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2020 | 395 |
Expected benefit payments, 2021 | 424 |
Expected benefit payments, 2022 | 432 |
Expected benefit payments, 2023 | 425 |
Expected benefit payments, 2024 | 407 |
Expected benefit payments, 2025-2029 | 1,712 |
U.S. | Pension Plans | Qualified Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2020 | 3,533 |
Expected benefit payments, 2021 | 3,523 |
Expected benefit payments, 2022 | 3,494 |
Expected benefit payments, 2023 | 3,441 |
Expected benefit payments, 2024 | 3,394 |
Expected benefit payments, 2025-2029 | 15,680 |
U.S. | Pension Plans | Nonqualified Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2020 | 122 |
Expected benefit payments, 2021 | 122 |
Expected benefit payments, 2022 | 122 |
Expected benefit payments, 2023 | 120 |
Expected benefit payments, 2024 | 119 |
Expected benefit payments, 2025-2029 | 557 |
U.S. | Nonpension Postretirement Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2020 | 354 |
Expected benefit payments, 2021 | 381 |
Expected benefit payments, 2022 | 388 |
Expected benefit payments, 2023 | 379 |
Expected benefit payments, 2024 | 359 |
Expected benefit payments, 2025-2029 | 1,449 |
Non-U.S. | Pension Plans | Qualified Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2020 | 1,937 |
Expected benefit payments, 2021 | 1,951 |
Expected benefit payments, 2022 | 1,990 |
Expected benefit payments, 2023 | 2,012 |
Expected benefit payments, 2024 | 2,030 |
Expected benefit payments, 2025-2029 | 10,015 |
Non-U.S. | Pension Plans | Nonqualified Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2020 | 320 |
Expected benefit payments, 2021 | 317 |
Expected benefit payments, 2022 | 327 |
Expected benefit payments, 2023 | 336 |
Expected benefit payments, 2024 | 345 |
Expected benefit payments, 2025-2029 | 1,864 |
Non-U.S. | Nonpension Postretirement Plans | Qualified Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2020 | 19 |
Expected benefit payments, 2021 | 20 |
Expected benefit payments, 2022 | 21 |
Expected benefit payments, 2023 | 23 |
Expected benefit payments, 2024 | 24 |
Expected benefit payments, 2025-2029 | 146 |
Non-U.S. | Nonpension Postretirement Plans | Nonqualified Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2020 | 23 |
Expected benefit payments, 2021 | 23 |
Expected benefit payments, 2022 | 23 |
Expected benefit payments, 2023 | 23 |
Expected benefit payments, 2024 | 24 |
Expected benefit payments, 2025-2029 | $ 116 |
Retirement-Related Benefits -_8
Retirement-Related Benefits - ABO and APBO in Excess of Plan Assets (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Pension Plans | ||
Defined Benefit Plan, Pension and Non-Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets | ||
Plans with PBO in excess of plan assets, Benefit Obligation | $ 31,714 | $ 30,059 |
Plans with PBO in excess of plan assets, Plan Assets | 18,398 | 16,783 |
Plans with ABO in excess of plan assets, Benefit Obligation | 30,882 | 29,312 |
Plans with ABO in excess of plan assets, Plan Assets | 18,127 | 16,522 |
Plans with assets in excess of PBO, Benefit Obligation | 66,842 | 63,524 |
Plans with assets in excess of PBO, Plan Assets | 73,705 | 68,190 |
Nonpension Postretirement Plans | ||
Defined Benefit Plan, Pension and Non-Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets | ||
Plans with APBO in excess of plan assets, Benefit Obligation | 4,685 | 4,616 |
Plans with APBO in excess of plan assets, Plan Assets | 47 | $ 94 |
Plans with plan assets in excess of APBO, Benefit Obligation | 19 | |
Plans with plan assets in excess of APBO, Plan Assets | $ 21 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event - USD ($) $ / shares in Units, $ in Millions | Feb. 11, 2020 | Feb. 03, 2020 | Jan. 28, 2020 |
Subsequent Events | |||
Dividend declared, date | Jan. 28, 2020 | ||
Dividend declared (in dollars per share) | $ 1.62 | ||
Dividend payable, date | Mar. 10, 2020 | ||
Shareholders of record, date | Feb. 10, 2020 | ||
Fixed rate debt due in 2021 | |||
Subsequent Events | |||
Outstanding debt | $ 2,900 | ||
Aggregate principal redeemed (as a percent) | 100.00% | ||
Fixed rate debt due in 2021 | Expected | |||
Subsequent Events | |||
Loss upon redemption on notes | $ (41) | ||
8 to 20 years fixed-rate notes | Euros | |||
Subsequent Events | |||
Notes issued | $ 4,100 | ||
8 to 20 years fixed-rate notes | Euros | Minimum | |||
Subsequent Events | |||
Term of debt instrument | 8 years | ||
Coupon rate (as a percent) | 0.30% | ||
8 to 20 years fixed-rate notes | Euros | Maximum | |||
Subsequent Events | |||
Term of debt instrument | 20 years | ||
Coupon rate (as a percent) | 1.20% |
SCHEDULE II VALUATION AND QUA_2
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Allowance for Credit Losses - Current | |||
Movement in Valuation and Qualifying Accounts and Reserves | |||
Balance at Beginning of Period | $ 591 | $ 594 | $ 675 |
Additions / (Deductions), charged to expense and cost accounts | 99 | 69 | 65 |
Write-offs | (174) | (62) | (157) |
Other | 5 | (11) | 11 |
Balance at End of Period | 521 | 591 | 594 |
Allowance for Credit Losses - Noncurrent | |||
Movement in Valuation and Qualifying Accounts and Reserves | |||
Balance at Beginning of Period | 48 | 74 | 101 |
Additions / (Deductions), charged to expense and cost accounts | (10) | (3) | (10) |
Write-offs | (4) | (2) | (42) |
Other | (1) | (20) | 26 |
Balance at End of Period | 33 | 48 | 74 |
Allowance For Inventory Losses | |||
Movement in Valuation and Qualifying Accounts and Reserves | |||
Balance at Beginning of Period | 530 | 574 | 525 |
Additions / (Deductions), charged to expense and cost accounts | 115 | 136 | 164 |
Write-offs | (166) | (162) | (139) |
Other | 11 | (19) | 23 |
Balance at End of Period | 490 | 530 | 574 |
Revenue Based Provisions | |||
Movement in Valuation and Qualifying Accounts and Reserves | |||
Balance at Beginning of Period | 500 | 451 | 481 |
Additions / (Deductions), charged to revenue accounts | 823 | 897 | 1,006 |
Write-offs | (830) | (828) | (1,056) |
Other | 5 | (20) | 20 |
Balance at End of Period | $ 498 | $ 500 | $ 451 |