Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended |
Mar. 31, 2014 | |
Document and Entity Information | ' |
Entity Registrant Name | 'INTERNATIONAL BUSINESS MACHINES CORP |
Entity Central Index Key | '0000051143 |
Document Type | '10-Q |
Document Period End Date | 31-Mar-14 |
Amendment Flag | 'false |
Current Fiscal Year End Date | '--12-31 |
Entity Current Reporting Status | 'Yes |
Entity Filer Category | 'Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 1,012,183,432 |
Document Fiscal Year Focus | '2014 |
Document Fiscal Period Focus | 'Q1 |
CONSOLIDATED_STATEMENT_OF_EARN
CONSOLIDATED STATEMENT OF EARNINGS (USD $) | 3 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenue: | ' | ' |
Services | $13,982 | $14,274 |
Sales | 7,984 | 8,629 |
Financing | 517 | 505 |
Total revenue | 22,484 | 23,408 |
Cost: | ' | ' |
Services | 9,101 | 9,526 |
Sales | 2,561 | 2,931 |
Financing | 278 | 273 |
Total cost | 11,941 | 12,730 |
Gross profit | 10,543 | 10,678 |
Expense and other (income): | ' | ' |
Selling, general and administrative | 6,289 | 5,577 |
Research, development and engineering | 1,501 | 1,644 |
Intellectual property and custom development income | -207 | -183 |
Other (income) and expense | -126 | -60 |
Interest expense | 105 | 94 |
Total expense and other (income) | 7,563 | 7,072 |
Income before income taxes | 2,980 | 3,606 |
Provision for income taxes | 596 | 574 |
Net income | $2,384 | $3,032 |
Earnings per share of common stock: | ' | ' |
Assuming dilution (in dollars per share) | $2.29 | $2.70 |
Basic (in dollars per share) | $2.30 | $2.72 |
Weighted-average number of common shares outstanding: (millions) | ' | ' |
Assuming dilution (in shares) | 1,041.80 | 1,124 |
Basic (in shares) | 1,035.20 | 1,113.70 |
Cash dividend per common share (in dollars per share) | $0.95 | $0.85 |
CONSOLIDATED_STATEMENT_OF_COMP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ' | ' |
Net income | $2,384 | $3,032 |
Other comprehensive income/(loss), before tax | ' | ' |
Foreign currency translation adjustments | -61 | -405 |
Net changes related to available-for-sale securities: | ' | ' |
Unrealized gains/(losses) arising during the period | 0 | -3 |
Reclassification of (gains)/losses to net income | 4 | 1 |
Subsequent changes in previously impaired securities arising during the period | ' | 1 |
Total net changes related to available-for-sale securities | 4 | -1 |
Unrealized gains/(losses) on cash flow hedges: | ' | ' |
Unrealized gains/(losses) arising during the period | 88 | 360 |
Reclassification of (gains)/losses to net income | -1 | -56 |
Total unrealized gains/(losses) on cash flow hedges | 87 | 305 |
Retirement-related benefit plans: | ' | ' |
Prior service costs/(credits) | 1 | 33 |
Net (losses)/gains arising during the period | 32 | -15 |
Curtailments and settlements | 4 | ' |
Amortization of prior service (credits)/costs | -29 | -30 |
Amortization of net (gains)/losses | 649 | 886 |
Total retirement-related benefit plans | 656 | 875 |
Other comprehensive income/(loss), before tax | 687 | 773 |
Income tax (expense)/benefit related to items of other comprehensive income | -241 | -480 |
Other comprehensive income/(loss) | 446 | 293 |
Total comprehensive income/(loss) | $2,830 | $3,325 |
CONSOLIDATED_STATEMENT_OF_FINA
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $9,409 | $10,716 |
Marketable securities | 295 | 350 |
Notes and accounts receivable - trade (net of allowances of $305 in 2014 and $291 in 2013) | 9,682 | 10,465 |
Short-term financing receivables (net of allowances of $317 in 2014 and $308 in 2013) | 18,329 | 19,787 |
Other accounts receivable (net of allowances of $36 in 2014 and $36 in 2013) | 1,650 | 1,584 |
Inventories, at lower of average cost or market: | ' | ' |
Finished goods | 472 | 444 |
Work in process and raw materials | 1,984 | 1,866 |
Total inventories | 2,456 | 2,310 |
Deferred taxes | 1,708 | 1,651 |
Prepaid expenses and other current assets | 4,430 | 4,488 |
Total current assets | 47,959 | 51,350 |
Property, plant and equipment | 40,478 | 40,475 |
Less: Accumulated depreciation | 26,795 | 26,654 |
Property, plant and equipment - net | 13,683 | 13,821 |
Long-term financing receivables (net of allowances of $93 in 2014 and $80 in 2013) | 11,918 | 12,755 |
Prepaid pension assets | 6,110 | 5,551 |
Deferred taxes | 3,034 | 3,051 |
Goodwill | 31,214 | 31,184 |
Intangible assets - net | 3,698 | 3,871 |
Investments and sundry assets | 5,030 | 4,639 |
Total assets | 122,646 | 126,223 |
Current liabilities: | ' | ' |
Taxes | 2,245 | 4,633 |
Short-term debt | 9,312 | 6,862 |
Accounts payable | 6,865 | 7,461 |
Compensation and benefits | 3,664 | 3,893 |
Deferred income | 13,681 | 12,557 |
Other accrued expenses and liabilities | 5,292 | 4,748 |
Total current liabilities | 41,058 | 40,154 |
Long-term debt | 34,668 | 32,856 |
Retirement and nonpension postretirement benefit obligations | 16,031 | 16,242 |
Deferred income | 4,042 | 4,108 |
Other liabilities | 10,106 | 9,934 |
Total liabilities | 105,906 | 103,294 |
IBM stockholders' equity: | ' | ' |
Common stock, par value $0.20 per share, and additional paid-in capital, Shares authorized: 4,687,500,000; Shares issued: (2014 - 2,210,627,775 2013 - 2,207,522,548) | 51,943 | 51,594 |
Retained earnings | 131,431 | 130,042 |
Treasury stock - at cost; (Shares: 2014 - 1,198,444,343 , 2013 - 1,153,131,611 ) | -145,612 | -137,242 |
Accumulated other comprehensive income/(loss) | -21,156 | -21,602 |
Total IBM stockholders' equity | 16,607 | 22,792 |
Noncontrolling interests | 133 | 137 |
Total equity | 16,740 | 22,929 |
Total liabilities and equity | $122,646 | $126,223 |
CONSOLIDATED_STATEMENT_OF_FINA1
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, except Share data, unless otherwise specified | ||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ' | ' |
Notes and accounts receivable - trade, allowances | $305 | $291 |
Short-term financing receivables, allowances | 317 | 308 |
Other accounts receivable, allowances | 36 | 36 |
Long-term financing receivables, allowances | $93 | $80 |
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) | 2,210,627,775 | 2,207,522,548 |
Treasury stock, Shares (in shares) | 1,198,444,343 | 1,153,131,611 |
CONSOLIDATED_STATEMENT_OF_CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | $2,384 | $3,032 |
Adjustments to reconcile net income to cash provided by operating activities | ' | ' |
Depreciation | 802 | 822 |
Amortization of intangibles | 339 | 331 |
Stock-based compensation | 124 | 144 |
Net (gain)/loss on asset sales and other | -161 | -62 |
Changes in operating assets and liabilities, net of acquisitions/divestitures | -162 | -244 |
Net cash provided by operating activities | 3,326 | 4,023 |
Cash flows from investing activities: | ' | ' |
Payments for property, plant and equipment | -849 | -714 |
Proceeds from disposition of property, plant and equipment | 74 | 123 |
Investment in software | -112 | -139 |
Acquisition of businesses, net of cash acquired | -264 | -58 |
Divestitures of businesses, net of cash transferred | 391 | 10 |
Non-operating finance receivables - net | 665 | 732 |
Purchases of marketable securities and other investments | -477 | -2,136 |
Proceeds from disposition of marketable securities and other investments | 608 | 1,169 |
Net cash provided by/(used in) investing activities | 35 | -1,012 |
Cash flows from financing activities: | ' | ' |
Proceeds from new debt | 4,875 | 2,685 |
Payments to settle debt | -1,507 | -857 |
Short-term borrowings/(repayments) less than 90 days - net | 845 | -1,359 |
Common stock repurchases | -8,166 | -2,593 |
Common stock transactions - other | 270 | 356 |
Cash dividends paid | -990 | -948 |
Net cash used in financing activities | -4,673 | -2,716 |
Effect of exchange rate changes on cash and cash equivalents | 5 | -121 |
Net change in cash and cash equivalents | -1,307 | 173 |
Cash and cash equivalents at January 1 | 10,716 | 10,412 |
Cash and cash equivalents at March 31 | $9,409 | $10,585 |
CONSOLIDATED_STATEMENT_OF_CHAN
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (USD $) | Total | Total IBM Stockholders' Equity | Common Stock and Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income/(Loss) | Non-Controlling Interests |
In Millions, unless otherwise specified | |||||||
Equity - at Dec. 31, 2012 | $18,984 | $18,860 | $50,110 | $117,641 | ($123,131) | ($25,759) | $124 |
Net income plus other comprehensive income/(loss) | ' | ' | ' | ' | ' | ' | ' |
Net income | 3,032 | 3,032 | ' | 3,032 | ' | ' | ' |
Other comprehensive income/(loss) | 293 | 293 | ' | ' | ' | 293 | ' |
Total comprehensive income/(loss) | 3,325 | 3,325 | ' | ' | ' | ' | ' |
Cash dividends paid - common stock | -948 | -948 | ' | -948 | ' | ' | ' |
Common stock issued under employee plan (Shares - 3,105,227 and 3,726,163 for the three months ended March 31,2014 and 2013, respectively) | 361 | 361 | 361 | ' | ' | ' | ' |
Purchases ( (Shares - 488,203 and 629,550) and sales ( Shares - 328,673 and 648,990) of the treasury stock under employee plans - net, for the three months ended March 31, 2014 and 2013, respectively) | -65 | -65 | ' | -12 | -53 | ' | ' |
Other treasury shares purchased, not retire (Shares - 45,153,202 and 12,318,883 for the three months ended March 31, 2014 and 2013, respectively) | -2,493 | -2,493 | ' | ' | -2,493 | ' | ' |
Changes in other equity | 52 | 52 | 52 | ' | ' | ' | ' |
Changes in noncontrolling interests | -1 | ' | ' | ' | ' | ' | -1 |
Equity - at Mar. 31, 2013 | 19,214 | 19,092 | 50,522 | 119,713 | -125,677 | -25,466 | 122 |
Equity - at Dec. 31, 2013 | 22,929 | 22,792 | 51,594 | 130,042 | -137,242 | -21,602 | 137 |
Net income plus other comprehensive income/(loss) | ' | ' | ' | ' | ' | ' | ' |
Net income | 2,384 | 2,384 | ' | 2,384 | ' | ' | ' |
Other comprehensive income/(loss) | 446 | 446 | ' | ' | ' | 446 | ' |
Total comprehensive income/(loss) | 2,830 | 2,830 | ' | ' | ' | ' | ' |
Cash dividends paid - common stock | -990 | -990 | ' | -990 | ' | ' | ' |
Common stock issued under employee plan (Shares - 3,105,227 and 3,726,163 for the three months ended March 31,2014 and 2013, respectively) | 333 | 333 | 333 | ' | ' | ' | ' |
Purchases ( (Shares - 488,203 and 629,550) and sales ( Shares - 328,673 and 648,990) of the treasury stock under employee plans - net, for the three months ended March 31, 2014 and 2013, respectively) | -51 | -51 | ' | -5 | -46 | ' | ' |
Other treasury shares purchased, not retire (Shares - 45,153,202 and 12,318,883 for the three months ended March 31, 2014 and 2013, respectively) | -8,324 | -8,324 | ' | ' | -8,324 | ' | ' |
Changes in other equity | 16 | 16 | 16 | ' | ' | ' | ' |
Changes in noncontrolling interests | -4 | ' | ' | ' | ' | ' | -4 |
Equity - at Mar. 31, 2014 | $16,740 | $16,607 | $51,943 | $131,431 | ($145,612) | ($21,156) | $133 |
CONSOLIDATED_STATEMENT_OF_CHAN1
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ' | ' |
Common stock issued under employee plans (in shares) | 3,105,227 | 3,726,163 |
Purchases of treasury stock under employee plans (in shares) | 488,203 | 629,550 |
Sales of treasury stock under employee plans (in shares) | 328,673 | 648,990 |
Other treasury shares purchased, not retired (in shares) | 45,153,202 | 12,318,883 |
Basis_of_Presentation
Basis of Presentation: | 3 Months Ended |
Mar. 31, 2014 | |
Basis of Presentation: | ' |
Basis of Presentation: | ' |
1. Basis of Presentation: The accompanying Consolidated Financial Statements and footnotes of the International Business Machines Corporation (IBM or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The financial statements and footnotes are unaudited. In the opinion of the company's management, these statements include all adjustments, which are only of a normal recurring nature, necessary to present a fair statement of the company's results of operations, financial position and cash flows. | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) that are reported in the Consolidated Financial Statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates. See the company's 2013 Annual Report on pages 67 to 70 for a discussion of the company's critical accounting estimates. | |
Interim results are not necessarily indicative of financial results for a full year. The information included in this Form 10-Q should be read in conjunction with the company's 2013 Annual Report. | |
Noncontrolling interest amounts in income of $(0.5) million and $1.4 million, net of tax, for the three months ended March 31, 2014 and 2013, respectively, are included in the Consolidated Statement of Earnings within the other (income) and expense line item. | |
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. This is annotated where applicable. |
Accounting_Changes
Accounting Changes: | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Changes: | ' |
Accounting Changes: | ' |
2. Accounting Changes: In April 2014, the Financial Accounting Standards Board (FASB) issued guidance that changes the criteria for reporting a discontinued operation. According to the new guidance, only disposals of a component that represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results is a discontinued operation. The new guidance also requires expanded disclosures about discontinued operations and disposals of a significant part of an entity that does not qualify for discontinued operations reporting. The guidance is effective beginning January 1, 2015 with early adoption permitted, but only for disposals (or classifications as held for sale) that have not been reported in previously-issued financial statements. The impact to the company will be dependent on any transaction that is within the scope of the new guidance. | |
In July 2013, the FASB issued guidance regarding the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Under certain circumstances, unrecognized tax benefits should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The guidance was effective January 1, 2014, and was adopted by the company in the first quarter. The guidance is a change in financial statement presentation only and had no material impact in the consolidated financial results. | |
In March 2013, the FASB issued guidance on when foreign currency translation adjustments should be released to net income. When a parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity, the parent is required to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. The guidance was effective January 1, 2014 and did not have a material impact in the Consolidated Statement of Financial Position. | |
In February 2013, the FASB issued guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date. Examples include debt arrangements, other contractual obligations and settled litigation matters. The guidance requires an entity to measure such obligations as the sum of the amount that the reporting entity agreed to pay on the basis of its arrangement among its co-obligors plus additional amounts the reporting entity expects to pay on behalf of its co-obligors. The guidance was effective January 1, 2014 and did not have a material impact in the consolidated financial results. |
Financial_Instruments
Financial Instruments: | 3 Months Ended | |||||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||||
Financial Instruments: | ' | |||||||||||||||||||||
Financial Instruments: | ' | |||||||||||||||||||||
3. Financial Instruments: | ||||||||||||||||||||||
Fair Value Measurements | ||||||||||||||||||||||
Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the company is required to classify certain assets and liabilities based on the following fair value hierarchy: | ||||||||||||||||||||||
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date; | ||||||||||||||||||||||
Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and | ||||||||||||||||||||||
Level 3—Unobservable inputs for the asset or liability. | ||||||||||||||||||||||
The guidance requires the use of observable market data if such data is available without undue cost and effort. | ||||||||||||||||||||||
When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items within 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. | ||||||||||||||||||||||
As an example, the fair value of derivatives is derived utilizing a discounted cash flow model that uses observable market inputs such as known notional value amounts, yield curves, spot and forward exchange rates as well as discount rates. These inputs relate to liquid, heavily traded currencies with active markets which are available for the full term of the derivative. | ||||||||||||||||||||||
Certain financial assets are measured at fair value on a nonrecurring basis. These assets include equity method investments that are recognized at fair value at the measurement date to the extent that they are deemed to be other-than-temporarily impaired. Certain assets that are measured at fair value on a recurring basis can be subject to nonrecurring fair value measurements. These assets include available-for-sale equity investments that are deemed to be other-than-temporarily impaired. In the event of an other-than-temporary impairment of a financial investment, fair value is measured using a model described above. | ||||||||||||||||||||||
Non-financial assets such as property, plant and equipment, land, 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. See Note A, “Significant Accounting Policies - Impairment,” on page 88 in the company’s 2013 Annual Report for additional information. There were no material impairments of non-financial assets for the three months ended March 31, 2014 and 2013, respectively. | ||||||||||||||||||||||
Accounting guidance permits the measurement of eligible financial assets, financial liabilities and firm commitments at fair value, on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. This election is irrevocable. The company has not applied the fair value option to any eligible assets or liabilities. | ||||||||||||||||||||||
The following tables present the company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at March 31, 2014 and December 31, 2013. | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||
At March 31, 2014 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||
Assets: | ||||||||||||||||||||||
Cash equivalents (1) | ||||||||||||||||||||||
Time deposits and certificates of deposit | $ | — | $ | 4,619 | $ | — | $ | 4,619 | ||||||||||||||
Commercial paper | — | 559 | — | 559 | ||||||||||||||||||
Money market funds | 988 | — | — | 988 | ||||||||||||||||||
U.S. government securities | — | 599 | — | 599 | ||||||||||||||||||
Canadian government securities | — | 226 | — | 226 | ||||||||||||||||||
Other securities | — | 40 | — | 40 | ||||||||||||||||||
Total | 988 | 6,044 | — | 7,032 | -6 | |||||||||||||||||
Debt securities - current (2) | — | 295 | — | 295 | -6 | |||||||||||||||||
Debt securities - noncurrent (3) | 1 | 8 | — | 9 | ||||||||||||||||||
Trading securities investments (3) | — | 77 | — | 77 | ||||||||||||||||||
Available-for-sale equity investments (3) | 4 | — | — | 4 | ||||||||||||||||||
Derivative assets (4) | ||||||||||||||||||||||
Interest rate contracts | — | 363 | — | 363 | ||||||||||||||||||
Foreign exchange contracts | — | 297 | — | 297 | ||||||||||||||||||
Equity contracts | — | 17 | — | 17 | ||||||||||||||||||
Total | — | 678 | — | 678 | -7 | |||||||||||||||||
Total assets | $ | 993 | $ | 7,102 | $ | — | $ | 8,095 | -7 | |||||||||||||
Liabilities: | ||||||||||||||||||||||
Derivative liabilities (5) | ||||||||||||||||||||||
Foreign exchange contracts | $ | — | $ | 427 | $ | — | $ | 427 | ||||||||||||||
Equity contracts | — | 2 | — | 2 | ||||||||||||||||||
Interest rate contracts | — | 12 | — | 12 | ||||||||||||||||||
Total liabilities | $ | — | $ | 441 | $ | — | $ | 441 | -7 | |||||||||||||
(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
(2) Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of | ||||||||||||||||||||||
Financial Position. | ||||||||||||||||||||||
(3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
(4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments | ||||||||||||||||||||||
and sundry assets in the Consolidated Statement of Financial Position at March 31, 2014 were $202 million and | ||||||||||||||||||||||
$476 million, respectively. | ||||||||||||||||||||||
(5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other | ||||||||||||||||||||||
liabilities in the Consolidated Statement of Financial Position at March 31, 2014 were $370 million and $71 | ||||||||||||||||||||||
million, respectively. | ||||||||||||||||||||||
(6) Available-for-sale securities with carrying values that approximate fair value. | ||||||||||||||||||||||
(7) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated | ||||||||||||||||||||||
Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $221 | ||||||||||||||||||||||
million each. | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||
At December 31, 2013 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||
Assets: | ||||||||||||||||||||||
Cash equivalents (1) | ||||||||||||||||||||||
Time deposits and certificates of deposit | $ | — | $ | 4,754 | $ | — | $ | 4,754 | ||||||||||||||
Commercial paper | — | 1,507 | — | 1,507 | ||||||||||||||||||
Money market funds | 1,728 | — | — | 1,728 | ||||||||||||||||||
Other securities | — | 8 | — | 8 | ||||||||||||||||||
Total | 1,728 | 6,269 | — | 7,997 | -6 | |||||||||||||||||
Debt securities - current (2) | — | 350 | — | 350 | -6 | |||||||||||||||||
Debt securities - noncurrent (3) | 1 | 7 | — | 9 | ||||||||||||||||||
Available-for-sale equity investments (3) | 18 | — | — | 18 | ||||||||||||||||||
Derivative assets (4) | ||||||||||||||||||||||
Interest rate contracts | — | 308 | — | 308 | ||||||||||||||||||
Foreign exchange contracts | — | 375 | — | 375 | ||||||||||||||||||
Equity contracts | — | 36 | — | 36 | ||||||||||||||||||
Total | — | 719 | — | 719 | -7 | |||||||||||||||||
Total assets | $ | 1,747 | $ | 7,345 | $ | — | $ | 9,092 | -7 | |||||||||||||
Liabilities: | ||||||||||||||||||||||
Derivative liabilities (5) | ||||||||||||||||||||||
Interest rate contracts | $ | — | $ | 13 | $ | — | $ | 13 | ||||||||||||||
Foreign exchange contracts | — | 484 | — | 484 | ||||||||||||||||||
Equity contracts | — | 4 | — | 4 | ||||||||||||||||||
Total liabilities | $ | — | $ | 501 | $ | — | $ | 501 | -7 | |||||||||||||
(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
(2) Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of | ||||||||||||||||||||||
Financial Position. | ||||||||||||||||||||||
(3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
(4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments | ||||||||||||||||||||||
and sundry assets in the Consolidated Statement of Financial Position at December 31, 2013 were $318 million and | ||||||||||||||||||||||
$401 million, respectively. | ||||||||||||||||||||||
(5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other | ||||||||||||||||||||||
liabilities in the Consolidated Statement of Financial Position at December 31, 2013 were $375 million and $126 | ||||||||||||||||||||||
million, respectively. | ||||||||||||||||||||||
(6) Available-for-sale securities with carrying values that approximate fair value. | ||||||||||||||||||||||
(7) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated | ||||||||||||||||||||||
Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $251 | ||||||||||||||||||||||
million each. | ||||||||||||||||||||||
There were no transfers between Levels 1 and 2 for the three months ended March 31, 2014 and the year ended December 31, 2013. | ||||||||||||||||||||||
Financial Assets and Liabilities Not Measured at Fair Value | ||||||||||||||||||||||
Short-Term Receivables and Payables | ||||||||||||||||||||||
Notes and other accounts receivable and other investments are financial assets with carrying values that approximate fair value. Accounts payable, other accrued expenses and short-term debt (excluding the current portion of long-term debt) are financial liabilities with carrying values that approximate fair value. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. | ||||||||||||||||||||||
Loans and Long-term Receivables | ||||||||||||||||||||||
Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At March 31, 2014 and December 31, 2013, 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 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 $34,668 million and $32,856 million, and the estimated fair value was $36,808 million and $34,555 million at March 31, 2014 and December 31, 2013, respectively. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy. | ||||||||||||||||||||||
Debt and Marketable Equity Securities | ||||||||||||||||||||||
The company’s cash equivalents and current debt securities are considered available-for-sale and recorded at fair value, which is not materially different from carrying value, in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
During the quarter, the company acquired equity investments in conjunction with the sale of the customer care business which are classified as trading securities. At March 31, 2014, unrealized gains related to trading securities of $6 million were recorded in other (income) and expense in the Consolidated Statement of Earnings. | ||||||||||||||||||||||
The following tables summarize the company’s noncurrent debt and marketable equity securities which are also considered available-for-sale and recorded at fair value in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||
(Dollars in millions) | Adjusted | Unrealized | Unrealized | Fair | ||||||||||||||||||
At March 31, 2014: | Cost | Gains | Losses | Value | ||||||||||||||||||
Debt securities – noncurrent(1) | $ | 8 | $ | 2 | $ | — | $ | 9 | ||||||||||||||
Available-for-sale equity investments(1) | $ | 2 | $ | 2 | $ | 0 | $ | 4 | ||||||||||||||
(1) Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||
(Dollars in millions) | Adjusted | Unrealized | Unrealized | Fair | ||||||||||||||||||
At December 31, 2013: | Cost | Gains | Losses | Value | ||||||||||||||||||
Debt securities – noncurrent(1) | $ | 7 | $ | 1 | $ | — | $ | 9 | ||||||||||||||
Available-for-sale equity investments(1) | $ | 20 | $ | 2 | $ | 4 | $ | 18 | ||||||||||||||
(1) Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
Based on an evaluation of available evidence as of March 31, 2014 and December 31, 2013, the company believes that unrealized losses on debt and available-for-sale equity investments were temporary and did not represent a need for an other-than-temporary impairment. | ||||||||||||||||||||||
Sales of debt and available-for-sale equity investments during the period were as follows: | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||
For the three months ended March 31: | 2014 | 2013 | ||||||||||||||||||||
Proceeds | $ | 14 | $ | 18 | ||||||||||||||||||
Gross realized gains (before taxes) | — | 3 | ||||||||||||||||||||
Gross realized losses (before taxes) | 4 | 4 | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||
For the three months ended March 31: | 2014 | 2013 | ||||||||||||||||||||
Net unrealized gains/(losses) arising during the period | $ | 0 | $ | ($1) | ||||||||||||||||||
Net unrealized (gains)/losses reclassified to net income* | 3 | 0 | ||||||||||||||||||||
* There were no writedowns for the three months ended March 31, 2014 and 2013. | ||||||||||||||||||||||
The contractual maturities of substantially all available-for-sale debt securities are less than one year at March 31, 2014. | ||||||||||||||||||||||
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. | ||||||||||||||||||||||
As a result of the use of derivative instruments, the company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the company has a policy of only entering into contracts with carefully selected major financial institutions based upon their overall credit profile. The company’s established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. The right of set-off that exists under certain of these arrangements enables the legal entities of the company subject to the arrangement to net amounts due to and from the counterparty reducing the maximum loss from credit risk in the event of counterparty default. | ||||||||||||||||||||||
The company is also a party to collateral security arrangements with most of its major derivative counterparties. These arrangements require the company to hold or post collateral (cash or U.S. Treasury securities) when the derivative fair values exceed contractually established thresholds. Posting thresholds can be fixed or can vary based on credit default swap pricing or credit ratings received from the major credit agencies. The aggregate fair value of all derivative instruments under these collateralized arrangements that were in a liability position at March 31, 2014 and December 31, 2013 was $201 million and $216 million, respectively, for which no collateral was posted at March 31, 2014 and December 31, 2013. Full collateralization of these agreements would be required in the event that the company’s credit rating falls below investment grade or if its credit default swap spread exceeds 250 basis points, as applicable, pursuant to the terms of the collateral security arrangements. The aggregate fair value of derivative instruments in net asset positions as of March 31, 2014 and December 31, 2013 was $678 million and $719 million, respectively. This amount represents the maximum exposure to loss at the reporting date as a result of the counterparties failing to perform as contracted. This exposure was reduced by $221 million and $251 million at March 31, 2014 and December 31, 2013, respectively, of liabilities included in master netting arrangements with those counterparties. Additionally, at March 31, 2014 and December 31, 2013, this exposure was reduced by $23 million and $29 million of cash collateral, respectively, received by the company. At March 31, 2014 and December 31, 2013, the net exposure related to derivative assets recorded in the Consolidated Statement of Financial Position was $434 million and $439 million, respectively. At March 31, 2014 and December 31, 2013, the net amount related to derivative liabilities recorded in the Consolidated Statement of Financial Position was $220 million and $250 million, respectively. | ||||||||||||||||||||||
In the Consolidated Statement of Financial Position, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments. No amount was recognized in other receivables at March 31, 2014 or December 31, 2013 for the right to reclaim cash collateral. The amount recognized in accounts payable for the obligation to return cash collateral totaled $23 million and $29 million at March 31, 2014 and December 31, 2013, respectively. The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in prepaid expenses and other current assets in the Consolidated Statement of Financial Position. No amount was rehypothecated at March 31, 2014 or at December 31, 2013. At March 31, 2014 and December 31, 2013, no amounts of non-cash collateral were held. | ||||||||||||||||||||||
The company may employ derivative instruments to hedge the volatility in stockholders’ equity resulting from changes in currency exchange rates of significant foreign subsidiaries of the company with respect to the U.S. dollar. These instruments, designated as net investment hedges, expose the company to liquidity risk as the derivatives have an immediate cash flow impact upon maturity which is not offset by a cash flow from the translation of the underlying hedged equity. The company monitors this cash loss potential on an ongoing basis and may discontinue some of these hedging relationships by de-designating or terminating the derivative instrument in order to manage the liquidity risk. Although not designated as accounting hedges, the company may utilize derivatives to offset the changes in the fair value of the de-designated instruments from the date of de-designation until maturity. | ||||||||||||||||||||||
In its hedging programs, the company uses forward contracts, futures contracts, interest-rate swaps and cross-currency swaps, 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, principally to fund its financing lease and loan portfolios. 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 uses interest-rate swaps to convert specific fixed-rate debt issuances into variable-rate debt (i.e., fair value hedges) and to convert specific variable-rate debt issuances into fixed-rate debt (i.e., cash flow hedges). At March 31, 2014 and December 31, 2013, the total notional amount of the company’s interest rate swaps was $5.9 billion and $3.1 billion, respectively. The weighted-average remaining maturity of these instruments at March 31, 2014 and December 31, 2013 was approximately 9.5 years and 10.6 years, respectively. | ||||||||||||||||||||||
Forecasted Debt Issuance | ||||||||||||||||||||||
The company is exposed to interest rate volatility on future debt issuances. To manage this risk, the company may use forward starting interest-rate swaps to lock in the rate on the interest payments related to the forecasted debt issuance. These swaps are accounted for as cash flow hedges. The company did not have any derivative instruments relating to this program outstanding at March 31, 2014 and December 31, 2013. | ||||||||||||||||||||||
At March 31, 2014 and December 31, 2013, net gains of approximately $1 million (before taxes), respectively, were recorded in accumulated other comprehensive income/(loss) in connection with cash flow hedges of the company’s borrowings. Within these amounts, gains of less than $1 million, respectively, are expected to be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying transactions. | ||||||||||||||||||||||
Foreign Exchange Risk | ||||||||||||||||||||||
Long-Term Investments in Foreign Subsidiaries (Net Investment) | ||||||||||||||||||||||
A large portion of the company’s foreign currency denominated debt portfolio is designated as a hedge of net investment in foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates in the functional currency of major foreign subsidiaries with respect to the U.S. dollar. The company also uses cross-currency swaps and foreign exchange forward contracts for this risk management purpose. At March 31, 2014 and December 31, 2013, the total notional amount of derivative instruments designated as net investment hedges was $3.4 billion and $3.0 billion, respectively. The weighted-average remaining maturity of these instruments at March 31, 2014 and December 31, 2013 was approximately 0.4 years for both periods. | ||||||||||||||||||||||
Anticipated Royalties and Cost Transactions | ||||||||||||||||||||||
The company’s operations generate significant nonfunctional currency, third-party vendor payments and intercompany payments for royalties and goods and services among the company’s non-U.S. subsidiaries and with the parent company. In anticipation of these foreign currency cash flows and in view of 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 is hedging its exposure to the variability in future cash flows is four years. At March 31, 2014 and December 31, 2013, the total notional amount of forward contracts designated as cash flow hedges of forecasted royalty and cost transactions was $10.2 billion with a weighted-average remaining maturity of 0.7 years for both periods. | ||||||||||||||||||||||
At March 31, 2014 and December 31, 2013, in connection with cash flow hedges of anticipated royalties and cost transactions, the company recorded net losses of $169 million and $252 million (before taxes), respectively, in accumulated other comprehensive income/(loss). Within these amounts, $155 million and $166 million of losses, respectively, are expected to be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying 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. Currently, the maximum length of time over which the company has hedged its exposure to variability in future cash flows is approximately seven years. At March 31, 2014 and December 31, 2013, the total notional amount of cross currency swaps designated as cash flow hedges of foreign currency denominated debt was $1.2 billion for both periods. | ||||||||||||||||||||||
At March 31, 2014 and December 31, 2013, in connection with cash flow hedges of foreign currency denominated borrowings, the company recorded net losses of $6 million (before taxes) and $9 million (before taxes), respectively, in accumulated other comprehensive income/(loss). Within these amounts, $3 million of losses in both periods is expected to be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying exposure. | ||||||||||||||||||||||
Subsidiary Cash and Foreign Currency Asset/Liability Management | ||||||||||||||||||||||
The company uses 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 Statement of Earnings. At March 31, 2014 and December 31, 2013, the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $16.3 billion and $14.7 billion, respectively. | ||||||||||||||||||||||
Equity Risk Management | ||||||||||||||||||||||
The company is exposed to market price changes in certain broad market indices and in the company’s own stock primarily related to certain obligations to employees. Changes in the overall value of these employee compensation obligations are recorded in selling, general and administrative (SG&A) expense in the Consolidated Statement of Earnings. Although not designated as accounting hedges, the 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 Statement of Earnings. At March 31, 2014 and December 31, 2013, the total notional amount of derivative instruments in economic hedges of these compensation obligations was $1.2 billion and $1.3 billion, respectively. | ||||||||||||||||||||||
Other Risks | ||||||||||||||||||||||
The company may hold warrants to purchase shares of common stock in connection with various investments that are deemed derivatives because they contain net share or net cash settlement provisions. The company records the changes in the fair value of these warrants in other (income) and expense in the Consolidated Statement of Earnings. The company did not have any warrants qualifying as derivatives outstanding at March 31, 2014 and December 31, 2013. | ||||||||||||||||||||||
The company is exposed to a potential loss if a client fails to pay amounts due under contractual terms. The company may utilize credit default swaps to economically hedge its credit exposures. The swaps are recorded at fair value with gains and losses reported in other (income) and expense in the Consolidated Statement of Earnings. The company did not have any derivative instruments relating to this program outstanding at March 31, 2014 and December 31, 2013. | ||||||||||||||||||||||
The following tables provide a quantitative summary of the derivative and non-derivative instrument- related risk management activity as of March 31, 2014 and December 31, 2013 as well as for the three months ended March 31, 2014 and 2013, respectively: | ||||||||||||||||||||||
Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position | ||||||||||||||||||||||
As of March 31, 2014 and December 31, 2013 | ||||||||||||||||||||||
(Dollars in millions) | Fair Value of Derivative Assets | Fair Value of Derivative Liabilities | ||||||||||||||||||||
Balance Sheet | Balance Sheet | |||||||||||||||||||||
Classification | 3/31/14 | 12/31/13 | Classification | 3/31/14 | 12/31/13 | |||||||||||||||||
Designated as hedging | ||||||||||||||||||||||
instruments: | ||||||||||||||||||||||
Interest rate contracts: | Prepaid expenses and | Other accrued | ||||||||||||||||||||
other current assets | $ | — | $ | — | expenses and liabilities | $ | — | $ | 0 | |||||||||||||
Investments and sundry | ||||||||||||||||||||||
assets | 363 | 308 | Other liabilities | 12 | 13 | |||||||||||||||||
Foreign exchange | Prepaid expenses and | Other accrued | ||||||||||||||||||||
contracts: | other current assets | 110 | 187 | expenses and liabilities | 270 | 331 | ||||||||||||||||
Investments and sundry | ||||||||||||||||||||||
assets | 54 | 26 | Other liabilities | 55 | 112 | |||||||||||||||||
Fair value of derivative | Fair value of derivative | |||||||||||||||||||||
assets | $ | 528 | $ | 522 | liabilities | $ | 337 | $ | 456 | |||||||||||||
Not designated as | ||||||||||||||||||||||
hedging instruments: | ||||||||||||||||||||||
Foreign exchange | Prepaid expenses and | Other accrued | ||||||||||||||||||||
contracts: | other current assets | $ | 74 | $ | 94 | expenses and liabilities | $ | 98 | $ | 40 | ||||||||||||
Investments and sundry | ||||||||||||||||||||||
assets | 59 | 67 | Other liabilities | 4 | 1 | |||||||||||||||||
Equity contracts: | Prepaid expenses and | Other accrued | ||||||||||||||||||||
other current assets | 17 | 36 | expenses and liabilities | 2 | 4 | |||||||||||||||||
Fair value of derivative | Fair value of derivative | |||||||||||||||||||||
assets | $ | 151 | $ | 197 | liabilities | $ | 104 | $ | 45 | |||||||||||||
Total debt designated as | ||||||||||||||||||||||
hedging instruments: | ||||||||||||||||||||||
Short-term debt | N/A | N/A | $ | — | $ | 190 | ||||||||||||||||
Long-term debt | N/A | N/A | 6,116 | 6,111 | ||||||||||||||||||
Total | $ | 678 | $ | 719 | $ | 6,557 | $ | 6,802 | ||||||||||||||
N/A-not applicable | ||||||||||||||||||||||
The Effect of Derivative Instruments in the Consolidated Statement of Earnings | ||||||||||||||||||||||
For the three months ended March 31, 2014 and 2013 | ||||||||||||||||||||||
(Dollars in millions) | Gain (Loss) Recognized in Earnings | |||||||||||||||||||||
Consolidated | ||||||||||||||||||||||
Statement of | Recognized on | Attributable to Risk | ||||||||||||||||||||
Earnings Line Item | Derivatives(1) | Being Hedged(2) | ||||||||||||||||||||
For the three months ended March 31: | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Derivative instruments in fair value hedges: | ||||||||||||||||||||||
Interest rate contracts | Cost of financing | $ | 48 | $ | -20 | $ | -23 | $ | 46 | |||||||||||||
Interest expense | 33 | -13 | -15 | 30 | ||||||||||||||||||
Derivative instruments not designated as | ||||||||||||||||||||||
hedging instruments(1): | ||||||||||||||||||||||
Foreign exchange contracts | Other (income) | |||||||||||||||||||||
and expense | -34 | -439 | N/A | N/A | ||||||||||||||||||
Equity contracts | SG&A expense | 21 | 85 | N/A | N/A | |||||||||||||||||
Total | $ | 68 | $ | -387 | $ | -38 | $ | 76 | ||||||||||||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income | ||||||||||||||||||||||
Consolidated | (Ineffectiveness) and | |||||||||||||||||||||
Effective Portion | Statement of | Effective Portion Reclassified | Amounts Excluded from | |||||||||||||||||||
Recognized in OCI | Earnings Line Item | from AOCI | Effectiveness Testing(3) | |||||||||||||||||||
For the three months | ||||||||||||||||||||||
ended March 31: | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Derivative instruments | ||||||||||||||||||||||
in cash flow hedges: | ||||||||||||||||||||||
Interest rate contracts | $ | — | $ | — | Interest expense | $ | — | $ | — | $ | — | $ | — | |||||||||
Other (income) | ||||||||||||||||||||||
Foreign exchange | 88 | 360 | and expense | 29 | 37 | 0 | 1 | |||||||||||||||
contracts | Cost of sales | -26 | 9 | — | — | |||||||||||||||||
SG&A expense | -2 | 10 | — | — | ||||||||||||||||||
Instruments in net | ||||||||||||||||||||||
investment hedges(4): | ||||||||||||||||||||||
Foreign exchange | ||||||||||||||||||||||
contracts | -26 | 219 | Interest expense | — | — | 0 | -1 | |||||||||||||||
Total | $ | 62 | $ | 579 | $ | 1 | $ | 56 | $ | 0 | $ | 0 | ||||||||||
N/A-not applicable | ||||||||||||||||||||||
Note: OCI represents Other comprehensive income/(loss) in the Consolidated Statement of Comprehensive Income and AOCI represents Accumulated other comprehensive income/(loss) in the Consolidated Statement of Changes in Equity. | ||||||||||||||||||||||
The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. | ||||||||||||||||||||||
The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. | ||||||||||||||||||||||
The amount of gain (loss) recognized in income represents ineffectiveness on hedge relationships. | ||||||||||||||||||||||
Instruments in net investment hedges include derivative and non-derivative instruments | ||||||||||||||||||||||
For the three months ending March 31, 2014 and 2013, there were no significant gains or losses recognized in earnings representing hedge ineffectiveness or excluded from the assessment of hedge effectiveness (for fair value hedges), or associated with an underlying exposure that did not or was not expected to occur (for cash flow hedges); nor are there any anticipated in the normal course of business. | ||||||||||||||||||||||
Refer to the company’s 2013 Annual Report, Note A, “Significant Accounting Policies – Derivative Financial Instruments,” on pages 90 to 91 for additional information. |
Financing_Receivables
Financing Receivables: | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Financing Receivables: | ' | |||||||||||||
Financing Receivables: | ' | |||||||||||||
4. Financing Receivables: The following table presents financing receivables, net of allowances for credit losses, including residual values. | ||||||||||||||
At March 31, | At December 31, | |||||||||||||
(Dollars in millions) | 2014 | 2013 | ||||||||||||
Current: | ||||||||||||||
Net investment in sales-type and direct financing leases | $ | 4,096 | $ | 4,004 | ||||||||||
Commercial financing receivables | 7,024 | 8,541 | ||||||||||||
Client loan receivables | 5,797 | 5,854 | ||||||||||||
Installment payment receivables | 1,412 | 1,389 | ||||||||||||
Total | $ | 18,329 | $ | 19,787 | ||||||||||
Noncurrent: | ||||||||||||||
Net investment in sales-type and direct financing leases | $ | 5,152 | $ | 5,700 | ||||||||||
Commercial financing receivables | — | — | ||||||||||||
Client loan receivables | 6,147 | 6,360 | ||||||||||||
Installment payment receivables | 619 | 695 | ||||||||||||
Total | $ | 11,918 | $ | 12,755 | ||||||||||
Net investment in sales-type and direct financing leases relates principally to the company’s systems products and are for terms ranging generally from two to six years. Net investment in sales-type and direct financing leases includes unguaranteed residual values of $698 million and $737 million at March 31, 2014 and December 31, 2013, respectively, and is reflected net of unearned income of $634 million and $672 million, and net of the allowance for credit losses of $131 million and $123 million at those dates, respectively. | ||||||||||||||
Commercial financing receivables, net of allowance for credit losses of $16 million and $23 million at March 31, 2014 and December 31, 2013, respectively, relate primarily to inventory and accounts receivable financing for dealers and remarketers of IBM and OEM products. Payment terms for inventory and accounts receivable financing generally range from 30 to 90 days. | ||||||||||||||
Client loan receivables, net of allowance for credit losses of $222 million and $201 million at March 31, 2014 and December 31, 2013, respectively, are loans that are provided primarily to clients to finance the purchase of software and services. Separate contractual relationships on these financing arrangements are for terms ranging generally from one to seven years. | ||||||||||||||
Installment payment receivables, net of allowance for credit losses of $41 million and $41 million at March 31, 2014 and December 31, 2013, respectively, are loans that are provided primarily to clients to finance hardware, software and services ranging generally from one to three years. | ||||||||||||||
Client loan receivables and installment payment receivables financing contracts are priced independently at competitive market rates. The company has a history of enforcing the terms of these separate financing agreements. | ||||||||||||||
The company utilizes certain of its financing receivables as collateral for nonrecourse borrowings. Financing receivables pledged as collateral for borrowings were $756 million and $769 million at March 31, 2014 and December 31, 2013, respectively. | ||||||||||||||
The company did not have any financing receivables held for sale as of March 31, 2014 and December 31, 2013. | ||||||||||||||
Financing Receivables by Portfolio Segment | ||||||||||||||
The following tables present financing receivables on a gross basis, excluding the allowance for credit losses and residual value, by portfolio segment and by class, excluding current commercial financing receivables and other miscellaneous current financing receivables at March 31, 2014 and December 31, 2013. The company determines its allowance for credit losses based on two portfolio segments: lease receivables and loan receivables, and further segments the portfolio into two classes: major markets and growth markets. For additional information on the company’s accounting policies for the allowance for credit losses, see the company’s 2013 Annual Report on pages 92 and 93. | ||||||||||||||
(Dollars in millions) | Major | Growth | ||||||||||||
At March 31, 2014 | Markets | Markets | Total | |||||||||||
Financing receivables: | ||||||||||||||
Lease receivables | $ | 6,356 | $ | 2,235 | $ | 8,591 | ||||||||
Loan receivables | 9,980 | 4,259 | 14,239 | |||||||||||
Ending balance | $ | 16,336 | $ | 6,494 | $ | 22,831 | ||||||||
Collectively evaluated for impairment | $ | 16,223 | $ | 6,270 | $ | 22,494 | ||||||||
Individually evaluated for impairment | $ | 113 | $ | 224 | $ | 337 | ||||||||
Allowance for credit losses: | ||||||||||||||
Beginning balance at January 1, 2014 | ||||||||||||||
Lease receivables | $ | 42 | $ | 80 | $ | 123 | ||||||||
Loan receivables | 95 | 147 | 242 | |||||||||||
Total | $ | 137 | $ | 228 | $ | 365 | ||||||||
Write-offs | -5 | -3 | -8 | |||||||||||
Provision | 3 | 36 | 39 | |||||||||||
Other | 0 | -1 | -1 | |||||||||||
Ending balance at March 31, 2014 | $ | 134 | $ | 260 | $ | 394 | ||||||||
Lease receivables | $ | 41 | $ | 90 | $ | 131 | ||||||||
Loan receivables | $ | 93 | $ | 171 | $ | 263 | ||||||||
Collectively evaluated for impairment | $ | 41 | $ | 47 | $ | 89 | ||||||||
Individually evaluated for impairment | $ | 93 | $ | 213 | $ | 306 | ||||||||
(Dollars in millions) | Major | Growth | ||||||||||||
At December 31, 2013 | Markets | Markets | Total | |||||||||||
Financing receivables: | ||||||||||||||
Lease receivables | $ | 6,796 | $ | 2,200 | $ | 8,996 | ||||||||
Loan receivables | 10,529 | 4,012 | 14,542 | |||||||||||
Ending balance | $ | 17,325 | $ | 6,212 | $ | 23,537 | ||||||||
Collectively evaluated for impairment | $ | 17,206 | $ | 6,013 | $ | 23,219 | ||||||||
Individually evaluated for impairment | $ | 119 | $ | 199 | $ | 318 | ||||||||
Allowance for credit losses: | ||||||||||||||
Beginning balance at January 1, 2013 | ||||||||||||||
Lease receivables | $ | 59 | $ | 55 | $ | 114 | ||||||||
Loan receivables | 121 | 84 | 204 | |||||||||||
Total | $ | 180 | $ | 138 | $ | 318 | ||||||||
Write-offs | -23 | -10 | -33 | |||||||||||
Provision | -21 | 105 | 84 | |||||||||||
Other | 1 | -6 | -5 | |||||||||||
Ending balance at December 31, 2013 | $ | 137 | $ | 228 | $ | 365 | ||||||||
Lease receivables | $ | 42 | $ | 80 | $ | 123 | ||||||||
Loan receivables | $ | 95 | $ | 147 | $ | 242 | ||||||||
Collectively evaluated for impairment | $ | 45 | $ | 48 | $ | 93 | ||||||||
Individually evaluated for impairment | $ | 93 | $ | 179 | $ | 272 | ||||||||
When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For individually evaluated receivables, the company determines the expected cash flow for the receivable and calculates an estimate of the potential loss and the probability of loss. For those accounts in which the loss is probable, the company records a specific reserve. In addition, the company records an unallocated reserve that is determined by applying a reserve rate to its different portfolios, excluding accounts that have been specifically reserved. This reserve rate is based upon credit rating, probability of default, term, characteristics (lease/loan) and loss history. | ||||||||||||||
Financing Receivables on Non-Accrual Status | ||||||||||||||
Certain receivables for which the company has recorded a specific reserve may also be placed on non-accrual status. Non-accrual assets are those receivables with specific reserves and other accounts for which it is likely that the company will be unable to collect all amounts due according to original terms of the lease or loan agreement. Income recognition is discontinued on these receivables. | ||||||||||||||
The following table presents the recorded investment in financing receivables which were on non-accrual status at March 31, 2014 and December 31, 2013. | ||||||||||||||
At March 31, | At December 31, | |||||||||||||
(Dollars in millions) | 2014 | 2013 | ||||||||||||
Major markets | $ | 24 | $ | 25 | ||||||||||
Growth markets | 62 | 34 | ||||||||||||
Total lease receivables | $ | 85 | $ | 59 | ||||||||||
Major markets | $ | 41 | $ | 40 | ||||||||||
Growth markets | 116 | 92 | ||||||||||||
Total loan receivables | $ | 157 | $ | 132 | ||||||||||
Total receivables | $ | 242 | $ | 191 | ||||||||||
Impaired Loans | ||||||||||||||
The company considers any loan with an individually evaluated reserve as an impaired loan. Depending on the level of impairment, loans will also be placed on non-accrual status. | ||||||||||||||
The following tables present impaired client loan receivables. | ||||||||||||||
At March 31, 2014 | At December 31, 2013 | |||||||||||||
Recorded | Related | Recorded | Related | |||||||||||
(Dollars in millions) | Investment | Allowance | Investment | Allowance | ||||||||||
Major markets | $ | 75 | $ | 63 | $ | 79 | $ | 67 | ||||||
Growth markets | 147 | 136 | 122 | 116 | ||||||||||
Total | $ | 222 | $ | 199 | $ | 201 | $ | 183 | ||||||
Interest | ||||||||||||||
Average | Interest | Income | ||||||||||||
(Dollars in millions) | Recorded | Income | Recognized on | |||||||||||
For the three months ended March 31, 2014: | Investment | Recognized | Cash Basis | |||||||||||
Major markets | $ | 77 | $ | 0 | $ | 0 | ||||||||
Growth markets | 134 | 0 | 0 | |||||||||||
Total | $ | 211 | $ | 0 | $ | 0 | ||||||||
Interest | ||||||||||||||
Average | Interest | Income | ||||||||||||
(Dollars in millions) | Recorded | Income | Recognized on | |||||||||||
For the three months ended March 31, 2013: | Investment | Recognized | Cash Basis | |||||||||||
Major markets | $ | 79 | $ | 0 | $ | 0 | ||||||||
Growth markets | 79 | 0 | 0 | |||||||||||
Total | $ | 158 | $ | 0 | $ | 0 | ||||||||
Credit Quality Indicators | ||||||||||||||
The company’s credit quality indicators, which are based on rating agency data, publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Standard & Poor’s Ratings Services credit ratings as shown below. Standard & Poor’s does not provide credit ratings to the company on its customers. | ||||||||||||||
The following tables present the gross recorded investment for each class of receivables, by credit quality indicator, at March 31, 2014 and December 31, 2013. Receivables with a credit quality indicator ranging from AAA to BBB- are considered investment grade. All others are considered non-investment grade. The credit quality indicators do not reflect mitigation actions that the company may take to transfer credit risk to third parties. | ||||||||||||||
Lease Receivables | Loan Receivables | |||||||||||||
(Dollars in millions) | Major | Growth | Major | Growth | ||||||||||
At March 31, 2014: | Markets | Markets | Markets | Markets | ||||||||||
Credit Rating: | ||||||||||||||
AAA – AA- | $ | 648 | $ | 63 | $ | 1,017 | $ | 119 | ||||||
A+ – A- | 1,243 | 168 | 1,952 | 320 | ||||||||||
BBB+ – BBB- | 2,172 | 1,025 | 3,411 | 1,953 | ||||||||||
BB+ – BB | 1,349 | 333 | 2,119 | 634 | ||||||||||
BB- – B+ | 519 | 350 | 814 | 666 | ||||||||||
B – B- | 354 | 218 | 555 | 414 | ||||||||||
CCC+ – D | 71 | 80 | 111 | 152 | ||||||||||
Total | $ | 6,356 | $ | 2,235 | $ | 9,980 | $ | 4,259 | ||||||
At March 31, 2014, the industries which made up Global Financing’s receivables portfolio consisted of: Financial (39 percent), Government (15 percent), Manufacturing (13 percent), Retail (9 percent), Services (8 percent), Communications (6 percent), Healthcare (5 percent) and Other (4 percent). | ||||||||||||||
Lease Receivables | Loan Receivables | |||||||||||||
(Dollars in millions) | Major | Growth | Major | Growth | ||||||||||
At December 31, 2013: | Markets | Markets | Markets | Markets | ||||||||||
Credit Rating: | ||||||||||||||
AAA – AA- | $ | 743 | $ | 68 | $ | 1,151 | $ | 125 | ||||||
A+ – A- | 1,513 | 168 | 2,344 | 307 | ||||||||||
BBB+ – BBB- | 2,111 | 957 | 3,271 | 1,745 | ||||||||||
BB+ – BB | 1,393 | 350 | 2,158 | 638 | ||||||||||
BB- – B+ | 595 | 368 | 922 | 672 | ||||||||||
B – B- | 365 | 214 | 565 | 391 | ||||||||||
CCC+ – D | 76 | 74 | 118 | 134 | ||||||||||
Total | $ | 6,796 | $ | 2,200 | $ | 10,529 | $ | 4,012 | ||||||
At December 31, 2013, the industries which made up Global Financing’s receivables portfolio consisted of: Financial (39 percent), Government (14 percent), Manufacturing (14 percent), Retail (8 percent), Services (8 percent), Healthcare (6 percent), Communications (6 percent) and Other (4 percent). | ||||||||||||||
Past Due Financing Receivables | ||||||||||||||
The company views receivables as past due when payment has not been received after 90 days, measured from the billing date. | ||||||||||||||
Recorded | ||||||||||||||
Total | Total | Investment | ||||||||||||
(Dollars in millions) | Past Due | Financing | > 90 Days | |||||||||||
At March 31, 2014: | > 90 days* | Current | Receivables | and Accruing | ||||||||||
Major markets | $ | 8 | $ | 6,348 | $ | 6,356 | $ | 8 | ||||||
Growth markets | 17 | 2,218 | 2,235 | 10 | ||||||||||
Total lease receivables | $ | 25 | $ | 8,566 | $ | 8,591 | $ | 18 | ||||||
Major markets | $ | 11 | $ | 9,969 | $ | 9,980 | $ | 11 | ||||||
Growth markets | 31 | 4,228 | 4,259 | 6 | ||||||||||
Total loan receivables | $ | 43 | $ | 14,197 | $ | 14,239 | $ | 18 | ||||||
Total | $ | 68 | $ | 22,763 | $ | 22,831 | $ | 35 | ||||||
* Does not include accounts that are fully reserved. | ||||||||||||||
Recorded | ||||||||||||||
Total | Total | Investment | ||||||||||||
(Dollars in millions) | Past Due | Financing | > 90 Days | |||||||||||
At December 31, 2013: | > 90 days* | Current | Receivables | and Accruing | ||||||||||
Major markets | $ | 6 | $ | 6,789 | $ | 6,796 | $ | 5 | ||||||
Growth markets | 19 | 2,181 | 2,200 | 11 | ||||||||||
Total lease receivables | $ | 25 | $ | 8,970 | $ | 8,996 | $ | 16 | ||||||
Major markets | $ | 9 | $ | 10,520 | $ | 10,529 | $ | 6 | ||||||
Growth markets | 34 | 3,979 | 4,012 | 18 | ||||||||||
Total loan receivables | $ | 43 | $ | 14,499 | $ | 14,542 | $ | 25 | ||||||
Total | $ | 68 | $ | 23,469 | $ | 23,537 | $ | 41 | ||||||
* Does not include accounts that are fully reserved. | ||||||||||||||
Troubled Debt Restructurings | ||||||||||||||
The company did not have any troubled debt restructurings during the three months ended March 31, 2014 and for the year ended December 31, 2013. |
StockBased_Compensation
Stock-Based Compensation: | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Stock-Based Compensation: | ' | ||||||
Stock-Based Compensation: | ' | ||||||
5. Stock-Based Compensation: Stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. The following table presents total stock-based compensation cost included in the Consolidated Statement of Earnings: | |||||||
(Dollars in millions) | |||||||
For the three months ended March 31: | 2014 | 2013 | |||||
Cost | $ | 31 | $ | 31 | |||
Selling, general and administrative | 88 | 99 | |||||
Research, development and engineering | 14 | 14 | |||||
Other (income) and expense* | -9 | — | |||||
Pre-tax stock-based compensation cost | 124 | 144 | |||||
Income tax benefits | -41 | -50 | |||||
Total stock-based compensation cost | $ | 83 | $ | 94 | |||
* Reflects the one-time effects related to the divestiture of the customer care business. | |||||||
The decrease in pre-tax stock-based compensation cost for the three months ended March 31, 2014, as compared to the corresponding period in the prior year, was due to decreases related to restricted stock units ($9 million), performance share units ($7 million) and the company’s assumption of stock-based awards previously issued by acquired entities ($4 million). | |||||||
As of March 31, 2014, the total unrecognized compensation cost of $853 million related to non-vested awards is expected to be recognized over a weighted-average period of approximately 2.4 years. | |||||||
There was no significant capitalized stock-based compensation cost at March 31, 2014 and 2013. |
Segments
Segments: | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||
Segments: | ' | ||||||||||||||||||||
Segments: | ' | ||||||||||||||||||||
6. Segments: The table on page 25 reflects the results of operations of the company’s segments consistent with the management and measurement system utilized within the company. Performance measurement is based on pre-tax income. These results are used, in part, by senior management, both in evaluating the performance of, and in allocating resources to, each of the segments | |||||||||||||||||||||
SEGMENT INFORMATION | |||||||||||||||||||||
Global Services | |||||||||||||||||||||
Global | Global | ||||||||||||||||||||
Technology | Business | Systems and | Global | Total | |||||||||||||||||
(Dollars in millions) | Services | Services | Software | Technology | Financing | Segments | |||||||||||||||
For the three months | |||||||||||||||||||||
ended March 31, 2014: | |||||||||||||||||||||
External revenue | $ | 9,330 | $ | 4,483 | $ | 5,661 | $ | 2,391 | $ | 512 | $ | 22,376 | |||||||||
Internal revenue | 241 | 141 | 932 | 168 | 617 | 2,099 | |||||||||||||||
Total revenue | $ | 9,570 | $ | 4,624 | $ | 6,593 | $ | 2,559 | $ | 1,129 | $ | 24,476 | |||||||||
Pre-tax income | $ | 1,345 | $ | 628 | $ | 1,918 | $ | -660 | $ | 596 | $ | 3,828 | |||||||||
Revenue year-to-year change | -2.9 | % | -0.9 | % | 3 | % | -20.7 | % | 8.6 | % | -2.8 | % | |||||||||
Pre-tax income year-to-year | |||||||||||||||||||||
change | -15.1 | % | -10.6 | % | -4.7 | % | -63.1 | % | 10.7 | % | -13.7 | % | |||||||||
Pre-tax income margin | 14.1 | % | 13.6 | % | 29.1 | % | -25.8 | % | 52.8 | % | 15.6 | % | |||||||||
nm - not meaningful | |||||||||||||||||||||
For the three months | |||||||||||||||||||||
ended March 31, 2013: | |||||||||||||||||||||
External revenue | $ | 9,605 | $ | 4,484 | $ | 5,572 | $ | 3,106 | $ | 499 | $ | 23,266 | |||||||||
Internal revenue | 248 | 180 | 831 | 120 | 541 | 1,919 | |||||||||||||||
Total revenue | $ | 9,852 | $ | 4,664 | $ | 6,403 | $ | 3,226 | $ | 1,040 | $ | 25,185 | |||||||||
Pre-tax income | $ | 1,585 | $ | 703 | $ | 2,014 | $ | -405 | $ | 538 | $ | 4,435 | |||||||||
Pre-tax income margin | 16.1 | % | 15.1 | % | 31.5 | % | -12.5 | % | 51.8 | % | 17.6 | % | |||||||||
Reconciliations to IBM as Reported: | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
For the three months ended March 31: | 2014 | 2013 | |||||||||||||||||||
Revenue: | |||||||||||||||||||||
Total reportable segments | $ | 24,476 | $ | 25,185 | |||||||||||||||||
Eliminations of internal transactions | -2,099 | -1,919 | |||||||||||||||||||
Other revenue adjustments | 107 | 142 | |||||||||||||||||||
Total IBM Consolidated | $ | 22,484 | $ | 23,408 | |||||||||||||||||
Pre-tax income: | |||||||||||||||||||||
Total reportable segments | $ | 3,828 | $ | 4,435 | |||||||||||||||||
Amortization of acquired intangible assets | -194 | -183 | |||||||||||||||||||
Acquisition-related charges | -8 | -11 | |||||||||||||||||||
Non-operating retirement-related (costs)/income | -123 | -283 | |||||||||||||||||||
Eliminations of internal transactions | -524 | -339 | |||||||||||||||||||
Unallocated corporate amounts | 0 | -13 | |||||||||||||||||||
Total IBM Consolidated | $ | 2,980 | $ | 3,606 | |||||||||||||||||
Equity_Activity
Equity Activity: | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Equity Activity: | ' | ||||||||||||||||
Equity Activity: | ' | ||||||||||||||||
7. Equity Activity: | |||||||||||||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||||||||||||||||
(Dollars in millions) | Before Tax | Tax (Expense)/ | Net of Tax | ||||||||||||||
For the three months ended March 31, 2014: | Amount | Benefit | Amount | ||||||||||||||
Other comprehensive income/(loss): | |||||||||||||||||
Foreign currency translation adjustments | $ | -61 | $ | 10 | $ | -51 | |||||||||||
Net changes related to available-for-sale securities: | |||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Reclassification of (gains)/losses to other (income) and expense | 4 | -2 | 3 | ||||||||||||||
Subsequent changes in previously impaired securities arising during | |||||||||||||||||
the period | — | — | — | ||||||||||||||
Total net changes related to available-for-sale securities | $ | 4 | $ | -2 | $ | 3 | |||||||||||
Unrealized gains/(losses) on cash flow hedges: | |||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | 88 | $ | -33 | $ | 54 | |||||||||||
Reclassification of (gains)/losses to: | |||||||||||||||||
Cost of sales | 26 | -10 | 16 | ||||||||||||||
SG&A expense | 2 | 0 | 2 | ||||||||||||||
Other (income) and expense | -29 | 11 | -18 | ||||||||||||||
Interest expense | 0 | 0 | 0 | ||||||||||||||
Total unrealized gains/(losses) on cash flow hedges | $ | 87 | $ | -32 | $ | 55 | |||||||||||
Retirement-related benefit plans(1): | |||||||||||||||||
Prior service costs/(credits) | $ | 1 | $ | 0 | $ | 0 | |||||||||||
Net (losses)/gains arising during the period | 32 | -11 | 21 | ||||||||||||||
Curtailments and settlements | 4 | -1 | 3 | ||||||||||||||
Amortization of prior service (credits)/costs | -29 | 10 | -20 | ||||||||||||||
Amortization of net (gains)/losses | 649 | -214 | 434 | ||||||||||||||
Total retirement-related benefit plans | $ | 656 | $ | -217 | $ | 439 | |||||||||||
Other comprehensive income/(loss) | $ | 687 | $ | -241 | $ | 446 | |||||||||||
(1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, "Retirement-Related Benefits," | |||||||||||||||||
for additional information.) | |||||||||||||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||||||||||||||||
(Dollars in millions) | Before Tax | Tax (Expense)/ | Net of Tax | ||||||||||||||
For the three months ended March 31, 2013: | Amount | Benefit | Amount | ||||||||||||||
Other comprehensive income/(loss): | |||||||||||||||||
Foreign currency translation adjustments | $ | -405 | $ | -84 | $ | -489 | |||||||||||
Net changes related to available-for-sale securities: | |||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | -3 | $ | 1 | $ | -2 | |||||||||||
Reclassification of (gains)/losses to other (income) and expense | 1 | 0 | 0 | ||||||||||||||
Subsequent changes in previously impaired securities arising during | |||||||||||||||||
the period | 1 | 0 | 1 | ||||||||||||||
Total net changes related to available-for-sale securities | $ | -1 | $ | 0 | $ | 0 | |||||||||||
Unrealized gains/(losses) on cash flow hedges: | |||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | 360 | $ | -128 | $ | 232 | |||||||||||
Reclassification of (gains)/losses to: | |||||||||||||||||
Cost of sales | -9 | 3 | -6 | ||||||||||||||
SG&A expense | -10 | 3 | -7 | ||||||||||||||
Other (income) and expense | -37 | 14 | -23 | ||||||||||||||
Interest expense | 0 | — | 0 | ||||||||||||||
Total unrealized gains/(losses) on cash flow hedges | $ | 305 | $ | -108 | $ | 197 | |||||||||||
Retirement-related benefit plans(1): | |||||||||||||||||
Prior service costs/(credits) | $ | 33 | $ | -11 | $ | 22 | |||||||||||
Net (losses)/gains arising during the period | -15 | 5 | -10 | ||||||||||||||
Curtailments and settlements | — | — | — | ||||||||||||||
Amortization of prior service (credits)/costs | -30 | 10 | -20 | ||||||||||||||
Amortization of net (gains)/losses | 886 | -293 | 594 | ||||||||||||||
Total retirement-related benefit plans | $ | 875 | $ | -289 | $ | 586 | |||||||||||
Other comprehensive income/(loss) | $ | 773 | $ | -480 | $ | 293 | |||||||||||
(1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, "Retirement-Related Benefits," | |||||||||||||||||
for additional information.) | |||||||||||||||||
Accumulated Other Comprehensive Income/(Loss) (net of tax) | |||||||||||||||||
Net Change | Net Unrealized | ||||||||||||||||
Net Unrealized | Foreign | Retirement- | Gains/(Losses) | Accumulated | |||||||||||||
Gains/(Losses) | Currency | Related | on Available- | Other | |||||||||||||
on Cash Flow | Translation | Benefit | For-Sale | Comprehensive | |||||||||||||
(Dollars in Millions) | Hedges | Adjustments* | Plans | Securities | Income/(Loss) | ||||||||||||
1-Jan-14 | $ | -165 | $ | 332 | $ | -21,767 | $ | -1 | $ | -21,602 | |||||||
Other comprehensive income before | |||||||||||||||||
reclassifications | 54 | -51 | 21 | 0 | 24 | ||||||||||||
Amount reclassified from accumulated | |||||||||||||||||
other comprehensive income | 1 | 0 | 417 | 3 | 421 | ||||||||||||
Total change for the period | 55 | -51 | 439 | 3 | 446 | ||||||||||||
31-Mar-14 | $ | -111 | $ | 281 | $ | -21,328 | $ | 2 | $ | -21,156 | |||||||
Net Change | Net Unrealized | ||||||||||||||||
Net Unrealized | Foreign | Retirement- | Gains/(Losses) | Accumulated | |||||||||||||
Gains/(Losses) | Currency | Related | on Available- | Other | |||||||||||||
on Cash Flow | Translation | Benefit | For-Sale | Comprehensive | |||||||||||||
(Dollars in Millions) | Hedges | Adjustments* | Plans | Securities | Income/(Loss) | ||||||||||||
1-Jan-13 | $ | -90 | $ | 1,733 | $ | -27,406 | $ | 4 | $ | -25,759 | |||||||
Other comprehensive income before | |||||||||||||||||
reclassifications | 232 | -489 | 12 | -1 | -245 | ||||||||||||
Amount reclassified from accumulated | |||||||||||||||||
other comprehensive income | -35 | 0 | 574 | 0 | 539 | ||||||||||||
Total change for the period | 197 | -489 | 586 | 0 | 293 | ||||||||||||
31-Mar-13 | $ | 107 | $ | 1,243 | $ | -26,820 | $ | 4 | $ | -25,466 | |||||||
* Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. |
RetirementRelated_Benefits
Retirement-Related Benefits: | 3 Months Ended | ||||||||||||||
Mar. 31, 2014 | |||||||||||||||
Retirement-Related Benefits: | ' | ||||||||||||||
Retirement-Related Benefits: | ' | ||||||||||||||
8. Retirement-Related Benefits: The company offers defined benefit pension plans, defined contribution pension plans, as well as nonpension postretirement plans primarily consisting of retiree medical benefits. The following table provides the total retirement-related benefit plans’ impact on income before income taxes: | |||||||||||||||
Yr. to Yr. | |||||||||||||||
(Dollars in millions) | Percent | ||||||||||||||
For the three months ended March 31: | 2014 | 2013 | Change | ||||||||||||
Retirement-related plans – cost | |||||||||||||||
Defined benefit and contribution pension plans – cost | $ | 474 | $ | 674 | -29.6 | % | |||||||||
Nonpension postretirement plans – cost | 67 | 80 | -16 | ||||||||||||
Total | $ | 541 | $ | 754 | -28.2 | % | |||||||||
The following tables provide the components of the cost/(income) for the company’s pension plans: | |||||||||||||||
Cost/(Income) of Pension Plans | |||||||||||||||
(Dollars in millions) | U.S. Plans | Non-U.S. Plans | |||||||||||||
For the three months ended March 31: | 2014 | 2013 | 2014 | 2013 | |||||||||||
Service cost | $ | — | $ | — | $ | 116 | $ | 131 | |||||||
Interest cost | 555 | 496 | 390 | 382 | |||||||||||
Expected return on plan assets | -1,024 | -995 | -572 | -554 | |||||||||||
Amortization of prior service costs/(credits) | 2 | 2 | -29 | -31 | |||||||||||
Recognized actuarial losses | 269 | 451 | 360 | 404 | |||||||||||
Curtailments and settlements | — | — | 4 | 0 | |||||||||||
Multi-employer plans/other costs | — | — | 79 | 30 | |||||||||||
Total net periodic pension (income)/cost of defined | |||||||||||||||
benefit plans | -198 | -46 | 348 | 363 | |||||||||||
Cost of defined contribution plans | 191 | 206 | 133 | 151 | |||||||||||
Total defined benefit and contribution plans cost recognized | |||||||||||||||
in the Consolidated Statement of Earnings | $ | -7 | $ | 160 | $ | 481 | $ | 514 | |||||||
On March 24, 2014, the Supreme Court of Spain issued a ruling against IBM Spain in litigation involving its defined benefit and defined contributions plans. See page 35 for additional information. As a result of the ruling, the company recorded an additional pre-tax retirement-related obligation of $55 million in the first quarter of 2014 in selling, general and administrative expense in the Consolidated Statement of Earnings. This charge is not reflected in operating (non-GAAP) expense. This obligation is reflected in "Non-U.S. Plans - Multi-employer plans/other costs" in the table above. To date, the rulings in this case are declaratory only and there have been no quantifications of any individual remedies. | |||||||||||||||
In March 2014, the company initiated a change to the investment strategy of its U.S. defined benefit plan. The 2014 target asset allocation was modified, primarily by reducing equity securities from 42 percent to 32 percent, and increasing debt securities from 47 percent to 57 percent of total plan assets, respectively. The asset allocation change was substantially completed by March 31, 2014. This change is designed to reduce the potential negative impact that equity markets might have on the funded status of the U.S. defined benefit plan. The change is expected to reduce the 2015 expected long-term rate of return on assets to approximately 7.75 percent. See note S, "Retirement-Related Benefits," on page 135 in the company's 2013 Annual Report for additional information regarding the company's investment strategy. | |||||||||||||||
In 2014, the company expects to contribute to its non-U.S. defined benefit and multi-employer plans approximately $600 million, which will be mainly contributed to the defined benefit pension plans in Japan, the UK, Switzerland and the Netherlands. This amount represents the legally mandated minimum contributions. Total net contributions to the non-U.S. plans in the first three months of 2014 were $126 million. | |||||||||||||||
The following table provides the components of the cost/(income) for the company's nonpension postretirement plans: | |||||||||||||||
Cost of Nonpension Postretirement Plans | |||||||||||||||
U.S. Plan | Non-U.S. Plans | ||||||||||||||
(Dollars in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||
For the three months ended March 31: | |||||||||||||||
Service cost | $ | 7 | $ | 9 | $ | 2 | $ | 3 | |||||||
Interest cost | 45 | 42 | 16 | 16 | |||||||||||
Expected return on plan assets | 0 | 0 | -2 | -2 | |||||||||||
Amortization of prior service costs/(credits) | -2 | — | -1 | -1 | |||||||||||
Recognized actuarial losses | 0 | 8 | 3 | 6 | |||||||||||
Total nonpension postretirement plan cost recognized in | |||||||||||||||
Consolidated Statement of Earnings | $ | 50 | $ | 58 | $ | 17 | $ | 22 | |||||||
In connection with the Medicare Prescription Drug Improvement and Modernization Act of 2003 (the ‘Act’), the company qualified to receive a subsidy through 2013. Due to benefit plan changes effective January 1, 2014, the company no longer qualifies for the subsidy as of that date. The company is expected to receive additional subsidies after 2013 to true up the final subsidy amount due to IBM under the Act. The company received a $5.4 million subsidy in the first quarter of 2014 and a $6.1 million subsidy in the first quarter of 2013. For further information related to the Act, see page 141 in the company’s 2013 Annual Report. |
AcquisitionsDivestitures
Acquisitions/Divestitures: | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Acquisitions/Divestitures: | ' | |||||||||||||
Acquisitions/Divestitures: | ' | |||||||||||||
9. Acquisitions/Divestitures: | ||||||||||||||
Acquisitions: During the three months ended March 31, 2014, the company completed two acquisitions at an aggregate cost of $286 million. | ||||||||||||||
The Software segment completed acquisitions of two privately held companies in the first quarter: Aspera, Inc. (Aspera) and Cloudant, Inc. (Cloudant). Both acquisitions were for 100 percent of the acquired companies. | ||||||||||||||
The table below reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of March 31, 2014: | ||||||||||||||
Amortization | Total | |||||||||||||
(Dollars in millions) | Life (in yrs.) | Acquisitions | ||||||||||||
Current assets | $ | 21 | ||||||||||||
Fixed assets/noncurrent assets | 18 | |||||||||||||
Intangible assets: | ||||||||||||||
Goodwill | N/A | 239 | ||||||||||||
Completed technology | 7 | 33 | ||||||||||||
Client relationships | 7 | 1 | ||||||||||||
Patents/trademarks | 7-May | 8 | ||||||||||||
Total assets acquired | 319 | |||||||||||||
Current liabilities | -11 | |||||||||||||
Noncurrent liabilities | -22 | |||||||||||||
Total liabilities assumed | -33 | |||||||||||||
Total purchase price | $ | 286 | ||||||||||||
N/A - not applicable | ||||||||||||||
Each acquisition further complemented and enhanced the company’s portfolio of product and services offerings. Aspera’s technology makes cloud computing faster, more predictable and more cost effective for big data transfers such as enterprise storage, sharing virtual images or accessing the cloud for increased computing capacity. The acquisition of Cloudant will extend the company’s mobile and cloud platforms by enabling developers to easily and quickly create next generation mobile and web-based applications. Purchase price consideration for these acquisitions as reflected in the table above, was paid primarily in cash. All acquisitions are reported in the Consolidated Statement of Cash Flows net of acquired cash and cash equivalents. | ||||||||||||||
The acquisitions were accounted for as business combinations using the acquisition method, and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity was recorded at their estimated fair values at the date of acquisition. The primary items that generated the goodwill are the value of the synergies between the acquired companies and IBM and the acquired assembled work-force, neither of which qualify as an amortizable intangible asset. The overall weighted-average life of the identified amortizable intangible assets acquired is 6.8 years. These identified intangible assets will be amortized on a straight-line basis over their useful lives. Goodwill of $239 million has been assigned to the Software segment. It is expected that none of the goodwill will be deductible for tax purposes. | ||||||||||||||
On April 10, 2014, the company announced that it had entered into a definitive agreement to acquire Silverpop, a privately held company based in Atlanta, GA. Silverpop is a provider of cloud-based capabilities that deliver personalized customer engagements in highly scalable environments. The acquisition is expected to close in the second quarter of 2014. | ||||||||||||||
Divestitures: | ||||||||||||||
On January 23, 2014, IBM and Lenovo Group Limited (Lenovo) announced a definitive agreement in which Lenovo will acquire the company’s x86 server portfolio for $2.3 billion, consisting of approximately $2 billion in cash, with the balance in Lenovo stock. The stock will represent less than 5 percent equity ownership in Lenovo. The company will sell to Lenovo its System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations. | ||||||||||||||
IBM and Lenovo plan to enter into a strategic relationship which will include a global OEM and reseller agreement for sales of IBM’s industry-leading entry and midrange Storwize disk storage systems, tape storage systems, General Parallel File System software, SmartCloud Entry offering, and elements of IBM’s system software, including Systems Director and Platform Computing solutions. Following the closing of the transaction, Lenovo will assume related customer service and maintenance operations. IBM will continue to provide maintenance delivery on Lenovo’s behalf for an extended period of time. | ||||||||||||||
The transaction will be completed as soon as is practical, subject to the satisfaction of regulatory requirements, customary closing conditions and any other required approvals. At March 31, 2014, the company is engaged in the regulatory review process and in the activities necessary to separate the tangible assets in order to close the transaction. The transaction is expected to be completed in phases, with the initial closing expected in the second half of 2014. Subsequent local closings will occur subject to similar conditions, agreements and the information and consultation process in applicable countries. | ||||||||||||||
The company expects to recognize a total pre-tax gain on the sale of approximately $1 billion. This gain will be recognized consistent with the closing schedule for the transaction. The exact amount of the gain and the breakdown by closing date is not yet determinable. The variables that can impact the final gain include the valuation of the final balance sheet transferred, the valuation of other related agreements and transaction-related expenses. | ||||||||||||||
The company’s worldwide x86 business is reported in the Systems and Technology segment, and the associated maintenance operations are part of the Global Technology Services segment. In 2013, this combined business delivered approximately $4.6 billion of revenue, was essentially breakeven on a pre-tax income basis and had approximately $100 million in tangible assets. | ||||||||||||||
On September 10, 2013, IBM and SYNNEX announced a definitive agreement in which SYNNEX will acquire the company’s worldwide customer care business process outsourcing services business for $501 million, consisting of approximately $430 million in cash, net of balance sheet adjustments, and $71 million in SYNNEX stock, which represents less than 5 percent equity ownership in SYNNEX. As part of the transaction, SYNNEX entered into a multi-year agreement with the company, and Concentrix, SYNNEX’s outsourcing business, has become an IBM strategic business partner for global customer care business process outsourcing services. | ||||||||||||||
The transaction is being completed in phases – the initial closing was completed on January 31, 2014, with subsequent closings expected to be completed in the second quarter of 2014, subject to customary closing conditions, local agreements and the information and consultation process in applicable countries. The company expects to recognize a total pre-tax gain on the sale of between $200 million and $225 million. The gain recognized in the first quarter of 2014 was $98 million. The company’s worldwide customer care business process outsourcing services and industry process services was reported in the Global Technology Services segment. In 2013, the divested business delivered approximately $1.3 billion of revenue, approximately $0.1 billion of pre-tax income and had approximately $50 million in tangible assets. | ||||||||||||||
On April 17, 2012, the company announced that it had signed a definitive agreement with Toshiba TEC for the sale of its Retail Store Solutions business. As part of the transaction, the company agreed to transfer the maintenance business to Toshiba TEC within three years of the original closing of the transaction. | ||||||||||||||
In first quarter 2014, the company completed the first phase of the transfer of the maintenance workforce to Toshiba. Subsequent wave closings are scheduled to be completed through the first quarter of 2015 along with associated parts and inventory transfer. The first phase transfer and an assessment of the ongoing contractual terms of the overall transaction resulted in the recognition of an additional pre-tax gain of $34 million in the first quarter of 2014. | ||||||||||||||
The company expects to close the final phase of the divestiture in the first quarter of 2015. Overall, the company expects to recognize a cumulative total pre-tax gain on the sale of approximately $508 million. |
Intangible_Assets_Including_Go
Intangible Assets Including Goodwill: | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||
Intangible Assets Including Goodwill: | ' | ||||||||||||||||||
Intangible Assets Including Goodwill: | ' | ||||||||||||||||||
10. Intangible Assets Including Goodwill: The following table details the company’s intangible asset balances by major asset class: | |||||||||||||||||||
At March 31, 2014 | |||||||||||||||||||
(Dollars in millions) | Gross Carrying | Accumulated | Net Carrying | ||||||||||||||||
Intangible asset class | Amount | Amortization | Amount | ||||||||||||||||
Capitalized software | $ | 1,471 | $ | -696 | $ | 775 | |||||||||||||
Client relationships | 2,149 | -1,050 | 1,099 | ||||||||||||||||
Completed technology | 2,935 | -1,312 | 1,623 | ||||||||||||||||
In-process R&D | 2 | — | 2 | ||||||||||||||||
Patents/trademarks | 366 | -169 | 198 | ||||||||||||||||
Other* | 7 | -5 | 2 | ||||||||||||||||
Total | $ | 6,929 | $ | -3,231 | $ | 3,698 | |||||||||||||
At December 31, 2013 | |||||||||||||||||||
(Dollars in millions) | Gross Carrying | Accumulated | Net Carrying | ||||||||||||||||
Intangible asset class | Amount | Amortization | Amount | ||||||||||||||||
Capitalized software | $ | 1,494 | $ | -699 | $ | 794 | |||||||||||||
Client relationships | 2,148 | -977 | 1,171 | ||||||||||||||||
Completed technology | 2,910 | -1,224 | 1,687 | ||||||||||||||||
In-process R&D | 13 | — | 13 | ||||||||||||||||
Patents/trademarks | 358 | -154 | 204 | ||||||||||||||||
Other* | 7 | -5 | 2 | ||||||||||||||||
Total | $ | 6,930 | $ | -3,059 | $ | 3,871 | |||||||||||||
* Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. | |||||||||||||||||||
The net carrying amount of intangible assets decreased $173 million during the first quarter of 2014, primarily due to amortization, partially offset by intangible asset additions resulting from acquisitions. The aggregate intangible amortization expense for acquired intangibles (excluding capitalized software) was $339 million and $331 million for the quarters ended March 31, 2014 and 2013, respectively. In addition, in the first three months of 2014, the company retired $164 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount. | |||||||||||||||||||
The amortization expense for each of the five succeeding years relating to intangible assets currently recorded in the Consolidated Statement of Financial Position is estimated to be the following at March 31, 2014: | |||||||||||||||||||
Capitalized | Acquired | ||||||||||||||||||
(Dollars in millions) | Software | Intangibles | Total | ||||||||||||||||
2014 (for Q2-Q4) | $ | 377 | $ | 619 | $ | 997 | |||||||||||||
2015 | 294 | 642 | 936 | ||||||||||||||||
2016 | 96 | 601 | 697 | ||||||||||||||||
2017 | 8 | 479 | 487 | ||||||||||||||||
2018 | — | 328 | 328 | ||||||||||||||||
The change in the goodwill balances by reportable segment, for the three months ended March 31, 2014 and for the year ended December 31, 2013 are as follows: | |||||||||||||||||||
Foreign | |||||||||||||||||||
Currency | |||||||||||||||||||
Purchase | Translation | ||||||||||||||||||
(Dollars in millions) | Balance | Goodwill | Price | And Other | Balance | ||||||||||||||
Segment | 1/1/14 | Additions | Adjustments | Divestitures | Adjustments | 3/31/14 | |||||||||||||
Global Business Services | $ | 4,334 | $ | — | $ | — | $ | — | $ | 4 | $ | 4,337 | |||||||
Global Technology Services | 4,129 | — | — | -52 | 16 | 4,094 | |||||||||||||
Software | 21,121 | 239 | 0 | — | -170 | 21,190 | |||||||||||||
Systems and Technology | 1,601 | — | — | — | -8 | 1,593 | |||||||||||||
Total | $ | 31,184 | $ | 239 | $ | 0 | $ | -52 | $ | -158 | $ | 31,214 | |||||||
Foreign | |||||||||||||||||||
Currency | |||||||||||||||||||
Purchase | Translation | ||||||||||||||||||
(Dollars in millions) | Balance | Goodwill | Price | And Other | Balance | ||||||||||||||
Segment | 1/1/13 | Additions | Adjustments | Divestitures | Adjustments | 12/31/13 | |||||||||||||
Global Business Services | $ | 4,357 | $ | — | $ | 0 | $ | -3 | $ | -21 | $ | 4,334 | |||||||
Global Technology Services | 2,916 | 1,246 | 17 | — | -50 | 4,129 | |||||||||||||
Software | 20,405 | 987 | 11 | -4 | -279 | 21,121 | |||||||||||||
Systems and Technology | 1,568 | 13 | 33 | — | -14 | 1,601 | |||||||||||||
Total | $ | 29,247 | $ | 2,246 | $ | 61 | $ | -7 | $ | -363 | $ | 31,184 | |||||||
Purchase price adjustments recorded in the first three months of 2014 and full year 2013 were related to acquisitions that were completed on or prior to December 31, 2013 or December 31, 2012, respectively, and were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. There were no goodwill impairment losses recorded during the first three months of 2014 or the full year of 2013 and the company has no accumulated impairment losses. |
RestructuringRelated_Liabiliti
Restructuring-Related Liabilities: | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Restructuring-Related Liabilities: | ' | |||||||||||||
Restructuring-Related Liabilities: | ' | |||||||||||||
11. Restructuring-Related Liabilities: The following table provides a roll forward of the current and noncurrent liabilities for special restructuring-related actions taken prior to 2006. | ||||||||||||||
Liability | Liability | |||||||||||||
as of | Other | as of | ||||||||||||
(Dollars in millions) | 1/1/14 | Payments | Adjustments* | 3/31/14 | ||||||||||
Current: | ||||||||||||||
Workforce | $ | 27 | $ | -7 | $ | 8 | $ | 28 | ||||||
Total current | $ | 27 | $ | -7 | $ | 8 | $ | 28 | ||||||
Noncurrent: | ||||||||||||||
Workforce | $ | 440 | $ | — | $ | -3 | $ | 437 | ||||||
Total noncurrent | $ | 440 | $ | — | $ | -3 | $ | 437 | ||||||
* Other Adjustments principally include the reclassification of noncurrent to current, remeasurement of actuarial assumptions, | ||||||||||||||
foreign currency translation adjustments and interest accretion. |
Contingencies
Contingencies: | 3 Months Ended |
Mar. 31, 2014 | |
Contingencies: | ' |
Contingencies: | ' |
12. Contingencies: As a company with a substantial employee population and with clients in more than 175 countries, IBM is involved, either as plaintiff or defendant, in a variety of ongoing claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business. The company is a leader in the information technology industry and, as such, has been and will continue to be subject to claims challenging its IP rights and 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 quarter ended March 31, 2014 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, 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. The company has asserted counterclaims, including breach of contract, violation of the Lanham Act, unfair competition, intentional torts, unfair and deceptive trade practices, breach of the General Public License that governs open source distributions, promissory estoppel and copyright infringement. Motions for summary judgment were heard in March 2007, and the court has not yet issued its decision. On September 14, 2007, plaintiff filed for bankruptcy protection, and all proceedings in this case were stayed. On August 25, 2009, the U.S. Bankruptcy Court for the District of Delaware approved the appointment of a Trustee of SCO. 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. On July 10, 2013, the Court entered an order dismissing seven of SCO's ten claims, specifically its breach of contract and copyright claims, and one tortious interference claim. | |
On May 13, 2010, IBM and the State of Indiana (acting on behalf of the Indiana Family and Social Services Administration) sued one another in a dispute over a 2006 contract regarding the modernization of social service program processing in Indiana. The State terminated the contract, claiming that IBM was in breach, and the State is seeking damages. IBM believes the State’s claims against it are without merit and is seeking payment of termination amounts specified in the contract. After six weeks of trial, on July 18, 2012, the Indiana Superior Court in Marion County rejected the State’s claims in their entirety and awarded IBM $52 million plus interest and costs. On February 13, 2014, the Indiana Court of Appeals reversed portions of the trial judge’s findings, found IBM in material breach, and ordered the case remanded to the trial judge to determine the State’s damages, if any. The Indiana Court of Appeals also affirmed approximately $50 million of the trial court’s award of damages to IBM. This matter remains pending in the Indiana courts. | |
On April 16, 2014, Iusacell SA de C.V. (Iusacell) sued IBM, claiming that IBM made fraudulent misrepresentations that induced Iusacell to enter into an agreement with IBM Mexico. Iusacell claims $2.5 billion in damages for lost profits. Iusacell’s complaint relates to a contractual dispute in Mexico, which is the subject of a pending arbitration proceeding in Mexico initiated by IBM Mexico against Iusacell for breach of the underlying agreement. | |
IBM United Kingdom Limited (IBM UK) initiated legal proceedings in May 2010 before the High Court in London against the IBM UK Pensions Trust (the UK Trust) and two representative beneficiaries of the UK Trust membership. IBM UK is seeking a declaration that it acted lawfully both in notifying the Trustee of the UK Trust that it was closing its UK defined benefit plans to future accruals for most participants and in implementing the company’s new retirement policy. On April 4, 2014, the High Court acknowledged that the changes made to its UK defined benefit plans were within IBM’s discretion, but ruled that IBM breached its implied duty of good faith both in implementing these changes and in the manner in which it consulted with employees. This judgment contemplates a future hearing to determine what remedies are available. In addition, IBM UK is a defendant in approximately 290 individual actions brought since early 2010 by participants of the defined benefits plans who left IBM UK. These actions, which allege constructive dismissal and age discrimination, are pending before the Employment Tribunal in Southampton UK and are currently stayed. | |
In a separate but related proceeding, in March 2011, the Trustee of the IBM UK Trust was granted leave to initiate a claim before the High Court in London against IBM UK and one member of the UK Trust membership, seeking an order modifying certain documents and terms relating to retirement provisions in IBM UK’s largest defined benefit plan (the C Plan) dating back to 1983. The trial of these proceedings began in May 2012 and finished in early June. On October 12, 2012, the High Court in London issued its ruling, holding that the 1983 Trust Deeds and Rules should be modified to allow certain categories of current IBM UK employees who are members of the C Plan to retire from the age of 60 (rather than from the age of 63) without actuarial reduction of their defined benefit pension. In a supplementary ruling on December 13, 2012, the Court declined to similarly modify the Trust Deeds and Rules for former employees who were C Plan members and who left the company prior to retirement. On February 7, 2013, the Court issued an order agreed to by all parties, under which there will be no appeals of the October 2012 and December 2012 judgments. As a result of the October 2012 ruling, IBM recorded an additional pre-tax retirement-related obligation of $162 million in the third quarter of 2012. | |
On March 24, 2014, in a suit brought by local Works Councils, the Supreme Court of Spain held that IBM Spain’s defined contribution (DC) plan implemented in 1993 was null and void, and held that current employees could reinstate their rights to a defined benefit (DB) plan, although with an offset for DC contributions paid to date. The Court held that IBM Spain did not consult with the Works Councils in seeking the voluntary participation of employees in changing the pension scheme, and recommended that IBM Spain and the Works Councils engage in discussions over how to carry out the offset. The ruling is declaratory only and there have been no quantifications of, or suits for, individual remedies. IBM Spain is considering its options for appeal. | |
In March 2011, the company announced that it had agreed to settle a civil enforcement action with the Securities and Exchange Commission (SEC) relating to alleged violations of the Foreign Corrupt Practices Act of 1977 (FCPA). On July 25, 2013, the court approved that 2011 settlement and required that for a two-year period IBM make reports to the SEC and the court on certain matters, including those relating to compliance with the FCPA. In early 2012, IBM notified the SEC of an investigation by the Polish Central Anti-Corruption Bureau involving allegations of illegal activity by a former IBM Poland employee in connection with sales to the Polish government. IBM is cooperating with the SEC and Polish authorities in this matter. In April 2013, IBM learned that the U.S. Department of Justice (DOJ) is also investigating allegations related to the Poland matter, as well as allegations relating to transactions in Argentina, Bangladesh and Ukraine. The DOJ is also seeking information regarding the company's global FCPA compliance program and its public sector business. The company is cooperating with the DOJ in this matter. | |
In May 2013, IBM learned that the SEC is conducting an investigation into how IBM reports cloud revenue. IBM is cooperating with the SEC in this matter. | |
In December 2013, a putative class action lawsuit was filed in the United States District Court for the Southern District of New York related to the company’s third-quarter 2013 financial results disclosure. The company, its Chairman, President and Chief Executive Officer, and a former Senior Vice President and Chief Financial Officer of the company are named as defendants. Plaintiffs allege that defendants violated Section 20(a) and Section10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. | |
The company is a defendant in numerous actions filed after January 1, 2008 in the Supreme Court for the State of New York, county of Broome, on behalf of hundreds of plaintiffs. The complaints allege numerous and different causes of action, including for negligence and recklessness, private nuisance and trespass. Plaintiffs in these cases seek medical monitoring and claim damages in unspecified amounts for a variety of personal injuries and property damages allegedly arising out of the presence of groundwater contamination and vapor intrusion of groundwater contaminants into certain structures in which plaintiffs reside or resided, or conducted business, allegedly resulting from the release of chemicals into the environment by the company at its former manufacturing and development facility in Endicott. These complaints also seek punitive damages in an unspecified amount. | |
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 authorities regarding non-income tax assessments and non-income tax litigation matters. These matters include claims for taxes on the importation of computer software. In November 2008, the company won a significant case in the Superior Chamber of the federal administrative tax court in Brazil, and in late July 2009, the company received written confirmation regarding this decision. The total potential amount related to the remaining matters for all applicable years is approximately $720 million. The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability. |
Commitments
Commitments: | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Commitments: | ' | ||||||
Commitments: | ' | ||||||
13. Commitments: The company’s extended lines of credit to third-party entities include unused amounts of $6,103 million and $5,028 million at March 31, 2014 and December 31, 2013, respectively. A portion of these amounts was available to the company’s business partners to support their working capital needs. In addition, the company has committed to provide future financing to its clients in connection with client purchase agreements for approximately $1,589 million and $1,769 million at March 13, 2014 and December 31, 2013, 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 party harmless against losses arising from a breach of representations and covenants related to such matters as title to the assets sold, certain intellectual property (IP) rights, specified environmental matters, third-party performance of nonfinancial contractual obligations and certain income taxes. In each of these circumstances, payment by the company is conditioned on the other party making a 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 $45 million and $44 million at March 13, 2014 and December 31, 2013, respectively. The fair value of the guarantees recognized in the Consolidated Statement of Financial Position is not material. | |||||||
Changes in the company’s warranty liability for standard warranties and deferred income for extended warranty contracts are presented in the following tables: | |||||||
Standard Warranty Liability | |||||||
(Dollars in millions) | 2014 | 2013 | |||||
Balance at January 1 | $ | 376 | $ | 394 | |||
Current period accruals | 54 | 71 | |||||
Accrual adjustments to reflect actual experience | -3 | 9 | |||||
Charges incurred | -85 | -93 | |||||
Balance at March 31 | $ | 342 | $ | 381 | |||
Extended Warranty Liability | |||||||
(Dollars in millions) | 2014 | 2013 | |||||
Aggregate deferred revenue at January 1 | $ | 579 | $ | 606 | |||
Revenue deferred for new extended warranty contracts | 54 | 47 | |||||
Amortization of deferred revenue | -73 | -82 | |||||
Other* | -11 | -7 | |||||
Aggregate deferred revenue at March 31 | $ | 548 | $ | 565 | |||
Current portion | $ | 268 | $ | 286 | |||
Noncurrent portion | 280 | 278 | |||||
Aggregate deferred revenue at March 31 | $ | 548 | $ | 565 | |||
* Other primarily consists of foreign currency translation adjustments. | |||||||
Subsequent_Events
Subsequent Events: | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events: | ' |
Subsequent Events: | ' |
14. Subsequent Events: On April 29, 2014, the company announced that the Board of Directors approved a quarterly dividend of $1.10 per common share. The dividend is payable June 10, 2014 to shareholders of record on May 9, 2014. The dividend declaration represents an increase of $0.15 per common share, which is 16 percent higher than the prior quarterly dividend of $0.95 per common share. |
Financial_Instruments_Tables
Financial Instruments: (Tables) | 3 Months Ended | |||||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||||
Financial Instruments: | ' | |||||||||||||||||||||
Financial assets and financial liabilities measured at fair value on a recurring basis | ' | |||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||
At March 31, 2014 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||
Assets: | ||||||||||||||||||||||
Cash equivalents (1) | ||||||||||||||||||||||
Time deposits and certificates of deposit | $ | — | $ | 4,619 | $ | — | $ | 4,619 | ||||||||||||||
Commercial paper | — | 559 | — | 559 | ||||||||||||||||||
Money market funds | 988 | — | — | 988 | ||||||||||||||||||
U.S. government securities | — | 599 | — | 599 | ||||||||||||||||||
Canadian government securities | — | 226 | — | 226 | ||||||||||||||||||
Other securities | — | 40 | — | 40 | ||||||||||||||||||
Total | 988 | 6,044 | — | 7,032 | -6 | |||||||||||||||||
Debt securities - current (2) | — | 295 | — | 295 | -6 | |||||||||||||||||
Debt securities - noncurrent (3) | 1 | 8 | — | 9 | ||||||||||||||||||
Trading securities investments (3) | — | 77 | — | 77 | ||||||||||||||||||
Available-for-sale equity investments (3) | 4 | — | — | 4 | ||||||||||||||||||
Derivative assets (4) | ||||||||||||||||||||||
Interest rate contracts | — | 363 | — | 363 | ||||||||||||||||||
Foreign exchange contracts | — | 297 | — | 297 | ||||||||||||||||||
Equity contracts | — | 17 | — | 17 | ||||||||||||||||||
Total | — | 678 | — | 678 | -7 | |||||||||||||||||
Total assets | $ | 993 | $ | 7,102 | $ | — | $ | 8,095 | -7 | |||||||||||||
Liabilities: | ||||||||||||||||||||||
Derivative liabilities (5) | ||||||||||||||||||||||
Foreign exchange contracts | $ | — | $ | 427 | $ | — | $ | 427 | ||||||||||||||
Equity contracts | — | 2 | — | 2 | ||||||||||||||||||
Interest rate contracts | — | 12 | — | 12 | ||||||||||||||||||
Total liabilities | $ | — | $ | 441 | $ | — | $ | 441 | -7 | |||||||||||||
(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
(2) Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of | ||||||||||||||||||||||
Financial Position. | ||||||||||||||||||||||
(3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
(4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments | ||||||||||||||||||||||
and sundry assets in the Consolidated Statement of Financial Position at March 31, 2014 were $202 million and | ||||||||||||||||||||||
$476 million, respectively. | ||||||||||||||||||||||
(5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other | ||||||||||||||||||||||
liabilities in the Consolidated Statement of Financial Position at March 31, 2014 were $370 million and $71 | ||||||||||||||||||||||
million, respectively. | ||||||||||||||||||||||
(6) Available-for-sale securities with carrying values that approximate fair value. | ||||||||||||||||||||||
(7) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated | ||||||||||||||||||||||
Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $221 | ||||||||||||||||||||||
million each. | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||
At December 31, 2013 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||
Assets: | ||||||||||||||||||||||
Cash equivalents (1) | ||||||||||||||||||||||
Time deposits and certificates of deposit | $ | — | $ | 4,754 | $ | — | $ | 4,754 | ||||||||||||||
Commercial paper | — | 1,507 | — | 1,507 | ||||||||||||||||||
Money market funds | 1,728 | — | — | 1,728 | ||||||||||||||||||
Other securities | — | 8 | — | 8 | ||||||||||||||||||
Total | 1,728 | 6,269 | — | 7,997 | -6 | |||||||||||||||||
Debt securities - current (2) | — | 350 | — | 350 | -6 | |||||||||||||||||
Debt securities - noncurrent (3) | 1 | 7 | — | 9 | ||||||||||||||||||
Available-for-sale equity investments (3) | 18 | — | — | 18 | ||||||||||||||||||
Derivative assets (4) | ||||||||||||||||||||||
Interest rate contracts | — | 308 | — | 308 | ||||||||||||||||||
Foreign exchange contracts | — | 375 | — | 375 | ||||||||||||||||||
Equity contracts | — | 36 | — | 36 | ||||||||||||||||||
Total | — | 719 | — | 719 | -7 | |||||||||||||||||
Total assets | $ | 1,747 | $ | 7,345 | $ | — | $ | 9,092 | -7 | |||||||||||||
Liabilities: | ||||||||||||||||||||||
Derivative liabilities (5) | ||||||||||||||||||||||
Interest rate contracts | $ | — | $ | 13 | $ | — | $ | 13 | ||||||||||||||
Foreign exchange contracts | — | 484 | — | 484 | ||||||||||||||||||
Equity contracts | — | 4 | — | 4 | ||||||||||||||||||
Total liabilities | $ | — | $ | 501 | $ | — | $ | 501 | -7 | |||||||||||||
(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
(2) Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of | ||||||||||||||||||||||
Financial Position. | ||||||||||||||||||||||
(3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
(4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments | ||||||||||||||||||||||
and sundry assets in the Consolidated Statement of Financial Position at December 31, 2013 were $318 million and | ||||||||||||||||||||||
$401 million, respectively. | ||||||||||||||||||||||
(5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other | ||||||||||||||||||||||
liabilities in the Consolidated Statement of Financial Position at December 31, 2013 were $375 million and $126 | ||||||||||||||||||||||
million, respectively. | ||||||||||||||||||||||
(6) Available-for-sale securities with carrying values that approximate fair value. | ||||||||||||||||||||||
(7) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated | ||||||||||||||||||||||
Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $251 | ||||||||||||||||||||||
million each. | ||||||||||||||||||||||
There were no transfers between Levels 1 and 2 for the three months ended March 31, 2014 and the year ended December 31, 2013. | ||||||||||||||||||||||
Noncurrent debt and marketable equity securities available-for-sale and recorded at fair value | ' | |||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||
(Dollars in millions) | Adjusted | Unrealized | Unrealized | Fair | ||||||||||||||||||
At March 31, 2014: | Cost | Gains | Losses | Value | ||||||||||||||||||
Debt securities – noncurrent(1) | $ | 8 | $ | 2 | $ | — | $ | 9 | ||||||||||||||
Available-for-sale equity investments(1) | $ | 2 | $ | 2 | $ | 0 | $ | 4 | ||||||||||||||
(1) Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||
(Dollars in millions) | Adjusted | Unrealized | Unrealized | Fair | ||||||||||||||||||
At December 31, 2013: | Cost | Gains | Losses | Value | ||||||||||||||||||
Debt securities – noncurrent(1) | $ | 7 | $ | 1 | $ | — | $ | 9 | ||||||||||||||
Available-for-sale equity investments(1) | $ | 20 | $ | 2 | $ | 4 | $ | 18 | ||||||||||||||
(1) Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||
Sales of debt and available-for-sale equity investments | ' | |||||||||||||||||||||
Sales of debt and available-for-sale equity investments during the period were as follows: | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||
For the three months ended March 31: | 2014 | 2013 | ||||||||||||||||||||
Proceeds | $ | 14 | $ | 18 | ||||||||||||||||||
Gross realized gains (before taxes) | — | 3 | ||||||||||||||||||||
Gross realized losses (before taxes) | 4 | 4 | ||||||||||||||||||||
Unrealized gains/(losses) on available-for-sale debt and equity securities | ' | |||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||
For the three months ended March 31: | 2014 | 2013 | ||||||||||||||||||||
Net unrealized gains/(losses) arising during the period | $ | 0 | $ | ($1) | ||||||||||||||||||
Net unrealized (gains)/losses reclassified to net income* | 3 | 0 | ||||||||||||||||||||
* There were no writedowns for the three months ended March 31, 2014 and 2013. | ||||||||||||||||||||||
Fair Value of Derivative Instruments in the Consolidated Statement of Financial Position | ' | |||||||||||||||||||||
Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position | ||||||||||||||||||||||
As of March 31, 2014 and December 31, 2013 | ||||||||||||||||||||||
(Dollars in millions) | Fair Value of Derivative Assets | Fair Value of Derivative Liabilities | ||||||||||||||||||||
Balance Sheet | Balance Sheet | |||||||||||||||||||||
Classification | 3/31/14 | 12/31/13 | Classification | 3/31/14 | 12/31/13 | |||||||||||||||||
Designated as hedging | ||||||||||||||||||||||
instruments: | ||||||||||||||||||||||
Interest rate contracts: | Prepaid expenses and | Other accrued | ||||||||||||||||||||
other current assets | $ | — | $ | — | expenses and liabilities | $ | — | $ | 0 | |||||||||||||
Investments and sundry | ||||||||||||||||||||||
assets | 363 | 308 | Other liabilities | 12 | 13 | |||||||||||||||||
Foreign exchange | Prepaid expenses and | Other accrued | ||||||||||||||||||||
contracts: | other current assets | 110 | 187 | expenses and liabilities | 270 | 331 | ||||||||||||||||
Investments and sundry | ||||||||||||||||||||||
assets | 54 | 26 | Other liabilities | 55 | 112 | |||||||||||||||||
Fair value of derivative | Fair value of derivative | |||||||||||||||||||||
assets | $ | 528 | $ | 522 | liabilities | $ | 337 | $ | 456 | |||||||||||||
Not designated as | ||||||||||||||||||||||
hedging instruments: | ||||||||||||||||||||||
Foreign exchange | Prepaid expenses and | Other accrued | ||||||||||||||||||||
contracts: | other current assets | $ | 74 | $ | 94 | expenses and liabilities | $ | 98 | $ | 40 | ||||||||||||
Investments and sundry | ||||||||||||||||||||||
assets | 59 | 67 | Other liabilities | 4 | 1 | |||||||||||||||||
Equity contracts: | Prepaid expenses and | Other accrued | ||||||||||||||||||||
other current assets | 17 | 36 | expenses and liabilities | 2 | 4 | |||||||||||||||||
Fair value of derivative | Fair value of derivative | |||||||||||||||||||||
assets | $ | 151 | $ | 197 | liabilities | $ | 104 | $ | 45 | |||||||||||||
Total debt designated as | ||||||||||||||||||||||
hedging instruments: | ||||||||||||||||||||||
Short-term debt | N/A | N/A | $ | — | $ | 190 | ||||||||||||||||
Long-term debt | N/A | N/A | 6,116 | 6,111 | ||||||||||||||||||
Total | $ | 678 | $ | 719 | $ | 6,557 | $ | 6,802 | ||||||||||||||
N/A-not applicable | ||||||||||||||||||||||
Effect of Derivative Instruments in the Consolidated Statement of Earnings | ' | |||||||||||||||||||||
The Effect of Derivative Instruments in the Consolidated Statement of Earnings | ||||||||||||||||||||||
For the three months ended March 31, 2014 and 2013 | ||||||||||||||||||||||
(Dollars in millions) | Gain (Loss) Recognized in Earnings | |||||||||||||||||||||
Consolidated | ||||||||||||||||||||||
Statement of | Recognized on | Attributable to Risk | ||||||||||||||||||||
Earnings Line Item | Derivatives(1) | Being Hedged(2) | ||||||||||||||||||||
For the three months ended March 31: | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Derivative instruments in fair value hedges: | ||||||||||||||||||||||
Interest rate contracts | Cost of financing | $ | 48 | $ | -20 | $ | -23 | $ | 46 | |||||||||||||
Interest expense | 33 | -13 | -15 | 30 | ||||||||||||||||||
Derivative instruments not designated as | ||||||||||||||||||||||
hedging instruments(1): | ||||||||||||||||||||||
Foreign exchange contracts | Other (income) | |||||||||||||||||||||
and expense | -34 | -439 | N/A | N/A | ||||||||||||||||||
Equity contracts | SG&A expense | 21 | 85 | N/A | N/A | |||||||||||||||||
Total | $ | 68 | $ | -387 | $ | -38 | $ | 76 | ||||||||||||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income | ||||||||||||||||||||||
Consolidated | (Ineffectiveness) and | |||||||||||||||||||||
Effective Portion | Statement of | Effective Portion Reclassified | Amounts Excluded from | |||||||||||||||||||
Recognized in OCI | Earnings Line Item | from AOCI | Effectiveness Testing(3) | |||||||||||||||||||
For the three months | ||||||||||||||||||||||
ended March 31: | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Derivative instruments | ||||||||||||||||||||||
in cash flow hedges: | ||||||||||||||||||||||
Interest rate contracts | $ | — | $ | — | Interest expense | $ | — | $ | — | $ | — | $ | — | |||||||||
Other (income) | ||||||||||||||||||||||
Foreign exchange | 88 | 360 | and expense | 29 | 37 | 0 | 1 | |||||||||||||||
contracts | Cost of sales | -26 | 9 | — | — | |||||||||||||||||
SG&A expense | -2 | 10 | — | — | ||||||||||||||||||
Instruments in net | ||||||||||||||||||||||
investment hedges(4): | ||||||||||||||||||||||
Foreign exchange | ||||||||||||||||||||||
contracts | -26 | 219 | Interest expense | — | — | 0 | -1 | |||||||||||||||
Total | $ | 62 | $ | 579 | $ | 1 | $ | 56 | $ | 0 | $ | 0 | ||||||||||
N/A-not applicable | ||||||||||||||||||||||
Note: OCI represents Other comprehensive income/(loss) in the Consolidated Statement of Comprehensive Income and AOCI represents Accumulated other comprehensive income/(loss) in the Consolidated Statement of Changes in Equity. | ||||||||||||||||||||||
The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. | ||||||||||||||||||||||
The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. | ||||||||||||||||||||||
The amount of gain (loss) recognized in income represents ineffectiveness on hedge relationships. | ||||||||||||||||||||||
Instruments in net investment hedges include derivative and non-derivative instruments. | ||||||||||||||||||||||
Financing_Receivables_Tables
Financing Receivables: (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Financing Receivables: | ' | |||||||||||||
Financing receivables, net of allowances for credit losses, including residual values | ' | |||||||||||||
At March 31, | At December 31, | |||||||||||||
(Dollars in millions) | 2014 | 2013 | ||||||||||||
Current: | ||||||||||||||
Net investment in sales-type and direct financing leases | $ | 4,096 | $ | 4,004 | ||||||||||
Commercial financing receivables | 7,024 | 8,541 | ||||||||||||
Client loan receivables | 5,797 | 5,854 | ||||||||||||
Installment payment receivables | 1,412 | 1,389 | ||||||||||||
Total | $ | 18,329 | $ | 19,787 | ||||||||||
Noncurrent: | ||||||||||||||
Net investment in sales-type and direct financing leases | $ | 5,152 | $ | 5,700 | ||||||||||
Commercial financing receivables | — | — | ||||||||||||
Client loan receivables | 6,147 | 6,360 | ||||||||||||
Installment payment receivables | 619 | 695 | ||||||||||||
Total | $ | 11,918 | $ | 12,755 | ||||||||||
Schedule of financing receivables and allowance for credit losses by portfolio segment | ' | |||||||||||||
(Dollars in millions) | Major | Growth | ||||||||||||
At March 31, 2014 | Markets | Markets | Total | |||||||||||
Financing receivables: | ||||||||||||||
Lease receivables | $ | 6,356 | $ | 2,235 | $ | 8,591 | ||||||||
Loan receivables | 9,980 | 4,259 | 14,239 | |||||||||||
Ending balance | $ | 16,336 | $ | 6,494 | $ | 22,831 | ||||||||
Collectively evaluated for impairment | $ | 16,223 | $ | 6,270 | $ | 22,494 | ||||||||
Individually evaluated for impairment | $ | 113 | $ | 224 | $ | 337 | ||||||||
Allowance for credit losses: | ||||||||||||||
Beginning balance at January 1, 2014 | ||||||||||||||
Lease receivables | $ | 42 | $ | 80 | $ | 123 | ||||||||
Loan receivables | 95 | 147 | 242 | |||||||||||
Total | $ | 137 | $ | 228 | $ | 365 | ||||||||
Write-offs | -5 | -3 | -8 | |||||||||||
Provision | 3 | 36 | 39 | |||||||||||
Other | 0 | -1 | -1 | |||||||||||
Ending balance at March 31, 2014 | $ | 134 | $ | 260 | $ | 394 | ||||||||
Lease receivables | $ | 41 | $ | 90 | $ | 131 | ||||||||
Loan receivables | $ | 93 | $ | 171 | $ | 263 | ||||||||
Collectively evaluated for impairment | $ | 41 | $ | 47 | $ | 89 | ||||||||
Individually evaluated for impairment | $ | 93 | $ | 213 | $ | 306 | ||||||||
(Dollars in millions) | Major | Growth | ||||||||||||
At December 31, 2013 | Markets | Markets | Total | |||||||||||
Financing receivables: | ||||||||||||||
Lease receivables | $ | 6,796 | $ | 2,200 | $ | 8,996 | ||||||||
Loan receivables | 10,529 | 4,012 | 14,542 | |||||||||||
Ending balance | $ | 17,325 | $ | 6,212 | $ | 23,537 | ||||||||
Collectively evaluated for impairment | $ | 17,206 | $ | 6,013 | $ | 23,219 | ||||||||
Individually evaluated for impairment | $ | 119 | $ | 199 | $ | 318 | ||||||||
Allowance for credit losses: | ||||||||||||||
Beginning balance at January 1, 2013 | ||||||||||||||
Lease receivables | $ | 59 | $ | 55 | $ | 114 | ||||||||
Loan receivables | 121 | 84 | 204 | |||||||||||
Total | $ | 180 | $ | 138 | $ | 318 | ||||||||
Write-offs | -23 | -10 | -33 | |||||||||||
Provision | -21 | 105 | 84 | |||||||||||
Other | 1 | -6 | -5 | |||||||||||
Ending balance at December 31, 2013 | $ | 137 | $ | 228 | $ | 365 | ||||||||
Lease receivables | $ | 42 | $ | 80 | $ | 123 | ||||||||
Loan receivables | $ | 95 | $ | 147 | $ | 242 | ||||||||
Collectively evaluated for impairment | $ | 45 | $ | 48 | $ | 93 | ||||||||
Individually evaluated for impairment | $ | 93 | $ | 179 | $ | 272 | ||||||||
Schedule of recorded investment in financing receivables which are on Non-Accrual Status | ' | |||||||||||||
At March 31, | At December 31, | |||||||||||||
(Dollars in millions) | 2014 | 2013 | ||||||||||||
Major markets | $ | 24 | $ | 25 | ||||||||||
Growth markets | 62 | 34 | ||||||||||||
Total lease receivables | $ | 85 | $ | 59 | ||||||||||
Major markets | $ | 41 | $ | 40 | ||||||||||
Growth markets | 116 | 92 | ||||||||||||
Total loan receivables | $ | 157 | $ | 132 | ||||||||||
Total receivables | $ | 242 | $ | 191 | ||||||||||
Schedule of impaired client loan receivables | ' | |||||||||||||
At March 31, 2014 | At December 31, 2013 | |||||||||||||
Recorded | Related | Recorded | Related | |||||||||||
(Dollars in millions) | Investment | Allowance | Investment | Allowance | ||||||||||
Major markets | $ | 75 | $ | 63 | $ | 79 | $ | 67 | ||||||
Growth markets | 147 | 136 | 122 | 116 | ||||||||||
Total | $ | 222 | $ | 199 | $ | 201 | $ | 183 | ||||||
Interest | ||||||||||||||
Average | Interest | Income | ||||||||||||
(Dollars in millions) | Recorded | Income | Recognized on | |||||||||||
For the three months ended March 31, 2014: | Investment | Recognized | Cash Basis | |||||||||||
Major markets | $ | 77 | $ | 0 | $ | 0 | ||||||||
Growth markets | 134 | 0 | 0 | |||||||||||
Total | $ | 211 | $ | 0 | $ | 0 | ||||||||
Interest | ||||||||||||||
Average | Interest | Income | ||||||||||||
(Dollars in millions) | Recorded | Income | Recognized on | |||||||||||
For the three months ended March 31, 2013: | Investment | Recognized | Cash Basis | |||||||||||
Major markets | $ | 79 | $ | 0 | $ | 0 | ||||||||
Growth markets | 79 | 0 | 0 | |||||||||||
Total | $ | 158 | $ | 0 | $ | 0 | ||||||||
Schedule of gross recorded investment by credit quality indicator | ' | |||||||||||||
Lease Receivables | Loan Receivables | |||||||||||||
(Dollars in millions) | Major | Growth | Major | Growth | ||||||||||
At March 31, 2014: | Markets | Markets | Markets | Markets | ||||||||||
Credit Rating: | ||||||||||||||
AAA – AA- | $ | 648 | $ | 63 | $ | 1,017 | $ | 119 | ||||||
A+ – A- | 1,243 | 168 | 1,952 | 320 | ||||||||||
BBB+ – BBB- | 2,172 | 1,025 | 3,411 | 1,953 | ||||||||||
BB+ – BB | 1,349 | 333 | 2,119 | 634 | ||||||||||
BB- – B+ | 519 | 350 | 814 | 666 | ||||||||||
B – B- | 354 | 218 | 555 | 414 | ||||||||||
CCC+ – D | 71 | 80 | 111 | 152 | ||||||||||
Total | $ | 6,356 | $ | 2,235 | $ | 9,980 | $ | 4,259 | ||||||
Lease Receivables | Loan Receivables | |||||||||||||
(Dollars in millions) | Major | Growth | Major | Growth | ||||||||||
At December 31, 2013: | Markets | Markets | Markets | Markets | ||||||||||
Credit Rating: | ||||||||||||||
AAA – AA- | $ | 743 | $ | 68 | $ | 1,151 | $ | 125 | ||||||
A+ – A- | 1,513 | 168 | 2,344 | 307 | ||||||||||
BBB+ – BBB- | 2,111 | 957 | 3,271 | 1,745 | ||||||||||
BB+ – BB | 1,393 | 350 | 2,158 | 638 | ||||||||||
BB- – B+ | 595 | 368 | 922 | 672 | ||||||||||
B – B- | 365 | 214 | 565 | 391 | ||||||||||
CCC+ – D | 76 | 74 | 118 | 134 | ||||||||||
Total | $ | 6,796 | $ | 2,200 | $ | 10,529 | $ | 4,012 | ||||||
Schedule of past due financing receivables | ' | |||||||||||||
Recorded | ||||||||||||||
Total | Total | Investment | ||||||||||||
(Dollars in millions) | Past Due | Financing | > 90 Days | |||||||||||
At March 31, 2014: | > 90 days* | Current | Receivables | and Accruing | ||||||||||
Major markets | $ | 8 | $ | 6,348 | $ | 6,356 | $ | 8 | ||||||
Growth markets | 17 | 2,218 | 2,235 | 10 | ||||||||||
Total lease receivables | $ | 25 | $ | 8,566 | $ | 8,591 | $ | 18 | ||||||
Major markets | $ | 11 | $ | 9,969 | $ | 9,980 | $ | 11 | ||||||
Growth markets | 31 | 4,228 | 4,259 | 6 | ||||||||||
Total loan receivables | $ | 43 | $ | 14,197 | $ | 14,239 | $ | 18 | ||||||
Total | $ | 68 | $ | 22,763 | $ | 22,831 | $ | 35 | ||||||
* Does not include accounts that are fully reserved. | ||||||||||||||
Recorded | ||||||||||||||
Total | Total | Investment | ||||||||||||
(Dollars in millions) | Past Due | Financing | > 90 Days | |||||||||||
At December 31, 2013: | > 90 days* | Current | Receivables | and Accruing | ||||||||||
Major markets | $ | 6 | $ | 6,789 | $ | 6,796 | $ | 5 | ||||||
Growth markets | 19 | 2,181 | 2,200 | 11 | ||||||||||
Total lease receivables | $ | 25 | $ | 8,970 | $ | 8,996 | $ | 16 | ||||||
Major markets | $ | 9 | $ | 10,520 | $ | 10,529 | $ | 6 | ||||||
Growth markets | 34 | 3,979 | 4,012 | 18 | ||||||||||
Total loan receivables | $ | 43 | $ | 14,499 | $ | 14,542 | $ | 25 | ||||||
Total | $ | 68 | $ | 23,469 | $ | 23,537 | $ | 41 | ||||||
* Does not include accounts that are fully reserved. | ||||||||||||||
StockBased_Compensation_Tables
Stock-Based Compensation: (Tables) | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Stock-Based Compensation: | ' | ||||||
Stock-based compensation cost included in Consolidated Statement of Earnings | ' | ||||||
(Dollars in millions) | |||||||
For the three months ended March 31: | 2014 | 2013 | |||||
Cost | $ | 31 | $ | 31 | |||
Selling, general and administrative | 88 | 99 | |||||
Research, development and engineering | 14 | 14 | |||||
Other (income) and expense* | -9 | — | |||||
Pre-tax stock-based compensation cost | 124 | 144 | |||||
Income tax benefits | -41 | -50 | |||||
Total stock-based compensation cost | $ | 83 | $ | 94 | |||
* Reflects the one-time effects related to the divestiture of the customer care business. | |||||||
Segments_Tables
Segments: (Tables) | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||
Segments: | ' | ||||||||||||||||||||
Revenue and Pre-tax Income by Segment | ' | ||||||||||||||||||||
SEGMENT INFORMATION | |||||||||||||||||||||
Global Services | |||||||||||||||||||||
Global | Global | ||||||||||||||||||||
Technology | Business | Systems and | Global | Total | |||||||||||||||||
(Dollars in millions) | Services | Services | Software | Technology | Financing | Segments | |||||||||||||||
For the three months | |||||||||||||||||||||
ended March 31, 2014: | |||||||||||||||||||||
External revenue | $ | 9,330 | $ | 4,483 | $ | 5,661 | $ | 2,391 | $ | 512 | $ | 22,376 | |||||||||
Internal revenue | 241 | 141 | 932 | 168 | 617 | 2,099 | |||||||||||||||
Total revenue | $ | 9,570 | $ | 4,624 | $ | 6,593 | $ | 2,559 | $ | 1,129 | $ | 24,476 | |||||||||
Pre-tax income | $ | 1,345 | $ | 628 | $ | 1,918 | $ | -660 | $ | 596 | $ | 3,828 | |||||||||
Revenue year-to-year change | -2.9 | % | -0.9 | % | 3 | % | -20.7 | % | 8.6 | % | -2.8 | % | |||||||||
Pre-tax income year-to-year | |||||||||||||||||||||
change | -15.1 | % | -10.6 | % | -4.7 | % | -63.1 | % | 10.7 | % | -13.7 | % | |||||||||
Pre-tax income margin | 14.1 | % | 13.6 | % | 29.1 | % | -25.8 | % | 52.8 | % | 15.6 | % | |||||||||
nm - not meaningful | |||||||||||||||||||||
For the three months | |||||||||||||||||||||
ended March 31, 2013: | |||||||||||||||||||||
External revenue | $ | 9,605 | $ | 4,484 | $ | 5,572 | $ | 3,106 | $ | 499 | $ | 23,266 | |||||||||
Internal revenue | 248 | 180 | 831 | 120 | 541 | 1,919 | |||||||||||||||
Total revenue | $ | 9,852 | $ | 4,664 | $ | 6,403 | $ | 3,226 | $ | 1,040 | $ | 25,185 | |||||||||
Pre-tax income | $ | 1,585 | $ | 703 | $ | 2,014 | $ | -405 | $ | 538 | $ | 4,435 | |||||||||
Pre-tax income margin | 16.1 | % | 15.1 | % | 31.5 | % | -12.5 | % | 51.8 | % | 17.6 | % | |||||||||
Revenue and pre-tax income reconciliations to IBM as Reported | ' | ||||||||||||||||||||
Reconciliations to IBM as Reported: | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
For the three months ended March 31: | 2014 | 2013 | |||||||||||||||||||
Revenue: | |||||||||||||||||||||
Total reportable segments | $ | 24,476 | $ | 25,185 | |||||||||||||||||
Eliminations of internal transactions | -2,099 | -1,919 | |||||||||||||||||||
Other revenue adjustments | 107 | 142 | |||||||||||||||||||
Total IBM Consolidated | $ | 22,484 | $ | 23,408 | |||||||||||||||||
Pre-tax income: | |||||||||||||||||||||
Total reportable segments | $ | 3,828 | $ | 4,435 | |||||||||||||||||
Amortization of acquired intangible assets | -194 | -183 | |||||||||||||||||||
Acquisition-related charges | -8 | -11 | |||||||||||||||||||
Non-operating retirement-related (costs)/income | -123 | -283 | |||||||||||||||||||
Eliminations of internal transactions | -524 | -339 | |||||||||||||||||||
Unallocated corporate amounts | 0 | -13 | |||||||||||||||||||
Total IBM Consolidated | $ | 2,980 | $ | 3,606 | |||||||||||||||||
Equity_Activity_Tables
Equity Activity: (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Equity Activity: | ' | ||||||||||||||||
Schedule of Reclassifications and Taxes Related to items of Other Comprehensive Income | ' | ||||||||||||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||||||||||||||||
(Dollars in millions) | Before Tax | Tax (Expense)/ | Net of Tax | ||||||||||||||
For the three months ended March 31, 2014: | Amount | Benefit | Amount | ||||||||||||||
Other comprehensive income/(loss): | |||||||||||||||||
Foreign currency translation adjustments | $ | -61 | $ | 10 | $ | -51 | |||||||||||
Net changes related to available-for-sale securities: | |||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Reclassification of (gains)/losses to other (income) and expense | 4 | -2 | 3 | ||||||||||||||
Subsequent changes in previously impaired securities arising during | |||||||||||||||||
the period | — | — | — | ||||||||||||||
Total net changes related to available-for-sale securities | $ | 4 | $ | -2 | $ | 3 | |||||||||||
Unrealized gains/(losses) on cash flow hedges: | |||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | 88 | $ | -33 | $ | 54 | |||||||||||
Reclassification of (gains)/losses to: | |||||||||||||||||
Cost of sales | 26 | -10 | 16 | ||||||||||||||
SG&A expense | 2 | 0 | 2 | ||||||||||||||
Other (income) and expense | -29 | 11 | -18 | ||||||||||||||
Interest expense | 0 | 0 | 0 | ||||||||||||||
Total unrealized gains/(losses) on cash flow hedges | $ | 87 | $ | -32 | $ | 55 | |||||||||||
Retirement-related benefit plans(1): | |||||||||||||||||
Prior service costs/(credits) | $ | 1 | $ | 0 | $ | 0 | |||||||||||
Net (losses)/gains arising during the period | 32 | -11 | 21 | ||||||||||||||
Curtailments and settlements | 4 | -1 | 3 | ||||||||||||||
Amortization of prior service (credits)/costs | -29 | 10 | -20 | ||||||||||||||
Amortization of net (gains)/losses | 649 | -214 | 434 | ||||||||||||||
Total retirement-related benefit plans | $ | 656 | $ | -217 | $ | 439 | |||||||||||
Other comprehensive income/(loss) | $ | 687 | $ | -241 | $ | 446 | |||||||||||
(1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, "Retirement-Related Benefits," | |||||||||||||||||
for additional information.) | |||||||||||||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||||||||||||||||
(Dollars in millions) | Before Tax | Tax (Expense)/ | Net of Tax | ||||||||||||||
For the three months ended March 31, 2013: | Amount | Benefit | Amount | ||||||||||||||
Other comprehensive income/(loss): | |||||||||||||||||
Foreign currency translation adjustments | $ | -405 | $ | -84 | $ | -489 | |||||||||||
Net changes related to available-for-sale securities: | |||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | -3 | $ | 1 | $ | -2 | |||||||||||
Reclassification of (gains)/losses to other (income) and expense | 1 | 0 | 0 | ||||||||||||||
Subsequent changes in previously impaired securities arising during | |||||||||||||||||
the period | 1 | 0 | 1 | ||||||||||||||
Total net changes related to available-for-sale securities | $ | -1 | $ | 0 | $ | 0 | |||||||||||
Unrealized gains/(losses) on cash flow hedges: | |||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | 360 | $ | -128 | $ | 232 | |||||||||||
Reclassification of (gains)/losses to: | |||||||||||||||||
Cost of sales | -9 | 3 | -6 | ||||||||||||||
SG&A expense | -10 | 3 | -7 | ||||||||||||||
Other (income) and expense | -37 | 14 | -23 | ||||||||||||||
Interest expense | 0 | — | 0 | ||||||||||||||
Total unrealized gains/(losses) on cash flow hedges | $ | 305 | $ | -108 | $ | 197 | |||||||||||
Retirement-related benefit plans(1): | |||||||||||||||||
Prior service costs/(credits) | $ | 33 | $ | -11 | $ | 22 | |||||||||||
Net (losses)/gains arising during the period | -15 | 5 | -10 | ||||||||||||||
Curtailments and settlements | — | — | — | ||||||||||||||
Amortization of prior service (credits)/costs | -30 | 10 | -20 | ||||||||||||||
Amortization of net (gains)/losses | 886 | -293 | 594 | ||||||||||||||
Total retirement-related benefit plans | $ | 875 | $ | -289 | $ | 586 | |||||||||||
Other comprehensive income/(loss) | $ | 773 | $ | -480 | $ | 293 | |||||||||||
(1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, "Retirement-Related Benefits," | |||||||||||||||||
for additional information.) | |||||||||||||||||
Accumulated Other Comprehensive Income/(Loss) (net of tax) | ' | ||||||||||||||||
Accumulated Other Comprehensive Income/(Loss) (net of tax) | |||||||||||||||||
Net Change | Net Unrealized | ||||||||||||||||
Net Unrealized | Foreign | Retirement- | Gains/(Losses) | Accumulated | |||||||||||||
Gains/(Losses) | Currency | Related | on Available- | Other | |||||||||||||
on Cash Flow | Translation | Benefit | For-Sale | Comprehensive | |||||||||||||
(Dollars in Millions) | Hedges | Adjustments* | Plans | Securities | Income/(Loss) | ||||||||||||
1-Jan-14 | $ | -165 | $ | 332 | $ | -21,767 | $ | -1 | $ | -21,602 | |||||||
Other comprehensive income before | |||||||||||||||||
reclassifications | 54 | -51 | 21 | 0 | 24 | ||||||||||||
Amount reclassified from accumulated | |||||||||||||||||
other comprehensive income | 1 | 0 | 417 | 3 | 421 | ||||||||||||
Total change for the period | 55 | -51 | 439 | 3 | 446 | ||||||||||||
31-Mar-14 | $ | -111 | $ | 281 | $ | -21,328 | $ | 2 | $ | -21,156 | |||||||
Net Change | Net Unrealized | ||||||||||||||||
Net Unrealized | Foreign | Retirement- | Gains/(Losses) | Accumulated | |||||||||||||
Gains/(Losses) | Currency | Related | on Available- | Other | |||||||||||||
on Cash Flow | Translation | Benefit | For-Sale | Comprehensive | |||||||||||||
(Dollars in Millions) | Hedges | Adjustments* | Plans | Securities | Income/(Loss) | ||||||||||||
1-Jan-13 | $ | -90 | $ | 1,733 | $ | -27,406 | $ | 4 | $ | -25,759 | |||||||
Other comprehensive income before | |||||||||||||||||
reclassifications | 232 | -489 | 12 | -1 | -245 | ||||||||||||
Amount reclassified from accumulated | |||||||||||||||||
other comprehensive income | -35 | 0 | 574 | 0 | 539 | ||||||||||||
Total change for the period | 197 | -489 | 586 | 0 | 293 | ||||||||||||
31-Mar-13 | $ | 107 | $ | 1,243 | $ | -26,820 | $ | 4 | $ | -25,466 | |||||||
* Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. |
RetirementRelated_Benefits_Tab
Retirement-Related Benefits: (Tables) | 3 Months Ended | ||||||||||||||
Mar. 31, 2014 | |||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block | ' | ||||||||||||||
Retirement-related benefits net periodic (income)/cost in the Consolidated Statement of Earnings | ' | ||||||||||||||
Yr. to Yr. | |||||||||||||||
(Dollars in millions) | Percent | ||||||||||||||
For the three months ended March 31: | 2014 | 2013 | Change | ||||||||||||
Retirement-related plans – cost | |||||||||||||||
Defined benefit and contribution pension plans – cost | $ | 474 | $ | 674 | -29.6 | % | |||||||||
Nonpension postretirement plans – cost | 67 | 80 | -16 | ||||||||||||
Total | $ | 541 | $ | 754 | -28.2 | % | |||||||||
Defined Benefit Pension Plans | ' | ||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block | ' | ||||||||||||||
Retirement-related benefits net periodic (income)/cost in the Consolidated Statement of Earnings | ' | ||||||||||||||
Cost/(Income) of Pension Plans | |||||||||||||||
(Dollars in millions) | U.S. Plans | Non-U.S. Plans | |||||||||||||
For the three months ended March 31: | 2014 | 2013 | 2014 | 2013 | |||||||||||
Service cost | $ | — | $ | — | $ | 116 | $ | 131 | |||||||
Interest cost | 555 | 496 | 390 | 382 | |||||||||||
Expected return on plan assets | -1,024 | -995 | -572 | -554 | |||||||||||
Amortization of prior service costs/(credits) | 2 | 2 | -29 | -31 | |||||||||||
Recognized actuarial losses | 269 | 451 | 360 | 404 | |||||||||||
Curtailments and settlements | — | — | 4 | 0 | |||||||||||
Multi-employer plans/other costs | — | — | 79 | 30 | |||||||||||
Total net periodic pension (income)/cost of defined | |||||||||||||||
benefit plans | -198 | -46 | 348 | 363 | |||||||||||
Cost of defined contribution plans | 191 | 206 | 133 | 151 | |||||||||||
Total defined benefit and contribution plans cost recognized | |||||||||||||||
in the Consolidated Statement of Earnings | $ | -7 | $ | 160 | $ | 481 | $ | 514 | |||||||
Nonpension Postretirement Plans | ' | ||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block | ' | ||||||||||||||
Retirement-related benefits net periodic (income)/cost in the Consolidated Statement of Earnings | ' | ||||||||||||||
The following table provides the components of the cost/(income) for the company's nonpension postretirement plans: | |||||||||||||||
Cost of Nonpension Postretirement Plans | |||||||||||||||
U.S. Plan | Non-U.S. Plans | ||||||||||||||
(Dollars in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||
For the three months ended March 31: | |||||||||||||||
Service cost | $ | 7 | $ | 9 | $ | 2 | $ | 3 | |||||||
Interest cost | 45 | 42 | 16 | 16 | |||||||||||
Expected return on plan assets | 0 | 0 | -2 | -2 | |||||||||||
Amortization of prior service costs/(credits) | -2 | — | -1 | -1 | |||||||||||
Recognized actuarial losses | 0 | 8 | 3 | 6 | |||||||||||
Total nonpension postretirement plan cost recognized in | |||||||||||||||
Consolidated Statement of Earnings | $ | 50 | $ | 58 | $ | 17 | $ | 22 | |||||||
AcquisitionsDivestitures_Table
Acquisitions/Divestitures: (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Acquisitions/Divestitures: | ' | |||||||||||||
Business acquisition, purchase price allocation | ' | |||||||||||||
Amortization | Total | |||||||||||||
(Dollars in millions) | Life (in yrs.) | Acquisitions | ||||||||||||
Current assets | $ | 21 | ||||||||||||
Fixed assets/noncurrent assets | 18 | |||||||||||||
Intangible assets: | ||||||||||||||
Goodwill | N/A | 239 | ||||||||||||
Completed technology | 7 | 33 | ||||||||||||
Client relationships | 7 | 1 | ||||||||||||
Patents/trademarks | 7-May | 8 | ||||||||||||
Total assets acquired | 319 | |||||||||||||
Current liabilities | -11 | |||||||||||||
Noncurrent liabilities | -22 | |||||||||||||
Total liabilities assumed | -33 | |||||||||||||
Total purchase price | $ | 286 | ||||||||||||
N/A - not applicable | ||||||||||||||
Intangible_Assets_Including_Go1
Intangible Assets Including Goodwill: (Tables) | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||
Intangible Assets Including Goodwill: | ' | ||||||||||||||||||
Intangible asset balances by major asset class | ' | ||||||||||||||||||
At March 31, 2014 | |||||||||||||||||||
(Dollars in millions) | Gross Carrying | Accumulated | Net Carrying | ||||||||||||||||
Intangible asset class | Amount | Amortization | Amount | ||||||||||||||||
Capitalized software | $ | 1,471 | $ | -696 | $ | 775 | |||||||||||||
Client relationships | 2,149 | -1,050 | 1,099 | ||||||||||||||||
Completed technology | 2,935 | -1,312 | 1,623 | ||||||||||||||||
In-process R&D | 2 | — | 2 | ||||||||||||||||
Patents/trademarks | 366 | -169 | 198 | ||||||||||||||||
Other* | 7 | -5 | 2 | ||||||||||||||||
Total | $ | 6,929 | $ | -3,231 | $ | 3,698 | |||||||||||||
At December 31, 2013 | |||||||||||||||||||
(Dollars in millions) | Gross Carrying | Accumulated | Net Carrying | ||||||||||||||||
Intangible asset class | Amount | Amortization | Amount | ||||||||||||||||
Capitalized software | $ | 1,494 | $ | -699 | $ | 794 | |||||||||||||
Client relationships | 2,148 | -977 | 1,171 | ||||||||||||||||
Completed technology | 2,910 | -1,224 | 1,687 | ||||||||||||||||
In-process R&D | 13 | — | 13 | ||||||||||||||||
Patents/trademarks | 358 | -154 | 204 | ||||||||||||||||
Other* | 7 | -5 | 2 | ||||||||||||||||
Total | $ | 6,930 | $ | -3,059 | $ | 3,871 | |||||||||||||
* Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. | |||||||||||||||||||
Intangible assets, future amortization expense | ' | ||||||||||||||||||
Capitalized | Acquired | ||||||||||||||||||
(Dollars in millions) | Software | Intangibles | Total | ||||||||||||||||
2014 (for Q2-Q4) | $ | 377 | $ | 619 | $ | 997 | |||||||||||||
2015 | 294 | 642 | 936 | ||||||||||||||||
2016 | 96 | 601 | 697 | ||||||||||||||||
2017 | 8 | 479 | 487 | ||||||||||||||||
2018 | — | 328 | 328 | ||||||||||||||||
Changes in goodwill balances by reportable segment | ' | ||||||||||||||||||
Foreign | |||||||||||||||||||
Currency | |||||||||||||||||||
Purchase | Translation | ||||||||||||||||||
(Dollars in millions) | Balance | Goodwill | Price | And Other | Balance | ||||||||||||||
Segment | 1/1/14 | Additions | Adjustments | Divestitures | Adjustments | 3/31/14 | |||||||||||||
Global Business Services | $ | 4,334 | $ | — | $ | — | $ | — | $ | 4 | $ | 4,337 | |||||||
Global Technology Services | 4,129 | — | — | -52 | 16 | 4,094 | |||||||||||||
Software | 21,121 | 239 | 0 | — | -170 | 21,190 | |||||||||||||
Systems and Technology | 1,601 | — | — | — | -8 | 1,593 | |||||||||||||
Total | $ | 31,184 | $ | 239 | $ | 0 | $ | -52 | $ | -158 | $ | 31,214 | |||||||
Foreign | |||||||||||||||||||
Currency | |||||||||||||||||||
Purchase | Translation | ||||||||||||||||||
(Dollars in millions) | Balance | Goodwill | Price | And Other | Balance | ||||||||||||||
Segment | 1/1/13 | Additions | Adjustments | Divestitures | Adjustments | 12/31/13 | |||||||||||||
Global Business Services | $ | 4,357 | $ | — | $ | 0 | $ | -3 | $ | -21 | $ | 4,334 | |||||||
Global Technology Services | 2,916 | 1,246 | 17 | — | -50 | 4,129 | |||||||||||||
Software | 20,405 | 987 | 11 | -4 | -279 | 21,121 | |||||||||||||
Systems and Technology | 1,568 | 13 | 33 | — | -14 | 1,601 | |||||||||||||
Total | $ | 29,247 | $ | 2,246 | $ | 61 | $ | -7 | $ | -363 | $ | 31,184 | |||||||
RestructuringRelated_Liabiliti1
Restructuring-Related Liabilities: (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Restructuring-Related Liabilities: | ' | |||||||||||||
Schedule of restructuring related liabilities | ' | |||||||||||||
11. Restructuring-Related Liabilities: The following table provides a roll forward of the current and noncurrent liabilities for special restructuring-related actions taken prior to 2006. | ||||||||||||||
Liability | Liability | |||||||||||||
as of | Other | as of | ||||||||||||
(Dollars in millions) | 1/1/14 | Payments | Adjustments* | 3/31/14 | ||||||||||
Current: | ||||||||||||||
Workforce | $ | 27 | $ | -7 | $ | 8 | $ | 28 | ||||||
Total current | $ | 27 | $ | -7 | $ | 8 | $ | 28 | ||||||
Noncurrent: | ||||||||||||||
Workforce | $ | 440 | $ | — | $ | -3 | $ | 437 | ||||||
Total noncurrent | $ | 440 | $ | — | $ | -3 | $ | 437 | ||||||
* Other Adjustments principally include the reclassification of noncurrent to current, remeasurement of actuarial assumptions, | ||||||||||||||
foreign currency translation adjustments and interest accretion. |
Commitments_Tables
Commitments: (Tables) | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Commitments: | ' | ||||||
Changes in warranty liabilities | ' | ||||||
Standard Warranty Liability | |||||||
(Dollars in millions) | 2014 | 2013 | |||||
Balance at January 1 | $ | 376 | $ | 394 | |||
Current period accruals | 54 | 71 | |||||
Accrual adjustments to reflect actual experience | -3 | 9 | |||||
Charges incurred | -85 | -93 | |||||
Balance at March 31 | $ | 342 | $ | 381 | |||
Extended Warranty Liability | |||||||
(Dollars in millions) | 2014 | 2013 | |||||
Aggregate deferred revenue at January 1 | $ | 579 | $ | 606 | |||
Revenue deferred for new extended warranty contracts | 54 | 47 | |||||
Amortization of deferred revenue | -73 | -82 | |||||
Other* | -11 | -7 | |||||
Aggregate deferred revenue at March 31 | $ | 548 | $ | 565 | |||
Current portion | $ | 268 | $ | 286 | |||
Noncurrent portion | 280 | 278 | |||||
Aggregate deferred revenue at March 31 | $ | 548 | $ | 565 | |||
* Other primarily consists of foreign currency translation adjustments. | |||||||
Basis_of_Presentation_Details
Basis of Presentation: (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Basis of Presentation: | ' | ' |
Noncontrolling interest amounts in income, net of tax | ($0.50) | $1.40 |
Financial_Instruments_Details
Financial Instruments (Details) (USD $) | 3 Months Ended | ||||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | ||
Financial Instruments: | ' | ' | ' | ||
Impairments of non-financial assets | $0 | $0 | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Debt securities - noncurrent | 9 | [1] | ' | 9 | [1] |
Available-for-sale equity investments | 4 | [1] | ' | 18 | [1] |
Derivative assets | 434 | ' | 439 | ||
Derivative liabilities | 220 | ' | 250 | ||
Potential reduction in net position of total derivative liabilities | 221 | ' | 251 | ||
Recurring | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 7,032 | [2],[3] | ' | 7,997 | [2],[3] |
Debt securities - current | 295 | [2],[4] | ' | 350 | [2],[4] |
Debt securities - noncurrent | 9 | [1] | ' | 9 | [1] |
Trading securities investments | 77 | [1] | ' | ' | |
Available-for-sale equity investments | 4 | [1] | ' | 18 | [1] |
Derivative assets | 678 | [5],[6] | ' | 719 | [7],[8] |
Total Assets | 8,095 | [6] | ' | 9,092 | [8] |
Total Liabilities | 441 | [6] | ' | 501 | [8] |
Potential reduction in net position of total derivative assets | 221 | ' | 251 | ||
Potential reduction in net position of total derivative liabilities | 221 | ' | 251 | ||
Recurring | Prepaid expenses and other current assets | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Derivative assets | 202 | ' | 318 | ||
Recurring | Investments and sundry assets | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Derivative assets | 476 | ' | 401 | ||
Recurring | Other accrued expenses and liabilities | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Derivative liabilities | 370 | ' | 375 | ||
Recurring | Other liabilities | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Derivative liabilities | 71 | ' | 126 | ||
Recurring | Interest rate contracts | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Derivative assets | 363 | [5] | ' | 308 | [7] |
Derivative liabilities | 12 | [9] | ' | 13 | [10] |
Recurring | Foreign exchange contracts | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Derivative assets | 297 | [5] | ' | 375 | [7] |
Derivative liabilities | 427 | [9] | ' | 484 | [10] |
Recurring | Equity contracts | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Derivative assets | 17 | [5] | ' | 36 | [7] |
Derivative liabilities | 2 | [9] | ' | 4 | [10] |
Recurring | Time deposits and certificates of deposit | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 4,619 | [3] | ' | 4,754 | [3] |
Recurring | Commercial paper | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 559 | [3] | ' | 1,507 | [3] |
Recurring | Money market funds | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 988 | [3] | ' | 1,728 | [3] |
Recurring | U.S. government securities | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 599 | [3] | ' | ' | |
Recurring | Canadian government securities | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 226 | [3] | ' | ' | |
Recurring | Other securities | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 40 | [3] | ' | 8 | [3] |
Recurring | Level 1 | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 988 | [2],[3] | ' | 1,728 | [2],[3] |
Debt securities - noncurrent | 1 | [1] | ' | 1 | [1] |
Available-for-sale equity investments | 4 | [1] | ' | 18 | [1] |
Total Assets | 993 | [6] | ' | 1,747 | [8] |
Recurring | Level 1 | Money market funds | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 988 | [3] | ' | 1,728 | [3] |
Recurring | Level 2 | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 6,044 | [2],[3] | ' | 6,269 | [2],[3] |
Debt securities - current | 295 | [2],[4] | ' | 350 | [2],[4] |
Debt securities - noncurrent | 8 | [1] | ' | 7 | [1] |
Trading securities investments | 77 | [1] | ' | ' | |
Derivative assets | 678 | [5],[6] | ' | 719 | [7],[8] |
Total Assets | 7,102 | [6] | ' | 7,345 | [8] |
Total Liabilities | 441 | [6] | ' | 501 | [8] |
Recurring | Level 2 | Interest rate contracts | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Derivative assets | 363 | [5] | ' | 308 | [7] |
Derivative liabilities | 12 | [9] | ' | 13 | [10] |
Recurring | Level 2 | Foreign exchange contracts | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Derivative assets | 297 | [5] | ' | 375 | [7] |
Derivative liabilities | 427 | [9] | ' | 484 | [10] |
Recurring | Level 2 | Equity contracts | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Derivative assets | 17 | [5] | ' | 36 | [7] |
Derivative liabilities | 2 | [9] | ' | 4 | [10] |
Recurring | Level 2 | Time deposits and certificates of deposit | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 4,619 | [3] | ' | 4,754 | [3] |
Recurring | Level 2 | Commercial paper | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 559 | [3] | ' | 1,507 | [3] |
Recurring | Level 2 | U.S. government securities | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 599 | [3] | ' | ' | |
Recurring | Level 2 | Canadian government securities | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | 226 | [3] | ' | ' | |
Recurring | Level 2 | Other securities | ' | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ' | ||
Cash equivalents | $40 | [3] | ' | $8 | [3] |
[1] | Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||
[2] | Available-for-sale securities with carrying values that approximate fair value. | ||||
[3] | Included within cash and cash equivalents in the Consolidated Statement of Financial Position. | ||||
[4] | Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of | ||||
Financial Position. | |||||
[5] | The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments | ||||
and sundry assets in the Consolidated Statement of Financial Position at March 31, 2014 were $202 million and | |||||
$476 million, respectively. | |||||
[6] | If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated | ||||
Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $221 | |||||
million each. | |||||
[7] | The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments | ||||
and sundry assets in the Consolidated Statement of Financial Position at December 31, 2013 were $318 million and | |||||
$401 million, respectively. | |||||
[8] | If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated | ||||
Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $251 | |||||
million each. | |||||
[9] | The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other | ||||
liabilities in the Consolidated Statement of Financial Position at March 31, 2014 were $370 million and $71 | |||||
million, respectively. | |||||
[10] | The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other | ||||
liabilities in the Consolidated Statement of Financial Position at December 31, 2013 were $375 million and $126 | |||||
million, respectively. |
Financial_Instruments_Details_
Financial Instruments (Details 2) (USD $) | 3 Months Ended | |||||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |||
Fair value of financial instruments, details: | ' | ' | ' | |||
Carrying amount of long-term debt | $34,668 | ' | $32,856 | |||
Fair value of long-term debt | 36,808 | ' | 34,555 | |||
Debt and Marketable Equity Securities. | ' | ' | ' | |||
Debt securities - noncurrent, Adjusted Cost | 8 | [1] | ' | 7 | [1] | |
Debt securities - noncurrent, gross unrealized gains | 2 | [1] | ' | 1 | [1] | |
Available-for-sale equity investments, Adjusted Cost | 2 | [1] | ' | 20 | [1] | |
Available-for-sale equity investments, gross unrealized gains | 2 | [1] | ' | 2 | [1] | |
Available-for-sale equity investments, gross unrealized losses | 0 | [1] | ' | 4 | [1] | |
Debt securities - noncurrent | 9 | [1] | ' | 9 | [1] | |
Available-for-sale equity investments | 4 | [1] | ' | 18 | [1] | |
Sales of debt and available-for-sale equity investments | ' | ' | ' | |||
Proceeds | 14 | 18 | ' | |||
Gross realized gains (before taxes) | ' | 3 | ' | |||
Gross realized losses (before taxes) | 4 | 4 | ' | |||
Unrealized holding gains/(losses) on available-for-sale debt and equity securities | ' | ' | ' | |||
Net unrealized gains/(losses) arising during the period | 0 | -1 | ' | |||
Net unrealized (gains)/losses reclassified to net income | 3 | [2] | 0 | [2] | ' | |
Writedowns included in net income for the period | 0 | 0 | ' | |||
Maximum contractual maturities of substantially all available-for-sale debt securities | '1 year | ' | ' | |||
Other operating (income) and expense | ' | ' | ' | |||
Debt and Marketable Equity Securities. | ' | ' | ' | |||
Trading securitites, unrealized gains | $6 | ' | ' | |||
[1] | Included within investments and sundry assets in the Consolidated Statement of Financial Position. | |||||
[2] | * There were no writedowns for the three months ended March 31, 2014 and 2013. |
Financial_Instruments_Details_1
Financial Instruments (Details 3) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Financial Instruments: | ' | ' |
Derivative instruments with credit-risk related contingent features | $201 | $216 |
Collateral posted on derivative instruments | 0 | 0 |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 678 | 719 |
Fair value of total derivative liabilities and debt | 6,557 | 6,802 |
Maximum spread on credit default swap agreements before full overnight collateralization is required | 2.50% | ' |
Liabilities included in master netting arrangements | 221 | 251 |
Cash collateral received, derivatives | 23 | 29 |
Net exposure related to derivative assets recorded in the Statement of Financial Position | 434 | 439 |
Net amount related to derivative liabilities recorded in the Statement of Financial Position | 220 | 250 |
Non-cash collateral received | 0 | 0 |
Cash collateral rehypothecated | 0 | 0 |
Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 528 | 522 |
Fair value of total derivative instruments, Liabilities | 337 | 456 |
Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 151 | 197 |
Fair value of total derivative instruments, Liabilities | 104 | 45 |
Other receivables | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Cash collateral issued, derivatives | 0 | 0 |
Accounts payable | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Cash collateral received, derivatives | 23 | 29 |
Prepaid expenses and other current assets | Foreign exchange contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 110 | 187 |
Prepaid expenses and other current assets | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 74 | 94 |
Prepaid expenses and other current assets | Equity contracts | Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 17 | 36 |
Investments and sundry assets | Interest rate contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 363 | 308 |
Investments and sundry assets | Foreign exchange contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 54 | 26 |
Investments and sundry assets | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 59 | 67 |
Other accrued expenses and liabilities | Interest rate contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | ' | 0 |
Other accrued expenses and liabilities | Foreign exchange contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 270 | 331 |
Other accrued expenses and liabilities | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 98 | 40 |
Other accrued expenses and liabilities | Equity contracts | Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 2 | 4 |
Other liabilities | Interest rate contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 12 | 13 |
Other liabilities | Foreign exchange contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 55 | 112 |
Other liabilities | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 4 | 1 |
Long term debt | Designated as hedging instruments | Net investment hedge | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Debt designated as hedging instrument | 6,116 | 6,111 |
Short term debt | Designated as hedging instruments | Net investment hedge | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Debt designated as hedging instrument | ' | $190 |
Financial_Instruments_Details_2
Financial Instruments: (Details 4) (USD $) | 3 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Derivative instruments in fair value hedging relationships | Interest rate swaps | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | $5,900 | $3,100 |
Average remaining maturity | '9 years 6 months | '10 years 7 months |
Derivative instruments in cash flow hedging relationships | Foreign exchange forward contracts | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | 10,200 | 10,200 |
Average remaining maturity | '8 months | '8 months |
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges of borrowings | -169 | -252 |
Gains (losses) expected to be reclassified to net income within the next 12 months | -155 | -166 |
Maximum length of time hedged | '4 years | ' |
Derivative instruments in cash flow hedging relationships | Interest rate swaps | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges of borrowings | 1 | 1 |
Gains (losses) expected to be reclassified to net income within the next 12 months | 1 | 1 |
Derivative instruments in cash flow hedging relationships | Currency swaps | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | 1,200 | 1,200 |
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges of borrowings | -6 | -9 |
Gains (losses) expected to be reclassified to net income within the next 12 months | -3 | -3 |
Maximum length of time hedged | '7 years | ' |
Derivative instruments in net investment hedging relationships | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | 3,400 | 3,000 |
Average remaining maturity | '4 months 24 days | '4 months 24 days |
Derivative instruments not designated as hedging instruments | Foreign exchange forward and swap contracts | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | 16,300 | 14,700 |
Maximum length of time hedged | '1 year | ' |
Derivative instruments not designated as hedging instruments | Equity contracts | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | $1,200 | $1,300 |
Financial_Instruments_Details_3
Financial Instruments: (Details 5) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Amount of gain (loss) recognized in income on derivatives | $68 | [1] | ($387) | [1] |
Gain (loss) recognized in earnings attributable to risk being hedged | -38 | [2] | 76 | [2] |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI | 62 | 579 | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | 1 | 56 | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing | 0 | [3] | 0 | [3] |
Interest rate contracts | Derivative instruments in fair value hedging relationships | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing | 0 | 0 | ||
Foreign exchange contracts | Derivative instruments in cash flow hedging relationships | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI | 88 | 360 | ||
Foreign exchange contracts | Derivative instruments in net investment hedging relationships | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI | -26 | [4] | 219 | [4] |
Cost of financing | Interest rate contracts | Derivative instruments in fair value hedging relationships | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Amount of gain (loss) recognized in income, recognized on derivative instruments in fair value hedges | 48 | [1] | -20 | [1] |
Gain (loss) recognized in earnings attributable to risk being hedged | -23 | [2] | 46 | [2] |
Interest expense | Interest rate contracts | Derivative instruments in fair value hedging relationships | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Amount of gain (loss) recognized in income, recognized on derivative instruments in fair value hedges | 33 | [1] | -13 | [1] |
Gain (loss) recognized in earnings attributable to risk being hedged | -15 | [2] | 30 | [2] |
Interest expense | Foreign exchange contracts | Derivative instruments in net investment hedging relationships | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing | 0 | [3],[4] | -1 | [3],[4] |
Other (income) and expense | Foreign exchange contracts | Derivative instruments in cash flow hedging relationships | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | 29 | 37 | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing | 0 | [3] | 1 | [3] |
Other (income) and expense | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Amount of gain (loss) recognized in income on derivatives | -34 | [1] | -439 | [1] |
Cost of sales | Foreign exchange contracts | Derivative instruments in cash flow hedging relationships | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | -26 | 9 | ||
SG&A expense | Foreign exchange contracts | Derivative instruments in cash flow hedging relationships | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | -2 | 10 | ||
SG&A expense | Equity contracts | Derivative instruments not designated as hedging instruments | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Amount of gain (loss) recognized in income on derivatives | $21 | [1] | $85 | [1] |
[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 amount of gain (loss) recognized in income represents ineffectiveness on hedge relationships. | |||
[4] | Instruments in net investment hedges include derivative and non-derivative instruments. |
Financing_Receivables_Details
Financing Receivables: (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 |
In Millions, unless otherwise specified | Net investment in sales-type and direct financing leases | Net investment in sales-type and direct financing leases | Net investment in sales-type and direct financing leases | Net investment in sales-type and direct financing leases | Commercial financing receivables | Commercial financing receivables | Commercial financing receivables | Commercial financing receivables | Client loan receivables | Client loan receivables | Client loan receivables | Client loan receivables | Installment payment receivables | Installment payment receivables | Installment payment receivables | Installment payment receivables | |||
Financing receivable, lower range of payment terms | Financing receivable, upper range of payment terms | Financing receivable, lower range of payment terms | Financing receivable, upper range of payment terms | Financing receivable, lower range of payment terms | Financing receivable, upper range of payment terms | Financing receivable, lower range of payment terms | Financing receivable, upper range of payment terms | ||||||||||||
Financing receivables: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing receivables used as collateral for non-recourse borrowings | $756 | $769 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing receivables held for sale | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing receivables, current | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing receivables, net, current | 18,329 | 19,787 | ' | 4,096 | 4,004 | ' | ' | 7,024 | 8,541 | ' | ' | 5,797 | 5,854 | ' | ' | 1,412 | 1,389 | ' | ' |
Financing receivables, noncurrent | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing receivables, net, noncurrent | 11,918 | 12,755 | ' | 5,152 | 5,700 | ' | ' | ' | ' | ' | ' | 6,147 | 6,360 | ' | ' | 619 | 695 | ' | ' |
Financing receivables | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing receivable, payment terms | ' | ' | ' | ' | ' | '2 years | '6 years | ' | ' | '30 days | '90 days | ' | ' | '1 year | '7 years | ' | ' | '1 year | '3 years |
Sales-type and direct financing leases, unguaranteed residual value | ' | ' | ' | 698 | 737 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Sales-type and direct financing leases, unearned income | ' | ' | ' | 634 | 672 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Allowance for credit losses | $394 | $365 | $318 | $131 | $123 | ' | ' | $16 | $23 | ' | ' | $222 | $201 | ' | ' | $41 | $41 | ' | ' |
Financing_Receivables_Details_
Financing Receivables: (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||||||||
In Millions, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Major Markets | Major Markets | Growth Markets | Growth Markets | Lease receivables | Lease receivables | Lease receivables | Lease receivables | Lease receivables | Lease receivables | Lease receivables | Lease receivables | Lease receivables | Loan receivables | Loan receivables | Loan receivables | Loan receivables | Loan receivables | Loan receivables | Loan receivables | Loan receivables | Loan receivables | |||
Major Markets | Major Markets | Major Markets | Growth Markets | Growth Markets | Growth Markets | Major Markets | Major Markets | Major Markets | Growth Markets | Growth Markets | Growth Markets | |||||||||||||
Financing Receivables | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ending Balance | $22,831 | $23,537 | $16,336 | $17,325 | $6,494 | $6,212 | $8,591 | $8,996 | ' | $6,356 | $6,796 | ' | $2,235 | $2,200 | ' | $14,239 | $14,542 | ' | $9,980 | $10,529 | ' | $4,259 | $4,012 | ' |
Collectively evaluated for impairment | 22,494 | 23,219 | 16,223 | 17,206 | 6,270 | 6,013 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Individually evaluated for impairment | 337 | 318 | 113 | 119 | 224 | 199 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Allowance for Credit Losses | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Allowance for credit losses, beginning balance | 365 | 318 | 137 | 180 | 228 | 138 | 131 | 123 | 114 | 41 | 42 | 59 | 90 | 80 | 55 | 263 | 242 | 204 | 93 | 95 | 121 | 171 | 147 | 84 |
Write-offs | -8 | -33 | -5 | -23 | -3 | -10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Provision | 39 | 84 | 3 | -21 | 36 | 105 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other | -1 | -5 | 0 | 1 | -1 | -6 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Allowance for credit losses, ending balance | 394 | 365 | 134 | 137 | 260 | 228 | 131 | 123 | 114 | 41 | 42 | 59 | 90 | 80 | 55 | 263 | 242 | 204 | 93 | 95 | 121 | 171 | 147 | 84 |
Collectively evaluated for impairment | 89 | 93 | 41 | 45 | 47 | 48 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Individually evaluated for impairment | $306 | $272 | $93 | $93 | $213 | $179 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing_Receivables_Details_1
Financing Receivables: (Details 3) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | $242 | $191 |
Lease receivables | ' | ' |
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | 85 | 59 |
Lease receivables | Major Markets | ' | ' |
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | 24 | 25 |
Lease receivables | Growth Markets | ' | ' |
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | 62 | 34 |
Loan receivables | ' | ' |
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | 157 | 132 |
Loan receivables | Major Markets | ' | ' |
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | 41 | 40 |
Loan receivables | Growth Markets | ' | ' |
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | $116 | $92 |
Financing_Receivables_Details_2
Financing Receivables: (Details 4) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Impaired client loan receivables | ' | ' | ' |
Recorded Investment | $222 | ' | $201 |
Related Allowance | 199 | ' | 183 |
Average Recorded Investment | 211 | 158 | ' |
Interest Income Recognized | 0 | 0 | ' |
Interest Income Recognized on Cash Basis | 0 | 0 | ' |
Major Markets | ' | ' | ' |
Impaired client loan receivables | ' | ' | ' |
Recorded Investment | 75 | ' | 79 |
Related Allowance | 63 | ' | 67 |
Average Recorded Investment | 77 | 79 | ' |
Interest Income Recognized | 0 | 0 | ' |
Interest Income Recognized on Cash Basis | 0 | 0 | ' |
Growth Markets | ' | ' | ' |
Impaired client loan receivables | ' | ' | ' |
Recorded Investment | 147 | ' | 122 |
Related Allowance | 136 | ' | 116 |
Average Recorded Investment | 134 | 79 | ' |
Interest Income Recognized | 0 | 0 | ' |
Interest Income Recognized on Cash Basis | $0 | $0 | ' |
Financing_Receivables_Details_3
Financing Receivables: (Details 5) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | $22,831 | $23,537 |
Major Markets | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 16,336 | 17,325 |
Growth Markets | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 6,494 | 6,212 |
Lease receivables | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 8,591 | 8,996 |
Lease receivables | Major Markets | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 6,356 | 6,796 |
Lease receivables | Major Markets | AAA - AA- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 648 | 743 |
Lease receivables | Major Markets | A+ - A- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 1,243 | 1,513 |
Lease receivables | Major Markets | BBB+ - BBB- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 2,172 | 2,111 |
Lease receivables | Major Markets | BB+ - BB | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 1,349 | 1,393 |
Lease receivables | Major Markets | BB- - B+ | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 519 | 595 |
Lease receivables | Major Markets | B - B- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 354 | 365 |
Lease receivables | Major Markets | CCC+ - D | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 71 | 76 |
Lease receivables | Growth Markets | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 2,235 | 2,200 |
Lease receivables | Growth Markets | AAA - AA- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 63 | 68 |
Lease receivables | Growth Markets | A+ - A- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 168 | 168 |
Lease receivables | Growth Markets | BBB+ - BBB- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 1,025 | 957 |
Lease receivables | Growth Markets | BB+ - BB | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 333 | 350 |
Lease receivables | Growth Markets | BB- - B+ | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 350 | 368 |
Lease receivables | Growth Markets | B - B- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 218 | 214 |
Lease receivables | Growth Markets | CCC+ - D | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 80 | 74 |
Loan receivables | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 14,239 | 14,542 |
Loan receivables | Major Markets | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 9,980 | 10,529 |
Loan receivables | Major Markets | AAA - AA- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 1,017 | 1,151 |
Loan receivables | Major Markets | A+ - A- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 1,952 | 2,344 |
Loan receivables | Major Markets | BBB+ - BBB- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 3,411 | 3,271 |
Loan receivables | Major Markets | BB+ - BB | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 2,119 | 2,158 |
Loan receivables | Major Markets | BB- - B+ | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 814 | 922 |
Loan receivables | Major Markets | B - B- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 555 | 565 |
Loan receivables | Major Markets | CCC+ - D | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 111 | 118 |
Loan receivables | Growth Markets | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 4,259 | 4,012 |
Loan receivables | Growth Markets | AAA - AA- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 119 | 125 |
Loan receivables | Growth Markets | A+ - A- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 320 | 307 |
Loan receivables | Growth Markets | BBB+ - BBB- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 1,953 | 1,745 |
Loan receivables | Growth Markets | BB+ - BB | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 634 | 638 |
Loan receivables | Growth Markets | BB- - B+ | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 666 | 672 |
Loan receivables | Growth Markets | B - B- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 414 | 391 |
Loan receivables | Growth Markets | CCC+ - D | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | $152 | $134 |
Financing_Receivables_Details_4
Financing Receivables: (Details 6) (Global Financing, Financing Receivable Portfolio) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Financial Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 39.00% | 39.00% |
Government Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 15.00% | 14.00% |
Manufacturing Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 13.00% | 14.00% |
Retail Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 9.00% | 8.00% |
Services Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 8.00% | 8.00% |
Healthcare Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 5.00% | 6.00% |
Communications Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 6.00% | 6.00% |
Other industries | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 4.00% | 4.00% |
Financing_Receivables_Details_5
Financing Receivables: (Details 7) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Past Due Financing Receivable | ' | ' | ||
Total Past Due (> 90 days) | $68 | [1] | $68 | [1] |
Current | 22,763 | 23,469 | ||
Total Financing Receivables | 22,831 | 23,537 | ||
Recorded Investment > 90 Days and Accruing | 35 | 41 | ||
Troubled debt restructurings of financing receivables | 0 | 0 | ||
Major Markets | ' | ' | ||
Past Due Financing Receivable | ' | ' | ||
Total Financing Receivables | 16,336 | 17,325 | ||
Growth Markets | ' | ' | ||
Past Due Financing Receivable | ' | ' | ||
Total Financing Receivables | 6,494 | 6,212 | ||
Lease receivables | ' | ' | ||
Past Due Financing Receivable | ' | ' | ||
Total Past Due (> 90 days) | 25 | [1] | 25 | [1] |
Current | 8,566 | 8,970 | ||
Total Financing Receivables | 8,591 | 8,996 | ||
Recorded Investment > 90 Days and Accruing | 18 | 16 | ||
Lease receivables | Major Markets | ' | ' | ||
Past Due Financing Receivable | ' | ' | ||
Total Past Due (> 90 days) | 8 | [1] | 6 | [1] |
Current | 6,348 | 6,789 | ||
Total Financing Receivables | 6,356 | 6,796 | ||
Recorded Investment > 90 Days and Accruing | 8 | 5 | ||
Lease receivables | Growth Markets | ' | ' | ||
Past Due Financing Receivable | ' | ' | ||
Total Past Due (> 90 days) | 17 | [1] | 19 | [1] |
Current | 2,218 | 2,181 | ||
Total Financing Receivables | 2,235 | 2,200 | ||
Recorded Investment > 90 Days and Accruing | 10 | 11 | ||
Loan receivables | ' | ' | ||
Past Due Financing Receivable | ' | ' | ||
Total Past Due (> 90 days) | 43 | [1] | 43 | [1] |
Current | 14,197 | 14,499 | ||
Total Financing Receivables | 14,239 | 14,542 | ||
Recorded Investment > 90 Days and Accruing | 18 | 25 | ||
Loan receivables | Major Markets | ' | ' | ||
Past Due Financing Receivable | ' | ' | ||
Total Past Due (> 90 days) | 11 | [1] | 9 | [1] |
Current | 9,969 | 10,520 | ||
Total Financing Receivables | 9,980 | 10,529 | ||
Recorded Investment > 90 Days and Accruing | 11 | 6 | ||
Loan receivables | Growth Markets | ' | ' | ||
Past Due Financing Receivable | ' | ' | ||
Total Past Due (> 90 days) | 31 | [1] | 34 | [1] |
Current | 4,228 | 3,979 | ||
Total Financing Receivables | 4,259 | 4,012 | ||
Recorded Investment > 90 Days and Accruing | $6 | $18 | ||
[1] | * Does not include accounts that are fully reserved. |
StockBased_Compensation_Detail
Stock-Based Compensation: (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | |
Stock-based compensation cost, allocation of recognized costs | ' | ' | |
Pre-tax stock-based compensation cost | $124 | $144 | |
Income tax benefits | -41 | -50 | |
Total Stock-based compensation cost | 83 | 94 | |
Stock-based compensation cost, increase (decrease) due to performance share units | -7 | ' | |
Stock-based compensation cost, increase (decrease) due to restricted stock units | -9 | ' | |
Stock-based compensation cost, increase (decrease) related to the company's assumption of stock-based awards previously issued by acquired entities | -4 | ' | |
Stock-based compensation cost, unrecognized, related to non-vested awards | 853 | ' | |
Stock-based compensation cost, unrecognized, related to non-vested awards, weighted average period of recognition | '2 years 5 months | ' | |
Capitalized stock-based compensation cost | 0 | 0 | |
Cost | ' | ' | |
Stock-based compensation cost, allocation of recognized costs | ' | ' | |
Pre-tax stock-based compensation cost | 31 | 31 | |
Selling, general and administrative expense | ' | ' | |
Stock-based compensation cost, allocation of recognized costs | ' | ' | |
Pre-tax stock-based compensation cost | 88 | 99 | |
Research, development and engineering | ' | ' | |
Stock-based compensation cost, allocation of recognized costs | ' | ' | |
Pre-tax stock-based compensation cost | 14 | 14 | |
Other (income) and expense | ' | ' | |
Stock-based compensation cost, allocation of recognized costs | ' | ' | |
Pre-tax stock-based compensation cost | ($9) | [1] | ' |
[1] | Reflects the one-time effects related to the divestiture of the customer care business. |
Segments_Details
Segments: (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Segment Information | ' | ' |
Revenue | $22,484 | $23,408 |
Pre-tax income | 2,980 | 3,606 |
Global Technology Services | ' | ' |
Segment Information | ' | ' |
Revenue | 9,330 | 9,605 |
Global Business Services | ' | ' |
Segment Information | ' | ' |
Revenue | 4,483 | 4,484 |
Software | ' | ' |
Segment Information | ' | ' |
Revenue | 5,661 | 5,572 |
Systems and Technology | ' | ' |
Segment Information | ' | ' |
Revenue | 2,391 | 3,106 |
Global Financing | ' | ' |
Segment Information | ' | ' |
Revenue | 512 | 499 |
Total Segments | ' | ' |
Segment Information | ' | ' |
Revenue | 22,376 | 23,266 |
Business Segments | ' | ' |
Segment Information | ' | ' |
Revenue | 24,476 | 25,185 |
Pre-tax income | 3,828 | 4,435 |
Business Segments | Global Technology Services | ' | ' |
Segment Information | ' | ' |
Revenue | 9,570 | 9,852 |
Pre-tax income | 1,345 | 1,585 |
Revenue year-to-year change (as a percent) | -2.90% | ' |
Pre-tax income year-to-year change (as a percent) | -15.10% | ' |
Pre-tax income margin (as a percent) | 14.10% | 16.10% |
Business Segments | Global Business Services | ' | ' |
Segment Information | ' | ' |
Revenue | 4,624 | 4,664 |
Pre-tax income | 628 | 703 |
Revenue year-to-year change (as a percent) | -0.90% | ' |
Pre-tax income year-to-year change (as a percent) | -10.60% | ' |
Pre-tax income margin (as a percent) | 13.60% | 15.10% |
Business Segments | Software | ' | ' |
Segment Information | ' | ' |
Revenue | 6,593 | 6,403 |
Pre-tax income | 1,918 | 2,014 |
Revenue year-to-year change (as a percent) | 3.00% | ' |
Pre-tax income year-to-year change (as a percent) | -4.70% | ' |
Pre-tax income margin (as a percent) | 29.10% | 31.50% |
Business Segments | Systems and Technology | ' | ' |
Segment Information | ' | ' |
Revenue | 2,559 | 3,226 |
Pre-tax income | -660 | -405 |
Revenue year-to-year change (as a percent) | -20.70% | ' |
Pre-tax income year-to-year change (as a percent) | -63.10% | ' |
Pre-tax income margin (as a percent) | -25.80% | -12.50% |
Business Segments | Global Financing | ' | ' |
Segment Information | ' | ' |
Revenue | 1,129 | 1,040 |
Pre-tax income | 596 | 538 |
Revenue year-to-year change (as a percent) | 8.60% | ' |
Pre-tax income year-to-year change (as a percent) | 10.70% | ' |
Pre-tax income margin (as a percent) | 52.80% | 51.80% |
Business Segments | Total Segments | ' | ' |
Segment Information | ' | ' |
Revenue | 24,476 | 25,185 |
Pre-tax income | 3,828 | 4,435 |
Revenue year-to-year change (as a percent) | -2.80% | ' |
Pre-tax income year-to-year change (as a percent) | -13.70% | ' |
Pre-tax income margin (as a percent) | 15.60% | 17.60% |
Internal transactions | ' | ' |
Segment Information | ' | ' |
Revenue | -2,099 | -1,919 |
Pre-tax income | -524 | -339 |
Internal transactions | Global Technology Services | ' | ' |
Segment Information | ' | ' |
Revenue | -241 | -248 |
Internal transactions | Global Business Services | ' | ' |
Segment Information | ' | ' |
Revenue | -141 | -180 |
Internal transactions | Software | ' | ' |
Segment Information | ' | ' |
Revenue | -932 | -831 |
Internal transactions | Systems and Technology | ' | ' |
Segment Information | ' | ' |
Revenue | -168 | -120 |
Internal transactions | Global Financing | ' | ' |
Segment Information | ' | ' |
Revenue | -617 | -541 |
Internal transactions | Total Segments | ' | ' |
Segment Information | ' | ' |
Revenue | ($2,099) | ($1,919) |
Segments_Revenue_by_segments_D
Segments: (Revenue by segments) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenue | ' | ' |
Revenue | $22,484 | $23,408 |
Total reportable segments | ' | ' |
Revenue | ' | ' |
Revenue | 24,476 | 25,185 |
Internal transactions | ' | ' |
Revenue | ' | ' |
Revenue | -2,099 | -1,919 |
Other revenue adjustments | ' | ' |
Revenue | ' | ' |
Revenue | $107 | $142 |
Segments_Segment_reconciliatio
Segments: (Segment reconciliations) (Details3) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Pre-tax Income | ' | ' |
Income before income taxes | $2,980 | $3,606 |
Total reportable segments | ' | ' |
Pre-tax Income | ' | ' |
Income before income taxes | 3,828 | 4,435 |
Pre-tax reconciliations items | ' | ' |
Pre-tax Income | ' | ' |
Amortization of acquired intangible assets | -194 | -183 |
Acquisition-related charges | -8 | -11 |
Non-operating retirement-related (costs)/income | -123 | -283 |
Internal transactions | ' | ' |
Pre-tax Income | ' | ' |
Income before income taxes | -524 | -339 |
Unallocated corporate amounts | ' | ' |
Pre-tax Income | ' | ' |
Income before income taxes | $0 | ($13) |
Equity_Activity_Details
Equity Activity: (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Other comprehensive income/(loss), before tax | ' | ' | ||
Foreign currency translation adjustments, before tax | ($61) | ($405) | ||
Net changes related to available-for-sale securities, before tax | ' | ' | ||
Unrealized gains/(losses) arising during the period, before tax | 0 | -3 | ||
Reclassification of (gains)/losses to other (income) and expense, before tax | 4 | 1 | ||
Subsequent changes in previously impaired securities arising during the period, before tax | ' | 1 | ||
Total net changes related to available-for-sale securities | 4 | -1 | ||
Unrealized gains/(losses) on cash flow hedges, before tax | ' | ' | ||
Unrealized gains/(losses) arising during the period, before tax | 88 | 360 | ||
Reclassification of (gains)/losses to net income, before tax | -1 | -56 | ||
Total unrealized gains/(losses) on cash flow hedges | 87 | 305 | ||
Retirement-related benefit plans, before tax | ' | ' | ||
Prior service costs/(credits), before tax | 1 | 33 | ||
Net (losses)/gains arising during the period, before tax | 32 | -15 | ||
Curtailments and settlements | 4 | ' | ||
Amortization of prior service (credits)/costs, before tax | -29 | -30 | ||
Amortization of net (gains)/losses, before tax | 649 | 886 | ||
Total retirement-related benefit plans | 656 | 875 | ||
Other comprehensive income/(loss), before tax | 687 | 773 | ||
Other comprehensive income/(loss), tax | ' | ' | ||
Foreign currency translation adjustments, tax | 10 | -84 | ||
Net changes related to available-for-sale securities, tax | ' | ' | ||
Unrealized gains/(losses) arising during the period, tax | 0 | 1 | ||
Reclassification of (gains)/losses to other (income) and expense, tax | -2 | 0 | ||
Subsequent changes in previously impaired securities arising during the period, tax | ' | 0 | ||
Total net changes related to available-for-sale securities, tax | -2 | 0 | ||
Unrealized gains/(losses) on cash flow hedges, tax | ' | ' | ||
Unrealized gains/(losses) arising during the period, tax | -33 | -128 | ||
Total unrealized gains/(losses) on cash flow hedges, tax | -32 | -108 | ||
Retirement-related benefit plans, tax | ' | ' | ||
Prior service costs/(credits), tax | 0 | [1] | -11 | [1] |
Net (losses)/gains arising during the period, tax | -11 | [1] | 5 | [1] |
Curtailments and settlements, tax | -1 | [1] | ' | |
Amortization of prior service (credits)/costs, tax | 10 | [1] | 10 | [1] |
Amortization of net (gains)/losses, tax | -214 | [1] | -293 | [1] |
Total retirement-related benefit plans, tax | -217 | [1] | -289 | [1] |
Other comprehensive income/(loss), tax | -241 | -480 | ||
Other comprehensive income/(loss), net of tax | ' | ' | ||
Foreign currency translation adjustments, net of tax | -51 | -489 | ||
Net changes related to available-for-sale securities, net of tax | ' | ' | ||
Unrealized gains/(losses) arising during the period, net of tax | 0 | -2 | ||
Reclassification of (gains)/losses to other (income) and expense, net of tax | 3 | [2] | 0 | [2] |
Subsequent changes in previously impaired securities arising during the period, net of tax | ' | 1 | ||
Total net changes related to available-for-sale securities, net of tax | 3 | 0 | ||
Unrealized gains/(losses) on cash flow hedges, net of tax | ' | ' | ||
Unrealized gains/(losses) arising during the period, net of tax | 54 | 232 | ||
Total unrealized gains/(losses) on cash flow hedges, net of tax | 55 | 197 | ||
Retirement-related benefit plans, net of tax | ' | ' | ||
Prior service costs/(credits), net of tax | 0 | [1] | 22 | [1] |
Net (losses)/gains arising during the period, net of tax | 21 | [1] | -10 | [1] |
Curtailments and settlements, net of tax | 3 | [1] | ' | |
Amortization of prior service (credits)/costs, net of tax | -20 | [1] | -20 | [1] |
Amortization of net (gains)/losses, net of tax | 434 | [1] | 594 | [1] |
Total retirement-related benefit plans, net of tax | 439 | [1] | 586 | [1] |
Other comprehensive income/(loss) | 446 | 293 | ||
Cost of sales | ' | ' | ||
Unrealized gains/(losses) on cash flow hedges, before tax | ' | ' | ||
Reclassification of (gains)/losses to net income, before tax | 26 | -9 | ||
Unrealized gains/(losses) on cash flow hedges, tax | ' | ' | ||
Reclassification of (gains)/losses to other (income) and expense, tax | -10 | 3 | ||
Unrealized gains/(losses) on cash flow hedges, net of tax | ' | ' | ||
Reclassification of (gains)/losses to net income, net of tax | 16 | -6 | ||
SG&A expense | ' | ' | ||
Unrealized gains/(losses) on cash flow hedges, before tax | ' | ' | ||
Reclassification of (gains)/losses to net income, before tax | 2 | -10 | ||
Unrealized gains/(losses) on cash flow hedges, tax | ' | ' | ||
Reclassification of (gains)/losses to other (income) and expense, tax | 0 | 3 | ||
Unrealized gains/(losses) on cash flow hedges, net of tax | ' | ' | ||
Reclassification of (gains)/losses to net income, net of tax | 2 | -7 | ||
Other (income) and expense | ' | ' | ||
Net changes related to available-for-sale securities, before tax | ' | ' | ||
Reclassification of (gains)/losses to other (income) and expense, before tax | 4 | 1 | ||
Unrealized gains/(losses) on cash flow hedges, before tax | ' | ' | ||
Reclassification of (gains)/losses to net income, before tax | -29 | -37 | ||
Net changes related to available-for-sale securities, tax | ' | ' | ||
Reclassification of (gains)/losses to other (income) and expense, tax | -2 | 0 | ||
Unrealized gains/(losses) on cash flow hedges, tax | ' | ' | ||
Reclassification of (gains)/losses to other (income) and expense, tax | 11 | 14 | ||
Net changes related to available-for-sale securities, net of tax | ' | ' | ||
Reclassification of (gains)/losses to other (income) and expense, net of tax | 3 | 0 | ||
Unrealized gains/(losses) on cash flow hedges, net of tax | ' | ' | ||
Reclassification of (gains)/losses to net income, net of tax | -18 | -23 | ||
Interest expense | ' | ' | ||
Unrealized gains/(losses) on cash flow hedges, before tax | ' | ' | ||
Reclassification of (gains)/losses to net income, before tax | 0 | 0 | ||
Unrealized gains/(losses) on cash flow hedges, tax | ' | ' | ||
Reclassification of (gains)/losses to other (income) and expense, tax | 0 | ' | ||
Unrealized gains/(losses) on cash flow hedges, net of tax | ' | ' | ||
Reclassification of (gains)/losses to net income, net of tax | $0 | $0 | ||
[1] | (1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, "Retirement-Related Benefits," for additional information.) | |||
[2] | * There were no writedowns for the three months ended March 31, 2014 and 2013. |
Equity_Activity_Details_2
Equity Activity: (Details 2) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ' | ' | ||
Balance at the Beginning of the Period | ($21,602) | ($25,759) | ||
Other comprehensive income before reclassifications | 24 | -245 | ||
Amount reclassified from accumulated other comprehensive income | 421 | 539 | ||
Total change for the period | 446 | 293 | ||
Balance at the End of the Period | -21,156 | -25,466 | ||
Net Unrealized Gains/(Losses) on Cash Flow Hedges | ' | ' | ||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ' | ' | ||
Balance at the Beginning of the Period | -165 | -90 | ||
Other comprehensive income before reclassifications | 54 | 232 | ||
Amount reclassified from accumulated other comprehensive income | 1 | -35 | ||
Total change for the period | 55 | 197 | ||
Balance at the End of the Period | -111 | 107 | ||
Foreign Currency Translation Adjustments | ' | ' | ||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ' | ' | ||
Balance at the Beginning of the Period | 332 | [1] | 1,733 | [1] |
Other comprehensive income before reclassifications | -51 | [1] | -489 | [1] |
Amount reclassified from accumulated other comprehensive income | 0 | [1] | 0 | [1] |
Total change for the period | -51 | [1] | -489 | [1] |
Balance at the End of the Period | 281 | [1] | 1,243 | [1] |
Net Change Retirement-Related Benefit Plans | ' | ' | ||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ' | ' | ||
Balance at the Beginning of the Period | -21,767 | -27,406 | ||
Other comprehensive income before reclassifications | 21 | 12 | ||
Amount reclassified from accumulated other comprehensive income | 417 | 574 | ||
Total change for the period | 439 | 586 | ||
Balance at the End of the Period | -21,328 | -26,820 | ||
Net Unrealized Gains/(Losses) on Available-For-Sale Securities | ' | ' | ||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ' | ' | ||
Balance at the Beginning of the Period | -1 | 4 | ||
Other comprehensive income before reclassifications | 0 | -1 | ||
Amount reclassified from accumulated other comprehensive income | 3 | 0 | ||
Total change for the period | 3 | 0 | ||
Balance at the End of the Period | $2 | $4 | ||
[1] | * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. |
RetirementRelated_Benefits_Det
Retirement-Related Benefits (Details) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | |||||||||||||||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Defined Contribution U.S. Plans | Defined Contribution U.S. Plans | Defined Contribution Non-U.S. Plans | Defined Contribution Non-U.S. Plans | Multi-employer Plans - Non U.S. Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | Non-US Defined Benefit Pension Plans | Non-US Defined Benefit Pension Plans | Non-U.S. Defined Benefit and Multi-employer Plan | U.S. Defined Benefit Non Pension Postretirement Plans | U.S. Defined Benefit Non Pension Postretirement Plans | Non-U.S. Defined Benefit Non Pension Postretirement Plans | Non-U.S. Defined Benefit Non Pension Postretirement Plans | |||
Spain | Equity securities | Equity securities | Debt securities | Debt securities | ||||||||||||||||
Pending Litigation | ||||||||||||||||||||
SG&A expense | ||||||||||||||||||||
Retirement-related plans cost | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Service cost | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $116 | $131 | ' | $7 | $9 | $2 | $3 |
Interest cost | ' | ' | ' | ' | ' | ' | ' | 555 | 496 | ' | ' | ' | ' | 390 | 382 | ' | 45 | 42 | 16 | 16 |
Expected return on plan assets | ' | ' | ' | ' | ' | ' | ' | -1,024 | -995 | ' | ' | ' | ' | -572 | -554 | ' | 0 | 0 | -2 | -2 |
Amortization of prior service costs/(credits) | ' | ' | ' | ' | ' | ' | ' | 2 | 2 | ' | ' | ' | ' | -29 | -31 | ' | -2 | ' | -1 | -1 |
Recognized actuarial losses | ' | ' | ' | ' | ' | ' | ' | 269 | 451 | ' | ' | ' | ' | 360 | 404 | ' | 0 | 8 | 3 | 6 |
Curtailments and settlements | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | 0 | ' | ' | ' | ' | ' |
Multi-employer plans/other costs | ' | ' | ' | ' | ' | ' | 55 | ' | ' | ' | ' | ' | ' | 79 | 30 | ' | ' | ' | ' | ' |
Total net periodic pension (income)/cost of defined benefit plans | ' | ' | ' | ' | ' | ' | ' | -198 | -46 | ' | ' | ' | ' | 348 | 363 | ' | 50 | 58 | 17 | 22 |
Cost of defined contribution plans | ' | ' | 191 | 206 | 133 | 151 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Defined benefit and contribution pension plan - cost | 474 | 674 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Nonpension postretirement plans - cost | 67 | 80 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total | 541 | 754 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Year-to-year percent change, defined benefit and contribution pension plans cost | -29.60% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Year-to-year percent change, Nonpension postretirement plans cost | -16.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Year-to-year percent change, total | -28.20% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected current year contributions to non-U.S. defined benefit plans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 600 | ' | ' | ' | ' |
Year-to-date contributions to non-U.S. defined benefit plans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 126 | ' | ' | ' | ' |
Defined benefit and contribution pension plan - cost U.S. Plans | -7 | 160 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Defined benefit and contribution pension plan - cost Non U.S. Plans | 481 | 514 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from Medicare Prescription Drug Improvement and Modernization Act of 2003 | $5.40 | $6.10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Target allocation (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 32.00% | 42.00% | 57.00% | 47.00% | ' | ' | ' | ' | ' | ' | ' |
Expected long-term returns on plan assets (as a percent) | ' | ' | ' | ' | ' | ' | ' | 7.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
AcquisitionsDivestitures_Narra
Acquisitions/Divestitures (Narratives) (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
acquisitions | |||
Acquisitions: | ' | ' | ' |
Businesses acquired, number (in entities) | 2 | ' | ' |
Businesses acquired, aggregate cost | $286 | ' | ' |
Goodwill | 31,214 | 31,184 | 29,247 |
Software | ' | ' | ' |
Acquisitions: | ' | ' | ' |
Businesses acquired, number (in entities) | 2 | ' | ' |
Goodwill | 21,190 | 21,121 | 20,405 |
Percentage of business acquired | 100.00% | ' | ' |
Acquisitions | ' | ' | ' |
Acquisitions: | ' | ' | ' |
Acquired intangible asset, weighted average useful life | '6 years 10 months | ' | ' |
Expected percent of goodwill deductible for tax purposes | 0.00% | ' | ' |
Total purchase price | 286 | ' | ' |
Goodwill | 239 | ' | ' |
Acquisitions | Software | ' | ' | ' |
Acquisitions: | ' | ' | ' |
Goodwill | $239 | ' | ' |
AcquisitionsDivestitures_Purch
Acquisitions/Divestitures (Purchase Price allocation) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 |
In Millions, unless otherwise specified | Acquisitions | Acquisitions | Acquisitions | Acquisitions | Acquisitions | Acquisitions | |||
Completed technology | Client relationships | Patents/trademarks | Patents/trademarks | Patents/trademarks | |||||
Minimum | Maximum | ||||||||
Acquisitions: | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Current assets | ' | ' | ' | $21 | ' | ' | ' | ' | ' |
Fixed assets/noncurrent assets | ' | ' | ' | 18 | ' | ' | ' | ' | ' |
Goodwill | 31,214 | 31,184 | 29,247 | 239 | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | 33 | 1 | 8 | ' | ' |
Total assets acquired | ' | ' | ' | 319 | ' | ' | ' | ' | ' |
Current liabilities | ' | ' | ' | -11 | ' | ' | ' | ' | ' |
Noncurrent liabilities | ' | ' | ' | -22 | ' | ' | ' | ' | ' |
Total liabilities assumed | ' | ' | ' | -33 | ' | ' | ' | ' | ' |
Total purchase price | ' | ' | ' | $286 | ' | ' | ' | ' | ' |
Acquired intangible asset, weighted average useful life | ' | ' | ' | '6 years 10 months | '7 years | '7 years | ' | '5 years | '7 years |
AcquisitionsDivestitures_Dives
Acquisitions/Divestitures (Divestitures) (Details) (USD $) | 3 Months Ended | 0 Months Ended | 12 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | |||||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Jan. 23, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Jan. 23, 2014 | Sep. 10, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Sep. 10, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 |
x86 Server Portfolio | x86 Server Portfolio | x86 Server Portfolio | x86 Server Portfolio | Customer Care Business Process Outsourcing Services | Customer Care Business Process Outsourcing Services | Customer Care Business Process Outsourcing Services | Customer Care Business Process Outsourcing Services | Customer Care Business Process Outsourcing Services | Customer Care Business Process Outsourcing Services | Retail Stores Solutions business | Retail Stores Solutions business | ||||
Estimated | Maximum | Minimum | Maximum | Maximum | Estimated | ||||||||||
Estimated | Estimated | ||||||||||||||
Divestitures | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Transaction price for sale of business | ' | ' | ' | $2,300 | ' | ' | ' | $501 | ' | ' | ' | ' | ' | ' | ' |
Approximate amount of transaction price received in cash | ' | ' | ' | 2,000 | ' | ' | ' | 430 | ' | ' | ' | ' | ' | ' | ' |
Noncash consideration received on sale of business | ' | ' | ' | ' | ' | ' | ' | 71 | ' | ' | ' | ' | ' | ' | ' |
Equity Ownership percent acquired | ' | ' | ' | ' | ' | ' | 5.00% | ' | ' | ' | ' | 5.00% | ' | ' | ' |
Pre-tax gain on sale of business | ' | ' | ' | ' | ' | 1,000 | ' | ' | 98 | ' | 200 | ' | 225 | 34 | 508 |
Revenues | 22,484 | 23,408 | ' | ' | 4,600 | ' | ' | ' | ' | 1,300 | ' | ' | ' | ' | ' |
Services | 13,982 | 14,274 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pre-tax income | 2,980 | 3,606 | ' | ' | ' | ' | ' | ' | ' | 100 | ' | ' | ' | ' | ' |
Tangible assets | $13,683 | ' | $13,821 | ' | $100 | ' | ' | ' | ' | $50 | ' | ' | ' | ' | ' |
Intangible_Assets_Including_Go2
Intangible Assets Including Goodwill: (Details) (USD $) | 3 Months Ended | ||||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | ||
Intangible asset balances by major asset class: | ' | ' | ' | ||
Gross Carrying Amount | $6,929 | ' | $6,930 | ||
Accumulated Amortization | -3,231 | ' | -3,059 | ||
Net Carrying Amount | 3,698 | ' | 3,871 | ||
Net carrying amount increase/(decrease) | -173 | ' | ' | ||
Intangible asset amortization expense | 339 | 331 | ' | ||
Intangible assets retired and fully amortized | 164 | ' | ' | ||
Capitalized software | ' | ' | ' | ||
Intangible asset balances by major asset class: | ' | ' | ' | ||
Gross Carrying Amount | 1,471 | ' | 1,494 | ||
Accumulated Amortization | -696 | ' | -699 | ||
Net Carrying Amount | 775 | ' | 794 | ||
Client relationships | ' | ' | ' | ||
Intangible asset balances by major asset class: | ' | ' | ' | ||
Gross Carrying Amount | 2,149 | ' | 2,148 | ||
Accumulated Amortization | -1,050 | ' | -977 | ||
Net Carrying Amount | 1,099 | ' | 1,171 | ||
Completed technology | ' | ' | ' | ||
Intangible asset balances by major asset class: | ' | ' | ' | ||
Gross Carrying Amount | 2,935 | ' | 2,910 | ||
Accumulated Amortization | -1,312 | ' | -1,224 | ||
Net Carrying Amount | 1,623 | ' | 1,687 | ||
In-process R&D | ' | ' | ' | ||
Intangible asset balances by major asset class: | ' | ' | ' | ||
Gross Carrying Amount | 2 | ' | 13 | ||
Net Carrying Amount | 2 | ' | 13 | ||
Patents/trademarks | ' | ' | ' | ||
Intangible asset balances by major asset class: | ' | ' | ' | ||
Gross Carrying Amount | 366 | ' | 358 | ||
Accumulated Amortization | -169 | ' | -154 | ||
Net Carrying Amount | 198 | ' | 204 | ||
Other intangible assets | ' | ' | ' | ||
Intangible asset balances by major asset class: | ' | ' | ' | ||
Gross Carrying Amount | 7 | [1] | ' | 7 | [1] |
Accumulated Amortization | -5 | [1] | ' | -5 | [1] |
Net Carrying Amount | $2 | [1] | ' | $2 | [1] |
[1] | *Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. |
Intangible_Assets_Including_Go3
Intangible Assets Including Goodwill: (Details 2) (USD $) | Mar. 31, 2014 |
In Millions, unless otherwise specified | |
Future amortization expense, by year | ' |
2014 (for Q2-Q4) | $997 |
2015 | 936 |
2016 | 697 |
2017 | 487 |
2018 | 328 |
Capitalized software | ' |
Future amortization expense, by year | ' |
2014 (for Q2-Q4) | 377 |
2015 | 294 |
2016 | 96 |
2017 | 8 |
2018 | ' |
Acquired intangibles | ' |
Future amortization expense, by year | ' |
2014 (for Q2-Q4) | 619 |
2015 | 642 |
2016 | 601 |
2017 | 479 |
2018 | $328 |
Intangible_Assets_Including_Go4
Intangible Assets Including Goodwill: (Details 3) (USD $) | 3 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Changes in Goodwill Balances | ' | ' |
Beginning Balance | $31,184 | $29,247 |
Goodwill Additions | 239 | 2,246 |
Purchase Price Adjustments | 0 | 61 |
Divestitures | -52 | -7 |
Foreign Currency Translation and Other Adjustments | -158 | -363 |
Ending Balance | 31,214 | 31,184 |
Goodwill impairment losses | 0 | 0 |
Goodwill accumulated impairment losses | 0 | 0 |
Global Business Services | ' | ' |
Changes in Goodwill Balances | ' | ' |
Beginning Balance | 4,334 | 4,357 |
Purchase Price Adjustments | ' | 0 |
Divestitures | ' | -3 |
Foreign Currency Translation and Other Adjustments | 4 | -21 |
Ending Balance | 4,337 | 4,334 |
Global Technology Services | ' | ' |
Changes in Goodwill Balances | ' | ' |
Beginning Balance | 4,129 | 2,916 |
Goodwill Additions | ' | 1,246 |
Purchase Price Adjustments | ' | 17 |
Divestitures | -52 | ' |
Foreign Currency Translation and Other Adjustments | 16 | -50 |
Ending Balance | 4,094 | 4,129 |
Software | ' | ' |
Changes in Goodwill Balances | ' | ' |
Beginning Balance | 21,121 | 20,405 |
Goodwill Additions | 239 | 987 |
Purchase Price Adjustments | 0 | 11 |
Divestitures | ' | -4 |
Foreign Currency Translation and Other Adjustments | -170 | -279 |
Ending Balance | 21,190 | 21,121 |
Systems and Technology | ' | ' |
Changes in Goodwill Balances | ' | ' |
Beginning Balance | 1,601 | 1,568 |
Goodwill Additions | ' | 13 |
Purchase Price Adjustments | ' | 33 |
Foreign Currency Translation and Other Adjustments | -8 | -14 |
Ending Balance | $1,593 | $1,601 |
RestructuringRelated_Liabiliti2
Restructuring-Related Liabilities: (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | |
Current Liability | ' | |
Restructuring Reserve | ' | |
Liability at the beginning of the period | $27 | |
Payments | -7 | |
Other Adjustments | 8 | [1] |
Liability at the end of the period | 28 | |
Noncurrent Liability | ' | |
Restructuring Reserve | ' | |
Liability at the beginning of the period | 440 | |
Other Adjustments | -3 | [1] |
Liability at the end of the period | 437 | |
Workforce | Current Liability | ' | |
Restructuring Reserve | ' | |
Liability at the beginning of the period | 27 | |
Payments | -7 | |
Other Adjustments | 8 | [1] |
Liability at the end of the period | 28 | |
Workforce | Noncurrent Liability | ' | |
Restructuring Reserve | ' | |
Liability at the beginning of the period | 440 | |
Other Adjustments | -3 | [1] |
Liability at the end of the period | $437 | |
[1] | Other Adjustments principally include the reclassification of noncurrent to current, remeasurement of actuarial assumptions, foreign currency translation adjustments and interest accretion. |
Contingencies_Details
Contingencies: (Details) (USD $) | Mar. 31, 2014 | Oct. 12, 2012 | Sep. 30, 2012 | Mar. 31, 2014 | Jul. 25, 2013 | Feb. 13, 2014 | Jul. 18, 2012 | Jul. 10, 2013 | Apr. 16, 2014 |
In Millions, unless otherwise specified | countries | Litigation in United Kingdom regarding defined benefit plans (C Plan) | Litigation in United Kingdom regarding defined benefit plans (C Plan) | Former IBM UK Defined Benefit Plan Participants | Civil enforcement action with the SEC | State of Indiana | State of Indiana | SCO Group Inc. | Iusacell SA de C.V. |
IBM United Kingdom Limited | IBM Korea, LG IBM, IBM (China) Investment Company Limited and IBM Global Services (China) Co., Ltd. | Pending Litigation | Pending Litigation | claims | Subsequent event | ||||
claims | Pending Litigation | ||||||||
Contingencies: | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Clients presence in number of countries | 175 | ' | ' | ' | ' | ' | ' | ' | ' |
Loss Contingencies | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of settlement to be (paid)/received | ' | ' | ' | ' | ' | $50 | $52 | ' | ' |
Claims pending | ' | ' | ' | 290 | ' | ' | ' | ' | ' |
Additional pre-tax retirement-related obligation recorded | ' | ' | 162 | ' | ' | ' | ' | ' | ' |
Retirement age of employee under the C Plan | ' | '60 years | ' | ' | ' | ' | ' | ' | ' |
Retirement age of employee under the C Plan before modifications | ' | '63 years | ' | ' | ' | ' | ' | ' | ' |
Period for which reports are to be submitted to SEC and court on certain matters, including those relating to compliance with the FCPA | ' | ' | ' | ' | '2 years | ' | ' | ' | ' |
Number of breaches of contract and copyright claims filed | ' | ' | ' | ' | ' | ' | ' | 10 | ' |
Number of breaches of contract and copyright claims dismissed | ' | ' | ' | ' | ' | ' | ' | 7 | ' |
Number of tortious interference claims dismissed | ' | ' | ' | ' | ' | ' | ' | 1 | ' |
Damages sought, value | ' | ' | ' | ' | ' | ' | ' | ' | 2,500 |
Income tax examination - Brazil, total potential liability | $720 | ' | ' | ' | ' | ' | ' | ' | ' |
Commitments_Details
Commitments: (Details) (USD $) | 3 Months Ended | |||||||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 |
Extended lines of credit | Extended lines of credit | Financing for client purchase agreements | Financing for client purchase agreements | Financial guarantees | Financial guarantees | |||
Commitments, guarantees: | ' | ' | ' | ' | ' | ' | ' | ' |
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients | ' | ' | $6,103 | $5,028 | $1,589 | $1,769 | ' | ' |
Guarantor obligations, maximum exposure | ' | ' | ' | ' | ' | ' | 45 | 44 |
Movement in standard warranty liability | ' | ' | ' | ' | ' | ' | ' | ' |
Beginning Balance | 376 | 394 | ' | ' | ' | ' | ' | ' |
Current period accruals | 54 | 71 | ' | ' | ' | ' | ' | ' |
Accrual adjustments to reflect actual experience | -3 | 9 | ' | ' | ' | ' | ' | ' |
Charges incurred | -85 | -93 | ' | ' | ' | ' | ' | ' |
Ending Balance | $342 | $381 | ' | ' | ' | ' | ' | ' |
Commitments_Details_2
Commitments: (Details 2) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | ||
In Millions, unless otherwise specified | Extended warranty | Extended warranty | ||||
Movement in extended warranty liability | ' | ' | ' | ' | ||
Beginning balance, aggregate deferred revenue | ' | ' | $579 | $606 | ||
Revenue deferred for new extended warranty contracts | ' | ' | 54 | 47 | ||
Amortization of deferred revenue | ' | ' | -73 | -82 | ||
Other | ' | ' | -11 | [1] | -7 | [1] |
Ending balance, aggregate deferred revenue | ' | ' | 548 | 565 | ||
Deferred revenue: | ' | ' | ' | ' | ||
Deferred income, current portion | 13,681 | 12,557 | 268 | 286 | ||
Deferred income, noncurrent portion | 4,042 | 4,108 | 280 | 278 | ||
Aggregate deferred revenue | ' | ' | $548 | $565 | ||
[1] | * Other primarily consists of foreign currency translation adjustments. |
Subsequent_Events_Details
Subsequent Events: (Details) (USD $) | 3 Months Ended | 0 Months Ended |
Dec. 31, 2013 | Apr. 29, 2014 | |
Subsequent event | ||
Subsequent events: | ' | ' |
Dividend declared (in dollars per share) | $0.95 | $1.10 |
Dividend declared, date | ' | 29-Apr-14 |
Dividend payable, date | ' | 10-Jun-14 |
Shareholders of record, date | ' | 9-May-14 |
Dividend per share increase (in dollars per share) | ' | $0.15 |
Dividend per share increase (as a percent) | ' | 16.00% |