Cover
Cover | 9 Months Ended |
Sep. 30, 2023 shares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Sep. 30, 2023 |
Entity File Number | 1-2360 |
Entity Registrant Name | INTERNATIONAL BUSINESS MACHINES CORPORATION |
Entity Incorporation, State or Country Code | NY |
Entity Tax Identification Number | 13-0871985 |
Entity Address, Address Line One | One New Orchard Road |
Entity Address, City or Town | Armonk |
Entity Address, State or Province | NY |
Entity Address, Postal Zip Code | 10504 |
City Area Code | 914 |
Local Phone Number | 499-1900 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 913,118,581 |
Entity Central Index Key | 0000051143 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2023 |
Document Fiscal Period Focus | Q3 |
NEW YORK STOCK EXCHANGE, INC. | Common Stock | |
Document Information [Line Items] | |
Title of 12(b) Security | Capital stock, par value $.20 per share |
Trading Symbol | IBM |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 1.125% Notes due 2024 | |
Document Information [Line Items] | |
Title of 12(b) Security | 1.125% Notes due 2024 |
Trading Symbol | IBM 24A |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 2.875% Notes due 2025 | |
Document Information [Line Items] | |
Title of 12(b) Security | 2.875% Notes due 2025 |
Trading Symbol | IBM 25A |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 0.950% Notes due 2025 | |
Document Information [Line Items] | |
Title of 12(b) Security | 0.950% Notes due 2025 |
Trading Symbol | IBM 25B |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 0.875% Notes due 2025 | |
Document Information [Line Items] | |
Title of 12(b) Security | 0.875% Notes due 2025 |
Trading Symbol | IBM 25C |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 0.300% Notes due 2026 | |
Document Information [Line Items] | |
Title of 12(b) Security | 0.300% Notes due 2026 |
Trading Symbol | IBM 26B |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 1.250% Notes due 2027 | |
Document Information [Line Items] | |
Title of 12(b) Security | 1.250% Notes due 2027 |
Trading Symbol | IBM 27B |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 3.375% Notes due 2027 | |
Document Information [Line Items] | |
Title of 12(b) Security | 3.375% Notes due 2027 |
Trading Symbol | IBM 27F |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 0.300% Notes due 2028 | |
Document Information [Line Items] | |
Title of 12(b) Security | 0.300% Notes due 2028 |
Trading Symbol | IBM 28B |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 1.750% Notes due 2028 | |
Document Information [Line Items] | |
Title of 12(b) Security | 1.750% Notes due 2028 |
Trading Symbol | IBM 28A |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 1.500% Notes due 2029 | |
Document Information [Line Items] | |
Title of 12(b) Security | 1.500% Notes due 2029 |
Trading Symbol | IBM 29 |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 0.875% Notes due 2030 | |
Document Information [Line Items] | |
Title of 12(b) Security | 0.875% Notes due 2030 |
Trading Symbol | IBM 30A |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 1.750% Notes due 2031 | |
Document Information [Line Items] | |
Title of 12(b) Security | 1.750% Notes due 2031 |
Trading Symbol | IBM 31 |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 3.625% Notes due 2031 | |
Document Information [Line Items] | |
Title of 12(b) Security | 3.625% Notes due 2031 |
Trading Symbol | IBM 31B |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 0.650% Notes due 2032 | |
Document Information [Line Items] | |
Title of 12(b) Security | 0.650% Notes due 2032 |
Trading Symbol | IBM 32A |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 1.250% Notes due 2034 | |
Document Information [Line Items] | |
Title of 12(b) Security | 1.250% Notes due 2034 |
Trading Symbol | IBM 34 |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 3.750% Notes due 2035 | |
Document Information [Line Items] | |
Title of 12(b) Security | 3.750% Notes due 2035 |
Trading Symbol | IBM 35 |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 4.875% Notes due 2038 | |
Document Information [Line Items] | |
Title of 12(b) Security | 4.875% Notes due 2038 |
Trading Symbol | IBM 38 |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 1.200% Notes due 2040 | |
Document Information [Line Items] | |
Title of 12(b) Security | 1.200% Notes due 2040 |
Trading Symbol | IBM 40 |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 4.000% Notes due 2043 | |
Document Information [Line Items] | |
Title of 12(b) Security | 4.000% Notes due 2043 |
Trading Symbol | IBM 43 |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 7.00% Debentures due 2025 | |
Document Information [Line Items] | |
Title of 12(b) Security | 7.00% Debentures due 2025 |
Trading Symbol | IBM 25 |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 6.22% Debentures due 2027 | |
Document Information [Line Items] | |
Title of 12(b) Security | 6.22% Debentures due 2027 |
Trading Symbol | IBM 27 |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 6.50% Debentures due 2028 | |
Document Information [Line Items] | |
Title of 12(b) Security | 6.50% Debentures due 2028 |
Trading Symbol | IBM 28 |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 5.875% Debentures due 2032 | |
Document Information [Line Items] | |
Title of 12(b) Security | 5.875% Debentures due 2032 |
Trading Symbol | IBM 32D |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 7.00% Debentures due 2045 | |
Document Information [Line Items] | |
Title of 12(b) Security | 7.00% Debentures due 2045 |
Trading Symbol | IBM 45 |
Security Exchange Name | NYSE |
NEW YORK STOCK EXCHANGE, INC. | 7.125% Debentures due 2096 | |
Document Information [Line Items] | |
Title of 12(b) Security | 7.125% Debentures due 2096 |
Trading Symbol | IBM 96 |
Security Exchange Name | NYSE |
NYSE CHICAGO, INC. | Common Stock | |
Document Information [Line Items] | |
Title of 12(b) Security | Capital stock, par value $.20 per share |
Trading Symbol | IBM |
Security Exchange Name | CHX |
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED INCOME STATEMENT - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |||
Revenue | $ 14,752 | $ 14,107 | $ 44,479 | $ 43,840 | ||
Cost | 6,729 | 6,677 | 20,446 | 20,784 | ||
Gross profit | 8,023 | 7,430 | 24,033 | 23,055 | ||
Expense and other (income): | ||||||
Selling, general and administrative | 4,458 | 4,391 | 14,212 | 13,843 | ||
Research, development and engineering | 1,685 | 1,611 | 5,027 | 4,963 | ||
Intellectual property and custom development income | (190) | (121) | (618) | (418) | ||
Other (income) and expense | (215) | 5,755 | (721) | 5,921 | ||
Interest expense | 412 | 295 | 1,202 | 903 | ||
Total expense and other (income) | 6,150 | 11,931 | 19,102 | 25,212 | ||
Income/(loss) from continuing operations before income taxes | 1,873 | (4,501) | 4,931 | (2,156) | ||
Provision for/(benefit from) income taxes | 159 | (1,287) | 702 | (1,070) | ||
Income/(loss) from continuing operations | 1,714 | (3,214) | 4,229 | (1,087) | ||
Income/(loss) from discontinued operations, net of tax | (10) | 18 | (15) | 16 | ||
Net income/(loss) | $ 1,704 | $ (3,196) | [1] | $ 4,214 | $ (1,071) | [1],[2] |
Assuming dilution: | ||||||
Continuing operations (in dollars per share) | $ 1.86 | $ (3.55) | $ 4.59 | $ (1.21) | ||
Discontinued operations (in dollars per share) | (0.01) | 0.02 | (0.02) | 0.02 | ||
Total (in dollars per share) | 1.84 | (3.54) | 4.58 | (1.19) | ||
Basic: | ||||||
Continuing operations (in dollars per share) | 1.88 | (3.55) | 4.65 | (1.21) | ||
Discontinued operations (in dollars per share) | (0.01) | 0.02 | (0.02) | 0.02 | ||
Total (in dollars per share) | $ 1.87 | $ (3.54) | $ 4.63 | $ (1.19) | ||
Weighted-average number of common shares outstanding: | ||||||
Assuming dilution (in shares) | 923,673,300 | 904,076,831 | 920,323,692 | 901,621,217 | ||
Basic (in shares) | 912,790,387 | 904,076,831 | 910,057,739 | 901,621,217 | ||
Services | ||||||
Revenue | $ 7,541 | $ 7,365 | $ 22,618 | $ 22,708 | ||
Cost | 5,217 | 5,168 | 15,821 | 15,915 | ||
Sales | ||||||
Revenue | 7,025 | 6,565 | 21,296 | 20,652 | ||
Cost | 1,419 | 1,389 | 4,329 | 4,555 | ||
Financing | ||||||
Revenue | 186 | 176 | 566 | 479 | ||
Cost | $ 94 | $ 120 | $ 297 | $ 314 | ||
[1]Includes the impact of a one-time, non-cash pension settlement charge. Refer to note 18, "Retirement-Related Benefits," for additional information.[2]ncludes immaterial cash flows from discontinued operations. |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |||
Statement of Comprehensive Income [Abstract] | ||||||
Net income/(loss) | $ 1,704 | $ (3,196) | [1] | $ 4,214 | $ (1,071) | [1],[2] |
Other comprehensive income/(loss), before tax: | ||||||
Foreign currency translation adjustments | 151 | 143 | 180 | 799 | ||
Net changes related to available-for-sale securities: | ||||||
Unrealized gains/(losses) arising during the period | 0 | 0 | (1) | (1) | ||
Reclassification of (gains)/losses to net income | 0 | 0 | 0 | 0 | ||
Total net changes related to available-for-sale securities | 0 | 0 | (1) | (1) | ||
Unrealized gains/(losses) on cash flow hedges: | ||||||
Unrealized gains/(losses) arising during the period | 131 | 189 | 279 | 449 | ||
Reclassification of (gains)/losses to net income | 202 | (12) | 51 | 4 | ||
Total unrealized gains/(losses) on cash flow hedges | 333 | 178 | 330 | 453 | ||
Retirement-related benefit plans: | ||||||
Prior service costs/(credits) | 0 | 412 | 0 | 408 | ||
Net (losses)/gains arising during the period | 102 | 53 | 104 | 63 | ||
Curtailments and settlements | 2 | 5,913 | 7 | 5,931 | ||
Amortization of prior service (credits)/costs | (2) | 3 | (6) | 16 | ||
Amortization of net (gains)/losses | 128 | 388 | 389 | 1,305 | ||
Total retirement-related benefit plans | 230 | 6,768 | 494 | 7,722 | ||
Other comprehensive income/(loss), before tax | 714 | 7,089 | 1,003 | 8,973 | ||
Income tax (expense)/benefit related to items of other comprehensive income | (313) | (2,058) | (361) | (2,877) | ||
Other comprehensive income/(loss), net of tax | 402 | 5,030 | 642 | 6,096 | ||
Total comprehensive income | $ 2,105 | $ 1,834 | $ 4,857 | $ 5,025 | ||
[1]Includes the impact of a one-time, non-cash pension settlement charge. Refer to note 18, "Retirement-Related Benefits," for additional information.[2]ncludes immaterial cash flows from discontinued operations. |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 7,257 | $ 7,886 |
Restricted cash | 19 | 103 |
Marketable securities | 3,721 | 852 |
Notes and accounts receivable — trade (net of allowances of $198 in 2023 and $233 in 2022) | 5,330 | 6,541 |
Short-term financing receivables: | ||
Held for investment (net of allowances of $133 in 2023 and $145 in 2022) | 5,032 | 6,851 |
Held for sale | 593 | 939 |
Other accounts receivable (net of allowances of $106 in 2023 and $89 in 2022) | 842 | 817 |
Inventory, at lower of average cost or net realizable value: | ||
Finished goods | 159 | 158 |
Work in process and raw materials | 1,239 | 1,394 |
Total inventory | 1,399 | 1,552 |
Deferred costs | 931 | 967 |
Prepaid expenses and other current assets | 2,582 | 2,611 |
Total current assets | 27,705 | 29,118 |
Property, plant and equipment | 18,217 | 18,695 |
Less: Accumulated depreciation | 12,848 | 13,361 |
Property, plant and equipment — net | 5,369 | 5,334 |
Operating right-of-use assets — net | 3,112 | 2,878 |
Long-term financing receivables (net of allowances of $26 in 2023 and $28 in 2022) | 4,789 | 5,806 |
Prepaid pension assets | 8,901 | 8,236 |
Deferred costs | 822 | 866 |
Deferred taxes | 6,168 | 6,256 |
Goodwill | 59,596 | 55,949 |
Intangible assets — net | 11,278 | 11,184 |
Investments and sundry assets | 1,582 | 1,617 |
Total assets | 129,321 | 127,243 |
Current liabilities: | ||
Taxes | 1,559 | 2,196 |
Short-term debt | 6,414 | 4,760 |
Accounts payable | 3,342 | 4,051 |
Compensation and benefits | 3,257 | 3,481 |
Deferred income | 11,917 | 12,032 |
Operating lease liabilities | 807 | 874 |
Other accrued expenses and liabilities | 3,309 | 4,111 |
Total current liabilities | 30,606 | 31,505 |
Long-term debt | 48,828 | 46,189 |
Retirement and nonpension postretirement benefit obligations | 9,090 | 9,596 |
Deferred income | 3,085 | 3,499 |
Operating lease liabilities | 2,476 | 2,190 |
Other liabilities | 12,081 | 12,243 |
Total liabilities | 106,165 | 105,222 |
IBM stockholders’ equity: | ||
Common stock | 59,313 | 58,343 |
Retained earnings | 149,506 | 149,825 |
Treasury stock | (169,640) | (169,484) |
Accumulated other comprehensive income/(loss) | (16,098) | (16,740) |
Total IBM stockholders’ equity | 23,081 | 21,944 |
Noncontrolling interests | 75 | 77 |
Total equity | 23,156 | 22,021 |
Total liabilities and equity | $ 129,321 | $ 127,243 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Notes and accounts receivable - trade, allowances | $ 198 | $ 233 |
Short-term financing receivables, allowances | 133 | 145 |
Other accounts receivable, allowances | 106 | 89 |
Long-term financing receivables, allowances | $ 26 | $ 28 |
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) | 2,265,198,427 | 2,257,116,920 |
Treasury stock, shares (in shares) | 1,352,079,846 | 1,351,024,943 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | [2] | |
Cash flows from operating activities: | |||
Net income/(loss) | $ 4,214 | $ (1,071) | [1] |
Adjustments to reconcile net income/(loss) to cash provided by operating activities: | |||
Pension settlement charge | 0 | 5,894 | |
Depreciation | 1,568 | 1,837 | |
Amortization of intangibles | 1,676 | 1,828 | |
Stock-based compensation | 843 | 739 | |
Net (gain)/loss on asset sales and other | (89) | (60) | |
Changes in operating assets and liabilities, net of acquisitions/divestitures | 1,257 | (2,695) | [3] |
Net cash provided by operating activities | 9,468 | 6,470 | |
Cash flows from investing activities: | |||
Payments for property, plant and equipment | (945) | (937) | |
Proceeds from disposition of property, plant and equipment | 137 | 98 | |
Investment in software | (417) | (479) | |
Acquisition of businesses, net of cash acquired | (4,945) | (1,020) | |
Divestitures of businesses, net of cash transferred | (4) | 1,271 | |
Purchases of marketable securities and other investments | (10,374) | (4,474) | |
Proceeds from disposition of marketable securities and other investments | 6,642 | 2,655 | |
Net cash provided by/(used in) investing activities | (9,906) | (2,883) | |
Cash flows from financing activities: | |||
Proceeds from new debt | 9,586 | 7,797 | |
Payments to settle debt | (4,973) | (5,446) | |
Short-term borrowings/(repayments) less than 90 days — net | 6 | 221 | |
Common stock repurchases for tax withholdings | (338) | (329) | |
Financing — other | 86 | 106 | |
Cash dividends paid | (4,522) | (4,454) | |
Net cash provided by/(used in) financing activities | (154) | (2,106) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (120) | (463) | |
Net change in cash, cash equivalents and restricted cash | (713) | 1,018 | |
Cash, cash equivalents and restricted cash at January 1 | 7,988 | 6,957 | |
Cash, cash equivalents and restricted cash at September 30 | $ 7,275 | $ 7,975 | |
[1]Includes the impact of a one-time, non-cash pension settlement charge. Refer to note 18, "Retirement-Related Benefits," for additional information.[2]ncludes immaterial cash flows from discontinued operations.[3]Refer to note 1, "Basis of Presentation," for additional information. |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Millions | Total | Total IBM Stockholders' Equity | Common Stock and Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income/(Loss) | Non- Controlling Interests | |
Balance at the beginning of the period at Dec. 31, 2021 | $ 18,996 | $ 18,901 | $ 57,319 | $ 154,209 | $ (169,392) | $ (23,234) | $ 95 | |
Net income plus other comprehensive income/(loss): | ||||||||
Net income/(loss) | (1,071) | [1],[2] | (1,071) | (1,071) | ||||
Other comprehensive income/(loss) | 6,096 | 6,096 | 6,096 | |||||
Total comprehensive income | 5,025 | 5,025 | ||||||
Cash dividends paid - common stock | (4,454) | (4,454) | (4,454) | |||||
Common stock issued under employee plans | 736 | 736 | 736 | |||||
Purchases and sales of treasury stock under employee plans - net | (133) | (133) | (10) | (122) | ||||
Other equity | 0 | 0 | 63 | (63) | ||||
Changes in noncontrolling interests | (23) | (23) | ||||||
Balance at the end of the period at Sep. 30, 2022 | 20,147 | 20,076 | 58,117 | 148,611 | (169,514) | (17,138) | 71 | |
Balance at the beginning of the period at Jun. 30, 2022 | 19,476 | 19,409 | 57,802 | 153,298 | (169,522) | (22,169) | 67 | |
Net income plus other comprehensive income/(loss): | ||||||||
Net income/(loss) | (3,196) | [1] | (3,196) | (3,196) | ||||
Other comprehensive income/(loss) | 5,030 | 5,030 | 5,030 | |||||
Total comprehensive income | 1,834 | 1,834 | ||||||
Cash dividends paid - common stock | (1,491) | (1,491) | (1,491) | |||||
Common stock issued under employee plans | 315 | 315 | 315 | |||||
Purchases and sales of treasury stock under employee plans - net | 8 | 8 | 0 | 8 | ||||
Changes in noncontrolling interests | 4 | 4 | ||||||
Balance at the end of the period at Sep. 30, 2022 | 20,147 | 20,076 | 58,117 | 148,611 | (169,514) | (17,138) | 71 | |
Balance at the beginning of the period at Dec. 31, 2022 | 22,021 | 21,944 | 58,343 | 149,825 | (169,484) | (16,740) | 77 | |
Net income plus other comprehensive income/(loss): | ||||||||
Net income/(loss) | 4,214 | 4,214 | 4,214 | |||||
Other comprehensive income/(loss) | 642 | 642 | 642 | |||||
Total comprehensive income | 4,857 | 4,857 | ||||||
Cash dividends paid - common stock | (4,522) | (4,522) | (4,522) | |||||
Common stock issued under employee plans | 970 | 970 | 970 | |||||
Purchases and sales of treasury stock under employee plans - net | (167) | (167) | (11) | (156) | ||||
Changes in noncontrolling interests | (2) | (2) | ||||||
Balance at the end of the period at Sep. 30, 2023 | 23,156 | 23,081 | 59,313 | 149,506 | (169,640) | (16,098) | 75 | |
Balance at the beginning of the period at Jun. 30, 2023 | 22,271 | 22,201 | 58,963 | 149,318 | (169,581) | (16,499) | 70 | |
Net income plus other comprehensive income/(loss): | ||||||||
Net income/(loss) | 1,704 | 1,704 | 1,704 | |||||
Other comprehensive income/(loss) | 402 | 402 | 402 | |||||
Total comprehensive income | 2,105 | 2,105 | ||||||
Cash dividends paid - common stock | (1,515) | (1,515) | (1,515) | |||||
Common stock issued under employee plans | 350 | 350 | 350 | |||||
Purchases and sales of treasury stock under employee plans - net | (60) | (60) | (1) | (60) | ||||
Changes in noncontrolling interests | 5 | 5 | ||||||
Balance at the end of the period at Sep. 30, 2023 | $ 23,156 | $ 23,081 | $ 59,313 | $ 149,506 | $ (169,640) | $ (16,098) | $ 75 | |
[1]Includes the impact of a one-time, non-cash pension settlement charge. Refer to note 18, "Retirement-Related Benefits," for additional information.[2]ncludes immaterial cash flows from discontinued operations. |
CONSOLIDATED STATEMENT OF EQU_2
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividend per common share (in dollars per share) | $ 1.66 | $ 1.65 | $ 4.97 | $ 4.94 |
Common stock issued under employee plans (in shares) | 2,501,236 | 871,676 | 8,081,507 | 6,832,400 |
Purchases of treasury stock under employee plans (in shares) | 688,254 | 103,736 | 2,498,567 | 2,423,220 |
Sales of treasury stock under employee plans (in shares) | 299,359 | 178,069 | 1,443,664 | 1,648,583 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation: The accompanying Consolidated Financial Statements and footnotes of the International Business Machines Corporation (IBM or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The financial statements and footnotes are unaudited. In the opinion of the company’s management, these statements include all adjustments, which are only of a normal recurring nature, necessary to present a fair 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. In September 2022, the IBM Qualified Personal Pension Plan (Qualified PPP) purchased two separate nonparticipating single premium group annuity contracts from The Prudential Insurance Company of America and Metropolitan Life Insurance Company (collectively, the Insurers) and irrevocably transferred to the Insurers approximately $16 billion of the Qualified PPP’s defined benefit pension obligations and related plan assets, thereby reducing the company’s pension obligations and assets by the same amount. The group annuity contracts were purchased using assets of the Qualified PPP and no additional funding contribution was required from the company. As a result of this transaction the company recognized a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion ($4.4 billion net of tax) in the third quarter of 2022, primarily related to the accelerated recognition of accumulated actuarial losses of the Qualified PPP. The $1.5 billion tax effect associated with the settlement charge is reflected as an adjustment to reconcile net income/(loss) to cash from operating activities within changes in operating assets and liabilities, net of acquisitions/divestitures in the Consolidated Statement of Cash Flows for the nine months ended September 30, 2022. Refer to note 18, “Retirement-Related Benefits,” for additional information. In the fourth quarter of 2022, the company completed its annual assessment of the useful lives of its property, plant and equipment. Due to advances in technology, the company determined it should increase the estimated useful lives of its server and network equipment from five three For the three and nine months ended September 30, 2023, the company reported a provision for income taxes of $159 million and $702 million, respectively, and its effective tax rate was 8.5 percent and 14.2 percent, respectively. The rates are driven by many factors including the impacts of changes to the U.S. Foreign Tax Credit regulations, geographical mix of income, incentives and changes in unrecognized tax benefits. For the three and nine months ended September 30, 2022, the company reported a benefit from income taxes of $1,287 million and $1,070 million, respectively. The tax benefits were primarily due to the transfer of a portion of the Qualified PPP's defined benefit pension obligations and related plan assets, as described above. Noncontrolling interest amounts of $4 million, net of tax, for both the three months ended September 30, 2023 and 2022, respectively, and $13 million and $14 million, net of tax, for the nine months ended September 30, 2023 and 2022, respectively, are included as a reduction within other (income) and expense in the Consolidated Income Statement. The company has supplier finance programs with third-party financial institutions where the company agrees to pay the financial institutions the stated amounts of invoices from participating suppliers on the originally invoiced maturity date, which have an average term of 90 to 120 days, consistent with the company's standard payment terms. The financial institutions offer earlier payment of the invoices at the sole discretion of the supplier for a discounted amount. The company does not provide secured legal assets or other forms of guarantees under the arrangements. The company is not a party to the arrangements between its suppliers and the financial institutions. These obligations are recognized as accounts payable in the Consolidated Balance Sheet. The obligations outstanding under these programs at September 30, 2023 and December 31, 2022 were $99 million and $60 million, respectively. 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 2022 Annual Report. Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior-period amounts have been reclassified to conform to the current-period presentation. This is annotated where applicable. |
Accounting Changes
Accounting Changes | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
Accounting Changes | Accounting Changes: Standards Implemented Disclosures of Supplier Finance Program Obligations Standard/Description– Issuance date: September 2022. This guidance requires an entity to provide certain interim and annual disclosures about the use of supplier finance programs in connection with the purchase of goods or services. Effective Date and Adoption Considerations– The guidance was effective January 1, 2023 with certain annual disclosures required beginning in 2024 and early adoption was permitted. The company adopted the guidance as of the effective date. Effect on Financial Statements or Other Significant Matters– The guidance did not have a material impact in the consolidated financial results. Refer to note 1, "Basis of Presentation," for additional information. Troubled Debt Restructurings and Vintage Disclosures Standard/Description –Issuance date: March 2022. This eliminates the accounting guidance for troubled debt restructurings and requires an entity to apply the general loan modification guidance to all loan modifications, including those made to customers experiencing financial difficulty, to determine whether the modification results in a new loan or a continuation of an existing loan. The guidance also requires presenting current-period gross write-offs by year of origination for financing receivables and net investment in leases. Effective Date and Adoption Considerations –The amendment was effective January 1, 2023 and early adoption was permitted. The company adopted the guidance on a prospective basis as of the effective date. Effect on Financial Statements or Other Significant Matters –The guidance did not have a material impact in the consolidated financial results. Refer to note 9, "Financing Receivables," for additional information. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition: Disaggregation of Revenue The following tables provide details of revenue by major products/service offerings and revenue by geography. Revenue by Major Products/Service Offerings Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2023 2022 2023 2022 Hybrid Platform & Solutions $ 4,506 $ 4,172 $ 13,350 $ 12,641 Transaction Processing 1,759 1,640 5,444 5,107 Total Software $ 6,265 $ 5,811 $ 18,794 $ 17,749 Business Transformation 2,291 2,165 6,869 6,646 Application Operations 1,710 1,593 5,204 4,865 Technology Consulting 961 943 2,865 2,826 Total Consulting $ 4,963 $ 4,700 $ 14,938 $ 14,337 Hybrid Infrastructure 1,943 1,931 5,912 6,392 Infrastructure Support 1,329 1,421 4,076 4,413 Total Infrastructure $ 3,272 $ 3,352 $ 9,988 $ 10,805 Financing* 186 174 566 474 Other 67 70 192 475 Total revenue $ 14,752 $ 14,107 $ 44,479 $ 43,840 * Contains lease and loan financing arrangements which are not subject to the guidance on revenue from contracts with customers. Revenue by Geography Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2023 2022 2023 2022 Americas $ 7,686 $ 7,416 $ 22,810 $ 22,614 Europe/Middle East/Africa 4,223 3,959 13,156 12,716 Asia Pacific 2,843 2,732 8,513 8,509 Total $ 14,752 $ 14,107 $ 44,479 $ 43,840 Remaining Performance Obligations The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not include contracts that have an original duration of one year or less. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency. At September 30, 2023, the aggregate amount of the transaction price allocated to RPO related to customer contracts that are unsatisfied or partially unsatisfied was $55 billion. Approximately 71 percent of the amount is expected to be recognized as revenue in the subsequent two years, approximately 26 percent in the subsequent three Revenue Recognized for Performance Obligations Satisfied (or Partially Satisfied) in Prior Periods For the three months ended September 30, 2023 the revenue recognized for performance obligations satisfied (or partially satisfied) in previous periods was immaterial. For the nine months ended September 30, 2023, revenue was reduced by $16 million mainly due to changes in estimates on contracts with cost-to-cost measures of progress. Reconciliation of Contract Balances The following table provides information about notes and accounts receivable–trade, contract assets and deferred income balances. (Dollars in millions) At September 30, 2023 At December 31, 2022 Notes and accounts receivable — trade (net of allowances of $198 in 2023 and $233 in 2022) $ 5,330 $ 6,541 Contract assets* $ 454 $ 464 Deferred income (current) $ 11,917 $ 12,032 Deferred income (noncurrent) $ 3,085 $ 3,499 * Included within prepaid expenses and other current assets in the Consolidated Balance Sheet. The amount of revenue recognized during the three and nine months ended September 30, 2023 that was included within the deferred income balance at June 30, 2023 and December 31, 2022 was $4.3 billion and $9.0 billion, respectively, and was primarily related to services and software. The following table provides roll forwards of the notes and accounts receivable–trade allowance for expected credit losses for the nine months ended September 30, 2023 and the year ended December 31, 2022. (Dollars in millions) January 1, 2023 Additions / (Releases) Write-offs Foreign currency and other September 30, 2023 $ 233 $ 28 $ (67) $ 4 $ 198 January 1, 2022 Additions / (Releases) Write-offs Foreign currency and other December 31, 2022 $ 218 $ 59 $ (31) $ (14) $ 233 The contract assets allowance for expected credit losses was not material in any of the periods presented. |
Segments
Segments | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Segments | Segments:The following tables reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company. Performance measurement is based on pre-tax income from continuing operations. These results are used by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments. SEGMENT INFORMATION (Dollars in millions) Software Consulting Infrastructure Financing Total For the three months ended September 30, 2023: Revenue $ 6,265 $ 4,963 $ 3,272 $ 186 $ 14,685 Pre-tax income from continuing operations $ 1,486 $ 509 $ 387 $ 91 $ 2,473 Revenue year-to-year change 7.8 % 5.6 % (2.4) % 6.9 % 4.6 % Pre-tax income year-to-year change 13.7 % 10.0 % 38.3 % 16.0 % 16.2 % Pre-tax income margin 23.7 % 10.2 % 11.8 % 49.2 % 16.8 % For the three months ended September 30, 2022: Revenue $ 5,811 $ 4,700 $ 3,352 $ 174 $ 14,037 Pre-tax income from continuing operations $ 1,306 $ 462 $ 280 $ 79 $ 2,128 Pre-tax income margin 22.5 % 9.8 % 8.3 % 45.4 % 15.2 % Reconciliations to IBM as Reported: (Dollars in millions) For the three months ended September 30: 2023 2022 Revenue: Total reportable segments $ 14,685 $ 14,037 Other ‒ divested businesses 0 3 Other revenue 66 68 Total revenue from continuing operations $ 14,752 $ 14,107 Pre-tax income from continuing operations: Total reportable segments $ 2,473 $ 2,128 Amortization of acquired intangible assets (414) (417) Acquisition-related (charges)/income (25) (1) Non-operating retirement-related (costs)/income 12 (6,062) * Kyndryl-related impacts — 14 ** Workforce rebalancing charges+ (34) — Other ‒ divested businesses 8 0 Unallocated corporate amounts and other (148) (163) ++ Total pre-tax income/(loss) from continuing operations $ 1,873 $ (4,501) * Includes a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion. See note 18, “Retirement-Related Benefits,” for additional information. **Net impacts from Kyndryl retained shares and related swap. Refer to note 5, "Acquisitions & Divestitures," and note 16, "Derivative Financial Instruments," for additional information. + Beginning in the first quarter of 2023, the company updated its measure of segment pre-tax income, consistent with its management system, to no longer allocate workforce rebalancing charges to its segments. Workforce rebalancing charges in the third quarter of 2022 of $13 million were included in the segments. ++Recast to conform to 2023 presentation. SEGMENT INFORMATION (Dollars in millions) Software Consulting Infrastructure Financing Total For the nine months ended September 30, 2023: Revenue $ 18,794 $ 14,938 $ 9,988 $ 566 $ 44,287 Pre-tax income from continuing operations $ 4,154 $ 1,336 $ 1,236 $ 256 $ 6,983 Revenue year-to-year change 5.9 % 4.2 % (7.6) % 19.5 % 2.1 % Pre-tax income year-to-year change 8.9 % 15.8 % 0.0 % (3.2) % 7.9 % Pre-tax income margin 22.1 % 8.9 % 12.4 % 45.3 % 15.8 % For the nine months ended September 30, 2022: Revenue $ 17,749 $ 14,337 $ 10,805 $ 474 $ 43,365 Pre-tax income from continuing operations $ 3,816 $ 1,154 $ 1,236 $ 265 $ 6,470 Pre-tax income margin 21.5 % 8.0 % 11.4 % 55.9 % 14.9 % Reconciliations to IBM as Reported: (Dollars in millions) For the nine months ended September 30: 2023 2022 Revenue: Total reportable segments $ 44,287 $ 43,365 Other ‒ divested businesses (1) 319 Other revenue 193 156 Total consolidated revenue $ 44,479 $ 43,840 Pre-tax income from continuing operations: Total reportable segments $ 6,983 $ 6,470 Amortization of acquired intangible assets (1,194) (1,337) Acquisition-related charges (35) (9) Non-operating retirement-related (costs)/income 16 (6,455) * Kyndryl-related impacts — (353) ** Workforce rebalancing charges+ (410) — Other ‒ divested businesses 4 108 Unallocated corporate amounts (432) (581) ++ Total pre-tax income/(loss) from continuing operations $ 4,931 $ (2,156) * Includes a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion. See note 18, “Retirement-Related Benefits,” for additional information. **Net impacts from Kyndryl retained shares and related swaps. Refer to note 5, "Acquisitions & Divestitures," and note 16, "Derivative Financial Instruments," for additional information. + Beginning in the first quarter of 2023, the company updated its measure of segment pre-tax income, consistent with its management system, to no longer allocate workforce rebalancing charges to its segments. Workforce rebalancing charges in the first nine months of 2022 of $22 million were included in the segments. ++Recast to conform to 2023 presentation. |
Acquisitions & Divestitures
Acquisitions & Divestitures | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions & Divestitures | Acquisitions & Divestitures: Acquisitions Purchase price consideration for all acquisitions was paid primarily in cash. All acquisitions, unless otherwise stated, were for 100 percent of the acquired business and are reported in the Consolidated Statement of Cash Flows, net of acquired cash and cash equivalents. During the nine months ended September 30, 2023, the company completed seven acquisitions at an aggregate cost of $5,033 million. Each acquisition is expected to enhance the company’s portfolio of products and services capabilities and further advance IBM’s hybrid cloud and AI strategy. Acquisition Segment Description of Acquired Business First Quarter StepZen, Inc. Software Developer of GraphQL to help build application programming interfaces (APIs) Asset Strategy Library (ASL) Portfolio of Uptake Technologies Software Library of industrial asset management data NS1 Software Leading provider of network automation SaaS solutions Second Quarter Ahana Cloud, Inc. Software Expert in open-source-based solutions for data analytics Polar Security Software Innovator in technology that helps companies discover, continuously monitor and secure cloud and SaaS application data Agyla SAS Consulting Leading provider of cloud platform engineering services in France specializing in Cloud, DevOps and Security Third Quarter Apptio, Inc. Software Leading provider of financial and operational IT management and optimization software which enables enterprise leaders to deliver enhanced business value across technology investments At September 30, 2023, the remaining cash to be remitted by the company related to certain 2023 acquisitions was $38 million, most of which is expected to be paid in the first half of 2024. The unremitted cash associated with these acquisitions is primarily a non-cash financing activity for purposes of the company's Consolidated Statement of Cash Flows as of September 30, 2023. The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of September 30, 2023. (Dollars in millions) Amortization Apptio, Inc. Other Acquisitions Current assets $ 150 $ 46 Property, plant and equipment/noncurrent assets 35 7 Intangible assets: Goodwill N/A 3,552 301 Client relationships 6-10 740 37 Completed technology 5-7 530 66 Trademarks 2-5 35 2 Total assets acquired $ 5,042 $ 458 Current liabilities 255 26 Noncurrent liabilities 177 10 Total liabilities assumed $ 432 $ 36 Total purchase price $ 4,610 $ 423 N/A – not applicable The goodwill generated is primarily attributable to the assembled workforce of the acquired businesses and the increased synergies expected to be achieved from the integration of the acquired businesses into the company’s various integrated solutions and services, neither of which qualifies as an amortizable intangible asset. Apptio, Inc. — Goodwill of $3,180 million and $372 million was assigned to the Software and Consulting segments, respectively. It is expected that one percent of the goodwill will be deductible for tax purposes. The overall weighted-average useful life of the identified amortizable intangible assets acquired was 8.6 years. Other Acquisitions — Goodwill of $266 million, $23 million and $12 million was assigned to the Software, Consulting and Infrastructure segments, respectively. It is expected that none of the goodwill will be deductible for tax purposes. The overall weighted-average useful life of the identified amortizable intangible assets acquired was 6.7 years. The identified intangible assets will be amortized on a straight-line basis over their useful lives, which approximates the pattern that the assets economic benefits are expected to be consumed over time. The valuation of the assets acquired and liabilities assumed is subject to revision. If additional information becomes available, the company may further revise the purchase price allocation as soon as practical, but no later than one year from the acquisition date; however, material changes are not expected. Transactions Closed — In October 2023, the company acquired Manta Software, Inc. (Manta), a world-class data lineage platform to complement its capabilities within watsonx.ai, watsonx.data and watsonx.governance. Manta will be integrated into the Software segment. At the date of issuance of the financial statements, the initial purchase accounting for Manta was not complete. Divestitures Separation of Kyndryl — On November 3, 2021, the company completed the separation of its managed infrastructure services unit into a new public company with the distribution of 80.1 percent of the outstanding common stock of Kyndryl Holdings, Inc. (Kyndryl) to IBM stockholders on a pro rata basis. The company retained 19.9 percent of the shares of Kyndryl common stock immediately following the separation. During 2022, the company fully disposed of its retained interest in Kyndryl common stock pursuant to exchange agreements with a third-party financial institution, which were completed within twelve months of separation. As of November 2, 2022, the company no longer held an ownership interest in Kyndryl. Loss from discontinued operations, net of tax for the three and nine months ended September 30, 2023 of $10 million and $15 million, respectively, reflects the net impact of changes in separation-related estimates and the settlement of assets and liabilities in accordance with the separation and distribution agreement. Income from discontinued operations, net of tax for the three and nine months ended September 30, 2022 of $18 million and $16 million, respectively, reflects the same drivers as above and also reflects a gain on sale of a joint venture historically managed by Kyndryl, which was sold to Kyndryl in the first quarter of 2022 upon receiving regulatory approval. Other — The company completed two divestitures in the second quarter of 2023. The financial terms related to these transactions were not material. Transactions Signed — In August 2023, IBM and Zephyr Buyer, L.P., a wholly-owned subsidiary of Francisco Partners (collectively, Francisco), entered into a definitive agreement under which Francisco would acquire The Weather Company assets from IBM for $1,100 million inclusive of $250 million of contingent consideration, of which $200 million is contingent on Francisco’s attainment of certain investment return metrics. The assets, reported within the company’s Software segment, include The Weather Company's digital consumer-facing offerings, The Weather Channel mobile and cloud-based digital properties including Weather.com, Weather Underground and Storm Radar, as well as its enterprise offerings for broadcast, media, aviation, advertising technology and data solutions for other emerging industries. The transaction is expected to close in the first quarter of 2024, subject to customary regulatory clearances and closing conditions. Upon the initial closing, the company expects to receive cash proceeds of approximately $750 million and will provide seller financing to Francisco in the form of a $100 million loan with a term of 7 years. The company expects to recognize a pre-tax gain on the sale, of which the final amount is not yet determinable. At September 30, 2023, the business met the criteria for held for sale classification. Held for sale assets of approximately $531 million, which consist primarily of goodwill, prepaid and other current assets, intangible assets-net and plant, property and equipment-net of approximately $450 million, $50 million, $20 million and $11 million, respectively, and held for sale liabilities of $17 million consisting primarily of deferred income, were included in the company’s Consolidated Balance Sheet at September 30, 2023. |
Other (Income) and Expenses
Other (Income) and Expenses | 9 Months Ended |
Sep. 30, 2023 | |
Other Income and Expenses [Abstract] | |
Other (Income) and Expenses | Other (Income) and Expense : Components of other (income) and expense are as follows: Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2023 2022 2023 2022 Other (income) and expense: Foreign currency transaction losses/(gains) (1) $ (260) $ (352) $ (338) $ (1,021) (Gains)/losses on derivative instruments (2) 316 189 315 730 Interest income (156) (53) (527) (98) Net (gains)/losses from securities and investment assets (3) (5) (11) 3 262 Retirement-related costs/(income) (4) (12) 6,062 (16) 6,455 Other (5) (97) (80) (158) (407) Total other (income) and expense $ (215) $ 5,755 $ (721) $ 5,921 (1) The company uses financial hedging instruments to limit specific currency risks related to foreign currency-based transactions. The hedging program does not hedge 100 percent of currency exposures and defers, versus eliminates, the impact of currency. Refer to note 16, "Derivative Financial Instruments," for additional information on foreign exchange risk. (2) Prior year includes a gain of $3 million and a loss of $85 million recognized in the three and nine months ended September 30, 2022, respectively, on the cash-settled swap related to the Kyndryl retained shares. Refer to note 16, "Derivative Financial Instruments," for additional information. (3) Prior year includes a gain of $11 million and a loss of $267 million recognized in the three and nine months ended September 30, 2022, respectively, on Kyndryl retained shares. Refer to note 5, "Acquisitions & Divestitures," for additional information. (4) Prior year includes a one-time, non-cash pension settlement charge of $5.9 billion. Refer to note 18, "Retirement-Related Benefits," for additional information. (5) Other primarily consists of (gains)/losses from divestitures and dispositions of land/buildings. The nine months ended September 30, 2022 includes a pre-tax gain of $259 million related to the divestiture of IBM's healthcare software assets in the second quarter 2022. |
Earnings_(Loss) Per Share of Co
Earnings/(Loss) Per Share of Common Stock | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings/(Loss) Per Share of Common Stock | Earnings/(Loss) Per Share of Common Stock : The following tables provide the computation of basic and diluted earnings per share of common stock for the three and nine months ended September 30, 2023 and 2022. (Dollars in millions except per share amounts) For the three months ended September 30: 2023 2022 Number of shares on which basic earnings per share is calculated: Weighted-average shares outstanding during period 912,790,387 904,076,831 Add — Incremental shares under stock-based compensation plans 8,531,982 — Add — Incremental shares associated with contingently issuable shares 2,350,932 — Number of shares on which diluted earnings per share is calculated 923,673,300 904,076,831 Income/(loss) from continuing operations $ 1,714 $ (3,214) Income/(loss) from discontinued operations, net of tax (10) 18 Net income/(loss) on which basic earnings per share is calculated $ 1,704 $ (3,196) Income/(loss) from continuing operations $ 1,714 $ (3,214) Net income applicable to contingently issuable shares — — Income/(loss) from continuing operations on which diluted earnings per share is calculated $ 1,714 $ (3,214) Income/(loss) from discontinued operations, net of tax, on which diluted earnings per share is calculated (10) 18 Net income/(loss) on which diluted earnings per share is calculated $ 1,704 $ (3,196) Earnings/(loss) per share of common stock: Assuming dilution Continuing operations $ 1.86 $ (3.55) Discontinued operations (0.01) 0.02 Total $ 1.84 $ (3.54) Basic Continuing operations $ 1.88 $ (3.55) Discontinued operations (0.01) 0.02 Total $ 1.87 $ (3.54) Stock options to purchase 536,391 shares and 840,544 shares were outstanding as of September 30, 2023 and 2022, respectively, but were not included in the computation of diluted earnings per share because the exercise price of the options during the respective period was greater than the average market price of the common shares, and therefore, the effect would have been antidilutive. Due to the net loss for the three months ended September 30, 2022, otherwise dilutive potential shares of common stock under stock-based compensation plans and contingently issuable shares of 6,696,350 and 2,069,742, respectively, have been excluded from the computation of diluted earnings/(loss) per share for the three months ended September 30, 2022, as the effect would have been antidilutive. (Dollars in millions except per share amounts) For the nine months ended September 30: 2023 2022 Number of shares on which basic earnings per share is calculated: Weighted-average shares outstanding during period 910,057,739 901,621,217 Add — Incremental shares under stock-based compensation plans 8,241,752 — Add — Incremental shares associated with contingently issuable shares 2,024,201 — Number of shares on which diluted earnings per share is calculated 920,323,692 901,621,217 Income/(loss) from continuing operations $ 4,229 $ (1,087) Income/(loss) from discontinued operations, net of tax (15) 16 Net income/(loss) on which basic earnings per share is calculated $ 4,214 $ (1,071) Income/(loss) from continuing operations $ 4,229 $ (1,087) Net income applicable to contingently issuable shares — — Income/(loss) from continuing operations on which diluted earnings per share is calculated $ 4,229 $ (1,087) Income/(loss) from discontinued operations, net of tax, on which diluted earnings per share is calculated (15) 16 Net income/(loss) on which diluted earnings per share is calculated $ 4,214 $ (1,071) Earnings/(loss) per share of common stock: Assuming dilution Continuing operations $ 4.59 $ (1.21) Discontinued operations (0.02) 0.02 Total $ 4.58 $ (1.19) Basic Continuing operations $ 4.65 $ (1.21) Discontinued operations (0.02) 0.02 Total $ 4.63 $ (1.19) Stock options to purchase 2,346,268 shares and 930,788 shares (average of first, second and third quarter share amounts) were outstanding as of September 30, 2023 and 2022, respectively, but were not included in the computation of diluted earnings per share because the exercise price of the options during the respective period was greater than the average market price of the common shares, and therefore, the effect would have been antidilutive. Due to the net loss for the nine months ended September 30, 2022, otherwise dilutive potential shares of common stock under stock-based compensation plans and contingently issuable shares of 7,530,115 and 1,899,113, respectively, have been excluded from the computation of diluted earnings/(loss) per share for the nine months ended September 30, 2022, as the effect would have been antidilutive. |
Financial Assets & Liabilities
Financial Assets & Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Investments, All Other Investments [Abstract] | |
Financial Assets & Liabilities | Financial Assets & Liabilities: Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The company classifies certain assets and liabilities based on the following fair value hierarchy: • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date; • Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and • Level 3 – Unobservable inputs for the asset or liability. When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items as Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation. The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument. In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calculated using the methodologies described below for several parameters that market participants would consider in determining fair value: • Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument. • Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market. The company holds investments primarily in time deposits, certificates of deposit, and U.S. government debt that are designated as available-for-sale. The primary objective of the company’s cash and debt investment portfolio is to protect principal by investing in very liquid investment securities with highly rated counterparties. The company’s standard practice is to hold all of its debt security investments classified as available-for-sale until maturity. No impairments for credit losses and no material non-credit impairments were recorded for the three and nine months ended September 30, 2023. Certain non-financial assets such as property, plant and equipment, operating right-of-use assets, goodwill and intangible assets are also subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for non-financial assets depend on the type of asset. There were no material impairments of non-financial assets for the three and nine months ended September 30, 2023 and 2022, respectively. The following table presents the company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022. Fair Value At September 30, 2023 At December 31, 2022 (Dollars in millions) Assets (5) Liabilities (6) Assets (5) Liabilities (6) Cash equivalents: (1) Time deposits and certificates of deposit (2) 2 $ 3,765 N/A $ 3,712 N/A Money market funds 1 212 N/A 306 N/A Total cash equivalents $ 3,977 N/A $ 4,018 N/A Equity investments 1 2 N/A — N/A Debt securities-current (2)(3) 2 3,721 N/A 852 N/A Debt securities-noncurrent (2)(4) 2,3 33 N/A 31 N/A Derivatives designated as hedging instruments: Interest rate contracts 2 0 579 3 336 Foreign exchange contracts 2 420 185 184 674 Derivatives not designated as hedging instruments: Foreign exchange contracts 2 12 45 42 16 Equity contracts 2 0 55 49 8 Total $ 8,164 $ 864 $ 5,179 $ 1,034 (1) Included within cash and cash equivalents in the Consolidated Balance Sheet. (2) Available-for-sale debt securities with carrying values that approximate fair value. (3) Term deposits and U.S. treasury bills that are reported within marketable securities in the Consolidated Balance Sheet. The September 30, 2023 balance includes partial proceeds from the first quarter 2023 debt issuances. See note 12, "Borrowings," for additional information. (4) Includes immaterial activity related to private company investments reported within investments and sundry assets in the Consolidated Balance Sheet. (5) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Balance Sheet at September 30, 2023 were $431 million and $1 million, respectively, and at December 31, 2022 were $271 million and $7 million, respectively. (6) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Balance Sheet at September 30, 2023 were $171 million and $693 million, respectively, and at December 31, 2022 were $546 million and $488 million, respectively. N/A – not applicable Financial Assets and Liabilities Not Measured at Fair Value Short-Term Receivables and Payables Short-term receivables (excluding the current portion of long-term receivables) 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, except for short-term debt which would be classified as Level 2. Loans and Long-Term Receivables Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At September 30, 2023 and December 31, 2022, the difference between the carrying amount and estimated fair value for loans and long-term receivables was immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. Long-Term Debt Fair value of publicly traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt (including long-term finance lease liabilities) for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. The carrying amount of long-term debt was $48,828 million and $46,189 million, and the estimated fair value was $44,264 million and $42,514 million at September 30, 2023 and December 31, 2022, 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. |
Financing Receivables
Financing Receivables | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Financing Receivables | Financing Receivables: Financing receivables primarily consist of client loan and installment payment receivables (loans), investment in sales-type and direct financing leases (collectively referred to as client financing receivables) and commercial financing receivables. Loans are provided primarily to clients to finance the purchase of hardware, software and services. Payment terms on these financing arrangements are for terms up to seven years. Investment in sales-type and direct financing leases relate principally to the company’s Infrastructure products and are for terms ranging generally from two A summary of the components of the company’s financing receivables is presented as follows: Client Financing Receivables Client Loan and Installment Payment Receivables Investment in Sales-Type and Direct Financing Commercial Financing Receivables (Dollars in millions) Held for Held for At September 30, 2023 (Loans) Leases Investment Sale* Total Financing receivables, gross $ 6,398 $ 3,628 $ 313 $ 593 $ 10,932 Unearned income (406) (355) — — (761) Unguaranteed residual value — 403 — — 403 Amortized cost $ 5,992 $ 3,676 $ 313 $ 593 $ 10,573 Allowance for credit losses (95) (59) (5) — (159) Total financing receivables, net $ 5,897 $ 3,617 $ 308 $ 593 $ 10,414 Current portion $ 3,337 $ 1,387 $ 308 $ 593 $ 5,625 Noncurrent portion $ 2,560 $ 2,230 $ — $ — $ 4,789 Client Financing Receivables Client Loan and Installment Payment Receivables Investment in Sales-Type and Direct Financing Commercial Financing Receivables (Dollars in millions) Held for Held for At December 31, 2022 (Loans) Leases Investment Sale* Total Financing receivables, gross $ 8,875 $ 4,023 $ 299 $ 939 $ 14,136 Unearned income (439) (351) — — (790) Unguaranteed residual value — 422 — — 422 Amortized cost $ 8,437 $ 4,094 $ 299 $ 939 $ 13,769 Allowance for credit losses (108) (60) (5) — (173) Total financing receivables, net $ 8,329 $ 4,034 $ 293 $ 939 $ 13,596 Current portion $ 5,073 $ 1,485 $ 293 $ 939 $ 7,790 Noncurrent portion $ 3,256 $ 2,549 $ — $ — $ 5,806 * The carrying value of the receivables classified as held for sale approximates fair value. The company has a long-standing practice of taking mitigation actions, in certain circumstances, to transfer credit risk to third parties. These actions may include credit insurance, financial guarantees, nonrecourse secured borrowings, transfers of receivables recorded as true sales in accordance with accounting guidance or sales of equipment under operating lease. Sale of receivables arrangements are also utilized in the normal course of business as part of the company’s cash and liquidity management. Financing receivables pledged as collateral for secured borrowings were $294 million and $349 million at September 30, 2023 and December 31, 2022, respectively. These borrowings are included in note 12, “Borrowings.” Transfer of Financial Assets The company has an existing agreement with a third-party investor to sell IBM short-term commercial financing receivables on a revolving basis. In addition, the company enters into agreements with third-party financial institutions to sell certain of its client financing receivables, including both loan and lease receivables, for cash proceeds. There were no material client financing receivables transferred for the nine months ended September 30, 2023 and 2022. The following table presents the total amount of commercial financing receivables transferred. (Dollars in millions) For the nine months ended September 30: 2023 2022 Commercial financing receivables: Receivables transferred during the period $ 6,453 $ 6,091 Receivables uncollected at end of period* $ 836 $ 816 * Of the total amount of commercial financing receivables sold and derecognized from the Consolidated Balance Sheet, the amounts presented remained uncollected from business partners as of September 30, 2023 and 2022. The transfer of these receivables qualified as true sales and therefore reduced financing receivables. The cash proceeds from the sales are included in cash flows from operating activities. For the nine months ended September 30, 2023 and 2022, the net loss, including fees, associated with the transfer of commercial financial receivables was $69 million and $38 million, respectively, and is included in other (income) and expense in the Consolidated Income Statement. Financing Receivables by Portfolio Segment The following tables present the amortized cost basis for client financing receivables at September 30, 2023 and December 31, 2022, further segmented by three classes: Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific. The commercial financing receivables portfolio segment is excluded from the tables in the sections below as the receivables are short term in nature and the current estimated risk of loss and resulting impact to the company’s financial results are not material. (Dollars in millions) At September 30, 2023: Americas EMEA Asia Pacific Total Amortized cost $ 5,841 $ 2,636 $ 1,190 $ 9,668 Allowance for credit losses: Beginning balance at January 1, 2023 $ 88 $ 60 $ 20 $ 168 Write-offs $ (9) $ 0 $ 0 $ (9) Recoveries 0 0 3 3 Additions/(releases) 6 (14) (4) (11) Other* 6 (1) (1) 3 Ending balance at September 30, 2023 $ 92 $ 44 $ 18 $ 154 * Primarily represents translation adjustments. (Dollars in millions) At December 31, 2022: Americas EMEA Asia Pacific Total Amortized cost $ 7,281 $ 3,546 $ 1,704 $ 12,531 Allowance for credit losses: Beginning balance at January 1, 2022 $ 111 $ 61 $ 23 $ 195 Write-offs $ (20) $ (3) $ (2) $ (25) Recoveries 1 0 4 5 Additions/(releases) (5) 6 (4) (3) Other* 2 (5) (2) (4) Ending balance at December 31, 2022 $ 88 $ 60 $ 20 $ 168 * Primarily represents translation adjustments. When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For the company’s policy on determining allowances for credit losses, refer to note A, “Significant Accounting Policies,” in the company’s 2022 Annual Report. Past Due Financing Receivables The company summarizes information about the amortized cost basis for client financing receivables, including amortized cost aged over 90 days and still accruing, billed invoices aged over 90 days and still accruing, and amortized cost not accruing. (Dollars in millions) Total Amortized Amortized Billed Amortized At September 30, 2023: Americas $ 5,841 $ 101 $ 33 $ 7 $ 70 EMEA 2,636 34 4 1 30 Asia Pacific 1,190 17 1 1 15 Total client financing receivables $ 9,668 $ 152 $ 37 $ 9 $ 115 (Dollars in millions) Total Amortized Amortized Billed Amortized At December 31, 2022: Americas $ 7,281 $ 272 $ 198 $ 22 $ 74 EMEA 3,546 52 8 1 46 Asia Pacific 1,704 20 3 1 17 Total client financing receivables $ 12,531 $ 344 $ 208 $ 23 $ 137 * At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days. ** Of the amortized cost not accruing, there was a related allowance of $112 million and $122 million at September 30, 2023 and December 31, 2022, respectively. Financing income recognized on these receivables was immaterial for the three and nine months ended September 30, 2023, respectively. Credit Quality Indicators The company’s credit quality indicators, which are based on rating agency data, publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Moody’s Investors Service credit ratings as shown below. The company uses information provided by Moody’s, where available, as one of many inputs in its determination of customer credit ratings. The credit quality of the customer is evaluated based on these indicators and is assigned the same risk rating whether the receivable is a lease or a loan. The following tables present the amortized cost basis for client financing receivables by credit quality indicator at September 30, 2023 and December 31, 2022, respectively. Receivables with a credit quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators reflect mitigating credit enhancement actions taken by customers which reduce the risk to IBM. Gross write-offs by vintage year at September 30, 2023 were not material. (Dollars in millions) Americas EMEA Asia Pacific At September 30, 2023: Aaa – Baa3 Ba1 – C Aaa – Baa3 Ba1 – C Aaa – Baa3 Ba1 – C Vintage year: 2023 $ 1,242 $ 718 $ 385 $ 384 $ 281 $ 59 2022 1,962 307 737 395 381 45 2021 780 160 290 94 120 43 2020 283 120 120 73 105 26 2019 124 33 66 45 52 10 2018 and prior 58 54 16 32 46 21 Total $ 4,449 $ 1,393 $ 1,613 $ 1,023 $ 986 $ 204 (Dollars in millions) Americas EMEA Asia Pacific At December 31, 2022: Aaa – Baa3 Ba1 – C Aaa – Baa3 Ba1 – C Aaa – Baa3 Ba1 – C Vintage year: 2022 $ 3,316 $ 1,097 $ 1,447 $ 704 $ 799 $ 96 2021 1,197 323 451 159 203 65 2020 559 217 258 158 210 49 2019 251 91 161 99 127 22 2018 128 26 42 16 84 21 2017 and prior 32 45 14 38 12 17 Total $ 5,482 $ 1,800 $ 2,373 $ 1,173 $ 1,434 $ 269 Modifications and Troubled Debt Restructurings The company did not have any significant modifications due to financial difficulty during the nine months ended September 30, 2023. The company did not have any significant troubled debt restructurings during the year ended December 31, 2022. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | Leases: Accounting for Leases as a Lessor The following table presents amounts included in the Consolidated Income Statement related to lessor activity. Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2023 2022 2023 2022 Lease income — sales-type and direct financing leases: Sales-type lease selling price $ 190 $ 99 $ 528 $ 888 Less: Carrying value of underlying assets* (42) (57) (133) (195) Gross profit $ 148 $ 43 $ 395 $ 693 Interest income on lease receivables 58 54 176 144 Total sales-type and direct financing lease income $ 206 $ 97 $ 571 $ 838 Lease income — operating leases 20 29 71 86 Variable lease income 12 19 47 75 Total lease income $ 238 $ 145 $ 689 $ 998 * Excludes unguaranteed residual value. |
Leases | Leases: Accounting for Leases as a Lessor The following table presents amounts included in the Consolidated Income Statement related to lessor activity. Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2023 2022 2023 2022 Lease income — sales-type and direct financing leases: Sales-type lease selling price $ 190 $ 99 $ 528 $ 888 Less: Carrying value of underlying assets* (42) (57) (133) (195) Gross profit $ 148 $ 43 $ 395 $ 693 Interest income on lease receivables 58 54 176 144 Total sales-type and direct financing lease income $ 206 $ 97 $ 571 $ 838 Lease income — operating leases 20 29 71 86 Variable lease income 12 19 47 75 Total lease income $ 238 $ 145 $ 689 $ 998 * Excludes unguaranteed residual value. |
Intangible Assets Including Goo
Intangible Assets Including Goodwill | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets Including Goodwill | Intangible Assets Including Goodwill: Intangible Assets The following tables present the company's intangible asset balances by major asset class. At September 30, 2023 (Dollars in millions) Gross Carrying Accumulated Net Carrying Intangible asset class: Capitalized software $ 1,606 $ (734) $ 872 Client relationships 8,946 (3,253) 5,693 Completed technology 5,630 (2,321) 3,309 Patents/trademarks 1,805 (404) 1,401 Other** 17 (15) 2 Total $ 18,004 $ (6,726) $ 11,278 At December 31, 2022 (Dollars in millions) Gross Carrying Accumulated Net Carrying Intangible asset class: Capitalized software $ 1,650 $ (705) $ 945 Client relationships 8,559 (2,951) 5,608 Completed technology 5,220 (2,045) 3,175 Patents/trademarks 2,140 (688) 1,452 Other** 19 (15) 4 Total $ 17,588 $ (6,404) $ 11,184 * Amounts as of September 30, 2023 and December 31, 2022 include a decrease in net intangible asset balances of $41 million and $198 million, respectively, due to foreign currency translation. ** Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems. The net carrying amount of intangible assets increased $94 million during the first nine months of 2023, primarily due to additions of acquired intangibles of $1,406 million, primarily related to the acquisition of Apptio, Inc. in the current quarter and capitalized software, partially offset by intangible asset amortization. The aggregate intangible asset amortization expense was $572 million and $1,676 million for the third quarter and first nine months of 2023, respectively, compared to $577 million and $1,828 million for the third quarter and first nine months of 2022, respectively. In the first nine months of 2023, the company retired $1,327 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount. The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet was estimated to be the following at September 30, 2023: (Dollars in millions) Capitalized Acquired Total Remainder of 2023 $ 156 $ 430 $ 585 2024 448 1,703 2,151 2025 213 1,684 1,897 2026 55 1,661 1,716 2027 — 1,642 1,642 Thereafter — 3,285 3,285 Goodwill The changes in the goodwill balances by segment for the nine months ended September 30, 2023 and for the year ended December 31, 2022 were as follows: (Dollars in millions) Balance Goodwill Purchase Foreign Balance Segment 1/1/2023 Divestitures 9/30/2023 Software $ 43,657 $ 3,447 $ (7) $ — $ (173) $ 46,923 Consulting 7,928 395 6 — (26) 8,302 Infrastructure 4,363 12 — — (5) 4,370 Other — — — — — — Total $ 55,949 $ 3,854 $ (1) $ — $ (205) $ 59,596 (Dollars in millions) Balance Goodwill Purchase Foreign Balance Segment 1/1/2022 Divestitures 12/31/2022 Software $ 43,966 $ 568 $ (118) $ — $ (760) $ 43,657 Consulting 6,797 1,366 (42) — (192) 7,928 Infrastructure 4,396 — — (1) (32) 4,363 Other** 484 — — (484) — — Total $ 55,643 $ 1,934 $ (159) $ (485) $ (984) $ 55,949 * Primarily driven by foreign currency translation. ** The company derecognized goodwill related to the divestiture of its healthcare software assets in the second quarter of 2022. There were no goodwill impairment losses recorded during the first nine months of 2023 or full-year 2022 and the company has no accumulated impairment losses. Purchase price adjustments recorded in the first nine months of 2023 and full-year 2022 were related to acquisitions that were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. Net purchase price adjustments recorded in the first nine months of 2023 were not material. Net purchase price adjustments recorded in 2022 primarily related to deferred tax assets and liabilities associated with the Turbonomic acquisition. |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings: Short-Term Debt (Dollars in millions) At September 30, 2023 At December 31, 2022 Short-term loans $ 13 $ 8 Long-term debt — current maturities 6,400 4,751 Total $ 6,414 $ 4,760 The weighted-average interest rate for short-term loans was 1.8 percent and 7.6 percent at September 30, 2023 and December 31, 2022, respectively. Long-Term Debt Pre-Swap Borrowing Balance Balance (Dollars in millions) Maturities 9/30/2023 12/31/2022 U.S. dollar debt (weighted-average interest rate at September 30, 2023):* 2.4% 2023 $ 2 $ 1,529 3.3% 2024 5,004 5,009 5.1% 2025 1,602 1,603 3.5% 2026 5,201 4,351 3.1% 2027 3,620 3,620 5.0% 2028 1,313 313 3.5% 2029 3,250 3,250 2.0% 2030 1,350 1,350 4.4% 2032 1,850 1,850 4.8% 2033 750 — 8.0% 2038 83 83 4.5% 2039 2,745 2,745 2.9% 2040 650 650 4.0% 2042 1,107 1,107 7.0% 2045 27 27 4.7% 2046 650 650 4.3% 2049 3,000 3,000 3.0% 2050 750 750 4.2% 2052 1,400 1,400 5.1% 2053 650 — 7.1% 2096 316 316 $ 35,321 $ 33,605 Other currencies (weighted-average interest rate at September 30, 2023, in parentheses):* Euro (1.8%) 2024–2043 $ 18,512 $ 17,087 Pound sterling (4.9%) 2038 915 — Japanese yen (0.5%) 2024–2028 1,182 694 Other (15.1%) 2023–2026 310 361 $ 56,240 $ 51,747 Finance lease obligations (4.3%) 2023–2030 303 239 $ 56,542 $ 51,986 Less: net unamortized discount 846 835 Less: net unamortized debt issuance costs 157 138 Add: fair value adjustment** (311) (73) $ 55,228 $ 50,940 Less: current maturities 6,400 4,751 Total $ 48,828 $ 46,189 * Includes notes, debentures, bank loans and secured borrowings. ** The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Balance Sheet as an amount equal to the sum of the debt’s carrying value and a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates. The company’s indenture governing its debt securities and its various credit facilities each contain significant covenants which obligate the company to promptly pay principal and interest, limit the aggregate amount of secured indebtedness and sale and leaseback transactions to 10 percent of the company’s consolidated net tangible assets, and restrict the company’s ability to merge or consolidate unless certain conditions are met. The credit facilities also include a covenant on the company’s consolidated net interest expense ratio, which cannot be less than 2.20 to 1.0, as well as a cross default provision with respect to other defaulted indebtedness of at least $500 million. The company is in compliance with its debt covenants and provides periodic certifications to its lenders. The failure to comply with its debt covenants could constitute an event of default with respect to the debt to which such provisions apply. If certain events of default were to occur, the principal and interest on the debt to which such event of default applied would become immediately due and payable. In the first quarter of 2023, the company issued $0.7 billion of Japanese yen floating-rate syndicated bank loans with a maturity of 5 years; $4.6 billion of Euro fixed-rate notes in tranches with maturities ranging from 4 to 20 years and coupons ranging from 3.375 percent to 4 percent; $0.9 billion of Pound sterling fixed-rate notes with a maturity of 15 years and a coupon of 4.875 percent; and $3.25 billion of U.S. dollar fixed-rate notes in tranches with maturities ranging from 3 to 30 years and coupons ranging from 4.5 to 5.1 percent. Pre-swap annual contractual obligations of long-term debt outstanding at September 30, 2023, were as follows: (Dollars in millions) Total Remainder of 2023 $ 75 2024 6,368 2025 4,912 2026 5,570 2027 5,772 Thereafter 33,845 Total $ 56,542 Interest on Debt (Dollars in millions) For the nine months ended September 30: 2023 2022 Cost of financing $ 255 $ 264 Interest expense 1,202 903 Interest capitalized 7 4 Total interest paid and accrued $ 1,464 $ 1,170 Lines of Credit The company has a $2.5 billion Three-Year Credit Agreement and a $7.5 billion Five-Year Credit Agreement (the Credit Agreements) with maturity dates of June 20, 2026 and June 22, 2028, respectively . The Credit Agreements permit the company and its subsidiary borrowers to borrow up to $10 billion on a revolving basis. At September 30, 2023, there were no borrowings by the company, or its subsidiaries, under these credit facilities. |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Commitments:The company’s extended lines of credit to third-party entities include unused amounts of $1.5 billion and $1.6 billion at September 30, 2023 and December 31, 2022, 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 $1.5 billion and $2.1 billion at September 30, 2023 and December 31, 2022, respectively. The reduction in the future financing commitments is primarily due to lower services financing in the current year. The company collectively evaluates the allowance for these arrangements using a provision methodology consistent with the portfolio of the commitments. Refer to note A, “Significant Accounting Policies,” in the company’s 2022 Annual Report for additional information. The allowance for these commitments is recorded in other liabilities in the Consolidated Balance Sheet and was not material at September 30, 2023. 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 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 indemnification provisions typically 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 and the fair value of these guarantees recognized in the Consolidated Balance Sheet at September 30, 2023 and December 31, 2022 was not material. Changes in the company’s warranty liability for standard warranties, which are included in other accrued expenses and liabilities and other liabilities in the Consolidated Balance Sheet, and for extended warranty contracts, which are included in deferred income in the Consolidated Balance Sheet, are presented in the following tables. Standard Warranty Liability (Dollars in millions) 2023 2022 Balance at January 1 $ 79 $ 77 Current-period accruals 53 58 Accrual adjustments to reflect actual experience (14) (1) Charges incurred (64) (62) Balance at September 30 $ 54 $ 72 Extended Warranty Liability (Dollars in millions) 2023 2022 Balance at January 1 $ 272 $ 350 Revenue deferred for new extended warranty contracts 55 103 Amortization of deferred revenue (122) (148) Other* (4) (21) Balance at September 30 $ 201 $ 284 Current portion $ 119 $ 139 Noncurrent portion $ 82 $ 145 * Other primarily consists of foreign currency translation adjustments. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | 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. Further, given the rapidly evolving external landscape of cybersecurity, privacy and data protection laws, regulations and threat actors, the company and its clients have been and will continue to be subject to actions or proceedings in various jurisdictions. 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 September 30, 2023 were not material to the Consolidated Financial Statements. In accordance with the relevant accounting guidance, the company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer and employee relations considerations. With respect to certain of the claims, suits, investigations and proceedings discussed herein, the company believes at this time that the likelihood of any material loss is remote, given, for example, the procedural status, court rulings, and/or the strength of the company’s defenses in those matters. With respect to the remaining claims, suits, investigations and proceedings discussed in this note, except as specifically discussed herein, the company is unable to provide estimates of reasonably possible losses or range of losses, including losses in excess of amounts accrued, if any, for the following reasons. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of these matters. It is the company’s experience that damage amounts claimed in litigation against it are unreliable and unrelated to possible outcomes, and as such are not meaningful indicators of the company’s potential liability. Further, the company is unable to provide such an estimate due to a number of other factors with respect to these claims, suits, investigations and proceedings, including considerations of the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. The company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate), to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter. Whether any losses, damages or remedies finally determined in any claim, suit, investigation or proceeding could reasonably have a material effect on the company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including: the timing and amount of such losses or damages; the structure and type of any such remedies; the significance of the impact any such losses, damages or remedies may have in the Consolidated Financial Statements; and the unique facts and circumstances of the particular matter that may give rise to additional factors. While the company will continue to defend itself vigorously, it is possible that the company’s business, financial condition, results of operations or cash flows could be affected in any particular period by the resolution of one or more of these matters. The following is a summary of the more significant legal matters involving the company. On June 8, 2021, IBM sued GlobalFoundries U.S. Inc. (GF) in New York State Supreme Court for claims including fraud and breach of contract relating to a long-term strategic relationship between IBM and GF for researching, developing, and manufacturing advanced semiconductor chips for IBM. GF walked away from its obligations and IBM is now suing to recover amounts paid to GF, and other compensatory and punitive damages, totaling more than $1.5 billion. On September 14, 2021, the court ruled on GF’s motion to dismiss. On April 7, 2022, the Appellate Division unanimously reversed the lower court’s dismissal of IBM’s fraud claim. IBM’s claims for breaches of contract, promissory estoppel, and fraud are proceeding. On June 2, 2022, a putative class action lawsuit was filed in the United States District Court for the Southern District of New York alleging that the IBM Pension Plan miscalculated certain joint and survivor annuity pension benefits by using outdated actuarial tables in violation of the Employee Retirement Income Security Act of 1974. IBM, the Plan Administrator Committee, and the IBM Pension Plan are named as defendants. As disclosed in the Kyndryl Form 10 and subsequent Kyndryl public filings, in 2017 BMC Software, Inc. (BMC) filed suit against IBM in the United States District Court for the Southern District of Texas in a dispute involving IBM’s former managed infrastructure services business. On May 30, 2022, the trial court awarded BMC $718 million in direct damages and $718 million in punitive damages, plus interest and fees. IBM filed a notice of appeal. IBM does not believe it has any material exposure relating to this litigation. No material liability or related indemnification asset has been recorded by IBM. The company is party to, or otherwise involved in, proceedings brought by U.S. federal or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), known as “Superfund,” or laws similar to CERCLA. Such statutes require potentially responsible parties to participate in remediation activities regardless of fault or ownership of sites. The company is also conducting environmental investigations, assessments or remediations at or in the vicinity of several current or former operating sites globally pursuant to permits, administrative orders or agreements with country, state or local environmental agencies, and is involved in lawsuits and claims concerning certain current or former operating sites. The company is also subject to ongoing tax examinations and governmental assessments in various jurisdictions. Along with many other U.S. companies doing business in Brazil, the company is involved in various challenges with Brazilian tax authorities regarding non-income tax assessments and non-income tax litigation matters. The total potential amount related to all these matters for all applicable years is approximately $400 million. The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability. |
Equity Activity
Equity Activity | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
Equity Activity | 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 September 30, 2023: Other comprehensive income/(loss): Foreign currency translation adjustments $ 151 $ (164) $ (13) 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 — — — Total net changes related to available-for-sale securities $ 0 $ 0 $ 0 Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ 131 $ (35) $ 95 Reclassification of (gains)/losses to: Cost of services 2 0 1 Cost of sales 5 (1) 4 Cost of financing 3 (1) 2 SG&A expense 4 (1) 3 Other (income) and expense 175 (44) 131 Interest expense 14 (4) 11 Total unrealized gains/(losses) on cash flow hedges $ 333 $ (85) $ 248 Retirement-related benefit plans:* Prior service costs/(credits) $ — $ — $ — Net (losses)/gains arising during the period 102 (26) 77 Curtailments and settlements 2 (1) 1 Amortization of prior service (credits)/costs (2) 1 (2) Amortization of net (gains)/losses 128 (37) 91 Total retirement-related benefit plans $ 230 $ (63) $ 167 Other comprehensive income/(loss) $ 714 $ (313) $ 402 * These accumulated other comprehensive income (AOCI) components are included in the computation of net periodic pension cost. Refer to note 18, “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 September 30, 2022: Other comprehensive income/(loss): Foreign currency translation adjustments $ 143 $ (301) $ (158) 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 — — — Total net changes related to available-for-sale securities $ 0 $ 0 $ 0 Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ 189 $ (49) $ 140 Reclassification of (gains)/losses to: Cost of services (4) 1 (3) Cost of sales (35) 10 (25) Cost of financing 7 (2) 5 SG&A expense (8) 2 (6) Other (income) and expense 6 (2) 5 Interest expense 22 (5) 16 Total unrealized gains/(losses) on cash flow hedges $ 178 $ (45) $ 133 Retirement-related benefit plans:* Prior service costs/(credits) $ 412 $ (104) $ 309 Net (losses)/gains arising during the period 53 (13) 39 Curtailments and settlements 5,913 (1,487) 4,426 Amortization of prior service (credits)/costs 3 (1) 2 Amortization of net (gains)/losses 388 (108) 279 Total retirement-related benefit plans $ 6,768 $ (1,712) $ 5,056 Other comprehensive income/(loss) $ 7,089 $ (2,058) $ 5,030 * These AOCI components are included in the computation of net periodic pension cost and include the impact of a one-time, non-cash pension settlement charge of $5.9 billion ($4.4 billion net of tax) in the third quarter of 2022. Refer to note 18, “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 nine months ended September 30, 2023: Other comprehensive income/(loss): Foreign currency translation adjustments $ 180 $ (142) $ 39 Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period $ (1) $ 0 $ (1) Reclassification of (gains)/losses to other (income) and expense — — — Total net changes related to available-for-sale securities $ (1) $ 0 $ (1) Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ 279 $ (77) $ 203 Reclassification of (gains)/losses to: Cost of services 6 (1) 5 Cost of sales (12) 4 (8) Cost of financing 12 (3) 9 SG&A expense (7) 2 (4) Other (income) and expense (6) 1 (4) Interest expense 57 (14) 43 Total unrealized gains/(losses) on cash flow hedges $ 330 $ (87) $ 243 Retirement-related benefit plans:* Prior service costs/(credits) $ — $ 1 $ 1 Net (losses)/gains arising during the period 104 (19) 85 Curtailments and settlements 7 (2) 5 Amortization of prior service (credits)/costs (6) 2 (5) Amortization of net (gains)/losses 389 (113) 276 Total retirement-related benefit plans $ 494 $ (132) $ 361 Other comprehensive income/(loss) $ 1,003 $ (361) $ 642 * These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “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 nine months ended September 30, 2022: Other comprehensive income/(loss): Foreign currency translation adjustments $ 799 $ (784) $ 14 Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period $ (1) $ 0 $ (1) Reclassification of (gains)/losses to other (income) and expense — — — Total net changes related to available-for-sale securities $ (1) $ 0 $ (1) Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ 449 $ (118) $ 332 Reclassification of (gains)/losses to: Cost of services (32) 8 (24) Cost of sales (71) 20 (50) Cost of financing 19 (5) 14 SG&A expense (28) 8 (20) Other (income) and expense 51 (13) 38 Interest expense 64 (16) 48 Total unrealized gains/(losses) on cash flow hedges $ 453 $ (116) $ 338 Retirement-related benefit plans:* Prior service costs/(credits) $ 408 $ (99) $ 309 Net (losses)/gains arising during the period 63 (20) 43 Curtailments and settlements 5,931 (1,491) 4,440 Amortization of prior service (credits)/costs 16 (4) 12 Amortization of net (gains)/losses 1,305 (364) 941 Total retirement-related benefit plans $ 7,722 $ (1,978) $ 5,745 Other comprehensive income/(loss) $ 8,973 $ (2,877) $ 6,096 * These AOCI components are included in the computation of net periodic pension cost and include the impact of a one-time, non-cash pension settlement charge of $5.9 billion ($4.4 billion net of tax) in the third quarter of 2022. Refer to note 18, “Retirement-Related Benefits,” for additional information. Accumulated Other Comprehensive Income/(Loss) (net of tax) (Dollars in millions) Net Unrealized Foreign Net Change Net Unrealized Accumulated January 1, 2023 $ (135) $ (3,591) $ (13,013) $ (1) $ (16,740) Other comprehensive income before reclassifications 203 39 86 (1) 326 Amount reclassified from accumulated other comprehensive income 40 — 276 — 316 Total change for the period $ 243 $ 39 $ 361 $ (1) $ 642 September 30, 2023 $ 109 $ (3,552) $ (12,652) $ (2) $ (16,098) (Dollars in millions) Net Unrealized Foreign Net Change Net Unrealized Accumulated January 1, 2022 $ (18) $ (3,362) $ (19,854) $ (1) $ (23,234) Other comprehensive income before reclassifications 332 14 352 (1) 697 Amount reclassified from accumulated other comprehensive income 6 — 5,393 ** — 5,399 Total change for the period $ 338 $ 14 $ 5,745 $ (1) $ 6,096 September 30, 2022 $ 320 $ (3,347) $ (14,110) $ (1) $ (17,138) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. ** Includes the impact of a one-time, non-cash pension settlement charge of $5.9 billion ($4.4 billion net of tax) in the third quarter of 2022. Refer to note 18, “Retirement-Related Benefits,” for additional information. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments: The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations. In the Consolidated Balance Sheet, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments. At September 30, 2023 and December 31, 2022, the amount recognized in other accounts receivables for the right to reclaim cash collateral was $112 million and $140 million, respectively. At September 30, 2023 and December 31, 2022, the amount recognized in accounts payable for the obligation to return cash collateral was $3 million and $8 million respectively. The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in restricted cash in the Consolidated Balance Sheet. At September 30, 2023 and December 31, 2022, the amount rehypothecated was $3 million and $8 million respectively. Additionally, if derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated Balance Sheet at September 30, 2023 and December 31, 2022, the total derivative asset and liability positions each would have been reduced by $281 million and $220 million, respectively. On May 19, 2022, in connection with the disposition of 22.3 million shares of Kyndryl common stock, the company entered into a cash-settled swap that maintained IBM’s continued economic exposure in those shares. The notional value of the swap was $311 million. For the three and nine months ended September 30, 2022, an unrealized gain of $3 million and an unrealized loss of $85 million, respectively, was recorded in other (income) and expense in the Consolidated Income Statement. The company settled the swap on November 2, 2022. In its hedging programs, the company may use forward contracts, futures contracts, interest-rate swaps, cross-currency swaps, equity swaps, and options depending upon the underlying exposure. The company is not a party to leveraged derivative instruments. A brief description of the major hedging programs, categorized by underlying risk, follows. Interest Rate Risk Fixed and Variable Rate Borrowings The company issues debt in the global capital markets to fund its operations and financing business. Access to cost-effective financing can result in interest rate mismatches with the underlying assets. To manage these mismatches and to reduce overall interest cost, the company may use interest-rate swaps to convert specific fixed-rate debt issuances into variable-rate debt (i.e., fair value hedges) and to convert specific variable-rate debt issuances into fixed-rate debt (i.e., cash flow hedges). At September 30, 2023 and December 31, 2022, the total notional amount of the company’s interest-rate swaps was $6.7 billion and $6.5 billion, respectively. The weighted-average remaining maturity of these instruments at September 30, 2023 and December 31, 2022 was approximately 5.7 years and 6.0 years, respectively. These interest-rate contracts were accounted for as fair value hedges. The company did not have any cash flow hedges relating to this program outstanding at September 30, 2023 and December 31, 2022. Forecasted Debt Issuance The company is exposed to interest rate volatility on future debt issuances. To manage this risk, the company may use instruments such as forward starting interest-rate swaps to lock in the rate on the interest payments related to the forecasted debt issuances. There were no instruments outstanding at September 30, 2023 and December 31, 2022. In connection with cash flow hedges of forecasted interest payments related to the company's borrowings, the company recorded net losses (before taxes) of $126 million and $139 million at September 30, 2023 and December 31, 2022, respectively, in AOCI. The company estimates that $16 million of the deferred net losses (before taxes) on derivatives in AOCI at September 30, 2023 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying interest payments. 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. At September 30, 2023 and December 31, 2022, the carrying value of debt designated as hedging instruments was $15.2 billion and $13.4 billion, respectively. The company also uses cross-currency swaps and foreign exchange forward contracts (forward contracts) for this risk management purpose. At September 30, 2023 and December 31, 2022, the total notional amount of derivative instruments designated as net investment hedges was $5.3 billion and $4.7 billion, respectively. At September 30, 2023 and December 31, 2022, the weighted-average remaining maturity of these instruments was approximately 0.2 years and 0.1 years, respectively. Anticipated Royalties and Cost Transactions The company’s operations generate significant nonfunctional currency, third-party vendor payments and intercompany payments for royalties and goods and services among the company’s non-U.S. subsidiaries and with the company. In anticipation of these foreign currency cash flows and in view of the volatility of the currency markets, the company selectively employs foreign exchange forward contracts to manage its currency risk. These forward contracts are accounted for as cash flow hedges. At September 30, 2023, the maximum remaining length of time over which the company hedged its exposure is approximately two years. At September 30, 2023 and December 31, 2022, the total notional amount of forward contracts designated as cash flow hedges of forecasted royalty and cost transactions was $9.0 billion and $8.1 billion, respectively. At both September 30, 2023 and December 31, 2022, the weighted-average remaining maturity of these instruments was approximately 0.6 years. At September 30, 2023 and December 31, 2022, in connection with cash flow hedges of anticipated royalties and cost transactions, the company recorded net gains (before taxes) of $317 million and $66 million, respectively, in AOCI. The company estimates that $257 million of deferred net gains (before taxes) on derivatives in AOCI at September 30, 2023 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions. Foreign Currency Denominated Borrowings The company is exposed to exchange rate volatility on foreign currency denominated debt. To manage this risk, the company may employ forward contracts or cross-currency swaps to convert the principal, or principal and interest payments of foreign currency denominated debt to debt denominated in the functional currency of the borrowing entity. These derivatives are accounted for as cash flow hedges. For forward contracts, the company excludes the initial forward points from the assessment of hedge effectiveness and recognizes it in other (income) and expense in the Consolidated Income Statement on a straight-line basis over the life of the hedging instrument. Changes in the fair value of the amounts excluded from the assessment of hedge effectiveness are recognized in OCI. In August 2023, the company terminated all of its outstanding cross-currency swaps designated as cash flow hedges of the principal and interest associated with foreign currency denominated debt and executed forward contracts designated as cash flow hedges of the principal associated with foreign currency denominated debt. At September 30, 2023, the maximum length of time remaining over which the company hedged its exposure was approximately seven years. At September 30, 2023 and December 31, 2022, the total notional amount of derivative instruments designated as cash flow hedges of foreign-currency denominated debt was $5.2 billion and $3.1 billion, respectively. At September 30, 2023 and December 31, 2022, in connection with cross-currency swaps, the company recorded net losses (before taxes) of $74 million and $101 million, respectively, in AOCI, of which $23 million of deferred net losses (before taxes) is estimated to be reclassified to net income within the next 12 months. At September 30, 2023, in connection with forward contracts, the company has recorded net gains (before taxes) of $40 million in AOCI. Approximately $72 million of losses (before taxes) related to the initial forward points excluded from the assessment of hedge effectiveness is expected to be amortized to other (income) and expenses within the next 12 months. There was no activity associated with forward contracts recorded in AOCI at December 31, 2022. 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 forward contracts to economically hedge, on a net basis, the foreign currency exposure of a portion of the company’s nonfunctional currency assets and liabilities. The terms of these forward and swap contracts are generally less than one year. The changes in the fair values of these contracts and of the underlying hedged exposures are generally offsetting and are recorded in other (income) and expense in the Consolidated Income Statement. At September 30, 2023 and December 31, 2022, the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $6.2 billion and $5.9 billion, respectively. Equity Risk Management The company is exposed to market price changes in certain broad market indices and in the company’s own stock primarily related to certain obligations to employees. Changes in the overall value of these employee compensation obligations are recorded in SG&A expense in the Consolidated Income Statement. Although not designated as accounting hedges, the company utilizes derivatives, including equity swaps and futures, to economically hedge the exposures related to its employee compensation obligations. The derivatives are linked to the total return on certain broad market indices or the total return on the company’s common stock, and are recorded at fair value with gains or losses also reported in SG&A expense in the Consolidated Income Statement. At September 30, 2023 and December 31, 2022, the total notional amount of derivative instruments in economic hedges of these compensation obligations was $1.2 billion and $1.1 billion, respectively. Cumulative Basis Adjustments for Fair Value Hedges At September 30, 2023 and December 31, 2022, the following amounts were recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges: (Dollars in millions) September 30, December 31, Short-term debt: Carrying amount of the hedged item $ (2) $ (199) Cumulative hedging adjustments included in the carrying amount — assets/(liabilities)* $ (2) $ 1 Long-term debt: Carrying amount of the hedged item $ (6,376) $ (6,216) Cumulative hedging adjustments included in the carrying amount — assets/(liabilities)* $ 312 $ 72 * Includes ($212) million and ($250) million of hedging adjustments on discontinued hedging relationships at September 30, 2023 and December 31, 2022, respectively. The Effect of Derivative Instruments in the Consolidated Income Statement The total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value hedges, cash flow hedges, net investment hedges and derivatives not designated as hedging instruments are recorded and the total effect of hedge activity on these income and expense line items are as follows: (Dollars in millions) Total Gains/(Losses) of For the three months ended September 30: 2023 2022 2023 2022 Cost of services $ 5,217 $ 5,168 $ (2) $ 4 Cost of sales $ 1,419 $ 1,389 $ (5) $ 35 Cost of financing $ 94 $ 120 $ (3) $ 1 SG&A expense $ 4,458 $ 4,391 $ (58) $ (69) Other (income) and expense $ (215) $ 5,755 $ (316) $ (189) Interest expense $ 412 $ 295 $ (15) $ 4 Gain (Loss) Recognized in Consolidated Income Statement (Dollars in millions) Consolidated Recognized on Attributable to Risk Being Hedged (2) For the three months ended September 30: 2023 2022 2023 2022 Derivative instruments in fair value hedges (1) : Interest rate contracts Cost of financing $ (33) $ (64) $ 28 $ 68 Interest expense (166) (191) 139 203 Derivative instruments not designated as hedging instruments: Foreign exchange contracts Other (income) and expense (141) (186) N/A N/A Equity contracts SG&A expense (54) (76) N/A N/A Other (income) and expense — 3 N/A N/A Total $ (394) $ (514) $ 167 $ 271 Gain (Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income Recognized in OCI Consolidated Reclassified Amounts Excluded from Effectiveness Testing (3) (Dollars in millions) For the three months ended September 30: 2023 2022 2023 2022 2023 2022 Derivative instruments in cash flow hedges: Interest rate contracts $ — $ — Cost of financing $ (1) $ (1) $ — $ — Interest expense (4) (3) — — Foreign exchange contracts Cost of services (2) 4 — — Amount included in the assessment of effectiveness 101 189 Cost of sales (5) 35 — — Amount excluded from the assessment of effectiveness 29 — Cost of financing (2) (6) — — SG&A expense (4) 8 — — Other (income) and expense (164) (6) (11) — Interest expense (11) (18) — — Instruments in net investment hedges (4) : Foreign exchange contracts 652 1,198 Cost of financing — — 5 5 Interest expense — — 26 14 Total $ 782 $ 1,387 $ (192) $ 12 $ 21 $ 19 (1) The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. (2) The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. (3) The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing for net investment hedges in net income each period. For cash flow hedges of foreign currency denominated debt, the amounts excluded from effectiveness testing are amortized to net income over the life of the hedging instrument. (4) Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries. N/A - not applicable (Dollars in millions) Total Gains/(Losses) of For the nine months ended September 30: 2023 2022 2023 2022 Cost of services $ 15,821 $ 15,915 $ (6) $ 32 Cost of sales $ 4,329 $ 4,555 $ 12 $ 71 Cost of financing $ 297 $ 314 $ (10) $ 0 SG&A expense $ 14,212 $ 13,843 $ 44 $ (291) Other (income) and expense $ (721) $ 5,921 $ (315) $ (730) Interest expense $ 1,202 $ 903 $ (46) $ 1 Gain (Loss) Recognized in Consolidated Income Statement (Dollars in millions) Consolidated Recognized on Attributable to Risk Being Hedged (2) For the nine months ended September 30: 2023 2022 2023 2022 Derivative instruments in fair value hedges (1) : Interest rate contracts Cost of financing $ (55) $ (76) $ 42 $ 89 Interest expense (261) (261) 196 305 Derivative instruments not designated as hedging instruments: Foreign exchange contracts Other (income) and expense (321) (595) N/A N/A Equity contracts SG&A expense 37 (319) N/A N/A Other (income) and expense — (85) N/A N/A Total $ (600) $ (1,336) $ 238 $ 395 Gain (Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income Recognized in OCI Consolidated Reclassified Amounts Excluded from Effectiveness Testing (3) (Dollars in millions) For the nine months ended September 30: 2023 2022 2023 2022 2023 2022 Derivative instruments in cash flow hedges: Interest rate contracts $ — $ — Cost of financing $ (2) $ (3) $ — $ — Interest expense (11) (10) — — Foreign exchange contracts Cost of services (6) 32 — — Amount included in the assessment of effectiveness 250 449 Cost of sales 12 71 — — Amount excluded from the assessment of effectiveness 29 — Cost of financing (10) (16) — — SG&A expense 7 28 — — Other (income) and expense 16 (51) (11) — Interest expense (46) (54) — — Instruments in net investment hedges (4) : Foreign exchange contracts 564 3,118 Cost of financing — — 16 6 Interest expense — — 75 22 Total $ 843 $ 3,567 $ (40) $ (4) $ 81 $ 28 (1) The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. (2) The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. (3) The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing for net investment hedges in net income each period. For cash flow hedges of foreign currency denominated debt, the amounts excluded from effectiveness testing are amortized to net income over the life of the hedging instrument. (4) Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries. N/A - not applicable |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation: Stock-based compensation cost for stock awards and stock options is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. The following table presents total stock-based compensation cost included in income from continuing operations. Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2023 2022 2023 2022 Cost $ 48 $ 40 $ 141 $ 124 Selling, general and administrative 148 138 465 427 Research, development and engineering 91 73 237 188 Pre-tax stock-based compensation cost $ 286 $ 251 $ 843 $ 739 Income tax benefits (74) (51) (216) (191) Total net stock-based compensation cost $ 213 $ 200 $ 627 $ 548 Pre-tax stock-based compensation cost for the three months ended September 30, 2023 increased $35 million compared to the corresponding period in the prior year due to increases in restricted stock units ($26 million), performance share units ($4 million) and stock options ($4 million). The increases are driven by stock-based compensation awards granted by the company as part of its annual cycles for executives and other employees. Pre-tax stock-based compensation cost for the nine months ended September 30, 2023 increased $104 million compared to the corresponding period in the prior year due to increases in restricted stock units ($44 million), stock options ($25 million), Employees Stock Purchase Plan (ESPP) ($20 million) and performance share units ($15 million). The increases are driven by stock-based compensation awards granted by the company as part of its annual cycles for executives and other employees and the ESPP being considered compensatory effective April 1, 2022. |
Retirement-Related Benefits
Retirement-Related Benefits | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Retirement-Related Benefits | Retirement-Related Benefits: The company offers defined benefit (DB) pension plans, defined contribution pension plans, as well as nonpension postretirement plans primarily consisting of retiree medical benefits. The following tables provide the pre-tax cost for all retirement-related plans. Yr. to Yr. (Dollars in millions) Percent For the three months ended September 30: 2023 2022 Change Retirement-related plans — cost: Defined benefit and contribution pension plans — cost $ 250 $ 6,319 * (96.0) % Nonpension postretirement plans — cost 33 31 5.3 Total $ 283 $ 6,350 (95.5) % * Includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion related to the Qualified PPP, as described below. Yr. to Yr. (Dollars in millions) Percent For the nine months ended September 30: 2023 2022 Change Retirement-related plans — cost: Defined benefit and contribution pension plans — cost $ 791 $ 7,252 * (89.1) % Nonpension postretirement plans — cost 98 97 0.4 Total $ 888 $ 7,350 (87.9) % * Includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion related to the Qualified PPP, as described below. Cost/(Income) of Pension Plans The following tables provide the components of the cost/(income) for the company’s pension plans. (Dollars in millions) U.S. Plans Non-U.S. Plans For the three months ended September 30: 2023 2022 2023 2022 Service cost $ — $ — $ 44 $ 57 Interest cost* 272 282 293 124 Expected return on plan assets* (382) (432) (363) (246) Amortization of prior service costs/(credits)* — 2 5 3 Recognized actuarial losses* 27 132 99 247 Curtailments and settlements* — 5,894 ** 2 19 Multi-employer plans — — 4 4 Other costs/(credits)* — — 3 8 Total net periodic pension (income)/cost of defined benefit plans $ (82) $ 5,877 $ 88 $ 216 Cost of defined contribution plans 150 134 95 91 Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement $ 68 $ 6,012 $ 182 $ 307 (Dollars in millions) U.S. Plans Non-U.S. Plans For the nine months ended September 30: 2023 2022 2023 2022 Service cost $ — $ — $ 133 $ 180 Interest cost* 817 885 873 394 Expected return on plan assets* (1,146) (1,382) (1,081) (778) Amortization of prior service costs/(credits)* 0 6 15 10 Recognized actuarial losses* 82 490 302 784 Curtailments and settlements* — 5,894 ** 7 38 Multi-employer plans — — 10 11 Other costs/(credits)* — — 21 24 Total net periodic pension (income)/cost of defined benefit plans $ (247) $ 5,893 $ 281 $ 663 Cost of defined contribution plans 473 416 283 280 Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement $ 226 $ 6,309 $ 565 $ 943 * These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement. ** Reflects the impact of a one-time, non-cash, pre-tax pension settlement charge related to the Qualified PPP, as described below. Cost of Nonpension Postretirement Plans The following tables provide the components of the cost for the company’s nonpension postretirement plans. (Dollars in millions) U.S. Plan Non-U.S. Plans For the three months ended September 30: 2023 2022 2023 2022 Service cost $ 1 $ 1 $ 1 $ 1 Interest cost* 29 21 10 8 Expected return on plan assets* — — (1) 0 Amortization of prior service costs/(credits)* (7) (2) 0 0 Recognized actuarial losses* — 1 0 1 Curtailments and settlements* — — — — Total nonpension postretirement plans cost recognized in the Consolidated Income Statement $ 23 $ 21 $ 10 $ 10 (Dollars in millions) U.S. Plan Non-U.S. Plans For the nine months ended September 30: 2023 2022 2023 2022 Service cost $ 3 $ 4 $ 2 $ 2 Interest cost* 88 58 29 26 Expected return on plan assets* — — (2) (2) Amortization of prior service costs/(credits)* (22) (1) 0 0 Recognized actuarial losses* — 6 (1) 3 Curtailments and settlements* — — — — Total nonpension postretirement plans cost recognized in the Consolidated Income Statement $ 69 $ 67 $ 28 $ 30 * These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement. IBM U.S. Pension Plan Change As described in note 1, “Basis of Presentation,” in September 2022, the Qualified PPP irrevocably transferred to the Insurers approximately $16 billion of the Qualified PPP’s defined benefit pension obligations and related plan assets, thereby reducing the company’s pension obligations and assets by the same amount. This transaction further de-risked the company’s retirement-related plans by eliminating the potential for the company to make future cash contributions to fund this portion of pension obligations being transferred to the Insurers. Upon issuance of the group annuity contracts, the Qualified PPP’s benefit obligations and administration for approximately 100,000 of the company’s retirees and beneficiaries (the Transferred Participants) were transferred to the Insurers. Under the group annuity contracts, each Insurer made an irrevocable commitment, and is solely responsible, to pay 50 percent of the pension benefits of each Transferred Participant that are due on and after January 1, 2023. The company recognized a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion ($4.4 billion net of tax) in the third quarter of 2022 primarily related to the accelerated recognition of actuarial losses included within AOCI in the Consolidated Statement of Equity. Plan Contributions The company does not anticipate any significant changes to the expected plan contributions in 2023 from the amounts disclosed in the 2022 Annual Report. The table below includes contributions to the following plans: (Dollars in millions) Plan Contributions For the nine months ended September 30: 2023 2022 U.S. nonpension postretirement benefit plans $ 188 $ 272 Non-U.S. DB and multi-employer plans* 45 85 Total plan contributions $ 233 $ 357 * Amounts reported net of refunds. During the nine months ended September 30, 2023 and 2022, the company contributed $188 million and $247 million of U.S. Treasury Securities, respectively, to the U.S. nonpension postretirement benefit plan. Additionally, during the nine months ended September 30, 2023 and 2022, the company contributed $537 million and $366 million of U.S. Treasury securities, respectively, to the Active Medical Trust. Contributions made with U.S. Treasury securities are considered a non-cash transaction. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events : |
Accounting Changes (Policies)
Accounting Changes (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
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. In September 2022, the IBM Qualified Personal Pension Plan (Qualified PPP) purchased two separate nonparticipating single premium group annuity contracts from The Prudential Insurance Company of America and Metropolitan Life Insurance Company (collectively, the Insurers) and irrevocably transferred to the Insurers approximately $16 billion of the Qualified PPP’s defined benefit pension obligations and related plan assets, thereby reducing the company’s pension obligations and assets by the same amount. The group annuity contracts were purchased using assets of the Qualified PPP and no additional funding contribution was required from the company. As a result of this transaction the company recognized a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion ($4.4 billion net of tax) in the third quarter of 2022, primarily related to the accelerated recognition of accumulated actuarial losses of the Qualified PPP. The $1.5 billion tax effect associated with the settlement charge is reflected as an adjustment to reconcile net income/(loss) to cash from operating activities within changes in operating assets and liabilities, net of acquisitions/divestitures in the Consolidated Statement of Cash Flows for the nine months ended September 30, 2022. Refer to note 18, “Retirement-Related Benefits,” for additional information. In the fourth quarter of 2022, the company completed its annual assessment of the useful lives of its property, plant and equipment. Due to advances in technology, the company determined it should increase the estimated useful lives of its server and network equipment from five three For the three and nine months ended September 30, 2023, the company reported a provision for income taxes of $159 million and $702 million, respectively, and its effective tax rate was 8.5 percent and 14.2 percent, respectively. The rates are driven by many factors including the impacts of changes to the U.S. Foreign Tax Credit regulations, geographical mix of income, incentives and changes in unrecognized tax benefits. For the three and nine months ended September 30, 2022, the company reported a benefit from income taxes of $1,287 million and $1,070 million, respectively. The tax benefits were primarily due to the transfer of a portion of the Qualified PPP's defined benefit pension obligations and related plan assets, as described above. Noncontrolling interest amounts of $4 million, net of tax, for both the three months ended September 30, 2023 and 2022, respectively, and $13 million and $14 million, net of tax, for the nine months ended September 30, 2023 and 2022, respectively, are included as a reduction within other (income) and expense in the Consolidated Income Statement. The company has supplier finance programs with third-party financial institutions where the company agrees to pay the financial institutions the stated amounts of invoices from participating suppliers on the originally invoiced maturity date, which have an average term of 90 to 120 days, consistent with the company's standard payment terms. The financial institutions offer earlier payment of the invoices at the sole discretion of the supplier for a discounted amount. The company does not provide secured legal assets or other forms of guarantees under the arrangements. The company is not a party to the arrangements between its suppliers and the financial institutions. These obligations are recognized as accounts payable in the Consolidated Balance Sheet. The obligations outstanding under these programs at September 30, 2023 and December 31, 2022 were $99 million and $60 million, respectively. 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 2022 Annual Report. Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior-period amounts have been reclassified to conform to the current-period presentation. This is annotated where applicable. |
Standards Implemented | Standards Implemented Disclosures of Supplier Finance Program Obligations Standard/Description– Issuance date: September 2022. This guidance requires an entity to provide certain interim and annual disclosures about the use of supplier finance programs in connection with the purchase of goods or services. Effective Date and Adoption Considerations– The guidance was effective January 1, 2023 with certain annual disclosures required beginning in 2024 and early adoption was permitted. The company adopted the guidance as of the effective date. Effect on Financial Statements or Other Significant Matters– The guidance did not have a material impact in the consolidated financial results. Refer to note 1, "Basis of Presentation," for additional information. Troubled Debt Restructurings and Vintage Disclosures Standard/Description –Issuance date: March 2022. This eliminates the accounting guidance for troubled debt restructurings and requires an entity to apply the general loan modification guidance to all loan modifications, including those made to customers experiencing financial difficulty, to determine whether the modification results in a new loan or a continuation of an existing loan. The guidance also requires presenting current-period gross write-offs by year of origination for financing receivables and net investment in leases. Effective Date and Adoption Considerations –The amendment was effective January 1, 2023 and early adoption was permitted. The company adopted the guidance on a prospective basis as of the effective date. Effect on Financial Statements or Other Significant Matters –The guidance did not have a material impact in the consolidated financial results. Refer to note 9, "Financing Receivables," for additional information. |
Remaining Performance Obligations | Remaining Performance ObligationsThe remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not include contracts that have an original duration of one year or less. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency. |
Segments | Performance measurement is based on pre-tax income from continuing operations. These results are used by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments.Beginning in the first quarter of 2023, the company updated its measure of segment pre-tax income, consistent with its management system, to no longer allocate workforce rebalancing charges to its segments. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The company classifies certain assets and liabilities based on the following fair value hierarchy: • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date; • Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and • Level 3 – Unobservable inputs for the asset or liability. When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items as Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation. The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument. In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calculated using the methodologies described below for several parameters that market participants would consider in determining fair value: • Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument. • Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market. The company holds investments primarily in time deposits, certificates of deposit, and U.S. government debt that are designated as available-for-sale. The primary objective of the company’s cash and debt investment portfolio is to protect principal by investing in very liquid investment securities with highly rated counterparties. The company’s standard practice is to hold all of its debt security investments classified as available-for-sale until maturity. No impairments for credit losses and no material non-credit impairments were recorded for the three and nine months ended September 30, 2023. Certain non-financial assets such as property, plant and equipment, operating right-of-use assets, goodwill and intangible assets are also subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for non-financial assets depend on the type of asset. There were no material impairments of non-financial assets for the three and nine months ended September 30, 2023 and 2022, respectively. |
Financial Assets and Liabilities Not Measured at Fair Value | Financial Assets and Liabilities Not Measured at Fair Value Short-Term Receivables and Payables Short-term receivables (excluding the current portion of long-term receivables) 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, except for short-term debt which would be classified as Level 2. Loans and Long-Term Receivables Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At September 30, 2023 and December 31, 2022, the difference between the carrying amount and estimated fair value for loans and long-term receivables was immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. Long-Term Debt Fair value of publicly traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt (including long-term finance lease liabilities) for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. The carrying amount of long-term debt was $48,828 million and $46,189 million, and the estimated fair value was $44,264 million and $42,514 million at September 30, 2023 and December 31, 2022, 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. |
Financing Receivables | Financing receivables primarily consist of client loan and installment payment receivables (loans), investment in sales-type and direct financing leases (collectively referred to as client financing receivables) and commercial financing receivables. Loans are provided primarily to clients to finance the purchase of hardware, software and services. Payment terms on these financing arrangements are for terms up to seven years. Investment in sales-type and direct financing leases relate principally to the company’s Infrastructure products and are for terms ranging generally from two |
Commitments | The company collectively evaluates the allowance for these arrangements using a provision methodology consistent with the portfolio of the commitments. Refer to note A, “Significant Accounting Policies,” in the company’s 2022 Annual Report for additional information.The company has applied the guidance requiring a guarantor to disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s performance is remote. |
Contingencies | The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any recorded liabilities, including any changes to such liabilities for the quarter ended September 30, 2023 were not material to the Consolidated Financial Statements. In accordance with the relevant accounting guidance, the company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer and employee relations considerations. With respect to certain of the claims, suits, investigations and proceedings discussed herein, the company believes at this time that the likelihood of any material loss is remote, given, for example, the procedural status, court rulings, and/or the strength of the company’s defenses in those matters. With respect to the remaining claims, suits, investigations and proceedings discussed in this note, except as specifically discussed herein, the company is unable to provide estimates of reasonably possible losses or range of losses, including losses in excess of amounts accrued, if any, for the following reasons. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of these matters. It is the company’s experience that damage amounts claimed in litigation against it are unreliable and unrelated to possible outcomes, and as such are not meaningful indicators of the company’s potential liability. Further, the company is unable to provide such an estimate due to a number of other factors with respect to these claims, suits, investigations and proceedings, including considerations of the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. The company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate), to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter. |
Derivative Financial Instruments | The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations. |
Offsetting Derivatives | In the Consolidated Balance Sheet, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments.The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in restricted cash in the Consolidated Balance Sheet. |
Derivatives, Methods of Accounting, Hedge Effectiveness | The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing for net investment hedges in net income each period. For cash flow hedges of foreign currency denominated debt, the amounts excluded from effectiveness testing are amortized to net income over the life of the hedging instrument. |
Stock-Based Compensation | Stock-based compensation cost for stock awards and stock options is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregation of revenue | The following tables provide details of revenue by major products/service offerings and revenue by geography. Revenue by Major Products/Service Offerings Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2023 2022 2023 2022 Hybrid Platform & Solutions $ 4,506 $ 4,172 $ 13,350 $ 12,641 Transaction Processing 1,759 1,640 5,444 5,107 Total Software $ 6,265 $ 5,811 $ 18,794 $ 17,749 Business Transformation 2,291 2,165 6,869 6,646 Application Operations 1,710 1,593 5,204 4,865 Technology Consulting 961 943 2,865 2,826 Total Consulting $ 4,963 $ 4,700 $ 14,938 $ 14,337 Hybrid Infrastructure 1,943 1,931 5,912 6,392 Infrastructure Support 1,329 1,421 4,076 4,413 Total Infrastructure $ 3,272 $ 3,352 $ 9,988 $ 10,805 Financing* 186 174 566 474 Other 67 70 192 475 Total revenue $ 14,752 $ 14,107 $ 44,479 $ 43,840 * Contains lease and loan financing arrangements which are not subject to the guidance on revenue from contracts with customers. |
Schedule of disaggregation of revenue by geography | Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2023 2022 2023 2022 Americas $ 7,686 $ 7,416 $ 22,810 $ 22,614 Europe/Middle East/Africa 4,223 3,959 13,156 12,716 Asia Pacific 2,843 2,732 8,513 8,509 Total $ 14,752 $ 14,107 $ 44,479 $ 43,840 |
Schedule of reconciliation of contract balances | The following table provides information about notes and accounts receivable–trade, contract assets and deferred income balances. (Dollars in millions) At September 30, 2023 At December 31, 2022 Notes and accounts receivable — trade (net of allowances of $198 in 2023 and $233 in 2022) $ 5,330 $ 6,541 Contract assets* $ 454 $ 464 Deferred income (current) $ 11,917 $ 12,032 Deferred income (noncurrent) $ 3,085 $ 3,499 * Included within prepaid expenses and other current assets in the Consolidated Balance Sheet. |
Schedule of notes and accounts receivable - trade allowance for credit losses | The following table provides roll forwards of the notes and accounts receivable–trade allowance for expected credit losses for the nine months ended September 30, 2023 and the year ended December 31, 2022. (Dollars in millions) January 1, 2023 Additions / (Releases) Write-offs Foreign currency and other September 30, 2023 $ 233 $ 28 $ (67) $ 4 $ 198 January 1, 2022 Additions / (Releases) Write-offs Foreign currency and other December 31, 2022 $ 218 $ 59 $ (31) $ (14) $ 233 |
Segments (Tables)
Segments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Revenue and Pre-tax Income by Segment | The following tables reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company. Performance measurement is based on pre-tax income from continuing operations. These results are used by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments. SEGMENT INFORMATION (Dollars in millions) Software Consulting Infrastructure Financing Total For the three months ended September 30, 2023: Revenue $ 6,265 $ 4,963 $ 3,272 $ 186 $ 14,685 Pre-tax income from continuing operations $ 1,486 $ 509 $ 387 $ 91 $ 2,473 Revenue year-to-year change 7.8 % 5.6 % (2.4) % 6.9 % 4.6 % Pre-tax income year-to-year change 13.7 % 10.0 % 38.3 % 16.0 % 16.2 % Pre-tax income margin 23.7 % 10.2 % 11.8 % 49.2 % 16.8 % For the three months ended September 30, 2022: Revenue $ 5,811 $ 4,700 $ 3,352 $ 174 $ 14,037 Pre-tax income from continuing operations $ 1,306 $ 462 $ 280 $ 79 $ 2,128 Pre-tax income margin 22.5 % 9.8 % 8.3 % 45.4 % 15.2 % |
Reconciliation of segment revenue and pre-tax income to IBM as reported | Reconciliations to IBM as Reported: (Dollars in millions) For the three months ended September 30: 2023 2022 Revenue: Total reportable segments $ 14,685 $ 14,037 Other ‒ divested businesses 0 3 Other revenue 66 68 Total revenue from continuing operations $ 14,752 $ 14,107 Pre-tax income from continuing operations: Total reportable segments $ 2,473 $ 2,128 Amortization of acquired intangible assets (414) (417) Acquisition-related (charges)/income (25) (1) Non-operating retirement-related (costs)/income 12 (6,062) * Kyndryl-related impacts — 14 ** Workforce rebalancing charges+ (34) — Other ‒ divested businesses 8 0 Unallocated corporate amounts and other (148) (163) ++ Total pre-tax income/(loss) from continuing operations $ 1,873 $ (4,501) * Includes a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion. See note 18, “Retirement-Related Benefits,” for additional information. **Net impacts from Kyndryl retained shares and related swap. Refer to note 5, "Acquisitions & Divestitures," and note 16, "Derivative Financial Instruments," for additional information. + Beginning in the first quarter of 2023, the company updated its measure of segment pre-tax income, consistent with its management system, to no longer allocate workforce rebalancing charges to its segments. Workforce rebalancing charges in the third quarter of 2022 of $13 million were included in the segments. ++Recast to conform to 2023 presentation. SEGMENT INFORMATION (Dollars in millions) Software Consulting Infrastructure Financing Total For the nine months ended September 30, 2023: Revenue $ 18,794 $ 14,938 $ 9,988 $ 566 $ 44,287 Pre-tax income from continuing operations $ 4,154 $ 1,336 $ 1,236 $ 256 $ 6,983 Revenue year-to-year change 5.9 % 4.2 % (7.6) % 19.5 % 2.1 % Pre-tax income year-to-year change 8.9 % 15.8 % 0.0 % (3.2) % 7.9 % Pre-tax income margin 22.1 % 8.9 % 12.4 % 45.3 % 15.8 % For the nine months ended September 30, 2022: Revenue $ 17,749 $ 14,337 $ 10,805 $ 474 $ 43,365 Pre-tax income from continuing operations $ 3,816 $ 1,154 $ 1,236 $ 265 $ 6,470 Pre-tax income margin 21.5 % 8.0 % 11.4 % 55.9 % 14.9 % Reconciliations to IBM as Reported: (Dollars in millions) For the nine months ended September 30: 2023 2022 Revenue: Total reportable segments $ 44,287 $ 43,365 Other ‒ divested businesses (1) 319 Other revenue 193 156 Total consolidated revenue $ 44,479 $ 43,840 Pre-tax income from continuing operations: Total reportable segments $ 6,983 $ 6,470 Amortization of acquired intangible assets (1,194) (1,337) Acquisition-related charges (35) (9) Non-operating retirement-related (costs)/income 16 (6,455) * Kyndryl-related impacts — (353) ** Workforce rebalancing charges+ (410) — Other ‒ divested businesses 4 108 Unallocated corporate amounts (432) (581) ++ Total pre-tax income/(loss) from continuing operations $ 4,931 $ (2,156) * Includes a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion. See note 18, “Retirement-Related Benefits,” for additional information. **Net impacts from Kyndryl retained shares and related swaps. Refer to note 5, "Acquisitions & Divestitures," and note 16, "Derivative Financial Instruments," for additional information. + Beginning in the first quarter of 2023, the company updated its measure of segment pre-tax income, consistent with its management system, to no longer allocate workforce rebalancing charges to its segments. Workforce rebalancing charges in the first nine months of 2022 of $22 million were included in the segments. ++Recast to conform to 2023 presentation. |
Acquisitions & Divestitures (Ta
Acquisitions & Divestitures (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of business acquisitions | Acquisition Segment Description of Acquired Business First Quarter StepZen, Inc. Software Developer of GraphQL to help build application programming interfaces (APIs) Asset Strategy Library (ASL) Portfolio of Uptake Technologies Software Library of industrial asset management data NS1 Software Leading provider of network automation SaaS solutions Second Quarter Ahana Cloud, Inc. Software Expert in open-source-based solutions for data analytics Polar Security Software Innovator in technology that helps companies discover, continuously monitor and secure cloud and SaaS application data Agyla SAS Consulting Leading provider of cloud platform engineering services in France specializing in Cloud, DevOps and Security Third Quarter Apptio, Inc. Software Leading provider of financial and operational IT management and optimization software which enables enterprise leaders to deliver enhanced business value across technology investments |
Business acquisition, purchase price allocation | The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of September 30, 2023. (Dollars in millions) Amortization Apptio, Inc. Other Acquisitions Current assets $ 150 $ 46 Property, plant and equipment/noncurrent assets 35 7 Intangible assets: Goodwill N/A 3,552 301 Client relationships 6-10 740 37 Completed technology 5-7 530 66 Trademarks 2-5 35 2 Total assets acquired $ 5,042 $ 458 Current liabilities 255 26 Noncurrent liabilities 177 10 Total liabilities assumed $ 432 $ 36 Total purchase price $ 4,610 $ 423 N/A – not applicable |
Other (Income) and Expenses (Ta
Other (Income) and Expenses (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Income and Expenses [Abstract] | |
Schedule of components of other income and expense | Components of other (income) and expense are as follows: Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2023 2022 2023 2022 Other (income) and expense: Foreign currency transaction losses/(gains) (1) $ (260) $ (352) $ (338) $ (1,021) (Gains)/losses on derivative instruments (2) 316 189 315 730 Interest income (156) (53) (527) (98) Net (gains)/losses from securities and investment assets (3) (5) (11) 3 262 Retirement-related costs/(income) (4) (12) 6,062 (16) 6,455 Other (5) (97) (80) (158) (407) Total other (income) and expense $ (215) $ 5,755 $ (721) $ 5,921 (1) The company uses financial hedging instruments to limit specific currency risks related to foreign currency-based transactions. The hedging program does not hedge 100 percent of currency exposures and defers, versus eliminates, the impact of currency. Refer to note 16, "Derivative Financial Instruments," for additional information on foreign exchange risk. (2) Prior year includes a gain of $3 million and a loss of $85 million recognized in the three and nine months ended September 30, 2022, respectively, on the cash-settled swap related to the Kyndryl retained shares. Refer to note 16, "Derivative Financial Instruments," for additional information. (3) Prior year includes a gain of $11 million and a loss of $267 million recognized in the three and nine months ended September 30, 2022, respectively, on Kyndryl retained shares. Refer to note 5, "Acquisitions & Divestitures," for additional information. (4) Prior year includes a one-time, non-cash pension settlement charge of $5.9 billion. Refer to note 18, "Retirement-Related Benefits," for additional information. (5) Other primarily consists of (gains)/losses from divestitures and dispositions of land/buildings. The nine months ended September 30, 2022 includes a pre-tax gain of $259 million related to the divestiture of IBM's healthcare software assets in the second quarter 2022. |
Earnings_(Loss) Per Share of _2
Earnings/(Loss) Per Share of Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted earnings/(loss) per share | The following tables provide the computation of basic and diluted earnings per share of common stock for the three and nine months ended September 30, 2023 and 2022. (Dollars in millions except per share amounts) For the three months ended September 30: 2023 2022 Number of shares on which basic earnings per share is calculated: Weighted-average shares outstanding during period 912,790,387 904,076,831 Add — Incremental shares under stock-based compensation plans 8,531,982 — Add — Incremental shares associated with contingently issuable shares 2,350,932 — Number of shares on which diluted earnings per share is calculated 923,673,300 904,076,831 Income/(loss) from continuing operations $ 1,714 $ (3,214) Income/(loss) from discontinued operations, net of tax (10) 18 Net income/(loss) on which basic earnings per share is calculated $ 1,704 $ (3,196) Income/(loss) from continuing operations $ 1,714 $ (3,214) Net income applicable to contingently issuable shares — — Income/(loss) from continuing operations on which diluted earnings per share is calculated $ 1,714 $ (3,214) Income/(loss) from discontinued operations, net of tax, on which diluted earnings per share is calculated (10) 18 Net income/(loss) on which diluted earnings per share is calculated $ 1,704 $ (3,196) Earnings/(loss) per share of common stock: Assuming dilution Continuing operations $ 1.86 $ (3.55) Discontinued operations (0.01) 0.02 Total $ 1.84 $ (3.54) Basic Continuing operations $ 1.88 $ (3.55) Discontinued operations (0.01) 0.02 Total $ 1.87 $ (3.54) (Dollars in millions except per share amounts) For the nine months ended September 30: 2023 2022 Number of shares on which basic earnings per share is calculated: Weighted-average shares outstanding during period 910,057,739 901,621,217 Add — Incremental shares under stock-based compensation plans 8,241,752 — Add — Incremental shares associated with contingently issuable shares 2,024,201 — Number of shares on which diluted earnings per share is calculated 920,323,692 901,621,217 Income/(loss) from continuing operations $ 4,229 $ (1,087) Income/(loss) from discontinued operations, net of tax (15) 16 Net income/(loss) on which basic earnings per share is calculated $ 4,214 $ (1,071) Income/(loss) from continuing operations $ 4,229 $ (1,087) Net income applicable to contingently issuable shares — — Income/(loss) from continuing operations on which diluted earnings per share is calculated $ 4,229 $ (1,087) Income/(loss) from discontinued operations, net of tax, on which diluted earnings per share is calculated (15) 16 Net income/(loss) on which diluted earnings per share is calculated $ 4,214 $ (1,071) Earnings/(loss) per share of common stock: Assuming dilution Continuing operations $ 4.59 $ (1.21) Discontinued operations (0.02) 0.02 Total $ 4.58 $ (1.19) Basic Continuing operations $ 4.65 $ (1.21) Discontinued operations (0.02) 0.02 Total $ 4.63 $ (1.19) |
Financial Assets & Liabilities
Financial Assets & Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Investments, All Other Investments [Abstract] | |
Financial assets and financial liabilities measured at fair value on a recurring basis | The following table presents the company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022. Fair Value At September 30, 2023 At December 31, 2022 (Dollars in millions) Assets (5) Liabilities (6) Assets (5) Liabilities (6) Cash equivalents: (1) Time deposits and certificates of deposit (2) 2 $ 3,765 N/A $ 3,712 N/A Money market funds 1 212 N/A 306 N/A Total cash equivalents $ 3,977 N/A $ 4,018 N/A Equity investments 1 2 N/A — N/A Debt securities-current (2)(3) 2 3,721 N/A 852 N/A Debt securities-noncurrent (2)(4) 2,3 33 N/A 31 N/A Derivatives designated as hedging instruments: Interest rate contracts 2 0 579 3 336 Foreign exchange contracts 2 420 185 184 674 Derivatives not designated as hedging instruments: Foreign exchange contracts 2 12 45 42 16 Equity contracts 2 0 55 49 8 Total $ 8,164 $ 864 $ 5,179 $ 1,034 (1) Included within cash and cash equivalents in the Consolidated Balance Sheet. (2) Available-for-sale debt securities with carrying values that approximate fair value. (3) Term deposits and U.S. treasury bills that are reported within marketable securities in the Consolidated Balance Sheet. The September 30, 2023 balance includes partial proceeds from the first quarter 2023 debt issuances. See note 12, "Borrowings," for additional information. (4) Includes immaterial activity related to private company investments reported within investments and sundry assets in the Consolidated Balance Sheet. (5) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Balance Sheet at September 30, 2023 were $431 million and $1 million, respectively, and at December 31, 2022 were $271 million and $7 million, respectively. (6) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Balance Sheet at September 30, 2023 were $171 million and $693 million, respectively, and at December 31, 2022 were $546 million and $488 million, respectively. N/A – not applicable |
Financing Receivables (Tables)
Financing Receivables (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Summary of the components of financing receivables | A summary of the components of the company’s financing receivables is presented as follows: Client Financing Receivables Client Loan and Installment Payment Receivables Investment in Sales-Type and Direct Financing Commercial Financing Receivables (Dollars in millions) Held for Held for At September 30, 2023 (Loans) Leases Investment Sale* Total Financing receivables, gross $ 6,398 $ 3,628 $ 313 $ 593 $ 10,932 Unearned income (406) (355) — — (761) Unguaranteed residual value — 403 — — 403 Amortized cost $ 5,992 $ 3,676 $ 313 $ 593 $ 10,573 Allowance for credit losses (95) (59) (5) — (159) Total financing receivables, net $ 5,897 $ 3,617 $ 308 $ 593 $ 10,414 Current portion $ 3,337 $ 1,387 $ 308 $ 593 $ 5,625 Noncurrent portion $ 2,560 $ 2,230 $ — $ — $ 4,789 Client Financing Receivables Client Loan and Installment Payment Receivables Investment in Sales-Type and Direct Financing Commercial Financing Receivables (Dollars in millions) Held for Held for At December 31, 2022 (Loans) Leases Investment Sale* Total Financing receivables, gross $ 8,875 $ 4,023 $ 299 $ 939 $ 14,136 Unearned income (439) (351) — — (790) Unguaranteed residual value — 422 — — 422 Amortized cost $ 8,437 $ 4,094 $ 299 $ 939 $ 13,769 Allowance for credit losses (108) (60) (5) — (173) Total financing receivables, net $ 8,329 $ 4,034 $ 293 $ 939 $ 13,596 Current portion $ 5,073 $ 1,485 $ 293 $ 939 $ 7,790 Noncurrent portion $ 3,256 $ 2,549 $ — $ — $ 5,806 |
Schedule of transfer of commercial financing assets | The following table presents the total amount of commercial financing receivables transferred. (Dollars in millions) For the nine months ended September 30: 2023 2022 Commercial financing receivables: Receivables transferred during the period $ 6,453 $ 6,091 Receivables uncollected at end of period* $ 836 $ 816 |
Schedule of client financing receivables and allowance for credit losses by class | The following tables present the amortized cost basis for client financing receivables at September 30, 2023 and December 31, 2022, further segmented by three classes: Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific. The commercial financing receivables portfolio segment is excluded from the tables in the sections below as the receivables are short term in nature and the current estimated risk of loss and resulting impact to the company’s financial results are not material. (Dollars in millions) At September 30, 2023: Americas EMEA Asia Pacific Total Amortized cost $ 5,841 $ 2,636 $ 1,190 $ 9,668 Allowance for credit losses: Beginning balance at January 1, 2023 $ 88 $ 60 $ 20 $ 168 Write-offs $ (9) $ 0 $ 0 $ (9) Recoveries 0 0 3 3 Additions/(releases) 6 (14) (4) (11) Other* 6 (1) (1) 3 Ending balance at September 30, 2023 $ 92 $ 44 $ 18 $ 154 * Primarily represents translation adjustments. (Dollars in millions) At December 31, 2022: Americas EMEA Asia Pacific Total Amortized cost $ 7,281 $ 3,546 $ 1,704 $ 12,531 Allowance for credit losses: Beginning balance at January 1, 2022 $ 111 $ 61 $ 23 $ 195 Write-offs $ (20) $ (3) $ (2) $ (25) Recoveries 1 0 4 5 Additions/(releases) (5) 6 (4) (3) Other* 2 (5) (2) (4) Ending balance at December 31, 2022 $ 88 $ 60 $ 20 $ 168 * Primarily represents translation adjustments. |
Schedule of past due client financing receivables | (Dollars in millions) Total Amortized Amortized Billed Amortized At September 30, 2023: Americas $ 5,841 $ 101 $ 33 $ 7 $ 70 EMEA 2,636 34 4 1 30 Asia Pacific 1,190 17 1 1 15 Total client financing receivables $ 9,668 $ 152 $ 37 $ 9 $ 115 (Dollars in millions) Total Amortized Amortized Billed Amortized At December 31, 2022: Americas $ 7,281 $ 272 $ 198 $ 22 $ 74 EMEA 3,546 52 8 1 46 Asia Pacific 1,704 20 3 1 17 Total client financing receivables $ 12,531 $ 344 $ 208 $ 23 $ 137 * At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days. ** Of the amortized cost not accruing, there was a related allowance of $112 million and $122 million at September 30, 2023 and December 31, 2022, respectively. Financing income recognized on these receivables was immaterial for the three and nine months ended September 30, 2023, respectively. |
Schedule of amortized cost by credit quality indicator | The following tables present the amortized cost basis for client financing receivables by credit quality indicator at September 30, 2023 and December 31, 2022, respectively. Receivables with a credit quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators reflect mitigating credit enhancement actions taken by customers which reduce the risk to IBM. Gross write-offs by vintage year at September 30, 2023 were not material. (Dollars in millions) Americas EMEA Asia Pacific At September 30, 2023: Aaa – Baa3 Ba1 – C Aaa – Baa3 Ba1 – C Aaa – Baa3 Ba1 – C Vintage year: 2023 $ 1,242 $ 718 $ 385 $ 384 $ 281 $ 59 2022 1,962 307 737 395 381 45 2021 780 160 290 94 120 43 2020 283 120 120 73 105 26 2019 124 33 66 45 52 10 2018 and prior 58 54 16 32 46 21 Total $ 4,449 $ 1,393 $ 1,613 $ 1,023 $ 986 $ 204 (Dollars in millions) Americas EMEA Asia Pacific At December 31, 2022: Aaa – Baa3 Ba1 – C Aaa – Baa3 Ba1 – C Aaa – Baa3 Ba1 – C Vintage year: 2022 $ 3,316 $ 1,097 $ 1,447 $ 704 $ 799 $ 96 2021 1,197 323 451 159 203 65 2020 559 217 258 158 210 49 2019 251 91 161 99 127 22 2018 128 26 42 16 84 21 2017 and prior 32 45 14 38 12 17 Total $ 5,482 $ 1,800 $ 2,373 $ 1,173 $ 1,434 $ 269 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of amounts included in the Consolidated Income Statement related to lessor activity | The following table presents amounts included in the Consolidated Income Statement related to lessor activity. Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2023 2022 2023 2022 Lease income — sales-type and direct financing leases: Sales-type lease selling price $ 190 $ 99 $ 528 $ 888 Less: Carrying value of underlying assets* (42) (57) (133) (195) Gross profit $ 148 $ 43 $ 395 $ 693 Interest income on lease receivables 58 54 176 144 Total sales-type and direct financing lease income $ 206 $ 97 $ 571 $ 838 Lease income — operating leases 20 29 71 86 Variable lease income 12 19 47 75 Total lease income $ 238 $ 145 $ 689 $ 998 * Excludes unguaranteed residual value. |
Intangible Assets Including G_2
Intangible Assets Including Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible asset balances by major asset class | The following tables present the company's intangible asset balances by major asset class. At September 30, 2023 (Dollars in millions) Gross Carrying Accumulated Net Carrying Intangible asset class: Capitalized software $ 1,606 $ (734) $ 872 Client relationships 8,946 (3,253) 5,693 Completed technology 5,630 (2,321) 3,309 Patents/trademarks 1,805 (404) 1,401 Other** 17 (15) 2 Total $ 18,004 $ (6,726) $ 11,278 At December 31, 2022 (Dollars in millions) Gross Carrying Accumulated Net Carrying Intangible asset class: Capitalized software $ 1,650 $ (705) $ 945 Client relationships 8,559 (2,951) 5,608 Completed technology 5,220 (2,045) 3,175 Patents/trademarks 2,140 (688) 1,452 Other** 19 (15) 4 Total $ 17,588 $ (6,404) $ 11,184 * Amounts as of September 30, 2023 and December 31, 2022 include a decrease in net intangible asset balances of $41 million and $198 million, respectively, due to foreign currency translation. ** Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems. |
Intangible assets, future amortization expense | The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet was estimated to be the following at September 30, 2023: (Dollars in millions) Capitalized Acquired Total Remainder of 2023 $ 156 $ 430 $ 585 2024 448 1,703 2,151 2025 213 1,684 1,897 2026 55 1,661 1,716 2027 — 1,642 1,642 Thereafter — 3,285 3,285 |
Changes in goodwill balances by reportable segment | The changes in the goodwill balances by segment for the nine months ended September 30, 2023 and for the year ended December 31, 2022 were as follows: (Dollars in millions) Balance Goodwill Purchase Foreign Balance Segment 1/1/2023 Divestitures 9/30/2023 Software $ 43,657 $ 3,447 $ (7) $ — $ (173) $ 46,923 Consulting 7,928 395 6 — (26) 8,302 Infrastructure 4,363 12 — — (5) 4,370 Other — — — — — — Total $ 55,949 $ 3,854 $ (1) $ — $ (205) $ 59,596 (Dollars in millions) Balance Goodwill Purchase Foreign Balance Segment 1/1/2022 Divestitures 12/31/2022 Software $ 43,966 $ 568 $ (118) $ — $ (760) $ 43,657 Consulting 6,797 1,366 (42) — (192) 7,928 Infrastructure 4,396 — — (1) (32) 4,363 Other** 484 — — (484) — — Total $ 55,643 $ 1,934 $ (159) $ (485) $ (984) $ 55,949 * Primarily driven by foreign currency translation. ** The company derecognized goodwill related to the divestiture of its healthcare software assets in the second quarter of 2022. |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Short-Term Debt | (Dollars in millions) At September 30, 2023 At December 31, 2022 Short-term loans $ 13 $ 8 Long-term debt — current maturities 6,400 4,751 Total $ 6,414 $ 4,760 |
Long-Term Debt | Pre-Swap Borrowing Balance Balance (Dollars in millions) Maturities 9/30/2023 12/31/2022 U.S. dollar debt (weighted-average interest rate at September 30, 2023):* 2.4% 2023 $ 2 $ 1,529 3.3% 2024 5,004 5,009 5.1% 2025 1,602 1,603 3.5% 2026 5,201 4,351 3.1% 2027 3,620 3,620 5.0% 2028 1,313 313 3.5% 2029 3,250 3,250 2.0% 2030 1,350 1,350 4.4% 2032 1,850 1,850 4.8% 2033 750 — 8.0% 2038 83 83 4.5% 2039 2,745 2,745 2.9% 2040 650 650 4.0% 2042 1,107 1,107 7.0% 2045 27 27 4.7% 2046 650 650 4.3% 2049 3,000 3,000 3.0% 2050 750 750 4.2% 2052 1,400 1,400 5.1% 2053 650 — 7.1% 2096 316 316 $ 35,321 $ 33,605 Other currencies (weighted-average interest rate at September 30, 2023, in parentheses):* Euro (1.8%) 2024–2043 $ 18,512 $ 17,087 Pound sterling (4.9%) 2038 915 — Japanese yen (0.5%) 2024–2028 1,182 694 Other (15.1%) 2023–2026 310 361 $ 56,240 $ 51,747 Finance lease obligations (4.3%) 2023–2030 303 239 $ 56,542 $ 51,986 Less: net unamortized discount 846 835 Less: net unamortized debt issuance costs 157 138 Add: fair value adjustment** (311) (73) $ 55,228 $ 50,940 Less: current maturities 6,400 4,751 Total $ 48,828 $ 46,189 * Includes notes, debentures, bank loans and secured borrowings. ** The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Balance Sheet as an amount equal to the sum of the debt’s carrying value and a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates. |
Pre-swap annual contractual obligations of long-term debt outstanding | Pre-swap annual contractual obligations of long-term debt outstanding at September 30, 2023, were as follows: (Dollars in millions) Total Remainder of 2023 $ 75 2024 6,368 2025 4,912 2026 5,570 2027 5,772 Thereafter 33,845 Total $ 56,542 |
Interest on Debt | (Dollars in millions) For the nine months ended September 30: 2023 2022 Cost of financing $ 255 $ 264 Interest expense 1,202 903 Interest capitalized 7 4 Total interest paid and accrued $ 1,464 $ 1,170 |
Commitments (Tables)
Commitments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Changes in warranty liabilities | Changes in the company’s warranty liability for standard warranties, which are included in other accrued expenses and liabilities and other liabilities in the Consolidated Balance Sheet, and for extended warranty contracts, which are included in deferred income in the Consolidated Balance Sheet, are presented in the following tables. Standard Warranty Liability (Dollars in millions) 2023 2022 Balance at January 1 $ 79 $ 77 Current-period accruals 53 58 Accrual adjustments to reflect actual experience (14) (1) Charges incurred (64) (62) Balance at September 30 $ 54 $ 72 Extended Warranty Liability (Dollars in millions) 2023 2022 Balance at January 1 $ 272 $ 350 Revenue deferred for new extended warranty contracts 55 103 Amortization of deferred revenue (122) (148) Other* (4) (21) Balance at September 30 $ 201 $ 284 Current portion $ 119 $ 139 Noncurrent portion $ 82 $ 145 * Other primarily consists of foreign currency translation adjustments. |
Equity Activity (Tables)
Equity Activity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
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 September 30, 2023: Other comprehensive income/(loss): Foreign currency translation adjustments $ 151 $ (164) $ (13) 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 — — — Total net changes related to available-for-sale securities $ 0 $ 0 $ 0 Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ 131 $ (35) $ 95 Reclassification of (gains)/losses to: Cost of services 2 0 1 Cost of sales 5 (1) 4 Cost of financing 3 (1) 2 SG&A expense 4 (1) 3 Other (income) and expense 175 (44) 131 Interest expense 14 (4) 11 Total unrealized gains/(losses) on cash flow hedges $ 333 $ (85) $ 248 Retirement-related benefit plans:* Prior service costs/(credits) $ — $ — $ — Net (losses)/gains arising during the period 102 (26) 77 Curtailments and settlements 2 (1) 1 Amortization of prior service (credits)/costs (2) 1 (2) Amortization of net (gains)/losses 128 (37) 91 Total retirement-related benefit plans $ 230 $ (63) $ 167 Other comprehensive income/(loss) $ 714 $ (313) $ 402 * These accumulated other comprehensive income (AOCI) components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information. (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended September 30, 2022: Other comprehensive income/(loss): Foreign currency translation adjustments $ 143 $ (301) $ (158) 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 — — — Total net changes related to available-for-sale securities $ 0 $ 0 $ 0 Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ 189 $ (49) $ 140 Reclassification of (gains)/losses to: Cost of services (4) 1 (3) Cost of sales (35) 10 (25) Cost of financing 7 (2) 5 SG&A expense (8) 2 (6) Other (income) and expense 6 (2) 5 Interest expense 22 (5) 16 Total unrealized gains/(losses) on cash flow hedges $ 178 $ (45) $ 133 Retirement-related benefit plans:* Prior service costs/(credits) $ 412 $ (104) $ 309 Net (losses)/gains arising during the period 53 (13) 39 Curtailments and settlements 5,913 (1,487) 4,426 Amortization of prior service (credits)/costs 3 (1) 2 Amortization of net (gains)/losses 388 (108) 279 Total retirement-related benefit plans $ 6,768 $ (1,712) $ 5,056 Other comprehensive income/(loss) $ 7,089 $ (2,058) $ 5,030 * These AOCI components are included in the computation of net periodic pension cost and include the impact of a one-time, non-cash pension settlement charge of $5.9 billion ($4.4 billion net of tax) in the third quarter of 2022. Refer to note 18, “Retirement-Related Benefits,” for additional information. (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the nine months ended September 30, 2023: Other comprehensive income/(loss): Foreign currency translation adjustments $ 180 $ (142) $ 39 Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period $ (1) $ 0 $ (1) Reclassification of (gains)/losses to other (income) and expense — — — Total net changes related to available-for-sale securities $ (1) $ 0 $ (1) Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ 279 $ (77) $ 203 Reclassification of (gains)/losses to: Cost of services 6 (1) 5 Cost of sales (12) 4 (8) Cost of financing 12 (3) 9 SG&A expense (7) 2 (4) Other (income) and expense (6) 1 (4) Interest expense 57 (14) 43 Total unrealized gains/(losses) on cash flow hedges $ 330 $ (87) $ 243 Retirement-related benefit plans:* Prior service costs/(credits) $ — $ 1 $ 1 Net (losses)/gains arising during the period 104 (19) 85 Curtailments and settlements 7 (2) 5 Amortization of prior service (credits)/costs (6) 2 (5) Amortization of net (gains)/losses 389 (113) 276 Total retirement-related benefit plans $ 494 $ (132) $ 361 Other comprehensive income/(loss) $ 1,003 $ (361) $ 642 * These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information. (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the nine months ended September 30, 2022: Other comprehensive income/(loss): Foreign currency translation adjustments $ 799 $ (784) $ 14 Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period $ (1) $ 0 $ (1) Reclassification of (gains)/losses to other (income) and expense — — — Total net changes related to available-for-sale securities $ (1) $ 0 $ (1) Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ 449 $ (118) $ 332 Reclassification of (gains)/losses to: Cost of services (32) 8 (24) Cost of sales (71) 20 (50) Cost of financing 19 (5) 14 SG&A expense (28) 8 (20) Other (income) and expense 51 (13) 38 Interest expense 64 (16) 48 Total unrealized gains/(losses) on cash flow hedges $ 453 $ (116) $ 338 Retirement-related benefit plans:* Prior service costs/(credits) $ 408 $ (99) $ 309 Net (losses)/gains arising during the period 63 (20) 43 Curtailments and settlements 5,931 (1,491) 4,440 Amortization of prior service (credits)/costs 16 (4) 12 Amortization of net (gains)/losses 1,305 (364) 941 Total retirement-related benefit plans $ 7,722 $ (1,978) $ 5,745 Other comprehensive income/(loss) $ 8,973 $ (2,877) $ 6,096 * These AOCI components are included in the computation of net periodic pension cost and include the impact of a one-time, non-cash pension settlement charge of $5.9 billion ($4.4 billion net of tax) in the third quarter of 2022. Refer to note 18, “Retirement-Related Benefits,” for additional information. |
Accumulated other comprehensive income/(loss) (net of tax) | (Dollars in millions) Net Unrealized Foreign Net Change Net Unrealized Accumulated January 1, 2023 $ (135) $ (3,591) $ (13,013) $ (1) $ (16,740) Other comprehensive income before reclassifications 203 39 86 (1) 326 Amount reclassified from accumulated other comprehensive income 40 — 276 — 316 Total change for the period $ 243 $ 39 $ 361 $ (1) $ 642 September 30, 2023 $ 109 $ (3,552) $ (12,652) $ (2) $ (16,098) (Dollars in millions) Net Unrealized Foreign Net Change Net Unrealized Accumulated January 1, 2022 $ (18) $ (3,362) $ (19,854) $ (1) $ (23,234) Other comprehensive income before reclassifications 332 14 352 (1) 697 Amount reclassified from accumulated other comprehensive income 6 — 5,393 ** — 5,399 Total change for the period $ 338 $ 14 $ 5,745 $ (1) $ 6,096 September 30, 2022 $ 320 $ (3,347) $ (14,110) $ (1) $ (17,138) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. ** Includes the impact of a one-time, non-cash pension settlement charge of $5.9 billion ($4.4 billion net of tax) in the third quarter of 2022. Refer to note 18, “Retirement-Related Benefits,” for additional information. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Amounts related to cumulative basis adjustments for fair value hedges | At September 30, 2023 and December 31, 2022, the following amounts were recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges: (Dollars in millions) September 30, December 31, Short-term debt: Carrying amount of the hedged item $ (2) $ (199) Cumulative hedging adjustments included in the carrying amount — assets/(liabilities)* $ (2) $ 1 Long-term debt: Carrying amount of the hedged item $ (6,376) $ (6,216) Cumulative hedging adjustments included in the carrying amount — assets/(liabilities)* $ 312 $ 72 * Includes ($212) million and ($250) million of hedging adjustments on discontinued hedging relationships at September 30, 2023 and December 31, 2022, respectively. |
Effect of derivative instruments in the Consolidated Income Statement | The total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value hedges, cash flow hedges, net investment hedges and derivatives not designated as hedging instruments are recorded and the total effect of hedge activity on these income and expense line items are as follows: (Dollars in millions) Total Gains/(Losses) of For the three months ended September 30: 2023 2022 2023 2022 Cost of services $ 5,217 $ 5,168 $ (2) $ 4 Cost of sales $ 1,419 $ 1,389 $ (5) $ 35 Cost of financing $ 94 $ 120 $ (3) $ 1 SG&A expense $ 4,458 $ 4,391 $ (58) $ (69) Other (income) and expense $ (215) $ 5,755 $ (316) $ (189) Interest expense $ 412 $ 295 $ (15) $ 4 Gain (Loss) Recognized in Consolidated Income Statement (Dollars in millions) Consolidated Recognized on Attributable to Risk Being Hedged (2) For the three months ended September 30: 2023 2022 2023 2022 Derivative instruments in fair value hedges (1) : Interest rate contracts Cost of financing $ (33) $ (64) $ 28 $ 68 Interest expense (166) (191) 139 203 Derivative instruments not designated as hedging instruments: Foreign exchange contracts Other (income) and expense (141) (186) N/A N/A Equity contracts SG&A expense (54) (76) N/A N/A Other (income) and expense — 3 N/A N/A Total $ (394) $ (514) $ 167 $ 271 Gain (Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income Recognized in OCI Consolidated Reclassified Amounts Excluded from Effectiveness Testing (3) (Dollars in millions) For the three months ended September 30: 2023 2022 2023 2022 2023 2022 Derivative instruments in cash flow hedges: Interest rate contracts $ — $ — Cost of financing $ (1) $ (1) $ — $ — Interest expense (4) (3) — — Foreign exchange contracts Cost of services (2) 4 — — Amount included in the assessment of effectiveness 101 189 Cost of sales (5) 35 — — Amount excluded from the assessment of effectiveness 29 — Cost of financing (2) (6) — — SG&A expense (4) 8 — — Other (income) and expense (164) (6) (11) — Interest expense (11) (18) — — Instruments in net investment hedges (4) : Foreign exchange contracts 652 1,198 Cost of financing — — 5 5 Interest expense — — 26 14 Total $ 782 $ 1,387 $ (192) $ 12 $ 21 $ 19 (1) The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. (2) The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. (3) The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing for net investment hedges in net income each period. For cash flow hedges of foreign currency denominated debt, the amounts excluded from effectiveness testing are amortized to net income over the life of the hedging instrument. (4) Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries. N/A - not applicable (Dollars in millions) Total Gains/(Losses) of For the nine months ended September 30: 2023 2022 2023 2022 Cost of services $ 15,821 $ 15,915 $ (6) $ 32 Cost of sales $ 4,329 $ 4,555 $ 12 $ 71 Cost of financing $ 297 $ 314 $ (10) $ 0 SG&A expense $ 14,212 $ 13,843 $ 44 $ (291) Other (income) and expense $ (721) $ 5,921 $ (315) $ (730) Interest expense $ 1,202 $ 903 $ (46) $ 1 Gain (Loss) Recognized in Consolidated Income Statement (Dollars in millions) Consolidated Recognized on Attributable to Risk Being Hedged (2) For the nine months ended September 30: 2023 2022 2023 2022 Derivative instruments in fair value hedges (1) : Interest rate contracts Cost of financing $ (55) $ (76) $ 42 $ 89 Interest expense (261) (261) 196 305 Derivative instruments not designated as hedging instruments: Foreign exchange contracts Other (income) and expense (321) (595) N/A N/A Equity contracts SG&A expense 37 (319) N/A N/A Other (income) and expense — (85) N/A N/A Total $ (600) $ (1,336) $ 238 $ 395 Gain (Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income Recognized in OCI Consolidated Reclassified Amounts Excluded from Effectiveness Testing (3) (Dollars in millions) For the nine months ended September 30: 2023 2022 2023 2022 2023 2022 Derivative instruments in cash flow hedges: Interest rate contracts $ — $ — Cost of financing $ (2) $ (3) $ — $ — Interest expense (11) (10) — — Foreign exchange contracts Cost of services (6) 32 — — Amount included in the assessment of effectiveness 250 449 Cost of sales 12 71 — — Amount excluded from the assessment of effectiveness 29 — Cost of financing (10) (16) — — SG&A expense 7 28 — — Other (income) and expense 16 (51) (11) — Interest expense (46) (54) — — Instruments in net investment hedges (4) : Foreign exchange contracts 564 3,118 Cost of financing — — 16 6 Interest expense — — 75 22 Total $ 843 $ 3,567 $ (40) $ (4) $ 81 $ 28 (1) The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. (2) The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. (3) The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing for net investment hedges in net income each period. For cash flow hedges of foreign currency denominated debt, the amounts excluded from effectiveness testing are amortized to net income over the life of the hedging instrument. (4) Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries. N/A - not applicable |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-based compensation cost included in income from continuing operations | The following table presents total stock-based compensation cost included in income from continuing operations. Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2023 2022 2023 2022 Cost $ 48 $ 40 $ 141 $ 124 Selling, general and administrative 148 138 465 427 Research, development and engineering 91 73 237 188 Pre-tax stock-based compensation cost $ 286 $ 251 $ 843 $ 739 Income tax benefits (74) (51) (216) (191) Total net stock-based compensation cost $ 213 $ 200 $ 627 $ 548 |
Retirement-Related Benefits (Ta
Retirement-Related Benefits (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Pre-tax cost for all retirement-related plans | The following tables provide the pre-tax cost for all retirement-related plans. Yr. to Yr. (Dollars in millions) Percent For the three months ended September 30: 2023 2022 Change Retirement-related plans — cost: Defined benefit and contribution pension plans — cost $ 250 $ 6,319 * (96.0) % Nonpension postretirement plans — cost 33 31 5.3 Total $ 283 $ 6,350 (95.5) % * Includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion related to the Qualified PPP, as described below. Yr. to Yr. (Dollars in millions) Percent For the nine months ended September 30: 2023 2022 Change Retirement-related plans — cost: Defined benefit and contribution pension plans — cost $ 791 $ 7,252 * (89.1) % Nonpension postretirement plans — cost 98 97 0.4 Total $ 888 $ 7,350 (87.9) % |
Components of net periodic (income)/cost of the company's retirement-related benefit plans | The following tables provide the components of the cost/(income) for the company’s pension plans. (Dollars in millions) U.S. Plans Non-U.S. Plans For the three months ended September 30: 2023 2022 2023 2022 Service cost $ — $ — $ 44 $ 57 Interest cost* 272 282 293 124 Expected return on plan assets* (382) (432) (363) (246) Amortization of prior service costs/(credits)* — 2 5 3 Recognized actuarial losses* 27 132 99 247 Curtailments and settlements* — 5,894 ** 2 19 Multi-employer plans — — 4 4 Other costs/(credits)* — — 3 8 Total net periodic pension (income)/cost of defined benefit plans $ (82) $ 5,877 $ 88 $ 216 Cost of defined contribution plans 150 134 95 91 Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement $ 68 $ 6,012 $ 182 $ 307 (Dollars in millions) U.S. Plans Non-U.S. Plans For the nine months ended September 30: 2023 2022 2023 2022 Service cost $ — $ — $ 133 $ 180 Interest cost* 817 885 873 394 Expected return on plan assets* (1,146) (1,382) (1,081) (778) Amortization of prior service costs/(credits)* 0 6 15 10 Recognized actuarial losses* 82 490 302 784 Curtailments and settlements* — 5,894 ** 7 38 Multi-employer plans — — 10 11 Other costs/(credits)* — — 21 24 Total net periodic pension (income)/cost of defined benefit plans $ (247) $ 5,893 $ 281 $ 663 Cost of defined contribution plans 473 416 283 280 Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement $ 226 $ 6,309 $ 565 $ 943 * These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement. |
Components of the cost/(income) for the company's nonpension postretirement plans | The following tables provide the components of the cost for the company’s nonpension postretirement plans. (Dollars in millions) U.S. Plan Non-U.S. Plans For the three months ended September 30: 2023 2022 2023 2022 Service cost $ 1 $ 1 $ 1 $ 1 Interest cost* 29 21 10 8 Expected return on plan assets* — — (1) 0 Amortization of prior service costs/(credits)* (7) (2) 0 0 Recognized actuarial losses* — 1 0 1 Curtailments and settlements* — — — — Total nonpension postretirement plans cost recognized in the Consolidated Income Statement $ 23 $ 21 $ 10 $ 10 (Dollars in millions) U.S. Plan Non-U.S. Plans For the nine months ended September 30: 2023 2022 2023 2022 Service cost $ 3 $ 4 $ 2 $ 2 Interest cost* 88 58 29 26 Expected return on plan assets* — — (2) (2) Amortization of prior service costs/(credits)* (22) (1) 0 0 Recognized actuarial losses* — 6 (1) 3 Curtailments and settlements* — — — — Total nonpension postretirement plans cost recognized in the Consolidated Income Statement $ 69 $ 67 $ 28 $ 30 * These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement. |
Schedule of contributions | The table below includes contributions to the following plans: (Dollars in millions) Plan Contributions For the nine months ended September 30: 2023 2022 U.S. nonpension postretirement benefit plans $ 188 $ 272 Non-U.S. DB and multi-employer plans* 45 85 Total plan contributions $ 233 $ 357 * Amounts reported net of refunds. |
Basis of Presentation (Details)
Basis of Presentation (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 USD ($) contract | Sep. 30, 2023 USD ($) $ / shares | Sep. 30, 2022 USD ($) $ / shares | Sep. 30, 2023 USD ($) $ / shares | Sep. 30, 2022 USD ($) $ / shares | Dec. 31, 2022 USD ($) | ||
Noncontrolling Interest [Line Items] | |||||||
Number of annuity contracts entered into by the company relating to the change in PPP | contract | 2 | ||||||
Pension settlement charge | $ 5,900 | $ 0 | $ 5,894 | [1] | |||
Pension settlement charge, net of tax | 4,400 | ||||||
Income/(loss) from continuing operations | $ 1,714 | $ (3,214) | $ 4,229 | $ (1,087) | |||
Earnings per share, basic (in dollars per share) | $ / shares | $ 1.87 | $ (3.54) | $ 4.63 | $ (1.19) | |||
Earnings per share, diluted (in dollars per share) | $ / shares | $ 1.84 | $ (3.54) | $ 4.58 | $ (1.19) | |||
Provision for/(benefit from) income taxes | $ 159 | $ (1,287) | $ 702 | $ (1,070) | |||
Effective tax rate | 8.50% | 14.20% | |||||
Commitment With Third Party Financial Institution | |||||||
Noncontrolling Interest [Line Items] | |||||||
Contractual obligation | $ 99 | $ 99 | $ 60 | ||||
Commitment With Third Party Financial Institution | Minimum | |||||||
Noncontrolling Interest [Line Items] | |||||||
Contractual obligation average payment term duration | 90 days | ||||||
Commitment With Third Party Financial Institution | Maximum | |||||||
Noncontrolling Interest [Line Items] | |||||||
Contractual obligation average payment term duration | 120 days | ||||||
Other (income) and expense | |||||||
Noncontrolling Interest [Line Items] | |||||||
Noncontrolling interest amounts, net of tax | 4 | 4 | $ 13 | $ 14 | |||
Service Life | |||||||
Noncontrolling Interest [Line Items] | |||||||
Income/(loss) from continuing operations | $ 44 | $ 175 | |||||
Earnings per share, basic (in dollars per share) | $ / shares | $ 0.04 | $ 0.16 | |||||
Earnings per share, diluted (in dollars per share) | $ / shares | $ 0.04 | $ 0.15 | |||||
Service Life | Service and Network Equipment New | |||||||
Noncontrolling Interest [Line Items] | |||||||
Property, plant and equipment useful life | 6 years | 6 years | 5 years | ||||
Service Life | Server and Network Equipment Used | |||||||
Noncontrolling Interest [Line Items] | |||||||
Property, plant and equipment useful life | 4 years | 4 years | 3 years | ||||
U.S. Plans | Qualified Plan | Pension Plan | |||||||
Noncontrolling Interest [Line Items] | |||||||
Benefit plan obligation and plan assets transferred to insurers | $ 16,000 | ||||||
Pension settlement charge | 5,900 | ||||||
Pension settlement charge, net of tax | 4,400 | ||||||
Pension settlement charge, tax | $ 1,500 | ||||||
[1]ncludes immaterial cash flows from discontinued operations. |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue by Major Products and Service Offerings (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue by Major Products/Service Offerings | ||||
Total Revenue | $ 14,752 | $ 14,107 | $ 44,479 | $ 43,840 |
Operating Segments | ||||
Revenue by Major Products/Service Offerings | ||||
Total Revenue | 14,685 | 14,037 | 44,287 | 43,365 |
Other | ||||
Revenue by Major Products/Service Offerings | ||||
Revenue | 67 | 70 | 192 | 475 |
Software | Operating Segments | ||||
Revenue by Major Products/Service Offerings | ||||
Total Revenue | 6,265 | 5,811 | 18,794 | 17,749 |
Consulting | Operating Segments | ||||
Revenue by Major Products/Service Offerings | ||||
Total Revenue | 4,963 | 4,700 | 14,938 | 14,337 |
Infrastructure | Operating Segments | ||||
Revenue by Major Products/Service Offerings | ||||
Total Revenue | 3,272 | 3,352 | 9,988 | 10,805 |
Financing | Operating Segments | ||||
Revenue by Major Products/Service Offerings | ||||
Total Revenue | 186 | 174 | 566 | 474 |
Hybrid Platform & Solutions | Software | Operating Segments | ||||
Revenue by Major Products/Service Offerings | ||||
Revenue | 4,506 | 4,172 | 13,350 | 12,641 |
Transaction Processing | Software | Operating Segments | ||||
Revenue by Major Products/Service Offerings | ||||
Revenue | 1,759 | 1,640 | 5,444 | 5,107 |
Business Transformation | Consulting | Operating Segments | ||||
Revenue by Major Products/Service Offerings | ||||
Revenue | 2,291 | 2,165 | 6,869 | 6,646 |
Application Operations | Consulting | Operating Segments | ||||
Revenue by Major Products/Service Offerings | ||||
Revenue | 1,710 | 1,593 | 5,204 | 4,865 |
Technology Consulting | Consulting | Operating Segments | ||||
Revenue by Major Products/Service Offerings | ||||
Revenue | 961 | 943 | 2,865 | 2,826 |
Hybrid Infrastructure | Infrastructure | Operating Segments | ||||
Revenue by Major Products/Service Offerings | ||||
Revenue | 1,943 | 1,931 | 5,912 | 6,392 |
Infrastructure Support | Infrastructure | Operating Segments | ||||
Revenue by Major Products/Service Offerings | ||||
Revenue | $ 1,329 | $ 1,421 | $ 4,076 | $ 4,413 |
Revenue Recognition - Disaggr_2
Revenue Recognition - Disaggregation of Revenue by Geography (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue by Geography | ||||
Revenue | $ 14,752 | $ 14,107 | $ 44,479 | $ 43,840 |
Americas | ||||
Revenue by Geography | ||||
Revenue | 7,686 | 7,416 | 22,810 | 22,614 |
Europe/Middle East/Africa | ||||
Revenue by Geography | ||||
Revenue | 4,223 | 3,959 | 13,156 | 12,716 |
Asia Pacific | ||||
Revenue by Geography | ||||
Revenue | $ 2,843 | $ 2,732 | $ 8,513 | $ 8,509 |
Revenue Recognition - Remaining
Revenue Recognition - Remaining Performance Obligations (Details) $ in Billions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Remaining Performance Obligations | |
Practical expedient, remaining performance obligations | true |
Remaining performance obligations related to customer contracts that are unsatisfied or partially unsatisfied | $ 55 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01 | |
Remaining Performance Obligations | |
Percentage of remaining performance obligation expected to be recognized | 71% |
Duration of expected recognition period for remaining performance obligation | 2 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01 | |
Remaining Performance Obligations | |
Percentage of remaining performance obligation expected to be recognized | 26% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01 | Minimum | |
Remaining Performance Obligations | |
Duration of expected recognition period for remaining performance obligation | 3 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01 | Maximum | |
Remaining Performance Obligations | |
Duration of expected recognition period for remaining performance obligation | 5 years |
Revenue Recognition - Performan
Revenue Recognition - Performance Obligations Satisfied or Partially Satisfied in Prior Periods (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations satisfied | $ 16 |
Revenue Recognition - Reconcili
Revenue Recognition - Reconciliation of Contract Balances (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Reconciliation of Contract Balances | |||
Notes and accounts receivable — trade (net of allowances of $198 in 2023 and $233 in 2022) | $ 5,330 | $ 5,330 | $ 6,541 |
Notes and accounts receivable - trade, allowances | 198 | 198 | 233 |
Contract assets | 454 | 454 | 464 |
Deferred income (current) | 11,917 | 11,917 | 12,032 |
Deferred income (noncurrent) | 3,085 | 3,085 | $ 3,499 |
Revenue recognized that was included in deferred income at the beginning of the period | $ 4,300 | $ 9,000 |
Revenue Recognition - Trade All
Revenue Recognition - Trade Allowance for Credit Losses (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Roll forward of notes and accounts receivable - trade allowance for credit losses | ||
Allowance for Credit Loss, Beginning Balance | $ 233 | $ 218 |
Additions / (Releases) | 28 | 59 |
Write-offs | (67) | (31) |
Foreign currency and other | 4 | (14) |
Allowance for Credit Loss, Ending Balance | $ 198 | $ 233 |
Segments - Results of Continuin
Segments - Results of Continuing Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Information | ||||
Revenue | $ 14,752 | $ 14,107 | $ 44,479 | $ 43,840 |
Pre-tax income from continuing operations | 1,873 | (4,501) | 4,931 | (2,156) |
Operating Segments | ||||
Segment Information | ||||
Revenue | 14,685 | 14,037 | 44,287 | 43,365 |
Pre-tax income from continuing operations | $ 2,473 | $ 2,128 | $ 6,983 | $ 6,470 |
Revenue year-to-year change (as a percent) | 4.60% | 2.10% | ||
Pre-tax income year-to-year change (as a percent) | 16.20% | 7.90% | ||
Pre-tax income margin (as a percent) | 16.80% | 15.20% | 15.80% | 14.90% |
Operating Segments | Software | ||||
Segment Information | ||||
Revenue | $ 6,265 | $ 5,811 | $ 18,794 | $ 17,749 |
Pre-tax income from continuing operations | $ 1,486 | $ 1,306 | $ 4,154 | $ 3,816 |
Revenue year-to-year change (as a percent) | 7.80% | 5.90% | ||
Pre-tax income year-to-year change (as a percent) | 13.70% | 8.90% | ||
Pre-tax income margin (as a percent) | 23.70% | 22.50% | 22.10% | 21.50% |
Operating Segments | Consulting | ||||
Segment Information | ||||
Revenue | $ 4,963 | $ 4,700 | $ 14,938 | $ 14,337 |
Pre-tax income from continuing operations | $ 509 | $ 462 | $ 1,336 | $ 1,154 |
Revenue year-to-year change (as a percent) | 5.60% | 4.20% | ||
Pre-tax income year-to-year change (as a percent) | 10% | 15.80% | ||
Pre-tax income margin (as a percent) | 10.20% | 9.80% | 8.90% | 8% |
Operating Segments | Infrastructure | ||||
Segment Information | ||||
Revenue | $ 3,272 | $ 3,352 | $ 9,988 | $ 10,805 |
Pre-tax income from continuing operations | $ 387 | $ 280 | $ 1,236 | $ 1,236 |
Revenue year-to-year change (as a percent) | (2.40%) | (7.60%) | ||
Pre-tax income year-to-year change (as a percent) | 38.30% | (0.00%) | ||
Pre-tax income margin (as a percent) | 11.80% | 8.30% | 12.40% | 11.40% |
Operating Segments | Financing | ||||
Segment Information | ||||
Revenue | $ 186 | $ 174 | $ 566 | $ 474 |
Pre-tax income from continuing operations | $ 91 | $ 79 | $ 256 | $ 265 |
Revenue year-to-year change (as a percent) | 6.90% | 19.50% | ||
Pre-tax income year-to-year change (as a percent) | 16% | (3.20%) | ||
Pre-tax income margin (as a percent) | 49.20% | 45.40% | 45.30% | 55.90% |
Segments - Revenue Reconciliati
Segments - Revenue Reconciliation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue | ||||
Revenue | $ 14,752 | $ 14,107 | $ 44,479 | $ 43,840 |
Operating Segments | ||||
Revenue | ||||
Revenue | 14,685 | 14,037 | 44,287 | 43,365 |
Other | ||||
Revenue | ||||
Other‒divested businesses | 0 | 3 | (1) | 319 |
Other revenue | $ 66 | $ 68 | $ 193 | $ 156 |
Segments - Pre-Tax Income Recon
Segments - Pre-Tax Income Reconciliation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pre-tax income from continuing operations | ||||
Amortization of acquired intangible assets | $ (414) | $ (417) | $ (1,194) | $ (1,337) |
Acquisition-related (charges)/income | (25) | (1) | (35) | (9) |
Non-operating retirement-related (costs)/income | 12 | (6,062) | 16 | (6,455) |
Kyndryl-related impacts | 0 | 14 | 0 | (353) |
Workforce rebalancing charges | (34) | 0 | (410) | 0 |
Other divested businesses | 8 | 0 | 4 | 108 |
Total pre-tax income/(loss) from continuing operations | 1,873 | (4,501) | 4,931 | (2,156) |
Operating Segments | ||||
Pre-tax income from continuing operations | ||||
Workforce rebalancing charges | (13) | (22) | ||
Total pre-tax income/(loss) from continuing operations | 2,473 | 2,128 | 6,983 | 6,470 |
Unallocated corporate amounts and other | ||||
Pre-tax income from continuing operations | ||||
Total pre-tax income/(loss) from continuing operations | $ (148) | $ (163) | $ (432) | $ (581) |
Acquisitions & Divestitures - A
Acquisitions & Divestitures - Acquisitions (Details) $ in Millions | 9 Months Ended | ||
Sep. 30, 2023 USD ($) acquisition | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Acquisitions | |||
Goodwill | $ 59,596 | $ 55,949 | $ 55,643 |
Software | |||
Acquisitions | |||
Goodwill | 46,923 | 43,657 | 43,966 |
Consulting | |||
Acquisitions | |||
Goodwill | 8,302 | 7,928 | 6,797 |
Infrastructure | |||
Acquisitions | |||
Goodwill | $ 4,370 | $ 4,363 | $ 4,396 |
2023 Acquisitions | |||
Acquisitions | |||
Percentage of business acquired (as a percent) | 100% | ||
Number of acquisitions | acquisition | 7 | ||
Aggregate acquisitions cost | $ 5,033 | ||
Cash consideration payable | 38 | ||
Apptio | |||
Acquisitions | |||
Goodwill | $ 3,552 | ||
Estimated percent of goodwill deductible for tax purposes | 1% | ||
Weighted average useful life | 8 years 7 months 6 days | ||
Apptio | Software | |||
Acquisitions | |||
Goodwill | $ 3,180 | ||
Apptio | Consulting | |||
Acquisitions | |||
Goodwill | 372 | ||
Other 2023 Acquisitions | |||
Acquisitions | |||
Goodwill | $ 301 | ||
Estimated percent of goodwill deductible for tax purposes | 0% | ||
Weighted average useful life | 6 years 8 months 12 days | ||
Other 2023 Acquisitions | Software | |||
Acquisitions | |||
Goodwill | $ 266 | ||
Other 2023 Acquisitions | Consulting | |||
Acquisitions | |||
Goodwill | 23 | ||
Other 2023 Acquisitions | Infrastructure | |||
Acquisitions | |||
Goodwill | $ 12 |
Acquisitions & Divestitures - P
Acquisitions & Divestitures - Purchase Price Allocation (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Acquisitions | |||
Goodwill | $ 59,596 | $ 55,949 | $ 55,643 |
2023 Acquisitions | Client relationships | Minimum | |||
Acquisitions | |||
Weighted average useful life | 6 years | ||
2023 Acquisitions | Client relationships | Maximum | |||
Acquisitions | |||
Weighted average useful life | 10 years | ||
2023 Acquisitions | Completed technology | Minimum | |||
Acquisitions | |||
Weighted average useful life | 5 years | ||
2023 Acquisitions | Completed technology | Maximum | |||
Acquisitions | |||
Weighted average useful life | 7 years | ||
2023 Acquisitions | Trademarks | Minimum | |||
Acquisitions | |||
Weighted average useful life | 2 years | ||
2023 Acquisitions | Trademarks | Maximum | |||
Acquisitions | |||
Weighted average useful life | 5 years | ||
Apptio | |||
Acquisitions | |||
Current assets | $ 150 | ||
Property, plant and equipment/noncurrent assets | 35 | ||
Goodwill | 3,552 | ||
Total assets acquired | 5,042 | ||
Current liabilities | 255 | ||
Noncurrent liabilities | 177 | ||
Total liabilities assumed | 432 | ||
Total purchase price | $ 4,610 | ||
Weighted average useful life | 8 years 7 months 6 days | ||
Apptio | Client relationships | |||
Acquisitions | |||
Intangible assets | $ 740 | ||
Apptio | Completed technology | |||
Acquisitions | |||
Intangible assets | 530 | ||
Apptio | Trademarks | |||
Acquisitions | |||
Intangible assets | 35 | ||
Other 2023 Acquisitions | |||
Acquisitions | |||
Current assets | 46 | ||
Property, plant and equipment/noncurrent assets | 7 | ||
Goodwill | 301 | ||
Total assets acquired | 458 | ||
Current liabilities | 26 | ||
Noncurrent liabilities | 10 | ||
Total liabilities assumed | 36 | ||
Total purchase price | $ 423 | ||
Weighted average useful life | 6 years 8 months 12 days | ||
Other 2023 Acquisitions | Client relationships | |||
Acquisitions | |||
Intangible assets | $ 37 | ||
Other 2023 Acquisitions | Completed technology | |||
Acquisitions | |||
Intangible assets | 66 | ||
Other 2023 Acquisitions | Trademarks | |||
Acquisitions | |||
Intangible assets | $ 2 |
Acquisitions & Divestitures - D
Acquisitions & Divestitures - Divestitures (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Mar. 31, 2024 USD ($) | Sep. 30, 2023 USD ($) | Jun. 30, 2023 divestiture | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Nov. 02, 2022 | Nov. 03, 2021 | |
Divestitures | ||||||||
Income/(loss) from discontinued operations, net of tax | $ (10) | $ 18 | $ (15) | $ 16 | ||||
Number of divestitures | divestiture | 2 | |||||||
Kyndryl Holdings, Inc | ||||||||
Divestitures | ||||||||
Income/(loss) from discontinued operations, net of tax | (10) | $ 18 | (15) | $ 16 | ||||
Discontinued Operations, Held-for-Sale | The Weather Company | ||||||||
Divestitures | ||||||||
Disposal group, assets | 531 | 531 | ||||||
Disposal group, goodwill | 450 | 450 | ||||||
Disposal group, prepaid and other current assets | 50 | 50 | ||||||
Disposal group, intangible assets | 20 | 20 | ||||||
Disposal group, plant, property and equipment | 11 | 11 | ||||||
Disposal group, liabilities | $ 17 | $ 17 | ||||||
Discontinued Operations, Held-for-Sale | The Weather Company | Forecast | ||||||||
Divestitures | ||||||||
Consideration | $ 1,100 | |||||||
Contingent consideration | 250 | |||||||
Cash consideration received | 750 | |||||||
Financing receivable | $ 100 | |||||||
Seller financing loan term | 7 years | |||||||
Discontinued Operations, Held-for-Sale | The Weather Company | Forecast | Contingent Consideration, Attainment Of Certain Investment Return Metrics | ||||||||
Divestitures | ||||||||
Contingent consideration | $ 200 | |||||||
Kyndryl Holdings, Inc | ||||||||
Divestitures | ||||||||
Ownership interest by stockholders (in percent) | 19.90% | |||||||
Kyndryl Holdings, Inc | Kyndryl Holdings, Inc | ||||||||
Divestitures | ||||||||
Kyndryl stock distributed to IBM stockholders | 80.10% | |||||||
Ownership interest by stockholders (in percent) | 0% |
Other (Income) and Expenses (De
Other (Income) and Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Derivative Instruments, Gain (Loss) | |||||
Foreign currency transaction losses/(gains) | $ (260) | $ (352) | $ (338) | $ (1,021) | |
(Gains)/losses on derivative instruments | 316 | 189 | 315 | 730 | |
Interest income | (156) | (53) | (527) | (98) | |
Net (gains)/losses from securities and investment assets | (5) | (11) | 3 | 262 | |
Retirement-related costs/(income) | (12) | 6,062 | (16) | 6,455 | |
Other | (97) | (80) | (158) | (407) | |
Total other (income) and expense | $ (215) | 5,755 | (721) | 5,921 | |
Pension settlement charge | 5,900 | $ 0 | 5,894 | [1] | |
Gain (loss) on divestiture of assets | 259 | ||||
Kyndryl Holdings, Inc | |||||
Derivative Instruments, Gain (Loss) | |||||
Equity securities, gain (loss) | 11 | (267) | |||
Cash-Settled Swap | |||||
Derivative Instruments, Gain (Loss) | |||||
(Gains)/losses on derivative instruments | $ (3) | $ 85 | |||
[1]ncludes immaterial cash flows from discontinued operations. |
Earnings_(Loss) Per Share of _3
Earnings/(Loss) Per Share of Common Stock - Computation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |||
Number of shares on which basic earnings per share is calculated: | ||||||
Weighted-average shares outstanding during period (in shares) | 912,790,387 | 904,076,831 | 910,057,739 | 901,621,217 | ||
Add - Incremental shares under stock-based compensation plans (in shares) | 8,531,982 | 0 | 8,241,752 | 0 | ||
Add - Incremental shares associated with contingently issuable shares (in shares) | 2,350,932 | 0 | 2,024,201 | 0 | ||
Number of shares on which diluted earnings per share is calculated (in shares) | 923,673,300 | 904,076,831 | 920,323,692 | 901,621,217 | ||
Net income on which basic earnings per share is calculated | ||||||
Income/(loss) from continuing operations | $ 1,714 | $ (3,214) | $ 4,229 | $ (1,087) | ||
Income/(loss) from discontinued operations, net of tax | (10) | 18 | (15) | 16 | ||
Net income/(loss) | 1,704 | (3,196) | [1] | 4,214 | (1,071) | [1],[2] |
Net income/(loss) on which diluted earnings per share is calculated | ||||||
Income/(loss) from continuing operations | 1,714 | (3,214) | 4,229 | (1,087) | ||
Net income applicable to contingently issuable shares | 0 | 0 | 0 | 0 | ||
Income/(loss) from continuing operations on which diluted earnings per share is calculated | 1,714 | (3,214) | 4,229 | (1,087) | ||
Income/(loss) from discontinued operations, net of tax, on which diluted earnings per share is calculated | (10) | 18 | (15) | 16 | ||
Net income/(loss) on which diluted earnings per share is calculated | $ 1,704 | $ (3,196) | $ 4,214 | $ (1,071) | ||
Assuming dilution: | ||||||
Continuing operations (in dollars per share) | $ 1.86 | $ (3.55) | $ 4.59 | $ (1.21) | ||
Discontinued operations (in dollars per share) | (0.01) | 0.02 | (0.02) | 0.02 | ||
Total (in dollars per share) | 1.84 | (3.54) | 4.58 | (1.19) | ||
Basic: | ||||||
Continuing operations (in dollars per share) | 1.88 | (3.55) | 4.65 | (1.21) | ||
Discontinued operations (in dollars per share) | (0.01) | 0.02 | (0.02) | 0.02 | ||
Total (in dollars per share) | $ 1.87 | $ (3.54) | $ 4.63 | $ (1.19) | ||
[1]Includes the impact of a one-time, non-cash pension settlement charge. Refer to note 18, "Retirement-Related Benefits," for additional information.[2]ncludes immaterial cash flows from discontinued operations. |
Earnings_(Loss) Per Share of _4
Earnings/(Loss) Per Share of Common Stock - Antidilutive Stock Options (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock option | ||||
Antidilutive stock options | ||||
Outstanding stock options not included in the computation of diluted earnings per share (in shares) | 536,391 | 840,544 | 2,346,268 | 930,788 |
Stock-based compensation plans | ||||
Antidilutive stock options | ||||
Outstanding stock options not included in the computation of diluted earnings per share (in shares) | 6,696,350 | 7,530,115 | ||
Contingently issuable shares | ||||
Antidilutive stock options | ||||
Outstanding stock options not included in the computation of diluted earnings per share (in shares) | 2,069,742 | 1,899,113 |
Financial Assets & Liabilitie_2
Financial Assets & Liabilities - Impairment (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Investments, All Other Investments [Abstract] | ||
Impairment for credit losses | $ 0 | $ 0 |
Financial Assets & Liabilitie_3
Financial Assets & Liabilities - Fair Value Measurements (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Debt securities - current | $ 3,721 | $ 852 |
Fair Value, Recurring | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Cash equivalents | 3,977 | 4,018 |
Total assets | 8,164 | 5,179 |
Total liabilities | 864 | 1,034 |
Fair Value, Recurring | Prepaid Expenses and Other Current Assets | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivative assets | 431 | 271 |
Fair Value, Recurring | Other Noncurrent Assets | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivative assets | 1 | 7 |
Fair Value, Recurring | Other Current Liabilities | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivative liabilities | 171 | 546 |
Fair Value, Recurring | Other Noncurrent Liabilities | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivative liabilities | 693 | 488 |
Fair Value, Recurring | Level 1 | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Equity investments | 2 | 0 |
Fair Value, Recurring | Level 1 | Money market funds | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Cash equivalents | 212 | 306 |
Fair Value, Recurring | Level 2 | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Debt securities - current | 3,721 | 852 |
Fair Value, Recurring | Level 2 | Interest rate contracts | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivatives designated as hedging - Assets | 0 | 3 |
Derivatives designated as hedging - Liabilities | 579 | 336 |
Fair Value, Recurring | Level 2 | Foreign exchange contracts | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivatives designated as hedging - Assets | 420 | 184 |
Derivatives designated as hedging - Liabilities | 185 | 674 |
Derivatives not designated as hedging - Assets | 12 | 42 |
Derivatives not designated as hedging - Liabilities | 45 | 16 |
Fair Value, Recurring | Level 2 | Equity contracts | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Derivatives not designated as hedging - Assets | 0 | 49 |
Derivatives not designated as hedging - Liabilities | 55 | 8 |
Fair Value, Recurring | Level 2 | Time deposits and certificates of deposit | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Cash equivalents | 3,765 | 3,712 |
Fair Value, Recurring | Level 2 And 3 | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ||
Debt securities - noncurrent | $ 33 | $ 31 |
Financial Assets & Liabilitie_4
Financial Assets & Liabilities - Not Measured at Fair Value (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Long-Term Debt | ||
Long-term debt | $ 48,828 | $ 46,189 |
Fair value of long-term debt | $ 44,264 | $ 42,514 |
Financing Receivables - Payment
Financing Receivables - Payment Terms (Details) | 9 Months Ended |
Sep. 30, 2023 | |
Loans Receivable | Maximum | |
Financing receivables | |
Financing receivable, payment terms | 7 years |
Finance Leases Portfolio Segment | Minimum | |
Financing receivables | |
Financing receivable, payment terms | 2 years |
Finance Leases Portfolio Segment | Maximum | |
Financing receivables | |
Financing receivable, payment terms | 6 years |
Commercial Financing Receivables | Minimum | |
Financing receivables | |
Financing receivable, payment terms | 30 days |
Commercial Financing Receivables | Maximum | |
Financing receivables | |
Financing receivable, payment terms | 90 days |
Financing Receivables - Compone
Financing Receivables - Components of Financing Receivables (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Components of the company's financing receivables | ||
Net investment in lease, gross | $ 3,628 | $ 4,023 |
Net investment in lease, unearned income | (355) | (351) |
Net investment in lease, unguaranteed residual value | 403 | 422 |
Net investment in lease, amortized cost | 3,676 | 4,094 |
Net investment in lease, allowance for credit loss | (59) | (60) |
Total net investment in lease, net | 3,617 | 4,034 |
Financing receivable and net investment in lease, gross | 10,932 | 14,136 |
Financing receivable and net investment in lease, unearned income | (761) | (790) |
Financing receivable and net investment in lease, unguaranteed residual value | 403 | 422 |
Financing receivable and net investment in lease, amortized cost | 10,573 | 13,769 |
Financing receivable and net investment in lease, allowance for credit loss | (159) | (173) |
Financing receivable and net investment in lease, net | 10,414 | 13,596 |
Asset Pledged as Collateral | ||
Components of the company's financing receivables | ||
Amortized cost | 294 | 349 |
Current portion | ||
Components of the company's financing receivables | ||
Net investment in lease, current | 1,387 | 1,485 |
Financing receivable and net investment in lease, net | 5,625 | 7,790 |
Noncurrent portion | ||
Components of the company's financing receivables | ||
Net investment in lease, noncurrent | 2,230 | 2,549 |
Financing receivable and net investment in lease, net | 4,789 | 5,806 |
Loans Receivable | ||
Components of the company's financing receivables | ||
Financing receivables, gross | 6,398 | 8,875 |
Unearned income | (406) | (439) |
Amortized cost | 5,992 | 8,437 |
Allowance for credit losses | (95) | (108) |
Total financing receivables, net | 5,897 | 8,329 |
Loans Receivable | Current portion | ||
Components of the company's financing receivables | ||
Total financing receivables, net | 3,337 | 5,073 |
Loans Receivable | Noncurrent portion | ||
Components of the company's financing receivables | ||
Total financing receivables, net | 2,560 | 3,256 |
Held for Investment | ||
Components of the company's financing receivables | ||
Financing receivables, gross | 313 | 299 |
Amortized cost | 313 | 299 |
Allowance for credit losses | (5) | (5) |
Total financing receivables, net | 308 | 293 |
Held for Investment | Current portion | ||
Components of the company's financing receivables | ||
Total financing receivables, net | 308 | 293 |
Held for Sale | ||
Components of the company's financing receivables | ||
Financing receivables, gross | 593 | 939 |
Amortized cost | 593 | 939 |
Total financing receivables, net | 593 | 939 |
Held for Sale | Current portion | ||
Components of the company's financing receivables | ||
Total financing receivables, net | $ 593 | $ 939 |
Financing Receivables - Transfe
Financing Receivables - Transfer of Financing Assets (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Financing receivables | ||
Financing receivable transferred, net gain (loss) | $ (69) | $ (38) |
Commercial Financing Receivables | ||
Financing receivables | ||
Financing receivables transferred | 6,453 | 6,091 |
Financing receivables transferred and uncollected | $ 836 | $ 816 |
Financing Receivables - By Port
Financing Receivables - By Portfolio Segment (Details) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 USD ($) class | Dec. 31, 2022 USD ($) class | |
Financing receivables | ||
Amortized cost | $ 10,573 | $ 13,769 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 173 | |
Allowance for credit losses, ending balance | $ 159 | $ 173 |
Client Financing Receivables | ||
Financing receivables | ||
Number of classes of financing receivable | class | 3 | 3 |
Amortized cost | $ 9,668 | $ 12,531 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 168 | 195 |
Write-offs | (9) | (25) |
Recoveries | 3 | 5 |
Additions/(releases) | (11) | (3) |
Other | 3 | (4) |
Allowance for credit losses, ending balance | 154 | 168 |
Client Financing Receivables | Americas | ||
Financing receivables | ||
Amortized cost | 5,841 | 7,281 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 88 | 111 |
Write-offs | (9) | (20) |
Recoveries | 0 | 1 |
Additions/(releases) | 6 | (5) |
Other | 6 | 2 |
Allowance for credit losses, ending balance | 92 | 88 |
Client Financing Receivables | Europe/Middle East/Africa | ||
Financing receivables | ||
Amortized cost | 2,636 | 3,546 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 60 | 61 |
Write-offs | 0 | (3) |
Recoveries | 0 | 0 |
Additions/(releases) | (14) | 6 |
Other | (1) | (5) |
Allowance for credit losses, ending balance | 44 | 60 |
Client Financing Receivables | Asia Pacific | ||
Financing receivables | ||
Amortized cost | 1,190 | 1,704 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 20 | 23 |
Write-offs | 0 | (2) |
Recoveries | 3 | 4 |
Additions/(releases) | (4) | (4) |
Other | (1) | (2) |
Allowance for credit losses, ending balance | $ 18 | $ 20 |
Financing Receivables - Past Du
Financing Receivables - Past Due (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Past Due Financing Receivable | ||
Amortized cost | $ 10,573 | $ 13,769 |
Client Financing Receivables | ||
Past Due Financing Receivable | ||
Amortized cost | 9,668 | 12,531 |
Amortized Cost Not Accruing | 115 | 137 |
Impaired financing receivables, related allowance | 112 | 122 |
Client Financing Receivables | Financial Asset, Equal to or Greater than 90 Days Past Due | ||
Past Due Financing Receivable | ||
Amortized cost | 152 | 344 |
Amortized Cost > 90 Days and Accruing | 37 | 208 |
Billed Invoices > 90 Days and Accruing | 9 | 23 |
Client Financing Receivables | Americas | ||
Past Due Financing Receivable | ||
Amortized cost | 5,841 | 7,281 |
Amortized Cost Not Accruing | 70 | 74 |
Client Financing Receivables | Americas | Financial Asset, Equal to or Greater than 90 Days Past Due | ||
Past Due Financing Receivable | ||
Amortized cost | 101 | 272 |
Amortized Cost > 90 Days and Accruing | 33 | 198 |
Billed Invoices > 90 Days and Accruing | 7 | 22 |
Client Financing Receivables | Europe/Middle East/Africa | ||
Past Due Financing Receivable | ||
Amortized cost | 2,636 | 3,546 |
Amortized Cost Not Accruing | 30 | 46 |
Client Financing Receivables | Europe/Middle East/Africa | Financial Asset, Equal to or Greater than 90 Days Past Due | ||
Past Due Financing Receivable | ||
Amortized cost | 34 | 52 |
Amortized Cost > 90 Days and Accruing | 4 | 8 |
Billed Invoices > 90 Days and Accruing | 1 | 1 |
Client Financing Receivables | Asia Pacific | ||
Past Due Financing Receivable | ||
Amortized cost | 1,190 | 1,704 |
Amortized Cost Not Accruing | 15 | 17 |
Client Financing Receivables | Asia Pacific | Financial Asset, Equal to or Greater than 90 Days Past Due | ||
Past Due Financing Receivable | ||
Amortized cost | 17 | 20 |
Amortized Cost > 90 Days and Accruing | 1 | 3 |
Billed Invoices > 90 Days and Accruing | $ 1 | $ 1 |
Financing Receivables - Credit
Financing Receivables - Credit Quality Year of Origination (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Amortized cost for each class of receivables, by credit quality indicator | ||
Financing receivable and net investment in lease, amortized cost | $ 10,573 | $ 13,769 |
Americas | Aaa – Baa3 | ||
Amortized cost for each class of receivables, by credit quality indicator | ||
Originated in current fiscal year | 1,242 | 3,316 |
Originated in fiscal year before latest fiscal year | 1,962 | 1,197 |
Originated two years before latest fiscal year | 780 | 559 |
Originated three years before latest fiscal year | 283 | 251 |
Originated four years before latest fiscal year | 124 | 128 |
Originated five or more years before latest fiscal year | 58 | 32 |
Financing receivable and net investment in lease, amortized cost | 4,449 | 5,482 |
Americas | Ba1 – C | ||
Amortized cost for each class of receivables, by credit quality indicator | ||
Originated in current fiscal year | 718 | 1,097 |
Originated in fiscal year before latest fiscal year | 307 | 323 |
Originated two years before latest fiscal year | 160 | 217 |
Originated three years before latest fiscal year | 120 | 91 |
Originated four years before latest fiscal year | 33 | 26 |
Originated five or more years before latest fiscal year | 54 | 45 |
Financing receivable and net investment in lease, amortized cost | 1,393 | 1,800 |
Europe/Middle East/Africa | Aaa – Baa3 | ||
Amortized cost for each class of receivables, by credit quality indicator | ||
Originated in current fiscal year | 385 | 1,447 |
Originated in fiscal year before latest fiscal year | 737 | 451 |
Originated two years before latest fiscal year | 290 | 258 |
Originated three years before latest fiscal year | 120 | 161 |
Originated four years before latest fiscal year | 66 | 42 |
Originated five or more years before latest fiscal year | 16 | 14 |
Financing receivable and net investment in lease, amortized cost | 1,613 | 2,373 |
Europe/Middle East/Africa | Ba1 – C | ||
Amortized cost for each class of receivables, by credit quality indicator | ||
Originated in current fiscal year | 384 | 704 |
Originated in fiscal year before latest fiscal year | 395 | 159 |
Originated two years before latest fiscal year | 94 | 158 |
Originated three years before latest fiscal year | 73 | 99 |
Originated four years before latest fiscal year | 45 | 16 |
Originated five or more years before latest fiscal year | 32 | 38 |
Financing receivable and net investment in lease, amortized cost | 1,023 | 1,173 |
Asia Pacific | Aaa – Baa3 | ||
Amortized cost for each class of receivables, by credit quality indicator | ||
Originated in current fiscal year | 281 | 799 |
Originated in fiscal year before latest fiscal year | 381 | 203 |
Originated two years before latest fiscal year | 120 | 210 |
Originated three years before latest fiscal year | 105 | 127 |
Originated four years before latest fiscal year | 52 | 84 |
Originated five or more years before latest fiscal year | 46 | 12 |
Financing receivable and net investment in lease, amortized cost | 986 | 1,434 |
Asia Pacific | Ba1 – C | ||
Amortized cost for each class of receivables, by credit quality indicator | ||
Originated in current fiscal year | 59 | 96 |
Originated in fiscal year before latest fiscal year | 45 | 65 |
Originated two years before latest fiscal year | 43 | 49 |
Originated three years before latest fiscal year | 26 | 22 |
Originated four years before latest fiscal year | 10 | 21 |
Originated five or more years before latest fiscal year | 21 | 17 |
Financing receivable and net investment in lease, amortized cost | $ 204 | $ 269 |
Leases - Lease Amounts Included
Leases - Lease Amounts Included in Consolidated Income Statement (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Lease income — sales-type and direct financing leases: | ||||
Sales-type lease selling price | $ 190 | $ 99 | $ 528 | $ 888 |
Less: Carrying value of underlying assets | (42) | (57) | (133) | (195) |
Gross profit | 148 | 43 | 395 | 693 |
Interest income on lease receivables | 58 | 54 | 176 | 144 |
Total sales-type and direct financing lease income | 206 | 97 | 571 | 838 |
Lease income — operating leases | 20 | 29 | 71 | 86 |
Variable lease income | 12 | 19 | 47 | 75 |
Total lease income | $ 238 | $ 145 | $ 689 | $ 998 |
Intangible Assets Including G_3
Intangible Assets Including Goodwill - Intangible Assets by Class (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Intangible asset balances by major asset class | ||
Gross Carrying Amount | $ 18,004 | $ 17,588 |
Accumulated Amortization | (6,726) | (6,404) |
Net Carrying Amount | 11,278 | 11,184 |
Amount of foreign currency translation increase (decrease) | (41) | (198) |
Capitalized software | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 1,606 | 1,650 |
Accumulated Amortization | (734) | (705) |
Net Carrying Amount | 872 | 945 |
Client relationships | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 8,946 | 8,559 |
Accumulated Amortization | (3,253) | (2,951) |
Net Carrying Amount | 5,693 | 5,608 |
Completed technology | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 5,630 | 5,220 |
Accumulated Amortization | (2,321) | (2,045) |
Net Carrying Amount | 3,309 | 3,175 |
Patents/trademarks | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 1,805 | 2,140 |
Accumulated Amortization | (404) | (688) |
Net Carrying Amount | 1,401 | 1,452 |
Other | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 17 | 19 |
Accumulated Amortization | (15) | (15) |
Net Carrying Amount | $ 2 | $ 4 |
Intangible Assets Including G_4
Intangible Assets Including Goodwill - Intangible Assets Activity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Intangible assets, increase (decrease) | $ 94 | |||
Acquired intangibles | 1,406 | |||
Intangible asset amortization expense | $ 572 | $ 577 | 1,676 | $ 1,828 |
Retirement of fully amortized intangible assets | $ 1,327 |
Intangible Assets Including G_5
Intangible Assets Including Goodwill - Future Amortization (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Future amortization expense, by year | |
Remainder of 2023 | $ 585 |
2024 | 2,151 |
2025 | 1,897 |
2026 | 1,716 |
2027 | 1,642 |
Thereafter | 3,285 |
Capitalized software | |
Future amortization expense, by year | |
Remainder of 2023 | 156 |
2024 | 448 |
2025 | 213 |
2026 | 55 |
2027 | 0 |
Thereafter | 0 |
Acquired intangibles | |
Future amortization expense, by year | |
Remainder of 2023 | 430 |
2024 | 1,703 |
2025 | 1,684 |
2026 | 1,661 |
2027 | 1,642 |
Thereafter | $ 3,285 |
Intangible Assets Including G_6
Intangible Assets Including Goodwill - Goodwill by Segment (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Changes in Goodwill Balances | ||
Beginning Balance | $ 55,949 | $ 55,643 |
Goodwill Additions | 3,854 | 1,934 |
Purchase Price Adjustments | (1) | (159) |
Divestitures | 0 | (485) |
Foreign Currency Translation and Other Adjustments | (205) | (984) |
Ending Balance | 59,596 | 55,949 |
Goodwill impairment losses | 0 | 0 |
Goodwill accumulated impairment losses | 0 | 0 |
Software | ||
Changes in Goodwill Balances | ||
Beginning Balance | 43,657 | 43,966 |
Goodwill Additions | 3,447 | 568 |
Purchase Price Adjustments | (7) | (118) |
Divestitures | 0 | 0 |
Foreign Currency Translation and Other Adjustments | (173) | (760) |
Ending Balance | 46,923 | 43,657 |
Consulting | ||
Changes in Goodwill Balances | ||
Beginning Balance | 7,928 | 6,797 |
Goodwill Additions | 395 | 1,366 |
Purchase Price Adjustments | 6 | (42) |
Divestitures | 0 | 0 |
Foreign Currency Translation and Other Adjustments | (26) | (192) |
Ending Balance | 8,302 | 7,928 |
Infrastructure | ||
Changes in Goodwill Balances | ||
Beginning Balance | 4,363 | 4,396 |
Goodwill Additions | 12 | 0 |
Purchase Price Adjustments | 0 | 0 |
Divestitures | 0 | (1) |
Foreign Currency Translation and Other Adjustments | (5) | (32) |
Ending Balance | 4,370 | 4,363 |
Other | ||
Changes in Goodwill Balances | ||
Beginning Balance | 0 | 484 |
Goodwill Additions | 0 | 0 |
Purchase Price Adjustments | 0 | 0 |
Divestitures | 0 | (484) |
Foreign Currency Translation and Other Adjustments | 0 | 0 |
Ending Balance | $ 0 | $ 0 |
Borrowings - Short-Term Debt (D
Borrowings - Short-Term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Short-term debt disclosures | ||
Short-term loans | $ 13 | $ 8 |
Long-term debt - current maturities | 6,400 | 4,751 |
Total | $ 6,414 | $ 4,760 |
Loans Payable | ||
Short-term debt disclosures | ||
Weighted-average interest rates for short-term debt (as a percent) | 1.80% | 7.60% |
Borrowings - Long-Term Debt, Co
Borrowings - Long-Term Debt, Components (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Borrowings | ||
Long-term debt, gross | $ 56,542 | $ 51,986 |
Long-term debt excluding finance lease obligations | 56,240 | 51,747 |
Less: net unamortized discount | 846 | 835 |
Less: net unamortized debt issuance costs | 157 | 138 |
Add: fair value adjustment | (311) | (73) |
Total | 55,228 | 50,940 |
Less: current maturities | 6,400 | 4,751 |
Total long-term debt (excluding current portion) | 48,828 | 46,189 |
United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | 35,321 | 33,605 |
Maturing 2023 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 2 | 1,529 |
Debt instrument, weighted-average interest rate (as a percent) | 2.40% | |
Maturing 2024 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 5,004 | 5,009 |
Debt instrument, weighted-average interest rate (as a percent) | 3.30% | |
Maturing 2025 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 1,602 | 1,603 |
Debt instrument, weighted-average interest rate (as a percent) | 5.10% | |
Maturing 2026 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 5,201 | 4,351 |
Debt instrument, weighted-average interest rate (as a percent) | 3.50% | |
Maturing 2027 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 3,620 | 3,620 |
Debt instrument, weighted-average interest rate (as a percent) | 3.10% | |
Maturing 2028 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 1,313 | 313 |
Debt instrument, weighted-average interest rate (as a percent) | 5% | |
Maturing 2029 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 3,250 | 3,250 |
Debt instrument, weighted-average interest rate (as a percent) | 3.50% | |
Maturing 2030 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 1,350 | 1,350 |
Debt instrument, weighted-average interest rate (as a percent) | 2% | |
Maturing 2032 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 1,850 | 1,850 |
Debt instrument, weighted-average interest rate (as a percent) | 4.40% | |
Maturing 2033 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 750 | 0 |
Debt instrument, weighted-average interest rate (as a percent) | 4.80% | |
Maturing 2038 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 83 | 83 |
Debt instrument, weighted-average interest rate (as a percent) | 8% | |
Maturing 2038 | United Kingdom, Pounds | ||
Borrowings | ||
Long-term debt, gross | $ 915 | 0 |
Debt instrument, weighted-average interest rate (as a percent) | 4.90% | |
Maturing 2039 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 2,745 | 2,745 |
Debt instrument, weighted-average interest rate (as a percent) | 4.50% | |
Maturing 2040 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 650 | 650 |
Debt instrument, weighted-average interest rate (as a percent) | 2.90% | |
Maturing 2042 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 1,107 | 1,107 |
Debt instrument, weighted-average interest rate (as a percent) | 4% | |
Maturing 2045 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 27 | 27 |
Debt instrument, weighted-average interest rate (as a percent) | 7% | |
Maturing 2046 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 650 | 650 |
Debt instrument, weighted-average interest rate (as a percent) | 4.70% | |
Maturing 2049 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 3,000 | 3,000 |
Debt instrument, weighted-average interest rate (as a percent) | 4.30% | |
Maturing 2050 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 750 | 750 |
Debt instrument, weighted-average interest rate (as a percent) | 3% | |
Maturing 2052 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 1,400 | 1,400 |
Debt instrument, weighted-average interest rate (as a percent) | 4.20% | |
Maturing 2053 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 650 | 0 |
Debt instrument, weighted-average interest rate (as a percent) | 5.10% | |
Maturing 2096 | United States of America, Dollars | ||
Borrowings | ||
Long-term debt, gross | $ 316 | 316 |
Debt instrument, weighted-average interest rate (as a percent) | 7.10% | |
Maturing 2024-2043 | Euro Member Countries, Euro | ||
Borrowings | ||
Long-term debt, gross | $ 18,512 | 17,087 |
Debt instrument, weighted-average interest rate (as a percent) | 1.80% | |
Maturing 2024-2028 | Japan, Yen | ||
Borrowings | ||
Long-term debt, gross | $ 1,182 | 694 |
Debt instrument, weighted-average interest rate (as a percent) | 0.50% | |
Maturing 2023-2026 | Other currencies | ||
Borrowings | ||
Long-term debt, gross | $ 310 | 361 |
Debt instrument, weighted-average interest rate (as a percent) | 15.10% | |
Finance Lease Obligations Maturing 2023-2030 | ||
Borrowings | ||
Finance lease obligations | $ 303 | $ 239 |
Finance lease obligations, interest rate (as a percent) | 4.30% |
Borrowings - Long-Term Debt, _2
Borrowings - Long-Term Debt, Covenants (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Borrowings | |
Limit based on net tangible assets | 10% |
Revolving Credit Facility | |
Borrowings | |
Minimum net interest expense ratio | 2.20 |
Default provision on credit facility | $ 500 |
Borrowings - Long-Term Debt, De
Borrowings - Long-Term Debt, Debt Issued (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Yen floating-rate notes | |
Notes Issued | |
Aggregate amount of debt issued | $ 700 |
Credit facility term | 5 years |
Euro fixed-rate notes | |
Notes Issued | |
Aggregate amount of debt issued | $ 4,600 |
Euro fixed-rate notes | Minimum | |
Notes Issued | |
Credit facility term | 4 years |
Coupon rate (as a percent) | 3.375% |
Euro fixed-rate notes | Maximum | |
Notes Issued | |
Credit facility term | 20 years |
Coupon rate (as a percent) | 4% |
Pound sterling fixed-rate notes | |
Notes Issued | |
Aggregate amount of debt issued | $ 900 |
Credit facility term | 15 years |
Coupon rate (as a percent) | 4.875% |
U.S. dollar fixed-rate notes | |
Notes Issued | |
Aggregate amount of debt issued | $ 3,250 |
U.S. dollar fixed-rate notes | Minimum | |
Notes Issued | |
Credit facility term | 3 years |
Coupon rate (as a percent) | 4.50% |
U.S. dollar fixed-rate notes | Maximum | |
Notes Issued | |
Credit facility term | 30 years |
Coupon rate (as a percent) | 5.10% |
Borrowings - Pre-Swap Obligatio
Borrowings - Pre-Swap Obligations (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Pre-swap annual contractual obligations of long-term debt outstanding | ||
Remainder of 2023 | $ 75 | |
2024 | 6,368 | |
2025 | 4,912 | |
2026 | 5,570 | |
2027 | 5,772 | |
Thereafter | 33,845 | |
Total | $ 56,542 | $ 51,986 |
Borrowings - Interest on Debt (
Borrowings - Interest on Debt (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Interest on Debt | ||
Interest capitalized | $ 7 | $ 4 |
Total interest paid and accrued | 1,464 | 1,170 |
Cost of financing | ||
Interest on Debt | ||
Interest paid | 255 | 264 |
Interest expense | ||
Interest on Debt | ||
Interest paid | $ 1,202 | $ 903 |
Borrowings - Lines of Credit (D
Borrowings - Lines of Credit (Details) | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Revolving Credit Facility | |
Lines of Credit | |
Amount of credit facility | $ 10,000,000,000 |
Borrowings outstanding | 0 |
Three-Year Credit Agreement | |
Lines of Credit | |
Amount of credit facility | $ 2,500,000,000 |
Credit facility term | 3 years |
Five-Year Credit Agreement | |
Lines of Credit | |
Amount of credit facility | $ 7,500,000,000 |
Credit facility term | 5 years |
Commitments - Extensions of Cre
Commitments - Extensions of Credit (Details) - USD ($) $ in Billions | Sep. 30, 2023 | Dec. 31, 2022 |
Extended lines of credit | ||
Commitments, guarantees: | ||
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients | $ 1.5 | $ 1.6 |
Financing for client purchase agreements | ||
Commitments, guarantees: | ||
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients | $ 1.5 | $ 2.1 |
Commitments - Standard Warranty
Commitments - Standard Warranty Liability (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Movement in standard warranty liability | ||
Beginning Balance | $ 79 | $ 77 |
Current-period accruals | 53 | 58 |
Accrual adjustments to reflect actual experience | (14) | (1) |
Charges incurred | (64) | (62) |
Ending Balance | $ 54 | $ 72 |
Commitments - Extended Warranty
Commitments - Extended Warranty Liability (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Movement in deferred income | ||||
Amortization of deferred revenue | $ (4,300) | $ (9,000) | ||
Deferred income (current) | 11,917 | 11,917 | $ 12,032 | |
Deferred income (noncurrent) | 3,085 | 3,085 | $ 3,499 | |
Extended Warranty | ||||
Movement in deferred income | ||||
Beginning Balance | 272 | $ 350 | ||
Revenue deferred for new extended warranty contracts | 55 | 103 | ||
Amortization of deferred revenue | (122) | (148) | ||
Other | (4) | (21) | ||
Ending Balance | 201 | 201 | 284 | |
Deferred income (current) | 119 | 119 | 139 | |
Deferred income (noncurrent) | $ 82 | $ 82 | $ 145 |
Contingencies (Details)
Contingencies (Details) $ in Millions | 9 Months Ended | ||
May 30, 2022 USD ($) | Jun. 08, 2021 USD ($) | Sep. 30, 2023 USD ($) country | |
Brazil Tax Matters | |||
Loss Contingencies | |||
Damages sought, value | $ 400 | ||
BMC v. IBM | |||
Loss Contingencies | |||
Direct damages sought, value | $ 718 | ||
Punitive damages sought, value | $ 718 | ||
Minimum | |||
Loss Contingencies | |||
Clients' presence in number of countries | country | 175 | ||
Minimum | IBM v. GF | |||
Loss Contingencies | |||
Damages sought, value | $ 1,500 |
Equity Activity - Reclassificat
Equity Activity - Reclassifications and Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Cost | $ 6,729 | $ 6,677 | $ 20,446 | $ 20,784 | ||
SG&A expense | 4,458 | 4,391 | 14,212 | 13,843 | ||
Other (income) and expense | (215) | 5,755 | (721) | 5,921 | ||
Interest expense | 412 | 295 | 1,202 | 903 | ||
Provision for/(benefit from) income taxes | 159 | (1,287) | 702 | (1,070) | ||
Net (income) loss | (1,704) | 3,196 | [1] | (4,214) | 1,071 | [1],[2] |
Pension settlement charge | 5,900 | 0 | 5,894 | [2] | ||
Pension settlement charge, net of tax | 4,400 | |||||
Services | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Cost | 5,217 | 5,168 | 15,821 | 15,915 | ||
Sales | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Cost | 1,419 | 1,389 | 4,329 | 4,555 | ||
Financing | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Cost | 94 | 120 | 297 | 314 | ||
Cost of services | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Cost | 5,217 | 5,168 | 15,821 | 15,915 | ||
Cost of sales | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Cost | 1,419 | 1,389 | 4,329 | 4,555 | ||
Cost of financing | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Cost | 94 | 120 | 297 | 314 | ||
SG&A expense | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
SG&A expense | 4,458 | 4,391 | 14,212 | 13,843 | ||
Other (income) and expense | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Other (income) and expense | (215) | 5,755 | (721) | 5,921 | ||
Interest expense | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Interest expense | 412 | 295 | 1,202 | 903 | ||
Accumulated Other Comprehensive Income/(Loss) | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Other Comprehensive Income (Loss), before Tax | 714 | 7,089 | 1,003 | 8,973 | ||
Other comprehensive income/(loss), Tax (Expense)/Benefit | (313) | (2,058) | (361) | (2,877) | ||
Other comprehensive income/(loss) | 402 | 5,030 | 642 | 6,096 | ||
Unrealized gains/(losses) arising during the period, Net of Tax Amount | 326 | 697 | ||||
Reclassification/amortization, Net of Tax Amount | 316 | 5,399 | ||||
Accumulated Foreign Currency Adjustment Attributable to Parent | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Other Comprehensive Income (Loss), before Tax | 151 | 143 | 180 | 799 | ||
Other comprehensive income/(loss), Tax (Expense)/Benefit | (164) | (301) | (142) | (784) | ||
Other comprehensive income/(loss) | (13) | (158) | 39 | 14 | ||
Unrealized gains/(losses) arising during the period, Net of Tax Amount | 39 | 14 | ||||
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-Sale, Parent | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Other Comprehensive Income (Loss), before Tax | 0 | 0 | (1) | (1) | ||
Other comprehensive income/(loss), Tax (Expense)/Benefit | 0 | 0 | 0 | 0 | ||
Other comprehensive income/(loss) | 0 | 0 | (1) | (1) | ||
Unrealized gains/(losses) arising during the period, Before Tax Amount | 0 | 0 | (1) | (1) | ||
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | 0 | 0 | 0 | 0 | ||
Unrealized gains/(losses) arising during the period, Net of Tax Amount | 0 | 0 | (1) | (1) | ||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Other Comprehensive Income (Loss), before Tax | 333 | 178 | 330 | 453 | ||
Other comprehensive income/(loss), Tax (Expense)/Benefit | (85) | (45) | (87) | (116) | ||
Other comprehensive income/(loss) | 248 | 133 | 243 | 338 | ||
Unrealized gains/(losses) arising during the period, Before Tax Amount | 131 | 189 | 279 | 449 | ||
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | (35) | (49) | (77) | (118) | ||
Unrealized gains/(losses) arising during the period, Net of Tax Amount | 95 | 140 | 203 | 332 | ||
Reclassification/amortization, Net of Tax Amount | 40 | 6 | ||||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
SG&A expense | 4 | (8) | (7) | (28) | ||
Other (income) and expense | 175 | 6 | (6) | 51 | ||
Interest expense | 14 | 22 | 57 | 64 | ||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | Services | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Cost | 2 | (4) | 6 | (32) | ||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | Sales | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Cost | 5 | (35) | (12) | (71) | ||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | Financing | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Cost | 3 | 7 | 12 | 19 | ||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | Cost of services | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Provision for/(benefit from) income taxes | 0 | 1 | (1) | 8 | ||
Net (income) loss | 1 | (3) | 5 | (24) | ||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | Cost of sales | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Provision for/(benefit from) income taxes | (1) | 10 | 4 | 20 | ||
Net (income) loss | 4 | (25) | (8) | (50) | ||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | Cost of financing | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Provision for/(benefit from) income taxes | (1) | (2) | (3) | (5) | ||
Net (income) loss | 2 | 5 | 9 | 14 | ||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | SG&A expense | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Provision for/(benefit from) income taxes | (1) | 2 | 2 | 8 | ||
Net (income) loss | 3 | (6) | (4) | (20) | ||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | Other (income) and expense | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Provision for/(benefit from) income taxes | (44) | (2) | 1 | (13) | ||
Net (income) loss | 131 | 5 | (4) | 38 | ||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | Interest expense | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Provision for/(benefit from) income taxes | (4) | (5) | (14) | (16) | ||
Net (income) loss | 11 | 16 | 43 | 48 | ||
Accumulated Defined Benefit Plans Adjustment Attributable to Parent | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Other Comprehensive Income (Loss), before Tax | 230 | 6,768 | 494 | 7,722 | ||
Other comprehensive income/(loss), Tax (Expense)/Benefit | (63) | (1,712) | (132) | (1,978) | ||
Other comprehensive income/(loss) | 167 | 5,056 | 361 | 5,745 | ||
Unrealized gains/(losses) arising during the period, Net of Tax Amount | 86 | 352 | ||||
Reclassification/amortization, Net of Tax Amount | 276 | 5,393 | ||||
Accumulated Defined Benefit Plans Adjustment, Net Prior Service Attributable to Parent | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Unrealized gains/(losses) arising during the period, Before Tax Amount | 0 | 412 | 0 | 408 | ||
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | 0 | (104) | 1 | (99) | ||
Unrealized gains/(losses) arising during the period, Net of Tax Amount | 0 | 309 | 1 | 309 | ||
Reclassification/amortization, Before Tax Amount | (2) | 3 | (6) | 16 | ||
Reclassification/amortization, Tax (Expense)/Benefit | 1 | (1) | 2 | (4) | ||
Reclassification/amortization, Net of Tax Amount | (2) | 2 | (5) | 12 | ||
Accumulated Defined Benefit Plans Adjustment, Net Gain (Loss) Attributable to Parent | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Unrealized gains/(losses) arising during the period, Before Tax Amount | 102 | 53 | 104 | 63 | ||
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | (26) | (13) | (19) | (20) | ||
Unrealized gains/(losses) arising during the period, Net of Tax Amount | 77 | 39 | 85 | 43 | ||
Reclassification/amortization, Before Tax Amount | 128 | 388 | 389 | 1,305 | ||
Reclassification/amortization, Tax (Expense)/Benefit | (37) | (108) | (113) | (364) | ||
Reclassification/amortization, Net of Tax Amount | 91 | 279 | 276 | 941 | ||
Retirement-Related Benefit Plans, Curtailments and Settlements | ||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||
Unrealized gains/(losses) arising during the period, Before Tax Amount | 2 | 5,913 | 7 | 5,931 | ||
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | (1) | (1,487) | (2) | (1,491) | ||
Unrealized gains/(losses) arising during the period, Net of Tax Amount | $ 1 | $ 4,426 | $ 5 | $ 4,440 | ||
[1]Includes the impact of a one-time, non-cash pension settlement charge. Refer to note 18, "Retirement-Related Benefits," for additional information.[2]ncludes immaterial cash flows from discontinued operations. |
Equity Activity - AOCI Rollforw
Equity Activity - AOCI Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Balance at the beginning of the period | $ 22,271 | $ 19,476 | $ 22,021 | $ 18,996 | |
Balance at the end of the period | 23,156 | 20,147 | 23,156 | 20,147 | |
Pension settlement charge | 5,900 | 0 | 5,894 | [1] | |
Pension settlement charge, net of tax | 4,400 | ||||
Accumulated Other Comprehensive Income/(Loss) | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Balance at the beginning of the period | (16,499) | (22,169) | (16,740) | (23,234) | |
Other comprehensive income before reclassifications | 326 | 697 | |||
Amount reclassified from accumulated other comprehensive income | 316 | 5,399 | |||
Other comprehensive income/(loss) | 402 | 5,030 | 642 | 6,096 | |
Balance at the end of the period | (16,098) | (17,138) | (16,098) | (17,138) | |
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Balance at the beginning of the period | (135) | (18) | |||
Other comprehensive income before reclassifications | 95 | 140 | 203 | 332 | |
Amount reclassified from accumulated other comprehensive income | 40 | 6 | |||
Other comprehensive income/(loss) | 248 | 133 | 243 | 338 | |
Balance at the end of the period | 109 | 320 | 109 | 320 | |
Accumulated Foreign Currency Adjustment Attributable to Parent | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Balance at the beginning of the period | (3,591) | (3,362) | |||
Other comprehensive income before reclassifications | 39 | 14 | |||
Other comprehensive income/(loss) | (13) | (158) | 39 | 14 | |
Balance at the end of the period | (3,552) | (3,347) | (3,552) | (3,347) | |
Accumulated Defined Benefit Plans Adjustment Attributable to Parent | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Balance at the beginning of the period | (13,013) | (19,854) | |||
Other comprehensive income before reclassifications | 86 | 352 | |||
Amount reclassified from accumulated other comprehensive income | 276 | 5,393 | |||
Other comprehensive income/(loss) | 167 | 5,056 | 361 | 5,745 | |
Balance at the end of the period | (12,652) | (14,110) | (12,652) | (14,110) | |
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-Sale, Parent | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Balance at the beginning of the period | (1) | (1) | |||
Other comprehensive income before reclassifications | 0 | 0 | (1) | (1) | |
Other comprehensive income/(loss) | 0 | 0 | (1) | (1) | |
Balance at the end of the period | $ (2) | $ (1) | $ (2) | $ (1) | |
[1]ncludes immaterial cash flows from discontinued operations. |
Derivative Financial Instrume_3
Derivative Financial Instruments - Offsetting (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Derivative Financial Instruments | ||
Cash collateral rehypothecated | $ 3 | $ 8 |
Potential reduction in net position of total derivative liabilities | 281 | 220 |
Potential reduction in net position of total derivative assets | 281 | 220 |
Other receivables | ||
Derivative Financial Instruments | ||
Right to reclaim cash collateral | 112 | 140 |
Accounts Payable | ||
Derivative Financial Instruments | ||
Obligation to return cash collateral | $ 3 | $ 8 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Kyndryl-Related Transactions (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
May 19, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivative Financial Instruments | |||||
Disposition of investment (in shares) | 22.3 | ||||
Unrealized gain (loss) on derivative instruments | $ (316) | $ (189) | $ (315) | $ (730) | |
Cash-Settled Swap | |||||
Derivative Financial Instruments | |||||
Notional amount | $ 311 | ||||
Unrealized gain (loss) on derivative instruments | $ 3 | $ (85) |
Derivative Financial Instrume_5
Derivative Financial Instruments - Hedging Programs (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Net Investment Hedging | ||
Derivative Financial Instruments | ||
Notional amount | $ 5,300,000,000 | $ 4,700,000,000 |
Average remaining maturity | 2 months 12 days | 1 month 6 days |
Interest Rate Swap | Fair Value Hedging | ||
Derivative Financial Instruments | ||
Notional amount | $ 6,700,000,000 | $ 6,500,000,000 |
Average remaining maturity | 5 years 8 months 12 days | 6 years |
Interest Rate Swap | Cash Flow Hedging | ||
Derivative Financial Instruments | ||
Notional amount | $ 0 | $ 0 |
Forward-starting interest rate swaps | Cash Flow Hedging | ||
Derivative Financial Instruments | ||
Number of derivative instruments outstanding | 0 | 0 |
Net gains (losses) before taxes in accumulated other comprehensive income/(loss), cash flow hedges | $ (126,000,000) | $ (139,000,000) |
Gains (losses) expected to be reclassified to net income within the next 12 months | (16,000,000) | |
Foreign exchange contracts | Not Designated as Hedging Instrument, Economic Hedge | ||
Derivative Financial Instruments | ||
Notional amount | $ 6,200,000,000 | 5,900,000,000 |
Foreign exchange contracts | Not Designated as Hedging Instrument, Economic Hedge | Maximum | ||
Derivative Financial Instruments | ||
Term of contract | 1 year | |
Foreign exchange contracts | Cash Flow Hedging | ||
Derivative Financial Instruments | ||
Notional amount | $ 5,200,000,000 | 3,100,000,000 |
Net gains (losses) before taxes in accumulated other comprehensive income/(loss), cash flow hedges | 40,000,000 | 0 |
Gains (losses) expected to be reclassified to net income within the next 12 months | $ (72,000,000) | |
Maximum length of time hedged | 7 years | |
Foreign exchange contracts | Net Investment Hedging | ||
Derivative Financial Instruments | ||
Notional amount | $ 15,200,000,000 | 13,400,000,000 |
Foreign Exchange Forward | Cash Flow Hedging | ||
Derivative Financial Instruments | ||
Notional amount | $ 9,000,000,000 | $ 8,100,000,000 |
Average remaining maturity | 7 months 6 days | 7 months 6 days |
Net gains (losses) before taxes in accumulated other comprehensive income/(loss), cash flow hedges | $ 317,000,000 | $ 66,000,000 |
Gains (losses) expected to be reclassified to net income within the next 12 months | $ 257,000,000 | |
Maximum length of time hedged | 2 years | |
Currency Swap | Cash Flow Hedging | ||
Derivative Financial Instruments | ||
Net gains (losses) before taxes in accumulated other comprehensive income/(loss), cash flow hedges | $ (74,000,000) | (101,000,000) |
Gains (losses) expected to be reclassified to net income within the next 12 months | (23,000,000) | |
Equity contracts hedging employee compensation obligations | Not Designated as Hedging Instrument, Economic Hedge | ||
Derivative Financial Instruments | ||
Notional amount | $ 1,200,000,000 | $ 1,100,000,000 |
Derivative Financial Instrume_6
Derivative Financial Instruments - Cumulative Basis Adjustments for Fair Value Hedges (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Short-Term Debt | ||
Amounts recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges | ||
Carrying amount of the hedged item | $ (2) | $ (199) |
Cumulative hedging adjustments included in the carrying amount-assets/(liabilities) | (2) | 1 |
Long-Term Debt | ||
Amounts recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges | ||
Carrying amount of the hedged item | (6,376) | (6,216) |
Cumulative hedging adjustments included in the carrying amount-assets/(liabilities) | 312 | 72 |
Hedging adjustments on discontinued hedging relationships | $ (212) | $ (250) |
Derivative Financial Instrume_7
Derivative Financial Instruments - Effect of Hedge Activity on Income and Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivative Instruments, Gain (Loss) | ||||
Cost | $ 6,729 | $ 6,677 | $ 20,446 | $ 20,784 |
SG&A expense | 4,458 | 4,391 | 14,212 | 13,843 |
Other (income) and expense | (215) | 5,755 | (721) | 5,921 |
Interest expense | 412 | 295 | 1,202 | 903 |
Cost of services | ||||
Derivative Instruments, Gain (Loss) | ||||
Cost | 5,217 | 5,168 | 15,821 | 15,915 |
Gains/(losses) of total hedge activity | (2) | 4 | (6) | 32 |
Cost of sales | ||||
Derivative Instruments, Gain (Loss) | ||||
Cost | 1,419 | 1,389 | 4,329 | 4,555 |
Gains/(losses) of total hedge activity | (5) | 35 | 12 | 71 |
Cost of financing | ||||
Derivative Instruments, Gain (Loss) | ||||
Cost | 94 | 120 | 297 | 314 |
Gains/(losses) of total hedge activity | (3) | 1 | (10) | 0 |
SG&A expense | ||||
Derivative Instruments, Gain (Loss) | ||||
SG&A expense | 4,458 | 4,391 | 14,212 | 13,843 |
Gains/(losses) of total hedge activity | (58) | (69) | 44 | (291) |
Other (income) and expense | ||||
Derivative Instruments, Gain (Loss) | ||||
Other (income) and expense | (215) | 5,755 | (721) | 5,921 |
Gains/(losses) of total hedge activity | (316) | (189) | (315) | (730) |
Interest expense | ||||
Derivative Instruments, Gain (Loss) | ||||
Interest expense | 412 | 295 | 1,202 | 903 |
Gains/(losses) of total hedge activity | $ (15) | $ 4 | $ (46) | $ 1 |
Derivative Financial Instrume_8
Derivative Financial Instruments - Gains and Losses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivative Instruments, Gain (Loss) | ||||
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Cost, Interest expense, Selling, general and administrative, Other (income) and expense | Cost, Interest expense, Selling, general and administrative, Other (income) and expense | Cost, Interest expense, Selling, general and administrative, Other (income) and expense | Cost, Interest expense, Selling, general and administrative, Other (income) and expense |
Gain (loss) recognized in earnings on derivatives | $ (394) | $ (514) | $ (600) | $ (1,336) |
Gain (loss) recognized in earnings attributable to risk being hedged | 167 | 271 | 238 | 395 |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI | 782 | 1,387 | 843 | 3,567 |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (192) | 12 | (40) | (4) |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing | 21 | 19 | 81 | 28 |
Interest rate contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI - Cash flow hedges | 0 | 0 | 0 | 0 |
Foreign exchange contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI - Cash flow hedges | 101 | 189 | 250 | 449 |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI - Amount excluded from the assessment of effectiveness | 29 | 0 | 29 | 0 |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing | (11) | 0 | (11) | 0 |
Foreign exchange contracts | Net Investment Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI - Net investment hedges | 652 | 1,198 | 564 | 3,118 |
Foreign exchange contracts | Not Designated as Hedging Instrument, Economic Hedge | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (loss) recognized in earnings on derivatives | (141) | (186) | (321) | (595) |
Cost of financing | Interest rate contracts | Fair Value Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (loss) recognized in earnings on derivatives | (33) | (64) | (55) | (76) |
Gain (loss) recognized in earnings attributable to risk being hedged | 28 | 68 | 42 | 89 |
Cost of financing | Interest rate contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (1) | (1) | (2) | (3) |
Cost of financing | Foreign exchange contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (2) | (6) | (10) | (16) |
Cost of financing | Foreign exchange contracts | Net Investment Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing | 5 | 5 | 16 | 6 |
Interest expense | Interest rate contracts | Fair Value Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (loss) recognized in earnings on derivatives | (166) | (191) | (261) | (261) |
Gain (loss) recognized in earnings attributable to risk being hedged | 139 | 203 | 196 | 305 |
Interest expense | Interest rate contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (4) | (3) | (11) | (10) |
Interest expense | Foreign exchange contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (11) | (18) | (46) | (54) |
Interest expense | Foreign exchange contracts | Net Investment Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing | 26 | 14 | 75 | 22 |
Cost of services | Foreign exchange contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (2) | 4 | (6) | 32 |
Cost of sales | Foreign exchange contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (5) | 35 | 12 | 71 |
SG&A expense | Foreign exchange contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (4) | 8 | 7 | 28 |
SG&A expense | Equity contracts | Not Designated as Hedging Instrument, Economic Hedge | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (loss) recognized in earnings on derivatives | (54) | (76) | 37 | (319) |
Other (income) and expense | Foreign exchange contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (164) | (6) | 16 | (51) |
Other (income) and expense | Equity contracts | Not Designated as Hedging Instrument, Economic Hedge | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (loss) recognized in earnings on derivatives | $ 0 | $ 3 | $ 0 | $ (85) |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock-based compensation cost, allocation of recognized costs | ||||
Pre-tax stock-based compensation cost | $ 286 | $ 251 | $ 843 | $ 739 |
Income tax benefits | (74) | (51) | (216) | (191) |
Net stock-based compensation cost | 213 | 200 | 627 | 548 |
Pre-tax stock-based compensation cost increase (decrease) | 35 | 104 | ||
Unrecognized compensation cost related to non-vested awards | 1,700 | $ 1,700 | ||
Unrecognized compensation cost related to non-vested awards, weighted average period of recognition | 2 years 8 months 12 days | |||
Restricted Stock Units (RSUs) | ||||
Stock-based compensation cost, allocation of recognized costs | ||||
Pre-tax stock-based compensation cost increase (decrease) | 26 | $ 44 | ||
Performance Shares | ||||
Stock-based compensation cost, allocation of recognized costs | ||||
Pre-tax stock-based compensation cost increase (decrease) | 4 | 15 | ||
Stock option | ||||
Stock-based compensation cost, allocation of recognized costs | ||||
Pre-tax stock-based compensation cost increase (decrease) | 4 | 25 | ||
Employee Stock | ||||
Stock-based compensation cost, allocation of recognized costs | ||||
Pre-tax stock-based compensation cost increase (decrease) | 20 | |||
Cost | ||||
Stock-based compensation cost, allocation of recognized costs | ||||
Pre-tax stock-based compensation cost | 48 | 40 | 141 | 124 |
SG&A expense | ||||
Stock-based compensation cost, allocation of recognized costs | ||||
Pre-tax stock-based compensation cost | 148 | 138 | 465 | 427 |
Research, development and engineering | ||||
Stock-based compensation cost, allocation of recognized costs | ||||
Pre-tax stock-based compensation cost | $ 91 | $ 73 | $ 237 | $ 188 |
Retirement-Related Benefits - A
Retirement-Related Benefits - All Retirement Plans Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Retirement Benefits [Abstract] | ||||
Defined benefit and contribution pension plans — cost | $ 250 | $ 6,319 | $ 791 | $ 7,252 |
Nonpension postretirement plans — cost | 33 | 31 | 98 | 97 |
Total | $ 283 | $ 6,350 | $ 888 | $ 7,350 |
Year-to-year percent change, defined benefit and contribution pension plans cost (as a percent) | (96.00%) | (89.10%) | ||
Year-to-year percent change, nonpension postretirement plans cost (as a percent) | 5.30% | 0.40% | ||
Year-to-year percent change, total (as a percent) | (95.50%) | (87.90%) |
Retirement-Related Benefits - C
Retirement-Related Benefits - Cost of Pension Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Cost/(Income) of Pension Plans | ||||
Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement | $ 250 | $ 6,319 | $ 791 | $ 7,252 |
U.S. Plans | Pension Plan | ||||
Cost/(Income) of Pension Plans | ||||
Service cost | 0 | 0 | 0 | 0 |
Interest cost | 272 | 282 | 817 | 885 |
Expected return on plan assets | (382) | (432) | (1,146) | (1,382) |
Amortization of prior service costs/(credits) | 0 | 2 | 0 | 6 |
Recognized actuarial losses | 27 | 132 | 82 | 490 |
Curtailments and settlements | 0 | 5,894 | 0 | 5,894 |
Multi-employer plans | 0 | 0 | 0 | 0 |
Other costs/(credits) | 0 | 0 | 0 | 0 |
Total net periodic pension (income)/cost of defined benefit plans | (82) | 5,877 | (247) | 5,893 |
Cost of defined contribution plans | 150 | 134 | 473 | 416 |
Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement | 68 | 6,012 | 226 | 6,309 |
U.S. Plans | Other Postretirement Benefits Plan | ||||
Cost/(Income) of Pension Plans | ||||
Service cost | 1 | 1 | 3 | 4 |
Interest cost | 29 | 21 | 88 | 58 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service costs/(credits) | (7) | (2) | (22) | (1) |
Recognized actuarial losses | 0 | 1 | 0 | 6 |
Curtailments and settlements | 0 | 0 | 0 | 0 |
Total net periodic pension (income)/cost of defined benefit plans | 23 | 21 | 69 | 67 |
Non-U.S. Plans | Pension Plan | ||||
Cost/(Income) of Pension Plans | ||||
Service cost | 44 | 57 | 133 | 180 |
Interest cost | 293 | 124 | 873 | 394 |
Expected return on plan assets | (363) | (246) | (1,081) | (778) |
Amortization of prior service costs/(credits) | 5 | 3 | 15 | 10 |
Recognized actuarial losses | 99 | 247 | 302 | 784 |
Curtailments and settlements | 2 | 19 | 7 | 38 |
Multi-employer plans | 4 | 4 | 10 | 11 |
Other costs/(credits) | 3 | 8 | 21 | 24 |
Total net periodic pension (income)/cost of defined benefit plans | 88 | 216 | 281 | 663 |
Cost of defined contribution plans | 95 | 91 | 283 | 280 |
Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement | 182 | 307 | 565 | 943 |
Non-U.S. Plans | Other Postretirement Benefits Plan | ||||
Cost/(Income) of Pension Plans | ||||
Service cost | 1 | 1 | 2 | 2 |
Interest cost | 10 | 8 | 29 | 26 |
Expected return on plan assets | (1) | 0 | (2) | (2) |
Amortization of prior service costs/(credits) | 0 | 0 | 0 | 0 |
Recognized actuarial losses | 0 | 1 | (1) | 3 |
Curtailments and settlements | 0 | 0 | 0 | 0 |
Total net periodic pension (income)/cost of defined benefit plans | $ 10 | $ 10 | $ 28 | $ 30 |
Retirement-Related Benefits - P
Retirement-Related Benefits - Pension Plan Change (Details) participant in Thousands, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) participant | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | ||
Retirement-Related Benefits | |||||
Pre-tax pension settlement charge | $ 5,900 | $ 0 | $ 5,894 | [1] | |
Pension settlement charge, net of tax | $ 4,400 | ||||
Qualified Plan | Pension Plan | U.S. Plans | |||||
Retirement-Related Benefits | |||||
Benefit plan obligation and plan assets transferred to insurers | $ 16,000 | ||||
Number of participants transferred to insurers | participant | 100 | ||||
Percentage of transferred participant pension benefits each insurer is responsible to pay | 50% | 50% | 50% | ||
Pre-tax pension settlement charge | $ 5,900 | ||||
Pension settlement charge, net of tax | $ 4,400 | ||||
[1]ncludes immaterial cash flows from discontinued operations. |
Retirement-Related Benefits -_2
Retirement-Related Benefits - Contributions (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Retirement-Related Benefits | ||
Total plan contributions | $ 233 | $ 357 |
U.S. nonpension postretirement benefit plans | ||
Retirement-Related Benefits | ||
Total plan contributions | 188 | 272 |
Non-U.S. DB plans and multi-employer plans | ||
Retirement-Related Benefits | ||
Total plan contributions | 45 | 85 |
Pension Plans, Including Multi-employer Plans | ||
Retirement-Related Benefits | ||
Contributions by employer - Noncash | 537 | 366 |
Other Postretirement Benefits Plan | U.S. nonpension postretirement benefit plans | ||
Retirement-Related Benefits | ||
Contributions by employer - Noncash | $ 188 | $ 247 |
Subsequent Events (Details)
Subsequent Events (Details) | Oct. 30, 2023 $ / shares |
Subsequent Event | |
Subsequent Event [Line Items] | |
Dividend declared (in dollars per share) | $ 1.66 |