Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Billions, except Share data, unless otherwise specified | Dec. 31, 2013 | Feb. 10, 2014 | Jun. 30, 2013 |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'INTERNATIONAL BUSINESS MACHINES CORP | ' | ' |
Entity Central Index Key | '0000051143 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $209.30 |
Entity Common Stock, Shares Outstanding | ' | 1,041,340,758 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Consolidated_Statement_of_Earn
Consolidated Statement of Earnings (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Revenue: | ' | ' | ' |
Services | $57,655 | $59,453 | $60,721 |
Sales | 40,049 | 43,014 | 44,063 |
Financing | 2,047 | 2,040 | 2,132 |
Total revenue | 99,751 | 104,507 | 106,916 |
Cost: | ' | ' | ' |
Services | 37,564 | 39,166 | 40,740 |
Sales | 12,572 | 13,956 | 14,973 |
Financing | 1,110 | 1,087 | 1,065 |
Total cost | 51,246 | 54,209 | 56,778 |
Gross profit | 48,505 | 50,298 | 50,138 |
Expense and other income: | ' | ' | ' |
Selling, general and administrative | 23,502 | 23,553 | 23,594 |
Research, development and engineering (Note O) | 6,226 | 6,302 | 6,258 |
Intellectual property and custom development income | -822 | -1,074 | -1,108 |
Other (income) and expense | -327 | -843 | -20 |
Interest expense (Note D&J) | 402 | 459 | 411 |
Total expense and other (income) | 28,981 | 28,396 | 29,135 |
Income before income taxes | 19,524 | 21,902 | 21,003 |
Provision for income taxes (Note N) | 3,041 | 5,298 | 5,148 |
Net income | $16,483 | $16,604 | $15,855 |
Earnings per share of common stock: | ' | ' | ' |
Assuming dilution (in dollars per share) (Note P) | $14.94 | $14.37 | $13.06 |
Basic (in dollars per share) (Note P) | $15.06 | $14.53 | $13.25 |
Weighted-average number of common shares outstanding: | ' | ' | ' |
Assuming dilution (in shares) | 1,103,042,156 | 1,155,449,317 | 1,213,767,985 |
Basic (in shares) | 1,094,486,604 | 1,142,508,521 | 1,196,951,006 |
Consolidated_Statement_of_Comp
Consolidated Statement of Comprehensive Income (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ' | ' | ' |
Net income | $16,483 | $16,604 | $15,855 |
Other comprehensive income/(loss), before tax | ' | ' | ' |
Foreign currency translation adjustments (Note L) | -1,335 | -44 | -693 |
Net changes related to available-for-sale securities: (Note L) | ' | ' | ' |
Unrealized gains/(losses) arising during the period | -4 | 8 | -14 |
Reclassification of (gains)/losses to net income | -8 | -42 | -231 |
Subsequent changes in previously impaired securities arising during the period | 4 | 20 | 4 |
Total net changes related to available-for-sale securities | -8 | -14 | -241 |
Unrealized gains/(losses) on cash flow hedges: (Note L) | ' | ' | ' |
Unrealized gains/(losses) arising during the period | 43 | 32 | -266 |
Reclassification of (gains)/losses to net income | -166 | -253 | 511 |
Total unrealized gains/(losses) on cash flow hedges | -123 | -220 | 245 |
Retirement-related benefit plans: (Note L) | ' | ' | ' |
Prior service costs/(credits) | 16 | ' | -28 |
Net (losses)/gains arising during the period | 5,369 | -7,489 | -5,463 |
Curtailments and settlements | -3 | -2 | 11 |
Amortization of prior service (credits)/costs | -114 | -148 | -157 |
Amortization of net (gains)/losses | 3,499 | 2,457 | 1,847 |
Total retirement-related benefit plans | 8,767 | -5,182 | -3,790 |
Other comprehensive income/(loss), before tax (Note L) | 7,301 | -5,460 | -4,479 |
Income tax (expense)/benefit related to items of other comprehensive income (Note L) | -3,144 | 1,587 | 1,339 |
Other comprehensive income/(loss) (Note L) | 4,157 | -3,874 | -3,142 |
Total comprehensive income/(loss) | $20,641 | $12,731 | $12,713 |
Consolidated_Statement_of_Fina
Consolidated Statement of Financial Position (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $10,716 | $10,412 |
Marketable securities (Note D) | 350 | 717 |
Notes and accounts receivable - trade (net of allowances of $291 in 2013 and $255 in 2012) | 10,465 | 10,667 |
Short-term financing receivables (net of allowances of $308 in 2013 and $288 in 2012) (Note F) | 19,787 | 18,038 |
Other accounts receivable (net of allowances of $36 in 2013 and $17 in 2012) | 1,584 | 1,873 |
Inventories (Note E) | 2,310 | 2,287 |
Deferred taxes (Note N) | 1,651 | 1,415 |
Prepaid expenses and other current assets | 4,488 | 4,024 |
Total current assets | 51,350 | 49,433 |
Property, plant and equipment (Note G) | 40,475 | 40,501 |
Less: Accumulated depreciation (Note G) | 26,654 | 26,505 |
Property, plant and equipment - net (Note G) | 13,821 | 13,996 |
Long-term financing receivables (net of allowances of $80 in 2013 and $66 in 2012) (Note F) | 12,755 | 12,812 |
Prepaid pension assets (Note S) | 5,551 | 945 |
Deferred taxes (Note N) | 3,051 | 3,973 |
Goodwill (Note I) | 31,184 | 29,247 |
Intangible assets - net (Note I) | 3,871 | 3,787 |
Investments and sundry assets (Note H) | 4,639 | 5,021 |
Total assets | 126,223 | 119,213 |
Current liabilities: | ' | ' |
Taxes (Note N) | 4,633 | 4,948 |
Short-term debt (Note D&J) | 6,862 | 9,181 |
Accounts payable | 7,461 | 7,952 |
Compensation and benefits | 3,893 | 4,745 |
Deferred income | 12,557 | 11,952 |
Other accrued expenses and liabilities | 4,748 | 4,847 |
Total current liabilities | 40,154 | 43,625 |
Long-term debt (Note D&J) | 32,856 | 24,088 |
Retirement and nonpension postretirement benefit obligations (Note S) | 16,242 | 20,418 |
Deferred income | 4,108 | 4,491 |
Other liabilities (Note K) | 9,934 | 7,607 |
Total liabilities | 103,294 | 100,229 |
Contingencies and commitments (Note M) | ' | ' |
IBM stockholders' equity: | ' | ' |
Common stock, par value $0.20 per share, and additional paid-in capital, Shares authorized: 4,687,500,000; Shares issued ( (2013 -- 2,207,522,548; 2012 -- 2,197,561,159) | 51,594 | 50,110 |
Retained earnings | 130,042 | 117,641 |
Treasury stock, at cost; ((shares: 2013 -- 1,153,131,611; 2012 -- 1,080,193,483) | -137,242 | -123,131 |
Accumulated other comprehensive income/(loss) | -21,602 | -25,759 |
Total IBM stockholders' equity | 22,792 | 18,860 |
Noncontrolling interests (Note A) | 137 | 124 |
Total equity | 22,929 | 18,984 |
Total liabilities and equity | $126,223 | $119,213 |
Consolidated_Statement_of_Fina1
Consolidated Statement of Financial Position (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, except Share data, unless otherwise specified | ||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ' | ' |
Notes and accounts receivable - trade, allowances | $291 | $255 |
Short-term financing receivables, allowances | 308 | 288 |
Other accounts receivable, allowances | 36 | 17 |
Long-term financing receivables, allowances | $80 | $66 |
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) | 2,207,522,548 | 2,197,561,159 |
Treasury stock, Shares (in shares) | 1,153,131,611 | 1,080,193,483 |
Consolidated_Statement_of_Cash
Consolidated Statement of Cash Flows (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Cash flows from operating activities: | ' | ' | ' |
Net income | $16,483 | $16,604 | $15,855 |
Adjustments to reconcile net income to cash provided by operating activities | ' | ' | ' |
Depreciation | 3,327 | 3,392 | 3,589 |
Amortization of intangibles | 1,351 | 1,284 | 1,226 |
Stock-based compensation | 614 | 688 | 697 |
Deferred taxes | -1,610 | 797 | 1,212 |
Net (gain)/loss on asset sales and other | -236 | -729 | -342 |
Changes in operating assets and liabilities, net of acquisitions/divestitures | ' | ' | ' |
Receivables (including financing receivables) | -1,407 | -2,230 | -1,279 |
Retirement related | 294 | -1,008 | -1,371 |
Inventories | -57 | 280 | -163 |
Other assets/other liabilities | -747 | 733 | -28 |
Accounts payable | -529 | -224 | 451 |
Net cash provided by operating activities | 17,485 | 19,586 | 19,846 |
Cash flows from investing activities: | ' | ' | ' |
Payments for property, plant and equipment | -3,623 | -4,082 | -4,108 |
Proceeds from disposition of property, plant and equipment | 372 | 410 | 608 |
Investment in software | -517 | -635 | -559 |
Purchases of marketable securities and other investments | -4,608 | -4,109 | -1,594 |
Proceeds from disposition of marketable securities and other investments | 4,873 | 3,142 | 3,345 |
Non-operating finance receivables - net | -1,063 | -608 | -291 |
Acquisition of businesses, net of cash acquired | -3,056 | -3,722 | -1,811 |
Divestitures of businesses, net of cash transferred | 297 | 599 | 14 |
Net cash used in investing activities | -7,326 | -9,004 | -4,396 |
Cash flows from financing activities: | ' | ' | ' |
Proceeds from new debt | 16,353 | 12,242 | 9,996 |
Payments to settle debt | -10,013 | -9,549 | -8,947 |
Short-term borrowings/(repayments) less than 90 days - net | 621 | -441 | 1,321 |
Common stock repurchases | -13,859 | -11,995 | -15,046 |
Common stock transactions - other | 1,074 | 1,540 | 2,453 |
Cash dividends paid | -4,058 | -3,773 | -3,473 |
Net cash used in financing activities | -9,883 | -11,976 | -13,696 |
Effect of exchange rate changes on cash and cash equivalents | 28 | -116 | -493 |
Net change in cash and cash equivalents | 304 | -1,511 | 1,262 |
Cash and cash equivalents at January 1 | 10,412 | 11,922 | 10,661 |
Cash and cash equivalents at December 31 | 10,716 | 10,412 | 11,922 |
Supplemental data | ' | ' | ' |
Income taxes paid-net of refunds received | 4,024 | 3,169 | 4,168 |
Interest paid on debt | 982 | 1,009 | 956 |
Capital lease obligations | $14 | $10 | $39 |
Consolidated_Statement_of_Chan
Consolidated Statement of Changes in Equity (USD $) | Total | Total IBM Stockholders' Equity | Common Stock and Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income/(Loss) | Non-Controlling Interests |
In Millions, unless otherwise specified | |||||||
Equity - at Dec. 31, 2010 | $23,172 | $23,046 | $45,418 | $92,532 | ($96,161) | ($18,743) | $126 |
Net income plus other comprehensive income/(loss) | ' | ' | ' | ' | ' | ' | ' |
Net income | 15,855 | 15,855 | ' | 15,855 | ' | ' | ' |
Other comprehensive income/(loss) | -3,142 | -3,142 | ' | ' | ' | -3,142 | ' |
Total comprehensive income/(loss) | 12,713 | 12,713 | ' | ' | ' | ' | ' |
Cash dividends paid - common stock | -3,473 | -3,473 | ' | -3,473 | ' | ' | ' |
Common stock issued under employee plans ( (Shares - 9,961,389 ,15,091,320 and 20,669,785 for 2013, 2012 and 2011, respectively) | 2,394 | 2,394 | 2,394 | ' | ' | ' | ' |
Purchases ( (Shares - 1,666,069, 2,406,007 and 1,717,246) and sales ( Shares - 1,849,883 , 2,746,169 and 4,920,198) of the treasury stock under employee plans - net, for 2013, 2012 and 2011, respectively) | 175 | 175 | ' | -56 | 231 | ' | ' |
Other treasury shares purchased,not retired ( (Shares - 73,121,942 , 61,246,371 and 88,683,716 for 2013, 2012 and 2011, respectively) | -15,034 | -15,034 | ' | ' | -15,034 | ' | ' |
Changes in other equity | 317 | 317 | 317 | ' | ' | ' | ' |
Changes in noncontrolling interests | -29 | ' | ' | ' | ' | ' | -29 |
Equity - at Dec. 31, 2011 | 20,236 | 20,138 | 48,129 | 104,857 | -110,963 | -21,885 | 97 |
Net income plus other comprehensive income/(loss) | ' | ' | ' | ' | ' | ' | ' |
Net income | 16,604 | 16,604 | ' | 16,604 | ' | ' | ' |
Other comprehensive income/(loss) | -3,874 | -3,874 | ' | ' | ' | -3,874 | ' |
Total comprehensive income/(loss) | 12,731 | 12,731 | ' | ' | ' | ' | ' |
Cash dividends paid - common stock | -3,773 | -3,773 | ' | -3,773 | ' | ' | ' |
Common stock issued under employee plans ( (Shares - 9,961,389 ,15,091,320 and 20,669,785 for 2013, 2012 and 2011, respectively) | 1,532 | 1,532 | 1,532 | ' | ' | ' | ' |
Purchases ( (Shares - 1,666,069, 2,406,007 and 1,717,246) and sales ( Shares - 1,849,883 , 2,746,169 and 4,920,198) of the treasury stock under employee plans - net, for 2013, 2012 and 2011, respectively) | -208 | -208 | ' | -48 | -160 | ' | ' |
Other treasury shares purchased,not retired ( (Shares - 73,121,942 , 61,246,371 and 88,683,716 for 2013, 2012 and 2011, respectively) | -12,008 | -12,008 | ' | ' | -12,008 | ' | ' |
Changes in other equity | 448 | 448 | 448 | ' | ' | ' | ' |
Changes in noncontrolling interests | 27 | ' | ' | ' | ' | ' | 27 |
Equity - at Dec. 31, 2012 | 18,984 | 18,860 | 50,110 | 117,641 | -123,131 | -25,759 | 124 |
Net income plus other comprehensive income/(loss) | ' | ' | ' | ' | ' | ' | ' |
Net income | 16,483 | 16,483 | ' | 16,483 | ' | ' | ' |
Other comprehensive income/(loss) | 4,157 | 4,157 | ' | ' | ' | 4,157 | ' |
Total comprehensive income/(loss) | 20,641 | 20,641 | ' | ' | ' | ' | ' |
Cash dividends paid - common stock | -4,058 | -4,058 | ' | -4,058 | ' | ' | ' |
Common stock issued under employee plans ( (Shares - 9,961,389 ,15,091,320 and 20,669,785 for 2013, 2012 and 2011, respectively) | 1,216 | 1,216 | 1,216 | ' | ' | ' | ' |
Purchases ( (Shares - 1,666,069, 2,406,007 and 1,717,246) and sales ( Shares - 1,849,883 , 2,746,169 and 4,920,198) of the treasury stock under employee plans - net, for 2013, 2012 and 2011, respectively) | -142 | -142 | ' | -25 | -117 | ' | ' |
Other treasury shares purchased,not retired ( (Shares - 73,121,942 , 61,246,371 and 88,683,716 for 2013, 2012 and 2011, respectively) | -13,993 | -13,993 | ' | ' | -13,993 | ' | ' |
Changes in other equity | 268 | 268 | 268 | ' | ' | ' | ' |
Changes in noncontrolling interests | 13 | ' | ' | ' | ' | ' | 13 |
Equity - at Dec. 31, 2013 | $22,929 | $22,792 | $51,594 | $130,042 | ($137,242) | ($21,602) | $137 |
Consolidated_Statement_of_Chan1
Consolidated Statement of Changes in Equity (Parenthetical) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ' | ' | ' |
Common stock issued under employee plans (in shares) | 9,961,389 | 15,091,320 | 20,669,785 |
Purchases of treasury stock under employee plans (in shares) | 1,666,069 | 2,406,007 | 1,717,246 |
Sales of treasury stock under employee plans (in shares) | 1,849,883 | 2,746,169 | 4,920,198 |
Other treasury shares purchased, not retired (in shares) | 73,121,942 | 61,246,371 | 88,683,716 |
Significant_Accounting_Policie
Significant Accounting Policies | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Significant Accounting Policies | ' | ||||||||
Note A. | |||||||||
Significant Accounting Policies | |||||||||
Basis of Presentation | |||||||||
The accompanying Consolidated Financial Statements and footnotes of the International Business Machines Corporation (IBM or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). | |||||||||
Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior year amounts have been reclassified to conform to the current year presentation. This is annotated where applicable. | |||||||||
Noncontrolling interest amounts in income of $7 million, $11 million and $6 million, net of tax, for the years ended December 31, 2013, 2012 and 2011, respectively, are included in the Consolidated Statement of Earnings within the other (income) and expense line item. | |||||||||
Principles of Consolidation | |||||||||
The Consolidated Financial Statements include the accounts of IBM and its controlled subsidiaries, which are generally majority owned. Any noncontrolling interest in the equity of a subsidiary is reported in Equity in the Consolidated Statement of Financial Position. Net income and losses attributable to the noncontrolling interest is reported as described above in the Consolidated Statement of Earnings. The accounts of variable interest entities (VIEs) are included in the Consolidated Financial Statements, if required. Investments in business entities in which the company does not have control, but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method and the company’s proportionate share of income or loss is recorded in other (income) and expense. The accounting policy for other investments in equity securities is on page 92 within “Marketable Securities.” Equity investments in non-publicly traded entities are primarily accounted for using the cost method. All intercompany transactions and accounts have been eliminated in consolidation. | |||||||||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) (OCI) that are reported in the Consolidated Financial Statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates. See “Critical Accounting Estimates” on pages 67 to 70 for a discussion of the company’s critical accounting estimates. | |||||||||
Revenue | |||||||||
The company recognizes revenue when it is realized or realizable and earned. The company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Delivery does not occur until products have been shipped or services have been provided to the client, risk of loss has transferred to the client, and either client acceptance has been obtained, client acceptance provisions have lapsed, or the company has objective evidence that the criteria specified in the client acceptance provisions have been satisfied. The sales price is not considered to be fixed or determinable until all contingencies related to the sale have been resolved. | |||||||||
The company recognizes revenue on sales to solution providers, resellers and distributors (herein referred to as “resellers”) when the reseller has: economic substance apart from the company, credit risk, title and risk of loss to the inventory; and, the fee to the company is not contingent upon resale or payment by the end user, the company has no further obligations related to bringing about resale or delivery and all other revenue recognition criteria have been met. | |||||||||
The company reduces revenue for estimated client returns, stock rotation, price protection, rebates and other similar allowances. (See Schedule II, “Valuation and Qualifying Accounts and Reserves” included in the company’s Annual Report on Form 10-K). Revenue is recognized only if these estimates can be reasonably and reliably determined. The company bases its estimates on historical results taking into consideration the type of client, the type of transaction and the specifics of each arrangement. Payments made under cooperative marketing programs are recognized as an expense only if the company receives from the client an identifiable benefit sufficiently separable from the product sale whose fair value can be reasonably and reliably estimated. If the company does not receive an identifiable benefit sufficiently separable from the product sale whose fair value can be reasonably estimated, such payments are recorded as a reduction of revenue. | |||||||||
Revenue from sales of third-party vendor products or services is recorded net of costs when the company is acting as an agent between the client and the vendor, and gross when the company is a principal to the transaction. Several factors are considered to determine whether the company is an agent or principal, most notably whether the company is the primary obligor to the client, or has inventory risk. Consideration is also given to whether the company adds meaningful value to the vendor’s product or service, was involved in the selection of the vendor’s product or service, has latitude in establishing the sales price or has credit risk. | |||||||||
The company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. In addition to the aforementioned general policies, the following are the specific revenue recognition policies for multiple-deliverable arrangements and for each major category of revenue. | |||||||||
Multiple-Deliverable Arrangements | |||||||||
The company enters into revenue arrangements that may consist of multiple deliverables of its products and services based on the needs of its clients. These arrangements may include any combination of services, software, hardware and/or financing. For example, a client may purchase a server that includes operating system software. In addition, the arrangement may include post-contract support for the software and a contract for post-warranty maintenance service for the hardware. These types of arrangements can also include financing provided by the company. These arrangements consist of multiple deliverables, with the hardware and software delivered in one reporting period and the software support and hardware maintenance services delivered across multiple reporting periods. In another example, a client may outsource the running of its datacenter operations to the company on a long-term, multiple-year basis and periodically purchase servers and/or software products from the company to upgrade or expand its facility. The outsourcing services are provided on a continuous basis across multiple reporting periods and the hardware and software products are delivered in one reporting period. To the extent that a deliverable in a multiple-deliverable arrangement is subject to specific accounting guidance that deliverable is accounted for in accordance with such specific guidance. Examples of such arrangements may include leased hardware which is subject to specific leasing guidance or software which is subject to specific software revenue recognition guidance on whether and/or how to separate multiple-deliverable arrangements into separate units of accounting (separability) and how to allocate the arrangement consideration among those separate units of accounting (allocation). For all other deliverables in multiple-deliverable arrangements, the guidance below is applied for separability and allocation. A multiple-deliverable arrangement is separated into more than one unit of accounting if the following criteria are met: | |||||||||
The delivered item(s) has value to the client on a stand-alone basis; and | |||||||||
If the arrangement includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the company. | |||||||||
If these criteria are not met, the arrangement is accounted for as one unit of accounting which would result in revenue being recognized ratably over the contract term or being deferred until the earlier of when such criteria are met or when the last undelivered element is delivered. If these criteria are met for each element and there is a relative selling price for all units of accounting in an arrangement, the arrangement consideration is allocated to the separate units of accounting based on each unit’s relative selling price. The following revenue policies are then applied to each unit of accounting, as applicable. | |||||||||
Revenue from the company’s business analytics, Smarter Planet and cloud offerings follow the specific revenue recognition policies for multiple deliverable arrangements and for each major category of revenue depending on the type of offering which can be comprised of services, hardware and/or software. | |||||||||
Services | |||||||||
The company’s primary services offerings include information technology (IT) datacenter and business process outsourcing, application management services, consulting and systems integration, technology infrastructure and system maintenance, Web hosting and the design and development of complex IT systems to a client’s specifications (design and build). These services are provided on a time-and-material basis, as a fixed-price contract or as a fixed-price per measure of output contract and the contract terms range from less than one year to over 10 years. | |||||||||
Revenue from IT datacenter and business process outsourcing contracts is recognized in the period the services are provided using either an objective measure of output or on a straight-line basis over the term of the contract. Under the output method, the amount of revenue recognized is based on the services delivered in the period. | |||||||||
Revenue from application management services, technology infrastructure and system maintenance and Web hosting contracts is recognized on a straight-line basis over the terms of the contracts. Revenue from time-and-material contracts is recognized as labor hours are delivered and direct expenses are incurred. Revenue related to extended warranty and product maintenance contracts is recognized on a straight-line basis over the delivery period. | |||||||||
Revenue from fixed-price design and build contracts is recognized under the percentage-of-completion (POC) method. Under the POC method, revenue is recognized based on the labor costs incurred to date as a percentage of the total estimated labor costs to fulfill the contract. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made. These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are reflected in income in the period in which the circumstances that gave rise to the revision become known by the company. | |||||||||
The company performs ongoing profitability analyses of its services contracts accounted for under the POC method in order to determine whether the latest estimates of revenues, costs and profits require updating. If at any time these estimates indicate that the contract will be unprofitable, the entire estimated loss for the remainder of the contract is recorded immediately. For non-POC method services contracts, any losses are recorded as incurred. | |||||||||
In some services contracts, the company bills the client prior to recognizing revenue from performing the services. Deferred income of $7,153 million and $7,281 million at December 31, 2013 and 2012, respectively, is included in the Consolidated Statement of Financial Position. In other services contracts, the company performs the services prior to billing the client. Unbilled accounts receivable of $2,053 million and $1,998 million at December 31, 2013 and 2012, respectively, is included in notes and accounts receivable-trade in the Consolidated Statement of Financial Position. | |||||||||
Billings usually occur in the month after the company performs the services or in accordance with specific contractual provisions. Unbilled receivables are expected to be billed within four months. | |||||||||
Hardware | |||||||||
The company’s hardware offerings include the sale or lease of system servers, storage solutions and the sale of semiconductors. The company also offers installation services for its more complex hardware products. | |||||||||
Revenue from hardware sales and sales-type leases is recognized when risk of loss has transferred to the client and there are no unfulfilled company obligations that affect the client’s final acceptance of the arrangement. Any cost of standard warranties and remaining obligations that are inconsequential or perfunctory are accrued when the corresponding revenue is recognized. Revenue from rentals and operating leases is recognized on a straight-line basis over the term of the rental or lease. | |||||||||
Software | |||||||||
Revenue from perpetual (one-time charge) license software is recognized at the inception of the license term if all revenue recognition criteria have been met. Revenue from term (recurring license charge) license software is recognized on a straight-line basis over the period that the client is entitled to use the license. Revenue from post-contract support, which may include unspecified upgrades on a when-and-if-available basis, is recognized on a straight-line basis over the period such items are delivered. In multiple-deliverable arrangements that include software that is more than incidental to the products or services as a whole (software multiple-deliverable arrangements), software and software-related elements are accounted for in accordance with software revenue recognition guidance. Software-related elements include software products and services for which a software deliverable is essential to its functionality. Tangible products containing software components and non-software components that function together to deliver the tangible product’s essential functionality are not within the scope of software revenue recognition guidance and are accounted for based on other applicable revenue recognition guidance. | |||||||||
A software multiple-deliverable arrangement is separated into more than one unit of accounting if all of the following criteria are met: | |||||||||
The functionality of the delivered element(s) is not dependent on the undelivered element(s); | |||||||||
There is vendor-specific objective evidence (VSOE) of fair value of the undelivered element(s). VSOE of fair value is based on the price charged when the deliverable is sold separately by the company on a regular basis and not as part of the multiple-deliverable arrangement; and | |||||||||
Delivery of the delivered element(s) represents the culmination of the earnings process for that element(s). | |||||||||
If any one of these criteria is not met, the arrangement is accounted for as one unit of accounting which would result in revenue being recognized ratably over the contract term or being deferred until the earlier of when such criteria are met or when the last undelivered element is delivered. If these criteria are met for each element and there is VSOE of fair value for all units of accounting in an arrangement, the arrangement consideration is allocated to the separate units of accounting based on each unit’s relative VSOE of fair value. There may be cases, however, in which there is VSOE of fair value of the undelivered item(s) but no such evidence for the delivered item(s). In these cases, the residual method is used to allocate the arrangement consideration. Under the residual method, the amount of consideration allocated to the delivered item(s) equals the total arrangement consideration less the aggregate VSOE of fair value of the undelivered elements. | |||||||||
The company’s multiple-deliverable arrangements may have a stand-alone software deliverable that is subject to the existing software revenue recognition guidance. The revenue for these multiple-deliverable arrangements is allocated to the software deliverable and the non-software deliverables based on the relative selling prices of all of the deliverables in the arrangement using the hierarchy: VSOE, third-party evidence (TPE) or best estimate of selling price (BESP). In the limited circumstances where the company cannot determine VSOE or TPE of the selling price for all of the deliverables in the arrangement, including the software deliverable, BESP is used for the purpose of performing this allocation. | |||||||||
Financing | |||||||||
Financing income attributable to sales-type leases, direct financing leases and loans is recognized on the accrual basis using the effective interest method. Operating lease income is recognized on a straight-line basis over the term of the lease. | |||||||||
Best Estimate of Selling Price | |||||||||
In certain limited instances, the company is not able to establish VSOE for all elements in a multiple-deliverable arrangement. When VSOE cannot be established, the company attempts to establish the selling price of each element based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. | |||||||||
When the company is unable to establish selling price using VSOE or TPE, the company uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which the company would transact a sale if the product or service were sold on a stand-alone basis. Due to the fact that the company sells its products and services on a stand-alone basis, and therefore has established VSOE for its products and services offerings, the company uses BESP to determine the relative selling price for a product or service in a multiple-deliverable arrangement on an infrequent basis. An example of when BESP would be used is when the company sells a new product, for which VSOE and TPE does not yet exist, in a multiple-deliverable arrangement prior to selling the new product on a stand-alone basis. | |||||||||
The company determines BESP by considering multiple factors including, but not limited to, overall market conditions, including geographic or regional specific factors, competitive positioning, competitor actions, internal costs, profit objectives and pricing practices. The determination of BESP is a formal process that includes review and approval by the company’s management. In addition, the company regularly reviews VSOE and TPE for its products and services, in addition to BESP. | |||||||||
Services Costs | |||||||||
Recurring operating costs for services contracts, including costs related to bid and proposal activities, are recognized as incurred. For fixed-price design and build contracts, the costs of external hardware and software accounted for under the POC method are deferred and recognized based on the labor costs incurred to date, as a percentage of the total estimated labor costs to fulfill the contract. Certain eligible, nonrecurring costs incurred in the initial phases of outsourcing contracts are deferred and subsequently amortized. These costs consist of transition and setup costs related to the installation of systems and processes and are amortized on a straight-line basis over the expected period of benefit, not to exceed the term of the contract. Additionally, fixed assets associated with outsourcing contracts are capitalized and depreciated on a straight-line basis over the expected useful life of the asset. If an asset is contract specific, then the depreciation period is the shorter of the useful life of the asset or the contract term. Amounts paid to clients in excess of the fair value of acquired assets used in outsourcing arrangements are deferred and amortized on a straight-line basis as a reduction of revenue over the expected period of benefit not to exceed the term of the contract. The company performs periodic reviews to assess the recoverability of deferred contract transition and setup costs. This review is done by comparing the estimated minimum remaining undiscounted cash flows of a contract to the unamortized contract costs. If such minimum undiscounted cash flows are not sufficient to recover the unamortized costs, an impairment loss is recognized. | |||||||||
Deferred services transition and setup costs were $2,402 million and $2,424 million at December 31, 2013 and 2012, respectively. Amortization of deferred services transition and setup costs was estimated at December 31, 2013 to be $812 million in 2014, $612 million in 2015, $400 million in 2016, $247 million in 2017 and $332 million thereafter. | |||||||||
Deferred amounts paid to clients in excess of the fair value of acquired assets used in outsourcing arrangements were $89 million and $51 million at December 31, 2013 and 2012, respectively. Amortization of deferred amounts paid to clients in excess of the fair value of acquired assets is recorded as an offset of revenue and was estimated at December 31, 2013 to be $27 million in 2014, $27 million in 2015, $8 million in 2016, $5 million in 2017 and $22 million thereafter. In situations in which an outsourcing contract is terminated, the terms of the contract may require the client to reimburse the company for the recovery of unbilled accounts receivable, unamortized deferred costs incurred to purchase specific assets utilized in the delivery of services and to pay any additional costs incurred by the company to transition the services. | |||||||||
Software Costs | |||||||||
Costs that are related to the conceptual formulation and design of licensed software programs are expensed as incurred to research, development and engineering expense; costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. Capitalized amounts are amortized on a straight-line basis over periods ranging up to three years and are recorded in software cost within cost of sales. The company performs periodic reviews to ensure that unamortized program costs remain recoverable from future revenue. Costs to support or service licensed programs are charged to software cost within cost of sales as incurred. | |||||||||
The company capitalizes certain costs that are incurred to purchase or to create and implement internal-use software programs, including software coding, installation, testing and certain data conversions. These capitalized costs are amortized on a straight-line basis over periods ranging up to two years and are recorded in selling, general and administrative expense. | |||||||||
Product Warranties | |||||||||
The company offers warranties for its hardware products that generally range up to three years, with the majority being either one or three years. Estimated costs for warranty terms standard to the deliverable are recognized when revenue is recorded for the related deliverable. The company estimates its warranty costs standard to the deliverable based on historical warranty claim experience and estimates of future spending, and applies this estimate to the revenue stream for products under warranty. Estimated future costs for warranties applicable to revenue recognized in the current period are charged to cost of sales. The warranty liability is reviewed quarterly to verify that it properly reflects the remaining obligation based on the anticipated expenditures over the balance of the obligation period. Adjustments are made when actual warranty claim experience differs from estimates. Costs from fixed-price support or maintenance contracts, including extended warranty contracts, are recognized as incurred. | |||||||||
Revenue from separately priced extended warranty contracts is initially recorded as deferred income and subsequently recognized on a straight-line basis over the delivery period. Changes in deferred income for extended warranty contracts, and in the warranty liability for standard warranties, which are included in other accrued expenses and liabilities and other liabilities in the Consolidated Statement of Financial Position, are presented in the following tables: | |||||||||
Standard Warranty Liability | |||||||||
($ in millions) | |||||||||
2013 | 2012 | ||||||||
Balance at January 1 | $ | 394 | $ | 407 | |||||
Current period accruals | 346 | 394 | |||||||
Accrual adjustments to reflect experience | 22 | -15 | |||||||
Changes incurred | -387 | -392 | |||||||
Balance at December 31 | $ | 376 | $ | 394 | |||||
Extended Warranty Liability (Deferred Income) | |||||||||
($ in millions) | |||||||||
2013 | 2012 | ||||||||
Balance at January 1 | $ | 606 | $ | 636 | |||||
Revenue deferred for new extended warranty contracts | 305 | 268 | |||||||
Amortization of deferred revenue | -324 | -301 | |||||||
Other* | -8 | 4 | |||||||
Balance at December 31 | $ | 579 | $ | 606 | |||||
Current portion | $ | 284 | $ | 289 | |||||
Noncurrent portion | 295 | 317 | |||||||
Balance at December 31 | $ | 579 | $ | 606 | |||||
* Other consists primarily of foreign currency translation adjustments. | |||||||||
Shipping and Handling | |||||||||
Costs related to shipping and handling are recognized as incurred and included in cost in the Consolidated Statement of Earnings. | |||||||||
Expense and Other Income | |||||||||
Selling, General and Administrative | |||||||||
Selling, general and administrative (SG&A) expense is charged to income as incurred. Expenses of promoting and selling products and services are classified as selling expense and include such items as compensation, advertising, sales commissions and travel. General and administrative expense includes such items as compensation, legal costs, office supplies, non-income taxes, insurance and office rental. In addition, general and administrative expense includes other operating items such as an allowance for credit losses, workforce rebalancing accruals for contractually obligated payments to employees terminated in the ongoing course of business, acquisition costs related to business combinations, amortization of certain intangible assets and environmental remediation costs. | |||||||||
Advertising and Promotional Expense | |||||||||
The company expenses advertising and promotional costs as incurred. Cooperative advertising reimbursements from vendors are recorded net of advertising and promotional expense in the period in which the related advertising and promotional expense is incurred. Advertising and promotional expense, which includes media, agency and promotional expense, was $1,294 million, $1,339 million and $1,373 million in 2013, 2012 and 2011, respectively, and is recorded in SG&A expense in the Consolidated Statement of Earnings. | |||||||||
Research, Development and Engineering | |||||||||
Research, development and engineering (RD&E) costs are expensed as incurred. Software costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. See “Software Costs” on page 87. | |||||||||
Intellectual Property and Custom Development Income | |||||||||
The company licenses and sells the rights to certain of its intellectual property (IP) including internally developed patents, trade secrets and technological know-how. Certain IP transactions to third parties are licensing/royalty-based and others are transaction-based sales and other transfers. Licensing/royalty-based fees involve transfers in which the company earns the income over time, or the amount of income is not fixed or determinable until the licensee sells future related products (i.e., variable royalty, based upon licensee’s revenue). Sales and other transfers typically include transfers of IP whereby the company has fulfilled its obligations and the fee received is fixed or determinable at the transfer date. The company also enters into cross-licensing arrangements of patents, and income from these arrangements is recorded when earned. In addition, the company earns income from certain custom development projects for strategic technology partners and specific clients. The company records the income from these projects when the fee is realized and earned, is not refundable and is not dependent upon the success of the project. | |||||||||
Other (Income) and Expense | |||||||||
Other (income) and expense includes interest income (other than from Global Financing external business transactions), gains and losses on certain derivative instruments, gains and losses from securities and other investments, gains and losses from certain real estate transactions, foreign currency transaction gains and losses, gains and losses from the sale of businesses and amounts related to accretion of asset retirement obligations. | |||||||||
Business Combinations and Intangible Assets Including Goodwill | |||||||||
The company accounts for business combinations using the acquisition method and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree are recorded at their acquisition date fair values. Goodwill represents the excess of the purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. The primary drivers that generate goodwill are the value of synergies between the acquired entities and the company and the acquired assembled workforce, neither of which qualifies as an identifiable intangible asset. Goodwill recorded in an acquisition is assigned to applicable reporting units based on expected revenues. Identifiable intangible assets with finite lives are amortized over their useful lives. Amortization of completed technology is recorded in Cost, and amortization of all other intangible assets is recorded in SG&A expense. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the Consolidated Financial Statements from the acquisition date. | |||||||||
Impairment | |||||||||
Long-lived assets, other than goodwill and indefinite-lived intangible assets, are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The impairment test is based on undiscounted cash flows and, if impaired, the asset is written down to fair value based on either discounted cash flows or appraised values. Goodwill and indefinite-lived intangible assets are tested annually, in the fourth quarter, for impairment and whenever changes in circumstances indicate an impairment may exist. Goodwill is tested at the reporting unit level which is the operating segment, or a business, which is one level below that operating segment (the “component” level) if discrete financial information is prepared and regularly reviewed by management at the segment level. Components are aggregated as a single reporting unit if they have similar economic characteristics. | |||||||||
Depreciation and Amortization | |||||||||
Property, plant and equipment are carried at cost and depreciated over their estimated useful lives using the straight-line method. The estimated useful lives of certain depreciable assets are as follows: buildings, 30 to 50 years; building equipment, 10 to 20 years; land improvements, 20 years; plant, laboratory and office equipment, 2 to 20 years; and computer equipment, 1.5 to 5 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease term, rarely exceeding 25 years. | |||||||||
Capitalized software costs incurred or acquired after technological feasibility has been established are amortized over periods ranging up to 3 years. Capitalized costs for internal-use software are amortized on a straight-line basis over periods ranging up to 2 years. Other intangible assets are amortized over periods between 1 and 7 years. | |||||||||
Environmental | |||||||||
The cost of internal environmental protection programs that are preventative in nature are expensed as incurred. When a cleanup program becomes likely, and it is probable that the company will incur cleanup costs and those costs can be reasonably estimated, the company accrues remediation costs for known environmental liabilities. The company’s maximum exposure for all environmental liabilities cannot be estimated and no amounts are recorded for environmental liabilities that are not probable or estimable. | |||||||||
Asset Retirement Obligations | |||||||||
Asset retirement obligations (ARO) are legal obligations associated with the retirement of long-lived assets. These liabilities are initially recorded at fair value and the related asset retirement costs are capitalized by increasing the carrying amount of the related assets by the same amount as the liability. Asset retirement costs are subsequently depreciated over the useful lives of the related assets. Subsequent to initial recognition, the company records period-to-period changes in the ARO liability resulting from the passage of time in interest expense and revisions to either the timing or the amount of the original expected cash flows to the related assets. | |||||||||
Defined Benefit Pension and Nonpension Postretirement Benefit Plans | |||||||||
The funded status of the company’s defined benefit pension plans and nonpension postretirement benefit plans (retirement-related benefit plans) is recognized in the Consolidated Statement of Financial Position. The funded status is measured as the difference between the fair value of plan assets and the benefit obligation at December 31, the measurement date. For defined benefit pension plans, the benefit obligation is the projected benefit obligation (PBO), which represents the actuarial present value of benefits expected to be paid upon retirement based on employee services already rendered and estimated future compensation levels. For the nonpension postretirement benefit plans, the benefit obligation is the accumulated postretirement benefit obligation (APBO), which represents the actuarial present value of postretirement benefits attributed to employee services already rendered. The fair value of plan assets represents the current market value of cumulative company and participant contributions made to an irrevocable trust fund, held for the sole benefit of participants, which are invested by the trust fund. Overfunded plans, with the fair value of plan assets exceeding the benefit obligation, are aggregated and recorded as a prepaid pension asset equal to this excess. Underfunded plans, with the benefit obligation exceeding the fair value of plan assets, are aggregated and recorded as a retirement and nonpension postretirement benefit obligation equal to this excess. | |||||||||
The current portion of the retirement and nonpension postretirement benefit obligations represents the actuarial present value of benefits payable in the next 12 months exceeding the fair value of plan assets, measured on a plan-by-plan basis. This obligation is recorded in compensation and benefits in the Consolidated Statement of Financial Position. | |||||||||
Net periodic pension and nonpension postretirement benefit cost/(income) is recorded in the Consolidated Statement of Earnings and includes service cost, interest cost, expected return on plan assets, amortization of prior service costs/(credits) and (gains)/losses previously recognized as a component of OCI and amortization of the net transition asset remaining in accumulated other comprehensive income/(loss) (AOCI). Service cost represents the actuarial present value of participant benefits earned in the current year. Interest cost represents the time value of money cost associated with the passage of time. Certain events, such as changes in the employee base, plan amendments and changes in actuarial assumptions, result in a change in the benefit obligation and the corresponding change in OCI. The result of these events is amortized as a component of net periodic cost/(income) over the service lives or life expectancy of the participants, depending on the plan, provided such amounts exceed thresholds which are based upon the benefit obligation or the value of plan assets. Net periodic cost/(income) is recorded in Cost, SG&A and RD&E in the Consolidated Statement of Earnings based on the employees’ respective functions. | |||||||||
(Gains)/losses and prior service costs/(credits) not recognized as a component of net periodic cost/(income) in the Consolidated Statement of Earnings as they arise are recognized as a component of OCI in the Consolidated Statement of Comprehensive Income. Those (gains)/losses and prior service costs/(credits) are subsequently recognized as a component of net periodic cost/(income) pursuant to the recognition and amortization provisions of applicable accounting guidance. (Gains)/losses arise as a result of differences between actual experience and assumptions or as a result of changes in actuarial assumptions. Prior service costs/ (credits) represent the cost of benefit changes attributable to prior service granted in plan amendments. | |||||||||
The measurement of benefit obligations and net periodic cost/(income) is based on estimates and assumptions approved by the company’s management. These valuations reflect the terms of the plans and use participant-specific information such as compensation, age and years of service, as well as certain assumptions, including estimates of discount rates, expected return on plan assets, rate of compensation increases, interest crediting rates and mortality rates. | |||||||||
Defined Contribution Plans | |||||||||
The company’s contribution for defined contribution plans is recorded when the employee renders service to the company. The charge is recorded in Cost, SG&A and RD&E in the Consolidated Statement of Earnings based on the employees’ respective functions. | |||||||||
Stock-Based Compensation | |||||||||
Stock-based compensation represents the cost related to stock-based awards granted to employees. The company measures stock-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost on a straight-line basis (net of estimated forfeitures) over the employee requisite service period. The company estimates the fair value of stock options using a Black-Scholes valuation model. The company also grants its employees Restricted Stock Units (RSUs), including Retention Restricted Stock Units (RRSUs) and Performance Share Units (PSUs). RSUs are stock awards granted to employees that entitle the holder to shares of common stock as the award vests, typically over a one- to five-year period. The fair value of the awards is determined and fixed on the grant date based on the company’s stock price, adjusted for the exclusion of dividend equivalents. All stock-based compensation cost is recorded in Cost, SG&A, and RD&E in the Consolidated Statement of Earnings based on the employees’ respective functions. | |||||||||
The company records deferred tax assets for awards that result in deductions on the company’s income tax returns, based on the amount of compensation cost recognized and the statutory tax rate in the jurisdiction in which it will receive a deduction. Differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the income tax return are recorded in additional paid-in capital (if the tax deduction exceeds the deferred tax asset) or in the Consolidated Statement of Earnings (if the deferred tax asset exceeds the tax deduction and no additional paid-in capital exists from previous awards). | |||||||||
Income Taxes | |||||||||
Income tax expense is based on reported income before income taxes. Deferred income taxes reflect the tax effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. These deferred taxes are measured by applying currently enacted tax laws. Valuation allowances are recognized to reduce deferred tax assets to the amount that will more likely than not be realized. In assessing the need for a valuation allowance, management considers all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. When the company changes its determination as to the amount of deferred tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to income tax expense in the period in which such determination is made. | |||||||||
The company recognizes tax liabilities when, despite the company’s belief that its tax return positions are supportable, the company believes that certain positions may not be fully sustained upon review by tax authorities. Benefits from tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. The current portion of tax liabilities is included in taxes and the noncurrent portion of tax liabilities is included in other liabilities in the Consolidated Statement of Financial Position. To the extent that new information becomes available which causes the company to change its judgment regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. | |||||||||
Translation of Non-U.S. Currency Amounts | |||||||||
Assets and liabilities of non-U.S. subsidiaries that have a local functional currency are translated to United States (U.S.) dollars at year-end exchange rates. Translation adjustments are recorded in OCI. Income and expense items are translated at weighted-average rates of exchange prevailing during the year. | |||||||||
Inventories, property, plant and equipment—net and other non-monetary assets and liabilities of non-U.S. subsidiaries and branches that operate in U.S. dollars are translated at the approximate exchange rates prevailing when the company acquired the assets or liabilities. All other assets and liabilities denominated in a currency other than U.S. dollars are translated at year-end exchange rates with the transaction gain or loss recognized in other (income) and expense. Income and expense items are translated at the weighted-average rates of exchange prevailing during the year. These translation gains and losses are included in net income for the period in which exchange rates change. | |||||||||
Derivative Financial Instruments | |||||||||
Derivatives are recognized in the Consolidated Statement of Financial Position at fair value and are reported in prepaid expenses and other current assets, investments and sundry assets, other accrued expenses and liabilities or other liabilities. Classification of each derivative as current or noncurrent is based upon whether the maturity of the instrument is less than or greater than 12 months. To qualify for hedge accounting, the company requires that the instruments be effective in reducing the risk exposure that they are designated to hedge. For instruments that hedge cash flows, hedge designation criteria also require that it be probable that the underlying transaction will occur. Instruments that meet established accounting criteria are formally designated as hedges. These criteria demonstrate that the derivative is expected to be highly effective at offsetting changes in fair value or cash flows of the underlying exposure both at inception of the hedging relationship and on an ongoing basis. The method of assessing hedge effectiveness and measuring hedge ineffectiveness is formally documented at hedge inception. The company assesses hedge effectiveness and measures hedge ineffectiveness at least quarterly throughout the designated hedge period. | |||||||||
Where the company applies hedge accounting, the company designates each derivative as a hedge of: (1) the fair value of a recognized financial asset or liability, or of an unrecognized firm commitment (fair value hedge attributable to interest rate or foreign currency risk); (2) the variability of anticipated cash flows of a forecasted transaction, or the cash flows to be received or paid related to a recognized financial asset or liability (cash flow hedge attributable to interest rate or foreign currency risk); or (3) a hedge of a long-term investment (net investment hedge) in a foreign operation. In addition, the company may enter into derivative contracts that economically hedge certain of its risks, even though hedge accounting does not apply or the company elects not to apply hedge accounting. In these cases, there exists a natural hedging relationship in which changes in the fair value of the derivative, which are recognized currently in net income, act as an economic offset to changes in the fair value of the underlying hedged item(s). | |||||||||
Changes in the fair value of a derivative that is designated as a fair value hedge, along with offsetting changes in the fair value of the underlying hedged exposure, are recorded in earnings each period. For hedges of interest rate risk, the fair value adjustments are recorded as adjustments to interest expense and cost of financing in the Consolidated Statement of Earnings. For hedges of currency risk associated with recorded financial assets or liabilities, derivative fair value adjustments are recognized in other (income) and expense in the Consolidated Statement of Earnings. Changes in the fair value of a derivative that is designated as a cash flow hedge are recorded, net of applicable taxes, in OCI, in the Consolidated Statement of Comprehensive Income. When net income is affected by the variability of the underlying cash flow, the applicable offsetting amount of the gain or loss from the derivative that is deferred in AOCI is released to net income and reported in interest expense, Cost, SG&A expense or other (income) and expense in the Consolidated Statement of Earnings based on the nature of the underlying cash flow hedged. Effectiveness for net investment hedging derivatives is measured on a spot-to-spot basis. The effective portion of changes in the fair value of net investment hedging derivatives and other non-derivative financial instruments designated as net investment hedges are recorded as foreign currency translation adjustments in OCI. Changes in the fair value of the portion of a net investment hedging derivative excluded from the effectiveness assessment are recorded in interest expense. If the underlying hedged item in a fair value hedge ceases to exist, all changes in the fair value of the derivative are included in net income each period until the instrument matures. When the derivative transaction ceases to exist, a hedged asset or liability is no longer adjusted for changes in its fair value except as required under other relevant accounting standards. Derivatives that are not designated as hedges, as well as changes in the fair value of derivatives that do not effectively offset changes in the fair value of the underlying hedged item throughout the designated hedge period (collectively, “ineffectiveness”), are recorded in net income for each period and are reported in other (income) and expense. When a cash flow hedging relationship is discontinued, the net gain or loss in AOCI must generally remain in AOCI until the item that was hedged affects earnings. However, when it is probable that a forecasted transaction will not occur by the end of the originally specified time period or within an additional two-month period thereafter, the net gain or loss in AOCI must be reclassified into earnings immediately. The company reports cash flows arising from derivative financial instruments designated as fair value or cash flow hedges consistent with the classification of cash flows from the underlying hedged items that these derivatives are hedging. Accordingly, the cash flows associated with derivatives designated as fair value or cash flow hedges are classified in cash flows from operating activities in the Consolidated Statement of Cash Flows. Cash flows from derivatives designated as net investment hedges and derivatives that do not qualify as hedges are reported in cash flows from investing activities. For currency swaps designated as hedges of foreign currency denominated debt (included in the company’s debt risk management program as addressed in note D, “Financial Instruments,” on pages 102 through 106), cash flows directly associated with the settlement of the principal element of these swaps are reported in payments to settle debt in cash flows from financing activities in the Consolidated Statement of Cash Flows. | |||||||||
Financial Instruments | |||||||||
In determining the fair value of its financial instruments, the company uses a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. See note D, “Financial Instruments,” on pages 100 to 102 for further information. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized. | |||||||||
Fair Value Measurement | |||||||||
Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the company is required to classify certain assets and liabilities based on the following fair value hierarchy: | |||||||||
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date; | |||||||||
Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and | |||||||||
Level 3—Unobservable inputs for the asset or liability. | |||||||||
The guidance requires the use of observable market data if such data is available without undue cost and effort. | |||||||||
When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items within Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation. | |||||||||
The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument. | |||||||||
In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calculated using the methodologies described below for several parameters that market participants would consider in determining fair value: | |||||||||
Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument. | |||||||||
Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market. | |||||||||
As an example, the fair value of derivatives is derived utilizing a discounted cash flow model that uses observable market inputs such as known notional value amounts, yield curves, spot and forward exchange rates as well as discount rates. These inputs relate to liquid, heavily traded currencies with active markets which are available for the full term of the derivative. | |||||||||
Certain financial assets are measured at fair value on a nonrecurring basis. These assets include equity method investments that are recognized at fair value at the measurement date to the extent that they are deemed to be other-than-temporarily impaired. Certain assets that are measured at fair value on a recurring basis can be subject to nonrecurring fair value measurements. These assets include available-for-sale equity investments that are deemed to be other-than-temporarily impaired. In the event of an other-than-temporary impairment of a financial instrument, fair value is measured using a model described above. | |||||||||
Accounting guidance permits the measurement of eligible financial assets, financial liabilities and firm commitments at fair value, on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. This election is irrevocable. The company does not apply the fair value option to any eligible assets or liabilities. | |||||||||
Cash Equivalents | |||||||||
All highly liquid investments with maturities of three months or less at the date of purchase are considered to be cash equivalents. | |||||||||
Marketable Securities | |||||||||
Debt securities included in current assets represent securities that are expected to be realized in cash within one year of the balance sheet date. Long-term debt securities that are not expected to be realized in cash within one year and alliance equity securities are included in investments and sundry assets. Debt and marketable equity securities are considered available for sale and are reported at fair value with unrealized gains and losses, net of applicable taxes, in OCI. The realized gains and losses for available-for-sale securities are included in other (income) and expense in the Consolidated Statement of Earnings. Realized gains and losses are calculated based on the specific identification method. | |||||||||
In determining whether an other-than-temporary decline in market value has occurred, the company considers the duration that, and extent to which, the fair value of the investment is below its cost, the financial condition and near-term prospects of the issuer or underlying collateral of a security; and the company’s intent and ability to retain the security in order to allow for an anticipated recovery in fair value. Other-than-temporary declines in fair value from amortized cost for available-for-sale equity and debt securities that the company intends to sell or would more likely than not be required to sell before the expected recovery of the amortized cost basis are charged to other (income) and expense in the period in which the loss occurs. For debt securities that the company has no intent to sell and believes that it more likely than not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in other (income) and expense, while the remaining loss is recognized in OCI. The credit loss component recognized in other (income) and expense is identified as the amount of the principal cash flows not expected to be received over the remaining term of the debt security as projected using the company’s cash flow projections. | |||||||||
Inventories | |||||||||
Raw materials, work in process and finished goods are stated at the lower of average cost or market. Cash flows related to the sale of inventories are reflected in net cash provided by operating activities in the Consolidated Statement of Cash Flows. | |||||||||
Allowance for Credit Losses | |||||||||
Receivables are recorded concurrent with billing and shipment of a product and/or delivery of a service to customers. A reasonable estimate of probable net losses on the value of customer receivables is recognized by establishing an allowance for credit losses. | |||||||||
Notes and Accounts Receivable—Trade | |||||||||
An allowance for uncollectible trade receivables is estimated based on a combination of write-off history, aging analysis and any specific, known troubled accounts. | |||||||||
Financing Receivables | |||||||||
Financing receivables include sales-type leases, direct financing leases and loans. Leases are accounted for in accordance with lease accounting standards. Loan receivables are financial assets recorded at amortized cost which approximates fair value. The company determines its allowances for credit losses on financing receivables based on two portfolio segments: lease receivables and loan receivables. The company further segments the portfolio into two classes: major markets and growth markets. | |||||||||
When calculating the allowances, the company considers its ability to mitigate a potential loss by repossessing leased equipment and by considering the current fair market value of any other collateral. The value of the equipment is the net realizable value. The allowance for credit losses for capital leases, installment sales and customer loans includes an assessment of the entire balance of the capital lease or loan, including amounts not yet due. The methodologies that the company uses to calculate its receivables reserves, which are applied consistently to its different portfolios, are as follows: | |||||||||
Individually Evaluated—The company reviews all financing receivables considered at risk on a quarterly basis. The review primarily consists of an analysis based upon current information available about the client, such as financial statements, news reports, published credit ratings, current market-implied credit analysis, as well as the current economic environment, collateral net of repossession cost and prior collection history. For loans that are collateral dependent, impairment is measured using the fair value of the collateral when foreclosure is probable. Using this information, the company determines the expected cash flow for the receivable and calculates an estimate of the potential loss and the probability of loss. For those accounts in which the loss is probable, the company records a specific reserve. | |||||||||
Collectively Evaluated—The company records an unallocated reserve that is calculated by applying a reserve rate to its different portfolios, excluding accounts that have been specifically reserved. This reserve rate is based upon credit rating, probability of default, term, characteristics (lease/loan) and loss history. Factors that could result in actual receivable losses that are materially different from the estimated reserve include sharp changes in the economy, or a significant change in the economic health of a particular client that represents a concentration in the company’s receivables portfolio. | |||||||||
Other Credit-Related Policies | |||||||||
Non-Accrual—Certain receivables for which the company has recorded a specific reserve may also be placed on non-accrual status. Non-accrual assets are those receivables (impaired loans or nonperforming leases) with specific reserves and other accounts for which it is likely that the company will be unable to collect all amounts due according to original terms of the lease or loan agreement. Income recognition is discontinued on these receivables. Cash collections are first applied as a reduction to principal outstanding. Any cash received in excess of principal payments outstanding is recognized as interest income. Receivables may be removed from non-accrual status, if appropriate, based upon changes in client circumstances. | |||||||||
Write Off—Receivable losses are charged against the allowance when management believes the uncollectibility of the receivable is confirmed. Subsequent recoveries, if any, are credited to the allowance. | |||||||||
Past Due—The company views receivables as past due when payment has not been received after 90 days, measured from the original billing date. | |||||||||
Impaired Loans—As stated above, the company evaluates all financing receivables considered at-risk, including loans, for impairment on a quarterly basis. The company considers any loan with an individually evaluated reserve as an impaired loan. Depending on the level of impairment, loans will also be placed on non-accrual status as appropriate. Client loans are primarily for software and services and are unsecured. These loans are subjected to credit analysis to evaluate the associated risk and, when deemed necessary, actions are taken to mitigate risks in the loan agreements which include covenants to protect against credit deterioration during the life of the obligation. | |||||||||
Estimated Residual Values of Lease Assets | |||||||||
The recorded residual values of lease assets are estimated at the inception of the lease to be the expected fair value of the assets at the end of the lease term. The company periodically reassesses the realizable value of its lease residual values. Any anticipated increases in specific future residual values are not recognized before realization through remarketing efforts. Anticipated decreases in specific future residual values that are considered to be other-than-temporary are recognized immediately upon identification and are recorded as an adjustment to the residual value estimate. For sales-type and direct-financing leases, this reduction lowers the recorded net investment and is recognized as a loss charged to financing income in the period in which the estimate is changed, as well as an adjustment to unearned income to reduce future-period financing income. | |||||||||
Common Stock | |||||||||
Common stock refers to the $.20 par value per share capital stock as designated in the company’s Certificate of Incorporation. Treasury stock is accounted for using the cost method. When treasury stock is reissued, the value is computed and recorded using a weighted-average basis. | |||||||||
Earnings Per Share of Common Stock | |||||||||
Earnings per share (EPS) is computed using the two-class method. The two-class method determines EPS for each class of common stock and participating securities according to dividends and dividend equivalents and their respective participation rights in undistributed earnings. Basic EPS of common stock is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS of common stock is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options, stock awards and convertible notes. | |||||||||
Accounting_Changes
Accounting Changes | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Changes: | ' |
Accounting Changes | ' |
Note B. | |
Accounting Changes | |
New Standards to be Implemented | |
In July 2013, the Financial Accounting Standards Board (FASB) issued guidance regarding the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Under certain circumstances, unrecognized tax benefits should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The guidance was a change in financial statement presentation only and has no material impact in the consolidated financial results. The guidance was effective January 1, 2014, and the company will adopt it on a prospective basis. | |
In March 2013, the FASB issued guidance on when foreign currency translation adjustments should be released to net income. When a parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity, the parent is required to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. The guidance was effective January 1, 2014 on a prospective basis. It is not expected to have a material impact in the consolidated financial results. | |
In February 2013, the FASB issued guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date. Examples include debt arrangements, other contractual obligations and settled litigation matters. The guidance requires an entity to measure such obligations as the sum of the amount that the reporting entity agreed to pay on the basis of its arrangement among its co-obligors plus additional amounts the reporting entity expects to pay on behalf of its co-obligors. The guidance was effective January 1, 2014 and is not expected to have a material impact in the consolidated financial results. | |
Standards Implemented | |
In July 2013, the FASB issued guidance allowing the use of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a benchmark interest rate for hedge accounting purposes in addition to interest rates on direct Treasury obligations of the United States government and the LIBOR. In addition, the guidance removes the restriction on using different benchmark rates for similar hedges. The guidance became effective on a prospective basis for qualifying new or re-designated hedging relationships entered into on or after July 17, 2013. The company has not utilized the Fed Funds Effective Swap Rate on any financial instrument transactions through December 31, 2013. | |
In February 2013, the FASB issued additional guidance regarding reclassifications out of AOCI. The guidance requires entities to report the effect of significant reclassifications out of AOCI on the respective line items in net income unless the amounts are not reclassified in their entirety to net income. For amounts that are not required to be reclassified in their entirety to net income in the same reporting period, entities are required to cross-reference other disclosures that provide additional detail about those amounts. For the company, the new guidance was effective on a prospective basis for all interim and annual periods beginning January 1, 2013 with early adoption permitted. The company adopted the guidance in its December 31, 2012 financial statements. There was no impact in the consolidated financial results as the guidance related only to additional disclosures. | |
In July 2012, the FASB issued amended guidance that simplifies how entities test indefinite-lived intangible assets other than goodwill for impairment. After an assessment of certain qualitative factors, if it is determined to be more likely than not that an indefinite-lived intangible asset is impaired, entities must perform the quantitative impairment test. Otherwise, the quantitative test is optional. The amended guidance was effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The company adopted this guidance for its 2012 impairment testing of indefinite-lived intangible assets performed in the fourth quarter. There was no impact in the consolidated financial results. | |
In May 2011, the FASB issued amended guidance and disclosure requirements for fair value measurements. These changes were effective January 1, 2012 on a prospective basis. These amendments did not have a material impact in the consolidated financial results. | |
In September 2011, the FASB issued additional disclosure requirements for entities which participate in multi-employer pension plans. The purpose of the new disclosures was to provide financial statement users with information about an employer’s level of participation in these plans and the financial health of significant plans. The new disclosures were effective beginning with the full year 2011 financial statements. The company does not participate in any material multi-employer plans. There was no impact in the consolidated financial results as the changes relate only to additional disclosures. | |
In September 2011, the FASB issued amended guidance that simplified how entities test goodwill for impairment. After an assessment of certain qualitative factors, if it is determined to be more likely than not that the fair value of a reporting unit is less than its carrying amount, entities must perform the quantitative analysis of the goodwill impairment test. Otherwise, the quantitative test(s) is optional. The guidance was effective January 1, 2012 with early adoption permitted. The company adopted this guidance for the 2011 goodwill impairment test. There was no impact in the consolidated financial results. | |
In June 2011, the FASB issued amended disclosure requirements for the presentation of OCI and AOCI. OCI is comprised of costs, expenses, gains and losses that are included in comprehensive income but excluded from net income, and AOCI comprises the aggregated balances of OCI in equity. The amended guidance eliminated the option to present period changes in OCI as part of the Statement of Changes in Equity. Under the amended guidance, all period changes in OCI are to be presented either in a single continuous statement of comprehensive income, or in two separate, but consecutive financial statements. Only summary totals are to be included in the AOCI section of the Statement of Changes in Equity. These changes were effective January 1, 2012 with early adoption permitted. The company adopted the two statement approach effective with its full year 2011 financial statements. There was no impact in the consolidated financial results as the amendments related only to changes in financial statement presentation. | |
In April 2011, the FASB issued new and clarifying guidance and to help creditors in determining whether a creditor has granted a concession, and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring. The new guidance became effective July 1, 2011 applied retrospectively to January 1, 2011. Prospective application was required for any new impairments identified as a result of this guidance. These changes did not have a material impact in the consolidated financial results. | |
In December 2010, the FASB issued amended guidance to clarify the acquisition date that should be used for reporting pro-forma financial information for business combinations. If comparative financial statements are presented, the pro-forma revenue and earnings of the combined entity for the comparable prior reporting period should be reported as though the acquisition date for all business combinations that occurred during the current year had been completed as of the beginning of the comparable prior annual reporting period. The amendments in this guidance were effective on a prospective basis for business combinations for which the acquisition date was on or after January 1, 2011. There was no impact in the consolidated financial results as the amendments related only to additional disclosures. | |
In December 2010, the FASB issued amendments to the guidance on goodwill impairment testing. The amendments modified step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In making that determination, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist. The amendments were effective January 1, 2011 and did not have an impact in the consolidated financial results. | |
AcquisitionsDivestitures
Acquisitions/Divestitures | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Acquisitions/Divestitures | ' | |||||||||||||
Acquisitions/Divestitures | ' | |||||||||||||
Note C. | ||||||||||||||
Acquisitions/Divestitures | ||||||||||||||
Acquisitions | ||||||||||||||
Purchase price consideration for all acquisitions, as reflected in the tables in this note, is paid primarily in cash. All acquisitions are reported in the Consolidated Statement of Cash Flows net of acquired cash and cash equivalents. | ||||||||||||||
2013 | ||||||||||||||
In 2013, the company completed 10 acquisitions at an aggregate cost of $3,219 million. | ||||||||||||||
SoftLayer Technologies, Inc. (SoftLayer)—On July 3, 2013, the company completed the acquisition of 100 percent of the privately held company, SoftLayer, a cloud computing infrastructure provider based in Dallas, Texas for cash consideration of $1,977 million. SoftLayer joins the company’s new cloud services division, which combines SoftLayer with IBM SmartCloud into a global platform. The new division provides a broad range of choices to the company’s clients, ISVs and channel and technology partners. Goodwill of $1,285 million has been assigned to the Global Technology Services ($1,246 million) and Software ($39 million) segments. It is expected that none of the goodwill will be deductible for tax purposes. The overall weighted-average useful life of the identified intangible assets acquired is 7.0 years. | ||||||||||||||
Other Acquisitions — The Software segment completed acquisitions of eight privately held companies: in the first quarter, StoredIQ Inc. (StoredIQ) and Star Analytics, Inc. (Star Analytics); in the second quarter, UrbanCode Inc. (UrbanCode); and in the third quarter, Trusteer, Ltd. (Trusteer) and Daeja Image Systems, Ltd. (Daeja); and in the fourth quarter, Xtify, Inc. (Xtify), The Now Factory and Fiberlink Communications (Fiberlink). Systems and Technology (STG) completed one acquisition: in the third quarter, CSL International (CSL), a privately held company. All acquisitions were for 100 percent of the acquired companies. | ||||||||||||||
The table below reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of December 31, 2013. | ||||||||||||||
2013 Acquisitions | ||||||||||||||
($ in millions) | ||||||||||||||
Amortization | Other | |||||||||||||
Life (in Years) | SoftLayer | Acquisitions | ||||||||||||
Current assets | $ | 80 | $ | 97 | ||||||||||
Fixed assets/noncurrent assets | 300 | 41 | ||||||||||||
Intangible assets | ||||||||||||||
Goodwill | N/A | 1,285 | 961 | |||||||||||
Completed technology | 7-May | 290 | 181 | |||||||||||
Client relationships | 7-Jun | 245 | 97 | |||||||||||
In-process R&D | N/A | 2 | — | |||||||||||
Patents/trademarks | 7-Feb | 75 | 32 | |||||||||||
Total assets acquired | 2,277 | 1,408 | ||||||||||||
Current liabilities | -56 | -61 | ||||||||||||
Noncurrent liabilities | -244 | -105 | ||||||||||||
Total liabilities assumed | -300 | -166 | ||||||||||||
Total purchase price | $ | 1,977 | $ | 1,242 | ||||||||||
N/A - not applicable | ||||||||||||||
In addition to SoftLayer, each acquisition further complemented and enhanced the company’s portfolio of product and services offerings. The acquisition of StoredIQ advances the company’s efforts to help clients derive value from big data. The combination of the company’s and Star Analytics’ software will advance the company’s business analytics initiatives. UrbanCode automates the delivery of software, helping businesses quickly release and update mobile, social, big data and cloud applications. CSL deepens the consolidation cloud capabilities by offering simplified management of the virtualization environment. Trusteer extends the company’s data security capabilities further into the cloud, mobile and endpoint security space. Daeja delivers software that helps employees across all industries, especially data intensive ones such as banking, insurance and healthcare, get faster access to critical business information, and complements the company’s big data capabilities. Xtify is a leading provider of cloud-based mobile messaging tools that help organizations improve mobile sales, drive in-store traffic and engage customers with personalized offers. The Now Factory is a provider of analytics software that helps communications service providers (CSPs) deliver better customer experiences and drive new revenue opportunities. Fiberlink is a mobile management and security company, that supports the company’s expanding vision for enterprise mobility management, which encompasses secure transactions between businesses, partners, and customers. | ||||||||||||||
For the “Other Acquisitions,” the overall weighted-average life of the identified amortizable intangible assets acquired is 6.6 years. These identified intangible assets will be amortized on a straight-line basis over their useful lives. Goodwill of $961 million has been assigned to the Software ($948 million) and Systems and Technology ($13 million) segments. It is expected that approximately 2 percent of the goodwill will be deductible for tax purposes. | ||||||||||||||
On January 17, 2014, the company completed the acquisition of Aspera, Inc. (Aspera), a privately held company based in Emeryville, CA. Aspera’s technology helps companies securely speed the movement of massive data files around the world. At the time of issuance of the financial statements, the initial purchase accounting was not complete for this acquisition. | ||||||||||||||
On February 24, 2014, the company announced that it had signed a definitive agreement to acquire Boston, MA-based Cloudant, Inc., (Cloudant) a privately held database-as-a-service (DBaaS) provider that enables developers to easily and quickly create next generation mobile and web apps. Cloudant will extend the company's big data and analytics, cloud, and mobile offerings by further helping clients take advantage of these key growth initiatives. The acquisition is expected to close in the first quarter of 2014 . | ||||||||||||||
2012 | ||||||||||||||
In 2012, the company completed 11 acquisitions at an aggregate cost of $3,964 million. | ||||||||||||||
Kenexa Corporation (Kenexa)—On December 3, 2012, the company completed the acquisition of 100 percent of Kenexa, a publicly held company, for cash consideration of $1,351 million. Kenexa, a leading provider of recruiting and talent management solutions, brings a unique combination of cloud-based technology and consulting services that integrates both people and processes, providing solutions to engage a smarter, more effective workforce across their most critical businesses functions. Goodwill of $1,014 million was assigned to the Software ($771 million) and Global Technology Services (GTS) ($243 million) segments. As of the acquisition date, it was expected that approximately 10 percent of the goodwill would be deductible for tax purposes. The overall weighted-average useful life of the identified intangible assets acquired was 6.5 years. | ||||||||||||||
Other Acquisitions—The Software segment also completed eight other acquisitions: in the first quarter, Green Hat Software Limited (Green Hat), Emptoris Inc. (Emptoris) and Worklight, Inc. (Worklight), all privately held companies, and DemandTec, Inc. (DemandTec), a publicly held company; in the second quarter, Varicent Software Inc. (Varicent), Vivisimo Inc. (Vivisimo) and Tealeaf Technology Inc. (Tealeaf), all privately held companies; and in the third quarter, Butterfly Software, Ltd. (Butterfly), a privately held company. STG completed two acquisitions: in the first quarter, Platform Computing Corporation (Platform Computing), a privately held company; and in the third quarter, Texas Memory Systems (TMS), a privately held company. All acquisitions were for 100 percent of the acquired companies. | ||||||||||||||
The table below reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of December 31, 2012. | ||||||||||||||
2012 Acquisitions | ||||||||||||||
($ in millions) | ||||||||||||||
Amortization | Other | |||||||||||||
Life (in Years) | Kenexa | Acquisitions | ||||||||||||
Current assets | $ | 133 | $ | 278 | ||||||||||
Fixed assets/noncurrent assets | 98 | 217 | ||||||||||||
Intangible assets | ||||||||||||||
Goodwill | N/A | 1,014 | 1,880 | |||||||||||
Completed technology | 7-Mar | 169 | 403 | |||||||||||
Client relationships | 7-Apr | 179 | 194 | |||||||||||
In-process R&D | N/A | — | 11 | |||||||||||
Patents/trademarks | 7-Jan | 39 | 37 | |||||||||||
Total assets acquired | 1,632 | 3,020 | ||||||||||||
Current liabilities | -93 | -143 | ||||||||||||
Noncurrent liabilities | -188 | -264 | ||||||||||||
Total liabilities assumed | -281 | -407 | ||||||||||||
Total purchase price | $ | 1,351 | $ | 2,613 | ||||||||||
N/A - not applicable | ||||||||||||||
Each acquisition further complemented and enhanced the company’s portfolio of product and services offerings. Green Hat helps customers improve the quality of software applications by enabling developers to use cloud computing technologies to conduct testing of a software application prior to its delivery. Emptoris expands the company’s cloud-based analytics offerings that provide supply chain intelligence leading to better inventory management and cost efficiencies. Worklight delivers mobile application management capabilities to clients across a wide range of industries. The acquisition enhanced the company’s comprehensive mobile portfolio, which is designed to help global corporations leverage the proliferation of all mobile devices—from laptops and smartphones to tablets. DemandTec delivers cloud-based analytics software to help organizations improve their price, promotion and product mix within the broad context of enterprise commerce. Varicent’s software automates and analyzes data across sales, finance, human resources and IT departments to uncover trends and optimize sales performance and operations. Vivisimo software automates the discovery of big data, regardless of its format or where it resides, providing decision makers with a view of key business information necessary to drive new initiatives. Tealeaf provides a full suite of customer experience management software, which analyzes interactions on websites and mobile devices. Butterfly offers storage planning software and storage migration tools, helping companies save storage space, operational time, IT budget and power consumption. Platform Computing’s focused technical and distributed computing management software helps clients create, integrate and manage shared computing environments that are used in compute-and-data intensive applications such as simulations, computer modeling and analytics. TMS designs and sells high-performance solid state storage solutions. | ||||||||||||||
For the “Other Acquisitions,” the overall weighted-average life of the identified amortizable intangible assets acquired is 6.6 years. These identified intangible assets will be amortized on a straight-line basis over their useful lives. Goodwill of $1,880 million was assigned to the Software ($1,412 million), Global Business Services (GBS) ($5 million), GTS ($21 million) and STG ($443 million) segments. As of the acquisition dates, it was expected that approximately 15 percent of the goodwill would be deductible for tax purposes. | ||||||||||||||
2011 | ||||||||||||||
In 2011, the company completed five acquisitions of privately held companies at an aggregate cost of $1,849 million. | ||||||||||||||
These acquisitions were completed as follows: in the second quarter, TRIRIGA, Inc. (TRIRIGA); and in the fourth quarter, i2, Algorithmics, Inc. (Algorithmics), Q1 Labs and Curam Software Ltd. (Curam Software). TRIRIGA was integrated into the Software and GBS segments upon acquisition. All acquisitions were integrated into the Software segment upon acquisition. All acquisitions reflected 100 percent ownership of the acquired companies. | ||||||||||||||
TRIRIGA is a provider of facility and real estate management software solutions, which help clients make strategic decisions regarding space usage, evaluate alternative real estate initiatives, generate higher returns from capital projects and assess environmental impact investments. The acquisition added advanced real estate intelligence to the company’s smarter buildings initiative. i2 expanded the company’s Big Data analytics software for Smarter Cities by helping both public and private entities in government, law enforcement, retail, insurance and other industries access and analyze information they need to address crime, fraud and security threats. Algorithmics provides software and services for improved business insights at financial and insurance institutions to assess risk and address regulatory challenges. Q1 Labs is a provider of security intelligence software and accelerates efforts to help clients more intelligently secure their enterprises by applying analytics to correlate information from key security domains and creating security dashboards for their organizations. Curam Software is a provider of software and services which help governments improve the efficiency, effectiveness and accessibility of social programs for Smarter Cities. | ||||||||||||||
The overall weighted-average life of the indentified intangible assets acquired was 6.9 years. These identified intangible assets will be amortized on a straight-line basis over their useful lives. Goodwill of $1,291 million was assigned to the Software ($1,277 million) and GBS ($14 million) segments. As of the acquisition dates, it was expected that approximately 25 percent of the goodwill would be deductible for tax purposes. | ||||||||||||||
The table below reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of December 31, 2011. | ||||||||||||||
2011 Acquisitions | ||||||||||||||
($ in millions) | ||||||||||||||
Amortization | Total | |||||||||||||
Life (in Years) | Acquisitions | |||||||||||||
Current assets | $ | 251 | ||||||||||||
Fixed assets/noncurrent assets | 88 | |||||||||||||
Intangible assets | ||||||||||||||
Goodwill | N/A | 1,291 | ||||||||||||
Completed technology | 7 | 320 | ||||||||||||
Client relationships | 7 | 222 | ||||||||||||
Patents/trademarks | 7-Jan | 17 | ||||||||||||
Total assets acquired | 2,190 | |||||||||||||
Current liabilities | -191 | |||||||||||||
Noncurrent liabilities | -150 | |||||||||||||
Total liabilities assumed | -341 | |||||||||||||
Total purchase price | $ | 1,849 | ||||||||||||
N/A - not applicable | ||||||||||||||
Divestitures | ||||||||||||||
2014 | ||||||||||||||
On January 23, 2014, IBM and Lenovo Group Limited (Lenovo) announced a definitive agreement in which Lenovo will acquire the company's x86 server portfolio for $2.3 billion, consisting of approximately $2 billion in cash, with the balance in Lenovo stock. The stock will represent less than 5 percent equity ownership in Lenovo. The company will sell to Lenovo its System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations. | ||||||||||||||
IBM and Lenovo plan to enter into a strategic relationship which will include a global OEM and reseller agreement for sales of IBM’s industry-leading entry and midrange Storwize disk storage systems, tape storage systems, General Parallel File System software, SmartCloud Entry offering, and elements of IBM’s system software, including Systems Director and Platform Computing solutions. Following the closing of the transaction, Lenovo will assume related customer service and maintenance operations. IBM will continue to provide maintenance delivery on Lenovo’s behalf for an extended period of time. | ||||||||||||||
The transaction will be completed as soon as is practical, subject to the satisfaction of regulatory requirements, customary closing conditions and any other required approvals. The transaction is expected to be completed in phases, with the initial closing in the second half of 2014. Subsequent local closings will occur subject to similar conditions, agreements and the information and consultation process in applicable countries. | ||||||||||||||
The company expects to recognize a pre-tax gain on the sale. This gain will be recognized consistent with the closing schedule for the transaction. The exact amount of the gain and the breakdown by closing date is not yet determinable. The variables that can impact the final gain include the valuation of the final balance sheet transferred, the valuation of other related agreements and transaction-related expenses. See “Looking Forward” on page 64 for additional information. | ||||||||||||||
The company's worldwide x86 business is reported in the Systems and Technology segment, and the associated maintenance operations are part of the Global Technology Services segment. In 2013, this combined business delivered approximately $4.6 billion of revenue, and was essentially breakeven on a pre-tax income basis. | ||||||||||||||
2013 | ||||||||||||||
On September 10, 2013, IBM and SYNNEX announced a definitive agreement in which SYNNEX will acquire the company’s worldwide customer care business process outsourcing services business for $505 million, consisting of approximately $430 million in cash, net of balance sheet adjustments, and $75 million in SYNNEX stock, which represents less than 5 percent equity ownership in SYNNEX. As part of the transaction, SYNNEX will enter into a multi-year agreement with the company, and Concentrix, SYNNEX’s outsourcing business, will become an IBM strategic business partner for global customer care business process outsourcing services. | ||||||||||||||
The transaction will be completed in phases — the initial closing was completed on January 31, 2014, with subsequent closings expected to be completed in the second quarter of 2014, subject to customary closing conditions, local agreements and the information and consultation process in applicable countries. The company expects to recognize a total pre-tax gain on the sale of between $150 - $175 million. This gain will be recognized consistent with the closing schedule for the transaction. The company’s worldwide customer care business process outsourcing services and industry process services are included in the Global Technology Services segment. In 2013, the divested business delivered $1.3 billion of revenue, approximately 1 percent of the company’s total revenue, approximately $0.1 billion of pre-tax income, and had approximately $50 million in tangible assets. | ||||||||||||||
In the first quarter of 2013, the company completed the divestiture of its Showcase Reporting product set to Help/Systems. Showcase Reporting, which was acquired by the company through the SPSS acquisition in 2009, is an enterprise-class business intelligence platform that enables customers to build and manage analytical reporting environments. | ||||||||||||||
In the fourth quarter of 2013, the company completed two divestitures, the Applicazioni Contabili Gestionali (ACG) business and the Cognos Application Development Tools (ADT) business. | ||||||||||||||
The ACG business was purchased by TeamSystem. The ACG product is an Italian Enterprise Resource Planning solution for small- and medium- sized companies. The Cognos ADT business was purchased by UNICOM Systems, Inc. The Cognos ADT product suite represents a legacy family of products that provide application development environments that would enable programmers to develop COBOL applications at a higher productivity level. | ||||||||||||||
Financial terms of each transaction were not disclosed and did not have a material impact in the consolidated financial results. | ||||||||||||||
2012 | ||||||||||||||
On April 17, 2012, the company announced that it had signed a definitive agreement with Toshiba TEC for the sale of its Retail Store Solutions business to Toshiba TEC. As part of the transaction, Toshiba TEC and the company also signed a multi-year business partner agreement to integrate retail store solutions for Smarter Commerce. The transaction price was $850 million, and the company received approximately $800 million in cash, net of closing date working capital adjustments. | ||||||||||||||
Through December 31, 2012, the company completed the first three phases of the sale. For the completed phases, the company received net proceeds of $546 million, recorded a note receivable of $251 million and recognized a net pre-tax gain of $446 million. The gain was net of the fair value of certain contractual terms, certain transaction costs and the assets and liabilities sold. The gain was recorded in other (income) and expense in the Consolidated Statement of Earnings and the net proceeds are reflected within divestitures of businesses, net of cash transferred within cash flows from investing activities in the Consolidated Statement of Cash Flows. In addition, in the third quarter, the company acquired a 19.9 percent ownership interest for $161 million in Toshiba Global Commerce Solutions Holding Corporation, the new holding company that Toshiba TEC established for the business. The company will retain this ownership for a period of three years at which time Toshiba TEC will purchase the company’s equity interest for the initial acquisition value. This investment was recorded in investments and sundry assets in the Consolidated Statement of Financial Position and the payment was reflected within purchases of marketable securities and other investments within cash flows from investing activities in the Consolidated Statement of Cash Flows. | ||||||||||||||
The company closed additional phases of the divestiture in 2013. Overall, the company has recognized a pre-tax gain on the sale of $463 million through December 31, 2013. | ||||||||||||||
2011 | ||||||||||||||
During the fourth quarter of 2011, the company completed the divestiture of the iCluster business to Rocket Software. iCluster, which was acquired in the Data Mirror acquisition in 2007, was part of the Software business. This transaction was not material to the consolidated financial results. | ||||||||||||||
During the second quarter of 2011, the company completed two divestitures related to subsidiaries of IBM Japan. The impact of these transactions was not material to the consolidated financial results. |
Financial_Instruments
Financial Instruments | 12 Months Ended | |||||||||||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||||||||||
Financial Instruments | ' | |||||||||||||||||||||||||||||||||
Financial Instruments | ' | |||||||||||||||||||||||||||||||||
Note D. | ||||||||||||||||||||||||||||||||||
Financial Instruments | ||||||||||||||||||||||||||||||||||
Fair Value Measurements | ||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||||||||||||||||||||||||||||||||
The following tables present the company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at December 31, 2013 and 2012. | ||||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
At December 31, 2013: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||
Cash equivalents(1) | ||||||||||||||||||||||||||||||||||
Time deposits and certificates of deposit | $ | — | $ | 4,754 | $ | — | $ | 4,754 | ||||||||||||||||||||||||||
Commercial paper | — | 1,507 | — | 1,507 | ||||||||||||||||||||||||||||||
Money market funds | 1,728 | — | — | 1,728 | ||||||||||||||||||||||||||||||
Other securities | — | 8 | — | 8 | ||||||||||||||||||||||||||||||
Total | 1,728 | 6,269 | — | 7,997 | -6 | |||||||||||||||||||||||||||||
Debt securities — current (2) | — | 350 | — | 350 | -6 | |||||||||||||||||||||||||||||
Debt securities — noncurrent (3) | 1 | 7 | — | 9 | ||||||||||||||||||||||||||||||
Available-for-sale equity investments (3) | 18 | — | — | 18 | ||||||||||||||||||||||||||||||
Derivative assets (4) | ||||||||||||||||||||||||||||||||||
Interest rate contracts | — | 308 | — | 308 | ||||||||||||||||||||||||||||||
Foreign exchange contracts | — | 375 | — | 375 | ||||||||||||||||||||||||||||||
Equity contracts | — | 36 | — | 36 | ||||||||||||||||||||||||||||||
Total | — | 719 | — | 719 | -7 | |||||||||||||||||||||||||||||
Total assets | $ | 1,747 | $ | 7,345 | $ | — | $ | 9,092 | -7 | |||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||
Derivative liabilities (5) | ||||||||||||||||||||||||||||||||||
Interest rate contracts | $ | — | $ | 13 | $ | — | $ | 13 | ||||||||||||||||||||||||||
Foreign exchange contracts | — | 484 | — | 484 | ||||||||||||||||||||||||||||||
Equity contracts | — | 4 | — | 4 | ||||||||||||||||||||||||||||||
Total liabilities | $ | — | $ | 501 | $ | — | $ | 501 | -7 | |||||||||||||||||||||||||
(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||||||
(2) Commercial paper reported as marketable securities in the Consolidated Statement of | ||||||||||||||||||||||||||||||||||
Financial Position. | ||||||||||||||||||||||||||||||||||
(3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||||||
(4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments | ||||||||||||||||||||||||||||||||||
and sundry assets in the Consolidated Statement of Financial Position at December 31, 2013 were $318 million | ||||||||||||||||||||||||||||||||||
and $401 million, respectively. | ||||||||||||||||||||||||||||||||||
(5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Statement of Financial Position at December 31, 2013 were $375 million and $126 million, respectively. | ||||||||||||||||||||||||||||||||||
(6) Available-for-sale securities with carrying values that approximate fair value. | ||||||||||||||||||||||||||||||||||
(7) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated | ||||||||||||||||||||||||||||||||||
Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $251 | ||||||||||||||||||||||||||||||||||
million each. | ||||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
At December 31, 2012: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||
Cash equivalents(1) | ||||||||||||||||||||||||||||||||||
Time deposits and certificates of deposit | $ | — | $ | 3,694 | $ | — | $ | 3,694 | ||||||||||||||||||||||||||
Commercial paper | — | 2,098 | — | 2,098 | ||||||||||||||||||||||||||||||
Money market funds | 1,923 | — | — | 1,923 | ||||||||||||||||||||||||||||||
Other securities | — | 30 | — | 30 | ||||||||||||||||||||||||||||||
Total | 1,923 | 5,823 | — | 7,746 | -6 | |||||||||||||||||||||||||||||
Debt securities — current (2) | — | 717 | — | 717 | -6 | |||||||||||||||||||||||||||||
Debt securities — noncurrent (3) | 2 | 8 | 10 | |||||||||||||||||||||||||||||||
Available-for-sale equity investments (3) | 34 | — | — | 34 | ||||||||||||||||||||||||||||||
Derivative assets (4) | ||||||||||||||||||||||||||||||||||
Interest rate contracts | — | 604 | — | 604 | ||||||||||||||||||||||||||||||
Foreign exchange contracts | — | 305 | — | 305 | ||||||||||||||||||||||||||||||
Equity contracts | — | 9 | — | 9 | ||||||||||||||||||||||||||||||
Total | — | 918 | — | 918 | -7 | |||||||||||||||||||||||||||||
Total assets | $ | 1,959 | $ | 7,466 | $ | — | $ | 9,424 | -7 | |||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||
Derivative liabilities (5) | ||||||||||||||||||||||||||||||||||
Foreign exchange contracts | $ | — | $ | 496 | $ | — | $ | 496 | ||||||||||||||||||||||||||
Equity contracts | — | 7 | — | 7 | ||||||||||||||||||||||||||||||
Total liabilities | $ | — | $ | 503 | $ | — | $ | 503 | -7 | |||||||||||||||||||||||||
(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||||||
(2) Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of | ||||||||||||||||||||||||||||||||||
Financial Position. | ||||||||||||||||||||||||||||||||||
(3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||||||
(4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments | ||||||||||||||||||||||||||||||||||
and sundry assets in the Consolidated Statement of Financial Position at December 31, 2012 were $333 million and | ||||||||||||||||||||||||||||||||||
$585 million, respectively. | ||||||||||||||||||||||||||||||||||
(5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other | ||||||||||||||||||||||||||||||||||
liabilities in the Consolidated Statement of Financial Position at December 31, 2012 were $426 million and $78 | ||||||||||||||||||||||||||||||||||
million, respectively. | ||||||||||||||||||||||||||||||||||
(6) Available-for-sale securities with carrying values that approximate fair value. | ||||||||||||||||||||||||||||||||||
(7) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated | ||||||||||||||||||||||||||||||||||
Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $262 | ||||||||||||||||||||||||||||||||||
million each. | ||||||||||||||||||||||||||||||||||
There were no transfers between Levels 1 and 2 for the years ended December 31, 2013 and 2012. | ||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Not Measured at Fair Value | ||||||||||||||||||||||||||||||||||
Short-Term Receivables and Payables | ||||||||||||||||||||||||||||||||||
Notes and other accounts receivable and other investments are financial assets with carrying values that approximate fair value. Accounts payable, other accrued expenses and short-term debt (excluding the current portion of long-term debt) are financial liabilities with carrying values that approximate fair value. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. | ||||||||||||||||||||||||||||||||||
Loans and Long-Term Receivables | ||||||||||||||||||||||||||||||||||
Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At December 31, 2013 and 2012, the difference between the carrying amount and estimated fair value for loans and long-term receivables was immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. | ||||||||||||||||||||||||||||||||||
Long-Term Debt | ||||||||||||||||||||||||||||||||||
Fair value of publicly traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. The carrying amount of long-term debt is $32,856 million and $24,088 million and the estimated fair value is $34,555 million and $27,119 million at December 31, 2013 and 2012, respectively. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy. | ||||||||||||||||||||||||||||||||||
Debt and Marketable Equity Securities | ||||||||||||||||||||||||||||||||||
The company’s cash equivalents and current debt securities are considered available-for-sale and recorded at fair value, which is not materially different from carrying value, in the Consolidated Statement of Financial Position. The tables on the following page summarize the company’s noncurrent debt and marketable equity securities which are also considered available-for-sale and recorded at fair value in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | |||||||||||||||||||||||||||||||
At December 31, 2013: | Cost | Gains | Losses | Value | ||||||||||||||||||||||||||||||
Debt securities – noncurrent(1) | $ | 7 | $ | 1 | $ | — | $ | 9 | ||||||||||||||||||||||||||
Available-for-sale equity investments(1) | $ | 20 | $ | 2 | $ | 4 | $ | 18 | ||||||||||||||||||||||||||
-1 | Included within investments and sundry assets in the Consolidated Statement of Financial Position. | |||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | |||||||||||||||||||||||||||||||
At December 31, 2012: | Cost | Gains | Losses | Value | ||||||||||||||||||||||||||||||
Debt securities – noncurrent(1) | $ | 8 | $ | 2 | $ | — | $ | 10 | ||||||||||||||||||||||||||
Available-for-sale equity investments(1) | $ | 31 | $ | 4 | $ | 1 | $ | 34 | ||||||||||||||||||||||||||
-1 | Included within investments and sundry assets in the Consolidated Statement of Financial Position. | |||||||||||||||||||||||||||||||||
Based on an evaluation of available evidence as of December 31, 2013, the company believes that unrealized losses on debt and available-for-sale equity securities are temporary and do not represent an other-than-temporary impairment. | ||||||||||||||||||||||||||||||||||
Sales of debt and available-for-sale equity investments during the period were as follows: | ||||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||||||||||
Proceeds | $ | 41 | $ | 112 | $ | 405 | ||||||||||||||||||||||||||||
Gross realized gains (before taxes) | 13 | 45 | 232 | |||||||||||||||||||||||||||||||
Gross realized losses (before taxes) | 5 | 1 | 0 | |||||||||||||||||||||||||||||||
The after-tax net unrealized gains/(losses) on available-for-sale debt and equity securities that have been included in other comprehensive income/(loss) and the after-tax net (gains)/losses reclassified from accumulated other comprehensive income/(loss) to net income were as follows: | ||||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | ||||||||||||||||||||||||||||||||
Net unrealized gains/(losses) arising during the period | $ | 0 | $ | 17 | ||||||||||||||||||||||||||||||
Net unrealized (gains)/losses reclassified to net income* | -5 | -25 | ||||||||||||||||||||||||||||||||
* | Includes writedowns of $2.0 million in 2012. | |||||||||||||||||||||||||||||||||
The contractual maturities of substantially all available-for-sale debt securities are less than one year at December 31, 2013. | ||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | ||||||||||||||||||||||||||||||||||
The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations. | ||||||||||||||||||||||||||||||||||
As a result of the use of derivative instruments, the company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the company has a policy of only entering into contracts with carefully selected major financial institutions based upon their overall credit profile. The company’s established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. The right of set-off that exists under certain of these arrangements enables the legal entities of the company subject to the arrangement to net amounts due to and from the counterparty reducing the maximum loss from credit risk in the event of counterparty default. | ||||||||||||||||||||||||||||||||||
The company is also a party to collateral security arrangements with most of its major derivative counterparties. These arrangements require the company to hold or post collateral (cash or U.S. Treasury securities) when the derivative fair values exceed contractually established thresholds. Posting thresholds can be fixed or can vary based on credit default swap pricing or credit ratings received from the major credit agencies. The aggregate fair value of all derivative instruments under these collateralized arrangements that were in a liability position at December 31, 2013 and 2012 was $216 million and $94 million, respectively, for which no collateral was posted at either date. Full collateralization of these agreements would be required in the event that the company’s credit rating falls below investment grade or if its credit default swap spread exceeds 250 basis points, as applicable, pursuant to the terms of the collateral security arrangements. The aggregate fair value of derivative instruments in net asset positions as of December 31, 2013 and 2012 was $719 million and $918 million, respectively. This amount represents the maximum exposure to loss at the reporting date as a result of the counterparties failing to perform as contracted. This exposure was reduced by $251 million and $262 million at December 31, 2013 and 2012, respectively, of liabilities included in master netting arrangements with those counterparties. Additionally, at December 31, 2013 and 2012, this exposure was reduced by $29 million and $69 million of cash collateral, respectively, received by the company. At December 31, 2013 and 2012, the net exposure related to derivative assets recorded in the Statement of Financial Position was $439 million and $587 million, respectively. At December 31, 2013 and 2012, the net amount related to derivative liabilities recorded in the Statement of Financial Position was $250 million and $242 million, respectively. | ||||||||||||||||||||||||||||||||||
In the Consolidated Statement of Financial Position, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments. No amount was recognized in other receivables at December 31, 2013 and 2012 for the right to reclaim cash collateral. The amount recognized in accounts payable for the obligation to return cash collateral totaled $29 million and $69 million at December 31, 2013 and 2012, respectively. The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in prepaid expenses and other current assets in the Consolidated Statement of Financial Position. No amount was rehypothecated at December 31, 2013 and 2012. At December 31, 2013 and 2012 the company held $0 million and $31 million in non-cash collateral in U.S. Treasury securities. Per accounting guidance, non-cash collateral is not recorded on the Statement of Financial Position. | ||||||||||||||||||||||||||||||||||
The company may employ derivative instruments to hedge the volatility in stockholders’ equity resulting from changes in currency exchange rates of significant foreign subsidiaries of the company with respect to the U.S. dollar. These instruments, designated as net investment hedges, expose the company to liquidity risk as the derivatives have an immediate cash flow impact upon maturity which is not offset by a cash flow from the translation of the underlying hedged equity. The company monitors this cash loss potential on an ongoing basis, and may discontinue some of these hedging relationships by de-designating or terminating the derivative instrument in order to manage the liquidity risk. Although not designated as accounting hedges, the company may utilize derivatives to offset the changes in the fair value of the de-designated instruments from the date of de-designation until maturity. | ||||||||||||||||||||||||||||||||||
In its hedging programs, the company uses forward contracts, futures contracts, interest-rate swaps and cross-currency swaps, depending upon the underlying exposure. The company is not a party to leveraged derivative instruments. | ||||||||||||||||||||||||||||||||||
A brief description of the major hedging programs, categorized by underlying risk, follows. | ||||||||||||||||||||||||||||||||||
Interest Rate Risk | ||||||||||||||||||||||||||||||||||
Fixed and Variable Rate Borrowings | ||||||||||||||||||||||||||||||||||
The company issues debt in the global capital markets, principally to fund its financing lease and loan portfolio. Access to cost-effective financing can result in interest rate mismatches with the underlying assets. To manage these mismatches and to reduce overall interest cost, the company uses interest rate swaps to convert specific fixed-rate debt issuances into variable-rate debt (i.e., fair value hedges) and to convert specific variable-rate debt issuances into fixed-rate debt (i.e., cash flow hedges). At December 31, 2013 and 2012, the total notional amount of the company’s interest rate swaps was $3.1 billion and $4.3 billion, respectively. The weighted-average remaining maturity of these instruments at December 31, 2013 and 2012 was approximately 10.6 years and 5.1 years, respectively. | ||||||||||||||||||||||||||||||||||
Forecasted Debt Issuance | ||||||||||||||||||||||||||||||||||
The company is exposed to interest rate volatility on future debt issuances. To manage this risk, the company may use forward-starting interest rate swaps to lock in the rate on the interest payments related to the forecasted debt issuance. These swaps are accounted for as cash flow hedges. The company did not have any derivative instruments relating to this program outstanding at December 31, 2013 and 2012. | ||||||||||||||||||||||||||||||||||
At December 31, 2013 and 2012, net gains of approximately $1 million (before taxes), respectively, were recorded in AOCI in connection with cash flow hedges of the company’s borrowings. Within these amounts, less than $1 million of gains, respectively, are expected to be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying transactions. | ||||||||||||||||||||||||||||||||||
Foreign Exchange Risk | ||||||||||||||||||||||||||||||||||
Long-Term Investments in Foreign Subsidiaries | ||||||||||||||||||||||||||||||||||
(Net Investment) | ||||||||||||||||||||||||||||||||||
A large portion of the company’s foreign currency denominated debt portfolio is designated as a hedge of net investment in foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates in the functional currency of major foreign subsidiaries with respect to the U.S. dollar. The company also uses cross-currency swaps and foreign exchange forward contracts for this risk management purpose. At December 31, 2013 and 2012, the total notional amount of derivative instruments designated as net investment hedges was $3.0 billion and $3.3 billion, respectively. The weighted-average remaining maturity of these instruments at December 31, 2013 and 2012 was approximately 0.4 years for both periods. | ||||||||||||||||||||||||||||||||||
Anticipated Royalties and Cost Transactions | ||||||||||||||||||||||||||||||||||
The company’s operations generate significant nonfunctional currency, third-party vendor payments and intercompany payments for royalties and goods and services among the company’s non-U.S. subsidiaries and with the parent company. In anticipation of these foreign currency cash flows and in view of the volatility of the currency markets, the company selectively employs foreign exchange forward contracts to manage its currency risk. These forward contracts are accounted for as cash flow hedges. The maximum length of time over which the company is hedging its exposure to the variability in future cash flows is four years. At December 31, 2013 and 2012, the total notional amount of forward contracts designated as cash flow hedges of forecasted royalty and cost transactions was $10.2 billion and $10.7 billion, respectively, with a weighted-average remaining maturity of 0.7 years at both year-end dates. | ||||||||||||||||||||||||||||||||||
At December 31, 2013 and 2012, in connection with cash flow hedges of anticipated royalties and cost transactions, the company recorded net losses of $252 million and $138 million (before taxes), respectively, in AOCI. Within these amounts $166 million and $79 million of losses, respectively, are expected to be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions. | ||||||||||||||||||||||||||||||||||
Foreign Currency Denominated Borrowings | ||||||||||||||||||||||||||||||||||
The company is exposed to exchange rate volatility on foreign currency denominated debt. To manage this risk, the company employs cross-currency swaps to convert fixed-rate foreign currency denominated debt to fixed-rate debt denominated in the functional currency of the borrowing entity. These swaps are accounted for as cash flow hedges. The maximum length of time over which the company hedges its exposure to the variability in future cash flows is approximately seven years. At December 31, 2013 the total notional amount of cross currency swaps designated as cash flow hedges of foreign currency denominated debt was $1.2 billion. At December 31, 2012, no instruments relating to this program were outstanding. | ||||||||||||||||||||||||||||||||||
At December 31, 2013, in connection with cash flow hedges of foreign currency denominated borrowings, the company recorded net losses of $9 million (before taxes) in AOCI. Within this amount, $3 million of losses is expected to be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying exposure. | ||||||||||||||||||||||||||||||||||
Subsidiary Cash and Foreign Currency | ||||||||||||||||||||||||||||||||||
Asset/Liability Management | ||||||||||||||||||||||||||||||||||
The company uses its Global Treasury Centers to manage the cash of its subsidiaries. These centers principally use currency swaps to convert cash flows in a cost-effective manner. In addition, the company uses foreign exchange forward contracts to economically hedge, on a net basis, the foreign currency exposure of a portion of the company’s nonfunctional currency assets and liabilities. The terms of these forward and swap contracts are generally less than one year. The changes in the fair values of these contracts and of the underlying hedged exposures are generally offsetting and are recorded in other (income) and expense in the Consolidated Statement of Earnings. At December 31, 2013 and 2012, the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $14.7 billion and $12.9 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 Statement of Earnings. Although not designated as accounting hedges, the company utilizes derivatives, including equity swaps and futures, to economically hedge the exposures related to its employee compensation obligations. The derivatives are linked to the total return on certain broad market indices or the total return on the company’s common stock. They are recorded at fair value with gains or losses also reported in SG&A expense in the Consolidated Statement of Earnings. At December 31, 2013 and 2012, the total notional amount of derivative instruments in economic hedges of these compensation obligations was $1.3 billion and $1.2 billion, respectively. | ||||||||||||||||||||||||||||||||||
Other Risks | ||||||||||||||||||||||||||||||||||
The company may hold warrants to purchase shares of common stock in connection with various investments that are deemed derivatives because they contain net share or net cash settlement provisions. The company records the changes in the fair value of these warrants in other (income) and expense in the Consolidated Statement of Earnings. The company did not have any warrants qualifying as derivatives outstanding at December 31, 2013 and 2012. | ||||||||||||||||||||||||||||||||||
The company is exposed to a potential loss if a client fails to pay amounts due under contractual terms. The company utilizes credit default swaps to economically hedge its credit exposures. These derivatives have terms of one year or less. The swaps are recorded at fair value with gains and losses reported in other (income) and expense in the Consolidated Statement of Earnings. The company did not have any derivative instruments relating to this program outstanding at December 31, 2013 and 2012. | ||||||||||||||||||||||||||||||||||
The following tables provide a quantitative summary of the derivative and non-derivative instrument- related risk management activity as of December 31, 2013 and 2012 as well as for the years ended December 31, 2013, 2012 and 2011, respectively. | ||||||||||||||||||||||||||||||||||
Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position | ||||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
Fair Value of Derivative Assets | Fair Value of Derivative Liabilities | |||||||||||||||||||||||||||||||||
Balance Sheet | Balance Sheet | |||||||||||||||||||||||||||||||||
At December 31: | Classification | 2013 | 2012 | Classification | 2013 | 2012 | ||||||||||||||||||||||||||||
Designated as hedging | ||||||||||||||||||||||||||||||||||
instruments: | ||||||||||||||||||||||||||||||||||
Interest rate contracts | Prepaid expenses and | Other accrued | ||||||||||||||||||||||||||||||||
other current assets | $ | — | $ | 47 | expenses and liabilities | $ | 0 | $ | — | |||||||||||||||||||||||||
Investments and sundry | ||||||||||||||||||||||||||||||||||
assets | 308 | 557 | Other liabilities | 13 | — | |||||||||||||||||||||||||||||
Foreign exchange | Prepaid expenses and | Other accrued | ||||||||||||||||||||||||||||||||
contracts | other current assets | 187 | 135 | expenses and liabilities | 331 | 267 | ||||||||||||||||||||||||||||
Investments and sundry | ||||||||||||||||||||||||||||||||||
assets | 26 | 5 | Other liabilities | 112 | 78 | |||||||||||||||||||||||||||||
Fair value of derivative | Fair value of derivative | |||||||||||||||||||||||||||||||||
assets | $ | 522 | $ | 744 | liabilities | $ | 456 | $ | 345 | |||||||||||||||||||||||||
Not designated as | ||||||||||||||||||||||||||||||||||
hedging instruments | ||||||||||||||||||||||||||||||||||
Foreign exchange | Prepaid expenses and | Other accrued | ||||||||||||||||||||||||||||||||
contracts | other current assets | $ | 94 | $ | 142 | expenses and liabilities | $ | 40 | $ | 152 | ||||||||||||||||||||||||
Investments and sundry | ||||||||||||||||||||||||||||||||||
assets | 67 | 23 | Other liabilities | 1 | — | |||||||||||||||||||||||||||||
Equity contracts | Prepaid expenses and | Other accrued | ||||||||||||||||||||||||||||||||
other current assets | 36 | 9 | expenses and liabilities | 4 | 7 | |||||||||||||||||||||||||||||
Fair value of derivative | Fair value of derivative | |||||||||||||||||||||||||||||||||
assets | $ | 197 | $ | 174 | liabilities | $ | 45 | $ | 159 | |||||||||||||||||||||||||
Total debt designated as | ||||||||||||||||||||||||||||||||||
hedging instruments | ||||||||||||||||||||||||||||||||||
Short-term debt | N/A | N/A | $ | 190 | $ | 578 | ||||||||||||||||||||||||||||
Long-term debt | N/A | N/A | 6,111 | 3,035 | ||||||||||||||||||||||||||||||
Total | $ | 719 | $ | 918 | $ | 6,802 | $ | 4,116 | ||||||||||||||||||||||||||
N/A-not applicable | ||||||||||||||||||||||||||||||||||
The Effect of Derivative Instruments in the Consolidated Statement of Earnings | ||||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
Gain/(Loss) Recognized in Earnings | ||||||||||||||||||||||||||||||||||
Consolidated | ||||||||||||||||||||||||||||||||||
Statement of | ||||||||||||||||||||||||||||||||||
Earnings | Recognized on | Attributable to Risk | ||||||||||||||||||||||||||||||||
Line Item | Derivatives(1) | Being Hedged(2) | ||||||||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||||||
Derivative instruments | ||||||||||||||||||||||||||||||||||
in fair value hedges | ||||||||||||||||||||||||||||||||||
Interest rate contracts | Cost of financing | $ | -109 | $ | 65 | $ | 271 | $ | 202 | $ | 59 | $ | -117 | |||||||||||||||||||||
Interest expense | -74 | 55 | 205 | 138 | 50 | -89 | ||||||||||||||||||||||||||||
Derivative instruments not | ||||||||||||||||||||||||||||||||||
designated as hedging instruments(1) | ||||||||||||||||||||||||||||||||||
Foreign exchange contracts | Other (income) | |||||||||||||||||||||||||||||||||
and expense | -328 | -311 | 352 | N/A | N/A | N/A | ||||||||||||||||||||||||||||
Equity contracts | SG&A expense | 164 | 110 | 42 | N/A | N/A | N/A | |||||||||||||||||||||||||||
Warrants | Other (income) | |||||||||||||||||||||||||||||||||
and expense | — | — | 10 | N/A | N/A | N/A | ||||||||||||||||||||||||||||
Total | $ | -347 | $ | -81 | $ | 880 | $ | 340 | $ | 108 | $ | -206 | ||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
Gain/(Loss) Recognized in Earnings and Other Comprehensive Income | ||||||||||||||||||||||||||||||||||
Consolidated | ||||||||||||||||||||||||||||||||||
Statement of | (Ineffectiveness) and | |||||||||||||||||||||||||||||||||
Effective Portion | Earnings | Effective Portion | Amounts Excluded from | |||||||||||||||||||||||||||||||
For the year | Recognized in OCI | Line Item | Reclassified from AOCI | Effectiveness Testing(3) | ||||||||||||||||||||||||||||||
ended December 31: | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||
Derivative instruments | ||||||||||||||||||||||||||||||||||
in cash flow hedges | ||||||||||||||||||||||||||||||||||
Interest rate contracts | $ | — | $ | — | $ | — | Interest expense | $ | — | $ | -6 | $ | -8 | $ | — | $ | — | $ | — | |||||||||||||||
Foreign exchange | 43 | 32 | -266 | Other (income) | ||||||||||||||||||||||||||||||
contracts | and expense | 162 | 237 | -247 | 0 | 3 | -3 | |||||||||||||||||||||||||||
Cost of sales | -34 | 7 | -182 | — | — | — | ||||||||||||||||||||||||||||
SG&A expense | 39 | 16 | -74 | — | — | — | ||||||||||||||||||||||||||||
Instruments in net | ||||||||||||||||||||||||||||||||||
investment hedges(4) | ||||||||||||||||||||||||||||||||||
Foreign exchange | ||||||||||||||||||||||||||||||||||
contracts | 173 | -26 | 45 | Interest expense | — | — | 0 | 3 | 11 | -9 | ||||||||||||||||||||||||
Total | $ | 216 | $ | 6 | $ | -221 | $ | 167 | $ | 253 | $ | -511 | $ | 3 | $ | 14 | $ | -12 | ||||||||||||||||
(1) The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. | ||||||||||||||||||||||||||||||||||
(2) The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. | ||||||||||||||||||||||||||||||||||
(3) The amount of gain/(loss) recognized in income represents ineffectiveness on hedge relationships. | ||||||||||||||||||||||||||||||||||
(4) Instruments in net investment hedges include derivative and non-derivative instruments. | ||||||||||||||||||||||||||||||||||
N/A—Not applicable | ||||||||||||||||||||||||||||||||||
For the 12 months ending December 31, 2013, 2012 and 2011, there were no significant gains or losses recognized in earnings representing hedge ineffectiveness or excluded from the assessment of hedge effectiveness (for fair value hedges), or associated with an underlying exposure that did not or was not expected to occur (for cash flow hedges); nor are there any anticipated in the normal course of business. | ||||||||||||||||||||||||||||||||||
Refer to note A, “Significant Accounting Policies,” on pages 90 and 91 for additional information on the company’s use of derivative financial instruments. |
Inventories
Inventories | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Inventories | ' | |||||||
Inventories | ' | |||||||
Note E. | ||||||||
Inventories | ||||||||
($ in millions) | ||||||||
At December 31: | 2013 | 2012 | ||||||
Finished goods | $ | 444 | $ | 475 | ||||
Work in process and raw materials | 1,866 | 1,812 | ||||||
Total | $ | 2,310 | $ | 2,287 |
Financing_Receivables
Financing Receivables | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Financing Receivables | ' | ||||||||||||||
Financing Receivables | ' | ||||||||||||||
Note F. | |||||||||||||||
Financing Receivables | |||||||||||||||
The following table presents financing receivables, net of allowances for credit losses, including residual values. | |||||||||||||||
($ in millions) | |||||||||||||||
At December 31: | 2013 | 2012 | |||||||||||||
Current | |||||||||||||||
Net investment in sales-type and direct financing leases | $ | 4,004 | $ | 3,862 | |||||||||||
Commercial financing receivables | 8,541 | 7,750 | |||||||||||||
Client loan receivables | 5,854 | 5,395 | |||||||||||||
Installment payment receivables | 1,389 | 1,031 | |||||||||||||
Total | $ | 19,787 | $ | 18,038 | |||||||||||
Noncurrent | |||||||||||||||
Net investment in sales-type and direct financing leases | $ | 5,700 | $ | 6,107 | |||||||||||
Commercial financing receivables | — | 5 | |||||||||||||
Client loan receivables | 6,360 | 5,966 | |||||||||||||
Installment payment receivables | 695 | 733 | |||||||||||||
Total | $ | 12,755 | $ | 12,812 | |||||||||||
Net investment in sales-type and direct financing leases relates principally to the company’s systems products and are for terms ranging generally from two to six years. Net investment in sales-type and direct financing leases includes unguaranteed residual values of $737 million and $794 million at December 31, 2013 and 2012, respectively, and is reflected net of unearned income of $672 million and $728 million, and net of the allowance for credit losses of $123 million and $114 million at those dates, respectively. Scheduled maturities of minimum lease payments outstanding at December 31, 2013, expressed as a percentage of the total, are approximately: 2014, 44 percent; 2015, 30 percent; 2016, 17 percent; 2017, 6 percent; and 2018 and beyond, 3 percent. | |||||||||||||||
Commercial financing receivables, net of allowance for credit losses of $23 million and $46 million at December 31, 2013 and 2012, respectively, relate primarily to inventory and accounts receivable financing for dealers and remarketers of IBM and OEM products. Payment terms for inventory and accounts receivable financing generally range from 30 to 90 days. | |||||||||||||||
Client loan receivables, net of allowance for credit losses of $201 million and $155 million at December 31, 2013 and 2012, respectively, are loans that are provided primarily to clients to finance the purchase of software and services. Separate contractual relationships on these financing arrangements are for terms ranging generally from one to seven years. | |||||||||||||||
Installment payment receivables, net of allowance for credit losses of $41 million and $39 million at December 31, 2013 and 2012, respectively, are loans that are provided primarily to clients to finance hardware, software and services ranging generally from one to three years. | |||||||||||||||
Client loan receivables and installment payment receivables financing contracts are priced independently at competitive market rates. The company has a history of enforcing the terms of these separate financing agreements. | |||||||||||||||
The company utilizes certain of its financing receivables as collateral for nonrecourse borrowings. Financing receivables pledged as collateral for borrowings were $769 million and $650 million at December 31, 2013 and 2012, respectively. These borrowings are included in note J, “Borrowings,” on pages 112 to 114. | |||||||||||||||
The company did not have any financing receivables held for sale as of December 31, 2013 and 2012. | |||||||||||||||
Financing Receivables by Portfolio Segment | |||||||||||||||
The following tables present financing receivables on a gross basis, excluding the allowance for credit losses and residual value, by portfolio segment and by class, excluding current commercial financing receivables and other miscellaneous current financing receivables at December 31, 2013 and 2012. The company determines its allowance for credit losses based on two portfolio segments: lease receivables and loan receivables, and further segments the portfolio into two classes: major markets and growth markets. | |||||||||||||||
($ in millions) | |||||||||||||||
Major | Growth | ||||||||||||||
At December 31, 2013: | Markets | Markets | Total | ||||||||||||
Financing receivables | |||||||||||||||
Lease receivables | $ | 6,796 | $ | 2,200 | $ | 8,996 | |||||||||
Loan receivables | 10,529 | 4,012 | 14,542 | ||||||||||||
Ending balance | $ | 17,325 | $ | 6,212 | $ | 23,537 | |||||||||
Collectively evaluated for impairment | $ | 17,206 | $ | 6,013 | $ | 23,219 | |||||||||
Individually evaluated for impairment | $ | 119 | $ | 199 | $ | 318 | |||||||||
Allowance for credit losses: | |||||||||||||||
Beginning balance at January 1, 2013 | |||||||||||||||
Lease receivables | $ | 59 | $ | 55 | $ | 114 | |||||||||
Loan receivables | 121 | 84 | 204 | ||||||||||||
Total | $ | 180 | $ | 138 | $ | 318 | |||||||||
Write-offs | -23 | -10 | -33 | ||||||||||||
Provision | -21 | 105 | 84 | ||||||||||||
Other | 1 | -6 | -5 | ||||||||||||
Ending balance at December 31, 2013 | $ | 137 | $ | 228 | $ | 365 | |||||||||
Lease receivables | $ | 42 | $ | 80 | $ | 123 | |||||||||
Loan receivables | $ | 95 | $ | 147 | $ | 242 | |||||||||
Collectively evaluated for impairment | $ | 45 | $ | 48 | $ | 93 | |||||||||
Individually evaluated for impairment | $ | 93 | $ | 179 | $ | 272 | |||||||||
($ in millions) | |||||||||||||||
Major | Growth | ||||||||||||||
At December 31, 2012: | Markets | Markets | Total | ||||||||||||
Financing receivables | |||||||||||||||
Lease receivables | $ | 7,036 | $ | 2,138 | $ | 9,174 | |||||||||
Loan receivables | 9,666 | 3,670 | 13,336 | ||||||||||||
Ending balance | $ | 16,701 | $ | 5,808 | $ | 22,510 | |||||||||
Collectively evaluated for impairment | $ | 16,570 | $ | 5,684 | $ | 22,254 | |||||||||
Individually evaluated for impairment | $ | 131 | $ | 125 | $ | 256 | |||||||||
Allowance for credit losses: | |||||||||||||||
Beginning balance at January 1, 2012 | |||||||||||||||
Lease receivables | $ | 79 | $ | 40 | $ | 118 | |||||||||
Loan receivables | 125 | 64 | 189 | ||||||||||||
Total | $ | 203 | $ | 104 | $ | 307 | |||||||||
Write-offs | -14 | -1 | -15 | ||||||||||||
Provision | -9 | 38 | 28 | ||||||||||||
Other | 0 | -2 | -2 | ||||||||||||
Ending balance at December 31, 2012 | $ | 180 | $ | 138 | $ | 318 | |||||||||
Lease receivables | $ | 59 | $ | 55 | $ | 114 | |||||||||
Loan receivables | $ | 121 | $ | 84 | $ | 204 | |||||||||
Collectively evaluated for impairment | $ | 69 | $ | 29 | $ | 98 | |||||||||
Individually evaluated for impairment | $ | 111 | $ | 109 | $ | 220 | |||||||||
When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For individually evaluated receivables, the company determines the expected cash flow for the receivable and calculates an estimate of the potential loss and the probability of loss. For those accounts in which the loss is probable, the company records a specific reserve. In addition, the company records an unallocated reserve that is calculated by applying a reserve rate to its different portfolios, excluding accounts that have been specifically reserved. This reserve rate is based upon credit rating, probability of default, term, characteristics (lease/loan) and loss history. | |||||||||||||||
Financing Receivables on Non-Accrual Status | |||||||||||||||
The following table presents the recorded investment in financing receivables which were on non-accrual status at December 31, 2013 and 2012. | |||||||||||||||
($ in millions) | |||||||||||||||
At December 31: | 2013 | 2012 | |||||||||||||
Major markets | $ | 25 | $ | 27 | |||||||||||
Growth markets | 34 | 21 | |||||||||||||
Total lease receivables | $ | 59 | $ | 47 | |||||||||||
Major markets | $ | 40 | $ | 67 | |||||||||||
Growth markets | 92 | 25 | |||||||||||||
Total loan receivables | $ | 132 | $ | 92 | |||||||||||
Total receivables | $ | 191 | $ | 139 | |||||||||||
Impaired Loans | |||||||||||||||
The company considers any loan with an individually evaluated reserve as an impaired loan. Depending on the level of impairment, loans will also be placed on a non-accrual status. The following tables present impaired client loan receivables at December 31, 2013 and 2012. | |||||||||||||||
($ in millions) | |||||||||||||||
Recorded | Related | ||||||||||||||
At December 31, 2013: | Investment | Allowance | |||||||||||||
Major markets | $ | 79 | $ | 67 | |||||||||||
Growth markets | 122 | 116 | |||||||||||||
Total | $ | 201 | $ | 183 | |||||||||||
($ in millions) | |||||||||||||||
Recorded | Related | ||||||||||||||
At December 31, 2012: | Investment | Allowance | |||||||||||||
Major markets | $ | 88 | $ | 77 | |||||||||||
Growth markets | 72 | 65 | |||||||||||||
Total | $ | 160 | $ | 143 | |||||||||||
($ in millions) | |||||||||||||||
Interest | |||||||||||||||
Average | Interest | Income | |||||||||||||
Recorded | Income | Recognized on | |||||||||||||
For the year ended December 31, 2013: | Investment | Recognized | Cash Basis | ||||||||||||
Major markets | $ | 76 | $ | 0 | $ | 0 | |||||||||
Growth markets | 97 | 0 | 0 | ||||||||||||
Total | $ | 173 | $ | 0 | $ | 0 | |||||||||
($ in millions) | |||||||||||||||
Interest | |||||||||||||||
Average | Interest | Income | |||||||||||||
Recorded | Income | Recognized on | |||||||||||||
For the year ended December 31, 2012: | Investment | Recognized | Cash Basis | ||||||||||||
Major markets | $ | 90 | $ | 0 | $ | 0 | |||||||||
Growth markets | 65 | 0 | 0 | ||||||||||||
Total | $ | 156 | $ | 0 | $ | 0 | |||||||||
Credit Quality Indicators | |||||||||||||||
The company’s credit quality indicators are based on rating agency data, publicly available information and information provided by customers, and are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Standard & Poor’s Ratings Services credit ratings as shown on the following page. Standard & Poor’s does not provide credit ratings to the company on its customers. | |||||||||||||||
The tables present the gross recorded investment for each class of receivables, by credit quality indicator, at December 31, 2013 and 2012. Receivables with a credit quality indicator ranging from AAA to BBB- are considered investment grade. All others are considered non-investment grade. The credit quality indicators do not reflect mitigation actions that the company may take to transfer credit risk to third parties. | |||||||||||||||
Lease Receivables | |||||||||||||||
($ in millions) | |||||||||||||||
Major | Growth | ||||||||||||||
At December 31, 2013: | Markets | Markets | |||||||||||||
Credit Rating | |||||||||||||||
AAA – AA- | $ | 743 | $ | 68 | |||||||||||
A+ – A- | 1,513 | 168 | |||||||||||||
BBB+ – BBB- | 2,111 | 957 | |||||||||||||
BB+ – BB | 1,393 | 350 | |||||||||||||
BB- – B+ | 595 | 368 | |||||||||||||
B – B- | 365 | 214 | |||||||||||||
CCC+ – D | 76 | 74 | |||||||||||||
Total | $ | 6,796 | $ | 2,200 | |||||||||||
Loan Receivables | |||||||||||||||
($ in millions) | |||||||||||||||
Major | Growth | ||||||||||||||
At December 31, 2013: | Markets | Markets | |||||||||||||
Credit Rating | |||||||||||||||
AAA – AA- | $ | 1,151 | $ | 125 | |||||||||||
A+ – A- | 2,344 | 307 | |||||||||||||
BBB+ – BBB- | 3,271 | 1,745 | |||||||||||||
BB+ – BB | 2,158 | 638 | |||||||||||||
BB- – B+ | 922 | 672 | |||||||||||||
B – B- | 565 | 391 | |||||||||||||
CCC+ – D | 118 | 134 | |||||||||||||
Total | $ | 10,529 | $ | 4,012 | |||||||||||
At December 31, 2013, the industries which made up Global Financing’s receivables portfolio consisted of: Financial (39 percent), Government (14 percent), Manufacturing (14 percent), Services (8 percent), Retail (8 percent), Healthcare (6 percent), Communications (6 percent) and Other (4 percent). | |||||||||||||||
Lease Receivables | |||||||||||||||
($ in millions) | |||||||||||||||
Major | Growth | ||||||||||||||
At December 31, 2012: | Markets | Markets | |||||||||||||
Credit Rating | |||||||||||||||
AAA – AA- | $ | 646 | $ | 86 | |||||||||||
A+ – A- | 1,664 | 223 | |||||||||||||
BBB+ – BBB- | 2,285 | 776 | |||||||||||||
BB+ – BB | 1,367 | 450 | |||||||||||||
BB- – B+ | 552 | 418 | |||||||||||||
B – B- | 399 | 127 | |||||||||||||
CCC+ – D | 124 | 58 | |||||||||||||
Total | $ | 7,036 | $ | 2,138 | |||||||||||
Loan Receivables | |||||||||||||||
($ in millions) | |||||||||||||||
Major | Growth | ||||||||||||||
At December 31, 2012: | Markets | Markets | |||||||||||||
Credit Rating | |||||||||||||||
AAA – A- | $ | 887 | $ | 148 | |||||||||||
A+ – A- | 2,286 | 382 | |||||||||||||
BBB+ – BBB- | 3,139 | 1,333 | |||||||||||||
BB+ – BB | 1,878 | 773 | |||||||||||||
BB- – B+ | 758 | 718 | |||||||||||||
B – B- | 548 | 218 | |||||||||||||
CCC+ – D | 170 | 99 | |||||||||||||
Total | $ | 9,666 | $ | 3,670 | |||||||||||
At December 31, 2012, the industries which made up Global Financing’s receivables portfolio consist of: Financial (38 percent), Government (16 percent), Manufacturing (14 percent), Retail (9 percent), Services (7 percent), Healthcare (6 percent), Communications (6 percent) and Other (4 percent). | |||||||||||||||
Past Due Financing Receivables | |||||||||||||||
($ in millions) | |||||||||||||||
Recorded | |||||||||||||||
Total | Total | Investment | |||||||||||||
Past Due | Financing | > 90 Days | |||||||||||||
At December 31, 2013: | > 90 days* | Current | Receivables | and Accruing | |||||||||||
Major markets | $ | 6 | $ | 6,789 | $ | 6,796 | $ | 5 | |||||||
Growth markets | 19 | 2,181 | 2,200 | 11 | |||||||||||
Total lease receivables | $ | 25 | $ | 8,970 | $ | 8,996 | $ | 16 | |||||||
Major markets | $ | 9 | $ | 10,520 | $ | 10,529 | $ | 6 | |||||||
Growth markets | 34 | 3,979 | 4,012 | 18 | |||||||||||
Total loan receivables | $ | 43 | $ | 14,499 | $ | 14,542 | $ | 25 | |||||||
Total | $ | 68 | $ | 23,469 | $ | 23,537 | $ | 41 | |||||||
* Does not include accounts that are fully reserved. | |||||||||||||||
($ in millions) | |||||||||||||||
Recorded | |||||||||||||||
Total | Total | Investment | |||||||||||||
Past Due | Financing | > 90 Days | |||||||||||||
At December 31, 2012: | > 90 days* | Current | Receivables | and Accruing | |||||||||||
Major markets | $ | 8 | $ | 7,028 | $ | 7,036 | $ | 5 | |||||||
Growth markets | 11 | 2,127 | 2,138 | 8 | |||||||||||
Total lease receivables | $ | 20 | $ | 9,154 | $ | 9,174 | $ | 13 | |||||||
Major markets | $ | 27 | $ | 9,639 | $ | 9,666 | $ | 8 | |||||||
Growth markets | 36 | 3,634 | 3,670 | 31 | |||||||||||
Total loan receivables | $ | 63 | $ | 13,273 | $ | 13,336 | $ | 39 | |||||||
Total | $ | 82 | $ | 22,428 | $ | 22,510 | $ | 52 | |||||||
* Does not include accounts that are fully reserved. | |||||||||||||||
Troubled Debt Restructurings | |||||||||||||||
The company assessed all restructurings that occurred on or after January 1, 2012 and determined that there were no troubled debt restructurings for the years ended December 31, 2012 and 2013. | |||||||||||||||
Property_Plant_and_Equipment
Property, Plant and Equipment | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Property, Plant and Equipment | ' | |||||||
Property, Plant and Equipment | ' | |||||||
Note G. | ||||||||
Property, Plant and Equipment | ||||||||
($ in millions) | ||||||||
At December 31: | 2013 | 2012 | ||||||
Land and land improvements | $ | 706 | $ | 747 | ||||
Buildings and building improvements | 9,680 | 9,610 | ||||||
Plant, laboratory and office equipment | 28,169 | 27,731 | ||||||
Plant and other property—gross | 38,555 | 38,088 | ||||||
Less: Accumulated depreciation | 25,576 | 25,234 | ||||||
Plant and other property—net | 12,979 | 12,854 | ||||||
Rental machines | 1,920 | 2,414 | ||||||
Less: Accumulated depreciation | 1,078 | 1,271 | ||||||
Rental machines—net | 842 | 1,142 | ||||||
Total—net | $ | 13,821 | $ | 13,996 |
Investments_and_Sundry_Assets
Investments and Sundry Assets | 12 Months Ended | |||||||||
Dec. 31, 2013 | ||||||||||
Investments and Sundry Assets | ' | |||||||||
Investments and Sundry Assets | ' | |||||||||
Note H. | ||||||||||
Investments and Sundry Assets | ||||||||||
($ in millions) | ||||||||||
At December 31: | 2013 | 2012 | ||||||||
Deferred transition and setup costs and other deferred arrangements* | $ | 1,652 | $ | 1,630 | ||||||
Derivatives—noncurrent** | 401 | 585 | ||||||||
Alliance investments | ||||||||||
Equity method | 110 | 120 | ||||||||
Non-equity method | 200 | 226 | ||||||||
Prepaid software | 352 | 306 | ||||||||
Long-term deposits | 316 | 318 | ||||||||
Other receivables | 174 | 204 | ||||||||
Employee benefit-related | 392 | 439 | ||||||||
Prepaid income taxes | 305 | 459 | ||||||||
Other assets | 738 | 735 | ||||||||
Total | $ | 4,639 | $ | 5,021 | ||||||
* Deferred transition and setup costs and other deferred arrangements are related to Global Services client arrangements. See note A, “Significant Accounting Policies,” on pages 86 and 87 for additional information. | ||||||||||
** See note D, “Financial Instruments,” on pages 102 through 106 for the fair value of all derivatives reported in the Consolidated Statement of Financial Position. |
Intangible_Assets_Including_Go
Intangible Assets Including Goodwill | 12 Months Ended | ||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||
Intangible Assets Including Goodwill | ' | ||||||||||||||||||
Intangible Assets Including Goodwill | ' | ||||||||||||||||||
Note I. | |||||||||||||||||||
Intangible Assets Including Goodwill | |||||||||||||||||||
Intangible Assets | |||||||||||||||||||
The following table details the company’s intangible asset balances by major asset class. | |||||||||||||||||||
($ in millions) | |||||||||||||||||||
Gross Carrying | Accumulated | Net Carrying | |||||||||||||||||
At December 31, 2013: | Amount | Amortization | Amount | ||||||||||||||||
Intangible asset class | |||||||||||||||||||
Capitalized software | $ | 1,494 | $ | -699 | $ | 794 | |||||||||||||
Client relationships | 2,148 | -977 | 1,171 | ||||||||||||||||
Completed technology | 2,910 | -1,224 | 1,687 | ||||||||||||||||
In-process R&D | 13 | — | 13 | ||||||||||||||||
Patents/trademarks | 358 | -154 | 204 | ||||||||||||||||
Other* | 7 | -5 | 2 | ||||||||||||||||
Total | $ | 6,930 | $ | -3,059 | $ | 3,871 | |||||||||||||
($ in millions) | |||||||||||||||||||
Gross Carrying | Accumulated | Net Carrying | |||||||||||||||||
At December 31, 2012: | Amount | Amortization | Amount | ||||||||||||||||
Intangible asset class | |||||||||||||||||||
Capitalized software | $ | 1,527 | $ | -665 | $ | 861 | |||||||||||||
Client relationships | 2,103 | -961 | 1,142 | ||||||||||||||||
Completed technology | 2,709 | -1,112 | 1,597 | ||||||||||||||||
In-process R&D | 28 | — | 28 | ||||||||||||||||
Patents/trademarks | 281 | -127 | 154 | ||||||||||||||||
Other* | 31 | -27 | 3 | ||||||||||||||||
Total | $ | 6,679 | $ | -2,892 | $ | 3,787 | |||||||||||||
* Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. | |||||||||||||||||||
The net carrying amount of intangible assets increased $84 million during the year ended December 31, 2013, primarily due to intangible asset additions resulting from acquisitions, offset by amortization. There was no impairment of intangible assets recorded in 2013 and 2012. | |||||||||||||||||||
Total amortization was $1,351 million and $1,284 million for the years ended December 31, 2013 and 2012, respectively. The aggregate amortization expense for acquired intangible assets (excluding capitalized software) was $767 million and $709 million for the years ended December 31, 2013 and 2012, respectively. In addition, in 2013 the company retired $1,177 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount. | |||||||||||||||||||
The amortization expense for each of the five succeeding years relating to intangible assets currently recorded in the Consolidated Statement of Financial Position is estimated to be the following at December 31, 2013: | |||||||||||||||||||
($ in millions) | |||||||||||||||||||
Capitalized | Acquired | ||||||||||||||||||
Software | Intangibles | Total | |||||||||||||||||
2014 | $ | 484 | $ | 784 | $ | 1,267 | |||||||||||||
2015 | 247 | 637 | 884 | ||||||||||||||||
2016 | 64 | 595 | 660 | ||||||||||||||||
2017 | — | 477 | 477 | ||||||||||||||||
2018 | — | 322 | 322 | ||||||||||||||||
Goodwill | |||||||||||||||||||
The changes in the goodwill balances by reportable segment, for the years ended December 31, 2013 and 2012, are as follows: | |||||||||||||||||||
($ in millions) | |||||||||||||||||||
Foreign | |||||||||||||||||||
Currency | |||||||||||||||||||
Balance | Purchase | Translation | Balance | ||||||||||||||||
January 1, | Goodwill | Price | And Other | December 31, | |||||||||||||||
Segment | 2013 | Additions | Adjustments | Divestitures | Adjustments | 2013 | |||||||||||||
Global Business Services | $ | 4,357 | $ | — | $ | 0 | $ | -3 | $ | -21 | $ | 4,334 | |||||||
Global Technology Services | 2,916 | 1,246 | 17 | — | -50 | 4,129 | |||||||||||||
Software | 20,405 | 987 | 11 | -4 | -279 | 21,121 | |||||||||||||
Systems and Technology | 1,568 | 13 | 33 | — | -14 | 1,601 | |||||||||||||
Total | $ | 29,247 | $ | 2,246 | $ | 61 | $ | -7 | $ | -363 | $ | 31,184 | |||||||
($ in millions) | |||||||||||||||||||
Foreign | |||||||||||||||||||
Currency | |||||||||||||||||||
Balance | Purchase | Translation | Balance | ||||||||||||||||
January 1, | Goodwill | Price | And Other | December 31, | |||||||||||||||
Segment | 2012 | Additions | Adjustments | Divestitures | Adjustments | 2012 | |||||||||||||
Global Business Services | $ | 4,313 | $ | 5 | $ | 0 | $ | -2 | $ | 42 | $ | 4,357 | |||||||
Global Technology Services | 2,646 | 264 | — | 0 | 6 | 2,916 | |||||||||||||
Software | 18,121 | 2,182 | -30 | -6 | 137 | 20,405 | |||||||||||||
Systems and Technology | 1,133 | 443 | 0 | -14 | 6 | 1,568 | |||||||||||||
Total | $ | 26,213 | $ | 2,894 | $ | -30 | $ | -22 | $ | 192 | $ | 29,247 | |||||||
Purchase price adjustments recorded in 2013 and 2012 were related to acquisitions that were completed on or prior to December 31, 2012 or December 31, 2011, respectively, and were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. There were no goodwill impairment losses recorded in 2013 or 2012 and the company has no accumulated goodwill impairment losses. |
Borrowings
Borrowings | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Borrowings | ' | ||||||||||||||
Borrowings | ' | ||||||||||||||
Note J. | |||||||||||||||
Borrowings | |||||||||||||||
Short-Term Debt | |||||||||||||||
($ in millions) | |||||||||||||||
At December 31: | 2013 | 2012 | |||||||||||||
Commercial paper | $ | 2,458 | $ | 1,800 | |||||||||||
Short-term loans | 551 | 1,789 | |||||||||||||
Long-term debt—current maturities | 3,854 | 5,593 | |||||||||||||
Total | $ | 6,862 | $ | 9,181 | |||||||||||
The weighted-average interest rate for commercial paper at both December 31, 2013 and 2012 was 0.1 percent. The weighted-average interest rates for short-term loans was 5.1 percent and 1.8 percent at December 31, 2013 and 2012, respectively. | |||||||||||||||
Long-Term Debt | |||||||||||||||
Pre-Swap Borrowing | |||||||||||||||
($ in millions) | |||||||||||||||
At December 31: | Maturities | 2013 | 2012 | ||||||||||||
U.S. dollar notes and debentures (average interest rate at December 31, 2013): | |||||||||||||||
0.70% | 2014–2015 | $ | 6,456 | ** | $ | 7,131 | |||||||||
3.05% | 2016–2017 | 8,465 | 5,807 | ||||||||||||
3.99% | 2018–2021 | 6,206 | 7,457 | ||||||||||||
1.88% | 2022 | 1,000 | 1,000 | ||||||||||||
3.38% | 2023 | 1,500 | — | ||||||||||||
7.00% | 2025 | 600 | 600 | ||||||||||||
6.22% | 2027 | 469 | 469 | ||||||||||||
6.50% | 2028 | 313 | 313 | ||||||||||||
5.88% | 2032 | 600 | 600 | ||||||||||||
8.00% | 2038 | 83 | 83 | ||||||||||||
5.60% | 2039 | 745 | 745 | ||||||||||||
4.00% | 2042 | 1,107 | 1,107 | ||||||||||||
7.00% | 2045 | 27 | 27 | ||||||||||||
7.13% | 2096 | 316 | 316 | ||||||||||||
27,887 | 25,656 | ||||||||||||||
Other currencies (average interest rate at December 31, 2013, in parentheses): | |||||||||||||||
Euros (2.8%) | 2014–2025 | 5,894 | 2,338 | ||||||||||||
Pound sterling (2.75%) | 2017–2020 | 1,254 | 12 | ||||||||||||
Japanese yen (0.6%) | 2014–2017 | 1,057 | 878 | ||||||||||||
Swiss francs (3.8%) | 2015–2020 | 181 | 178 | ||||||||||||
Canadian (2.2%) | 2017 | 471 | 502 | ||||||||||||
Other (8.81%) | 2015–2017 | 291 | 95 | ||||||||||||
37,036 | 29,660 | ||||||||||||||
Less: net unamortized discount | 872 | 865 | |||||||||||||
Add: fair value adjustment* | 546 | 886 | |||||||||||||
36,710 | 29,680 | ||||||||||||||
Less: current maturities | 3,854 | 5,593 | |||||||||||||
Total | $ | 32,856 | $ | 24,088 | |||||||||||
* The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Statement of Financial Position as an amount equal to the sum of the debt’s carrying value plus a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates. | |||||||||||||||
** Includes $17 million of debt securities issued by IBM International Group Capital, LLC, which is an indirect, 100 percent owned finance subsidiary of the company and will mature in 2014. Debt securities issued by IBM International Group Capital LLC are fully and unconditionally guaranteed by the company. | |||||||||||||||
The company’s indenture governing its debt securities and its various credit facilities each contain significant covenants which obligate the company to promptly pay principal and interest, limit the aggregate amount of secured indebtedness and sale and leaseback transactions to 10 percent of the company’s consolidated net tangible assets, and restrict the company’s ability to merge or consolidate unless certain conditions are met. The credit facilities also include a covenant on the company’s consolidated net interest expense ratio, which cannot be less than 2.20 to 1.0, as well as a cross default provision with respect to other defaulted indebtedness of at least $500 million. | |||||||||||||||
The company is in compliance with all of its significant debt covenants and provides periodic certifications to its lenders. The failure to comply with its debt covenants could constitute an event of default with respect to the debt to which such provisions apply. If certain events of default were to occur, the principal and interest on the debt to which such event of default applied would become immediately due and payable. | |||||||||||||||
Post-Swap Borrowing (Long-Term Debt, Including Current Portion) | |||||||||||||||
($ in millions) | |||||||||||||||
2013 | 2012 | ||||||||||||||
For the year ended December 31: | Amount | Average Rate | Amount | Average Rate | |||||||||||
Fixed-rate debt | $ | 30,123 | 3.07 | % | $ | 24,049 | 3.43 | % | |||||||
Floating-rate debt* | 6,587 | 0.87 | % | 5,631 | 1.91 | % | |||||||||
Total | $ | 36,710 | $ | 29,680 | |||||||||||
* Includes $3,106 million in 2013 and $4,252 million in 2012 of notional interest rate swaps that effectively convert the fixed-rate long-term debt into floating-rate debt. (See note D, “Financial Instruments,” on pages 102 through 106.) | |||||||||||||||
Pre-swap annual contractual maturities of long-term debt outstanding at December 31, 2013, are as follows: | |||||||||||||||
($ in millions) | |||||||||||||||
Total | |||||||||||||||
2014 | $ | 3,854 | |||||||||||||
2015 | 4,566 | ||||||||||||||
2016 | 4,114 | ||||||||||||||
2017 | 5,386 | ||||||||||||||
2018 | 2,662 | ||||||||||||||
2019 and beyond | 16,453 | ||||||||||||||
Total | $ | 37,036 | |||||||||||||
Interest on Debt | |||||||||||||||
($ in millions) | |||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | ||||||||||||
Cost of financing | $ | 587 | $ | 545 | $ | 553 | |||||||||
Interest expense | 405 | 470 | 402 | ||||||||||||
Net investment derivative activity | -3 | -11 | 9 | ||||||||||||
Interest capitalized | 22 | 18 | 9 | ||||||||||||
Total interest paid and accrued | $ | 1,011 | $ | 1,022 | $ | 973 | |||||||||
Refer to the related discussion on page 143 in note T, “Segment Information,” for total interest expense of the Global Financing segment. See note D, “Financial Instruments,” on pages 102 through 106 for a discussion of the use of currency and interest rate swaps in the company’s debt risk management program. | |||||||||||||||
Lines of Credit | |||||||||||||||
In 2013, the company extended the term of its five-year, $10 billion Credit Agreement (the “Credit Agreement”) by one year to November 10, 2018. The total expense recorded by the company related to this global credit facility was $5.4 million in 2013, $5.3 million in 2012 and $5.0 million in 2011. The Credit Agreement permits the company and its Subsidiary Borrowers to borrow up to $10 billion on a revolving basis. Borrowings of the Subsidiary Borrowers will be unconditionally backed by the company. The company may also, upon the agreement of either existing lenders, or of the additional banks not currently party to the Credit Agreement, increase the commitments under the Credit Agreement up to an additional $2.0. billion. Subject to certain terms of the Credit Agreement, the company and Subsidiary Borrowers may borrow, prepay and reborrow amounts under the Credit Agreement at any time during the Credit Agreement. Interest rates on borrowings under the Credit Agreement will be based on prevailing market interest rates, as further described in the Credit Agreement. The Credit Agreement contains customary representations and warranties, covenants, events of default, and indemnification provisions. The company believes that circumstances that might give rise to breach of these covenants or an event of default, as specified in the Credit Agreement, are remote. As of December 31, 2013, there were no borrowings by the company, or its subsidiaries, under the Credit Agreement. | |||||||||||||||
The company also has other committed lines of credit in some of the geographies which are not significant in the aggregate. Interest rates and other terms of borrowing under these lines of credit vary from country to country, depending on local market conditions. |
Other_Liabilities
Other Liabilities | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Other Liabilities | ' | ||||||||||||
Other Liabilities | ' | ||||||||||||
Note K. | |||||||||||||
Other Liabilities | |||||||||||||
($ in millions) | |||||||||||||
At December 31: | 2013 | 2012* | |||||||||||
Income tax reserves | $ | 3,189 | $ | 2,527 | |||||||||
Excess 401(k) Plus Plan | 1,673 | 1,501 | |||||||||||
Disability benefits | 699 | 890 | |||||||||||
Derivative liabilities | 126 | 78 | |||||||||||
Special restructuring actions | 440 | 430 | |||||||||||
Workforce reductions | 500 | 473 | |||||||||||
Deferred taxes | 1,741 | 448 | |||||||||||
Other taxes payable | 186 | 24 | |||||||||||
Environmental accruals | 231 | 216 | |||||||||||
Warranty accruals | 171 | 167 | |||||||||||
Asset retirement obligations | 129 | 127 | |||||||||||
Acquisition-related accruals | 205 | 35 | |||||||||||
Other | 644 | 691 | |||||||||||
Total | $ | 9,934 | $ | 7,607 | |||||||||
* Reclassified to conform with 2013 presentation. | |||||||||||||
In response to changing business needs, the company periodically takes workforce reduction actions to improve productivity, cost competitiveness and to rebalance skills. The noncurrent contractually obligated future payments associated with these activities are reflected in the workforce reductions caption in the previous table. | |||||||||||||
In addition, the company executed certain special restructuring-related actions prior to 2006. The table below provides a roll forward of the current and noncurrent liabilities associated with these special actions. The current liabilities presented in the table are included in other accrued expenses and liabilities in the Consolidated Statement of Financial Position. | |||||||||||||
($ in millions) | |||||||||||||
Liability | Liability | ||||||||||||
as of | as of | ||||||||||||
January 1, | Other | December 31, | |||||||||||
2013 | Payments | Adjustments* | 2013 | ||||||||||
Current | |||||||||||||
Workforce | $ | 28 | $ | -29 | $ | 29 | $ | 27 | |||||
Space | 2 | -1 | -1 | 0 | |||||||||
Total current | $ | 30 | $ | -30 | $ | 28 | $ | 27 | |||||
Noncurrent | |||||||||||||
Workforce | $ | 430 | $ | — | $ | 10 | $ | 440 | |||||
Total noncurrent | $ | 430 | $ | — | $ | 10 | $ | 440 | |||||
* The other adjustments column in the table above principally includes the reclassification of noncurrent to current, remeasurement of actuarial assumptions, foreign currency translation adjustments and interest accretion. | |||||||||||||
The workforce accruals primarily relate to terminated employees who are no longer working for the company who were granted annual payments to supplement their incomes in certain countries. Depending on the individual country’s legal requirements, these required payments will continue until the former employee begins receiving pension benefits or passes away. The space accruals are for ongoing obligations to pay rent for vacant space that could not be sublet or space that was sublet at rates lower than the committed lease arrangement. These obligations for vacant space were settled through 2013. | |||||||||||||
The company employs extensive internal environmental protection programs that primarily are preventive in nature. The company also participates in environmental assessments and cleanups at a number of locations, including operating facilities, previously owned facilities and Superfund sites. The company’s maximum exposure for all environmental liabilities cannot be estimated and no amounts have been recorded for non-ARO environmental liabilities that are not probable or estimable. The total amounts accrued for non-ARO environmental liabilities, including amounts classified as current in the Consolidated Statement of Financial Position, that do not reflect actual or anticipated insurance recoveries, were $245 million and $229 million at December 31, 2013 and 2012, respectively. Estimated environmental costs are not expected to materially affect the consolidated financial position or consolidated results of the company’s operations in future periods. However, estimates of future costs are subject to change due to protracted cleanup periods and changing environmental remediation regulations. | |||||||||||||
As of December 31, 2013, the company was unable to estimate the range of settlement dates and the related probabilities for certain asbestos remediation AROs. These conditional AROs are primarily related to the encapsulated structural fireproofing that is not subject to abatement unless the buildings are demolished and non-encapsulated asbestos that the company would remediate only if it performed major renovations of certain existing buildings. Because these conditional obligations have indeterminate settlement dates, the company could not develop a reasonable estimate of their fair values. The company will continue to assess its ability to estimate fair values at each future reporting date. The related liability will be recognized once sufficient additional information becomes available. The total amounts accrued for ARO liabilities, including amounts classified as current in the Consolidated Statement of Financial Position were $160 million and $171 million at December 31, 2013 and 2012, respectively. |
Equity_Activity
Equity Activity | 12 Months Ended | |||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||
Equity Activity | ' | |||||||||||||||||
Equity Activity | ' | |||||||||||||||||
Note L. | ||||||||||||||||||
Equity Activity | ||||||||||||||||||
The authorized capital stock of IBM consists of 4,687,500,000 shares of common stock with a $.20 per share par value, of which 1,054,390,937 shares were outstanding at December 31, 2013 and 150,000,000 shares of preferred stock with a $.01 per share par value, none of which were outstanding at December 31, 2013. | ||||||||||||||||||
Stock Repurchases | ||||||||||||||||||
The Board of Directors authorizes the company to repurchase IBM common stock. The company repurchased 73,121,942 common shares at a cost of $13,993 million, 61,246,371 common shares at a cost of $12,008 million and 88,683,716 common shares at a cost of $15,034 million in 2013, 2012 and 2011, respectively. These amounts reflect transactions executed through December 31 of each year. Actual cash disbursements for repurchased shares may differ due to varying settlement dates for these transactions. At December 31, 2013, $14,659 million of Board common stock repurchase authorization was still available. The company plans to purchase shares on the open market or in private transactions from time to time, depending on market conditions. | ||||||||||||||||||
Other Stock Transactions | ||||||||||||||||||
The company issued the following shares of common stock as part of its stock-based compensation plans and employees stock purchase plan: 9,961,389 shares in 2013, 15,091,320 shares in 2012, and 20,669,785 shares in 2011. The company issued 1,849,883 treasury shares in 2013, 2,746,169 treasury shares in 2012 and 4,920,198 treasury shares in 2011, as a result of RSU releases and exercises of stock options by employees of certain acquired businesses and by non-U.S. employees. Also, as part of the company’s stock-based compensation plans, 1,666,069 common shares at a cost of $336 million, 2,406,007 common shares at a cost of $468 million, and 1,717,246 common shares at a cost of $289 million in 2013, 2012 and 2011, respectively, were remitted by employees to the company in order to satisfy minimum statutory tax withholding requirements. These amounts are included in the treasury stock balance in the Consolidated Statement of Financial Position and the Consolidated Statement of Changes in Equity. | ||||||||||||||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||||||||||||||
($ in millions) | ||||||||||||||||||
Before Tax | Tax (Expense)/ | Net of Tax | ||||||||||||||||
For the year ended December 31, 2013: | Amount | Benefit | Amount | |||||||||||||||
Other comprehensive income/(loss) | ||||||||||||||||||
Foreign currency translation adjustments | $ | -1,335 | $ | -66 | $ | -1,401 | ||||||||||||
Net changes related to available-for-sale securities | ||||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | -4 | $ | 2 | $ | -3 | ||||||||||||
Reclassification of (gains)/losses to other (income) and expense | -8 | 2 | -5 | |||||||||||||||
Subsequent changes in previously impaired securities arising during | ||||||||||||||||||
the period | 4 | -1 | 3 | |||||||||||||||
Total net changes related to available-for-sale securities | $ | -8 | $ | 3 | $ | -5 | ||||||||||||
Unrealized gains/(losses) on cash flow hedges | ||||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | 43 | $ | -15 | $ | 28 | ||||||||||||
Reclassification of (gains)/losses to: | ||||||||||||||||||
Cost of sales | 34 | -14 | 21 | |||||||||||||||
SG&A expense | -39 | 14 | -25 | |||||||||||||||
Other (income) and expense | -162 | 62 | -99 | |||||||||||||||
Interest expense | 0 | 0 | 0 | |||||||||||||||
Total unrealized gains/(losses) on cash flow hedges | $ | -123 | $ | 47 | $ | -76 | ||||||||||||
Retirement-related benefit plans(1) | ||||||||||||||||||
Prior service costs/(credits) | $ | 16 | $ | 0 | $ | 16 | ||||||||||||
Net (losses)/gains arising during the period | 5,369 | -1,974 | 3,395 | |||||||||||||||
Curtailments and settlements | -3 | 1 | -2 | |||||||||||||||
Amortization of prior service (credits)/costs | -114 | 40 | -75 | |||||||||||||||
Amortization of net (gains)/losses | 3,499 | -1,195 | 2,304 | |||||||||||||||
Total retirement-related benefit plans | $ | 8,767 | $ | -3,128 | $ | 5,639 | ||||||||||||
Other comprehensive income/(loss) | $ | 7,301 | $ | -3,144 | $ | 4,157 | ||||||||||||
-1 | These AOCI components are included in the computation of net periodic pension cost. (See note S, "Retirement-Related Benefits," on | |||||||||||||||||
pages 127 to 141 for additional information.) | ||||||||||||||||||
($ in millions) | ||||||||||||||||||
Before Tax | Tax (Expense)/ | Net of Tax | ||||||||||||||||
For the year ended December 31, 2012: | Amount | Benefit | Amount | |||||||||||||||
Other comprehensive income/(loss) | ||||||||||||||||||
Foreign currency translation adjustments | $ | -44 | $ | 10 | $ | -34 | ||||||||||||
Net changes related to available-for-sale securities | ||||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | 8 | $ | -4 | $ | 4 | ||||||||||||
Reclassification of (gains)/losses to other (income) and expense | -42 | 17 | -25 | |||||||||||||||
Subsequent changes in previously impaired securities arising during | ||||||||||||||||||
the period | 20 | -8 | 12 | |||||||||||||||
Total net changes related to available-for-sale securities | $ | -14 | $ | 5 | $ | -9 | ||||||||||||
Unrealized gains/(losses) on cash flow hedges | ||||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | 32 | $ | -27 | $ | 5 | ||||||||||||
Reclassification of (gains)/losses to: | ||||||||||||||||||
Cost of sales | -7 | -6 | -13 | |||||||||||||||
SG&A expense | -16 | 4 | -12 | |||||||||||||||
Other (income) and expense | -237 | 91 | -146 | |||||||||||||||
Interest expense | 6 | -3 | 3 | |||||||||||||||
Total unrealized gains/(losses) on cash flow hedges | $ | -220 | $ | 59 | $ | -161 | ||||||||||||
Retirement-related benefit plans(1) | ||||||||||||||||||
Net (losses)/gains arising during the period | $ | -7,489 | $ | 2,327 | $ | -5,162 | ||||||||||||
Curtailments and settlements | -2 | 0 | -2 | |||||||||||||||
Amortization of prior service (credits)/costs | -148 | 59 | -89 | |||||||||||||||
Amortization of net (gains)/losses | 2,457 | -874 | 1,583 | |||||||||||||||
Total retirement-related benefit plans | $ | -5,182 | $ | 1,513 | $ | -3,669 | ||||||||||||
Other comprehensive income/(loss) | $ | -5,460 | $ | 1,587 | $ | -3,874 | ||||||||||||
-1 | These AOCI components are included in the computation of net periodic pension cost. (See note S, "Retirement-Related Benefits," on | |||||||||||||||||
pages 127 to 141 for additional information.) | ||||||||||||||||||
($ in millions) | ||||||||||||||||||
Before Tax | Tax (Expense)/ | Net of Tax | ||||||||||||||||
For the year ended December 31, 2011: | Amount | Benefit | Amount | |||||||||||||||
Other comprehensive income/(loss) | ||||||||||||||||||
Foreign currency translation adjustments | $ | -693 | $ | -18 | $ | -711 | ||||||||||||
Net changes related to available-for-sale securities | ||||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | -14 | $ | 5 | $ | -9 | ||||||||||||
Reclassification of (gains)/losses to other (income) and expense | -231 | 88 | -143 | |||||||||||||||
Subsequent changes in previously impaired securities arising during | ||||||||||||||||||
the period | 4 | -1 | 3 | |||||||||||||||
Total net changes related to available-for-sale securities | $ | -241 | $ | 91 | $ | -150 | ||||||||||||
Unrealized gains/(losses) on cash flow hedges | ||||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | -266 | $ | 105 | $ | -162 | ||||||||||||
Reclassification of (gains)/losses to: | ||||||||||||||||||
Cost of sales | 182 | -61 | 121 | |||||||||||||||
SG&A expense | 75 | -23 | 52 | |||||||||||||||
Other (income) and expense | 247 | -3 | 244 | |||||||||||||||
Interest expense | 8 | -95 | -88 | |||||||||||||||
Total unrealized gains/(losses) on cash flow hedges | $ | 245 | $ | -77 | $ | 167 | ||||||||||||
Retirement-related benefit plans(1) | ||||||||||||||||||
Prior service costs/(credits) | $ | -28 | $ | 7 | $ | -22 | ||||||||||||
Net (losses)/gains arising during the period | -5,463 | 1,897 | -3,566 | |||||||||||||||
Curtailments and settlements | 11 | -3 | 7 | |||||||||||||||
Amortization of prior service (credits)/costs | -157 | 62 | -94 | |||||||||||||||
Amortization of net (gains)/losses | 1,847 | -619 | 1,227 | |||||||||||||||
Total retirement-related benefit plans | $ | -3,790 | $ | 1,343 | $ | -2,448 | ||||||||||||
Other comprehensive income/(loss) | $ | -4,479 | $ | 1,339 | $ | -3,142 | ||||||||||||
-1 | These AOCI components are included in the computation of net periodic pension cost. (See note S, "Retirement-Related Benefits," on | |||||||||||||||||
pages 127 to 141 for additional information.) | ||||||||||||||||||
Accumulated Other Comprehensive Income/(Loss) (net of tax) | ||||||||||||||||||
($ in millions) | ||||||||||||||||||
Net Change | Net Unrealized | |||||||||||||||||
Net Unrealized | Foreign | Retirement- | Gains/(Losses) | Accumulated | ||||||||||||||
Gains/(Losses) | Currency | Related | on Available- | Other | ||||||||||||||
on Cash Flow | Translation | Benefit | For-Sale | Comprehensive | ||||||||||||||
Hedges | Adjustments* | Plans | Securities | Income/(Loss) | ||||||||||||||
31-Dec-10 | $ | -96 | $ | 2,478 | $ | -21,289 | $ | 164 | $ | -18,743 | ||||||||
Other comprehensive income before | ||||||||||||||||||
reclassifications | -162 | -711 | -3,581 | -7 | -4,461 | |||||||||||||
Amount reclassified from accumulated | ||||||||||||||||||
other comprehensive income | 329 | 0 | 1,133 | -143 | 1,319 | |||||||||||||
Total change for the period | 167 | -711 | -2,448 | -150 | -3,142 | |||||||||||||
31-Dec-11 | 71 | 1,767 | -23,737 | 13 | -21,885 | |||||||||||||
Other comprehensive income before | ||||||||||||||||||
reclassifications | 5 | -34 | -5,164 | 16 | -5,177 | |||||||||||||
Amount reclassified from accumulated | ||||||||||||||||||
other comprehensive income | -167 | 0 | 1,495 | -25 | 1,303 | |||||||||||||
Total change for the period | -161 | -34 | -3,669 | -9 | -3,874 | |||||||||||||
31-Dec-12 | -90 | 1,733 | -27,406 | 4 | -25,759 | |||||||||||||
Other comprehensive income before | ||||||||||||||||||
reclassifications | 28 | -1,401 | 3,409 | 0 | 2,036 | |||||||||||||
Amount reclassified from accumulated | ||||||||||||||||||
other comprehensive income | -103 | 0 | 2,229 | -5 | 2,121 | |||||||||||||
Total change for the period | -76 | -1,401 | 5,639 | -5 | 4,157 | |||||||||||||
31-Dec-13 | $ | -165 | $ | 332 | $ | -21,767 | $ | -1 | $ | -21,602 | ||||||||
* Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. |
Contingencies_and_Commitments
Contingencies and Commitments | 12 Months Ended |
Dec. 31, 2013 | |
Contingencies and Commitments | ' |
Contingencies and Commitments | ' |
Note M. | |
Contingencies and Commitments | |
Contingencies | |
As a company with a substantial employee population and with clients in more than 175 countries, IBM is involved, either as plaintiff or defendant, in a variety of ongoing claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business. The company is a leader in the information technology industry and, as such, has been and will continue to be subject to claims challenging its IP rights and associated products and offerings, including claims of copyright and patent infringement and violations of trade secrets and other IP rights. In addition, the company enforces its own IP against infringement, through license negotiations, lawsuits or otherwise. Also, as is typical for companies of IBM’s scope and scale, the company is party to actions and proceedings in various jurisdictions involving a wide range of labor and employment issues (including matters related to contested employment decisions, country-specific labor and employment laws, and the company’s pension, retirement and other benefit plans), as well as actions with respect to contracts, product liability, securities, foreign operations, competition law and environmental matters. These actions may be commenced by a number of different parties, including competitors, clients, current or former employees, government and regulatory agencies, stockholders and representatives of the locations in which the company does business. Some of the actions to which the company is party may involve particularly complex technical issues, and some actions may raise novel questions under the laws of the various jurisdictions in which these matters arise. | |
The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any recorded liabilities, including any changes to such liabilities for the years ended December 31, 2013, 2012 and 2011 were not material to the Consolidated Financial Statements. | |
In accordance with the relevant accounting guidance, the company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer and employee relations considerations. | |
With respect to certain of the claims, suits, investigations and proceedings discussed herein, the company believes at this time that the likelihood of any material loss is remote, given, for example, the procedural status, court rulings, and/or the strength of the company’s defenses in those matters. With respect to the remaining claims, suits, investigations and proceedings discussed in this note, the company is unable to provide estimates of reasonably possible losses or range of losses, including losses in excess of amounts accrued, if any, for the following reasons. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of these matters. It is the company’s experience that damage amounts claimed in litigation against it are unreliable and unrelated to possible outcomes, and as such are not meaningful indicators of the company’s potential liability. Further, the company is unable to provide such an estimate due to a number of other factors with respect to these claims, suits, investigations and proceedings, including considerations of the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. The company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate), to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter. | |
Whether any losses, damages or remedies finally determined in any claim, suit, investigation or proceeding could reasonably have a material effect on the company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including: the timing and amount of such losses or damages; the structure and type of any such remedies; the significance of the impact any such losses, damages or remedies may have in the Consolidated Financial Statements; and the unique facts and circumstances of the particular matter that may give rise to additional factors. While the company will continue to defend itself vigorously, it is possible that the company’s business, financial condition, results of operations or cash flows could be affected in any particular period by the resolution of one or more of these matters. | |
The following is a summary of the more significant legal matters involving the company. | |
The company is a defendant in an action filed on March 6, 2003 in state court in Salt Lake City, Utah by the SCO Group (SCO v. IBM). The company removed the case to Federal Court in Utah. Plaintiff is an alleged successor in interest to some of AT&T’s UNIX IP rights, and alleges copyright infringement, unfair competition, interference with contract and breach of contract with regard to the company’s distribution of AIX and Dynix and contribution of code to Linux. The company has asserted counterclaims, including breach of contract, violation of the Lanham Act, unfair competition, intentional torts, unfair and deceptive trade practices, breach of the General Public License that governs open source distributions, promissory estoppel and copyright infringement. Motions for summary judgment were heard in March 2007, and the court has not yet issued its decision. On September 14, 2007, plaintiff filed for bankruptcy protection, and all proceedings in this case were stayed. On August 25, 2009, the U.S. Bankruptcy Court for the District of Delaware approved the appointment of a Trustee of SCO. The court in another suit, the SCO Group, Inc. v. Novell, Inc., held a trial in March 2010. The jury found that Novell is the owner of UNIX and UnixWare copyrights; the judge subsequently ruled that SCO is obligated to recognize Novell’s waiver of SCO’s claims against IBM and Sequent for breach of UNIX license agreements. On August 30, 2011, the Tenth Circuit Court of Appeals affirmed the district court’s ruling and denied SCO’s appeal of this matter. In June 2013, the Federal Court in Utah granted SCO’s motion to reopen the SCO v. IBM case. On July 10, 2013, the Court entered an order dismissing seven of SCO's ten claims, specifically its breach of contract and copyright claims, and one tortious interference claim. | |
On May 13, 2010, IBM and the State of Indiana (acting on behalf of the Indiana Family and Social Services Administration) sued one another in a dispute over a 2006 contract regarding the modernization of social service program processing in Indiana. The State terminated the contract, claiming that IBM was in breach, and the State is seeking damages. IBM believes the State’s claims against it are without merit and is seeking payment of termination amounts specified in the contract. After six weeks of trial, on July 18, 2012, the Indiana Superior Court in Marion County rejected the State’s claims in their entirety and awarded IBM $52 million plus interest and costs. On February 13, 2014, the Indiana Court of Appeals reversed portions of the trial judge’s findings, found IBM in material breach, and ordered the case remanded to the trial judge to determine the State's damages, if any. The Indiana Court of Appeals also affirmed approximately $50 million of the trial court's award of damages to IBM. This matter remains pending in the Indiana courts. | |
IBM United Kingdom Limited (IBM UK) initiated legal proceedings in May 2010 before the High Court in London against the IBM UK Pensions Trust (the UK Trust) and two representative beneficiaries of the UK Trust membership. IBM UK is seeking a declaration that it acted lawfully both in notifying the Trustee of the UK Trust that it was closing its UK defined benefit plans to future accruals for most participants and in implementing the company’s new retirement policy. The trial in the High Court concluded in April 2013 and the company is awaiting a ruling from the Court. In addition, IBM UK is a defendant in approximately 290 individual actions brought since early 2010 by participants of the defined benefits plans who left IBM UK. These actions, which allege constructive dismissal and age discrimination, are pending before the Employment Tribunal in Southampton UK and are currently stayed pending resolution of the above-referenced High Court proceedings. | |
In a separate but related proceeding, in March 2011, the Trustee of the IBM UK Trust was granted leave to initiate a claim before the High Court in London against IBM UK and one member of the UK Trust membership, seeking an order modifying certain documents and terms relating to retirement provisions in IBM UK’s largest defined benefit plan (the C Plan) dating back to 1983. The trial of these proceedings began in May 2012 and finished in early June. On October 12, 2012, the High Court in London issued its ruling, holding that the 1983 Trust Deeds and Rules should be modified to allow certain categories of current IBM UK employees who are members of the C Plan to retire from the age of 60 (rather than from the age of 63) without actuarial reduction of their defined benefit pension. In a supplementary ruling on December 13, 2012, the Court declined to similarly modify the Trust Deeds and Rules for former employees who were C Plan members and who left the company prior to retirement. On February 7, 2013, the Court issued an order agreed to by all parties, under which there will be no appeals of the October 2012 and December 2012 judgments. As a result of the October 2012 ruling, IBM recorded an additional pre-tax retirement-related obligation of $162 million in the third quarter of 2012. | |
In March 2011, the company announced that it had agreed to settle a civil enforcement action with the Securities and Exchange Commission (SEC) relating to activities by employees of IBM Korea, LG IBM, IBM (China) Investment Company Limited and IBM Global Services (China) Co., Ltd., during the period from 1998 through 2009, allegedly in violation of the Foreign Corrupt Practices Act of 1977. As part of that settlement, IBM consented to the entry of a judgment relating to the books and records and internal control provisions of the securities laws, and also agreed to pay a total of $10 million, categorized by the SEC as follows: (i) $5.3 million, representing profits gained as a result of the conduct alleged in the SEC’s complaint, (ii) prejudgment interest on that amount of $2.7 million, and (iii) a civil penalty of $2 million. On July 25, 2013, the court approved that 2011 settlement and required that for a two-year period IBM make reports to the SEC and the court on certain matters, including those relating to compliance with the FCPA. In early 2012, IBM notified the SEC of an investigation by the Polish Central Anti-Corruption Bureau involving allegations of illegal activity by a former IBM Poland employee in connection with sales to the Polish government. IBM is cooperating with the SEC and Polish authorities in this matter. In April 2013, IBM learned that the U.S. Department of Justice (DOJ) is also investigating allegations related to the Poland matter, as well as allegations relating to transactions in Argentina, Bangladesh and Ukraine. The DOJ is also seeking information regarding the company's global FCPA compliance program and its public sector business. The company is cooperating with the DOJ in this matter. | |
In May 2013, IBM learned that the SEC is conducting an investigation into how IBM reports cloud revenue. IBM is cooperating with the SEC in this matter. | |
In December 2013, a putative class action lawsuit was filed in the United States District Court for the Southern District of New York related to the company's third-quarter 2013 financial results disclosure. The company, its Chairman, President and Chief Executive Officer, and a former Senior Vice President and Chief Financial Officer of the company are named as defendants. Plaintiffs allege that defendants violated Section 20(a) and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. | |
The company is a defendant in numerous actions filed after January 1, 2008 in the Supreme Court for the State of New York, county of Broome, on behalf of hundreds of plaintiffs. The complaints allege numerous and different causes of action, including for negligence and recklessness, private nuisance and trespass. Plaintiffs in these cases seek medical monitoring and claim damages in unspecified amounts for a variety of personal injuries and property damages allegedly arising out of the presence of groundwater contamination and vapor intrusion of groundwater contaminants into certain structures in which plaintiffs reside or resided, or conducted business, allegedly resulting from the release of chemicals into the environment by the company at its former manufacturing and development facility in Endicott. These complaints also seek punitive damages in an unspecified amount. | |
The company is party to, or otherwise involved in, proceedings brought by U.S. federal or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), known as “Superfund,” or laws similar to CERCLA. Such statutes require potentially responsible parties to participate in remediation activities regardless of fault or ownership of sites. The company is also conducting environmental investigations, assessments or remediations at or in the vicinity of several current or former operating sites globally pursuant to permits, administrative orders or agreements with country, state or local environmental agencies, and is involved in lawsuits and claims concerning certain current or former operating sites. | |
The company is also subject to ongoing tax examinations and governmental assessments in various jurisdictions. Along with many other U.S. companies doing business in Brazil, the company is involved in various challenges with Brazilian authorities regarding non-income tax assessments and non-income tax litigation matters. These matters include claims for taxes on the importation of computer software. In November 2008, the company won a significant case in the Superior Chamber of the federal administrative tax court in Brazil, and in late July 2009, the company received written confirmation regarding this decision. The total potential amount related to the remaining matters for all applicable years is approximately $700 million. The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability. | |
Commitments | |
The company’s extended lines of credit to third-party entities include unused amounts of $5,028 million and $4,719 million at December 31, 2013 and 2012, respectively. A portion of these amounts was available to the company’s business partners to support their working capital needs. In addition, the company has committed to provide future financing to its clients in connection with client purchase agreements for approximately $1,769 million and $1,513 million at December 31, 2013 and 2012, respectively. | |
The company has applied the guidance requiring a guarantor to disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s performance is remote. The following is a description of arrangements in which the company is the guarantor. | |
The company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party with respect to certain matters. Typically, these obligations arise in the context of contracts entered into by the company, under which the company customarily agrees to hold the other party harmless against losses arising from a breach of representations and covenants related to such matters as title to assets sold, certain IP rights, specified environmental matters, third-party performance of nonfinancial contractual obligations and certain income taxes. In each of these circumstances, payment by the company is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, the procedures of which typically allow the company to challenge the other party’s claims. While typically indemnification provisions do not include a contractual maximum on the company’s payment, the company’s obligations under these agreements may be limited in terms of time and/or nature of claim, and in some instances, the company may have recourse against third parties for certain payments made by the company. | |
It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the company under these agreements have not had a material effect on the company’s business, financial condition or results of operations. | |
In addition, the company guarantees certain loans and financial commitments. The maximum potential future payment under these financial guarantees was $44 million and $65 million at December 31, 2013 and 2012, respectively. The fair value of the guarantees recognized in the Consolidated Statement of Financial Position is not material. |
Taxes
Taxes | 12 Months Ended | |||||||||||
Dec. 31, 2013 | ||||||||||||
Taxes | ' | |||||||||||
Taxes | ' | |||||||||||
Note N. | ||||||||||||
Taxes | ||||||||||||
($ in millions) | ||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||
Income before income taxes | ||||||||||||
U.S. operations | $ | 6,857 | $ | 9,668 | $ | 9,716 | ||||||
Non-U.S. operations | 12,667 | 12,234 | 11,287 | |||||||||
Total income before income taxes | $ | 19,524 | $ | 21,902 | $ | 21,003 | ||||||
The provision for income taxes by geographic operations is as follows: | ||||||||||||
($ in millions) | ||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||
U.S. operations | $ | 993 | $ | 2,582 | $ | 2,141 | ||||||
Non-U.S. operations | 2,048 | 2,716 | 3,007 | |||||||||
Total provision for income taxes | $ | 3,041 | $ | 5,298 | $ | 5,148 | ||||||
The components of the provision for income taxes by taxing jurisdiction are as follows: | ||||||||||||
($ in millions) | ||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||
U.S. federal | ||||||||||||
Current | $ | 1,406 | $ | 1,361 | $ | 268 | ||||||
Deferred | -652 | 403 | 909 | |||||||||
754 | 1,764 | 1,177 | ||||||||||
U.S. state and local | ||||||||||||
Current | 178 | 134 | 429 | |||||||||
Deferred | -321 | 289 | 81 | |||||||||
-143 | 423 | 510 | ||||||||||
Non-U.S. | ||||||||||||
Current | 3,067 | 3,006 | 3,239 | |||||||||
Deferred | -637 | 105 | 222 | |||||||||
2,430 | 3,111 | 3,461 | ||||||||||
Total provision for income taxes | 3,041 | 5,298 | 5,148 | |||||||||
Provision for social security, real estate, personal property | ||||||||||||
and other taxes | 4,198 | 4,331 | 4,289 | |||||||||
Total taxes included in net income | $ | 7,239 | $ | 9,629 | $ | 9,437 | ||||||
A reconciliation of the statutory U.S. federal tax rate to the company’s effective tax rate is as follows: | ||||||||||||
For the year ended December 31: | 2013* | 2012* | 2011* | |||||||||
Statutory rate | 35 | % | 35 | % | 35 | % | ||||||
Foreign tax differential | -14 | -11 | -10 | |||||||||
State and local | 0 | 1 | 2 | |||||||||
Domestic incentives | -3 | -1 | -1 | |||||||||
Other | -2 | 0 | -1 | |||||||||
Effective rate | 16 | % | 24 | % | 25 | % | ||||||
* Percentages rounded for disclosure purposes. | ||||||||||||
The significant components reflected within the tax rate reconciliation above labeled “Foreign tax differential” include the effects of foreign subsidiaries’ earnings taxed at rates other than the U.S. statutory rate, foreign export incentives, the U.S. tax impacts of non-U.S. earnings repatriation and any net impacts of intercompany transactions. These items also reflect audit settlements or changes in the amount of unrecognized tax benefits associated with each of these items. | ||||||||||||
In the fourth quarter of 2013, the Internal Revenue Service (IRS) concluded its examination of the company’s income tax returns for 2008 through 2010 and issued a final Revenue Agent Report (RAR). The company agreed with all of the adjustments. The company has redetermined its unrecognized tax benefits, including similar items in open tax years, based on the agreed adjustments in the RAR and associated information and analysis. | ||||||||||||
The 2013 effective tax rate benefitted by 11.5 points from the completion of the IRS examination discussed above including associated reserve redeterminations. In addition, the effective tax rate also benefitted from the company’s geographic mix of pre-tax income and incentives, the impact of foreign tax credits, benefits realized during the year related to the American Taxpayer Relief Act, a favorable tax agreement which required a reassessment of certain valuation allowances on deferred taxes and certain non-U.S. audit settlements. | ||||||||||||
These benefits were partially offset by 2013 tax charges related to certain intercompany payments made by foreign subsidiaries and the tax costs associated with the intercompany licensing of certain IP. | ||||||||||||
The effect of tax law changes on deferred tax assets and liabilities did not have a material impact on the company’s effective tax rate. | ||||||||||||
The significant components of deferred tax assets and liabilities that are recorded in the Consolidated Statement of Financial Position were as follows: | ||||||||||||
Deferred Tax Assets | ||||||||||||
($ in millions) | ||||||||||||
At December 31: | 2013 | 2012* | ||||||||||
Retirement benefits | $ | 3,704 | $ | 5,870 | ||||||||
Share-based and other compensation | 1,262 | 1,666 | ||||||||||
Domestic tax loss/credit carryforwards | 982 | 954 | ||||||||||
Deferred income | 964 | 1,018 | ||||||||||
Foreign tax loss/credit carryforwards | 651 | 681 | ||||||||||
Bad debt, inventory and warranty reserves | 592 | 586 | ||||||||||
Depreciation | 382 | 456 | ||||||||||
Other | 1,774 | 1,659 | ||||||||||
Gross deferred tax assets | 10,311 | 12,890 | ||||||||||
Less: valuation allowance | 734 | 1,187 | ||||||||||
Net deferred tax assets | $ | 9,577 | $ | 11,703 | ||||||||
* Reclassified to conform with 2013 presentation. | ||||||||||||
Deferred Tax Liabilities | ||||||||||||
($ in millions) | ||||||||||||
At December 31: | 2013 | 2012* | ||||||||||
Depreciation | $ | 1,346 | $ | 1,378 | ||||||||
Retirement benefits | 1,219 | 257 | ||||||||||
Goodwill and intangible assets | 1,173 | 957 | ||||||||||
Leases | 1,119 | 2,216 | ||||||||||
Software development costs | 558 | 542 | ||||||||||
Deferred transition costs | 424 | 440 | ||||||||||
Other | 841 | 993 | ||||||||||
Gross deferred tax liabilities | $ | 6,680 | $ | 6,783 | ||||||||
* Reclassified to conform with 2013 presentation. | ||||||||||||
For income tax return purposes, the company has foreign and domestic loss carryforwards, the tax effect of which is $626 million, as well as domestic and foreign credit carryforwards of $1,007 million. Substantially all of these carryforwards are available for at least two years or are available for 10 years or more. | ||||||||||||
The valuation allowance at December 31, 2013 principally applies to certain foreign, state and local loss carryforwards that, in the opinion of management, are more likely than not to expire unutilized. However, to the extent that tax benefits related to these carryforwards are realized in the future, the reduction in the valuation allowance will reduce income tax expense. | ||||||||||||
The amount of unrecognized tax benefits at December 31, 2013 decreased by $1,214 million in 2013 to $4,458 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: | ||||||||||||
($ in millions) | ||||||||||||
2013 | 2012 | 2011 | ||||||||||
Balance at January 1 | $ | 5,672 | $ | 5,575 | $ | 5,293 | ||||||
Additions based on tax positions related to the current year | 829 | 401 | 672 | |||||||||
Additions for tax positions of prior years | 417 | 215 | 379 | |||||||||
Reductions for tax positions of prior years (including | ||||||||||||
impacts due to a lapse in statute) | -2,201 | -425 | -538 | |||||||||
Settlements | -259 | -94 | -231 | |||||||||
Balance at December 31 | $ | 4,458 | $ | 5,672 | $ | 5,575 | ||||||
The additions to unrecognized tax benefits related to the current and prior years are primarily attributable to non-U.S. issues, certain tax incentives and credits, acquisition-related matters and state issues. The settlements and reductions to unrecognized tax benefits for tax positions of prior years are primarily attributable to the completion of the IRS examination for 2008 – 2010, non-U.S. audits and impacts due to lapses in statutes of limitation | ||||||||||||
. | ||||||||||||
In April 2010, the company appealed the determination of a non-U.S. taxing authority with respect to certain foreign tax losses. The tax benefit of these losses totals $1,141 million as of December 31, 2013. The 2013 decrease was driven by currency and has been included in the 2013 reductions for tax positions of prior years. In April 2011, the company received notification that the appeal was denied. In June 2011, the company filed a lawsuit challenging this decision. The company filed its latest brief in December 2013. No final determination has been reached on this matter. | ||||||||||||
The liability at December 31, 2013 of $4,458 million can be reduced by $556 million of offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, state income taxes and timing adjustments. The net amount of $3,902 million, if recognized, would favorably affect the company’s effective tax rate. The net amounts at December 31, 2012 and 2011 were $5,099 million and $5,090 million, respectively. | ||||||||||||
Interest and penalties related to income tax liabilities are included in income tax expense. During the year ended December 31, 2013, the company recognized a $93 million benefit in interest expense and penalties; in 2012, the company recognized $134 million in interest expense and penalties, and in 2011, the company recognized a $129 million in interest expense and penalties. The company has $417 million for the payment of interest and penalties accrued at December 31, 2013, and had $533 million accrued at December 31, 2012. | ||||||||||||
Within the next 12 months, the company believes it is reasonably possible that the total amount of unrecognized tax benefits associated with certain positions may be reduced. The company expects that certain foreign and state issues may be concluded in the next 12 months. The company estimates that the unrecognized tax benefits at December 31, 2013 could be reduced by approximately $101 million. | ||||||||||||
The company is subject to taxation in the U.S. and various state and foreign jurisdictions. With respect to major U.S. state and foreign taxing jurisdictions, the company is generally no longer subject to tax examinations for years prior to 2008. The company is no longer subject to income tax examination of its U.S. federal tax return for years prior to 2011. The open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations related to the amount and/or timing of income, deductions and tax credits. Although the outcome of tax audits is always uncertain, the company believes that adequate amounts of tax and interest have been provided for any adjustments that are expected to result for these years. | ||||||||||||
In the fourth quarter of 2013, the company received a draft tax assessment notice for approximately $866 million from the Indian Tax Authorities for 2009. The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability. At December 31, 2013, the company has recorded $433 million as prepaid income taxes in India. A significant portion of this balance represents cash tax deposits paid over time to protect the company’s right to appeal various income tax assessments made by the Indian Tax Authorities. | ||||||||||||
The company has not provided deferred taxes on $52.3 billion of undistributed earnings of non-U.S. subsidiaries at December 31, 2013, as it is the company’s policy to indefinitely reinvest these earnings in non-U.S. operations. However, the company periodically repatriates a portion of these earnings to the extent that it does not incur an additional U.S. tax liability. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested earnings is not practicable. |
Research_Development_and_Engin
Research, Development and Engineering | 12 Months Ended |
Dec. 31, 2013 | |
Research and Development [Abstract] | ' |
Research, Development and Engineering | ' |
Note O. | |
Research, Development and Engineering | |
RD&E expense was $6,226 million in 2013, $6,302 million in 2012 and $6,258 million in 2011. | |
The company incurred expense of $5,959 million, $6,034 million and $5,990 million in 2013, 2012 and 2011, respectively, for scientific research and the application of scientific advances to the development of new and improved products and their uses, as well as services and their application. Within these amounts, software-related expense was $3,077 million, $3,078 million and $3,097 million in 2013, 2012 and 2011, respectively. | |
Expense for product-related engineering was $267 million, $268 million and $267 million in 2013, 2012 and 2011, respectively. |
Earnings_Per_Share_of_Common_S
Earnings Per Share of Common Stock | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Earnings Per Share of Common Stock | ' | ||||||||||||
Earnings Per Share of Common Stock | ' | ||||||||||||
Note P. | |||||||||||||
Earnings Per Share of Common Stock | |||||||||||||
The following table presents the computation of basic and diluted earnings per share of common stock. | |||||||||||||
($ in millions except per share amounts) | |||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | ||||||||||
Weighted-average number of shares on which earnings | |||||||||||||
per share calculations are based | |||||||||||||
Basic | 1,094,486,604 | 1,142,508,521 | 1,196,951,006 | ||||||||||
Add—incremental shares under stock-based | |||||||||||||
compensation plans | 6,751,240 | 10,868,426 | 14,241,131 | ||||||||||
Add—incremental shares associated with contingently | |||||||||||||
issuable shares | 1,804,313 | 2,072,370 | 2,575,848 | ||||||||||
Assuming dilution | 1,103,042,156 | 1,155,449,317 | 1,213,767,985 | ||||||||||
Net income on which basic earnings per share is | |||||||||||||
calculated | $ | 16,483 | $ | 16,604 | $ | 15,855 | |||||||
Less—net income applicable to contingently issuable | |||||||||||||
shares | -1 | -1 | 0 | ||||||||||
Net income on which diluted earnings per share is | |||||||||||||
calculated | $ | 16,483 | $ | 16,603 | $ | 15,855 | |||||||
Earnings/(loss) per share of common stock | |||||||||||||
Assuming dilution | $ | 14.94 | $ | 14.37 | $ | 13.06 | |||||||
Basic | $ | 15.06 | $ | 14.53 | $ | 13.25 | |||||||
Weighted-average stock options to purchase 8,797 common shares in 2013 were outstanding, but were not included in the computation of diluted earnings per share because the exercise price of the options was greater than the average market price of the common shares for the full year, and therefore, the effect would have been antidilutive. There were no stock options outstanding in 2012 and 2011 that were considered antidilutive and not included in the diluted earnings per share calculation. |
Rental_Expense_and_Lease_Commi
Rental Expense and Lease Commitments | 12 Months Ended | |||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||
Rental Expense and Lease Commitments | ' | |||||||||||||||||||||
Rental Expense and Lease Commitments | ' | |||||||||||||||||||||
Note Q. | ||||||||||||||||||||||
Rental Expense and Lease Commitments | ||||||||||||||||||||||
Rental expense, including amounts charged to inventories and fixed assets, and excluding amounts previously reserved, was $1,759 million in 2013, $1,767 million in 2012 and $1,836 million in 2011. Rental expense in agreements with rent holidays and scheduled rent increases is recorded on a straight-line basis over the lease term. Contingent rentals are included in the determination of rental expense as accruable. The table below depicts gross minimum rental commitments under noncancelable leases, amounts related to vacant space associated with infrastructure reductions, sublease income commitments and capital lease commitments. These amounts reflect activities primarily related to office space, as well as manufacturing facilities. | ||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | Beyond 2018 | |||||||||||||||||
Operating lease commitments | ||||||||||||||||||||||
Gross minimum rental commitments | ||||||||||||||||||||||
(including vacant space below) | $ | 1,492 | $ | 1,286 | $ | 1,016 | $ | 799 | $ | 620 | $ | 778 | ||||||||||
Vacant space | $ | 24 | $ | 16 | $ | 6 | $ | 4 | $ | 1 | $ | 0 | ||||||||||
Sublease income commitments | $ | 22 | $ | 16 | $ | 14 | $ | 9 | $ | 4 | $ | 7 | ||||||||||
Capital lease commitments | $ | 16 | $ | 12 | $ | 13 | $ | 3 | $ | 9 | $ | 5 |
StockBased_Compensation
Stock-Based Compensation | 12 Months Ended | |||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||||
Note R. | ||||||||||||||||||
Stock-Based Compensation | ||||||||||||||||||
Stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. See note A, “Significant Accounting Policies,” on page 90 for additional information. | ||||||||||||||||||
The following table presents total stock-based compensation cost included in the Consolidated Statement of Earnings. | ||||||||||||||||||
($ in millions) | ||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||||||||
Cost | $ | 122 | $ | 132 | $ | 120 | ||||||||||||
Selling, general and administrative | 435 | 498 | 514 | |||||||||||||||
Research, development and engineering | 57 | 59 | 62 | |||||||||||||||
Other (income) and expense | — | -1 | — | |||||||||||||||
Pre-tax stock-based compensation cost | 614 | 688 | 697 | |||||||||||||||
Income tax benefits | -213 | -240 | -246 | |||||||||||||||
Total stock-based compensation cost | $ | 402 | $ | 448 | $ | 450 | ||||||||||||
Total unrecognized compensation cost related to non-vested awards at December 31, 2013 and 2012 was $995 million and $1,101 million, respectively. The amount at December 31, 2013 is expected to be recognized over a weighted-average period of approximately three years. | ||||||||||||||||||
There was no significant capitalized stock-based compensation cost at December 31, 2013, 2012 and 2011. | ||||||||||||||||||
Incentive Awards | ||||||||||||||||||
Stock-based incentive awards are provided to employees under the terms of the company’s long-term performance plans (the “Plans”). The Plans are administered by the Executive Compensation and Management Resources Committee of the Board of Directors (the “Committee”). Awards available under the Plans principally include stock options, restricted stock units, performance share units or any combination thereof. | ||||||||||||||||||
The amount of shares originally authorized to be issued under the company’s existing Plans was 274.1 million at December 31, 2013. In addition, certain incentive awards granted under previous plans, if and when those awards were canceled, could be reissued under the company’s existing Plans. As such, 66.2 million additional awards were considered authorized to be issued under the company’s existing Plans as of December 31, 2013. There were 118.6 million unused shares available to be granted under the Plans as of December 31, 2013. | ||||||||||||||||||
Under the company’s long-standing practices and policies, all awards are approved prior to or on the date of grant. The awards approval process specifies the individual receiving the grant, the number of options or the value of the award, the exercise price or formula for determining the exercise price and the date of grant. All awards for senior management are approved by the Committee. All awards for employees other than senior management are approved by senior management pursuant to a series of delegations that were approved by the Committee, and the grants made pursuant to these delegations are reviewed periodically with the Committee. Awards that are given as part of annual total compensation for senior management and other employees are made on specific cycle dates scheduled in advance. With respect to awards given in connection with promotions or new hires, the company’s policy requires approval of such awards prior to the grant date, which is typically the date of the promotion or the date of hire. | ||||||||||||||||||
Stock Options | ||||||||||||||||||
Stock options are awards which allow the employee to purchase shares of the company’s stock at a fixed price. Stock options are granted at an exercise price equal to the company’s average high and low stock price on the date of grant. These awards, which generally vest 25 percent per year, are fully vested four years from the date of grant and have a contractual term of 10 years. | ||||||||||||||||||
The company estimates the fair value of stock options at the date of grant using the Black-Scholes valuation model. Key inputs and assumptions used to estimate the fair value of stock options include the grant price of the award, the expected option term, volatility of the company’s stock, the risk-free rate and the company’s dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the company. | ||||||||||||||||||
During the years ended December 31, 2013, 2012 and 2011, the company did not grant stock options. | ||||||||||||||||||
The following table summarizes option activity under the Plans during the years ended December 31, 2013, 2012 and 2011. | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
Weighted- | Number of | Weighted- | Number of | Weighted- | Number of | |||||||||||||
Average | Shares | Average | Shares | Average | Shares | |||||||||||||
Exercise Price | Under Option | Exercise Price | Under Option | Exercise Price | Under Option | |||||||||||||
Balance at January 1 | $ | 94 | 11,389,721 | $ | 90 | 20,662,322 | $ | 94 | 39,197,728 | |||||||||
Options exercised | 90 | -5,585,127 | 86 | -9,080,170 | 98 | -18,144,309 | ||||||||||||
Options canceled/expired | 86 | -181,643 | 75 | -192,431 | 107 | -391,097 | ||||||||||||
Balance at December 31 | $ | 97 | 5,622,951 | $ | 94 | 11,389,721 | $ | 90 | 20,662,322 | |||||||||
Exercisable at December 31 | $ | 97 | 5,622,951 | $ | 94 | 11,389,721 | $ | 90 | 20,662,322 | |||||||||
The shares under option at December 31, 2013 were in the following exercise price ranges: | ||||||||||||||||||
Options Outstanding and Exercisable | ||||||||||||||||||
Weighted-Average | ||||||||||||||||||
Weighted- | Number of | Aggregate | Remaining | |||||||||||||||
Average | Shares | Intrinsic | Contractual Life | |||||||||||||||
Exercise Price Range | Exercise Price | Under Option | Value | (in Years) | ||||||||||||||
$85 and under | $ | 82 | 468,427 | $ | 49,244,658 | 2.1 | ||||||||||||
$86–$105 | 98 | 4,908,689 | 440,012,196 | 1.1 | ||||||||||||||
$106 and over | 106 | 245,835 | 20,055,475 | 0.2 | ||||||||||||||
$ | 97 | 5,622,951 | $ | 509,312,330 | 1.1 | |||||||||||||
In connection with various acquisition transactions, there was an additional 0.6 million stock-based awards, consisting of stock options and restricted stock units, outstanding at December 31, 2013, as a result of the company’s assumption of stock-based awards previously granted by the acquired entities. The weighted-average exercise price of these awards was $67 per share. | ||||||||||||||||||
Exercises of Employee Stock Options | ||||||||||||||||||
The total intrinsic value of options exercised during the years ended December 31, 2013, 2012 and 2011 was $614 million, $1,005 million and $1,269 million, respectively. The total cash received from employees as a result of employee stock option exercises for the years ended December 31, 2013, 2012 and 2011 was approximately $505 million, $785 million and $1,786 million, respectively. In connection with these exercises, the tax benefits realized by the company for the years ended December 31, 2013, 2012 and 2011 were $199 million, $341 million and $412 million, respectively. | ||||||||||||||||||
The company settles employee stock option exercises primarily with newly issued common shares and, occasionally, with treasury shares. Total treasury shares held at December 31, 2013 and 2012 were approximately 1,153 million and 1,080 million shares, respectively. | ||||||||||||||||||
Stock Awards | ||||||||||||||||||
In lieu of stock options, the company currently grants its employees stock awards. These awards are made in the form of Restricted Stock Units (RSUs), including Retention Restricted Stock Units (RRSUs), or Performance Share Units (PSUs). | ||||||||||||||||||
The tables below summarize RSU and PSU activity under the Plans during the years ended December 31, 2013, 2012 and 2011. | ||||||||||||||||||
RSUs | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||
Average | Number | Average | Number | Average | Number | |||||||||||||
Grant Price | of Units | Grant Price | of Units | Grant Price | of Units | |||||||||||||
Balance at January 1 | $ | 148 | 9,841,461 | $ | 129 | 12,218,601 | $ | 110 | 11,196,446 | |||||||||
RSUs granted | 189 | 2,541,081 | 184 | 2,635,772 | 154 | 5,196,802 | ||||||||||||
RSUs released | 131 | -2,952,363 | 117 | -4,338,787 | 106 | -3,508,700 | ||||||||||||
RSUs canceled/forfeited | 154 | -794,862 | 139 | -674,125 | 122 | -665,947 | ||||||||||||
Balance at December 31 | $ | 166 | 8,635,317 | $ | 148 | 9,841,461 | $ | 129 | 12,218,601 | |||||||||
PSUs | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||
Average | Number | Average | Number | Average | Number | |||||||||||||
Grant Price | of Units | Grant Price | of Units | Grant Price | of Units | |||||||||||||
Balance at January 1 | $ | 151 | 3,172,201 | $ | 122 | 3,686,991 | $ | 111 | 3,649,288 | |||||||||
PSUs granted at target | 195 | 869,875 | 185 | 1,004,003 | 154 | 1,055,687 | ||||||||||||
Additional shares earned | ||||||||||||||||||
above target* | 118 | 152,069 | 102 | 550,399 | 118 | 230,524 | ||||||||||||
PSUs released | 118 | -1,321,784 | 102 | -1,998,746 | 118 | -1,189,765 | ||||||||||||
PSUs canceled/forfeited | 170 | -48,067 | 131 | -70,446 | 118 | -58,743 | ||||||||||||
Balance at December 31** | $ | 178 | 2,824,294 | $ | 151 | 3,172,201 | $ | 122 | 3,686,991 | |||||||||
* Represents additional shares issued to employees after vesting of PSUs because final performance metrics exceeded specified targets. | ||||||||||||||||||
** Represents the number of shares expected to be issued based on achievement of grant date performance targets. The actual number of shares issued depends on the company’s performance against specified targets over the vesting period. | ||||||||||||||||||
RSUs are stock awards granted to employees that entitle the holder to shares of common stock as the award vests, typically over a one- to five-year period. For RSUs, dividend equivalents are not paid. The fair value of such RSUs is determined and fixed on the grant date based on the company’s stock price adjusted for the exclusion of dividend equivalents. | ||||||||||||||||||
The remaining weighted-average contractual term of RSUs at December 31, 2013, 2012 and 2011 is the same as the period over which the remaining cost of the awards will be recognized, which is approximately three years. The fair value of RSUs granted during the years ended December 31, 2013, 2012 and 2011 was $481 million, $486 million and $803 million, respectively. The total fair value of RSUs vested and released during the years ended December 31, 2013, 2012 and 2011 was $386 million, $509 million and $373 million, respectively. As of December 31, 2013, 2012 and 2011, there was $871 million, $938 million and $1,021 million, respectively, of unrecognized compensation cost related to non-vested RSUs. The company received no cash from employees as a result of employee vesting and release of RSUs for the years ended December 31, 2013, 2012 and 2011. In the second quarter of 2011, the company granted equity awards valued at approximately $1 thousand each to about 400,000 non-executive employees. These awards were made under the Plans and vest in December 2015. | ||||||||||||||||||
PSUs are stock awards where the number of shares ultimately received by the employee depends on the company’s performance against specified targets and typically vest over a three-year period. For PSUs, dividend equivalents are not paid. The fair value of each PSU is determined on the grant date, based on the company’s stock price, adjusted for the exclusion of dividend equivalents, and assumes that performance targets will be achieved. Over the performance period, the number of shares of stock that will be issued is adjusted upward or downward based upon the probability of achievement of performance targets. The ultimate number of shares issued and the related compensation cost recognized as expense will be based on a comparison of the final performance metrics to the specified targets. The fair value of PSUs granted at target during the years ended December 31, 2013, 2012 and 2011 was $170 million, $186 million and $165 million, respectively. Total fair value of PSUs vested and released during the years ended December 31, 2013, 2012 and 2011 was $156 million, $203 million and $141 million, respectively. | ||||||||||||||||||
In connection with vesting and release of RSUs and PSUs, the tax benefits realized by the company for the years ended December 31, 2013, 2012 and 2011 were $312 million, $454 million and $283 million, respectively. | ||||||||||||||||||
IBM Employees Stock Purchase Plan | ||||||||||||||||||
The company maintains a non-compensatory Employees Stock Purchase Plan (ESPP). The ESPP enables eligible participants to purchase full or fractional shares of IBM common stock at a 5 percent discount off the average market price on the day of purchase through payroll deductions of up to 10 percent of eligible compensation. Eligible compensation includes any compensation received by the employee during the year. The ESPP provides for offering periods during which shares may be purchased and continues as long as shares remain available under the ESPP, unless terminated earlier at the discretion of the Board of Directors. Individual ESPP participants are restricted from purchasing more than $25,000 of common stock in one calendar year or 1,000 shares in an offering period. | ||||||||||||||||||
Employees purchased 1.5 million, 1.6 million and 1.9 million shares under the ESPP during the years ended December 31, 2013, 2012 and 2011, respectively. Cash dividends declared and paid by the company on its common stock also include cash dividends on the company stock purchased through the ESPP. Dividends are paid on full and fractional shares and can be reinvested in the ESPP. The company stock purchased through the ESPP is considered outstanding and is included in the weighted-average outstanding shares for purposes of computing basic and diluted earnings per share. | ||||||||||||||||||
Approximately 2.3 million, 3.8 million and 5.4 million shares were available for purchase under the ESPP at December 31, 2013, 2012 and 2011, respectively. |
RetirementRelated_Benefits
Retirement-Related Benefits | 12 Months Ended | |||||||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ' | |||||||||||||||||||||||||||||
Retirement-Related Benefits | ' | |||||||||||||||||||||||||||||
Note S. | ||||||||||||||||||||||||||||||
Retirement-Related Benefits | ||||||||||||||||||||||||||||||
Description of Plans | ||||||||||||||||||||||||||||||
IBM sponsors defined benefit pension plans and defined contribution plans that cover substantially all regular employees, a supplemental retention plan that covers certain U.S. executives and nonpension postretirement benefit plans primarily consisting of retiree medical and dental benefits for eligible retirees and dependents. | ||||||||||||||||||||||||||||||
U.S. Plans | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plans | ||||||||||||||||||||||||||||||
IBM Personal Pension Plan | ||||||||||||||||||||||||||||||
IBM provides U.S. regular, full-time and part-time employees hired prior to January 1, 2005 with noncontributory defined benefit pension benefits via the IBM Personal Pension Plan. Prior to 2008, the IBM Personal Pension Plan consisted of a tax qualified (qualified) plan and a non-tax qualified (nonqualified) plan. Effective January 1, 2008, the nonqualified plan was renamed the Excess Personal Pension Plan (Excess PPP) and the qualified plan is now referred to as the Qualified PPP. The combined plan is now referred to as the PPP. The Qualified PPP is funded by company contributions to an irrevocable trust fund, which is held for the sole benefit of participants and beneficiaries. The Excess PPP, which is unfunded, provides benefits in excess of IRS limitations for qualified plans. | ||||||||||||||||||||||||||||||
Benefits provided to the PPP participants are calculated using benefit formulas that vary based on the participant. The first method uses a five-year, final pay formula that determines benefits based on salary, years of service, mortality and other participant-specific factors. The second method is a cash balance formula that calculates benefits using a percentage of employees’ annual salary, as well as an interest crediting rate. | ||||||||||||||||||||||||||||||
Benefit accruals under the IBM Personal Pension Plan ceased December 31, 2007 for all participants. | ||||||||||||||||||||||||||||||
U.S. Supplemental Executive Retention Plan | ||||||||||||||||||||||||||||||
The company also sponsors a nonqualified U.S. Supplemental Executive Retention Plan (Retention Plan). The Retention Plan, which is unfunded, provides benefits to eligible U.S. executives based on average earnings, years of service and age at termination of employment. | ||||||||||||||||||||||||||||||
Benefit accruals under the Retention Plan ceased December 31, 2007 for all participants. | ||||||||||||||||||||||||||||||
Defined Contribution Plans | ||||||||||||||||||||||||||||||
IBM 401(k) Plus Plan | ||||||||||||||||||||||||||||||
U.S. regular, full-time and part-time employees are eligible to participate in the IBM 401(k) Plus Plan, which is a qualified defined contribution plan under section 401(k) of the Internal Revenue Code. Effective January 1, 2008, under the IBM 401(k) Plus Plan, eligible employees receive a dollar-for-dollar match of their contributions up to 6 percent of eligible compensation for those hired prior to January 1, 2005, and, generally up to 5 percent of eligible compensation for those hired on or after January 1, 2005. In addition, eligible employees receive automatic contributions from the company equal to 1, 2 or 4 percent of eligible compensation based on their eligibility to participate in the PPP as of December 31, 2007. Employees generally receive automatic contributions and matching contributions after the completion of one year of service. Further, through June 30, 2009, IBM contributed transition credits to eligible participants’ 401(k) Plus Plan accounts. The amount of the transition credits was based on a participant’s age and service as of June 30, 1999. | ||||||||||||||||||||||||||||||
The company’s matching contributions vest immediately and participants are always fully vested in their own contributions. All contributions, including the company match, are made in cash and invested in accordance with participants’ investment elections. There are no minimum amounts that must be invested in company stock, and there are no restrictions on transferring amounts out of company stock to another investment choice, other than excessive trading rules applicable to such investments. Effective January 1, 2013, matching and automatic contributions are made once annually at the end of the year. In order to receive such contributions each year, a participant must be employed on December 15 of the plan year. However, if a participant separates from service prior to December 15, and has completed certain service and/or age requirements, then the participant will be eligible to receive such matching and automatic contributions following separation from service. | ||||||||||||||||||||||||||||||
IBM Excess 401(k) Plus Plan | ||||||||||||||||||||||||||||||
Effective January 1, 2008, the company replaced the IBM Executive Deferred Compensation Plan, an unfunded, nonqualified, defined contribution plan, with the IBM Excess 401(k) Plus Plan (Excess 401(k)), an unfunded, nonqualified defined contribution plan. Employees who are eligible to participate in the 401(k) Plus Plan and whose eligible compensation is expected to exceed the IRS compensation limit for qualified plans are eligible to participate in the Excess 401(k). The purpose of the Excess 401(k) is to provide benefits that would be provided under the qualified IBM 401(k) Plus Plan if the compensation limits did not apply. | ||||||||||||||||||||||||||||||
Amounts deferred into the Excess 401(k) are record-keeping (notional) accounts and are not held in trust for the participants. Participants in the Excess 401(k) may invest their notional accounts in investments which mirror the primary investment options available under the 401(k) Plus Plan. Participants in the Excess 401(k) are also eligible to receive company match and automatic contributions on eligible compensation deferred into the Excess 401(k) and on compensation earned in excess of the Internal Revenue Code pay limit once they have completed one year of service. Through June 30, 2009, eligible participants also received transition credits. Amounts deferred into the Excess 401(k), including company contributions are recorded as liabilities in the Consolidated Statement of Financial Position. Effective January 1, 2013, matching and automatic contributions are recorded once annually at the end of the year. In order to receive such contributions each year, a participant must be employed on December 15 of the plan year. However, if a participant separates from service prior to December 15, and has completed certain service and/or age requirements, then the participant will be eligible to receive such matching and automatic contributions following separation from service. | ||||||||||||||||||||||||||||||
Nonpension Postretirement Benefit Plan | ||||||||||||||||||||||||||||||
U.S. Nonpension Postretirement Plan | ||||||||||||||||||||||||||||||
The company sponsors a defined benefit nonpension postretirement benefit plan that provides medical and dental benefits to eligible U.S. retirees and eligible dependents, as well as life insurance for eligible U.S. retirees. Effective July 1, 1999, the company established a Future Health Account (FHA) for employees who were more than five years from retirement eligibility. Employees who were within five years of retirement eligibility are covered under the company’s prior retiree health benefits arrangements. Under either the FHA or the prior retiree health benefit arrangements, there is a maximum cost to the company for retiree health benefits. Effective January 1, 2014, the company amended the plan to establish a Health Reimbursement Arrangement (HRA) for each Medicare-eligible plan retiree, surviving spouse and long-term disability plan participant who is eligible for company subsidized coverage and who enrolls in an individual plan under the Medicare Exchange. The company also amended its life insurance plan. Employees retiring on or after January 1, 2015, will no longer be eligible for life insurance. Existing retirees and employees retiring during 2014 continue to be eligible for retiree life insurance | ||||||||||||||||||||||||||||||
Since January 1, 2004, new hires, as of that date or later, are not eligible for company subsidized nonpension postretirement benefits. | ||||||||||||||||||||||||||||||
Non-U.S. Plans | ||||||||||||||||||||||||||||||
Certain subsidiaries and branches outside the United States sponsor defined benefit and/or defined contribution plans that cover substantially all regular employees. The company deposits funds under various fiduciary-type arrangements, purchases annuities under group contracts or provides reserves for these plans. Benefits under the defined benefit plans are typically based either on years of service and the employee’s compensation (generally during a fixed number of years immediately before retirement) or on annual credits. The range of assumptions that are used for the non-U.S. defined benefit plans reflect the different economic environments within the various countries. | ||||||||||||||||||||||||||||||
In addition, certain of the company’s non-U.S. subsidiaries sponsor nonpension postretirement benefit plans that provide medical and dental benefits to eligible non-U.S. retirees and eligible dependents, as well as life insurance for certain eligible non-U.S. retirees. However, most non-U.S. retirees are covered by local government-sponsored and-administered programs. | ||||||||||||||||||||||||||||||
Plan Financial Information | ||||||||||||||||||||||||||||||
Summary of Financial Information | ||||||||||||||||||||||||||||||
The following table presents a summary of the total retirement-related benefits net periodic (income)/cost recorded in the Consolidated Statement of Earnings. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | Total | ||||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||||||||||
Defined benefit pension plans | $ | -223 | $ | -526 | $ | -774 | $ | 1,396 | $ | 1,040 | $ | 734 | $ | 1,173 | $ | 515 | $ | -40 | ||||||||||||
Retention Plan | 21 | 18 | 15 | — | — | — | 21 | 18 | 15 | |||||||||||||||||||||
Total defined benefit pension plans | ||||||||||||||||||||||||||||||
(income)/cost | $ | -202 | $ | -507 | $ | -759 | $ | 1,396 | $ | 1,040 | $ | 734 | $ | 1,195 | $ | 533 | $ | -25 | ||||||||||||
IBM 401(k) Plus Plan and | ||||||||||||||||||||||||||||||
non-U.S. plans | $ | 785 | $ | 857 | $ | 875 | $ | 575 | $ | 621 | $ | 608 | $ | 1,361 | $ | 1,478 | $ | 1,483 | ||||||||||||
Excess 401(k) | 24 | 29 | 30 | — | — | — | 24 | 29 | 30 | |||||||||||||||||||||
Total defined contribution plans cost | $ | 809 | $ | 885 | $ | 905 | $ | 575 | $ | 621 | $ | 608 | $ | 1,384 | $ | 1,506 | $ | 1,513 | ||||||||||||
Nonpension postretirement benefit | ||||||||||||||||||||||||||||||
plans cost | $ | 218 | $ | 268 | $ | 269 | $ | 79 | $ | 82 | $ | 76 | $ | 298 | $ | 350 | $ | 345 | ||||||||||||
Total retirement-related benefits | ||||||||||||||||||||||||||||||
net periodic cost | $ | 826 | $ | 646 | $ | 415 | $ | 2,051 | $ | 1,743 | $ | 1,418 | $ | 2,876 | $ | 2,389 | $ | 1,832 | ||||||||||||
The following table presents a summary of the total PBO for defined benefit pension plans, APBO for nonpension postretirement benefit plans, fair value of plan assets and the associated funded status recorded in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Benefit Obligations | Fair Value of Plan Assets | Funded Status* | ||||||||||||||||||||||||||||
At December 31: | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
U.S. Plans | ||||||||||||||||||||||||||||||
Overfunded plans | ||||||||||||||||||||||||||||||
Qualified PPP | $ | 49,315 | $ | — | $ | 53,954 | $ | — | $ | 4,639 | $ | — | ||||||||||||||||||
Underfunded plans | ||||||||||||||||||||||||||||||
Qualified PPP | $ | — | $ | 54,907 | $ | — | $ | 53,630 | $ | — | $ | -1,277 | ||||||||||||||||||
Excess PPP | 1,425 | 1,576 | — | — | -1,425 | -1,576 | ||||||||||||||||||||||||
Retention Plan | 294 | 327 | — | — | -294 | -327 | ||||||||||||||||||||||||
Nonpension postretirement benefit plan | 4,633 | 5,282 | 177 | 433 | -4,456 | -4,849 | ||||||||||||||||||||||||
Total underfunded U.S. plans | $ | 6,352 | $ | 62,092 | $ | 177 | $ | 54,063 | $ | -6,175 | $ | -8,029 | ||||||||||||||||||
Non-U.S. Plans | ||||||||||||||||||||||||||||||
Overfunded plans | ||||||||||||||||||||||||||||||
Qualified defined benefit pension plans | $ | 9,336 | $ | 6,944 | $ | 10,240 | $ | 7,889 | $ | 904 | $ | 945 | ||||||||||||||||||
Nonpension postretirement benefit plans | 10 | 12 | 11 | 12 | 1 | 0 | ||||||||||||||||||||||||
Total overfunded non-U.S. plans | $ | 9,346 | $ | 6,956 | $ | 10,251 | $ | 7,901 | $ | 905 | $ | 945 | ||||||||||||||||||
Underfunded plans | ||||||||||||||||||||||||||||||
Qualified defined benefit pension plans | $ | 32,697 | $ | 35,956 | $ | 29,223 | $ | 30,169 | $ | -3,474 | $ | -5,788 | ||||||||||||||||||
Nonqualified defined benefit pension plans | 6,587 | 6,418 | — | — | -6,587 | -6,418 | ||||||||||||||||||||||||
Nonpension postretirement benefit plans | 822 | 1,007 | 81 | 107 | -741 | -900 | ||||||||||||||||||||||||
Total underfunded non-U.S. plans | $ | 40,106 | $ | 43,381 | $ | 29,304 | $ | 30,276 | $ | -10,802 | $ | -13,106 | ||||||||||||||||||
Total overfunded plans | $ | 58,661 | $ | 6,956 | $ | 64,205 | $ | 7,901 | $ | 5,544 | $ | 945 | ||||||||||||||||||
Total underfunded plans | $ | 46,458 | $ | 105,473 | $ | 29,481 | $ | 84,338 | $ | -16,977 | $ | -21,134 | ||||||||||||||||||
* Funded status is recognized in the Consolidated Statement of Financial Position as follows: Asset amounts as prepaid pension assets; (Liability) amounts as compensation and benefits (current liability) and retirement and nonpension postretirement benefit obligations (noncurrent liability). | ||||||||||||||||||||||||||||||
At December 31, 2013, the company’s qualified defined benefit pension plans worldwide were 102 percent funded compared to the benefit obligations, with the U.S. Qualified PPP 109 percent funded. Overall, including nonqualifed plans, the company’s defined benefit pension plans were 94 percent funded. | ||||||||||||||||||||||||||||||
Defined Benefit Pension and Nonpension Postretirement Benefit Plan Financial Information | ||||||||||||||||||||||||||||||
The following tables through page 132 represent financial information for the company’s retirement-related benefit plans, excluding defined contribution plans. The defined benefit pension plans under U.S. Plans consists of the Qualified PPP, the Excess PPP and the Retention Plan. The defined benefit pension plans and the nonpension postretirement benefit plans under Non-U.S. Plans consists of all plans sponsored by the company’s subsidiaries. The nonpension postretirement benefit plan under U.S. Plan consists of only the U.S. Nonpension Postretirement Benefit Plan. | ||||||||||||||||||||||||||||||
The tables below present the components of net periodic (income)/cost of the retirement-related benefit plans recognized in the Consolidated Statement of Earnings, excluding defined contribution plans. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plans | ||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | |||||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | 501 | $ | 443 | $ | 505 | ||||||||||||||||||
Interest cost | 1,980 | 2,196 | 2,456 | 1,524 | 1,779 | 1,843 | ||||||||||||||||||||||||
Expected return on plan assets | -3,981 | -4,043 | -4,043 | -2,195 | -2,303 | -2,521 | ||||||||||||||||||||||||
Amortization of transition assets | — | — | — | 0 | 0 | 0 | ||||||||||||||||||||||||
Amortization of prior service costs/(credits) | 10 | 10 | 10 | -119 | -154 | -162 | ||||||||||||||||||||||||
Recognized actuarial losses | 1,790 | 1,331 | 818 | 1,600 | 1,027 | 957 | ||||||||||||||||||||||||
Curtailments and settlements | — | — | — | 0 | 0 | 1 | ||||||||||||||||||||||||
Multi-employer plans/other costs* | — | — | — | 85 | 247 | 111 | ||||||||||||||||||||||||
Total net periodic (income)/cost | $ | -202 | $ | -507 | $ | -759 | $ | 1,396 | $ | 1,040 | $ | 734 | ||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Nonpension Postretirement Benefit Plans | ||||||||||||||||||||||||||||||
U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||
Service cost | $ | 35 | $ | 36 | $ | 33 | $ | 10 | $ | 14 | $ | 11 | ||||||||||||||||||
Interest cost | 164 | 200 | 236 | 60 | 64 | 67 | ||||||||||||||||||||||||
Expected return on plan assets | -1 | — | — | -9 | -9 | -10 | ||||||||||||||||||||||||
Amortization of transition assets | — | — | — | 0 | 0 | 0 | ||||||||||||||||||||||||
Amortization of prior service costs/(credits) | — | — | — | -5 | -4 | -4 | ||||||||||||||||||||||||
Recognized actuarial losses | 21 | 32 | — | 23 | 17 | 13 | ||||||||||||||||||||||||
Curtailments and settlements | — | — | — | 0 | 0 | — | ||||||||||||||||||||||||
Total net periodic cost | $ | 218 | $ | 268 | $ | 269 | $ | 79 | $ | 82 | $ | 76 | ||||||||||||||||||
* The 2012 Non-U.S. plans amount includes $162 million related to the IBM UK pension litigation. See page 132 for additional information. | ||||||||||||||||||||||||||||||
The following table presents the changes in benefit obligations and plan assets of the company’s retirement-related benefit plans, excluding defined contribution plans. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plans | Nonpension Postretirement Benefit Plans | |||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||
Change in benefit obligation | ||||||||||||||||||||||||||||||
Benefit obligation at January 1 | $ | 56,810 | $ | 54,085 | $ | 49,319 | $ | 42,861 | $ | 5,282 | $ | 5,273 | $ | 1,019 | $ | 901 | ||||||||||||||
Service cost | — | — | 501 | 443 | 35 | 36 | 10 | 14 | ||||||||||||||||||||||
Interest cost | 1,980 | 2,196 | 1,524 | 1,779 | 164 | 200 | 60 | 64 | ||||||||||||||||||||||
Plan participants’ contributions | — | — | 42 | 47 | 191 | 200 | — | — | ||||||||||||||||||||||
Acquisitions/divestitures, net | — | — | 89 | 26 | -2 | 2 | 0 | — | ||||||||||||||||||||||
Actuarial losses/(gains) | -4,344 | 3,810 | -362 | 6,365 | -481 | 104 | -89 | 76 | ||||||||||||||||||||||
Benefits paid from trust | -3,303 | -3,184 | -1,920 | -1,987 | -557 | -551 | -6 | -6 | ||||||||||||||||||||||
Direct benefit payments | -108 | -97 | -464 | -454 | -43 | -35 | -28 | -27 | ||||||||||||||||||||||
Foreign exchange impact | — | — | -115 | 77 | — | — | -89 | -24 | ||||||||||||||||||||||
Medicare/Government subsidies | — | — | — | — | 30 | 53 | — | — | ||||||||||||||||||||||
Amendments/curtailments/ | ||||||||||||||||||||||||||||||
settlements/other | — | — | 6 | 161 | 15 | — | -44 | 21 | ||||||||||||||||||||||
Benefit obligation at December 31 | $ | 51,034 | $ | 56,810 | $ | 48,620 | $ | 49,319 | $ | 4,633 | $ | 5,282 | $ | 832 | $ | 1,019 | ||||||||||||||
Change in plan assets | ||||||||||||||||||||||||||||||
Fair value of plan assets at January 1 | $ | 53,630 | $ | 51,218 | $ | 38,058 | $ | 35,362 | $ | 433 | $ | 38 | $ | 119 | $ | 112 | ||||||||||||||
Actual return on plan assets | 3,626 | 5,596 | 2,515 | 3,742 | 0 | 0 | 5 | 10 | ||||||||||||||||||||||
Employer contributions | — | — | 449 | 557 | 110 | 746 | 0 | 1 | ||||||||||||||||||||||
Acquisitions/divestitures, net | — | — | 35 | 40 | — | — | 0 | — | ||||||||||||||||||||||
Plan participants’ contributions | — | — | 42 | 47 | 191 | 200 | — | — | ||||||||||||||||||||||
Benefits paid from trust | -3,303 | -3,184 | -1,920 | -1,987 | -557 | -551 | -6 | -6 | ||||||||||||||||||||||
Foreign exchange impact | — | — | 121 | 305 | — | — | -14 | -8 | ||||||||||||||||||||||
Amendments/curtailments/ | ||||||||||||||||||||||||||||||
settlements/other | — | — | 164 | * | -8 | — | — | -12 | 10 | |||||||||||||||||||||
Fair value of plan assets at | ||||||||||||||||||||||||||||||
December 31 | $ | 53,954 | $ | 53,630 | $ | 39,464 | $ | 38,058 | $ | 177 | $ | 433 | $ | 92 | $ | 119 | ||||||||||||||
Funded status at December 31 | $ | 2,920 | $ | -3,180 | $ | -9,157 | $ | -11,261 | $ | -4,456 | $ | -4,849 | $ | -740 | $ | -900 | ||||||||||||||
Accumulated benefit obligation** | $ | 51,034 | $ | 56,810 | $ | 47,806 | $ | 48,369 | N/A | N/A | N/A | N/A | ||||||||||||||||||
* Includes the reinstatement of certain plan assets in Brazil due to government rulings in 2011 and 2013 allowing certain previously restricted plan assets to be returned to IBM. The assets will be returned to IBM monthly over a three-year period, starting June 2011 and September 2013 respectively, with approximately $204 million returned during 2013. The remaining surplus in Brazil at December 31, 2013 remains excluded from total plan assets due to continued restrictions imposed by the government on the use of those plan assets. | ||||||||||||||||||||||||||||||
** Represents the benefit obligation assuming no future participant compensation increases. | ||||||||||||||||||||||||||||||
N/A—Not applicable | ||||||||||||||||||||||||||||||
The following table presents the net funded status recognized in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plans | Nonpension Postretirement Benefit Plans | |||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||
At December 31: | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||
Prepaid pension assets | $ | 4,639 | $ | 0 | $ | 912 | $ | 944 | $ | 0 | $ | 0 | $ | 1 | $ | 0 | ||||||||||||||
Current liabilities— | ||||||||||||||||||||||||||||||
compensation and benefits | -107 | -102 | -364 | -356 | -256 | -239 | -16 | -20 | ||||||||||||||||||||||
Noncurrent liabilities—retirement | ||||||||||||||||||||||||||||||
and nonpension postretirement | ||||||||||||||||||||||||||||||
benefit obligations | -1,612 | -3,078 | -9,705 | -11,849 | -4,200 | -4,610 | -725 | -880 | ||||||||||||||||||||||
Funded status—net | $ | 2,920 | $ | -3,180 | $ | -9,157 | $ | -11,261 | $ | -4,456 | $ | -4,849 | $ | -740 | $ | -900 | ||||||||||||||
The following table presents the pre-tax net loss and prior service costs/(credits) and transition (assets)/liabilities recognized in OCI and the changes in the pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in AOCI for the retirement-related benefit plans. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plans | Nonpension Postretirement Benefit Plans | |||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||
Net loss at January 1 | $ | 19,488 | $ | 18,561 | $ | 22,188 | $ | 18,309 | $ | 806 | $ | 734 | $ | 269 | $ | 211 | ||||||||||||||
Current period loss/(gain) | -3,989 | 2,258 | -814 | 4,905 | -480 | 104 | -85 | 75 | ||||||||||||||||||||||
Curtailments and settlements | — | — | 3 | 2 | — | — | 0 | — | ||||||||||||||||||||||
Amortization of net loss included in | ||||||||||||||||||||||||||||||
net periodic (income)/cost | -1,790 | -1,331 | -1,600 | -1,027 | -21 | -32 | -23 | -17 | ||||||||||||||||||||||
Net loss at December 31 | $ | 13,709 | $ | 19,488 | $ | 19,777 | $ | 22,188 | $ | 304 | $ | 806 | $ | 161 | $ | 269 | ||||||||||||||
Prior service costs/(credits) at January 1 | $ | 130 | $ | 139 | $ | -614 | $ | -768 | $ | — | $ | — | $ | -6 | $ | -10 | ||||||||||||||
Current period prior service costs/(credits) | — | — | 0 | — | 15 | — | -31 | — | ||||||||||||||||||||||
Amortization of prior service (costs)/ | ||||||||||||||||||||||||||||||
credits included in net periodic | ||||||||||||||||||||||||||||||
(income)/cost | -10 | -10 | 119 | 154 | — | — | 5 | 4 | ||||||||||||||||||||||
Prior service costs/(credits) at | ||||||||||||||||||||||||||||||
December 31 | $ | 120 | $ | 130 | $ | -496 | $ | -614 | $ | 15 | $ | — | $ | -32 | $ | -6 | ||||||||||||||
Transition (assets)/liabilities at January 1 | $ | — | $ | — | $ | 0 | $ | 0 | $ | — | $ | — | $ | 0 | $ | 0 | ||||||||||||||
Amortization of transition assets/ | ||||||||||||||||||||||||||||||
(liabilities) included in net periodic | ||||||||||||||||||||||||||||||
(income)/cost | — | — | 0 | 0 | — | — | 0 | 0 | ||||||||||||||||||||||
Transition (assets)/liabilities at | ||||||||||||||||||||||||||||||
December 31 | $ | — | $ | — | $ | 0 | $ | 0 | $ | — | $ | — | $ | 0 | $ | 0 | ||||||||||||||
Total loss recognized in accumulated | ||||||||||||||||||||||||||||||
other comprehensive income/(loss)* | $ | 13,829 | $ | 19,618 | $ | 19,281 | $ | 21,574 | $ | 319 | $ | 806 | $ | 129 | $ | 263 | ||||||||||||||
* See note L, “Equity Activity,” on pages 116 through 118 for the total change in AOCI, and the Consolidated Statement of Comprehensive Income for the components of net periodic (income)/cost, including the related tax effects, recognized in OCI for the retirement-related benefit plans. | ||||||||||||||||||||||||||||||
The following table presents the pre-tax estimated net loss, estimated prior service costs/(credits) and estimated transition (assets)/ liabilities of the retirement-related benefit plans that will be amortized from AOCI into net periodic (income)/cost in 2014. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Defined Benefit | Nonpension Postretirement | |||||||||||||||||||||||||||||
Pension Plans | Benefit Plans | |||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||
Net loss | $ | 1,076 | $ | 1,461 | $ | — | $ | 11 | ||||||||||||||||||||||
Prior service costs/(credits) | 10 | -127 | -7 | -6 | ||||||||||||||||||||||||||
Transition (assets)/liabilities | — | 0 | — | 0 | ||||||||||||||||||||||||||
During the years ended December 31, 2013, 2012 and 2011, the company paid $14 million, $22 million and $16 million, respectively, for mandatory pension insolvency insurance coverage premiums in certain non-U.S. countries (Germany, Canada and the UK). | ||||||||||||||||||||||||||||||
During the year ended December 31, 2013, the company amended the U.S. nonpension postretirement benefit plan. A plan amendment effective January 1, 2014, which established an HRA for Medicare eligible participants increased the benefit obligation $91 million. A plan amendment which ended life insurance eligibility for employees who retire on or after January 1, 2015 reduced the benefit obligation $76 million. | ||||||||||||||||||||||||||||||
On October 12, 2012, the High Court in London issued a ruling against IBM United Kingdom Limited and IBM United Kingdom Holdings Limited, both wholly-owned subsidiaries of the company, in litigation involving one of IBM UK’s defined benefit plans. As a result of the ruling, the company recorded an additional pre-tax retirement-related obligation of $162 million in 2012 in selling, general and administrative expense in the Consolidated Statement of Earnings. See note M, “Contingencies and Commitments,” on page 120 for additional information. | ||||||||||||||||||||||||||||||
Assumptions Used to Determine Plan Financial Information | ||||||||||||||||||||||||||||||
Underlying both the measurement of benefit obligations and net periodic (income)/cost are actuarial valuations. These valuations use participant-specific information such as salary, age and years of service, as well as certain assumptions, the most significant of which include estimates of discount rates, expected return on plan assets, rate of compensation increases, interest crediting rates and mortality rates. The company evaluates these assumptions, at a minimum, annually, and makes changes as necessary. | ||||||||||||||||||||||||||||||
The table below presents the assumptions used to measure the net periodic (income)/cost and the year-end benefit obligations for retirement-related benefit plans. | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plans | ||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | |||||||||||||||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||
Weighted-average assumptions used to measure net | ||||||||||||||||||||||||||||||
periodic (income)/cost for the year ended December 31 | ||||||||||||||||||||||||||||||
Discount rate | 3.6 | % | 4.2 | % | 5 | % | 3.23 | % | 4.28 | % | 4.33 | % | ||||||||||||||||||
Expected long-term returns on plan assets | 8 | % | 8 | % | 8 | % | 6.21 | % | 6.26 | % | 6.41 | % | ||||||||||||||||||
Rate of compensation increase* | N/A | N/A | N/A | 2.51 | % | 2.43 | % | 2.37 | % | |||||||||||||||||||||
Weighted-average assumptions used to measure | ||||||||||||||||||||||||||||||
benefit obligations at December 31 | ||||||||||||||||||||||||||||||
Discount rate | 4.5 | % | 3.6 | % | 4.2 | % | 3.32 | % | 3.23 | % | 4.28 | % | ||||||||||||||||||
Rate of compensation increase* | N/A | N/A | N/A | 2.52 | % | 2.51 | % | 2.43 | % | |||||||||||||||||||||
* Rate of compensation increase is not applicable to the U.S. defined benefit pension plans as benefit accruals ceased December 31, 2007 for all participants. | ||||||||||||||||||||||||||||||
N/A—Not applicable | ||||||||||||||||||||||||||||||
Nonpension Postretirement Benefit Plans | ||||||||||||||||||||||||||||||
U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||
Weighted-average assumptions used to measure | ||||||||||||||||||||||||||||||
net periodic cost for the year ended December 31 | ||||||||||||||||||||||||||||||
Discount rate | 3.3 | % | 3.9 | % | 4.8 | % | 6.43 | % | 7.37 | % | 7.75 | % | ||||||||||||||||||
Expected long-term returns on plan assets | 0.35 | % | N/A | N/A | 9.01 | % | 9.01 | % | 9.07 | % | ||||||||||||||||||||
Weighted-average assumptions used to measure | ||||||||||||||||||||||||||||||
benefit obligations at December 31 | ||||||||||||||||||||||||||||||
Discount rate | 4.1 | % | 3.3 | % | 3.9 | % | 7.78 | % | 6.43 | % | 7.37 | % | ||||||||||||||||||
N/A—Not applicable | ||||||||||||||||||||||||||||||
Discount Rate | ||||||||||||||||||||||||||||||
The discount rate assumptions used for retirement-related benefit plans accounting reflect the yields available on high-quality, fixed income debt instruments at the measurement date. For the U.S. and certain non-U.S. countries, a portfolio of high-quality corporate bonds is used to construct a yield curve. The cash flows from the company’s expected benefit obligation payments are then matched to the yield curve to derive the discount rates. In other non-U.S. countries, where the markets for high-quality long-term bonds are not generally as well developed, a portfolio of long-term government bonds is used as a base, to which a credit spread is added to simulate corporate bond yields at these maturities in the jurisdiction of each plan, as the benchmark for developing the respective discount rates. | ||||||||||||||||||||||||||||||
For the U.S. defined benefit pension plans, the changes in the discount rate assumptions impacted the net periodic (income)/cost and the PBO. The changes in the discount rate assumptions resulted in a decrease in 2013 net periodic income of $162 million, a decrease in 2012 net periodic income of $258 million and a decrease in 2011 net periodic income of $171 million. The changes in the discount rate assumptions resulted in a decrease in the PBO of $4,785 million and an increase of $3,414 million at December 31, 2013 and 2012, respectively. | ||||||||||||||||||||||||||||||
For the nonpension postretirement benefit plans, the changes in the discount rate assumptions had no material impact on net periodic cost for the years ended December 31, 2013, 2012 and 2011 and resulted in a decrease in the APBO of $298 million and an increase of $252 million at December 31, 2013 and 2012, respectively. | ||||||||||||||||||||||||||||||
Expected Long-Term Returns on Plan Assets | ||||||||||||||||||||||||||||||
Expected returns on plan assets, a component of net periodic (income)/cost, represent the expected long-term returns on plan assets based on the calculated market-related value of plan assets. Expected long-term returns on plan assets take into account long-term expectations for future returns and the investment policies and strategies as described on page 135. These rates of return are developed by the company and are tested for reasonableness against historical returns. The use of expected long-term returns on plan assets may result in recognized pension income that is greater or less than the actual returns of those plan assets in any given year. Over time, however, the expected long-term returns are designed to approximate the actual long-term returns, and therefore result in a pattern of income and cost recognition that more closely matches the pattern of the services provided by the employees. Differences between actual and expected returns are recognized as a component of net loss or gain in AOCI, which is amortized as a component of net periodic (income)/cost over the service lives or life expectancy of the plan participants, depending on the plan, provided such amounts exceed certain thresholds provided by accounting standards. The market-related value of plan assets recognizes changes in the fair value of plan assets systematically over a five-year period in the expected return on plan assets line in net periodic (income)/cost. | ||||||||||||||||||||||||||||||
For the U.S. defined benefit pension plan, the Qualified PPP, the expected long-term rate of return on plan assets of 8.00 percent remained constant for the years ended December 31, 2013, 2012 and 2011 and, consequently, had no incremental impact on net periodic (income)/cost. | ||||||||||||||||||||||||||||||
For the nonpension postretirement benefit plans, the company maintains a highly liquid trust fund balance to ensure timely payments are made. As a result, for the years ended December 31, 2013, 2012 and 2011, the expected long-term return on plan assets and the actual return on those assets were not material. | ||||||||||||||||||||||||||||||
Rate of Compensation Increases and Mortality Rate | ||||||||||||||||||||||||||||||
The rate of compensation increases is determined by the company, based upon its long-term plans for such increases. The rate of compensation increase is not applicable to the U.S. defined benefit pension plans as benefit accruals ceased December 31, 2007 for all participants. Mortality rate assumptions are based on life expectancy and death rates for different types of participants. Mortality rates are periodically updated based on actual experience. | ||||||||||||||||||||||||||||||
Interest Crediting Rate | ||||||||||||||||||||||||||||||
Benefits for certain participants in the PPP are calculated using a cash balance formula. An assumption underlying this formula is an interest crediting rate, which impacts both net periodic (income)/cost and the PBO. This assumption provides a basis for projecting the expected interest rate that participants will earn on the benefits that they are expected to receive in the following year and is based on the average from August to October of the one-year U.S. Treasury Constant Maturity yield plus one percent. | ||||||||||||||||||||||||||||||
For the PPP, the change in the interest crediting rate to 1.2.percent for the year ended December 31, 2013, from 1.1.percent for the year ended December 31, 2012, resulted in a decrease in 2013 net periodic income of $6 million. The change in the interest crediting rate to 1.1 percent for the year ended December 31, 2012, from 1.3 percent for the year ended December 31, 2011, resulted in an increase in 2012 net periodic income of $10 million. The change in the interest crediting rate to 1.3 percent for the year ended December 31, 2011, from 1.4 percent for the year ended December 31, 2010, resulted in an increase in 2011 net periodic income of $4 million. | ||||||||||||||||||||||||||||||
Healthcare Cost Trend Rate | ||||||||||||||||||||||||||||||
For nonpension postretirement benefit plan accounting, the company reviews external data and its own historical trends for healthcare costs to determine the healthcare cost trend rates. However, the healthcare cost trend rate has an insignificant effect on plan costs and obligations as a result of the terms of the plan which limit the company’s obligation to the participants. The company assumes that the healthcare cost trend rate for 2014 will be 6.5 percent. In addition, the company assumes that the same trend rate will decrease to 5 percent over the next three years. A one percentage point increase or decrease in the assumed healthcare cost trend rate would not have had a material effect on 2013, 2012 and 2011 net periodic cost or the benefit obligations as of December 31, 2013 and 2012. | ||||||||||||||||||||||||||||||
Healthcare Legislation | ||||||||||||||||||||||||||||||
The expected effects of the U.S. healthcare reform legislation enacted in March 2010 were incorporated into the remeasurements of the U.S. nonpension postretirement benefit plan at December 31, 2013 and 2012. The impact was insignificant as a result of the terms of the plan which limit the company’s obligation to the participants. | ||||||||||||||||||||||||||||||
Plan Assets | ||||||||||||||||||||||||||||||
Retirement-related benefit plan assets are recognized and measured at fair value as described in note A, “Significant Accounting Policies,” on pages 91 and 92. Because of the inherent uncertainty of valuations, these fair value measurements may not necessarily reflect the amounts the company could realize in current market transactions. | ||||||||||||||||||||||||||||||
Investment Policies and Strategies | ||||||||||||||||||||||||||||||
The investment objectives of the Qualified PPP portfolio are designed to generate returns that will enable the plan to meet its future obligations. The precise amount for which these obligations will be settled depends on future events, including the retirement dates and life expectancy of the plans’ participants. The obligations are estimated using actuarial assumptions, based on the current economic environment and other pertinent factors described on pages 132 through 134. The Qualified PPP portfolio’s investment strategy balances the requirement to generate returns, using potentially higher yielding assets such as equity securities, with the need to control risk in the portfolio with less volatile assets, such as fixed-income securities. Risks include, among others, inflation, volatility in equity values and changes in interest rates that could cause the plan to become underfunded, thereby increasing its dependence on contributions from the company. To mitigate any potential concentration risk, careful consideration is given to balancing the portfolio among industry sectors, companies and geographies, taking into account interest rate sensitivity, dependence on economic growth, currency and other factors that affect investment returns. As a result, the Qualified PPP portfolio’s target allocation is 42 percent equity securities, 47 percent fixed-income securities, 6 percent real estate and 5 percent other investments, which is consistent with the allocation decisions made by the company’s management and is similar to the prior year target allocation. The table on page 136 details the actual equity, fixed income, real estate and other types of investments in the Qualified PPP portfolio. | ||||||||||||||||||||||||||||||
The assets are managed by professional investment firms and investment professionals who are employees of the company. They are bound by investment mandates determined by the company’s management and are measured against specific benchmarks. Among these managers, consideration is given, but not limited to, balancing security concentration, issuer concentration, investment style and reliance on particular active and passive investment strategies. | ||||||||||||||||||||||||||||||
Market liquidity risks are tightly controlled, with $6,809 million of the Qualified PPP portfolio invested in private market assets consisting of private equities and private real estate investments, which are less liquid than publicly traded securities. As of December 31, 2013, the Qualified PPP portfolio had $2,830 million in commitments for future investments in private markets to be made over a number of years. These commitments are expected to be funded from plan assets. | ||||||||||||||||||||||||||||||
Derivatives are used as an effective means to achieve investment objectives and/or as a component of the plan’s risk management strategy. The primary reasons for the use of derivatives are fixed income management, including duration, interest rate management and credit exposure, cash equitization and to manage currency and commodity strategies. | ||||||||||||||||||||||||||||||
Outside the U.S., the investment objectives are similar to those described above, subject to local regulations. The weighted-average target allocation for the non-U.S. plans is 33 percent equity securities, 54 percent fixed-income securities, 2 percent real estate and 11 percent other investments, which is consistent with the allocation decisions made by the company’s management. The table on page 136 details the actual equity, fixed income, real estate and other types of investments for non-U.S. plans. In some countries, a higher percentage allocation to fixed income is required to manage solvency and funding risks. In others, the responsibility for managing the investments typically lies with a board that may include up to 50 percent of members elected by employees and retirees. This can result in slight differences compared with the strategies previously described. Generally, these non-U.S. plans do not invest in illiquid assets and their use of derivatives is consistent with the U.S. plan and mainly for currency hedging, interest rate risk management, credit exposure and alternative investment strategies. | ||||||||||||||||||||||||||||||
The company’s defined benefit pension plans include investments in certain European government securities. At December 31, 2013, the U.S. plan held $828 million and the non-U.S. plans held approximately $11 billion in European sovereign debt investments, primarily in AAA-rated securities. Investments in government debt securities in Italy, Spain and Ireland were de minimis in the U.S. plan and represented less than 1 percent of total non-U.S. plan assets. The plans hold no direct investments in government debt securities of Greece and Portugal. | ||||||||||||||||||||||||||||||
The company’s nonpension postretirement benefit plans are underfunded or unfunded. For some plans, the company maintains a nominal, highly liquid trust fund balance to ensure timely benefit payments. | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plan assets | ||||||||||||||||||||||||||||||
The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2013. The U.S. Plan consists of the Qualified PPP and the Non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||
Equity securities(a) | $ | 15,929 | $ | — | $ | — | $ | 15,929 | $ | 6,489 | $ | — | $ | — | $ | 6,489 | ||||||||||||||
Equity commingled/mutual funds(b)(c) | 216 | 2,593 | — | 2,809 | 132 | 8,325 | — | 8,457 | ||||||||||||||||||||||
Fixed income | ||||||||||||||||||||||||||||||
Government and related(d) | — | 7,093 | 1 | 7,094 | — | 8,682 | 42 | 8,724 | ||||||||||||||||||||||
Corporate bonds(e) | — | 14,639 | 5 | 14,644 | — | 1,881 | 4 | 1,885 | ||||||||||||||||||||||
Mortgage and asset-backed securities | — | 691 | 19 | 709 | — | 8 | — | 8 | ||||||||||||||||||||||
Fixed income commingled/ | ||||||||||||||||||||||||||||||
mutual funds(b)(f) | 221 | 716 | 274 | 1,211 | 75 | 8,596 | — | 8,670 | ||||||||||||||||||||||
Insurance contracts | — | — | — | — | — | 1,196 | — | 1,196 | ||||||||||||||||||||||
Cash and short-term investments(g) | 427 | 1,915 | — | 2,343 | 154 | 451 | — | 605 | ||||||||||||||||||||||
Hedge funds | — | 1,368 | 860 | 2,228 | — | 740 | — | 740 | ||||||||||||||||||||||
Private equity(h) | — | — | 3,771 | 3,771 | — | — | 410 | 410 | ||||||||||||||||||||||
Private real estate(h) | — | — | 3,038 | 3,038 | — | — | 655 | 655 | ||||||||||||||||||||||
Derivatives(i) | 1 | 6 | — | 7 | 1 | 150 | — | 151 | ||||||||||||||||||||||
Other commingled/mutual funds(b)(j) | — | — | — | — | 36 | 1,518 | — | 1,554 | ||||||||||||||||||||||
Subtotal | 16,795 | 29,021 | 7,968 | 53,784 | 6,886 | 31,547 | 1,110 | 39,544 | ||||||||||||||||||||||
Other(k) | — | — | — | 170 | — | — | — | -80 | ||||||||||||||||||||||
Fair value of plan assets | $ | 16,795 | $ | 29,021 | $ | 7,968 | $ | 53,954 | $ | 6,886 | $ | 31,547 | $ | 1,110 | $ | 39,464 | ||||||||||||||
Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $83 million, representing 0.2 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $31 million, representing 0.1 percent of the non-U.S. Plans assets. | ||||||||||||||||||||||||||||||
Commingled funds represent pooled institutional investments. | ||||||||||||||||||||||||||||||
Invests in predominantly equity securities. | ||||||||||||||||||||||||||||||
Includes debt issued by national, state and local governments and agencies. | ||||||||||||||||||||||||||||||
The U.S. Plan includes IBM corporate bonds of $9 million, representing 0.02 percent of the U.S. Plan assets. Non-U.S. plans include IBM corporate bonds of $1 million representing 0.001 percent of the non-U.S. Plan assets. | ||||||||||||||||||||||||||||||
Invests in predominantly fixed-income securities. | ||||||||||||||||||||||||||||||
Includes cash and cash equivalents and short-term marketable securities. | ||||||||||||||||||||||||||||||
Includes limited partnerships and venture capital partnerships. | ||||||||||||||||||||||||||||||
Primarily includes interest rate derivatives and, to a lesser extent, forwards, exchange traded and other over-the-counter derivatives. | ||||||||||||||||||||||||||||||
Invests in both equity and fixed-income securities. | ||||||||||||||||||||||||||||||
Represents net unsettled transactions, relating primarily to purchases and sales of plan assets. | ||||||||||||||||||||||||||||||
The U.S. nonpension postretirement benefit plan assets of $177 million were invested in cash, categorized as Level 1 in the fair value hierarchy. The Non-U.S. nonpension postretirement benefit plan assets of $92 million, primarily in Brazil, and, to a lesser extent, in Mexico and South Africa, were invested primarily in government and related fixed-income securities and corporate bonds, categorized as Level 2 in the fair value hierarchy. | ||||||||||||||||||||||||||||||
The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2012. The U.S. Plan consists of the Qualified PPP and the Non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||
Equity securities(a) | $ | 15,161 | $ | 1 | $ | — | $ | 15,163 | $ | 6,395 | $ | — | $ | — | $ | 6,395 | ||||||||||||||
Equity commingled/mutual funds(b)(c) | 96 | 2,556 | — | 2,652 | 138 | 7,641 | — | 7,779 | ||||||||||||||||||||||
Fixed income | ||||||||||||||||||||||||||||||
Government and related(d) | — | 12,945 | 6 | 12,951 | — | 8,978 | 76 | 9,054 | ||||||||||||||||||||||
Corporate bonds (e) | — | 8,499 | 11 | 8,510 | — | 1,878 | 5 | 1,883 | ||||||||||||||||||||||
Mortgage and asset-backed securities | — | 922 | 45 | 968 | — | 9 | — | 9 | ||||||||||||||||||||||
Fixed income commingled/ | ||||||||||||||||||||||||||||||
mutual funds(b)(f) | 155 | 804 | 267 | 1,226 | 78 | 8,018 | — | 8,096 | ||||||||||||||||||||||
Insurance contracts | — | — | — | — | — | 1,019 | — | 1,019 | ||||||||||||||||||||||
Cash and short-term investments(g) | 244 | 3,198 | — | 3,442 | 134 | 373 | — | 507 | ||||||||||||||||||||||
Hedge funds | — | 1,402 | 756 | 2,159 | — | 646 | — | 646 | ||||||||||||||||||||||
Private equity(h) | — | — | 4,085 | 4,085 | — | — | 353 | 353 | ||||||||||||||||||||||
Private real estate(h) | — | — | 2,861 | 2,861 | — | — | 609 | 609 | ||||||||||||||||||||||
Derivatives(i) | -6 | 62 | — | 56 | 0 | 856 | — | 857 | ||||||||||||||||||||||
Other commingled/mutual funds(b)(j) | — | — | — | — | 12 | 907 | — | 919 | ||||||||||||||||||||||
Subtotal | 15,650 | 30,390 | 8,032 | 54,072 | 6,757 | 30,325 | 1,042 | 38,124 | ||||||||||||||||||||||
Other(k) | — | — | — | -442 | — | — | — | -66 | ||||||||||||||||||||||
Fair value of plan assets | $ | 15,650 | $ | 30,390 | $ | 8,032 | $ | 53,630 | $ | 6,757 | $ | 30,325 | $ | 1,042 | $ | 38,058 | ||||||||||||||
Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $113 million, representing 0.2 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $40 million, representing 0.1 percent of the non-U.S. Plans assets. | ||||||||||||||||||||||||||||||
Commingled funds represent pooled institutional investments. | ||||||||||||||||||||||||||||||
Invests in predominantly equity securities. | ||||||||||||||||||||||||||||||
Includes debt issued by national, state and local governments and agencies. | ||||||||||||||||||||||||||||||
The U.S. Plan includes IBM corporate bonds of $6 million, representing 0.01 percent of the U.S. Plan assets. Non-U.S. plans include IBM corporate bonds of $2 million representing 0.004 percent of the non-U.S. Plan assets. | ||||||||||||||||||||||||||||||
Invests in predominantly fixed-income securities. | ||||||||||||||||||||||||||||||
Includes cash and cash equivalents and short-term marketable securities. | ||||||||||||||||||||||||||||||
Includes limited partnerships and venture capital partnerships. | ||||||||||||||||||||||||||||||
Primarily includes interest rate derivatives and, to a lesser extent, forwards, exchange traded and other over-the-counter derivatives. | ||||||||||||||||||||||||||||||
Invests in both equity and fixed-income securities. | ||||||||||||||||||||||||||||||
Represents net unsettled transactions, relating primarily to purchases and sales of plan assets. | ||||||||||||||||||||||||||||||
The U.S. nonpension postretirement benefit plan assets of $433 million were invested in cash, categorized as Level 1 in the fair value hierarchy. The Non-U.S. nonpension postretirement benefit plan assets of $119 million, primarily in Brazil, and, to a lesser extent, in Mexico and South Africa, were invested primarily in government and related fixed-income securities and corporate bonds, categorized as Level 2 in the fair value hierarchy. | ||||||||||||||||||||||||||||||
The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2013 and 2012 for the U.S. Plan. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Mortgage | ||||||||||||||||||||||||||||||
and Asset- | Fixed Income | |||||||||||||||||||||||||||||
Government | Corporate | Backed | Commingled/ | Hedge | Private | Private | ||||||||||||||||||||||||
and Related | Bonds | Securities | Mutual Funds | Funds | Equity | Real Estate | Total | |||||||||||||||||||||||
Balance at January 1, 2013 | $ | 6 | $ | 11 | $ | 45 | $ | 267 | $ | 756 | $ | 4,085 | $ | 2,861 | $ | 8,032 | ||||||||||||||
Return on assets held at end of year | 0 | 0 | -1 | 7 | 104 | 1,104 | 889 | 2,103 | ||||||||||||||||||||||
Return on assets sold during the year | 0 | 0 | 0 | — | 0 | -528 | -412 | -939 | ||||||||||||||||||||||
Purchases, sales and settlements, net | -5 | 3 | 0 | — | 0 | -891 | -301 | -1,194 | ||||||||||||||||||||||
Transfers, net | 0 | -8 | -26 | — | — | — | — | -33 | ||||||||||||||||||||||
Balance at December 31, 2013 | $ | 1 | $ | 5 | $ | 19 | $ | 274 | $ | 860 | $ | 3,771 | $ | 3,038 | $ | 7,968 | ||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Mortgage | ||||||||||||||||||||||||||||||
and Asset- | Fixed Income | |||||||||||||||||||||||||||||
Government | Corporate | Backed | Commingled/ | Hedge | Private | Private | ||||||||||||||||||||||||
and Related | Bonds | Securities | Mutual Funds | Funds | Equity | Real Estate | Total | |||||||||||||||||||||||
Balance at January 1, 2012 | $ | 29 | $ | 12 | $ | 45 | $ | 246 | $ | 713 | $ | 4,098 | $ | 2,790 | $ | 7,932 | ||||||||||||||
Return on assets held at end of year | 0 | 0 | 1 | 21 | 56 | 855 | 202 | 1,135 | ||||||||||||||||||||||
Return on assets sold during the year | 0 | 2 | 1 | — | 14 | -334 | -41 | -359 | ||||||||||||||||||||||
Purchases, sales and settlements, net | -1 | -2 | -9 | — | -26 | -533 | -90 | -660 | ||||||||||||||||||||||
Transfers, net | -22 | -1 | 8 | — | — | — | — | -15 | ||||||||||||||||||||||
Balance at December 31, 2012 | $ | 6 | $ | 11 | $ | 45 | $ | 267 | $ | 756 | $ | 4,085 | $ | 2,861 | $ | 8,032 | ||||||||||||||
The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2013 and 2012 for the non-U.S. Plans. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Government | Corporate | Private | Private | |||||||||||||||||||||||||||
and Related | Bonds | Equity | Real Estate | Total | ||||||||||||||||||||||||||
Balance at January 1, 2013 | $ | 76 | $ | 5 | $ | 353 | $ | 609 | $ | 1,042 | ||||||||||||||||||||
Return on assets held at end of year | -12 | 0 | 1 | 33 | 22 | |||||||||||||||||||||||||
Return on assets sold during the year | 1 | 0 | 18 | -3 | 16 | |||||||||||||||||||||||||
Purchases, sales and settlements, net | -24 | -1 | 26 | 1 | 1 | |||||||||||||||||||||||||
Foreign exchange impact | 2 | 0 | 12 | 15 | 29 | |||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 42 | $ | 4 | $ | 410 | $ | 655 | $ | 1,110 | ||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Government | Corporate | Private | Private | |||||||||||||||||||||||||||
and Related | Bonds | Equity | Real Estate | Total | ||||||||||||||||||||||||||
Balance at January 1, 2012 | $ | 96 | $ | 39 | $ | 262 | $ | 580 | $ | 977 | ||||||||||||||||||||
Return on assets held at end of year | 3 | -1 | 9 | -5 | 6 | |||||||||||||||||||||||||
Return on assets sold during the year | 3 | 1 | 9 | 0 | 14 | |||||||||||||||||||||||||
Purchases, sales and settlements, net | -26 | -29 | 62 | 14 | 21 | |||||||||||||||||||||||||
Transfers, net | -2 | -5 | 0 | -3 | -10 | |||||||||||||||||||||||||
Foreign exchange impact | 1 | 0 | 11 | 23 | 34 | |||||||||||||||||||||||||
Balance at December 31, 2012 | $ | 76 | $ | 5 | $ | 353 | $ | 609 | $ | 1,042 | ||||||||||||||||||||
Valuation Techniques | ||||||||||||||||||||||||||||||
The following is a description of the valuation techniques used to measure plan assets at fair value. There were no changes in valuation techniques during 2013 and 2012. | ||||||||||||||||||||||||||||||
Equity securities are valued at the closing price reported on the stock exchange on which the individual securities are traded. IBM common stock is valued at the closing price reported on the New York Stock Exchange. Equity commingled/mutual funds are typically valued using the net asset value (NAV) provided by the administrator of the fund and reviewed by the company. The NAV is based on the value of the underlying assets owned by the fund, minus liabilities and divided by the number of shares or units outstanding. These assets are classified as Level 1, Level 2 or Level 3 depending on availability of quoted market prices. | ||||||||||||||||||||||||||||||
The fair value of fixed-income securities is typically estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flows and are generally classified as Level 2. If available, they are valued using the closing price reported on the major market on which the individual securities are traded. | ||||||||||||||||||||||||||||||
Cash includes money market accounts that are valued at their cost plus interest on a daily basis, which approximates fair value. Short-term investments represent securities with original maturities of one year or less. These assets are classified as Level 1 or Level 2. | ||||||||||||||||||||||||||||||
Private equity and private real estate partnership valuations require significant judgment due to the absence of quoted market prices, the inherent lack of liquidity and the long-term nature of such assets. These assets are initially valued at cost and are reviewed periodically utilizing available and relevant market data to determine if the carrying value of these assets should be adjusted. These investments are classified as Level 3. The valuation methodology is applied consistently from period to period. | ||||||||||||||||||||||||||||||
Exchange traded derivatives are valued at the closing price reported on the exchange on which the individual securities are traded, while forward contracts are valued using a mid-close price. Over-the-counter derivatives are typically valued using pricing models. The models require a variety of inputs, including, for example, yield curves, credit curves, measures of volatility and foreign exchange rates. These assets are classified as Level 1 or Level 2 depending on availability of quoted market prices. | ||||||||||||||||||||||||||||||
Expected Contributions | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plans | ||||||||||||||||||||||||||||||
It is the company’s general practice to fund amounts for pensions sufficient to meet the minimum requirements set forth in applicable employee benefits laws and local tax laws. From time to time, the company contributes additional amounts as it deems appropriate. | ||||||||||||||||||||||||||||||
The company contributed $449 million and $557 million in cash to non-U.S. defined benefit pension plans and $57 million and $60 million in cash to non-U.S. multi-employer plans during the years ended December 31, 2013 and 2012, respectively. The cash contributions to multi-employer plans represent the annual cost included in net periodic (income)/cost recognized in the Consolidated Statement of Earnings. The company has no liability for participants in multi-employer plans other than its own employees. As a result, the company’s participation in multi-employer plans has no material impact on the company’s financial statements. | ||||||||||||||||||||||||||||||
In 2013, the company is not legally required to make any contributions to the U.S. defined benefit pension plans. However, depending on market conditions, or other factors, the company may elect to make discretionary contributions to the Qualified PPP during the year. | ||||||||||||||||||||||||||||||
The Pension Protection Act of 2006 (the Act), enacted into law in 2006, is a comprehensive reform package that, among other provisions, increases pension funding requirements for certain U.S. defined benefit plans, provides guidelines for measuring pension plan assets and pension obligations for funding purposes and raises tax deduction limits for contributions to retirement-related benefit plans. The additional funding requirements by the Act apply to plan years beginning after December 31, 2007. The Act was updated by the Worker, Retiree and Employer Recovery Act of 2008, which revised the funding requirements in the Act by clarifying that pension plans may smooth the value of pension plans over 24 months. At December 31, 2013, no mandatory contribution was required for 2014. | ||||||||||||||||||||||||||||||
In 2014, the company estimates contributions to its non-U.S. defined benefit and multi-employer plans to be approximately $600 million, which will be mainly contributed to defined benefit pension plans in Japan, the UK and Switzerland. This amount represents the legally mandated minimum contributions. Financial market performance in 2014 could increase the legally mandated minimum contribution in certain countries which require monthly or daily remeasurement of the funded status. The company could also elect to contribute more than the legally mandated amount based on market conditions or other factors. | ||||||||||||||||||||||||||||||
Defined Contribution Plans | ||||||||||||||||||||||||||||||
The company contributed $1,361 million and $1,478 million in cash to the defined contribution plans during the years ended December 31, 2013 and 2012, respectively. In 2014, the company estimates cash contributions to the defined contribution plans to be approximately $1.3 billion. | ||||||||||||||||||||||||||||||
Nonpension Postretirement Benefit Plans | ||||||||||||||||||||||||||||||
The company contributed $80 million and $693 million to the nonpension postretirement benefit plans during the years ended December 31, 2013 and 2012, respectively. These contribution amounts exclude the Medicare-related subsidy discussed on page 141. The 2012 amount includes a $400 million voluntary cash contribution to the U.S. nonpension postretirement benefit plan. This advanced funding was to be utilized to fund post-2012 benefit payments for Medicare-eligible prescription drugs. In 2013, the prefunding was used for this purpose. However, effective January 1, 2014, IBM will not be eligible for the Medicare subsidy. The remainder of the prefunding is being utilized to fund other eligible benefits under the plan. | ||||||||||||||||||||||||||||||
Expected Benefit Payments | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plan Expected Payments | ||||||||||||||||||||||||||||||
The following table presents the total expected benefit payments to defined benefit pension plan participants. These payments have been estimated based on the same assumptions used to measure the plans’ PBO at December 31, 2013 and include benefits attributable to estimated future compensation increases, where applicable. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Qualified | Nonqualified | Qualified | Nonqualified | Total Expected | ||||||||||||||||||||||||||
U.S. Plan | U.S. Plans | Non-U.S. Plans | Non-U.S. Plans | Benefit | ||||||||||||||||||||||||||
Payments | Payments | Payments | Payments | Payments | ||||||||||||||||||||||||||
2014 | $ | 3,393 | 109 | 2,026 | 382 | 5,910 | ||||||||||||||||||||||||
2015 | 3,430 | 112 | 2,021 | 382 | 5,945 | |||||||||||||||||||||||||
2016 | 3,460 | 114 | 2,062 | 385 | 6,022 | |||||||||||||||||||||||||
2017 | 3,477 | 116 | 2,086 | 394 | 6,073 | |||||||||||||||||||||||||
2018 | 3,441 | 118 | 2,121 | 407 | 6,087 | |||||||||||||||||||||||||
2019–2023 | 17,454 | 600 | 11,327 | 2,325 | 31,706 | |||||||||||||||||||||||||
The 2014 expected benefit payments to defined benefit pension plan participants not covered by the respective plan assets (underfunded plans) represent a component of compensation and benefits, within current liabilities, in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||
Nonpension Postretirement Benefit Plan Expected Payments | ||||||||||||||||||||||||||||||
The following table reflects the total expected benefit payments to nonpension postretirement benefit plan participants. These payments have been estimated based on the same assumptions used to measure the plans’ APBO at December 31, 2013. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||
Qualified | Nonqualified | Expected | ||||||||||||||||||||||||||||
U.S. Plan | Non-U.S. Plans | Non-U.S. Plans | Benefit | |||||||||||||||||||||||||||
Payments | Payments | Payments | Payments | |||||||||||||||||||||||||||
2014 | $ | 427 | $ | 8 | $ | 32 | $ | 467 | ||||||||||||||||||||||
2015 | 422 | 8 | 36 | 466 | ||||||||||||||||||||||||||
2016 | 416 | 9 | 39 | 464 | ||||||||||||||||||||||||||
2017 | 409 | 10 | 42 | 461 | ||||||||||||||||||||||||||
2018 | 393 | 10 | 46 | 449 | ||||||||||||||||||||||||||
2019–2023 | 1,799 | 63 | 286 | 2,148 | ||||||||||||||||||||||||||
The 2014 expected benefit payments to nonpension postretirement benefit plan participants not covered by the respective plan assets represent a component of compensation and benefits, within current liabilities, in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||
Medicare Prescription Drug Act | ||||||||||||||||||||||||||||||
In connection with the Medicare Prescription Drug Improvement and Modernization Act of 2003, the company qualified to receive a federal subsidy through 2013. Due to benefit plan changes effective January 1, 2014, the company will not qualify for the subsidy as of that date. The company received total subsidies of $30 million and $53 million for prescription drug-related coverage during the years ended December 31, 2013 and 2012, respectively, which were utilized to reduce the company contributions to the U.S. nonpension postretirement benefit plan. The company is also expected to receive additional subsidies after 2013 to true up the final subsidy amount due to IBM under the Act. | ||||||||||||||||||||||||||||||
The company has included the impact of its portion of the subsidy in the determination of net periodic cost for the U.S. nonpension postretirement benefit plan for the years ended December 31, 2013, 2012 and 2011. The impact of the subsidy resulted in a reduction in 2013, 2012 and 2011 net periodic cost of $45 million, $35 million and $37 million, respectively. | ||||||||||||||||||||||||||||||
Other Plan Information | ||||||||||||||||||||||||||||||
The following table presents information for defined benefit pension plans with accumulated benefit obligations (ABO) in excess of plan assets. For a more detailed presentation of the funded status of the company’s defined benefit pension plans, see the table on page 131. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||||
Benefit | Plan | Benefit | Plan | |||||||||||||||||||||||||||
At December 31: | Obligation | Assets | Obligation | Assets | ||||||||||||||||||||||||||
Plans with PBO in excess of plan assets | $ | 41,003 | $ | 29,223 | $ | 99,184 | $ | 83,799 | ||||||||||||||||||||||
Plans with ABO in excess of plan assets | 40,315 | 29,213 | 98,263 | 83,677 | ||||||||||||||||||||||||||
Plans with assets in excess of PBO | 58,651 | 64,194 | 6,944 | 7,889 |
Segment_Information
Segment Information | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||
Segment Information | ' | |||||||||||||||||||||||||
Segment Information | ' | |||||||||||||||||||||||||
Note T. | ||||||||||||||||||||||||||
Segment Information | ||||||||||||||||||||||||||
The company’s major operations consist of five business segments: Global Technology Services, Global Business Services, Software, Systems and Technology and Global Financing. The segments represent components of the company for which separate financial information is available that is utilized on a regular basis by the chief executive officer in determining how to allocate resources and evaluate performance. The segments are determined based on several factors, including client base, homogeneity of products, technology, delivery channels and similar economic characteristics. | ||||||||||||||||||||||||||
Information about each segment’s business and the products and services that generate each segment’s revenue is located in the “Description of Business” section on pages 32 to 34, and in “Segment Details,” on pages 35 to 40 in the Management Discussion. | ||||||||||||||||||||||||||
Segment revenue and pre-tax income include transactions between the segments that are intended to reflect an arm’s-length, market-based transfer price. Systems and software that are used by Global Technology Services in outsourcing engagements are primarily sourced internally from Systems and Technology and Software. For providing IT services that are used internally, Global Technology Services and Global Business Services recover cost, as well as a reasonable fee, that is intended to reflect the arm’s-length value of providing the services. The Global Services segments enter into arm’s-length loans at prices equivalent to market rates with Global Financing to facilitate the acquisition of equipment used in services engagements. All internal transaction prices are reviewed annually, and reset if appropriate. | ||||||||||||||||||||||||||
The company utilizes globally integrated support organizations to realize economies of scale and efficient use of resources. As a result, a considerable amount of expense is shared by all of the segments. This shared expense includes sales coverage, certain marketing functions and support functions such as Accounting, Treasury, Procurement, Legal, Human Resources, and Billing and Collections. Where practical, shared expenses are allocated based on measurable drivers of expense, e.g., head count. When a clear and measurable driver cannot be identified, shared expenses are allocated on a financial basis that is consistent with the company’s management system, e.g., advertising expense is allocated based on the gross profits of the segments. A portion of the shared expenses, which are recorded in net income, are not allocated to the segments. These expenses are associated with the elimination of internal transactions and other miscellaneous items. | ||||||||||||||||||||||||||
The following tables reflect the results of operations of the company’s segments consistent with the management and measurement system utilized within the company. Performance measurement is based on pre-tax income. These results are used, in part, by senior management, both in evaluating the performance of, and in allocating resources to, each of the segments. | ||||||||||||||||||||||||||
Management System Segment View | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
Global Services Segments | ||||||||||||||||||||||||||
Global | Global | |||||||||||||||||||||||||
Technology | Business | Systems and | Global | Total | ||||||||||||||||||||||
For the year ended December 31: | Services | Services | Software | Technology | Financing | Segments | ||||||||||||||||||||
2013 | ||||||||||||||||||||||||||
External revenue | $ | 38,551 | $ | 18,396 | $ | 25,932 | $ | 14,371 | $ | 2,022 | $ | 99,273 | ||||||||||||||
Internal revenue | 1,063 | 714 | 3,191 | 593 | 2,282 | 7,843 | ||||||||||||||||||||
Total revenue | $ | 39,615 | $ | 19,109 | $ | 29,123 | $ | 14,964 | $ | 4,304 | $ | 107,115 | ||||||||||||||
Pre-tax income | $ | 6,983 | $ | 3,214 | $ | 11,106 | $ | -507 | $ | 2,171 | $ | 22,967 | ||||||||||||||
Revenue year-to-year change | -4.3 | % | -0.9 | % | 1.4 | % | -18.4 | % | 5.7 | % | -4.2 | % | ||||||||||||||
Pre-tax income year-to-year change | 0.3 | % | 7.7 | % | 2.7 | % | -141.3 | % | 6.8 | % | -4.4 | % | ||||||||||||||
Pre-tax income margin | 17.6 | % | 16.8 | % | 38.1 | % | -3.4 | % | 50.4 | % | 21.4 | % | ||||||||||||||
2012 | ||||||||||||||||||||||||||
External revenue | $ | 40,236 | $ | 18,566 | $ | 25,448 | $ | 17,667 | $ | 2,013 | $ | 103,930 | ||||||||||||||
Internal revenue | 1,166 | 719 | 3,274 | 676 | 2,060 | 7,896 | ||||||||||||||||||||
Total revenue | $ | 41,402 | $ | 19,286 | $ | 28,722 | $ | 18,343 | $ | 4,073 | $ | 111,826 | ||||||||||||||
Pre-tax income | $ | 6,961 | $ | 2,983 | $ | 10,810 | $ | 1,227 | $ | 2,034 | $ | 24,015 | ||||||||||||||
Revenue year-to-year change | -1.7 | % | -4 | % | 1.8 | % | -7.5 | % | -2.9 | % | -2.3 | % | ||||||||||||||
Pre-tax income year-to-year change | 10.8 | % | -0.8 | % | 8.4 | % | -24.9 | % | 1.1 | % | 4.8 | % | ||||||||||||||
Pre-tax income margin | 16.8 | % | 15.5 | % | 37.6 | % | 6.7 | % | 49.9 | % | 21.5 | % | ||||||||||||||
2011 | ||||||||||||||||||||||||||
External revenue | $ | 40,879 | $ | 19,284 | $ | 24,944 | $ | 18,985 | $ | 2,102 | $ | 106,194 | ||||||||||||||
Internal revenue | 1,242 | 797 | 3,276 | 838 | 2,092 | 8,246 | ||||||||||||||||||||
Total revenue | $ | 42,121 | $ | 20,081 | $ | 28,219 | $ | 19,823 | $ | 4,195 | $ | 114,440 | ||||||||||||||
Pre-tax income | $ | 6,284 | $ | 3,006 | $ | 9,970 | $ | 1,633 | $ | 2,011 | $ | 22,904 | ||||||||||||||
Revenue year-to-year change | 6.6 | % | 5.6 | % | 10.9 | % | 5.6 | % | 2.8 | % | 7.1 | % | ||||||||||||||
Pre-tax income year-to-year change | 14.3 | % | 18.1 | % | 5.3 | % | 12.2 | % | 2.8 | % | 9.5 | % | ||||||||||||||
Pre-tax income margin | 14.9 | % | 15 | % | 35.3 | % | 8.2 | % | 47.9 | % | 20 | % | ||||||||||||||
Reconciliations of IBM as Reported | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
Total reportable segments | $ | 107,115 | $ | 111,826 | $ | 114,440 | ||||||||||||||||||||
Other revenue and adjustments | 478 | 577 | 722 | |||||||||||||||||||||||
Elimination of internal transactions | -7,843 | -7,896 | -8,246 | |||||||||||||||||||||||
Total IBM consolidated revenue | $ | 99,751 | $ | 104,507 | $ | 106,916 | ||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||
Pre-tax income | ||||||||||||||||||||||||||
Total reportable segments | $ | 22,967 | $ | 24,015 | $ | 22,904 | ||||||||||||||||||||
Amortization of acquired intangible assets | -758 | -703 | -629 | |||||||||||||||||||||||
Acquisition-related charges | -46 | -36 | -46 | |||||||||||||||||||||||
Non-operating retirement- related (costs)/income | -1,062 | -538 | 72 | |||||||||||||||||||||||
Elimination of internal transactions | -1,480 | -1,197 | -1,243 | |||||||||||||||||||||||
Unallocated corporate amounts* | -98 | 361 | -56 | |||||||||||||||||||||||
Total IBM consolidated pre-tax income | $ | 19,524 | $ | 21,902 | $ | 21,003 | ||||||||||||||||||||
* The 2013 and 2012 amounts include the gain related to the Retail Store Solutions divestiture. The 2011 amount includes gains related to the sale of Lenovo common stock. | ||||||||||||||||||||||||||
Immaterial Items | ||||||||||||||||||||||||||
Investment in Equity Alliances and Equity Alliances Gains/(Losses) | ||||||||||||||||||||||||||
The investments in equity alliances and the resulting gains and (losses) from these investments that are attributable to the segments did not have a material effect on the financial position or the financial results of the segments. | ||||||||||||||||||||||||||
Segment Assets and Other Items | ||||||||||||||||||||||||||
Global Technology Services assets are primarily plant, property and equipment including the assets associated with the outsourcing business, goodwill, accounts receivable, deferred services arrangement transition costs, maintenance parts inventory and acquired intangible assets. Global Business Services assets are primarily goodwill and accounts receivable. Software assets are mainly goodwill, acquired intangible assets and accounts receivable. Systems and Technology assets are primarily plant, property and equipment, goodwill, manufacturing inventory and accounts receivable. Global Financing assets are primarily financing receivables and fixed assets under operating leases. | ||||||||||||||||||||||||||
To ensure the efficient use of the company’s space and equipment, several segments may share plant, property and equipment assets. Where assets are shared, landlord ownership of the assets is assigned to one segment and is not allocated to each user segment. This is consistent with the company’s management system and is reflected accordingly in the table on page 144. In those cases, there will not be a precise correlation between segment pre-tax income and segment assets. | ||||||||||||||||||||||||||
Similarly, the depreciation amounts reported by each segment are based on the assigned landlord ownership and may not be consistent with the amounts that are included in the segments’ pre-tax income. The amounts that are included in pre-tax income reflect occupancy charges from the landlord segment and are not specifically identified by the management reporting system. Capital expenditures that are reported by each segment also are consistent with the landlord ownership basis of asset assignment. | ||||||||||||||||||||||||||
Global Financing amounts for interest income and interest expense reflect the interest income and interest expense associated with the Global Financing business, including the intercompany financing activities discussed on pages 33 and 34, as well as the income from investment in cash and marketable securities. The explanation of the difference between cost of financing and interest expense for segment presentation versus presentation in the Consolidated Statement of Earnings is included on page 75 of the Management Discussion. | ||||||||||||||||||||||||||
Management System Segment View | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
Global Services Segments | ||||||||||||||||||||||||||
Global | Global | |||||||||||||||||||||||||
Technology | Business | Systems and | Global | Total | ||||||||||||||||||||||
For the year ended December 31: | Services | Services | Software | Technology | Financing | Segments | ||||||||||||||||||||
2013 | ||||||||||||||||||||||||||
Assets | $ | 18,048 | $ | 8,311 | $ | 27,101 | $ | 7,960 | $ | 40,138 | $ | 101,558 | ||||||||||||||
Depreciation/amortization of intangibles* | 1,670 | 72 | 1,211 | 855 | 574 | 4,383 | ||||||||||||||||||||
Capital expenditures/investments in intangibles | 1,938 | 69 | 540 | 781 | 467 | 3,796 | ||||||||||||||||||||
Interest income | — | — | — | — | 1,904 | 1,904 | ||||||||||||||||||||
Interest expense | — | — | — | — | 405 | 405 | ||||||||||||||||||||
2012 | ||||||||||||||||||||||||||
Assets | $ | 15,884 | $ | 8,022 | $ | 26,291 | $ | 8,232 | $ | 38,882 | $ | 97,310 | ||||||||||||||
Depreciation/amortization of intangibles* | 1,597 | 75 | 1,157 | 786 | 853 | 4,470 | ||||||||||||||||||||
Capital expenditures/investments in intangibles | 1,760 | 42 | 618 | 1,106 | 708 | 4,233 | ||||||||||||||||||||
Interest income ** | — | — | — | — | 1,972 | 1,972 | ||||||||||||||||||||
Interest expense | — | — | — | — | 410 | 410 | ||||||||||||||||||||
2011 | ||||||||||||||||||||||||||
Assets | $ | 15,475 | $ | 8,078 | $ | 23,926 | $ | 7,649 | $ | 36,427 | $ | 91,557 | ||||||||||||||
Depreciation/amortization of intangibles* | 1,713 | 83 | 1,062 | 737 | 1,145 | 4,739 | ||||||||||||||||||||
Capital expenditures/investments in intangibles | 1,838 | 56 | 469 | 1,032 | 930 | 4,325 | ||||||||||||||||||||
Interest income ** | — | — | — | — | 2,176 | 2,176 | ||||||||||||||||||||
Interest expense | — | — | — | — | 538 | 538 | ||||||||||||||||||||
* Segment pre-tax income does not include the amortization of intangible assets. | ||||||||||||||||||||||||||
** Reclassified to conform with 2013 presentation.. | ||||||||||||||||||||||||||
Reconciliations of IBM as Reported | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
At December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Total reportable segments | $ | 101,558 | $ | 97,310 | $ | 91,557 | ||||||||||||||||||||
Elimination of internal transactions | -4,740 | -4,943 | -5,407 | |||||||||||||||||||||||
Unallocated amounts | ||||||||||||||||||||||||||
Cash and marketable securities | 9,697 | 9,779 | 10,575 | |||||||||||||||||||||||
Notes and accounts receivable | 2,741 | 3,769 | 3,526 | |||||||||||||||||||||||
Deferred tax assets | 4,532 | 5,194 | 4,865 | |||||||||||||||||||||||
Plant, other property and equipment | 2,505 | 2,555 | 2,918 | |||||||||||||||||||||||
Pension assets | 5,551 | 945 | 2,837 | |||||||||||||||||||||||
Other | 4,378 | 4,604 | 5,562 | |||||||||||||||||||||||
Total IBM consolidated assets | $ | 126,223 | $ | 119,213 | $ | 116,433 | ||||||||||||||||||||
Major Clients | ||||||||||||||||||||||||||
No single client represented 10 percent or more of the company’s total revenue in 2013, 2012 or 2011. | ||||||||||||||||||||||||||
Geographic Information | ||||||||||||||||||||||||||
The following provides information for those countries that are 10 percent or more of the specific category. | ||||||||||||||||||||||||||
Revenue* | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||
United States | $ | 34,809 | $ | 36,270 | $ | 37,041 | ||||||||||||||||||||
Japan | 9,071 | 10,697 | 10,968 | |||||||||||||||||||||||
Other countries | 55,871 | 57,540 | 58,906 | |||||||||||||||||||||||
Total IBM consolidated revenue | $ | 99,751 | $ | 104,507 | $ | 106,916 | ||||||||||||||||||||
* Revenues are attributed to countries based on the location of the client. | ||||||||||||||||||||||||||
Plant and Other Property—Net | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
At December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||
United States | $ | 6,723 | $ | 6,555 | $ | 6,271 | ||||||||||||||||||||
Other countries | 6,257 | 6,299 | 6,186 | |||||||||||||||||||||||
Total | $ | 12,979 | $ | 12,854 | $ | 12,457 | ||||||||||||||||||||
Revenue by Classes of Similar Products or Services | ||||||||||||||||||||||||||
The following table presents external revenue for similar classes of products or services within the company’s reportable segments. Within Global Technology Services and Global Business Services, client solutions often include IBM software and systems and other suppliers’ products if the client solution requires it. Within Software, product license charges and ongoing subscription and support are reported as Software, and software as a service, consulting, education, training and other product-related services are reported as Services. Within Systems and Technology, Microelectronics original equipment manufacturer (OEM) revenue is primarily from the sale of semiconductors. Microelectronics Services revenue includes circuit and component design services and technology and manufacturing consulting services. See “Description of the Business,” beginning on page 28 for additional information. | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||
Global Technology Services | ||||||||||||||||||||||||||
Services | $ | 29,953 | $ | 31,161 | $ | 31,746 | ||||||||||||||||||||
Maintenance | 7,111 | 7,343 | 7,515 | |||||||||||||||||||||||
Systems | 1,322 | 1,574 | 1,478 | |||||||||||||||||||||||
Software | 164 | 159 | 140 | |||||||||||||||||||||||
Global Business Services | ||||||||||||||||||||||||||
Services | $ | 18,065 | $ | 18,216 | $ | 18,956 | ||||||||||||||||||||
Software | 221 | 208 | 211 | |||||||||||||||||||||||
Systems | 109 | 142 | 118 | |||||||||||||||||||||||
Software | ||||||||||||||||||||||||||
Software | $ | 23,420 | $ | 23,144 | $ | 22,921 | ||||||||||||||||||||
Services | 2,512 | 2,304 | 2,022 | |||||||||||||||||||||||
Systems and Technology | ||||||||||||||||||||||||||
Servers | $ | 9,646 | $ | 11,980 | $ | 12,362 | ||||||||||||||||||||
Storage | 3,041 | 3,411 | 3,619 | |||||||||||||||||||||||
Microelectronics OEM | 1,463 | 1,572 | 1,975 | |||||||||||||||||||||||
Retail Store Solutions | 6 | 357 | 753 | |||||||||||||||||||||||
Microelectronics Services | 215 | 346 | 277 | |||||||||||||||||||||||
Global Financing | ||||||||||||||||||||||||||
Financing | $ | 1,493 | $ | 1,471 | $ | 1,612 | ||||||||||||||||||||
Used equipment sales | 529 | 542 | 490 |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events: | ' |
Subsequent Events | ' |
Note U. | |
Subsequent Events | |
On January 23, 2014, the company and Lenovo Group Limited (Lenovo) announced a definitive agreement in which Lenovo will acquire the company’s x86 server portfolio. See the caption, “Divestitures,” on page 98 for additional information. | |
On January 28, 2014, the company announced that the Board of Directors approved a quarterly dividend of $0.95 per common share. The dividend is payable March 10, 2014 to shareholders of record on February 10, 2014. | |
On January 31, 2014, the company completed the initial closing of the sale of its customer care business process outsourcing services business to SYNNEX. See the caption, “Divestitures,” on page 98 for additional information. | |
On February 6, 2014, the company issued $4.5 billion in bonds as follows: $1 billion of 2-year floating-rate bonds priced at 3-month LIBOR plus 7 basis points; $750 million of 5-year floating-rate bonds priced at 3-month LIBOR plus 37 basis points; $750 million of 5-year fixed rate bonds with a 1.95 percent coupon; and $2 billion of 10-year fixed-rate bonds with a 3.625 percent coupon.. |
SCHEDULE_II_VALUATION_AND_QUAL
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | ' | ||||||||||||||||
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | ' | ||||||||||||||||
Description | Balance at | Balance at | |||||||||||||||
Beginning | End of | ||||||||||||||||
of Period | Additions* | Writeoffs | Other** | Period | |||||||||||||
Allowance For Doubtful Accounts | |||||||||||||||||
2013 | |||||||||||||||||
—Current | $ | 560 | $ | 127 | $ | -60 | $ | 9 | $ | 636 | |||||||
—Noncurrent | $ | 66 | $ | 27 | $ | 0 | $ | -12 | $ | 80 | |||||||
2012 | |||||||||||||||||
—Current | $ | 578 | $ | 41 | $ | -45 | $ | -15 | $ | 560 | |||||||
—Noncurrent | $ | 38 | $ | 10 | $ | 0 | $ | 17 | $ | 66 | |||||||
2011 | |||||||||||||||||
—Current | $ | 676 | $ | 90 | $ | -154 | $ | -34 | $ | 578 | |||||||
—Noncurrent | $ | 58 | $ | 1 | $ | -17 | $ | -3 | $ | 38 | |||||||
Allowance For Inventory Losses | |||||||||||||||||
2013 | $ | 652 | $ | 201 | $ | -214 | $ | -16 | $ | 623 | |||||||
2012 | $ | 625 | $ | 294 | $ | -240 | $ | -28 | $ | 652 | |||||||
2011 | $ | 674 | $ | 230 | $ | -279 | $ | 1 | $ | 625 | |||||||
Revenue Based Provisions | |||||||||||||||||
2013 | $ | 777 | $ | 3,061 | $ | -3,004 | $ | -7 | $ | 827 | |||||||
2012 | $ | 861 | $ | 3,228 | $ | -3,345 | $ | 33 | $ | 777 | |||||||
2011 | $ | 888 | $ | 3,157 | $ | -3,132 | $ | -51 | $ | 861 | |||||||
* Additions for Allowance for Doubtful Accounts and Allowance for Inventory Losses are charged to expense and cost accounts, respectively, while Revenue Based Provisions are charged to revenue accounts. | |||||||||||||||||
** Primarily comprises currency translation adjustments. | |||||||||||||||||
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accounting Policies [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). | |||||||||
Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior year amounts have been reclassified to conform to the current year presentation. This is annotated where applicable. | |||||||||
Noncontrolling interest amounts in income of $7 million, $11 million and $6 million, net of tax, for the years ended December 31, 2013, 2012 and 2011, respectively, are included in the Consolidated Statement of Earnings within the other (income) and expense line item. | |||||||||
Principles of Consolidation | ' | ||||||||
Principles of Consolidation | |||||||||
The Consolidated Financial Statements include the accounts of IBM and its controlled subsidiaries, which are generally majority owned. Any noncontrolling interest in the equity of a subsidiary is reported in Equity in the Consolidated Statement of Financial Position. Net income and losses attributable to the noncontrolling interest is reported as described above in the Consolidated Statement of Earnings. The accounts of variable interest entities (VIEs) are included in the Consolidated Financial Statements, if required. Investments in business entities in which the company does not have control, but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method and the company’s proportionate share of income or loss is recorded in other (income) and expense. The accounting policy for other investments in equity securities is on page 92 within “Marketable Securities.” Equity investments in non-publicly traded entities are primarily accounted for using the cost method. All intercompany transactions and accounts have been eliminated in consolidation. | |||||||||
Use of Estimates | ' | ||||||||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) (OCI) that are reported in the Consolidated Financial Statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates. See “Critical Accounting Estimates” on pages 67 to 70 for a discussion of the company’s critical accounting estimates. | |||||||||
Revenue | ' | ||||||||
Revenue | |||||||||
The company recognizes revenue when it is realized or realizable and earned. The company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Delivery does not occur until products have been shipped or services have been provided to the client, risk of loss has transferred to the client, and either client acceptance has been obtained, client acceptance provisions have lapsed, or the company has objective evidence that the criteria specified in the client acceptance provisions have been satisfied. The sales price is not considered to be fixed or determinable until all contingencies related to the sale have been resolved. | |||||||||
The company recognizes revenue on sales to solution providers, resellers and distributors (herein referred to as “resellers”) when the reseller has: economic substance apart from the company, credit risk, title and risk of loss to the inventory; and, the fee to the company is not contingent upon resale or payment by the end user, the company has no further obligations related to bringing about resale or delivery and all other revenue recognition criteria have been met. | |||||||||
The company reduces revenue for estimated client returns, stock rotation, price protection, rebates and other similar allowances. (See Schedule II, “Valuation and Qualifying Accounts and Reserves” included in the company’s Annual Report on Form 10-K). Revenue is recognized only if these estimates can be reasonably and reliably determined. The company bases its estimates on historical results taking into consideration the type of client, the type of transaction and the specifics of each arrangement. Payments made under cooperative marketing programs are recognized as an expense only if the company receives from the client an identifiable benefit sufficiently separable from the product sale whose fair value can be reasonably and reliably estimated. If the company does not receive an identifiable benefit sufficiently separable from the product sale whose fair value can be reasonably estimated, such payments are recorded as a reduction of revenue. | |||||||||
Revenue from sales of third-party vendor products or services is recorded net of costs when the company is acting as an agent between the client and the vendor, and gross when the company is a principal to the transaction. Several factors are considered to determine whether the company is an agent or principal, most notably whether the company is the primary obligor to the client, or has inventory risk. Consideration is also given to whether the company adds meaningful value to the vendor’s product or service, was involved in the selection of the vendor’s product or service, has latitude in establishing the sales price or has credit risk. | |||||||||
The company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. In addition to the aforementioned general policies, the following are the specific revenue recognition policies for multiple-deliverable arrangements and for each major category of revenue. | |||||||||
Multiple-Deliverable Arrangements | ' | ||||||||
Multiple-Deliverable Arrangements | |||||||||
The company enters into revenue arrangements that may consist of multiple deliverables of its products and services based on the needs of its clients. These arrangements may include any combination of services, software, hardware and/or financing. For example, a client may purchase a server that includes operating system software. In addition, the arrangement may include post-contract support for the software and a contract for post-warranty maintenance service for the hardware. These types of arrangements can also include financing provided by the company. These arrangements consist of multiple deliverables, with the hardware and software delivered in one reporting period and the software support and hardware maintenance services delivered across multiple reporting periods. In another example, a client may outsource the running of its datacenter operations to the company on a long-term, multiple-year basis and periodically purchase servers and/or software products from the company to upgrade or expand its facility. The outsourcing services are provided on a continuous basis across multiple reporting periods and the hardware and software products are delivered in one reporting period. To the extent that a deliverable in a multiple-deliverable arrangement is subject to specific accounting guidance that deliverable is accounted for in accordance with such specific guidance. Examples of such arrangements may include leased hardware which is subject to specific leasing guidance or software which is subject to specific software revenue recognition guidance on whether and/or how to separate multiple-deliverable arrangements into separate units of accounting (separability) and how to allocate the arrangement consideration among those separate units of accounting (allocation). For all other deliverables in multiple-deliverable arrangements, the guidance below is applied for separability and allocation. A multiple-deliverable arrangement is separated into more than one unit of accounting if the following criteria are met: | |||||||||
The delivered item(s) has value to the client on a stand-alone basis; and | |||||||||
If the arrangement includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the company. | |||||||||
If these criteria are not met, the arrangement is accounted for as one unit of accounting which would result in revenue being recognized ratably over the contract term or being deferred until the earlier of when such criteria are met or when the last undelivered element is delivered. If these criteria are met for each element and there is a relative selling price for all units of accounting in an arrangement, the arrangement consideration is allocated to the separate units of accounting based on each unit’s relative selling price. The following revenue policies are then applied to each unit of accounting, as applicable. | |||||||||
Revenue from the company’s business analytics, Smarter Planet and cloud offerings follow the specific revenue recognition policies for multiple deliverable arrangements and for each major category of revenue depending on the type of offering which can be comprised of services, hardware and/or software. | |||||||||
Services | ' | ||||||||
Services | |||||||||
The company’s primary services offerings include information technology (IT) datacenter and business process outsourcing, application management services, consulting and systems integration, technology infrastructure and system maintenance, Web hosting and the design and development of complex IT systems to a client’s specifications (design and build). These services are provided on a time-and-material basis, as a fixed-price contract or as a fixed-price per measure of output contract and the contract terms range from less than one year to over 10 years. | |||||||||
Revenue from IT datacenter and business process outsourcing contracts is recognized in the period the services are provided using either an objective measure of output or on a straight-line basis over the term of the contract. Under the output method, the amount of revenue recognized is based on the services delivered in the period. | |||||||||
Revenue from application management services, technology infrastructure and system maintenance and Web hosting contracts is recognized on a straight-line basis over the terms of the contracts. Revenue from time-and-material contracts is recognized as labor hours are delivered and direct expenses are incurred. Revenue related to extended warranty and product maintenance contracts is recognized on a straight-line basis over the delivery period. | |||||||||
Revenue from fixed-price design and build contracts is recognized under the percentage-of-completion (POC) method. Under the POC method, revenue is recognized based on the labor costs incurred to date as a percentage of the total estimated labor costs to fulfill the contract. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made. These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are reflected in income in the period in which the circumstances that gave rise to the revision become known by the company. | |||||||||
The company performs ongoing profitability analyses of its services contracts accounted for under the POC method in order to determine whether the latest estimates of revenues, costs and profits require updating. If at any time these estimates indicate that the contract will be unprofitable, the entire estimated loss for the remainder of the contract is recorded immediately. For non-POC method services contracts, any losses are recorded as incurred. | |||||||||
In some services contracts, the company bills the client prior to recognizing revenue from performing the services. Deferred income of $7,153 million and $7,281 million at December 31, 2013 and 2012, respectively, is included in the Consolidated Statement of Financial Position. In other services contracts, the company performs the services prior to billing the client. Unbilled accounts receivable of $2,053 million and $1,998 million at December 31, 2013 and 2012, respectively, is included in notes and accounts receivable-trade in the Consolidated Statement of Financial Position. | |||||||||
Billings usually occur in the month after the company performs the services or in accordance with specific contractual provisions. Unbilled receivables are expected to be billed within four months. | |||||||||
Hardware | ' | ||||||||
Hardware | |||||||||
The company’s hardware offerings include the sale or lease of system servers, storage solutions and the sale of semiconductors. The company also offers installation services for its more complex hardware products. | |||||||||
Revenue from hardware sales and sales-type leases is recognized when risk of loss has transferred to the client and there are no unfulfilled company obligations that affect the client’s final acceptance of the arrangement. Any cost of standard warranties and remaining obligations that are inconsequential or perfunctory are accrued when the corresponding revenue is recognized. Revenue from rentals and operating leases is recognized on a straight-line basis over the term of the rental or lease. | |||||||||
Software | ' | ||||||||
Software | |||||||||
Revenue from perpetual (one-time charge) license software is recognized at the inception of the license term if all revenue recognition criteria have been met. Revenue from term (recurring license charge) license software is recognized on a straight-line basis over the period that the client is entitled to use the license. Revenue from post-contract support, which may include unspecified upgrades on a when-and-if-available basis, is recognized on a straight-line basis over the period such items are delivered. In multiple-deliverable arrangements that include software that is more than incidental to the products or services as a whole (software multiple-deliverable arrangements), software and software-related elements are accounted for in accordance with software revenue recognition guidance. Software-related elements include software products and services for which a software deliverable is essential to its functionality. Tangible products containing software components and non-software components that function together to deliver the tangible product’s essential functionality are not within the scope of software revenue recognition guidance and are accounted for based on other applicable revenue recognition guidance. | |||||||||
A software multiple-deliverable arrangement is separated into more than one unit of accounting if all of the following criteria are met: | |||||||||
The functionality of the delivered element(s) is not dependent on the undelivered element(s); | |||||||||
There is vendor-specific objective evidence (VSOE) of fair value of the undelivered element(s). VSOE of fair value is based on the price charged when the deliverable is sold separately by the company on a regular basis and not as part of the multiple-deliverable arrangement; and | |||||||||
Delivery of the delivered element(s) represents the culmination of the earnings process for that element(s). | |||||||||
If any one of these criteria is not met, the arrangement is accounted for as one unit of accounting which would result in revenue being recognized ratably over the contract term or being deferred until the earlier of when such criteria are met or when the last undelivered element is delivered. If these criteria are met for each element and there is VSOE of fair value for all units of accounting in an arrangement, the arrangement consideration is allocated to the separate units of accounting based on each unit’s relative VSOE of fair value. There may be cases, however, in which there is VSOE of fair value of the undelivered item(s) but no such evidence for the delivered item(s). In these cases, the residual method is used to allocate the arrangement consideration. Under the residual method, the amount of consideration allocated to the delivered item(s) equals the total arrangement consideration less the aggregate VSOE of fair value of the undelivered elements. | |||||||||
The company’s multiple-deliverable arrangements may have a stand-alone software deliverable that is subject to the existing software revenue recognition guidance. The revenue for these multiple-deliverable arrangements is allocated to the software deliverable and the non-software deliverables based on the relative selling prices of all of the deliverables in the arrangement using the hierarchy: VSOE, third-party evidence (TPE) or best estimate of selling price (BESP). In the limited circumstances where the company cannot determine VSOE or TPE of the selling price for all of the deliverables in the arrangement, including the software deliverable, BESP is used for the purpose of performing this allocation. | |||||||||
Financing | ' | ||||||||
Financing | |||||||||
Financing income attributable to sales-type leases, direct financing leases and loans is recognized on the accrual basis using the effective interest method. Operating lease income is recognized on a straight-line basis over the term of the lease. | |||||||||
Best Estimate of Selling Price | ' | ||||||||
Best Estimate of Selling Price | |||||||||
In certain limited instances, the company is not able to establish VSOE for all elements in a multiple-deliverable arrangement. When VSOE cannot be established, the company attempts to establish the selling price of each element based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. | |||||||||
When the company is unable to establish selling price using VSOE or TPE, the company uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which the company would transact a sale if the product or service were sold on a stand-alone basis. Due to the fact that the company sells its products and services on a stand-alone basis, and therefore has established VSOE for its products and services offerings, the company uses BESP to determine the relative selling price for a product or service in a multiple-deliverable arrangement on an infrequent basis. An example of when BESP would be used is when the company sells a new product, for which VSOE and TPE does not yet exist, in a multiple-deliverable arrangement prior to selling the new product on a stand-alone basis. | |||||||||
The company determines BESP by considering multiple factors including, but not limited to, overall market conditions, including geographic or regional specific factors, competitive positioning, competitor actions, internal costs, profit objectives and pricing practices. The determination of BESP is a formal process that includes review and approval by the company’s management. In addition, the company regularly reviews VSOE and TPE for its products and services, in addition to BESP. | |||||||||
Software and Services Costs | ' | ||||||||
Services Costs | |||||||||
Recurring operating costs for services contracts, including costs related to bid and proposal activities, are recognized as incurred. For fixed-price design and build contracts, the costs of external hardware and software accounted for under the POC method are deferred and recognized based on the labor costs incurred to date, as a percentage of the total estimated labor costs to fulfill the contract. Certain eligible, nonrecurring costs incurred in the initial phases of outsourcing contracts are deferred and subsequently amortized. These costs consist of transition and setup costs related to the installation of systems and processes and are amortized on a straight-line basis over the expected period of benefit, not to exceed the term of the contract. Additionally, fixed assets associated with outsourcing contracts are capitalized and depreciated on a straight-line basis over the expected useful life of the asset. If an asset is contract specific, then the depreciation period is the shorter of the useful life of the asset or the contract term. Amounts paid to clients in excess of the fair value of acquired assets used in outsourcing arrangements are deferred and amortized on a straight-line basis as a reduction of revenue over the expected period of benefit not to exceed the term of the contract. The company performs periodic reviews to assess the recoverability of deferred contract transition and setup costs. This review is done by comparing the estimated minimum remaining undiscounted cash flows of a contract to the unamortized contract costs. If such minimum undiscounted cash flows are not sufficient to recover the unamortized costs, an impairment loss is recognized. | |||||||||
Deferred services transition and setup costs were $2,402 million and $2,424 million at December 31, 2013 and 2012, respectively. Amortization of deferred services transition and setup costs was estimated at December 31, 2013 to be $812 million in 2014, $612 million in 2015, $400 million in 2016, $247 million in 2017 and $332 million thereafter. | |||||||||
Deferred amounts paid to clients in excess of the fair value of acquired assets used in outsourcing arrangements were $89 million and $51 million at December 31, 2013 and 2012, respectively. Amortization of deferred amounts paid to clients in excess of the fair value of acquired assets is recorded as an offset of revenue and was estimated at December 31, 2013 to be $27 million in 2014, $27 million in 2015, $8 million in 2016, $5 million in 2017 and $22 million thereafter. In situations in which an outsourcing contract is terminated, the terms of the contract may require the client to reimburse the company for the recovery of unbilled accounts receivable, unamortized deferred costs incurred to purchase specific assets utilized in the delivery of services and to pay any additional costs incurred by the company to transition the services. | |||||||||
Software Costs | |||||||||
Costs that are related to the conceptual formulation and design of licensed software programs are expensed as incurred to research, development and engineering expense; costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. Capitalized amounts are amortized on a straight-line basis over periods ranging up to three years and are recorded in software cost within cost of sales. The company performs periodic reviews to ensure that unamortized program costs remain recoverable from future revenue. Costs to support or service licensed programs are charged to software cost within cost of sales as incurred. | |||||||||
The company capitalizes certain costs that are incurred to purchase or to create and implement internal-use software programs, including software coding, installation, testing and certain data conversions. These capitalized costs are amortized on a straight-line basis over periods ranging up to two years and are recorded in selling, general and administrative expense. | |||||||||
Product Warranties | ' | ||||||||
Product Warranties | |||||||||
The company offers warranties for its hardware products that generally range up to three years, with the majority being either one or three years. Estimated costs for warranty terms standard to the deliverable are recognized when revenue is recorded for the related deliverable. The company estimates its warranty costs standard to the deliverable based on historical warranty claim experience and estimates of future spending, and applies this estimate to the revenue stream for products under warranty. Estimated future costs for warranties applicable to revenue recognized in the current period are charged to cost of sales. The warranty liability is reviewed quarterly to verify that it properly reflects the remaining obligation based on the anticipated expenditures over the balance of the obligation period. Adjustments are made when actual warranty claim experience differs from estimates. Costs from fixed-price support or maintenance contracts, including extended warranty contracts, are recognized as incurred. | |||||||||
Revenue from separately priced extended warranty contracts is initially recorded as deferred income and subsequently recognized on a straight-line basis over the delivery period. Changes in deferred income for extended warranty contracts, and in the warranty liability for standard warranties, which are included in other accrued expenses and liabilities and other liabilities in the Consolidated Statement of Financial Position, are presented in the following tables: | |||||||||
Standard Warranty Liability | |||||||||
($ in millions) | |||||||||
2013 | 2012 | ||||||||
Balance at January 1 | $ | 394 | $ | 407 | |||||
Current period accruals | 346 | 394 | |||||||
Accrual adjustments to reflect experience | 22 | -15 | |||||||
Changes incurred | -387 | -392 | |||||||
Balance at December 31 | $ | 376 | $ | 394 | |||||
Extended Warranty Liability (Deferred Income) | |||||||||
($ in millions) | |||||||||
2013 | 2012 | ||||||||
Balance at January 1 | $ | 606 | $ | 636 | |||||
Revenue deferred for new extended warranty contracts | 305 | 268 | |||||||
Amortization of deferred revenue | -324 | -301 | |||||||
Other* | -8 | 4 | |||||||
Balance at December 31 | $ | 579 | $ | 606 | |||||
Current portion | $ | 284 | $ | 289 | |||||
Noncurrent portion | 295 | 317 | |||||||
Balance at December 31 | $ | 579 | $ | 606 | |||||
* Other consists primarily of foreign currency translation adjustments. | |||||||||
Shipping and Handling | ' | ||||||||
Shipping and Handling | |||||||||
Costs related to shipping and handling are recognized as incurred and included in cost in the Consolidated Statement of Earnings. | |||||||||
Selling, General and Administrative | ' | ||||||||
Expense and Other Income | |||||||||
Selling, General and Administrative | |||||||||
Selling, general and administrative (SG&A) expense is charged to income as incurred. Expenses of promoting and selling products and services are classified as selling expense and include such items as compensation, advertising, sales commissions and travel. General and administrative expense includes such items as compensation, legal costs, office supplies, non-income taxes, insurance and office rental. In addition, general and administrative expense includes other operating items such as an allowance for credit losses, workforce rebalancing accruals for contractually obligated payments to employees terminated in the ongoing course of business, acquisition costs related to business combinations, amortization of certain intangible assets and environmental remediation costs. | |||||||||
Advertising and Promotional Expense | ' | ||||||||
Advertising and Promotional Expense | |||||||||
The company expenses advertising and promotional costs as incurred. Cooperative advertising reimbursements from vendors are recorded net of advertising and promotional expense in the period in which the related advertising and promotional expense is incurred. Advertising and promotional expense, which includes media, agency and promotional expense, was $1,294 million, $1,339 million and $1,373 million in 2013, 2012 and 2011, respectively, and is recorded in SG&A expense in the Consolidated Statement of Earnings. | |||||||||
Research, Development and Engineering | ' | ||||||||
Research, Development and Engineering | |||||||||
Research, development and engineering (RD&E) costs are expensed as incurred. Software costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. See “Software Costs” on page 87. | |||||||||
Intellectual Property and Custom Development Income | ' | ||||||||
Intellectual Property and Custom Development Income | |||||||||
The company licenses and sells the rights to certain of its intellectual property (IP) including internally developed patents, trade secrets and technological know-how. Certain IP transactions to third parties are licensing/royalty-based and others are transaction-based sales and other transfers. Licensing/royalty-based fees involve transfers in which the company earns the income over time, or the amount of income is not fixed or determinable until the licensee sells future related products (i.e., variable royalty, based upon licensee’s revenue). Sales and other transfers typically include transfers of IP whereby the company has fulfilled its obligations and the fee received is fixed or determinable at the transfer date. The company also enters into cross-licensing arrangements of patents, and income from these arrangements is recorded when earned. In addition, the company earns income from certain custom development projects for strategic technology partners and specific clients. The company records the income from these projects when the fee is realized and earned, is not refundable and is not dependent upon the success of the project. | |||||||||
Other (Income) and Expense | ' | ||||||||
Other (Income) and Expense | |||||||||
Other (income) and expense includes interest income (other than from Global Financing external business transactions), gains and losses on certain derivative instruments, gains and losses from securities and other investments, gains and losses from certain real estate transactions, foreign currency transaction gains and losses, gains and losses from the sale of businesses and amounts related to accretion of asset retirement obligations. | |||||||||
Business Combinations and Intangible Assets Including Goodwill | ' | ||||||||
Business Combinations and Intangible Assets Including Goodwill | |||||||||
The company accounts for business combinations using the acquisition method and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree are recorded at their acquisition date fair values. Goodwill represents the excess of the purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. The primary drivers that generate goodwill are the value of synergies between the acquired entities and the company and the acquired assembled workforce, neither of which qualifies as an identifiable intangible asset. Goodwill recorded in an acquisition is assigned to applicable reporting units based on expected revenues. Identifiable intangible assets with finite lives are amortized over their useful lives. Amortization of completed technology is recorded in Cost, and amortization of all other intangible assets is recorded in SG&A expense. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the Consolidated Financial Statements from the acquisition date. | |||||||||
Impairment | ' | ||||||||
Impairment | |||||||||
Long-lived assets, other than goodwill and indefinite-lived intangible assets, are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The impairment test is based on undiscounted cash flows and, if impaired, the asset is written down to fair value based on either discounted cash flows or appraised values. Goodwill and indefinite-lived intangible assets are tested annually, in the fourth quarter, for impairment and whenever changes in circumstances indicate an impairment may exist. Goodwill is tested at the reporting unit level which is the operating segment, or a business, which is one level below that operating segment (the “component” level) if discrete financial information is prepared and regularly reviewed by management at the segment level. Components are aggregated as a single reporting unit if they have similar economic characteristics. | |||||||||
Depreciation and Amortization | ' | ||||||||
Depreciation and Amortization | |||||||||
Property, plant and equipment are carried at cost and depreciated over their estimated useful lives using the straight-line method. The estimated useful lives of certain depreciable assets are as follows: buildings, 30 to 50 years; building equipment, 10 to 20 years; land improvements, 20 years; plant, laboratory and office equipment, 2 to 20 years; and computer equipment, 1.5 to 5 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease term, rarely exceeding 25 years. | |||||||||
Capitalized software costs incurred or acquired after technological feasibility has been established are amortized over periods ranging up to 3 years. Capitalized costs for internal-use software are amortized on a straight-line basis over periods ranging up to 2 years. Other intangible assets are amortized over periods between 1 and 7 years. | |||||||||
Environmental | ' | ||||||||
Environmental | |||||||||
The cost of internal environmental protection programs that are preventative in nature are expensed as incurred. When a cleanup program becomes likely, and it is probable that the company will incur cleanup costs and those costs can be reasonably estimated, the company accrues remediation costs for known environmental liabilities. The company’s maximum exposure for all environmental liabilities cannot be estimated and no amounts are recorded for environmental liabilities that are not probable or estimable. | |||||||||
Asset Retirement Obligations | ' | ||||||||
Asset Retirement Obligations | |||||||||
Asset retirement obligations (ARO) are legal obligations associated with the retirement of long-lived assets. These liabilities are initially recorded at fair value and the related asset retirement costs are capitalized by increasing the carrying amount of the related assets by the same amount as the liability. Asset retirement costs are subsequently depreciated over the useful lives of the related assets. Subsequent to initial recognition, the company records period-to-period changes in the ARO liability resulting from the passage of time in interest expense and revisions to either the timing or the amount of the original expected cash flows to the related assets. | |||||||||
Defined Benefit Pension and Nonpension Postretirement Benefit Plans | ' | ||||||||
Defined Benefit Pension and Nonpension Postretirement Benefit Plans | |||||||||
The funded status of the company’s defined benefit pension plans and nonpension postretirement benefit plans (retirement-related benefit plans) is recognized in the Consolidated Statement of Financial Position. The funded status is measured as the difference between the fair value of plan assets and the benefit obligation at December 31, the measurement date. For defined benefit pension plans, the benefit obligation is the projected benefit obligation (PBO), which represents the actuarial present value of benefits expected to be paid upon retirement based on employee services already rendered and estimated future compensation levels. For the nonpension postretirement benefit plans, the benefit obligation is the accumulated postretirement benefit obligation (APBO), which represents the actuarial present value of postretirement benefits attributed to employee services already rendered. The fair value of plan assets represents the current market value of cumulative company and participant contributions made to an irrevocable trust fund, held for the sole benefit of participants, which are invested by the trust fund. Overfunded plans, with the fair value of plan assets exceeding the benefit obligation, are aggregated and recorded as a prepaid pension asset equal to this excess. Underfunded plans, with the benefit obligation exceeding the fair value of plan assets, are aggregated and recorded as a retirement and nonpension postretirement benefit obligation equal to this excess. | |||||||||
The current portion of the retirement and nonpension postretirement benefit obligations represents the actuarial present value of benefits payable in the next 12 months exceeding the fair value of plan assets, measured on a plan-by-plan basis. This obligation is recorded in compensation and benefits in the Consolidated Statement of Financial Position. | |||||||||
Net periodic pension and nonpension postretirement benefit cost/(income) is recorded in the Consolidated Statement of Earnings and includes service cost, interest cost, expected return on plan assets, amortization of prior service costs/(credits) and (gains)/losses previously recognized as a component of OCI and amortization of the net transition asset remaining in accumulated other comprehensive income/(loss) (AOCI). Service cost represents the actuarial present value of participant benefits earned in the current year. Interest cost represents the time value of money cost associated with the passage of time. Certain events, such as changes in the employee base, plan amendments and changes in actuarial assumptions, result in a change in the benefit obligation and the corresponding change in OCI. The result of these events is amortized as a component of net periodic cost/(income) over the service lives or life expectancy of the participants, depending on the plan, provided such amounts exceed thresholds which are based upon the benefit obligation or the value of plan assets. Net periodic cost/(income) is recorded in Cost, SG&A and RD&E in the Consolidated Statement of Earnings based on the employees’ respective functions. | |||||||||
(Gains)/losses and prior service costs/(credits) not recognized as a component of net periodic cost/(income) in the Consolidated Statement of Earnings as they arise are recognized as a component of OCI in the Consolidated Statement of Comprehensive Income. Those (gains)/losses and prior service costs/(credits) are subsequently recognized as a component of net periodic cost/(income) pursuant to the recognition and amortization provisions of applicable accounting guidance. (Gains)/losses arise as a result of differences between actual experience and assumptions or as a result of changes in actuarial assumptions. Prior service costs/ (credits) represent the cost of benefit changes attributable to prior service granted in plan amendments. | |||||||||
The measurement of benefit obligations and net periodic cost/(income) is based on estimates and assumptions approved by the company’s management. These valuations reflect the terms of the plans and use participant-specific information such as compensation, age and years of service, as well as certain assumptions, including estimates of discount rates, expected return on plan assets, rate of compensation increases, interest crediting rates and mortality rates. | |||||||||
Defined Contribution Plans | ' | ||||||||
Defined Contribution Plans | |||||||||
The company’s contribution for defined contribution plans is recorded when the employee renders service to the company. The charge is recorded in Cost, SG&A and RD&E in the Consolidated Statement of Earnings based on the employees’ respective functions. | |||||||||
Stock-Based Compensation | ' | ||||||||
Stock-Based Compensation | |||||||||
Stock-based compensation represents the cost related to stock-based awards granted to employees. The company measures stock-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost on a straight-line basis (net of estimated forfeitures) over the employee requisite service period. The company estimates the fair value of stock options using a Black-Scholes valuation model. The company also grants its employees Restricted Stock Units (RSUs), including Retention Restricted Stock Units (RRSUs) and Performance Share Units (PSUs). RSUs are stock awards granted to employees that entitle the holder to shares of common stock as the award vests, typically over a one- to five-year period. The fair value of the awards is determined and fixed on the grant date based on the company’s stock price, adjusted for the exclusion of dividend equivalents. All stock-based compensation cost is recorded in Cost, SG&A, and RD&E in the Consolidated Statement of Earnings based on the employees’ respective functions. | |||||||||
The company records deferred tax assets for awards that result in deductions on the company’s income tax returns, based on the amount of compensation cost recognized and the statutory tax rate in the jurisdiction in which it will receive a deduction. Differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the income tax return are recorded in additional paid-in capital (if the tax deduction exceeds the deferred tax asset) or in the Consolidated Statement of Earnings (if the deferred tax asset exceeds the tax deduction and no additional paid-in capital exists from previous awards). | |||||||||
Income Taxes | ' | ||||||||
Income Taxes | |||||||||
Income tax expense is based on reported income before income taxes. Deferred income taxes reflect the tax effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. These deferred taxes are measured by applying currently enacted tax laws. Valuation allowances are recognized to reduce deferred tax assets to the amount that will more likely than not be realized. In assessing the need for a valuation allowance, management considers all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. When the company changes its determination as to the amount of deferred tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to income tax expense in the period in which such determination is made. | |||||||||
The company recognizes tax liabilities when, despite the company’s belief that its tax return positions are supportable, the company believes that certain positions may not be fully sustained upon review by tax authorities. Benefits from tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. The current portion of tax liabilities is included in taxes and the noncurrent portion of tax liabilities is included in other liabilities in the Consolidated Statement of Financial Position. To the extent that new information becomes available which causes the company to change its judgment regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. | |||||||||
Translation of Non-U.S. Currency Amounts | ' | ||||||||
Translation of Non-U.S. Currency Amounts | |||||||||
Assets and liabilities of non-U.S. subsidiaries that have a local functional currency are translated to United States (U.S.) dollars at year-end exchange rates. Translation adjustments are recorded in OCI. Income and expense items are translated at weighted-average rates of exchange prevailing during the year. | |||||||||
Inventories, property, plant and equipment—net and other non-monetary assets and liabilities of non-U.S. subsidiaries and branches that operate in U.S. dollars are translated at the approximate exchange rates prevailing when the company acquired the assets or liabilities. All other assets and liabilities denominated in a currency other than U.S. dollars are translated at year-end exchange rates with the transaction gain or loss recognized in other (income) and expense. Income and expense items are translated at the weighted-average rates of exchange prevailing during the year. These translation gains and losses are included in net income for the period in which exchange rates change. | |||||||||
Derivatives Financial Instruments | ' | ||||||||
Derivative Financial Instruments | |||||||||
Derivatives are recognized in the Consolidated Statement of Financial Position at fair value and are reported in prepaid expenses and other current assets, investments and sundry assets, other accrued expenses and liabilities or other liabilities. Classification of each derivative as current or noncurrent is based upon whether the maturity of the instrument is less than or greater than 12 months. To qualify for hedge accounting, the company requires that the instruments be effective in reducing the risk exposure that they are designated to hedge. For instruments that hedge cash flows, hedge designation criteria also require that it be probable that the underlying transaction will occur. Instruments that meet established accounting criteria are formally designated as hedges. These criteria demonstrate that the derivative is expected to be highly effective at offsetting changes in fair value or cash flows of the underlying exposure both at inception of the hedging relationship and on an ongoing basis. The method of assessing hedge effectiveness and measuring hedge ineffectiveness is formally documented at hedge inception. The company assesses hedge effectiveness and measures hedge ineffectiveness at least quarterly throughout the designated hedge period. | |||||||||
Where the company applies hedge accounting, the company designates each derivative as a hedge of: (1) the fair value of a recognized financial asset or liability, or of an unrecognized firm commitment (fair value hedge attributable to interest rate or foreign currency risk); (2) the variability of anticipated cash flows of a forecasted transaction, or the cash flows to be received or paid related to a recognized financial asset or liability (cash flow hedge attributable to interest rate or foreign currency risk); or (3) a hedge of a long-term investment (net investment hedge) in a foreign operation. In addition, the company may enter into derivative contracts that economically hedge certain of its risks, even though hedge accounting does not apply or the company elects not to apply hedge accounting. In these cases, there exists a natural hedging relationship in which changes in the fair value of the derivative, which are recognized currently in net income, act as an economic offset to changes in the fair value of the underlying hedged item(s). | |||||||||
Changes in the fair value of a derivative that is designated as a fair value hedge, along with offsetting changes in the fair value of the underlying hedged exposure, are recorded in earnings each period. For hedges of interest rate risk, the fair value adjustments are recorded as adjustments to interest expense and cost of financing in the Consolidated Statement of Earnings. For hedges of currency risk associated with recorded financial assets or liabilities, derivative fair value adjustments are recognized in other (income) and expense in the Consolidated Statement of Earnings. Changes in the fair value of a derivative that is designated as a cash flow hedge are recorded, net of applicable taxes, in OCI, in the Consolidated Statement of Comprehensive Income. When net income is affected by the variability of the underlying cash flow, the applicable offsetting amount of the gain or loss from the derivative that is deferred in AOCI is released to net income and reported in interest expense, Cost, SG&A expense or other (income) and expense in the Consolidated Statement of Earnings based on the nature of the underlying cash flow hedged. Effectiveness for net investment hedging derivatives is measured on a spot-to-spot basis. The effective portion of changes in the fair value of net investment hedging derivatives and other non-derivative financial instruments designated as net investment hedges are recorded as foreign currency translation adjustments in OCI. Changes in the fair value of the portion of a net investment hedging derivative excluded from the effectiveness assessment are recorded in interest expense. If the underlying hedged item in a fair value hedge ceases to exist, all changes in the fair value of the derivative are included in net income each period until the instrument matures. When the derivative transaction ceases to exist, a hedged asset or liability is no longer adjusted for changes in its fair value except as required under other relevant accounting standards. Derivatives that are not designated as hedges, as well as changes in the fair value of derivatives that do not effectively offset changes in the fair value of the underlying hedged item throughout the designated hedge period (collectively, “ineffectiveness”), are recorded in net income for each period and are reported in other (income) and expense. When a cash flow hedging relationship is discontinued, the net gain or loss in AOCI must generally remain in AOCI until the item that was hedged affects earnings. However, when it is probable that a forecasted transaction will not occur by the end of the originally specified time period or within an additional two-month period thereafter, the net gain or loss in AOCI must be reclassified into earnings immediately. The company reports cash flows arising from derivative financial instruments designated as fair value or cash flow hedges consistent with the classification of cash flows from the underlying hedged items that these derivatives are hedging. Accordingly, the cash flows associated with derivatives designated as fair value or cash flow hedges are classified in cash flows from operating activities in the Consolidated Statement of Cash Flows. Cash flows from derivatives designated as net investment hedges and derivatives that do not qualify as hedges are reported in cash flows from investing activities. For currency swaps designated as hedges of foreign currency denominated debt (included in the company’s debt risk management program as addressed in note D, “Financial Instruments,” on pages 102 through 106), cash flows directly associated with the settlement of the principal element of these swaps are reported in payments to settle debt in cash flows from financing activities in the Consolidated Statement of Cash Flows. | |||||||||
Financial Instruments | ' | ||||||||
Financial Instruments | |||||||||
In determining the fair value of its financial instruments, the company uses a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. See note D, “Financial Instruments,” on pages 100 to 102 for further information. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized. | |||||||||
Fair Value Measurement | ' | ||||||||
Fair Value Measurement | |||||||||
Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the company is required to classify certain assets and liabilities based on the following fair value hierarchy: | |||||||||
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date; | |||||||||
Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and | |||||||||
Level 3—Unobservable inputs for the asset or liability. | |||||||||
The guidance requires the use of observable market data if such data is available without undue cost and effort. | |||||||||
When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items within Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation. | |||||||||
The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument. | |||||||||
In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calculated using the methodologies described below for several parameters that market participants would consider in determining fair value: | |||||||||
Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument. | |||||||||
Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market. | |||||||||
As an example, the fair value of derivatives is derived utilizing a discounted cash flow model that uses observable market inputs such as known notional value amounts, yield curves, spot and forward exchange rates as well as discount rates. These inputs relate to liquid, heavily traded currencies with active markets which are available for the full term of the derivative. | |||||||||
Certain financial assets are measured at fair value on a nonrecurring basis. These assets include equity method investments that are recognized at fair value at the measurement date to the extent that they are deemed to be other-than-temporarily impaired. Certain assets that are measured at fair value on a recurring basis can be subject to nonrecurring fair value measurements. These assets include available-for-sale equity investments that are deemed to be other-than-temporarily impaired. In the event of an other-than-temporary impairment of a financial instrument, fair value is measured using a model described above. | |||||||||
Accounting guidance permits the measurement of eligible financial assets, financial liabilities and firm commitments at fair value, on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. This election is irrevocable. The company does not apply the fair value option to any eligible assets or liabilities. | |||||||||
Cash Equivalents | ' | ||||||||
Cash Equivalents | |||||||||
All highly liquid investments with maturities of three months or less at the date of purchase are considered to be cash equivalents. | |||||||||
Marketable Securities | ' | ||||||||
Marketable Securities | |||||||||
Debt securities included in current assets represent securities that are expected to be realized in cash within one year of the balance sheet date. Long-term debt securities that are not expected to be realized in cash within one year and alliance equity securities are included in investments and sundry assets. Debt and marketable equity securities are considered available for sale and are reported at fair value with unrealized gains and losses, net of applicable taxes, in OCI. The realized gains and losses for available-for-sale securities are included in other (income) and expense in the Consolidated Statement of Earnings. Realized gains and losses are calculated based on the specific identification method. | |||||||||
In determining whether an other-than-temporary decline in market value has occurred, the company considers the duration that, and extent to which, the fair value of the investment is below its cost, the financial condition and near-term prospects of the issuer or underlying collateral of a security; and the company’s intent and ability to retain the security in order to allow for an anticipated recovery in fair value. Other-than-temporary declines in fair value from amortized cost for available-for-sale equity and debt securities that the company intends to sell or would more likely than not be required to sell before the expected recovery of the amortized cost basis are charged to other (income) and expense in the period in which the loss occurs. For debt securities that the company has no intent to sell and believes that it more likely than not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in other (income) and expense, while the remaining loss is recognized in OCI. The credit loss component recognized in other (income) and expense is identified as the amount of the principal cash flows not expected to be received over the remaining term of the debt security as projected using the company’s cash flow projections. | |||||||||
Inventories | ' | ||||||||
Inventories | |||||||||
Raw materials, work in process and finished goods are stated at the lower of average cost or market. Cash flows related to the sale of inventories are reflected in net cash provided by operating activities in the Consolidated Statement of Cash Flows. | |||||||||
Allowance for Credit Losses | ' | ||||||||
Allowance for Credit Losses | |||||||||
Receivables are recorded concurrent with billing and shipment of a product and/or delivery of a service to customers. A reasonable estimate of probable net losses on the value of customer receivables is recognized by establishing an allowance for credit losses. | |||||||||
Notes and Accounts Receivable-Trade | ' | ||||||||
Notes and Accounts Receivable—Trade | |||||||||
An allowance for uncollectible trade receivables is estimated based on a combination of write-off history, aging analysis and any specific, known troubled accounts. | |||||||||
Financing Receivables | ' | ||||||||
Financing Receivables | |||||||||
Financing receivables include sales-type leases, direct financing leases and loans. Leases are accounted for in accordance with lease accounting standards. Loan receivables are financial assets recorded at amortized cost which approximates fair value. The company determines its allowances for credit losses on financing receivables based on two portfolio segments: lease receivables and loan receivables. The company further segments the portfolio into two classes: major markets and growth markets. | |||||||||
When calculating the allowances, the company considers its ability to mitigate a potential loss by repossessing leased equipment and by considering the current fair market value of any other collateral. The value of the equipment is the net realizable value. The allowance for credit losses for capital leases, installment sales and customer loans includes an assessment of the entire balance of the capital lease or loan, including amounts not yet due. The methodologies that the company uses to calculate its receivables reserves, which are applied consistently to its different portfolios, are as follows: | |||||||||
Individually Evaluated—The company reviews all financing receivables considered at risk on a quarterly basis. The review primarily consists of an analysis based upon current information available about the client, such as financial statements, news reports, published credit ratings, current market-implied credit analysis, as well as the current economic environment, collateral net of repossession cost and prior collection history. For loans that are collateral dependent, impairment is measured using the fair value of the collateral when foreclosure is probable. Using this information, the company determines the expected cash flow for the receivable and calculates an estimate of the potential loss and the probability of loss. For those accounts in which the loss is probable, the company records a specific reserve. | |||||||||
Collectively Evaluated—The company records an unallocated reserve that is calculated by applying a reserve rate to its different portfolios, excluding accounts that have been specifically reserved. This reserve rate is based upon credit rating, probability of default, term, characteristics (lease/loan) and loss history. Factors that could result in actual receivable losses that are materially different from the estimated reserve include sharp changes in the economy, or a significant change in the economic health of a particular client that represents a concentration in the company’s receivables portfolio. | |||||||||
Other Credit-Related Policies | ' | ||||||||
Other Credit-Related Policies | |||||||||
Non-Accrual—Certain receivables for which the company has recorded a specific reserve may also be placed on non-accrual status. Non-accrual assets are those receivables (impaired loans or nonperforming leases) with specific reserves and other accounts for which it is likely that the company will be unable to collect all amounts due according to original terms of the lease or loan agreement. Income recognition is discontinued on these receivables. Cash collections are first applied as a reduction to principal outstanding. Any cash received in excess of principal payments outstanding is recognized as interest income. Receivables may be removed from non-accrual status, if appropriate, based upon changes in client circumstances. | |||||||||
Write Off—Receivable losses are charged against the allowance when management believes the uncollectibility of the receivable is confirmed. Subsequent recoveries, if any, are credited to the allowance. | |||||||||
Past Due—The company views receivables as past due when payment has not been received after 90 days, measured from the original billing date. | |||||||||
Impaired Loans—As stated above, the company evaluates all financing receivables considered at-risk, including loans, for impairment on a quarterly basis. The company considers any loan with an individually evaluated reserve as an impaired loan. Depending on the level of impairment, loans will also be placed on non-accrual status as appropriate. Client loans are primarily for software and services and are unsecured. These loans are subjected to credit analysis to evaluate the associated risk and, when deemed necessary, actions are taken to mitigate risks in the loan agreements which include covenants to protect against credit deterioration during the life of the obligation. | |||||||||
Estimated Residual Values of Lease Assets | ' | ||||||||
Estimated Residual Values of Lease Assets | |||||||||
The recorded residual values of lease assets are estimated at the inception of the lease to be the expected fair value of the assets at the end of the lease term. The company periodically reassesses the realizable value of its lease residual values. Any anticipated increases in specific future residual values are not recognized before realization through remarketing efforts. Anticipated decreases in specific future residual values that are considered to be other-than-temporary are recognized immediately upon identification and are recorded as an adjustment to the residual value estimate. For sales-type and direct-financing leases, this reduction lowers the recorded net investment and is recognized as a loss charged to financing income in the period in which the estimate is changed, as well as an adjustment to unearned income to reduce future-period financing income. | |||||||||
Common Stock | ' | ||||||||
Common Stock | |||||||||
Common stock refers to the $.20 par value per share capital stock as designated in the company’s Certificate of Incorporation. Treasury stock is accounted for using the cost method. When treasury stock is reissued, the value is computed and recorded using a weighted-average basis. | |||||||||
Earnings Per Share of Common Stock | ' | ||||||||
Earnings Per Share of Common Stock | |||||||||
Earnings per share (EPS) is computed using the two-class method. The two-class method determines EPS for each class of common stock and participating securities according to dividends and dividend equivalents and their respective participation rights in undistributed earnings. Basic EPS of common stock is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS of common stock is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options, stock awards and convertible notes. | |||||||||
Significant_Accounting_Policie2
Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Changes in warranty liabilities | ' | ||||||||
Standard Warranty Liability | |||||||||
($ in millions) | |||||||||
2013 | 2012 | ||||||||
Balance at January 1 | $ | 394 | $ | 407 | |||||
Current period accruals | 346 | 394 | |||||||
Accrual adjustments to reflect experience | 22 | -15 | |||||||
Changes incurred | -387 | -392 | |||||||
Balance at December 31 | $ | 376 | $ | 394 | |||||
Extended Warranty Liability (Deferred Income) | |||||||||
($ in millions) | |||||||||
2013 | 2012 | ||||||||
Balance at January 1 | $ | 606 | $ | 636 | |||||
Revenue deferred for new extended warranty contracts | 305 | 268 | |||||||
Amortization of deferred revenue | -324 | -301 | |||||||
Other* | -8 | 4 | |||||||
Balance at December 31 | $ | 579 | $ | 606 | |||||
Current portion | $ | 284 | $ | 289 | |||||
Noncurrent portion | 295 | 317 | |||||||
Balance at December 31 | $ | 579 | $ | 606 | |||||
* Other consists primarily of foreign currency translation adjustments. | |||||||||
AcquisitionsDivestitures_Table
Acquisitions/Divestitures (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Acquisitions/Divestitures | ' | |||||||||||||
Business acquisition, purchase price allocation | ' | |||||||||||||
2013 Acquisitions | ||||||||||||||
($ in millions) | ||||||||||||||
Amortization | Other | |||||||||||||
Life (in Years) | SoftLayer | Acquisitions | ||||||||||||
Current assets | $ | 80 | $ | 97 | ||||||||||
Fixed assets/noncurrent assets | 300 | 41 | ||||||||||||
Intangible assets | ||||||||||||||
Goodwill | N/A | 1,285 | 961 | |||||||||||
Completed technology | 7-May | 290 | 181 | |||||||||||
Client relationships | 7-Jun | 245 | 97 | |||||||||||
In-process R&D | N/A | 2 | — | |||||||||||
Patents/trademarks | 7-Feb | 75 | 32 | |||||||||||
Total assets acquired | 2,277 | 1,408 | ||||||||||||
Current liabilities | -56 | -61 | ||||||||||||
Noncurrent liabilities | -244 | -105 | ||||||||||||
Total liabilities assumed | -300 | -166 | ||||||||||||
Total purchase price | $ | 1,977 | $ | 1,242 | ||||||||||
N/A - not applicable | ||||||||||||||
2012 Acquisitions | ||||||||||||||
($ in millions) | ||||||||||||||
Amortization | Other | |||||||||||||
Life (in Years) | Kenexa | Acquisitions | ||||||||||||
Current assets | $ | 133 | $ | 278 | ||||||||||
Fixed assets/noncurrent assets | 98 | 217 | ||||||||||||
Intangible assets | ||||||||||||||
Goodwill | N/A | 1,014 | 1,880 | |||||||||||
Completed technology | 7-Mar | 169 | 403 | |||||||||||
Client relationships | 7-Apr | 179 | 194 | |||||||||||
In-process R&D | N/A | — | 11 | |||||||||||
Patents/trademarks | 7-Jan | 39 | 37 | |||||||||||
Total assets acquired | 1,632 | 3,020 | ||||||||||||
Current liabilities | -93 | -143 | ||||||||||||
Noncurrent liabilities | -188 | -264 | ||||||||||||
Total liabilities assumed | -281 | -407 | ||||||||||||
Total purchase price | $ | 1,351 | $ | 2,613 | ||||||||||
N/A - not applicable | ||||||||||||||
2011 Acquisitions | ||||||||||||||
($ in millions) | ||||||||||||||
Amortization | Total | |||||||||||||
Life (in Years) | Acquisitions | |||||||||||||
Current assets | $ | 251 | ||||||||||||
Fixed assets/noncurrent assets | 88 | |||||||||||||
Intangible assets | ||||||||||||||
Goodwill | N/A | 1,291 | ||||||||||||
Completed technology | 7 | 320 | ||||||||||||
Client relationships | 7 | 222 | ||||||||||||
Patents/trademarks | 7-Jan | 17 | ||||||||||||
Total assets acquired | 2,190 | |||||||||||||
Current liabilities | -191 | |||||||||||||
Noncurrent liabilities | -150 | |||||||||||||
Total liabilities assumed | -341 | |||||||||||||
Total purchase price | $ | 1,849 | ||||||||||||
N/A - not applicable | ||||||||||||||
Financial_Instruments_Tables
Financial Instruments (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||||||||||
Financial Instruments | ' | |||||||||||||||||||||||||||||||||
Financial assets and financial liabilities measured at fair value on a recurring basis | ' | |||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
At December 31, 2013: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||
Cash equivalents(1) | ||||||||||||||||||||||||||||||||||
Time deposits and certificates of deposit | $ | — | $ | 4,754 | $ | — | $ | 4,754 | ||||||||||||||||||||||||||
Commercial paper | — | 1,507 | — | 1,507 | ||||||||||||||||||||||||||||||
Money market funds | 1,728 | — | — | 1,728 | ||||||||||||||||||||||||||||||
Other securities | — | 8 | — | 8 | ||||||||||||||||||||||||||||||
Total | 1,728 | 6,269 | — | 7,997 | -6 | |||||||||||||||||||||||||||||
Debt securities — current (2) | — | 350 | — | 350 | -6 | |||||||||||||||||||||||||||||
Debt securities — noncurrent (3) | 1 | 7 | — | 9 | ||||||||||||||||||||||||||||||
Available-for-sale equity investments (3) | 18 | — | — | 18 | ||||||||||||||||||||||||||||||
Derivative assets (4) | ||||||||||||||||||||||||||||||||||
Interest rate contracts | — | 308 | — | 308 | ||||||||||||||||||||||||||||||
Foreign exchange contracts | — | 375 | — | 375 | ||||||||||||||||||||||||||||||
Equity contracts | — | 36 | — | 36 | ||||||||||||||||||||||||||||||
Total | — | 719 | — | 719 | -7 | |||||||||||||||||||||||||||||
Total assets | $ | 1,747 | $ | 7,345 | $ | — | $ | 9,092 | -7 | |||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||
Derivative liabilities (5) | ||||||||||||||||||||||||||||||||||
Interest rate contracts | $ | — | $ | 13 | $ | — | $ | 13 | ||||||||||||||||||||||||||
Foreign exchange contracts | — | 484 | — | 484 | ||||||||||||||||||||||||||||||
Equity contracts | — | 4 | — | 4 | ||||||||||||||||||||||||||||||
Total liabilities | $ | — | $ | 501 | $ | — | $ | 501 | -7 | |||||||||||||||||||||||||
(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||||||
(2) Commercial paper reported as marketable securities in the Consolidated Statement of | ||||||||||||||||||||||||||||||||||
Financial Position. | ||||||||||||||||||||||||||||||||||
(3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||||||
(4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments | ||||||||||||||||||||||||||||||||||
and sundry assets in the Consolidated Statement of Financial Position at December 31, 2013 were $318 million | ||||||||||||||||||||||||||||||||||
and $401 million, respectively. | ||||||||||||||||||||||||||||||||||
(5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Statement of Financial Position at December 31, 2013 were $375 million and $126 million, respectively. | ||||||||||||||||||||||||||||||||||
(6) Available-for-sale securities with carrying values that approximate fair value. | ||||||||||||||||||||||||||||||||||
(7) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated | ||||||||||||||||||||||||||||||||||
Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $251 | ||||||||||||||||||||||||||||||||||
million each. | ||||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
At December 31, 2012: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||
Cash equivalents(1) | ||||||||||||||||||||||||||||||||||
Time deposits and certificates of deposit | $ | — | $ | 3,694 | $ | — | $ | 3,694 | ||||||||||||||||||||||||||
Commercial paper | — | 2,098 | — | 2,098 | ||||||||||||||||||||||||||||||
Money market funds | 1,923 | — | — | 1,923 | ||||||||||||||||||||||||||||||
Other securities | — | 30 | — | 30 | ||||||||||||||||||||||||||||||
Total | 1,923 | 5,823 | — | 7,746 | -6 | |||||||||||||||||||||||||||||
Debt securities — current (2) | — | 717 | — | 717 | -6 | |||||||||||||||||||||||||||||
Debt securities — noncurrent (3) | 2 | 8 | 10 | |||||||||||||||||||||||||||||||
Available-for-sale equity investments (3) | 34 | — | — | 34 | ||||||||||||||||||||||||||||||
Derivative assets (4) | ||||||||||||||||||||||||||||||||||
Interest rate contracts | — | 604 | — | 604 | ||||||||||||||||||||||||||||||
Foreign exchange contracts | — | 305 | — | 305 | ||||||||||||||||||||||||||||||
Equity contracts | — | 9 | — | 9 | ||||||||||||||||||||||||||||||
Total | — | 918 | — | 918 | -7 | |||||||||||||||||||||||||||||
Total assets | $ | 1,959 | $ | 7,466 | $ | — | $ | 9,424 | -7 | |||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||
Derivative liabilities (5) | ||||||||||||||||||||||||||||||||||
Foreign exchange contracts | $ | — | $ | 496 | $ | — | $ | 496 | ||||||||||||||||||||||||||
Equity contracts | — | 7 | — | 7 | ||||||||||||||||||||||||||||||
Total liabilities | $ | — | $ | 503 | $ | — | $ | 503 | -7 | |||||||||||||||||||||||||
(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||||||
(2) Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of | ||||||||||||||||||||||||||||||||||
Financial Position. | ||||||||||||||||||||||||||||||||||
(3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. | ||||||||||||||||||||||||||||||||||
(4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments | ||||||||||||||||||||||||||||||||||
and sundry assets in the Consolidated Statement of Financial Position at December 31, 2012 were $333 million and | ||||||||||||||||||||||||||||||||||
$585 million, respectively. | ||||||||||||||||||||||||||||||||||
(5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other | ||||||||||||||||||||||||||||||||||
liabilities in the Consolidated Statement of Financial Position at December 31, 2012 were $426 million and $78 | ||||||||||||||||||||||||||||||||||
million, respectively. | ||||||||||||||||||||||||||||||||||
(6) Available-for-sale securities with carrying values that approximate fair value. | ||||||||||||||||||||||||||||||||||
(7) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated | ||||||||||||||||||||||||||||||||||
Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $262 | ||||||||||||||||||||||||||||||||||
million each. | ||||||||||||||||||||||||||||||||||
Noncurrent debt and marketable equity securities available-for-sale and recorded at fair value | ' | |||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | |||||||||||||||||||||||||||||||
At December 31, 2013: | Cost | Gains | Losses | Value | ||||||||||||||||||||||||||||||
Debt securities – noncurrent(1) | $ | 7 | $ | 1 | $ | — | $ | 9 | ||||||||||||||||||||||||||
Available-for-sale equity investments(1) | $ | 20 | $ | 2 | $ | 4 | $ | 18 | ||||||||||||||||||||||||||
-1 | Included within investments and sundry assets in the Consolidated Statement of Financial Position. | |||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | |||||||||||||||||||||||||||||||
At December 31, 2012: | Cost | Gains | Losses | Value | ||||||||||||||||||||||||||||||
Debt securities – noncurrent(1) | $ | 8 | $ | 2 | $ | — | $ | 10 | ||||||||||||||||||||||||||
Available-for-sale equity investments(1) | $ | 31 | $ | 4 | $ | 1 | $ | 34 | ||||||||||||||||||||||||||
-1 | Included within investments and sundry assets in the Consolidated Statement of Financial Position. | |||||||||||||||||||||||||||||||||
Sales of debt and available-for-sale equity investments | ' | |||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||||||||||
Proceeds | $ | 41 | $ | 112 | $ | 405 | ||||||||||||||||||||||||||||
Gross realized gains (before taxes) | 13 | 45 | 232 | |||||||||||||||||||||||||||||||
Gross realized losses (before taxes) | 5 | 1 | 0 | |||||||||||||||||||||||||||||||
Unrealized gains/(losses) on available-for-sale debt and equity securities | ' | |||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | ||||||||||||||||||||||||||||||||
Net unrealized gains/(losses) arising during the period | $ | 0 | $ | 17 | ||||||||||||||||||||||||||||||
Net unrealized (gains)/losses reclassified to net income* | -5 | -25 | ||||||||||||||||||||||||||||||||
* | Includes writedowns of $2.0 million in 2012. | |||||||||||||||||||||||||||||||||
Fair Value of Derivative Instruments in the Consolidated Statement of Financial Position | ' | |||||||||||||||||||||||||||||||||
Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position | ||||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
Fair Value of Derivative Assets | Fair Value of Derivative Liabilities | |||||||||||||||||||||||||||||||||
Balance Sheet | Balance Sheet | |||||||||||||||||||||||||||||||||
At December 31: | Classification | 2013 | 2012 | Classification | 2013 | 2012 | ||||||||||||||||||||||||||||
Designated as hedging | ||||||||||||||||||||||||||||||||||
instruments: | ||||||||||||||||||||||||||||||||||
Interest rate contracts | Prepaid expenses and | Other accrued | ||||||||||||||||||||||||||||||||
other current assets | $ | — | $ | 47 | expenses and liabilities | $ | 0 | $ | — | |||||||||||||||||||||||||
Investments and sundry | ||||||||||||||||||||||||||||||||||
assets | 308 | 557 | Other liabilities | 13 | — | |||||||||||||||||||||||||||||
Foreign exchange | Prepaid expenses and | Other accrued | ||||||||||||||||||||||||||||||||
contracts | other current assets | 187 | 135 | expenses and liabilities | 331 | 267 | ||||||||||||||||||||||||||||
Investments and sundry | ||||||||||||||||||||||||||||||||||
assets | 26 | 5 | Other liabilities | 112 | 78 | |||||||||||||||||||||||||||||
Fair value of derivative | Fair value of derivative | |||||||||||||||||||||||||||||||||
assets | $ | 522 | $ | 744 | liabilities | $ | 456 | $ | 345 | |||||||||||||||||||||||||
Not designated as | ||||||||||||||||||||||||||||||||||
hedging instruments | ||||||||||||||||||||||||||||||||||
Foreign exchange | Prepaid expenses and | Other accrued | ||||||||||||||||||||||||||||||||
contracts | other current assets | $ | 94 | $ | 142 | expenses and liabilities | $ | 40 | $ | 152 | ||||||||||||||||||||||||
Investments and sundry | ||||||||||||||||||||||||||||||||||
assets | 67 | 23 | Other liabilities | 1 | — | |||||||||||||||||||||||||||||
Equity contracts | Prepaid expenses and | Other accrued | ||||||||||||||||||||||||||||||||
other current assets | 36 | 9 | expenses and liabilities | 4 | 7 | |||||||||||||||||||||||||||||
Fair value of derivative | Fair value of derivative | |||||||||||||||||||||||||||||||||
assets | $ | 197 | $ | 174 | liabilities | $ | 45 | $ | 159 | |||||||||||||||||||||||||
Total debt designated as | ||||||||||||||||||||||||||||||||||
hedging instruments | ||||||||||||||||||||||||||||||||||
Short-term debt | N/A | N/A | $ | 190 | $ | 578 | ||||||||||||||||||||||||||||
Long-term debt | N/A | N/A | 6,111 | 3,035 | ||||||||||||||||||||||||||||||
Total | $ | 719 | $ | 918 | $ | 6,802 | $ | 4,116 | ||||||||||||||||||||||||||
N/A-not applicable | ||||||||||||||||||||||||||||||||||
Effect of Derivative Instruments in the Consolidated Statement of Earnings | ' | |||||||||||||||||||||||||||||||||
The Effect of Derivative Instruments in the Consolidated Statement of Earnings | ||||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
Gain/(Loss) Recognized in Earnings | ||||||||||||||||||||||||||||||||||
Consolidated | ||||||||||||||||||||||||||||||||||
Statement of | ||||||||||||||||||||||||||||||||||
Earnings | Recognized on | Attributable to Risk | ||||||||||||||||||||||||||||||||
Line Item | Derivatives(1) | Being Hedged(2) | ||||||||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||||||
Derivative instruments | ||||||||||||||||||||||||||||||||||
in fair value hedges | ||||||||||||||||||||||||||||||||||
Interest rate contracts | Cost of financing | $ | -109 | $ | 65 | $ | 271 | $ | 202 | $ | 59 | $ | -117 | |||||||||||||||||||||
Interest expense | -74 | 55 | 205 | 138 | 50 | -89 | ||||||||||||||||||||||||||||
Derivative instruments not | ||||||||||||||||||||||||||||||||||
designated as hedging instruments(1) | ||||||||||||||||||||||||||||||||||
Foreign exchange contracts | Other (income) | |||||||||||||||||||||||||||||||||
and expense | -328 | -311 | 352 | N/A | N/A | N/A | ||||||||||||||||||||||||||||
Equity contracts | SG&A expense | 164 | 110 | 42 | N/A | N/A | N/A | |||||||||||||||||||||||||||
Warrants | Other (income) | |||||||||||||||||||||||||||||||||
and expense | — | — | 10 | N/A | N/A | N/A | ||||||||||||||||||||||||||||
Total | $ | -347 | $ | -81 | $ | 880 | $ | 340 | $ | 108 | $ | -206 | ||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||
Gain/(Loss) Recognized in Earnings and Other Comprehensive Income | ||||||||||||||||||||||||||||||||||
Consolidated | ||||||||||||||||||||||||||||||||||
Statement of | (Ineffectiveness) and | |||||||||||||||||||||||||||||||||
Effective Portion | Earnings | Effective Portion | Amounts Excluded from | |||||||||||||||||||||||||||||||
For the year | Recognized in OCI | Line Item | Reclassified from AOCI | Effectiveness Testing(3) | ||||||||||||||||||||||||||||||
ended December 31: | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||
Derivative instruments | ||||||||||||||||||||||||||||||||||
in cash flow hedges | ||||||||||||||||||||||||||||||||||
Interest rate contracts | $ | — | $ | — | $ | — | Interest expense | $ | — | $ | -6 | $ | -8 | $ | — | $ | — | $ | — | |||||||||||||||
Foreign exchange | 43 | 32 | -266 | Other (income) | ||||||||||||||||||||||||||||||
contracts | and expense | 162 | 237 | -247 | 0 | 3 | -3 | |||||||||||||||||||||||||||
Cost of sales | -34 | 7 | -182 | — | — | — | ||||||||||||||||||||||||||||
SG&A expense | 39 | 16 | -74 | — | — | — | ||||||||||||||||||||||||||||
Instruments in net | ||||||||||||||||||||||||||||||||||
investment hedges(4) | ||||||||||||||||||||||||||||||||||
Foreign exchange | ||||||||||||||||||||||||||||||||||
contracts | 173 | -26 | 45 | Interest expense | — | — | 0 | 3 | 11 | -9 | ||||||||||||||||||||||||
Total | $ | 216 | $ | 6 | $ | -221 | $ | 167 | $ | 253 | $ | -511 | $ | 3 | $ | 14 | $ | -12 | ||||||||||||||||
(1) The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. | ||||||||||||||||||||||||||||||||||
(2) The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. | ||||||||||||||||||||||||||||||||||
(3) The amount of gain/(loss) recognized in income represents ineffectiveness on hedge relationships. | ||||||||||||||||||||||||||||||||||
(4) Instruments in net investment hedges include derivative and non-derivative instruments. | ||||||||||||||||||||||||||||||||||
N/A—Not applicable |
Inventories_Tables
Inventories (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Inventories | ' | |||||||
Inventories | ' | |||||||
($ in millions) | ||||||||
At December 31: | 2013 | 2012 | ||||||
Finished goods | $ | 444 | $ | 475 | ||||
Work in process and raw materials | 1,866 | 1,812 | ||||||
Total | $ | 2,310 | $ | 2,287 |
Financing_Receivables_Tables
Financing Receivables (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Financing Receivables | ' | ||||||||||||||
Financing receivables, net of allowances for credit losses, including residual values | ' | ||||||||||||||
($ in millions) | |||||||||||||||
At December 31: | 2013 | 2012 | |||||||||||||
Current | |||||||||||||||
Net investment in sales-type and direct financing leases | $ | 4,004 | $ | 3,862 | |||||||||||
Commercial financing receivables | 8,541 | 7,750 | |||||||||||||
Client loan receivables | 5,854 | 5,395 | |||||||||||||
Installment payment receivables | 1,389 | 1,031 | |||||||||||||
Total | $ | 19,787 | $ | 18,038 | |||||||||||
Noncurrent | |||||||||||||||
Net investment in sales-type and direct financing leases | $ | 5,700 | $ | 6,107 | |||||||||||
Commercial financing receivables | — | 5 | |||||||||||||
Client loan receivables | 6,360 | 5,966 | |||||||||||||
Installment payment receivables | 695 | 733 | |||||||||||||
Total | $ | 12,755 | $ | 12,812 | |||||||||||
Schedule of financing receivables and allowance for credit losses by portfolio segment | ' | ||||||||||||||
($ in millions) | |||||||||||||||
Major | Growth | ||||||||||||||
At December 31, 2013: | Markets | Markets | Total | ||||||||||||
Financing receivables | |||||||||||||||
Lease receivables | $ | 6,796 | $ | 2,200 | $ | 8,996 | |||||||||
Loan receivables | 10,529 | 4,012 | 14,542 | ||||||||||||
Ending balance | $ | 17,325 | $ | 6,212 | $ | 23,537 | |||||||||
Collectively evaluated for impairment | $ | 17,206 | $ | 6,013 | $ | 23,219 | |||||||||
Individually evaluated for impairment | $ | 119 | $ | 199 | $ | 318 | |||||||||
Allowance for credit losses: | |||||||||||||||
Beginning balance at January 1, 2013 | |||||||||||||||
Lease receivables | $ | 59 | $ | 55 | $ | 114 | |||||||||
Loan receivables | 121 | 84 | 204 | ||||||||||||
Total | $ | 180 | $ | 138 | $ | 318 | |||||||||
Write-offs | -23 | -10 | -33 | ||||||||||||
Provision | -21 | 105 | 84 | ||||||||||||
Other | 1 | -6 | -5 | ||||||||||||
Ending balance at December 31, 2013 | $ | 137 | $ | 228 | $ | 365 | |||||||||
Lease receivables | $ | 42 | $ | 80 | $ | 123 | |||||||||
Loan receivables | $ | 95 | $ | 147 | $ | 242 | |||||||||
Collectively evaluated for impairment | $ | 45 | $ | 48 | $ | 93 | |||||||||
Individually evaluated for impairment | $ | 93 | $ | 179 | $ | 272 | |||||||||
($ in millions) | |||||||||||||||
Major | Growth | ||||||||||||||
At December 31, 2012: | Markets | Markets | Total | ||||||||||||
Financing receivables | |||||||||||||||
Lease receivables | $ | 7,036 | $ | 2,138 | $ | 9,174 | |||||||||
Loan receivables | 9,666 | 3,670 | 13,336 | ||||||||||||
Ending balance | $ | 16,701 | $ | 5,808 | $ | 22,510 | |||||||||
Collectively evaluated for impairment | $ | 16,570 | $ | 5,684 | $ | 22,254 | |||||||||
Individually evaluated for impairment | $ | 131 | $ | 125 | $ | 256 | |||||||||
Allowance for credit losses: | |||||||||||||||
Beginning balance at January 1, 2012 | |||||||||||||||
Lease receivables | $ | 79 | $ | 40 | $ | 118 | |||||||||
Loan receivables | 125 | 64 | 189 | ||||||||||||
Total | $ | 203 | $ | 104 | $ | 307 | |||||||||
Write-offs | -14 | -1 | -15 | ||||||||||||
Provision | -9 | 38 | 28 | ||||||||||||
Other | 0 | -2 | -2 | ||||||||||||
Ending balance at December 31, 2012 | $ | 180 | $ | 138 | $ | 318 | |||||||||
Lease receivables | $ | 59 | $ | 55 | $ | 114 | |||||||||
Loan receivables | $ | 121 | $ | 84 | $ | 204 | |||||||||
Collectively evaluated for impairment | $ | 69 | $ | 29 | $ | 98 | |||||||||
Individually evaluated for impairment | $ | 111 | $ | 109 | $ | 220 | |||||||||
Schedule of recorded investment in financing receivables which are on Non-Accrual Status | ' | ||||||||||||||
($ in millions) | |||||||||||||||
At December 31: | 2013 | 2012 | |||||||||||||
Major markets | $ | 25 | $ | 27 | |||||||||||
Growth markets | 34 | 21 | |||||||||||||
Total lease receivables | $ | 59 | $ | 47 | |||||||||||
Major markets | $ | 40 | $ | 67 | |||||||||||
Growth markets | 92 | 25 | |||||||||||||
Total loan receivables | $ | 132 | $ | 92 | |||||||||||
Total receivables | $ | 191 | $ | 139 | |||||||||||
Schedule of impaired client loan receivables | ' | ||||||||||||||
($ in millions) | |||||||||||||||
Recorded | Related | ||||||||||||||
At December 31, 2013: | Investment | Allowance | |||||||||||||
Major markets | $ | 79 | $ | 67 | |||||||||||
Growth markets | 122 | 116 | |||||||||||||
Total | $ | 201 | $ | 183 | |||||||||||
($ in millions) | |||||||||||||||
Recorded | Related | ||||||||||||||
At December 31, 2012: | Investment | Allowance | |||||||||||||
Major markets | $ | 88 | $ | 77 | |||||||||||
Growth markets | 72 | 65 | |||||||||||||
Total | $ | 160 | $ | 143 | |||||||||||
($ in millions) | |||||||||||||||
Interest | |||||||||||||||
Average | Interest | Income | |||||||||||||
Recorded | Income | Recognized on | |||||||||||||
For the year ended December 31, 2013: | Investment | Recognized | Cash Basis | ||||||||||||
Major markets | $ | 76 | $ | 0 | $ | 0 | |||||||||
Growth markets | 97 | 0 | 0 | ||||||||||||
Total | $ | 173 | $ | 0 | $ | 0 | |||||||||
($ in millions) | |||||||||||||||
Interest | |||||||||||||||
Average | Interest | Income | |||||||||||||
Recorded | Income | Recognized on | |||||||||||||
For the year ended December 31, 2012: | Investment | Recognized | Cash Basis | ||||||||||||
Major markets | $ | 90 | $ | 0 | $ | 0 | |||||||||
Growth markets | 65 | 0 | 0 | ||||||||||||
Total | $ | 156 | $ | 0 | $ | 0 | |||||||||
Schedule of gross recorded investment by credit quality indicator | ' | ||||||||||||||
Lease Receivables | |||||||||||||||
($ in millions) | |||||||||||||||
Major | Growth | ||||||||||||||
At December 31, 2013: | Markets | Markets | |||||||||||||
Credit Rating | |||||||||||||||
AAA – AA- | $ | 743 | $ | 68 | |||||||||||
A+ – A- | 1,513 | 168 | |||||||||||||
BBB+ – BBB- | 2,111 | 957 | |||||||||||||
BB+ – BB | 1,393 | 350 | |||||||||||||
BB- – B+ | 595 | 368 | |||||||||||||
B – B- | 365 | 214 | |||||||||||||
CCC+ – D | 76 | 74 | |||||||||||||
Total | $ | 6,796 | $ | 2,200 | |||||||||||
Loan Receivables | |||||||||||||||
($ in millions) | |||||||||||||||
Major | Growth | ||||||||||||||
At December 31, 2013: | Markets | Markets | |||||||||||||
Credit Rating | |||||||||||||||
AAA – AA- | $ | 1,151 | $ | 125 | |||||||||||
A+ – A- | 2,344 | 307 | |||||||||||||
BBB+ – BBB- | 3,271 | 1,745 | |||||||||||||
BB+ – BB | 2,158 | 638 | |||||||||||||
BB- – B+ | 922 | 672 | |||||||||||||
B – B- | 565 | 391 | |||||||||||||
CCC+ – D | 118 | 134 | |||||||||||||
Total | $ | 10,529 | $ | 4,012 | |||||||||||
Lease Receivables | |||||||||||||||
($ in millions) | |||||||||||||||
Major | Growth | ||||||||||||||
At December 31, 2012: | Markets | Markets | |||||||||||||
Credit Rating | |||||||||||||||
AAA – AA- | $ | 646 | $ | 86 | |||||||||||
A+ – A- | 1,664 | 223 | |||||||||||||
BBB+ – BBB- | 2,285 | 776 | |||||||||||||
BB+ – BB | 1,367 | 450 | |||||||||||||
BB- – B+ | 552 | 418 | |||||||||||||
B – B- | 399 | 127 | |||||||||||||
CCC+ – D | 124 | 58 | |||||||||||||
Total | $ | 7,036 | $ | 2,138 | |||||||||||
Loan Receivables | |||||||||||||||
($ in millions) | |||||||||||||||
Major | Growth | ||||||||||||||
At December 31, 2012: | Markets | Markets | |||||||||||||
Credit Rating | |||||||||||||||
AAA – A- | $ | 887 | $ | 148 | |||||||||||
A+ – A- | 2,286 | 382 | |||||||||||||
BBB+ – BBB- | 3,139 | 1,333 | |||||||||||||
BB+ – BB | 1,878 | 773 | |||||||||||||
BB- – B+ | 758 | 718 | |||||||||||||
B – B- | 548 | 218 | |||||||||||||
CCC+ – D | 170 | 99 | |||||||||||||
Total | $ | 9,666 | $ | 3,670 | |||||||||||
Schedule of past due financing receivables | ' | ||||||||||||||
($ in millions) | |||||||||||||||
Recorded | |||||||||||||||
Total | Total | Investment | |||||||||||||
Past Due | Financing | > 90 Days | |||||||||||||
At December 31, 2013: | > 90 days* | Current | Receivables | and Accruing | |||||||||||
Major markets | $ | 6 | $ | 6,789 | $ | 6,796 | $ | 5 | |||||||
Growth markets | 19 | 2,181 | 2,200 | 11 | |||||||||||
Total lease receivables | $ | 25 | $ | 8,970 | $ | 8,996 | $ | 16 | |||||||
Major markets | $ | 9 | $ | 10,520 | $ | 10,529 | $ | 6 | |||||||
Growth markets | 34 | 3,979 | 4,012 | 18 | |||||||||||
Total loan receivables | $ | 43 | $ | 14,499 | $ | 14,542 | $ | 25 | |||||||
Total | $ | 68 | $ | 23,469 | $ | 23,537 | $ | 41 | |||||||
* Does not include accounts that are fully reserved. | |||||||||||||||
($ in millions) | |||||||||||||||
Recorded | |||||||||||||||
Total | Total | Investment | |||||||||||||
Past Due | Financing | > 90 Days | |||||||||||||
At December 31, 2012: | > 90 days* | Current | Receivables | and Accruing | |||||||||||
Major markets | $ | 8 | $ | 7,028 | $ | 7,036 | $ | 5 | |||||||
Growth markets | 11 | 2,127 | 2,138 | 8 | |||||||||||
Total lease receivables | $ | 20 | $ | 9,154 | $ | 9,174 | $ | 13 | |||||||
Major markets | $ | 27 | $ | 9,639 | $ | 9,666 | $ | 8 | |||||||
Growth markets | 36 | 3,634 | 3,670 | 31 | |||||||||||
Total loan receivables | $ | 63 | $ | 13,273 | $ | 13,336 | $ | 39 | |||||||
Total | $ | 82 | $ | 22,428 | $ | 22,510 | $ | 52 | |||||||
* Does not include accounts that are fully reserved. | |||||||||||||||
Property_Plant_and_Equipment_T
Property, Plant and Equipment (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Property, Plant and Equipment | ' | |||||||
Property, Plant and Equipment | ' | |||||||
($ in millions) | ||||||||
At December 31: | 2013 | 2012 | ||||||
Land and land improvements | $ | 706 | $ | 747 | ||||
Buildings and building improvements | 9,680 | 9,610 | ||||||
Plant, laboratory and office equipment | 28,169 | 27,731 | ||||||
Plant and other property—gross | 38,555 | 38,088 | ||||||
Less: Accumulated depreciation | 25,576 | 25,234 | ||||||
Plant and other property—net | 12,979 | 12,854 | ||||||
Rental machines | 1,920 | 2,414 | ||||||
Less: Accumulated depreciation | 1,078 | 1,271 | ||||||
Rental machines—net | 842 | 1,142 | ||||||
Total—net | $ | 13,821 | $ | 13,996 |
Investments_and_Sundry_Assets_
Investments and Sundry Assets (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2013 | ||||||||||
Investments and Sundry Assets | ' | |||||||||
Investments and Sundry Assets | ' | |||||||||
($ in millions) | ||||||||||
At December 31: | 2013 | 2012 | ||||||||
Deferred transition and setup costs and other deferred arrangements* | $ | 1,652 | $ | 1,630 | ||||||
Derivatives—noncurrent** | 401 | 585 | ||||||||
Alliance investments | ||||||||||
Equity method | 110 | 120 | ||||||||
Non-equity method | 200 | 226 | ||||||||
Prepaid software | 352 | 306 | ||||||||
Long-term deposits | 316 | 318 | ||||||||
Other receivables | 174 | 204 | ||||||||
Employee benefit-related | 392 | 439 | ||||||||
Prepaid income taxes | 305 | 459 | ||||||||
Other assets | 738 | 735 | ||||||||
Total | $ | 4,639 | $ | 5,021 | ||||||
* Deferred transition and setup costs and other deferred arrangements are related to Global Services client arrangements. See note A, “Significant Accounting Policies,” on pages 86 and 87 for additional information. | ||||||||||
** See note D, “Financial Instruments,” on pages 102 through 106 for the fair value of all derivatives reported in the Consolidated Statement of Financial Position. | ||||||||||
Intangible_Assets_Including_Go1
Intangible Assets Including Goodwill (Tables) | 12 Months Ended | ||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||
Intangible Assets Including Goodwill | ' | ||||||||||||||||||
Intangible asset balances by major asset class | ' | ||||||||||||||||||
($ in millions) | |||||||||||||||||||
Gross Carrying | Accumulated | Net Carrying | |||||||||||||||||
At December 31, 2013: | Amount | Amortization | Amount | ||||||||||||||||
Intangible asset class | |||||||||||||||||||
Capitalized software | $ | 1,494 | $ | -699 | $ | 794 | |||||||||||||
Client relationships | 2,148 | -977 | 1,171 | ||||||||||||||||
Completed technology | 2,910 | -1,224 | 1,687 | ||||||||||||||||
In-process R&D | 13 | — | 13 | ||||||||||||||||
Patents/trademarks | 358 | -154 | 204 | ||||||||||||||||
Other* | 7 | -5 | 2 | ||||||||||||||||
Total | $ | 6,930 | $ | -3,059 | $ | 3,871 | |||||||||||||
($ in millions) | |||||||||||||||||||
Gross Carrying | Accumulated | Net Carrying | |||||||||||||||||
At December 31, 2012: | Amount | Amortization | Amount | ||||||||||||||||
Intangible asset class | |||||||||||||||||||
Capitalized software | $ | 1,527 | $ | -665 | $ | 861 | |||||||||||||
Client relationships | 2,103 | -961 | 1,142 | ||||||||||||||||
Completed technology | 2,709 | -1,112 | 1,597 | ||||||||||||||||
In-process R&D | 28 | — | 28 | ||||||||||||||||
Patents/trademarks | 281 | -127 | 154 | ||||||||||||||||
Other* | 31 | -27 | 3 | ||||||||||||||||
Total | $ | 6,679 | $ | -2,892 | $ | 3,787 | |||||||||||||
* Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. | |||||||||||||||||||
Intangible assets, future amortization expense | ' | ||||||||||||||||||
The amortization expense for each of the five succeeding years relating to intangible assets currently recorded in the Consolidated Statement of Financial Position is estimated to be the following at December 31, 2013: | |||||||||||||||||||
($ in millions) | |||||||||||||||||||
Capitalized | Acquired | ||||||||||||||||||
Software | Intangibles | Total | |||||||||||||||||
2014 | $ | 484 | $ | 784 | $ | 1,267 | |||||||||||||
2015 | 247 | 637 | 884 | ||||||||||||||||
2016 | 64 | 595 | 660 | ||||||||||||||||
2017 | — | 477 | 477 | ||||||||||||||||
2018 | — | 322 | 322 | ||||||||||||||||
Changes in goodwill balances by reportable segment | ' | ||||||||||||||||||
($ in millions) | |||||||||||||||||||
Foreign | |||||||||||||||||||
Currency | |||||||||||||||||||
Balance | Purchase | Translation | Balance | ||||||||||||||||
January 1, | Goodwill | Price | And Other | December 31, | |||||||||||||||
Segment | 2013 | Additions | Adjustments | Divestitures | Adjustments | 2013 | |||||||||||||
Global Business Services | $ | 4,357 | $ | — | $ | 0 | $ | -3 | $ | -21 | $ | 4,334 | |||||||
Global Technology Services | 2,916 | 1,246 | 17 | — | -50 | 4,129 | |||||||||||||
Software | 20,405 | 987 | 11 | -4 | -279 | 21,121 | |||||||||||||
Systems and Technology | 1,568 | 13 | 33 | — | -14 | 1,601 | |||||||||||||
Total | $ | 29,247 | $ | 2,246 | $ | 61 | $ | -7 | $ | -363 | $ | 31,184 | |||||||
($ in millions) | |||||||||||||||||||
Foreign | |||||||||||||||||||
Currency | |||||||||||||||||||
Balance | Purchase | Translation | Balance | ||||||||||||||||
January 1, | Goodwill | Price | And Other | December 31, | |||||||||||||||
Segment | 2012 | Additions | Adjustments | Divestitures | Adjustments | 2012 | |||||||||||||
Global Business Services | $ | 4,313 | $ | 5 | $ | 0 | $ | -2 | $ | 42 | $ | 4,357 | |||||||
Global Technology Services | 2,646 | 264 | — | 0 | 6 | 2,916 | |||||||||||||
Software | 18,121 | 2,182 | -30 | -6 | 137 | 20,405 | |||||||||||||
Systems and Technology | 1,133 | 443 | 0 | -14 | 6 | 1,568 | |||||||||||||
Total | $ | 26,213 | $ | 2,894 | $ | -30 | $ | -22 | $ | 192 | $ | 29,247 | |||||||
Borrowings_Tables
Borrowings (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Borrowings | ' | ||||||||||||||
Short-Term Debt | ' | ||||||||||||||
($ in millions) | |||||||||||||||
At December 31: | 2013 | 2012 | |||||||||||||
Commercial paper | $ | 2,458 | $ | 1,800 | |||||||||||
Short-term loans | 551 | 1,789 | |||||||||||||
Long-term debt—current maturities | 3,854 | 5,593 | |||||||||||||
Total | $ | 6,862 | $ | 9,181 | |||||||||||
Long-Term Debt | ' | ||||||||||||||
($ in millions) | |||||||||||||||
At December 31: | Maturities | 2013 | 2012 | ||||||||||||
U.S. dollar notes and debentures (average interest rate at December 31, 2013): | |||||||||||||||
0.70% | 2014–2015 | $ | 6,456 | ** | $ | 7,131 | |||||||||
3.05% | 2016–2017 | 8,465 | 5,807 | ||||||||||||
3.99% | 2018–2021 | 6,206 | 7,457 | ||||||||||||
1.88% | 2022 | 1,000 | 1,000 | ||||||||||||
3.38% | 2023 | 1,500 | — | ||||||||||||
7.00% | 2025 | 600 | 600 | ||||||||||||
6.22% | 2027 | 469 | 469 | ||||||||||||
6.50% | 2028 | 313 | 313 | ||||||||||||
5.88% | 2032 | 600 | 600 | ||||||||||||
8.00% | 2038 | 83 | 83 | ||||||||||||
5.60% | 2039 | 745 | 745 | ||||||||||||
4.00% | 2042 | 1,107 | 1,107 | ||||||||||||
7.00% | 2045 | 27 | 27 | ||||||||||||
7.13% | 2096 | 316 | 316 | ||||||||||||
27,887 | 25,656 | ||||||||||||||
Other currencies (average interest rate at December 31, 2013, in parentheses): | |||||||||||||||
Euros (2.8%) | 2014–2025 | 5,894 | 2,338 | ||||||||||||
Pound sterling (2.75%) | 2017–2020 | 1,254 | 12 | ||||||||||||
Japanese yen (0.6%) | 2014–2017 | 1,057 | 878 | ||||||||||||
Swiss francs (3.8%) | 2015–2020 | 181 | 178 | ||||||||||||
Canadian (2.2%) | 2017 | 471 | 502 | ||||||||||||
Other (8.81%) | 2015–2017 | 291 | 95 | ||||||||||||
37,036 | 29,660 | ||||||||||||||
Less: net unamortized discount | 872 | 865 | |||||||||||||
Add: fair value adjustment* | 546 | 886 | |||||||||||||
36,710 | 29,680 | ||||||||||||||
Less: current maturities | 3,854 | 5,593 | |||||||||||||
Total | $ | 32,856 | $ | 24,088 | |||||||||||
* The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Statement of Financial Position as an amount equal to the sum of the debt’s carrying value plus a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates. | |||||||||||||||
** Includes $17 million of debt securities issued by IBM International Group Capital, LLC, which is an indirect, 100 percent owned finance subsidiary of the company and will mature in 2014. Debt securities issued by IBM International Group Capital LLC are fully and unconditionally guaranteed by the company. | |||||||||||||||
Post-Swap Borrowing (Long-Term Debt, Including Current Portion) | ' | ||||||||||||||
($ in millions) | |||||||||||||||
2013 | 2012 | ||||||||||||||
For the year ended December 31: | Amount | Average Rate | Amount | Average Rate | |||||||||||
Fixed-rate debt | $ | 30,123 | 3.07 | % | $ | 24,049 | 3.43 | % | |||||||
Floating-rate debt* | 6,587 | 0.87 | % | 5,631 | 1.91 | % | |||||||||
Total | $ | 36,710 | $ | 29,680 | |||||||||||
* Includes $3,106 million in 2013 and $4,252 million in 2012 of notional interest rate swaps that effectively convert the fixed-rate long-term debt into floating-rate debt. (See note D, “Financial Instruments,” on pages 102 through 106. | |||||||||||||||
Pre-swap annual contractual maturities of long-term debt outstanding | ' | ||||||||||||||
($ in millions) | |||||||||||||||
Total | |||||||||||||||
2014 | $ | 3,854 | |||||||||||||
2015 | 4,566 | ||||||||||||||
2016 | 4,114 | ||||||||||||||
2017 | 5,386 | ||||||||||||||
2018 | 2,662 | ||||||||||||||
2019 and beyond | 16,453 | ||||||||||||||
Total | $ | 37,036 | |||||||||||||
Interest on Debt | ' | ||||||||||||||
($ in millions) | |||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | ||||||||||||
Cost of financing | $ | 587 | $ | 545 | $ | 553 | |||||||||
Interest expense | 405 | 470 | 402 | ||||||||||||
Net investment derivative activity | -3 | -11 | 9 | ||||||||||||
Interest capitalized | 22 | 18 | 9 | ||||||||||||
Total interest paid and accrued | $ | 1,011 | $ | 1,022 | $ | 973 |
Other_Liabilities_Tables
Other Liabilities (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Other Liabilities | ' | ||||||||||||
Other Liabilities | ' | ||||||||||||
($ in millions) | |||||||||||||
At December 31: | 2013 | 2012* | |||||||||||
Income tax reserves | $ | 3,189 | $ | 2,527 | |||||||||
Excess 401(k) Plus Plan | 1,673 | 1,501 | |||||||||||
Disability benefits | 699 | 890 | |||||||||||
Derivative liabilities | 126 | 78 | |||||||||||
Special restructuring actions | 440 | 430 | |||||||||||
Workforce reductions | 500 | 473 | |||||||||||
Deferred taxes | 1,741 | 448 | |||||||||||
Other taxes payable | 186 | 24 | |||||||||||
Environmental accruals | 231 | 216 | |||||||||||
Warranty accruals | 171 | 167 | |||||||||||
Asset retirement obligations | 129 | 127 | |||||||||||
Acquisition-related accruals | 205 | 35 | |||||||||||
Other | 644 | 691 | |||||||||||
Total | $ | 9,934 | $ | 7,607 | |||||||||
* Reclassified to conform with 2013 presentation. | |||||||||||||
Special actions liability rollforward | ' | ||||||||||||
($ in millions) | |||||||||||||
Liability | Liability | ||||||||||||
as of | as of | ||||||||||||
January 1, | Other | December 31, | |||||||||||
2013 | Payments | Adjustments* | 2013 | ||||||||||
Current | |||||||||||||
Workforce | $ | 28 | $ | -29 | $ | 29 | $ | 27 | |||||
Space | 2 | -1 | -1 | 0 | |||||||||
Total current | $ | 30 | $ | -30 | $ | 28 | $ | 27 | |||||
Noncurrent | |||||||||||||
Workforce | $ | 430 | $ | — | $ | 10 | $ | 440 | |||||
Total noncurrent | $ | 430 | $ | — | $ | 10 | $ | 440 |
Equity_Activity_Tables
Equity Activity (Tables) | 12 Months Ended | |||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||
Equity Activity | ' | |||||||||||||||||
Schedule of Reclassifications and Taxes Related to items of Other Comprehensive Income | ' | |||||||||||||||||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | ||||||||||||||||||
($ in millions) | ||||||||||||||||||
Before Tax | Tax (Expense)/ | Net of Tax | ||||||||||||||||
For the year ended December 31, 2013: | Amount | Benefit | Amount | |||||||||||||||
Other comprehensive income/(loss) | ||||||||||||||||||
Foreign currency translation adjustments | $ | -1,335 | $ | -66 | $ | -1,401 | ||||||||||||
Net changes related to available-for-sale securities | ||||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | -4 | $ | 2 | $ | -3 | ||||||||||||
Reclassification of (gains)/losses to other (income) and expense | -8 | 2 | -5 | |||||||||||||||
Subsequent changes in previously impaired securities arising during | ||||||||||||||||||
the period | 4 | -1 | 3 | |||||||||||||||
Total net changes related to available-for-sale securities | $ | -8 | $ | 3 | $ | -5 | ||||||||||||
Unrealized gains/(losses) on cash flow hedges | ||||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | 43 | $ | -15 | $ | 28 | ||||||||||||
Reclassification of (gains)/losses to: | ||||||||||||||||||
Cost of sales | 34 | -14 | 21 | |||||||||||||||
SG&A expense | -39 | 14 | -25 | |||||||||||||||
Other (income) and expense | -162 | 62 | -99 | |||||||||||||||
Interest expense | 0 | 0 | 0 | |||||||||||||||
Total unrealized gains/(losses) on cash flow hedges | $ | -123 | $ | 47 | $ | -76 | ||||||||||||
Retirement-related benefit plans(1) | ||||||||||||||||||
Prior service costs/(credits) | $ | 16 | $ | 0 | $ | 16 | ||||||||||||
Net (losses)/gains arising during the period | 5,369 | -1,974 | 3,395 | |||||||||||||||
Curtailments and settlements | -3 | 1 | -2 | |||||||||||||||
Amortization of prior service (credits)/costs | -114 | 40 | -75 | |||||||||||||||
Amortization of net (gains)/losses | 3,499 | -1,195 | 2,304 | |||||||||||||||
Total retirement-related benefit plans | $ | 8,767 | $ | -3,128 | $ | 5,639 | ||||||||||||
Other comprehensive income/(loss) | $ | 7,301 | $ | -3,144 | $ | 4,157 | ||||||||||||
-1 | These AOCI components are included in the computation of net periodic pension cost. (See note S, "Retirement-Related Benefits," on | |||||||||||||||||
pages 127 to 141 for additional information.) | ||||||||||||||||||
($ in millions) | ||||||||||||||||||
Before Tax | Tax (Expense)/ | Net of Tax | ||||||||||||||||
For the year ended December 31, 2012: | Amount | Benefit | Amount | |||||||||||||||
Other comprehensive income/(loss) | ||||||||||||||||||
Foreign currency translation adjustments | $ | -44 | $ | 10 | $ | -34 | ||||||||||||
Net changes related to available-for-sale securities | ||||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | 8 | $ | -4 | $ | 4 | ||||||||||||
Reclassification of (gains)/losses to other (income) and expense | -42 | 17 | -25 | |||||||||||||||
Subsequent changes in previously impaired securities arising during | ||||||||||||||||||
the period | 20 | -8 | 12 | |||||||||||||||
Total net changes related to available-for-sale securities | $ | -14 | $ | 5 | $ | -9 | ||||||||||||
Unrealized gains/(losses) on cash flow hedges | ||||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | 32 | $ | -27 | $ | 5 | ||||||||||||
Reclassification of (gains)/losses to: | ||||||||||||||||||
Cost of sales | -7 | -6 | -13 | |||||||||||||||
SG&A expense | -16 | 4 | -12 | |||||||||||||||
Other (income) and expense | -237 | 91 | -146 | |||||||||||||||
Interest expense | 6 | -3 | 3 | |||||||||||||||
Total unrealized gains/(losses) on cash flow hedges | $ | -220 | $ | 59 | $ | -161 | ||||||||||||
Retirement-related benefit plans(1) | ||||||||||||||||||
Net (losses)/gains arising during the period | $ | -7,489 | $ | 2,327 | $ | -5,162 | ||||||||||||
Curtailments and settlements | -2 | 0 | -2 | |||||||||||||||
Amortization of prior service (credits)/costs | -148 | 59 | -89 | |||||||||||||||
Amortization of net (gains)/losses | 2,457 | -874 | 1,583 | |||||||||||||||
Total retirement-related benefit plans | $ | -5,182 | $ | 1,513 | $ | -3,669 | ||||||||||||
Other comprehensive income/(loss) | $ | -5,460 | $ | 1,587 | $ | -3,874 | ||||||||||||
-1 | These AOCI components are included in the computation of net periodic pension cost. (See note S, "Retirement-Related Benefits," on | |||||||||||||||||
pages 127 to 141 for additional information.) | ||||||||||||||||||
($ in millions) | ||||||||||||||||||
Before Tax | Tax (Expense)/ | Net of Tax | ||||||||||||||||
For the year ended December 31, 2011: | Amount | Benefit | Amount | |||||||||||||||
Other comprehensive income/(loss) | ||||||||||||||||||
Foreign currency translation adjustments | $ | -693 | $ | -18 | $ | -711 | ||||||||||||
Net changes related to available-for-sale securities | ||||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | -14 | $ | 5 | $ | -9 | ||||||||||||
Reclassification of (gains)/losses to other (income) and expense | -231 | 88 | -143 | |||||||||||||||
Subsequent changes in previously impaired securities arising during | ||||||||||||||||||
the period | 4 | -1 | 3 | |||||||||||||||
Total net changes related to available-for-sale securities | $ | -241 | $ | 91 | $ | -150 | ||||||||||||
Unrealized gains/(losses) on cash flow hedges | ||||||||||||||||||
Unrealized gains/(losses) arising during the period | $ | -266 | $ | 105 | $ | -162 | ||||||||||||
Reclassification of (gains)/losses to: | ||||||||||||||||||
Cost of sales | 182 | -61 | 121 | |||||||||||||||
SG&A expense | 75 | -23 | 52 | |||||||||||||||
Other (income) and expense | 247 | -3 | 244 | |||||||||||||||
Interest expense | 8 | -95 | -88 | |||||||||||||||
Total unrealized gains/(losses) on cash flow hedges | $ | 245 | $ | -77 | $ | 167 | ||||||||||||
Retirement-related benefit plans(1) | ||||||||||||||||||
Prior service costs/(credits) | $ | -28 | $ | 7 | $ | -22 | ||||||||||||
Net (losses)/gains arising during the period | -5,463 | 1,897 | -3,566 | |||||||||||||||
Curtailments and settlements | 11 | -3 | 7 | |||||||||||||||
Amortization of prior service (credits)/costs | -157 | 62 | -94 | |||||||||||||||
Amortization of net (gains)/losses | 1,847 | -619 | 1,227 | |||||||||||||||
Total retirement-related benefit plans | $ | -3,790 | $ | 1,343 | $ | -2,448 | ||||||||||||
Other comprehensive income/(loss) | $ | -4,479 | $ | 1,339 | $ | -3,142 | ||||||||||||
-1 | These AOCI components are included in the computation of net periodic pension cost. (See note S, "Retirement-Related Benefits," on | |||||||||||||||||
pages 127 to 141 for additional information.) | ||||||||||||||||||
Accumulated Other Comprehensive Income/(Loss) (net of tax) | ' | |||||||||||||||||
Accumulated Other Comprehensive Income/(Loss) (net of tax) | ||||||||||||||||||
($ in millions) | ||||||||||||||||||
Net Change | Net Unrealized | |||||||||||||||||
Net Unrealized | Foreign | Retirement- | Gains/(Losses) | Accumulated | ||||||||||||||
Gains/(Losses) | Currency | Related | on Available- | Other | ||||||||||||||
on Cash Flow | Translation | Benefit | For-Sale | Comprehensive | ||||||||||||||
Hedges | Adjustments* | Plans | Securities | Income/(Loss) | ||||||||||||||
31-Dec-10 | $ | -96 | $ | 2,478 | $ | -21,289 | $ | 164 | $ | -18,743 | ||||||||
Other comprehensive income before | ||||||||||||||||||
reclassifications | -162 | -711 | -3,581 | -7 | -4,461 | |||||||||||||
Amount reclassified from accumulated | ||||||||||||||||||
other comprehensive income | 329 | 0 | 1,133 | -143 | 1,319 | |||||||||||||
Total change for the period | 167 | -711 | -2,448 | -150 | -3,142 | |||||||||||||
31-Dec-11 | 71 | 1,767 | -23,737 | 13 | -21,885 | |||||||||||||
Other comprehensive income before | ||||||||||||||||||
reclassifications | 5 | -34 | -5,164 | 16 | -5,177 | |||||||||||||
Amount reclassified from accumulated | ||||||||||||||||||
other comprehensive income | -167 | 0 | 1,495 | -25 | 1,303 | |||||||||||||
Total change for the period | -161 | -34 | -3,669 | -9 | -3,874 | |||||||||||||
31-Dec-12 | -90 | 1,733 | -27,406 | 4 | -25,759 | |||||||||||||
Other comprehensive income before | ||||||||||||||||||
reclassifications | 28 | -1,401 | 3,409 | 0 | 2,036 | |||||||||||||
Amount reclassified from accumulated | ||||||||||||||||||
other comprehensive income | -103 | 0 | 2,229 | -5 | 2,121 | |||||||||||||
Total change for the period | -76 | -1,401 | 5,639 | -5 | 4,157 | |||||||||||||
31-Dec-13 | $ | -165 | $ | 332 | $ | -21,767 | $ | -1 | $ | -21,602 | ||||||||
* Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. |
Taxes_Tables
Taxes (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2013 | ||||||||||||
Taxes | ' | |||||||||||
Income before income taxes | ' | |||||||||||
($ in millions) | ||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||
Income before income taxes | ||||||||||||
U.S. operations | $ | 6,857 | $ | 9,668 | $ | 9,716 | ||||||
Non-U.S. operations | 12,667 | 12,234 | 11,287 | |||||||||
Total income before income taxes | $ | 19,524 | $ | 21,902 | $ | 21,003 | ||||||
Provision for income taxes by geographic operations | ' | |||||||||||
The provision for income taxes by geographic operations is as follows: | ||||||||||||
($ in millions) | ||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||
U.S. operations | $ | 993 | $ | 2,582 | $ | 2,141 | ||||||
Non-U.S. operations | 2,048 | 2,716 | 3,007 | |||||||||
Total provision for income taxes | $ | 3,041 | $ | 5,298 | $ | 5,148 | ||||||
Components of the provision for income taxes by taxing jurisdiction | ' | |||||||||||
The components of the provision for income taxes by taxing jurisdiction are as follows: | ||||||||||||
($ in millions) | ||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||
U.S. federal | ||||||||||||
Current | $ | 1,406 | $ | 1,361 | $ | 268 | ||||||
Deferred | -652 | 403 | 909 | |||||||||
754 | 1,764 | 1,177 | ||||||||||
U.S. state and local | ||||||||||||
Current | 178 | 134 | 429 | |||||||||
Deferred | -321 | 289 | 81 | |||||||||
-143 | 423 | 510 | ||||||||||
Non-U.S. | ||||||||||||
Current | 3,067 | 3,006 | 3,239 | |||||||||
Deferred | -637 | 105 | 222 | |||||||||
2,430 | 3,111 | 3,461 | ||||||||||
Total provision for income taxes | 3,041 | 5,298 | 5,148 | |||||||||
Provision for social security, real estate, personal property | ||||||||||||
and other taxes | 4,198 | 4,331 | 4,289 | |||||||||
Total taxes included in net income | $ | 7,239 | $ | 9,629 | $ | 9,437 | ||||||
Income tax reconciliation | ' | |||||||||||
A reconciliation of the statutory U.S. federal tax rate to the company’s effective tax rate is as follows: | ||||||||||||
For the year ended December 31: | 2013* | 2012* | 2011* | |||||||||
Statutory rate | 35 | % | 35 | % | 35 | % | ||||||
Foreign tax differential | -14 | -11 | -10 | |||||||||
State and local | 0 | 1 | 2 | |||||||||
Domestic incentives | -3 | -1 | -1 | |||||||||
Other | -2 | 0 | -1 | |||||||||
Effective rate | 16 | % | 24 | % | 25 | % | ||||||
Components of deferred tax assets (liabilities) | ' | |||||||||||
Deferred Tax Assets | ||||||||||||
($ in millions) | ||||||||||||
At December 31: | 2013 | 2012* | ||||||||||
Retirement benefits | $ | 3,704 | $ | 5,870 | ||||||||
Share-based and other compensation | 1,262 | 1,666 | ||||||||||
Domestic tax loss/credit carryforwards | 982 | 954 | ||||||||||
Deferred income | 964 | 1,018 | ||||||||||
Foreign tax loss/credit carryforwards | 651 | 681 | ||||||||||
Bad debt, inventory and warranty reserves | 592 | 586 | ||||||||||
Depreciation | 382 | 456 | ||||||||||
Other | 1,774 | 1,659 | ||||||||||
Gross deferred tax assets | 10,311 | 12,890 | ||||||||||
Less: valuation allowance | 734 | 1,187 | ||||||||||
Net deferred tax assets | $ | 9,577 | $ | 11,703 | ||||||||
* Reclassified to conform with 2013 presentation. | ||||||||||||
Deferred Tax Liabilities | ||||||||||||
($ in millions) | ||||||||||||
At December 31: | 2013 | 2012* | ||||||||||
Depreciation | $ | 1,346 | $ | 1,378 | ||||||||
Retirement benefits | 1,219 | 257 | ||||||||||
Goodwill and intangible assets | 1,173 | 957 | ||||||||||
Leases | 1,119 | 2,216 | ||||||||||
Software development costs | 558 | 542 | ||||||||||
Deferred transition costs | 424 | 440 | ||||||||||
Other | 841 | 993 | ||||||||||
Gross deferred tax liabilities | $ | 6,680 | $ | 6,783 | ||||||||
* Reclassified to conform with 2013 presentation. | ||||||||||||
Reconciliation of the beginning and ending amount of unrecognized tax benefits | ' | |||||||||||
($ in millions) | ||||||||||||
2013 | 2012 | 2011 | ||||||||||
Balance at January 1 | $ | 5,672 | $ | 5,575 | $ | 5,293 | ||||||
Additions based on tax positions related to the current year | 829 | 401 | 672 | |||||||||
Additions for tax positions of prior years | 417 | 215 | 379 | |||||||||
Reductions for tax positions of prior years (including | ||||||||||||
impacts due to a lapse in statute) | -2,201 | -425 | -538 | |||||||||
Settlements | -259 | -94 | -231 | |||||||||
Balance at December 31 | $ | 4,458 | $ | 5,672 | $ | 5,575 |
Earnings_Per_Share_of_Common_S1
Earnings Per Share of Common Stock (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Earnings Per Share of Common Stock | ' | ||||||||||||
Computation of Earnings per share | ' | ||||||||||||
The following table presents the computation of basic and diluted earnings per share of common stock. | |||||||||||||
($ in millions except per share amounts) | |||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | ||||||||||
Weighted-average number of shares on which earnings | |||||||||||||
per share calculations are based | |||||||||||||
Basic | 1,094,486,604 | 1,142,508,521 | 1,196,951,006 | ||||||||||
Add—incremental shares under stock-based | |||||||||||||
compensation plans | 6,751,240 | 10,868,426 | 14,241,131 | ||||||||||
Add—incremental shares associated with contingently | |||||||||||||
issuable shares | 1,804,313 | 2,072,370 | 2,575,848 | ||||||||||
Assuming dilution | 1,103,042,156 | 1,155,449,317 | 1,213,767,985 | ||||||||||
Net income on which basic earnings per share is | |||||||||||||
calculated | $ | 16,483 | $ | 16,604 | $ | 15,855 | |||||||
Less—net income applicable to contingently issuable | |||||||||||||
shares | -1 | -1 | 0 | ||||||||||
Net income on which diluted earnings per share is | |||||||||||||
calculated | $ | 16,483 | $ | 16,603 | $ | 15,855 | |||||||
Earnings/(loss) per share of common stock | |||||||||||||
Assuming dilution | $ | 14.94 | $ | 14.37 | $ | 13.06 | |||||||
Basic | $ | 15.06 | $ | 14.53 | $ | 13.25 |
Rental_Expense_and_Lease_Commi1
Rental Expense and Lease Commitments (Tables) | 12 Months Ended | |||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||
Rental Expense and Lease Commitments | ' | |||||||||||||||||||||
Lease Commitments | ' | |||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | Beyond 2018 | |||||||||||||||||
Operating lease commitments | ||||||||||||||||||||||
Gross minimum rental commitments | ||||||||||||||||||||||
(including vacant space below) | $ | 1,492 | $ | 1,286 | $ | 1,016 | $ | 799 | $ | 620 | $ | 778 | ||||||||||
Vacant space | $ | 24 | $ | 16 | $ | 6 | $ | 4 | $ | 1 | $ | 0 | ||||||||||
Sublease income commitments | $ | 22 | $ | 16 | $ | 14 | $ | 9 | $ | 4 | $ | 7 | ||||||||||
Capital lease commitments | $ | 16 | $ | 12 | $ | 13 | $ | 3 | $ | 9 | $ | 5 |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 12 Months Ended | |||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||||
Stock-based compensation cost included in Consolidated Statement of Earnings | ' | |||||||||||||||||
($ in millions) | ||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||||||||
Cost | $ | 122 | $ | 132 | $ | 120 | ||||||||||||
Selling, general and administrative | 435 | 498 | 514 | |||||||||||||||
Research, development and engineering | 57 | 59 | 62 | |||||||||||||||
Other (income) and expense | — | -1 | — | |||||||||||||||
Pre-tax stock-based compensation cost | 614 | 688 | 697 | |||||||||||||||
Income tax benefits | -213 | -240 | -246 | |||||||||||||||
Total stock-based compensation cost | $ | 402 | $ | 448 | $ | 450 | ||||||||||||
Summary of option activity | ' | |||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
Weighted- | Number of | Weighted- | Number of | Weighted- | Number of | |||||||||||||
Average | Shares | Average | Shares | Average | Shares | |||||||||||||
Exercise Price | Under Option | Exercise Price | Under Option | Exercise Price | Under Option | |||||||||||||
Balance at January 1 | $ | 94 | 11,389,721 | $ | 90 | 20,662,322 | $ | 94 | 39,197,728 | |||||||||
Options exercised | 90 | -5,585,127 | 86 | -9,080,170 | 98 | -18,144,309 | ||||||||||||
Options canceled/expired | 86 | -181,643 | 75 | -192,431 | 107 | -391,097 | ||||||||||||
Balance at December 31 | $ | 97 | 5,622,951 | $ | 94 | 11,389,721 | $ | 90 | 20,662,322 | |||||||||
Exercisable at December 31 | $ | 97 | 5,622,951 | $ | 94 | 11,389,721 | $ | 90 | 20,662,322 | |||||||||
Options outstanding and exercisable with exercise price ranges | ' | |||||||||||||||||
Options Outstanding and Exercisable | ||||||||||||||||||
Weighted-Average | ||||||||||||||||||
Weighted- | Number of | Aggregate | Remaining | |||||||||||||||
Average | Shares | Intrinsic | Contractual Life | |||||||||||||||
Exercise Price Range | Exercise Price | Under Option | Value | (in Years) | ||||||||||||||
$85 and under | $ | 82 | 468,427 | $ | 49,244,658 | 2.1 | ||||||||||||
$86–$105 | 98 | 4,908,689 | 440,012,196 | 1.1 | ||||||||||||||
$106 and over | 106 | 245,835 | 20,055,475 | 0.2 | ||||||||||||||
$ | 97 | 5,622,951 | $ | 509,312,330 | 1.1 | |||||||||||||
Summary of Restricted Stock Units activity | ' | |||||||||||||||||
RSUs | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||
Average | Number | Average | Number | Average | Number | |||||||||||||
Grant Price | of Units | Grant Price | of Units | Grant Price | of Units | |||||||||||||
Balance at January 1 | $ | 148 | 9,841,461 | $ | 129 | 12,218,601 | $ | 110 | 11,196,446 | |||||||||
RSUs granted | 189 | 2,541,081 | 184 | 2,635,772 | 154 | 5,196,802 | ||||||||||||
RSUs released | 131 | -2,952,363 | 117 | -4,338,787 | 106 | -3,508,700 | ||||||||||||
RSUs canceled/forfeited | 154 | -794,862 | 139 | -674,125 | 122 | -665,947 | ||||||||||||
Balance at December 31 | $ | 166 | 8,635,317 | $ | 148 | 9,841,461 | $ | 129 | 12,218,601 | |||||||||
Summary of Performance Share Units activity | ' | |||||||||||||||||
PSUs | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||
Average | Number | Average | Number | Average | Number | |||||||||||||
Grant Price | of Units | Grant Price | of Units | Grant Price | of Units | |||||||||||||
Balance at January 1 | $ | 151 | 3,172,201 | $ | 122 | 3,686,991 | $ | 111 | 3,649,288 | |||||||||
PSUs granted at target | 195 | 869,875 | 185 | 1,004,003 | 154 | 1,055,687 | ||||||||||||
Additional shares earned | ||||||||||||||||||
above target* | 118 | 152,069 | 102 | 550,399 | 118 | 230,524 | ||||||||||||
PSUs released | 118 | -1,321,784 | 102 | -1,998,746 | 118 | -1,189,765 | ||||||||||||
PSUs canceled/forfeited | 170 | -48,067 | 131 | -70,446 | 118 | -58,743 | ||||||||||||
Balance at December 31** | $ | 178 | 2,824,294 | $ | 151 | 3,172,201 | $ | 122 | 3,686,991 | |||||||||
* Represents additional shares issued to employees after vesting of PSUs because final performance metrics exceeded specified targets. | ||||||||||||||||||
** Represents the number of shares expected to be issued based on achievement of grant date performance targets. The actual number of shares issued depends on the company’s performance against specified targets over the vesting period. |
RetirementRelated_Benefits_Tab
Retirement-Related Benefits (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block | ' | |||||||||||||||||||||||||||||
Retirement-related benefits net periodic (income)/cost in the Consolidated Statement of Earnings | ' | |||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | Total | ||||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||||||||||
Defined benefit pension plans | $ | -223 | $ | -526 | $ | -774 | $ | 1,396 | $ | 1,040 | $ | 734 | $ | 1,173 | $ | 515 | $ | -40 | ||||||||||||
Retention Plan | 21 | 18 | 15 | — | — | — | 21 | 18 | 15 | |||||||||||||||||||||
Total defined benefit pension plans | ||||||||||||||||||||||||||||||
(income)/cost | $ | -202 | $ | -507 | $ | -759 | $ | 1,396 | $ | 1,040 | $ | 734 | $ | 1,195 | $ | 533 | $ | -25 | ||||||||||||
IBM 401(k) Plus Plan and | ||||||||||||||||||||||||||||||
non-U.S. plans | $ | 785 | $ | 857 | $ | 875 | $ | 575 | $ | 621 | $ | 608 | $ | 1,361 | $ | 1,478 | $ | 1,483 | ||||||||||||
Excess 401(k) | 24 | 29 | 30 | — | — | — | 24 | 29 | 30 | |||||||||||||||||||||
Total defined contribution plans cost | $ | 809 | $ | 885 | $ | 905 | $ | 575 | $ | 621 | $ | 608 | $ | 1,384 | $ | 1,506 | $ | 1,513 | ||||||||||||
Nonpension postretirement benefit | ||||||||||||||||||||||||||||||
plans cost | $ | 218 | $ | 268 | $ | 269 | $ | 79 | $ | 82 | $ | 76 | $ | 298 | $ | 350 | $ | 345 | ||||||||||||
Total retirement-related benefits | ||||||||||||||||||||||||||||||
net periodic cost | $ | 826 | $ | 646 | $ | 415 | $ | 2,051 | $ | 1,743 | $ | 1,418 | $ | 2,876 | $ | 2,389 | $ | 1,832 | ||||||||||||
Summary of the total projected benefit obligation (PBO) for defined benefit plans, accumulated postretirement benefit obligation (APBO) for nonpension postretirement benefit plans (benefit obligations), fair value of plan assets and the associated funded status | ' | |||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Benefit Obligations | Fair Value of Plan Assets | Funded Status* | ||||||||||||||||||||||||||||
At December 31: | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
U.S. Plans | ||||||||||||||||||||||||||||||
Overfunded plans | ||||||||||||||||||||||||||||||
Qualified PPP | $ | 49,315 | $ | — | $ | 53,954 | $ | — | $ | 4,639 | $ | — | ||||||||||||||||||
Underfunded plans | ||||||||||||||||||||||||||||||
Qualified PPP | $ | — | $ | 54,907 | $ | — | $ | 53,630 | $ | — | $ | -1,277 | ||||||||||||||||||
Excess PPP | 1,425 | 1,576 | — | — | -1,425 | -1,576 | ||||||||||||||||||||||||
Retention Plan | 294 | 327 | — | — | -294 | -327 | ||||||||||||||||||||||||
Nonpension postretirement benefit plan | 4,633 | 5,282 | 177 | 433 | -4,456 | -4,849 | ||||||||||||||||||||||||
Total underfunded U.S. plans | $ | 6,352 | $ | 62,092 | $ | 177 | $ | 54,063 | $ | -6,175 | $ | -8,029 | ||||||||||||||||||
Non-U.S. Plans | ||||||||||||||||||||||||||||||
Overfunded plans | ||||||||||||||||||||||||||||||
Qualified defined benefit pension plans | $ | 9,336 | $ | 6,944 | $ | 10,240 | $ | 7,889 | $ | 904 | $ | 945 | ||||||||||||||||||
Nonpension postretirement benefit plans | 10 | 12 | 11 | 12 | 1 | 0 | ||||||||||||||||||||||||
Total overfunded non-U.S. plans | $ | 9,346 | $ | 6,956 | $ | 10,251 | $ | 7,901 | $ | 905 | $ | 945 | ||||||||||||||||||
Underfunded plans | ||||||||||||||||||||||||||||||
Qualified defined benefit pension plans | $ | 32,697 | $ | 35,956 | $ | 29,223 | $ | 30,169 | $ | -3,474 | $ | -5,788 | ||||||||||||||||||
Nonqualified defined benefit pension plans | 6,587 | 6,418 | — | — | -6,587 | -6,418 | ||||||||||||||||||||||||
Nonpension postretirement benefit plans | 822 | 1,007 | 81 | 107 | -741 | -900 | ||||||||||||||||||||||||
Total underfunded non-U.S. plans | $ | 40,106 | $ | 43,381 | $ | 29,304 | $ | 30,276 | $ | -10,802 | $ | -13,106 | ||||||||||||||||||
Total overfunded plans | $ | 58,661 | $ | 6,956 | $ | 64,205 | $ | 7,901 | $ | 5,544 | $ | 945 | ||||||||||||||||||
Total underfunded plans | $ | 46,458 | $ | 105,473 | $ | 29,481 | $ | 84,338 | $ | -16,977 | $ | -21,134 | ||||||||||||||||||
* Funded status is recognized in the Consolidated Statement of Financial Position as follows: Asset amounts as prepaid pension assets; (Liability) amounts as compensation and benefits (current liability) and retirement and nonpension postretirement benefit obligations (noncurrent liability). | ||||||||||||||||||||||||||||||
Changes in benefit obligations and plan assets | ' | |||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plans | Nonpension Postretirement Benefit Plans | |||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||
Change in benefit obligation | ||||||||||||||||||||||||||||||
Benefit obligation at January 1 | $ | 56,810 | $ | 54,085 | $ | 49,319 | $ | 42,861 | $ | 5,282 | $ | 5,273 | $ | 1,019 | $ | 901 | ||||||||||||||
Service cost | — | — | 501 | 443 | 35 | 36 | 10 | 14 | ||||||||||||||||||||||
Interest cost | 1,980 | 2,196 | 1,524 | 1,779 | 164 | 200 | 60 | 64 | ||||||||||||||||||||||
Plan participants’ contributions | — | — | 42 | 47 | 191 | 200 | — | — | ||||||||||||||||||||||
Acquisitions/divestitures, net | — | — | 89 | 26 | -2 | 2 | 0 | — | ||||||||||||||||||||||
Actuarial losses/(gains) | -4,344 | 3,810 | -362 | 6,365 | -481 | 104 | -89 | 76 | ||||||||||||||||||||||
Benefits paid from trust | -3,303 | -3,184 | -1,920 | -1,987 | -557 | -551 | -6 | -6 | ||||||||||||||||||||||
Direct benefit payments | -108 | -97 | -464 | -454 | -43 | -35 | -28 | -27 | ||||||||||||||||||||||
Foreign exchange impact | — | — | -115 | 77 | — | — | -89 | -24 | ||||||||||||||||||||||
Medicare/Government subsidies | — | — | — | — | 30 | 53 | — | — | ||||||||||||||||||||||
Amendments/curtailments/ | ||||||||||||||||||||||||||||||
settlements/other | — | — | 6 | 161 | 15 | — | -44 | 21 | ||||||||||||||||||||||
Benefit obligation at December 31 | $ | 51,034 | $ | 56,810 | $ | 48,620 | $ | 49,319 | $ | 4,633 | $ | 5,282 | $ | 832 | $ | 1,019 | ||||||||||||||
Change in plan assets | ||||||||||||||||||||||||||||||
Fair value of plan assets at January 1 | $ | 53,630 | $ | 51,218 | $ | 38,058 | $ | 35,362 | $ | 433 | $ | 38 | $ | 119 | $ | 112 | ||||||||||||||
Actual return on plan assets | 3,626 | 5,596 | 2,515 | 3,742 | 0 | 0 | 5 | 10 | ||||||||||||||||||||||
Employer contributions | — | — | 449 | 557 | 110 | 746 | 0 | 1 | ||||||||||||||||||||||
Acquisitions/divestitures, net | — | — | 35 | 40 | — | — | 0 | — | ||||||||||||||||||||||
Plan participants’ contributions | — | — | 42 | 47 | 191 | 200 | — | — | ||||||||||||||||||||||
Benefits paid from trust | -3,303 | -3,184 | -1,920 | -1,987 | -557 | -551 | -6 | -6 | ||||||||||||||||||||||
Foreign exchange impact | — | — | 121 | 305 | — | — | -14 | -8 | ||||||||||||||||||||||
Amendments/curtailments/ | ||||||||||||||||||||||||||||||
settlements/other | — | — | 164 | * | -8 | — | — | -12 | 10 | |||||||||||||||||||||
Fair value of plan assets at | ||||||||||||||||||||||||||||||
December 31 | $ | 53,954 | $ | 53,630 | $ | 39,464 | $ | 38,058 | $ | 177 | $ | 433 | $ | 92 | $ | 119 | ||||||||||||||
Funded status at December 31 | $ | 2,920 | $ | -3,180 | $ | -9,157 | $ | -11,261 | $ | -4,456 | $ | -4,849 | $ | -740 | $ | -900 | ||||||||||||||
Accumulated benefit obligation** | $ | 51,034 | $ | 56,810 | $ | 47,806 | $ | 48,369 | N/A | N/A | N/A | N/A | ||||||||||||||||||
* Includes the reinstatement of certain plan assets in Brazil due to government rulings in 2011 and 2013 allowing certain previously restricted plan assets to be returned to IBM. The assets will be returned to IBM monthly over a three-year period, starting June 2011 and September 2013 respectively, with approximately $204 million returned during 2013. The remaining surplus in Brazil at December 31, 2013 remains excluded from total plan assets due to continued restrictions imposed by the government on the use of those plan assets. | ||||||||||||||||||||||||||||||
** Represents the benefit obligation assuming no future participant compensation increases. | ||||||||||||||||||||||||||||||
N/A—Not applicable | ||||||||||||||||||||||||||||||
Net funded status | ' | |||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plans | Nonpension Postretirement Benefit Plans | |||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||
At December 31: | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||
Prepaid pension assets | $ | 4,639 | $ | 0 | $ | 912 | $ | 944 | $ | 0 | $ | 0 | $ | 1 | $ | 0 | ||||||||||||||
Current liabilities— | ||||||||||||||||||||||||||||||
compensation and benefits | -107 | -102 | -364 | -356 | -256 | -239 | -16 | -20 | ||||||||||||||||||||||
Noncurrent liabilities—retirement | ||||||||||||||||||||||||||||||
and nonpension postretirement | ||||||||||||||||||||||||||||||
benefit obligations | -1,612 | -3,078 | -9,705 | -11,849 | -4,200 | -4,610 | -725 | -880 | ||||||||||||||||||||||
Funded status—net | $ | 2,920 | $ | -3,180 | $ | -9,157 | $ | -11,261 | $ | -4,456 | $ | -4,849 | $ | -740 | $ | -900 | ||||||||||||||
Pre-tax net loss and prior service costs/(credits) and transition (assets)/liabilities recognized in other comprehensive income/(loss) and the changes in pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in accumulated other comprehensive income/(loss) | ' | |||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plans | Nonpension Postretirement Benefit Plans | |||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||
Net loss at January 1 | $ | 19,488 | $ | 18,561 | $ | 22,188 | $ | 18,309 | $ | 806 | $ | 734 | $ | 269 | $ | 211 | ||||||||||||||
Current period loss/(gain) | -3,989 | 2,258 | -814 | 4,905 | -480 | 104 | -85 | 75 | ||||||||||||||||||||||
Curtailments and settlements | — | — | 3 | 2 | — | — | 0 | — | ||||||||||||||||||||||
Amortization of net loss included in | ||||||||||||||||||||||||||||||
net periodic (income)/cost | -1,790 | -1,331 | -1,600 | -1,027 | -21 | -32 | -23 | -17 | ||||||||||||||||||||||
Net loss at December 31 | $ | 13,709 | $ | 19,488 | $ | 19,777 | $ | 22,188 | $ | 304 | $ | 806 | $ | 161 | $ | 269 | ||||||||||||||
Prior service costs/(credits) at January 1 | $ | 130 | $ | 139 | $ | -614 | $ | -768 | $ | — | $ | — | $ | -6 | $ | -10 | ||||||||||||||
Current period prior service costs/(credits) | — | — | 0 | — | 15 | — | -31 | — | ||||||||||||||||||||||
Amortization of prior service (costs)/ | ||||||||||||||||||||||||||||||
credits included in net periodic | ||||||||||||||||||||||||||||||
(income)/cost | -10 | -10 | 119 | 154 | — | — | 5 | 4 | ||||||||||||||||||||||
Prior service costs/(credits) at | ||||||||||||||||||||||||||||||
December 31 | $ | 120 | $ | 130 | $ | -496 | $ | -614 | $ | 15 | $ | — | $ | -32 | $ | -6 | ||||||||||||||
Transition (assets)/liabilities at January 1 | $ | — | $ | — | $ | 0 | $ | 0 | $ | — | $ | — | $ | 0 | $ | 0 | ||||||||||||||
Amortization of transition assets/ | ||||||||||||||||||||||||||||||
(liabilities) included in net periodic | ||||||||||||||||||||||||||||||
(income)/cost | — | — | 0 | 0 | — | — | 0 | 0 | ||||||||||||||||||||||
Transition (assets)/liabilities at | ||||||||||||||||||||||||||||||
December 31 | $ | — | $ | — | $ | 0 | $ | 0 | $ | — | $ | — | $ | 0 | $ | 0 | ||||||||||||||
Total loss recognized in accumulated | ||||||||||||||||||||||||||||||
other comprehensive income/(loss)* | $ | 13,829 | $ | 19,618 | $ | 19,281 | $ | 21,574 | $ | 319 | $ | 806 | $ | 129 | $ | 263 | ||||||||||||||
* See note L, “Equity Activity,” on pages 116 through 118 for the total change in AOCI, and the Consolidated Statement of Comprehensive Income for the components of net periodic (income)/cost, including the related tax effects, recognized in OCI for the retirement-related benefit plans. | ||||||||||||||||||||||||||||||
Pre-tax estimated net loss, estimated prior service costs/(credits) and estimated transition (assets)/liabilities of the retirement-related benefit plans that will be amortized from accumulated other comprehensive income/(loss) into net periodic (income)/cost and recorded in the Consolidated Statement of Earnings in next year | ' | |||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Defined Benefit | Nonpension Postretirement | |||||||||||||||||||||||||||||
Pension Plans | Benefit Plans | |||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||
Net loss | $ | 1,076 | $ | 1,461 | $ | — | $ | 11 | ||||||||||||||||||||||
Prior service costs/(credits) | 10 | -127 | -7 | -6 | ||||||||||||||||||||||||||
Transition (assets)/liabilities | — | 0 | — | 0 | ||||||||||||||||||||||||||
Defined benefit pension plans' major asset categories and their associated fair value | ' | |||||||||||||||||||||||||||||
The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2013. The U.S. Plan consists of the Qualified PPP and the Non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||
Equity securities(a) | $ | 15,929 | $ | — | $ | — | $ | 15,929 | $ | 6,489 | $ | — | $ | — | $ | 6,489 | ||||||||||||||
Equity commingled/mutual funds(b)(c) | 216 | 2,593 | — | 2,809 | 132 | 8,325 | — | 8,457 | ||||||||||||||||||||||
Fixed income | ||||||||||||||||||||||||||||||
Government and related(d) | — | 7,093 | 1 | 7,094 | — | 8,682 | 42 | 8,724 | ||||||||||||||||||||||
Corporate bonds(e) | — | 14,639 | 5 | 14,644 | — | 1,881 | 4 | 1,885 | ||||||||||||||||||||||
Mortgage and asset-backed securities | — | 691 | 19 | 709 | — | 8 | — | 8 | ||||||||||||||||||||||
Fixed income commingled/ | ||||||||||||||||||||||||||||||
mutual funds(b)(f) | 221 | 716 | 274 | 1,211 | 75 | 8,596 | — | 8,670 | ||||||||||||||||||||||
Insurance contracts | — | — | — | — | — | 1,196 | — | 1,196 | ||||||||||||||||||||||
Cash and short-term investments(g) | 427 | 1,915 | — | 2,343 | 154 | 451 | — | 605 | ||||||||||||||||||||||
Hedge funds | — | 1,368 | 860 | 2,228 | — | 740 | — | 740 | ||||||||||||||||||||||
Private equity(h) | — | — | 3,771 | 3,771 | — | — | 410 | 410 | ||||||||||||||||||||||
Private real estate(h) | — | — | 3,038 | 3,038 | — | — | 655 | 655 | ||||||||||||||||||||||
Derivatives(i) | 1 | 6 | — | 7 | 1 | 150 | — | 151 | ||||||||||||||||||||||
Other commingled/mutual funds(b)(j) | — | — | — | — | 36 | 1,518 | — | 1,554 | ||||||||||||||||||||||
Subtotal | 16,795 | 29,021 | 7,968 | 53,784 | 6,886 | 31,547 | 1,110 | 39,544 | ||||||||||||||||||||||
Other(k) | — | — | — | 170 | — | — | — | -80 | ||||||||||||||||||||||
Fair value of plan assets | $ | 16,795 | $ | 29,021 | $ | 7,968 | $ | 53,954 | $ | 6,886 | $ | 31,547 | $ | 1,110 | $ | 39,464 | ||||||||||||||
Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $83 million, representing 0.2 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $31 million, representing 0.1 percent of the non-U.S. Plans assets. | ||||||||||||||||||||||||||||||
Commingled funds represent pooled institutional investments. | ||||||||||||||||||||||||||||||
Invests in predominantly equity securities. | ||||||||||||||||||||||||||||||
Includes debt issued by national, state and local governments and agencies. | ||||||||||||||||||||||||||||||
The U.S. Plan includes IBM corporate bonds of $9 million, representing 0.02 percent of the U.S. Plan assets. Non-U.S. plans include IBM corporate bonds of $1 million representing 0.001 percent of the non-U.S. Plan assets. | ||||||||||||||||||||||||||||||
Invests in predominantly fixed-income securities. | ||||||||||||||||||||||||||||||
Includes cash and cash equivalents and short-term marketable securities. | ||||||||||||||||||||||||||||||
Includes limited partnerships and venture capital partnerships. | ||||||||||||||||||||||||||||||
Primarily includes interest rate derivatives and, to a lesser extent, forwards, exchange traded and other over-the-counter derivatives. | ||||||||||||||||||||||||||||||
Invests in both equity and fixed-income securities. | ||||||||||||||||||||||||||||||
Represents net unsettled transactions, relating primarily to purchases and sales of plan assets. | ||||||||||||||||||||||||||||||
The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2012. The U.S. Plan consists of the Qualified PPP and the Non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||
Equity securities(a) | $ | 15,161 | $ | 1 | $ | — | $ | 15,163 | $ | 6,395 | $ | — | $ | — | $ | 6,395 | ||||||||||||||
Equity commingled/mutual funds(b)(c) | 96 | 2,556 | — | 2,652 | 138 | 7,641 | — | 7,779 | ||||||||||||||||||||||
Fixed income | ||||||||||||||||||||||||||||||
Government and related(d) | — | 12,945 | 6 | 12,951 | — | 8,978 | 76 | 9,054 | ||||||||||||||||||||||
Corporate bonds (e) | — | 8,499 | 11 | 8,510 | — | 1,878 | 5 | 1,883 | ||||||||||||||||||||||
Mortgage and asset-backed securities | — | 922 | 45 | 968 | — | 9 | — | 9 | ||||||||||||||||||||||
Fixed income commingled/ | ||||||||||||||||||||||||||||||
mutual funds(b)(f) | 155 | 804 | 267 | 1,226 | 78 | 8,018 | — | 8,096 | ||||||||||||||||||||||
Insurance contracts | — | — | — | — | — | 1,019 | — | 1,019 | ||||||||||||||||||||||
Cash and short-term investments(g) | 244 | 3,198 | — | 3,442 | 134 | 373 | — | 507 | ||||||||||||||||||||||
Hedge funds | — | 1,402 | 756 | 2,159 | — | 646 | — | 646 | ||||||||||||||||||||||
Private equity(h) | — | — | 4,085 | 4,085 | — | — | 353 | 353 | ||||||||||||||||||||||
Private real estate(h) | — | — | 2,861 | 2,861 | — | — | 609 | 609 | ||||||||||||||||||||||
Derivatives(i) | -6 | 62 | — | 56 | 0 | 856 | — | 857 | ||||||||||||||||||||||
Other commingled/mutual funds(b)(j) | — | — | — | — | 12 | 907 | — | 919 | ||||||||||||||||||||||
Subtotal | 15,650 | 30,390 | 8,032 | 54,072 | 6,757 | 30,325 | 1,042 | 38,124 | ||||||||||||||||||||||
Other(k) | — | — | — | -442 | — | — | — | -66 | ||||||||||||||||||||||
Fair value of plan assets | $ | 15,650 | $ | 30,390 | $ | 8,032 | $ | 53,630 | $ | 6,757 | $ | 30,325 | $ | 1,042 | $ | 38,058 | ||||||||||||||
Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $113 million, representing 0.2 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $40 million, representing 0.1 percent of the non-U.S. Plans assets. | ||||||||||||||||||||||||||||||
Commingled funds represent pooled institutional investments. | ||||||||||||||||||||||||||||||
Invests in predominantly equity securities. | ||||||||||||||||||||||||||||||
Includes debt issued by national, state and local governments and agencies. | ||||||||||||||||||||||||||||||
The U.S. Plan includes IBM corporate bonds of $6 million, representing 0.01 percent of the U.S. Plan assets. Non-U.S. plans include IBM corporate bonds of $2 million representing 0.004 percent of the non-U.S. Plan assets. | ||||||||||||||||||||||||||||||
Invests in predominantly fixed-income securities. | ||||||||||||||||||||||||||||||
Includes cash and cash equivalents and short-term marketable securities. | ||||||||||||||||||||||||||||||
Includes limited partnerships and venture capital partnerships. | ||||||||||||||||||||||||||||||
Primarily includes interest rate derivatives and, to a lesser extent, forwards, exchange traded and other over-the-counter derivatives. | ||||||||||||||||||||||||||||||
Invests in both equity and fixed-income securities. | ||||||||||||||||||||||||||||||
Represents net unsettled transactions, relating primarily to purchases and sales of plan assets. | ||||||||||||||||||||||||||||||
Defined benefit pension plans with accumulated benefit obligations (ABO) in excess of plan assets | ' | |||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||||
Benefit | Plan | Benefit | Plan | |||||||||||||||||||||||||||
At December 31: | Obligation | Assets | Obligation | Assets | ||||||||||||||||||||||||||
Plans with PBO in excess of plan assets | $ | 41,003 | $ | 29,223 | $ | 99,184 | $ | 83,799 | ||||||||||||||||||||||
Plans with ABO in excess of plan assets | 40,315 | 29,213 | 98,263 | 83,677 | ||||||||||||||||||||||||||
Plans with assets in excess of PBO | 58,651 | 64,194 | 6,944 | 7,889 | ||||||||||||||||||||||||||
Defined Benefit Pension Plans | ' | |||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block | ' | |||||||||||||||||||||||||||||
Components of net periodic (income)/cost of the company's retirement-related benefit plans | ' | |||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Defined Benefit Pension Plans | ||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | |||||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | 501 | $ | 443 | $ | 505 | ||||||||||||||||||
Interest cost | 1,980 | 2,196 | 2,456 | 1,524 | 1,779 | 1,843 | ||||||||||||||||||||||||
Expected return on plan assets | -3,981 | -4,043 | -4,043 | -2,195 | -2,303 | -2,521 | ||||||||||||||||||||||||
Amortization of transition assets | — | — | — | 0 | 0 | 0 | ||||||||||||||||||||||||
Amortization of prior service costs/(credits) | 10 | 10 | 10 | -119 | -154 | -162 | ||||||||||||||||||||||||
Recognized actuarial losses | 1,790 | 1,331 | 818 | 1,600 | 1,027 | 957 | ||||||||||||||||||||||||
Curtailments and settlements | — | — | — | 0 | 0 | 1 | ||||||||||||||||||||||||
Multi-employer plans/other costs* | — | — | — | 85 | 247 | 111 | ||||||||||||||||||||||||
Total net periodic (income)/cost | $ | -202 | $ | -507 | $ | -759 | $ | 1,396 | $ | 1,040 | $ | 734 | ||||||||||||||||||
Assumptions used to measure the net periodic (income)/cost and benefit obligations | ' | |||||||||||||||||||||||||||||
Defined Benefit Pension Plans | ||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | |||||||||||||||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||
Weighted-average assumptions used to measure net | ||||||||||||||||||||||||||||||
periodic (income)/cost for the year ended December 31 | ||||||||||||||||||||||||||||||
Discount rate | 3.6 | % | 4.2 | % | 5 | % | 3.23 | % | 4.28 | % | 4.33 | % | ||||||||||||||||||
Expected long-term returns on plan assets | 8 | % | 8 | % | 8 | % | 6.21 | % | 6.26 | % | 6.41 | % | ||||||||||||||||||
Rate of compensation increase* | N/A | N/A | N/A | 2.51 | % | 2.43 | % | 2.37 | % | |||||||||||||||||||||
Weighted-average assumptions used to measure | ||||||||||||||||||||||||||||||
benefit obligations at December 31 | ||||||||||||||||||||||||||||||
Discount rate | 4.5 | % | 3.6 | % | 4.2 | % | 3.32 | % | 3.23 | % | 4.28 | % | ||||||||||||||||||
Rate of compensation increase* | N/A | N/A | N/A | 2.52 | % | 2.51 | % | 2.43 | % | |||||||||||||||||||||
* Rate of compensation increase is not applicable to the U.S. defined benefit pension plans as benefit accruals ceased December 31, 2007 for all participants. | ||||||||||||||||||||||||||||||
N/A—Not applicable | ||||||||||||||||||||||||||||||
Total expected benefit payments | ' | |||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Qualified | Nonqualified | Qualified | Nonqualified | Total Expected | ||||||||||||||||||||||||||
U.S. Plan | U.S. Plans | Non-U.S. Plans | Non-U.S. Plans | Benefit | ||||||||||||||||||||||||||
Payments | Payments | Payments | Payments | Payments | ||||||||||||||||||||||||||
2014 | $ | 3,393 | 109 | 2,026 | 382 | 5,910 | ||||||||||||||||||||||||
2015 | 3,430 | 112 | 2,021 | 382 | 5,945 | |||||||||||||||||||||||||
2016 | 3,460 | 114 | 2,062 | 385 | 6,022 | |||||||||||||||||||||||||
2017 | 3,477 | 116 | 2,086 | 394 | 6,073 | |||||||||||||||||||||||||
2018 | 3,441 | 118 | 2,121 | 407 | 6,087 | |||||||||||||||||||||||||
2019–2023 | 17,454 | 600 | 11,327 | 2,325 | 31,706 | |||||||||||||||||||||||||
Nonpension Postretirement Plans | ' | |||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block | ' | |||||||||||||||||||||||||||||
Components of net periodic (income)/cost of the company's retirement-related benefit plans | ' | |||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Nonpension Postretirement Benefit Plans | ||||||||||||||||||||||||||||||
U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||
Service cost | $ | 35 | $ | 36 | $ | 33 | $ | 10 | $ | 14 | $ | 11 | ||||||||||||||||||
Interest cost | 164 | 200 | 236 | 60 | 64 | 67 | ||||||||||||||||||||||||
Expected return on plan assets | -1 | — | — | -9 | -9 | -10 | ||||||||||||||||||||||||
Amortization of transition assets | — | — | — | 0 | 0 | 0 | ||||||||||||||||||||||||
Amortization of prior service costs/(credits) | — | — | — | -5 | -4 | -4 | ||||||||||||||||||||||||
Recognized actuarial losses | 21 | 32 | — | 23 | 17 | 13 | ||||||||||||||||||||||||
Curtailments and settlements | — | — | — | 0 | 0 | — | ||||||||||||||||||||||||
Total net periodic cost | $ | 218 | $ | 268 | $ | 269 | $ | 79 | $ | 82 | $ | 76 | ||||||||||||||||||
* The 2012 Non-U.S. plans amount includes $162 million related to the IBM UK pension litigation. See page 132 for additional information. | ||||||||||||||||||||||||||||||
Assumptions used to measure the net periodic (income)/cost and benefit obligations | ' | |||||||||||||||||||||||||||||
Nonpension Postretirement Benefit Plans | ||||||||||||||||||||||||||||||
U.S. Plan | Non-U.S. Plans | |||||||||||||||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||
Weighted-average assumptions used to measure | ||||||||||||||||||||||||||||||
net periodic cost for the year ended December 31 | ||||||||||||||||||||||||||||||
Discount rate | 3.3 | % | 3.9 | % | 4.8 | % | 6.43 | % | 7.37 | % | 7.75 | % | ||||||||||||||||||
Expected long-term returns on plan assets | 0.35 | % | N/A | N/A | 9.01 | % | 9.01 | % | 9.07 | % | ||||||||||||||||||||
Weighted-average assumptions used to measure | ||||||||||||||||||||||||||||||
benefit obligations at December 31 | ||||||||||||||||||||||||||||||
Discount rate | 4.1 | % | 3.3 | % | 3.9 | % | 7.78 | % | 6.43 | % | 7.37 | % | ||||||||||||||||||
N/A—Not applicable | ||||||||||||||||||||||||||||||
Total expected benefit payments | ' | |||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||
Qualified | Nonqualified | Expected | ||||||||||||||||||||||||||||
U.S. Plan | Non-U.S. Plans | Non-U.S. Plans | Benefit | |||||||||||||||||||||||||||
Payments | Payments | Payments | Payments | |||||||||||||||||||||||||||
2014 | $ | 427 | $ | 8 | $ | 32 | $ | 467 | ||||||||||||||||||||||
2015 | 422 | 8 | 36 | 466 | ||||||||||||||||||||||||||
2016 | 416 | 9 | 39 | 464 | ||||||||||||||||||||||||||
2017 | 409 | 10 | 42 | 461 | ||||||||||||||||||||||||||
2018 | 393 | 10 | 46 | 449 | ||||||||||||||||||||||||||
2019–2023 | 1,799 | 63 | 286 | 2,148 | ||||||||||||||||||||||||||
U.S. Defined Benefit Pension Plans | ' | |||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block | ' | |||||||||||||||||||||||||||||
Reconciliation of the beginning and ending balances of Level 3 assets | ' | |||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Mortgage | ||||||||||||||||||||||||||||||
and Asset- | Fixed Income | |||||||||||||||||||||||||||||
Government | Corporate | Backed | Commingled/ | Hedge | Private | Private | ||||||||||||||||||||||||
and Related | Bonds | Securities | Mutual Funds | Funds | Equity | Real Estate | Total | |||||||||||||||||||||||
Balance at January 1, 2013 | $ | 6 | $ | 11 | $ | 45 | $ | 267 | $ | 756 | $ | 4,085 | $ | 2,861 | $ | 8,032 | ||||||||||||||
Return on assets held at end of year | 0 | 0 | -1 | 7 | 104 | 1,104 | 889 | 2,103 | ||||||||||||||||||||||
Return on assets sold during the year | 0 | 0 | 0 | — | 0 | -528 | -412 | -939 | ||||||||||||||||||||||
Purchases, sales and settlements, net | -5 | 3 | 0 | — | 0 | -891 | -301 | -1,194 | ||||||||||||||||||||||
Transfers, net | 0 | -8 | -26 | — | — | — | — | -33 | ||||||||||||||||||||||
Balance at December 31, 2013 | $ | 1 | $ | 5 | $ | 19 | $ | 274 | $ | 860 | $ | 3,771 | $ | 3,038 | $ | 7,968 | ||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Mortgage | ||||||||||||||||||||||||||||||
and Asset- | Fixed Income | |||||||||||||||||||||||||||||
Government | Corporate | Backed | Commingled/ | Hedge | Private | Private | ||||||||||||||||||||||||
and Related | Bonds | Securities | Mutual Funds | Funds | Equity | Real Estate | Total | |||||||||||||||||||||||
Balance at January 1, 2012 | $ | 29 | $ | 12 | $ | 45 | $ | 246 | $ | 713 | $ | 4,098 | $ | 2,790 | $ | 7,932 | ||||||||||||||
Return on assets held at end of year | 0 | 0 | 1 | 21 | 56 | 855 | 202 | 1,135 | ||||||||||||||||||||||
Return on assets sold during the year | 0 | 2 | 1 | — | 14 | -334 | -41 | -359 | ||||||||||||||||||||||
Purchases, sales and settlements, net | -1 | -2 | -9 | — | -26 | -533 | -90 | -660 | ||||||||||||||||||||||
Transfers, net | -22 | -1 | 8 | — | — | — | — | -15 | ||||||||||||||||||||||
Balance at December 31, 2012 | $ | 6 | $ | 11 | $ | 45 | $ | 267 | $ | 756 | $ | 4,085 | $ | 2,861 | $ | 8,032 | ||||||||||||||
Non-U.S. Defined Benefit Pension Plans | ' | |||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block | ' | |||||||||||||||||||||||||||||
Reconciliation of the beginning and ending balances of Level 3 assets | ' | |||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Government | Corporate | Private | Private | |||||||||||||||||||||||||||
and Related | Bonds | Equity | Real Estate | Total | ||||||||||||||||||||||||||
Balance at January 1, 2013 | $ | 76 | $ | 5 | $ | 353 | $ | 609 | $ | 1,042 | ||||||||||||||||||||
Return on assets held at end of year | -12 | 0 | 1 | 33 | 22 | |||||||||||||||||||||||||
Return on assets sold during the year | 1 | 0 | 18 | -3 | 16 | |||||||||||||||||||||||||
Purchases, sales and settlements, net | -24 | -1 | 26 | 1 | 1 | |||||||||||||||||||||||||
Foreign exchange impact | 2 | 0 | 12 | 15 | 29 | |||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 42 | $ | 4 | $ | 410 | $ | 655 | $ | 1,110 | ||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Government | Corporate | Private | Private | |||||||||||||||||||||||||||
and Related | Bonds | Equity | Real Estate | Total | ||||||||||||||||||||||||||
Balance at January 1, 2012 | $ | 96 | $ | 39 | $ | 262 | $ | 580 | $ | 977 | ||||||||||||||||||||
Return on assets held at end of year | 3 | -1 | 9 | -5 | 6 | |||||||||||||||||||||||||
Return on assets sold during the year | 3 | 1 | 9 | 0 | 14 | |||||||||||||||||||||||||
Purchases, sales and settlements, net | -26 | -29 | 62 | 14 | 21 | |||||||||||||||||||||||||
Transfers, net | -2 | -5 | 0 | -3 | -10 | |||||||||||||||||||||||||
Foreign exchange impact | 1 | 0 | 11 | 23 | 34 | |||||||||||||||||||||||||
Balance at December 31, 2012 | $ | 76 | $ | 5 | $ | 353 | $ | 609 | $ | 1,042 |
Segment_Information_Tables
Segment Information (Tables) | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||
Segment Information | ' | |||||||||||||||||||||||||
Revenue and Pre-tax Income by Segment | ' | |||||||||||||||||||||||||
Management System Segment View | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
Global Services Segments | ||||||||||||||||||||||||||
Global | Global | |||||||||||||||||||||||||
Technology | Business | Systems and | Global | Total | ||||||||||||||||||||||
For the year ended December 31: | Services | Services | Software | Technology | Financing | Segments | ||||||||||||||||||||
2013 | ||||||||||||||||||||||||||
External revenue | $ | 38,551 | $ | 18,396 | $ | 25,932 | $ | 14,371 | $ | 2,022 | $ | 99,273 | ||||||||||||||
Internal revenue | 1,063 | 714 | 3,191 | 593 | 2,282 | 7,843 | ||||||||||||||||||||
Total revenue | $ | 39,615 | $ | 19,109 | $ | 29,123 | $ | 14,964 | $ | 4,304 | $ | 107,115 | ||||||||||||||
Pre-tax income | $ | 6,983 | $ | 3,214 | $ | 11,106 | $ | -507 | $ | 2,171 | $ | 22,967 | ||||||||||||||
Revenue year-to-year change | -4.3 | % | -0.9 | % | 1.4 | % | -18.4 | % | 5.7 | % | -4.2 | % | ||||||||||||||
Pre-tax income year-to-year change | 0.3 | % | 7.7 | % | 2.7 | % | -141.3 | % | 6.8 | % | -4.4 | % | ||||||||||||||
Pre-tax income margin | 17.6 | % | 16.8 | % | 38.1 | % | -3.4 | % | 50.4 | % | 21.4 | % | ||||||||||||||
2012 | ||||||||||||||||||||||||||
External revenue | $ | 40,236 | $ | 18,566 | $ | 25,448 | $ | 17,667 | $ | 2,013 | $ | 103,930 | ||||||||||||||
Internal revenue | 1,166 | 719 | 3,274 | 676 | 2,060 | 7,896 | ||||||||||||||||||||
Total revenue | $ | 41,402 | $ | 19,286 | $ | 28,722 | $ | 18,343 | $ | 4,073 | $ | 111,826 | ||||||||||||||
Pre-tax income | $ | 6,961 | $ | 2,983 | $ | 10,810 | $ | 1,227 | $ | 2,034 | $ | 24,015 | ||||||||||||||
Revenue year-to-year change | -1.7 | % | -4 | % | 1.8 | % | -7.5 | % | -2.9 | % | -2.3 | % | ||||||||||||||
Pre-tax income year-to-year change | 10.8 | % | -0.8 | % | 8.4 | % | -24.9 | % | 1.1 | % | 4.8 | % | ||||||||||||||
Pre-tax income margin | 16.8 | % | 15.5 | % | 37.6 | % | 6.7 | % | 49.9 | % | 21.5 | % | ||||||||||||||
2011 | ||||||||||||||||||||||||||
External revenue | $ | 40,879 | $ | 19,284 | $ | 24,944 | $ | 18,985 | $ | 2,102 | $ | 106,194 | ||||||||||||||
Internal revenue | 1,242 | 797 | 3,276 | 838 | 2,092 | 8,246 | ||||||||||||||||||||
Total revenue | $ | 42,121 | $ | 20,081 | $ | 28,219 | $ | 19,823 | $ | 4,195 | $ | 114,440 | ||||||||||||||
Pre-tax income | $ | 6,284 | $ | 3,006 | $ | 9,970 | $ | 1,633 | $ | 2,011 | $ | 22,904 | ||||||||||||||
Revenue year-to-year change | 6.6 | % | 5.6 | % | 10.9 | % | 5.6 | % | 2.8 | % | 7.1 | % | ||||||||||||||
Pre-tax income year-to-year change | 14.3 | % | 18.1 | % | 5.3 | % | 12.2 | % | 2.8 | % | 9.5 | % | ||||||||||||||
Pre-tax income margin | 14.9 | % | 15 | % | 35.3 | % | 8.2 | % | 47.9 | % | 20 | % | ||||||||||||||
Revenue and pre-tax income reconciliations to IBM as Reported | ' | |||||||||||||||||||||||||
Reconciliations of IBM as Reported | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
Total reportable segments | $ | 107,115 | $ | 111,826 | $ | 114,440 | ||||||||||||||||||||
Other revenue and adjustments | 478 | 577 | 722 | |||||||||||||||||||||||
Elimination of internal transactions | -7,843 | -7,896 | -8,246 | |||||||||||||||||||||||
Total IBM consolidated revenue | $ | 99,751 | $ | 104,507 | $ | 106,916 | ||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||
Pre-tax income | ||||||||||||||||||||||||||
Total reportable segments | $ | 22,967 | $ | 24,015 | $ | 22,904 | ||||||||||||||||||||
Amortization of acquired intangible assets | -758 | -703 | -629 | |||||||||||||||||||||||
Acquisition-related charges | -46 | -36 | -46 | |||||||||||||||||||||||
Non-operating retirement- related (costs)/income | -1,062 | -538 | 72 | |||||||||||||||||||||||
Elimination of internal transactions | -1,480 | -1,197 | -1,243 | |||||||||||||||||||||||
Unallocated corporate amounts* | -98 | 361 | -56 | |||||||||||||||||||||||
Total IBM consolidated pre-tax income | $ | 19,524 | $ | 21,902 | $ | 21,003 | ||||||||||||||||||||
* The 2013 and 2012 amounts include the gain related to the Retail Store Solutions divestiture. The 2011 amount includes gains related to the sale of Lenovo common stock. | ||||||||||||||||||||||||||
Assets and Other Items by segment | ' | |||||||||||||||||||||||||
Management System Segment View | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
Global Services Segments | ||||||||||||||||||||||||||
Global | Global | |||||||||||||||||||||||||
Technology | Business | Systems and | Global | Total | ||||||||||||||||||||||
For the year ended December 31: | Services | Services | Software | Technology | Financing | Segments | ||||||||||||||||||||
2013 | ||||||||||||||||||||||||||
Assets | $ | 18,048 | $ | 8,311 | $ | 27,101 | $ | 7,960 | $ | 40,138 | $ | 101,558 | ||||||||||||||
Depreciation/amortization of intangibles* | 1,670 | 72 | 1,211 | 855 | 574 | 4,383 | ||||||||||||||||||||
Capital expenditures/investments in intangibles | 1,938 | 69 | 540 | 781 | 467 | 3,796 | ||||||||||||||||||||
Interest income | — | — | — | — | 1,904 | 1,904 | ||||||||||||||||||||
Interest expense | — | — | — | — | 405 | 405 | ||||||||||||||||||||
2012 | ||||||||||||||||||||||||||
Assets | $ | 15,884 | $ | 8,022 | $ | 26,291 | $ | 8,232 | $ | 38,882 | $ | 97,310 | ||||||||||||||
Depreciation/amortization of intangibles* | 1,597 | 75 | 1,157 | 786 | 853 | 4,470 | ||||||||||||||||||||
Capital expenditures/investments in intangibles | 1,760 | 42 | 618 | 1,106 | 708 | 4,233 | ||||||||||||||||||||
Interest income ** | — | — | — | — | 1,972 | 1,972 | ||||||||||||||||||||
Interest expense | — | — | — | — | 410 | 410 | ||||||||||||||||||||
2011 | ||||||||||||||||||||||||||
Assets | $ | 15,475 | $ | 8,078 | $ | 23,926 | $ | 7,649 | $ | 36,427 | $ | 91,557 | ||||||||||||||
Depreciation/amortization of intangibles* | 1,713 | 83 | 1,062 | 737 | 1,145 | 4,739 | ||||||||||||||||||||
Capital expenditures/investments in intangibles | 1,838 | 56 | 469 | 1,032 | 930 | 4,325 | ||||||||||||||||||||
Interest income ** | — | — | — | — | 2,176 | 2,176 | ||||||||||||||||||||
Interest expense | — | — | — | — | 538 | 538 | ||||||||||||||||||||
* Segment pre-tax income does not include the amortization of intangible assets. | ||||||||||||||||||||||||||
** Reclassified to conform with 2013 presentation.. | ||||||||||||||||||||||||||
Asset reconciliation to IBM as reported | ' | |||||||||||||||||||||||||
Reconciliations of IBM as Reported | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
At December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Total reportable segments | $ | 101,558 | $ | 97,310 | $ | 91,557 | ||||||||||||||||||||
Elimination of internal transactions | -4,740 | -4,943 | -5,407 | |||||||||||||||||||||||
Unallocated amounts | ||||||||||||||||||||||||||
Cash and marketable securities | 9,697 | 9,779 | 10,575 | |||||||||||||||||||||||
Notes and accounts receivable | 2,741 | 3,769 | 3,526 | |||||||||||||||||||||||
Deferred tax assets | 4,532 | 5,194 | 4,865 | |||||||||||||||||||||||
Plant, other property and equipment | 2,505 | 2,555 | 2,918 | |||||||||||||||||||||||
Pension assets | 5,551 | 945 | 2,837 | |||||||||||||||||||||||
Other | 4,378 | 4,604 | 5,562 | |||||||||||||||||||||||
Total IBM consolidated assets | $ | 126,223 | $ | 119,213 | $ | 116,433 | ||||||||||||||||||||
Geographic Information | ' | |||||||||||||||||||||||||
Revenue* | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||
United States | $ | 34,809 | $ | 36,270 | $ | 37,041 | ||||||||||||||||||||
Japan | 9,071 | 10,697 | 10,968 | |||||||||||||||||||||||
Other countries | 55,871 | 57,540 | 58,906 | |||||||||||||||||||||||
Total IBM consolidated revenue | $ | 99,751 | $ | 104,507 | $ | 106,916 | ||||||||||||||||||||
* Revenues are attributed to countries based on the location of the client. | ||||||||||||||||||||||||||
Plant and Other Property—Net | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
At December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||
United States | $ | 6,723 | $ | 6,555 | $ | 6,271 | ||||||||||||||||||||
Other countries | 6,257 | 6,299 | 6,186 | |||||||||||||||||||||||
Total | $ | 12,979 | $ | 12,854 | $ | 12,457 | ||||||||||||||||||||
Revenue by Classes of Similar Products or Services | ' | |||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
For the year ended December 31: | 2013 | 2012 | 2011 | |||||||||||||||||||||||
Global Technology Services | ||||||||||||||||||||||||||
Services | $ | 29,953 | $ | 31,161 | $ | 31,746 | ||||||||||||||||||||
Maintenance | 7,111 | 7,343 | 7,515 | |||||||||||||||||||||||
Systems | 1,322 | 1,574 | 1,478 | |||||||||||||||||||||||
Software | 164 | 159 | 140 | |||||||||||||||||||||||
Global Business Services | ||||||||||||||||||||||||||
Services | $ | 18,065 | $ | 18,216 | $ | 18,956 | ||||||||||||||||||||
Software | 221 | 208 | 211 | |||||||||||||||||||||||
Systems | 109 | 142 | 118 | |||||||||||||||||||||||
Software | ||||||||||||||||||||||||||
Software | $ | 23,420 | $ | 23,144 | $ | 22,921 | ||||||||||||||||||||
Services | 2,512 | 2,304 | 2,022 | |||||||||||||||||||||||
Systems and Technology | ||||||||||||||||||||||||||
Servers | $ | 9,646 | $ | 11,980 | $ | 12,362 | ||||||||||||||||||||
Storage | 3,041 | 3,411 | 3,619 | |||||||||||||||||||||||
Microelectronics OEM | 1,463 | 1,572 | 1,975 | |||||||||||||||||||||||
Retail Store Solutions | 6 | 357 | 753 | |||||||||||||||||||||||
Microelectronics Services | 215 | 346 | 277 | |||||||||||||||||||||||
Global Financing | ||||||||||||||||||||||||||
Financing | $ | 1,493 | $ | 1,471 | $ | 1,612 | ||||||||||||||||||||
Used equipment sales | 529 | 542 | 490 |
Significant_Accounting_Policie3
Significant Accounting Policies (Narratives) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Accounting Policies [Abstract] | ' | ' | ' |
Noncontrolling interest amounts in income, net of tax | $7 | $11 | $6 |
Deferred services transition and setup costs | 2,402 | 2,424 | ' |
Estimated amortization of deferred services transition and setup costs for 2014 | 812 | ' | ' |
Estimated amortization of deferred services transition and setup costs for 2015 | 612 | ' | ' |
Estimated amortization of deferred transition and setup costs for 2016 | 400 | ' | ' |
Estimated amortization of deferred transition and setup costs for 2017 | 247 | ' | ' |
Estimated amortization of deferred transition and setup costs thereafter | 332 | ' | ' |
Deferred amounts paid to clients in excess of the fair value of acquired assets used in outsourcing arrangements | 89 | 51 | ' |
Estimated amortization of deferred amounts paid to clients in excess of the fair value of acquired assets for 2014 | 27 | ' | ' |
Estimated amortization of deferred amounts paid to clients in excess of the fair value of acquired assets for 2015 | 27 | ' | ' |
Estimated amortization of deferred amounts paid to clients in excess of the fair value of acquired assets for 2016 | 8 | ' | ' |
Estimated amortization of deferred amounts paid to clients in excess of the fair value of acquired assets for 2017 | 5 | ' | ' |
Estimated amortization of deferred amounts paid to clients in excess of the fair value of acquired assets thereafter | 22 | ' | ' |
Marketing and advertising expense: | ' | ' | ' |
Advertising and promotional expense | $1,294 | $1,339 | $1,373 |
Minimum | ' | ' | ' |
Deferred Revenue Arrangement [Line Items] | ' | ' | ' |
Product warranty term | '1 year | ' | ' |
Maximum | ' | ' | ' |
Deferred Revenue Arrangement [Line Items] | ' | ' | ' |
Product warranty term | '3 years | ' | ' |
Significant_Accounting_Policie4
Significant Accounting Policies (Standarded Warranty and Extended Warranty Tables) (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Movement in standard warranty liability | ' | ' |
Beginning Balance | $394 | $407 |
Current period accruals | 346 | 394 |
Accrual adjustments to reflect actual experience | 22 | -15 |
Charges incurred | -387 | -392 |
Ending Balance | 376 | 394 |
Deferred revenue: | ' | ' |
Deferred income, current portion | 12,557 | 11,952 |
Deferred income, noncurrent portion | 4,108 | 4,491 |
Extended Warranty [Member] | ' | ' |
Movement in Deferred Revenue [Roll Forward] | ' | ' |
Beginning balance, aggregate deferred revenue | 606 | 636 |
Revenue deferred for new extended warranty contracts | 305 | 268 |
Amortization of deferred revenue | -324 | -301 |
Other | -8 | 4 |
Ending balance, aggregate deferred revenue | 579 | 606 |
Deferred revenue: | ' | ' |
Deferred income, current portion | 284 | 289 |
Deferred income, noncurrent portion | $295 | $317 |
Significant_Accounting_Policie5
Significant Accounting Policies (Details 2) (Services, USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Multiple-Deliverable Arrangements | ' | ' |
Aggregate deferred revenue | $7,153 | $7,281 |
Unbilled services accounts receivable included in notes and accounts receivable trade | $2,053 | $1,998 |
Unbilled services accounts receivable, length of time expected to be billed | '4 months | ' |
Minimum | ' | ' |
Multiple-Deliverable Arrangements | ' | ' |
Services contract terms range | '1 year | ' |
Maximum | ' | ' |
Multiple-Deliverable Arrangements | ' | ' |
Services contract terms range | '10 years | ' |
Significant_Accounting_Policie6
Significant Accounting Policies (Details 3) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Accounting Policies [Abstract] | ' | ' |
Minimum percentage of likelihood of being realized upon settlement for benefits from tax positions (as a percent) | 50.00% | ' |
Maturity tenure of derivative used in classifying it as current or noncurrent | '12 months | ' |
Common stock, par value (in dollars per share) | $0.20 | $0.20 |
Expected realization period for debt securities included in current assets | '1 year | ' |
Number of days after which receivables are past-due | '90 days | ' |
Minimum | Restricted Stock Units | ' | ' |
Stock-Based Compensation | ' | ' |
Vesting period | '1 year | ' |
Maximum | Restricted Stock Units | ' | ' |
Stock-Based Compensation | ' | ' |
Vesting period | '5 years | ' |
Capitalized software | Maximum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of intangible assets | '3 years | ' |
Capitalized costs for internal-use software | Maximum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of intangible assets | '2 years | ' |
Other intangible assets | Minimum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of intangible assets | '1 year | ' |
Other intangible assets | Maximum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of intangible assets | '7 years | ' |
Buildings | Minimum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of plant, rental machines and other property | '30 years | ' |
Buildings | Maximum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of plant, rental machines and other property | '50 years | ' |
Building equipment | Minimum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of plant, rental machines and other property | '10 years | ' |
Building equipment | Maximum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of plant, rental machines and other property | '20 years | ' |
Land improvements | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of plant, rental machines and other property | '20 years | ' |
Plant, laboratory and office equipment | Minimum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of plant, rental machines and other property | '2 years | ' |
Plant, laboratory and office equipment | Maximum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of plant, rental machines and other property | '20 years | ' |
Computer equipment | Minimum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of plant, rental machines and other property | '1 year 6 months | ' |
Computer equipment | Maximum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of plant, rental machines and other property | '5 years | ' |
Leasehold improvements | Maximum | ' | ' |
Property, Plant and Equipment and Finite-Lived Intangible Assets | ' | ' |
Estimated useful lives of plant, rental machines and other property | '25 years | ' |
AcquisitionsDivestitures_Detai
Acquisitions/Divestitures (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Jul. 03, 2013 | Dec. 31, 2013 | Jul. 03, 2013 | Jul. 03, 2013 | Dec. 03, 2012 | Dec. 31, 2012 | Dec. 03, 2012 | Dec. 03, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2012 | Dec. 31, 2013 |
In Millions, unless otherwise specified | Software | Software | Software | GBS | GBS | GBS | GTS | GTS | GTS | STG | STG | STG | SoftLayer | SoftLayer | SoftLayer | SoftLayer | Kenexa | Kenexa | Kenexa | Kenexa | Other Acquisitions | Other Acquisitions | Other Acquisitions | Other Acquisitions | Other Acquisitions | Other Acquisitions | Other Acquisitions | Other Acquisitions | Acquisitions 2011 | Acquisitions 2011 | Acquisitions 2011 | Acquisitions 2012 | Acquisitions 2013 | |||
Software | GTS | Software | GTS | Software | Software | GBS | GTS | STG | STG | acquisitions | Software | GBS | acquisitions | acquisitions | ||||||||||||||||||||||
acquisitions | acquisitions | acquisitions | acquisitions | |||||||||||||||||||||||||||||||||
Acquisitions: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Businesses acquired, number (in entities) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8 | 8 | ' | ' | 1 | 2 | 5 | ' | ' | 11 | 10 |
Businesses acquired, aggregate cost | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,849 | ' | ' | $3,964 | $3,219 |
Percentage of business acquired | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | 100.00% | 100.00% | ' | ' | 100.00% | 100.00% | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' |
Businesses acquired, cash consideration | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,977 | ' | ' | ' | 1,351 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill | $31,184 | $29,247 | $26,213 | $21,121 | $20,405 | $18,121 | $4,334 | $4,357 | $4,313 | $4,129 | $2,916 | $2,646 | $1,601 | $1,568 | $1,133 | $1,285 | $1,285 | $39 | $1,246 | $1,014 | $1,014 | $771 | $243 | $961 | $1,880 | $948 | $1,412 | $5 | $21 | $13 | $443 | $1,291 | $1,277 | $14 | ' | ' |
Expected percent of goodwill deductible for tax purposes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.00% | ' | ' | ' | 10.00% | ' | ' | 2.00% | 15.00% | ' | ' | ' | ' | ' | ' | 25.00% | ' | ' | ' | ' |
Acquired intangible asset, weighted average useful life | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '7 years | ' | ' | ' | '6 years 6 months | ' | ' | '6 years 7 months | '6 years 7 months | ' | ' | ' | ' | ' | ' | '6 years 11 months | ' | ' | ' | ' |
AcquisitionsDivestitures_Purch
Acquisitions/Divestitures (Purchase Price Allocation) (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Jul. 03, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 03, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
In Millions, unless otherwise specified | SoftLayer | SoftLayer | SoftLayer | SoftLayer | SoftLayer | SoftLayer | Kenexa | Kenexa | Kenexa | Kenexa | Kenexa | Other Acquisitions | Other Acquisitions | Other Acquisitions | Other Acquisitions | Other Acquisitions | Other Acquisitions | Other Acquisitions | Other Acquisitions | Other Acquisitions | Acquisitions 2011 | Acquisitions 2011 | Acquisitions 2011 | Acquisitions 2011 | Acquisitions 2011 | Acquisitions 2011 | Acquisitions 2012 | Acquisitions 2012 | Acquisitions 2012 | Acquisitions 2012 | Acquisitions 2012 | Acquisitions 2012 | Acquisitions 2013 | Acquisitions 2013 | Acquisitions 2013 | Acquisitions 2013 | Acquisitions 2013 | Acquisitions 2013 | |||
Completed technology | Client relationships | In-process R&D | Patents/trademarks | Completed technology | Client relationships | Patents/trademarks | Completed technology | Completed technology | Client relationships | Client relationships | In-process R&D | Patents/trademarks | Patents/trademarks | Completed technology | Client relationships | Patents/trademarks | Patents/trademarks | Patents/trademarks | Completed technology | Completed technology | Client relationships | Client relationships | Patents/trademarks | Patents/trademarks | Completed technology | Completed technology | Client relationships | Client relationships | Patents/trademarks | Patents/trademarks | |||||||||||
Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | ||||||||||||||||||||||||||||
Acquisitions: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Current assets | ' | ' | ' | $80 | ' | ' | ' | ' | ' | $133 | ' | ' | ' | ' | $97 | $278 | ' | ' | ' | ' | ' | ' | ' | $251 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fixed assets/noncurrent assets | ' | ' | ' | 300 | ' | ' | ' | ' | ' | 98 | ' | ' | ' | ' | 41 | 217 | ' | ' | ' | ' | ' | ' | ' | 88 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill | 31,184 | 29,247 | 26,213 | 1,285 | 1,285 | ' | ' | ' | ' | 1,014 | 1,014 | ' | ' | ' | 961 | 1,880 | ' | ' | ' | ' | ' | ' | ' | 1,291 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' | 290 | 245 | 2 | 75 | ' | ' | 169 | 179 | 39 | ' | ' | 181 | 403 | 97 | 194 | 11 | 32 | 37 | 2,190 | 320 | 222 | 17 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets acquired | ' | ' | ' | 2,277 | ' | ' | ' | ' | ' | 1,632 | ' | ' | ' | ' | 1,408 | 3,020 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Current liabilities | ' | ' | ' | -56 | ' | ' | ' | ' | ' | -93 | ' | ' | ' | ' | -61 | -143 | ' | ' | ' | ' | ' | ' | ' | -191 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Noncurrent liabilities | ' | ' | ' | -244 | ' | ' | ' | ' | ' | -188 | ' | ' | ' | ' | -105 | -264 | ' | ' | ' | ' | ' | ' | ' | -150 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total liabilities assumed | ' | ' | ' | -300 | ' | ' | ' | ' | ' | -281 | ' | ' | ' | ' | -166 | -407 | ' | ' | ' | ' | ' | ' | ' | -341 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total purchase price | ' | ' | ' | $1,977 | ' | ' | ' | ' | ' | $1,351 | ' | ' | ' | ' | $1,242 | $2,613 | ' | ' | ' | ' | ' | ' | ' | $1,849 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization Life (in Years) | ' | ' | ' | '7 years | ' | ' | ' | ' | ' | '6 years 6 months | ' | ' | ' | ' | '6 years 7 months | '6 years 7 months | ' | ' | ' | ' | ' | ' | ' | '6 years 11 months | '7 years | '7 years | ' | '1 year | '7 years | '3 years | '7 years | '4 years | '7 years | '1 year | '7 years | '5 years | '7 years | '6 years | '7 years | '2 years | '7 years |
AcquisitionsDivestitures_Dives
Acquisitions/Divestitures (Divestiture) (Details 3) (USD $) | 3 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 24 Months Ended | 0 Months Ended | 12 Months Ended | 3 Months Ended | 0 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Jun. 30, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Jan. 23, 2014 | Dec. 31, 2013 | Jan. 23, 2014 | Apr. 17, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Sep. 10, 2013 | Dec. 31, 2013 | Sep. 30, 2012 | Sep. 10, 2013 | Sep. 10, 2013 |
Divestiture | Divestiture | x86 server portfolio | x86 server portfolio | x86 server portfolio | Retail Stores Solutions business | Retail Stores Solutions business | Retail Stores Solutions business | Customer Care Business Process Outsourcing Services | Customer Care Business Process Outsourcing Services | Toshiba Global Commerce Solutions Holding Corporation | Estimated | Estimated | ||||
Maximum | Phase | Customer Care Business Process Outsourcing Services | Customer Care Business Process Outsourcing Services | |||||||||||||
Minimum | Maximum | |||||||||||||||
Divestitures | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Transaction price for sale of business | ' | ' | ' | ' | ' | $2,300 | ' | ' | $850 | ' | ' | $505 | ' | ' | ' | ' |
Approximate amount of transaction price received in cash | ' | ' | ' | ' | ' | 2,000 | ' | ' | 800 | ' | ' | 430 | ' | ' | ' | ' |
Noncash consideration received on sale of business | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75 | ' | ' | ' | ' |
Equity Ownership percent acquired | ' | ' | ' | ' | ' | ' | ' | 5.00% | ' | ' | ' | 5.00% | ' | ' | ' | ' |
Proceeds from sale of business | ' | ' | 297 | 599 | 14 | ' | ' | ' | ' | 546 | ' | ' | ' | ' | ' | ' |
Note receivable on sale of business | ' | ' | ' | ' | ' | ' | ' | ' | ' | 251 | ' | ' | ' | ' | ' | ' |
Pre-tax gain on sale of business | ' | ' | ' | ' | ' | ' | ' | ' | ' | 446 | 463 | ' | ' | ' | 150 | 175 |
Revenues | ' | ' | 99,751 | 104,507 | 106,916 | ' | 4,600 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Services revenue | ' | ' | 57,655 | 59,453 | 60,721 | ' | ' | ' | ' | ' | ' | ' | 1,300 | ' | ' | ' |
Percent of the consolidated revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | ' | ' | ' |
Pre-tax income | ' | ' | 19,524 | 21,902 | 21,003 | ' | ' | ' | ' | ' | ' | ' | 100 | ' | ' | ' |
Phases of sale completed | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3 | ' | ' | ' | ' | ' | ' |
Businesses acquired, aggregate cost | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 161 | ' | ' |
Percentage of business acquired | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 19.90% | ' | ' |
Ownership retention period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | ' | ' |
Number of divestitures | 2 | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible Assets, Net (Excluding Goodwill) | 3,871 | ' | 3,871 | 3,787 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Tangible assets | $13,821 | ' | $13,821 | $13,996 | ' | ' | ' | ' | ' | ' | ' | ' | $50 | ' | ' | ' |
Financial_Instruments_Narrativ
Financial Instruments (Narratives) (Details 1) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Financial Instruments | ' | ' |
Fair value of derivative instruments under collateralized arrangements in a liability position | $216 | $94 |
Collateral posted on derivative instruments | 0 | 0 |
Fair value of derivative instruments in net asset position | 719 | 918 |
Fair value of total derivative liabilities and debt | 6,802 | 4,116 |
Maximum spread on credit default swap agreements before full overnight collateralization is required (in percent) | 2.50% | ' |
Liabilities included in master netting arrangements | 251 | 262 |
Cash collateral received, derivatives | 29 | 69 |
Net exposure related to derivative assets recorded in the Statement of Financial Position | 439 | 587 |
Net amount related to derivative liabilities recorded in the Statement of Financial Position | 250 | 242 |
Non-cash collateral received and not recorded on the Statement of Financial Position | 0 | 31 |
Cash collateral rehypothecated | 0 | 0 |
Derivative Instruments, Gain (Loss) | ' | ' |
Cash collateral issued, derivatives | 0 | 0 |
Amount recognized in accounts payable for the obligation to return cash collateral | 29 | 69 |
Interest rate swaps | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | 3,106 | 4,252 |
Credit default swaps | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Maximum length of time hedged | '1 year | ' |
Derivative instruments in fair value hedging relationships | Interest rate swaps | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | 3.1 | 4.3 |
Average remaining maturity | '10 years 7 months | '5 years 1 month |
Derivative instruments in cash flow hedging relationships | Foreign exchange forward contracts | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | 10,200 | 10,700 |
Average remaining maturity | '8 months 12 days | '8 months 12 days |
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges of borrowings | -252 | -138 |
Gains (losses) expected to be reclassified to net income within the next 12 months | -166 | -79 |
Maximum length of time hedged | '4 years | ' |
Derivative instruments in cash flow hedging relationships | Interest rate swaps | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges of borrowings | 1 | 1 |
Gains (losses) expected to be reclassified to net income within the next 12 months | 1 | 1 |
Derivative instruments in cash flow hedging relationships | Currency swaps | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | 1,200 | ' |
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges of borrowings | -9 | ' |
Gains (losses) expected to be reclassified to net income within the next 12 months | -3 | ' |
Maximum length of time hedged | '7 years | ' |
Derivative instruments in net investment hedging relationships | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | 3,000 | 3,300 |
Average remaining maturity | '4 months 24 days | '4 months 24 days |
Derivative instruments not designated as hedging instruments | Foreign exchange forward and swap contracts | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | 14,700 | 12,900 |
Maximum length of time hedged | '1 year | ' |
Derivative instruments not designated as hedging instruments | Equity contracts | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Notional amount | $1,300 | $1,200 |
Financial_Instruments_Assets_a
Financial Instruments (Assets and Liabilities Measured on Recurring Basis Table) (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | ||
In Millions, unless otherwise specified | ||||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Debt securities - noncurrent | $9 | $10 | ||
Available-for-sale equity investments | 18 | 34 | ||
Derivative assets | 439 | 587 | ||
Derivative liabilities | 250 | 242 | ||
Potential reduction in net position of total derivative liabilities | 251 | 262 | ||
Recurring | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Cash equivalents | 7,997 | [1],[2] | 7,746 | [1],[2] |
Debt securities - current | 350 | [1],[3] | 717 | [1],[4] |
Debt securities - noncurrent | 9 | [5] | 10 | [5] |
Available-for-sale equity investments | 18 | [5] | 34 | [5] |
Derivative assets | 719 | [6],[7] | 918 | [8],[9] |
Total Assets | 9,092 | [7] | 9,424 | [9] |
Total Liabilities | 501 | [10],[7] | 503 | [11],[9] |
Potential reduction in net position of total derivative assets | 251 | 262 | ||
Potential reduction in net position of total derivative liabilities | 251 | 262 | ||
Recurring | Prepaid expenses and other current assets | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Derivative assets | 318 | 333 | ||
Recurring | Investments and sundry assets | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Derivative assets | 401 | 585 | ||
Recurring | Other accrued expenses and liabilities | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Derivative liabilities | 375 | 426 | ||
Recurring | Other liabilities | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Derivative liabilities | 126 | 78 | ||
Recurring | Interest rate contracts | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Derivative assets | 308 | [6] | 604 | [8] |
Derivative liabilities | 13 | [10] | ' | |
Recurring | Foreign exchange contracts | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Derivative assets | 375 | [6] | 305 | [8] |
Derivative liabilities | 484 | [10] | 496 | [11] |
Recurring | Equity contracts | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Derivative assets | 36 | [6] | 9 | [8] |
Derivative liabilities | 4 | [10] | 7 | [11] |
Recurring | Time deposits and certificates of deposit | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Cash equivalents | 4,754 | [2] | 3,694 | [2] |
Recurring | Commercial paper | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Cash equivalents | 1,507 | [2] | 2,098 | [2] |
Recurring | Money market funds | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Cash equivalents | 1,728 | [2] | 1,923 | [2] |
Recurring | Other securities | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Cash equivalents | 8 | [2] | 30 | [2] |
Recurring | Level 1 | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Cash equivalents | 1,728 | [1],[2] | 1,923 | [1],[2] |
Debt securities - noncurrent | 1 | [5] | 2 | [5] |
Available-for-sale equity investments | 18 | [5] | 34 | [5] |
Total Assets | 1,747 | [7] | 1,959 | [9] |
Recurring | Level 1 | Money market funds | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Cash equivalents | 1,728 | [2] | 1,923 | [2] |
Recurring | Level 2 | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Cash equivalents | 6,269 | [1],[2] | 5,823 | [1],[2] |
Debt securities - current | 350 | [1],[3] | 717 | [1],[4] |
Debt securities - noncurrent | 7 | [5] | 8 | [5] |
Derivative assets | 719 | [6],[7] | 918 | [8],[9] |
Total Assets | 7,345 | [7] | 7,466 | [9] |
Total Liabilities | 501 | [10],[7] | 503 | [11],[9] |
Recurring | Level 2 | Interest rate contracts | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Derivative assets | 308 | [6] | 604 | [8] |
Derivative liabilities | 13 | [10] | ' | |
Recurring | Level 2 | Foreign exchange contracts | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Derivative assets | 375 | [6] | 305 | [8] |
Derivative liabilities | 484 | [10] | 496 | [11] |
Recurring | Level 2 | Equity contracts | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Derivative assets | 36 | [6] | 9 | [8] |
Derivative liabilities | 4 | [10] | 7 | [11] |
Recurring | Level 2 | Time deposits and certificates of deposit | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Cash equivalents | 4,754 | [2] | 3,694 | [2] |
Recurring | Level 2 | Commercial paper | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Cash equivalents | 1,507 | [2] | 2,098 | [2] |
Recurring | Level 2 | Other securities | ' | ' | ||
Financial assets and financial liabilities measured at fair value on a recurring basis: | ' | ' | ||
Cash equivalents | $8 | [2] | $30 | [2] |
[1] | Available-for-sale securities with carrying values that approximate fair value. | |||
[2] | Included within cash and cash equivalents in the Consolidated Statement of Financial Position. | |||
[3] | Commercial paper reported as marketable securities in the Consolidated Statement of | |||
Financial Position. | ||||
[4] | Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of | |||
Financial Position. | ||||
[5] | Included within investments and sundry assets in the Consolidated Statement of Financial Position. | |||
[6] | The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments | |||
and sundry assets in the Consolidated Statement of Financial Position at December 31, 2013 were $318 million | ||||
and $401 million, respectively. | ||||
[7] | If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated | |||
Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $251 | ||||
million each. | ||||
[8] | The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments | |||
and sundry assets in the Consolidated Statement of Financial Position at December 31, 2012 were $333 million and | ||||
$585 million, respectively. | ||||
[9] | If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated | |||
Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $262 | ||||
million each. | ||||
[10] | The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Statement of Financial Position at December 31, 2013 were $375 million and $126 million, respectively. | |||
[11] | The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other | |||
liabilities in the Consolidated Statement of Financial Position at December 31, 2012 were $426 million and $78 | ||||
million, respectively. |
Financial_Instruments_Debt_and
Financial Instruments (Debt and Marketable Equity Securities Table) (Details 3) (USD $) | 12 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | ||
Fair value of financial instruments, details: | ' | ' | ' | ||
Carrying amount of long-term debt | $32,856 | $24,088 | ' | ||
Fair value of long-term debt | 34,555 | 27,119 | ' | ||
Debt and Marketable Equity Securities. | ' | ' | ' | ||
Debt securities - noncurrent, adjusted cost | 7 | 8 | ' | ||
Debt securities - noncurrent, gross unrealized gains | 1 | 2 | ' | ||
Debt securities - noncurrent, fair value | 9 | 10 | ' | ||
Available-for-sale equity investments, adjusted cost | 20 | 31 | ' | ||
Available-for-sale equity investments, gross unrealized gains | 2 | 4 | ' | ||
Available-for-sale equity investments, gross unrealized losses | 4 | 1 | ' | ||
Available-for-sale equity investments, fair value | 18 | 34 | ' | ||
Carrying amount of long-term debt | 32,856 | 24,088 | ' | ||
Sales of debt and available-for-sale equity investments | ' | ' | ' | ||
Proceeds | 41 | 112 | 405 | ||
Gross realized gains (before taxes) | 13 | 45 | 232 | ||
Gross realized losses (before taxes) | 5 | 1 | 0 | ||
Unrealized holding gains/(losses) on available-for-sale debt and equity securities | ' | ' | ' | ||
Net unrealized gains/(losses) arising during the period | 0 | 17 | ' | ||
Net unrealized (gains)/losses reclassified to net income | -5 | [1] | -25 | [1] | -143 |
Writedowns included in net income for the period | ' | $2 | ' | ||
Maximum contractual maturities of substantially all available-for-sale debt securities | '1 year | ' | ' | ||
[1] | Includes writedowns of $2.0 million in 2012. |
Financial_Instruments_Fair_Val
Financial Instruments (Fair Value of Derivative Instruments Table) (Details 4) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | $719 | $918 |
Fair value of total derivative instruments, Liabilities | 6,802 | 4,116 |
Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 522 | 744 |
Fair value of total derivative instruments, Liabilities | 456 | 345 |
Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 197 | 174 |
Fair value of total derivative instruments, Liabilities | 45 | 159 |
Prepaid expenses and other current assets | Interest rate contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | ' | 47 |
Prepaid expenses and other current assets | Foreign exchange contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 187 | 135 |
Prepaid expenses and other current assets | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 94 | 142 |
Prepaid expenses and other current assets | Equity contracts | Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 36 | 9 |
Investments and sundry assets | Interest rate contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 308 | 557 |
Investments and sundry assets | Foreign exchange contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 26 | 5 |
Investments and sundry assets | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Assets | 67 | 23 |
Other accrued expenses and liabilities | Interest rate contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 0 | ' |
Other accrued expenses and liabilities | Foreign exchange contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 331 | 267 |
Other accrued expenses and liabilities | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 40 | 152 |
Other accrued expenses and liabilities | Equity contracts | Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 4 | 7 |
Other liabilities | Interest rate contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 13 | ' |
Other liabilities | Foreign exchange contracts | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 112 | 78 |
Other liabilities | Foreign exchange contracts | Derivative instruments not designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 1 | ' |
Long term debt | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 6,111 | 3,035 |
Long term debt | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 6,111 | 3,035 |
Short term debt | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | 190 | 578 |
Short term debt | Designated as hedging instruments | ' | ' |
Fair Values of Derivative Instruments | ' | ' |
Fair value of total derivative instruments, Liabilities | $190 | $578 |
Financial_Instruments_Effect_o
Financial Instruments (Effect of Derivative Instruments Table) (Details 5) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Amount of gain (loss) recognized in income on derivatives | ($347) | [1] | ($81) | [1] | $880 | [1] |
Gain (loss) recognized in earnings attributable to risk being hedged | 340 | [2] | 108 | [2] | -206 | [2] |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI | 216 | 6 | -221 | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | 167 | 253 | -511 | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing | 3 | [3] | 14 | [3] | -12 | [3] |
Foreign exchange Contracts | Derivative instruments in cash flow hedging relationships | ' | ' | ' | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI | 43 | 32 | -266 | |||
Foreign exchange Contracts | Derivative instruments in net investment hedging relationships | ' | ' | ' | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI | 173 | [4] | -26 | [4] | 45 | [4] |
Cost of financing | Interest rate contracts | Derivative instruments in fair value hedging relationships | ' | ' | ' | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Amount of gain (loss) recognized in income, recognized on derivative instruments in fair value hedges | -109 | [1] | 65 | [1] | 271 | [1] |
Gain (loss) recognized in earnings attributable to risk being hedged | 202 | [2] | 59 | [2] | -117 | [2] |
Interest expense | Interest rate contracts | Derivative instruments in fair value hedging relationships | ' | ' | ' | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Amount of gain (loss) recognized in income, recognized on derivative instruments in fair value hedges | -74 | [1] | 55 | [1] | 205 | [1] |
Gain (loss) recognized in earnings attributable to risk being hedged | 138 | [2] | 50 | [2] | -89 | [2] |
Interest expense | Interest rate contracts | Derivative instruments in cash flow hedging relationships | ' | ' | ' | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | ' | -6 | -8 | |||
Interest expense | Foreign exchange Contracts | Derivative instruments in net investment hedging relationships | ' | ' | ' | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | ' | ' | 0 | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing | 3 | [3],[4] | 11 | [3],[4] | -9 | [3],[4] |
Other (income) and expense | Foreign exchange Contracts | Derivative instruments in cash flow hedging relationships | ' | ' | ' | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | 162 | 237 | -247 | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing | 0 | [3] | 3 | [3] | -3 | [3] |
Other (income) and expense | Foreign exchange Contracts | Derivative instruments not designated as hedging instruments | ' | ' | ' | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Amount of gain (loss) recognized in income on derivatives | -328 | [1] | -311 | [1] | 352 | [1] |
Other (income) and expense | Warrants | Derivative instruments not designated as hedging instruments | ' | ' | ' | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Amount of gain (loss) recognized in income on derivatives | ' | ' | 10 | [1] | ||
Cost of sales | Foreign exchange Contracts | Derivative instruments in cash flow hedging relationships | ' | ' | ' | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | -34 | 7 | -182 | |||
SG&A expense | Foreign exchange Contracts | Derivative instruments in cash flow hedging relationships | ' | ' | ' | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings | 39 | 16 | -74 | |||
SG&A expense | Equity contracts | Derivative instruments not designated as hedging instruments | ' | ' | ' | |||
Derivative Instruments, Gain (Loss) | ' | ' | ' | |||
Amount of gain (loss) recognized in income on derivatives | $164 | [1] | $110 | [1] | $42 | [1] |
[1] | The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. | |||||
[2] | The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. | |||||
[3] | The amount of gain/(loss) recognized in income represents ineffectiveness on hedge relationships. | |||||
[4] | Instruments in net investment hedges include derivative and non-derivative instruments. |
Inventories_Details
Inventories (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Inventories | ' | ' |
Finished goods | $444 | $475 |
Work in process and raw materials | 1,866 | 1,812 |
Total inventories | $2,310 | $2,287 |
Financing_Receivables_Details
Financing Receivables (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 |
In Millions, unless otherwise specified | Net investment in sales-type and direct financing leases | Net investment in sales-type and direct financing leases | Net investment in sales-type and direct financing leases | Net investment in sales-type and direct financing leases | Commercial financing receivables | Commercial financing receivables | Commercial financing receivables | Commercial financing receivables | Client loan receivables | Client loan receivables | Client loan receivables | Client loan receivables | Installment payment receivables | Installment payment receivables | Installment payment receivables | Installment payment receivables | |||
Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | ||||||||||||
Financing receivables: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing receivables used as collateral for non-recourse borrowings | $769 | $650 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing receivables held for sale | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing receivables, current | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing receivables, net, current | 19,787 | 18,038 | ' | 4,004 | 3,862 | ' | ' | 8,541 | 7,750 | ' | ' | 5,854 | 5,395 | ' | ' | 1,389 | 1,031 | ' | ' |
Financing receivables, noncurrent | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing receivables, net, noncurrent | 12,755 | 12,812 | ' | 5,700 | 6,107 | ' | ' | ' | 5 | ' | ' | 6,360 | 5,966 | ' | ' | 695 | 733 | ' | ' |
Financing receivables | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing receivable, payment terms | ' | ' | ' | ' | ' | '2 years | '6 years | ' | ' | '30 days | '90 days | ' | ' | '1 year | '7 years | ' | ' | '1 year | '3 years |
Sales-type and direct financing leases, unguaranteed residual value | ' | ' | ' | 737 | 794 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Sales-type and direct financing leases, unearned income | ' | ' | ' | 672 | 728 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Allowance for credit losses | $365 | $318 | $307 | $123 | $114 | ' | ' | $23 | $46 | ' | ' | $201 | $155 | ' | ' | $41 | $39 | ' | ' |
Scheduled maturities of minimum lease payments outstanding as a percentage of the total, 2014 | ' | ' | ' | 44.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Scheduled maturities of minimum lease payments outstanding as a percentage of the total, 2015 | ' | ' | ' | 30.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Scheduled maturities of minimum lease payments outstanding as a percentage of the total, 2016 | ' | ' | ' | 17.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Scheduled maturities of minimum lease payments outstanding as a percentage of the total, 2017 | ' | ' | ' | 6.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Scheduled maturities of minimum lease payments outstanding as a percentage of the total, 2018 and beyond | ' | ' | ' | 3.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing_Receivables_Details_
Financing Receivables (Details 2) (USD $) | 12 Months Ended | |||||||||||||||||||||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Major Markets | Major Markets | Growth Markets | Growth Markets | Lease receivables | Lease receivables | Lease receivables | Lease receivables | Lease receivables | Lease receivables | Lease receivables | Lease receivables | Lease receivables | Loan receivables | Loan receivables | Loan receivables | Loan receivables | Loan receivables | Loan receivables | Loan receivables | Loan receivables | Loan receivables | |||
Major Markets | Major Markets | Major Markets | Growth Markets | Growth Markets | Growth Markets | Major Markets | Major Markets | Major Markets | Growth Markets | Growth Markets | Growth Markets | |||||||||||||
Financing Receivables | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ending Balance | $23,537 | $22,510 | $17,325 | $16,701 | $6,212 | $5,808 | $8,996 | $9,174 | ' | $6,796 | $7,036 | ' | $2,200 | $2,138 | ' | $14,542 | $13,336 | ' | $10,529 | $9,666 | ' | $4,012 | $3,670 | ' |
Collectively evaluated for impairment | 23,219 | 22,254 | 17,206 | 16,570 | 6,013 | 5,684 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Individually evaluated for impairment | 318 | 256 | 119 | 131 | 199 | 125 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Allowance for Credit Losses | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Allowance for credit losses, beginning balance | 318 | 307 | 180 | 203 | 138 | 104 | 123 | 114 | 118 | 42 | 59 | 79 | 80 | 55 | 40 | 242 | 204 | 189 | 95 | 121 | 125 | 147 | 84 | 64 |
Write-offs | -33 | -15 | -23 | -14 | -10 | -1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Provision | 84 | 28 | -21 | -9 | 105 | 38 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other | -5 | -2 | 1 | 0 | -6 | -2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Allowance for credit losses, ending balance | 365 | 318 | 137 | 180 | 228 | 138 | 123 | 114 | 118 | 42 | 59 | 79 | 80 | 55 | 40 | 242 | 204 | 189 | 95 | 121 | 125 | 147 | 84 | 64 |
Collectively evaluated for impairment | 93 | 98 | 45 | 69 | 48 | 29 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Individually evaluated for impairment | $272 | $220 | $93 | $111 | $179 | $109 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing_Receivables_Details_1
Financing Receivables (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | $191 | $139 |
Lease receivables | ' | ' |
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | 59 | 47 |
Lease receivables | Major Markets | ' | ' |
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | 25 | 27 |
Lease receivables | Growth Markets | ' | ' |
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | 34 | 21 |
Loan receivables | ' | ' |
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | 132 | 92 |
Loan receivables | Major Markets | ' | ' |
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | 40 | 67 |
Loan receivables | Growth Markets | ' | ' |
Financing Receivables on Non-accrual Status | ' | ' |
Total Receivables | $92 | $25 |
Financing_Receivables_Details_2
Financing Receivables (Details 4) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Impaired client loan receivables | ' | ' |
Recorded Investment | $201 | $160 |
Related Allowance | 183 | 143 |
Average Recorded Investment | 173 | 156 |
Interest Income Recognized | 0 | 0 |
Interest Income Recognized on Cash Basis | 0 | 0 |
Major Markets | ' | ' |
Impaired client loan receivables | ' | ' |
Recorded Investment | 79 | 88 |
Related Allowance | 67 | 77 |
Average Recorded Investment | 76 | 90 |
Interest Income Recognized | 0 | 0 |
Interest Income Recognized on Cash Basis | 0 | 0 |
Growth Markets | ' | ' |
Impaired client loan receivables | ' | ' |
Recorded Investment | 122 | 72 |
Related Allowance | 116 | 65 |
Average Recorded Investment | 97 | 65 |
Interest Income Recognized | 0 | 0 |
Interest Income Recognized on Cash Basis | $0 | $0 |
Financing_Receivables_Details_3
Financing Receivables (Details 5) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | $23,537 | $22,510 |
Major Markets | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 17,325 | 16,701 |
Growth Markets | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 6,212 | 5,808 |
Lease receivables | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 8,996 | 9,174 |
Lease receivables | Major Markets | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 6,796 | 7,036 |
Lease receivables | Major Markets | AAA - AA- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 743 | 646 |
Lease receivables | Major Markets | A+ - A- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 1,513 | 1,664 |
Lease receivables | Major Markets | BBB+ - BBB- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 2,111 | 2,285 |
Lease receivables | Major Markets | BB+ - BB | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 1,393 | 1,367 |
Lease receivables | Major Markets | BB- - B+ | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 595 | 552 |
Lease receivables | Major Markets | B - B- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 365 | 399 |
Lease receivables | Major Markets | CCC+ - D- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 76 | 124 |
Lease receivables | Growth Markets | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 2,200 | 2,138 |
Lease receivables | Growth Markets | AAA - AA- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 68 | 86 |
Lease receivables | Growth Markets | A+ - A- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 168 | 223 |
Lease receivables | Growth Markets | BBB+ - BBB- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 957 | 776 |
Lease receivables | Growth Markets | BB+ - BB | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 350 | 450 |
Lease receivables | Growth Markets | BB- - B+ | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 368 | 418 |
Lease receivables | Growth Markets | B - B- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 214 | 127 |
Lease receivables | Growth Markets | CCC+ - D- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 74 | 58 |
Loan receivables | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 14,542 | 13,336 |
Loan receivables | Major Markets | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 10,529 | 9,666 |
Loan receivables | Major Markets | AAA - AA- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 1,151 | 887 |
Loan receivables | Major Markets | A+ - A- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 2,344 | 2,286 |
Loan receivables | Major Markets | BBB+ - BBB- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 3,271 | 3,139 |
Loan receivables | Major Markets | BB+ - BB | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 2,158 | 1,878 |
Loan receivables | Major Markets | BB- - B+ | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 922 | 758 |
Loan receivables | Major Markets | B - B- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 565 | 548 |
Loan receivables | Major Markets | CCC+ - D- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 118 | 170 |
Loan receivables | Growth Markets | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 4,012 | 3,670 |
Loan receivables | Growth Markets | AAA - AA- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 125 | 148 |
Loan receivables | Growth Markets | A+ - A- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 307 | 382 |
Loan receivables | Growth Markets | BBB+ - BBB- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 1,745 | 1,333 |
Loan receivables | Growth Markets | BB+ - BB | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 638 | 773 |
Loan receivables | Growth Markets | BB- - B+ | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 672 | 718 |
Loan receivables | Growth Markets | B - B- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | 391 | 218 |
Loan receivables | Growth Markets | CCC+ - D- | ' | ' |
Gross recorded investment for each class of receivables, by credit quality indicator | ' | ' |
Total | $134 | $99 |
Financing_Receivables_Details_4
Financing Receivables (Details 6) (Global Financing, Financing Receivable Portfolio) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Financial Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 39.00% | 38.00% |
Government Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 14.00% | 16.00% |
Manufacturing Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 14.00% | 14.00% |
Retail Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 8.00% | 9.00% |
Services Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 8.00% | 7.00% |
Healthcare Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 6.00% | 6.00% |
Communications Industry | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 6.00% | 6.00% |
Other industries | ' | ' |
Financing Receivables by Portfolio Segment | ' | ' |
Financing receivables (as a percent) | 4.00% | 4.00% |
Financing_Receivables_Details_5
Financing Receivables (Details 7) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Past Due Financing Receivable | ' | ' |
Total Past Due (> 90 days) | $68 | $82 |
Current | 23,469 | 22,428 |
Total Financing Receivables | 23,537 | 22,510 |
Recorded Investment > 90 Days and Accruing | 41 | 52 |
Troubled debt restructurings of financing receivables | 0 | 0 |
Major Markets | ' | ' |
Past Due Financing Receivable | ' | ' |
Total Financing Receivables | 17,325 | 16,701 |
Growth Markets | ' | ' |
Past Due Financing Receivable | ' | ' |
Total Financing Receivables | 6,212 | 5,808 |
Lease receivables | ' | ' |
Past Due Financing Receivable | ' | ' |
Total Past Due (> 90 days) | 25 | 20 |
Current | 8,970 | 9,154 |
Total Financing Receivables | 8,996 | 9,174 |
Recorded Investment > 90 Days and Accruing | 16 | 13 |
Lease receivables | Major Markets | ' | ' |
Past Due Financing Receivable | ' | ' |
Total Past Due (> 90 days) | 6 | 8 |
Current | 6,789 | 7,028 |
Total Financing Receivables | 6,796 | 7,036 |
Recorded Investment > 90 Days and Accruing | 5 | 5 |
Lease receivables | Growth Markets | ' | ' |
Past Due Financing Receivable | ' | ' |
Total Past Due (> 90 days) | 19 | 11 |
Current | 2,181 | 2,127 |
Total Financing Receivables | 2,200 | 2,138 |
Recorded Investment > 90 Days and Accruing | 11 | 8 |
Loan receivables | ' | ' |
Past Due Financing Receivable | ' | ' |
Total Past Due (> 90 days) | 43 | 63 |
Current | 14,499 | 13,273 |
Total Financing Receivables | 14,542 | 13,336 |
Recorded Investment > 90 Days and Accruing | 25 | 39 |
Loan receivables | Major Markets | ' | ' |
Past Due Financing Receivable | ' | ' |
Total Past Due (> 90 days) | 9 | 27 |
Current | 10,520 | 9,639 |
Total Financing Receivables | 10,529 | 9,666 |
Recorded Investment > 90 Days and Accruing | 6 | 8 |
Loan receivables | Growth Markets | ' | ' |
Past Due Financing Receivable | ' | ' |
Total Past Due (> 90 days) | 34 | 36 |
Current | 3,979 | 3,634 |
Total Financing Receivables | 4,012 | 3,670 |
Recorded Investment > 90 Days and Accruing | $18 | $31 |
Property_Plant_and_Equipment_D
Property, Plant and Equipment (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Millions, unless otherwise specified | |||
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Property, plant and equipment (Note G) | $40,475 | $40,501 | ' |
Less: Accumulated depreciation (Note G) | 26,654 | 26,505 | ' |
Property, plant and equipment - net (Note G) | 13,821 | 13,996 | ' |
Plant and Other Property | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Property, plant and equipment (Note G) | 38,555 | 38,088 | ' |
Less: Accumulated depreciation (Note G) | 25,576 | 25,234 | ' |
Property, plant and equipment - net (Note G) | 12,979 | 12,854 | 12,457 |
Land and land improvements | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Property, plant and equipment (Note G) | 706 | 747 | ' |
Buildings and building improvements | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Property, plant and equipment (Note G) | 9,680 | 9,610 | ' |
Plant, laboratory and office equipment | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Property, plant and equipment (Note G) | 28,169 | 27,731 | ' |
Rental machines | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Property, plant and equipment (Note G) | 1,920 | 2,414 | ' |
Less: Accumulated depreciation (Note G) | 1,078 | 1,271 | ' |
Property, plant and equipment - net (Note G) | $842 | $1,142 | ' |
Investments_and_Sundry_Assets_1
Investments and Sundry Assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Investments and Sundry Assets | ' | ' |
Deferred transition and setup costs and other deferred arrangements | $1,652 | $1,630 |
Derivatives-noncurrent | 401 | 585 |
Alliance investments - equity method | 110 | 120 |
Alliance investments - non-equity method | 200 | 226 |
Prepaid software | 352 | 306 |
Long-term deposits | 316 | 318 |
Other receivables | 174 | 204 |
Employee benefit-related | 392 | 439 |
Prepaid income taxes | 305 | 459 |
Other assets | 738 | 735 |
Total | $4,639 | $5,021 |
Intangible_Assets_Including_Go2
Intangible Assets Including Goodwill (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Intangible asset balances by major asset class: | ' | ' | ' |
Gross Carrying Amount | $6,930 | $6,679 | ' |
Accumulated Amortization | -3,059 | -2,892 | ' |
Net Carrying Amount | 3,871 | 3,787 | ' |
Net carrying amount increase/(decrease) | 84 | ' | ' |
Intangible asset amortization expense | 1,351 | 1,284 | 1,226 |
Intangible assets retired and fully amortized | 1,177 | ' | ' |
Impairment Of Intangible Assets Excluding Goodwill | 0 | 0 | ' |
Capitalized software | ' | ' | ' |
Intangible asset balances by major asset class: | ' | ' | ' |
Gross Carrying Amount | 1,494 | 1,527 | ' |
Accumulated Amortization | -699 | -665 | ' |
Net Carrying Amount | 794 | 861 | ' |
Acquired Intangibles | ' | ' | ' |
Intangible asset balances by major asset class: | ' | ' | ' |
Intangible asset amortization expense | 767 | 709 | ' |
Client relationships | ' | ' | ' |
Intangible asset balances by major asset class: | ' | ' | ' |
Gross Carrying Amount | 2,148 | 2,103 | ' |
Accumulated Amortization | -977 | -961 | ' |
Net Carrying Amount | 1,171 | 1,142 | ' |
Completed technology | ' | ' | ' |
Intangible asset balances by major asset class: | ' | ' | ' |
Gross Carrying Amount | 2,910 | 2,709 | ' |
Accumulated Amortization | -1,224 | -1,112 | ' |
Net Carrying Amount | 1,687 | 1,597 | ' |
In-process R&D | ' | ' | ' |
Intangible asset balances by major asset class: | ' | ' | ' |
Gross Carrying Amount | 13 | 28 | ' |
Net Carrying Amount | 13 | 28 | ' |
Patents/trademarks | ' | ' | ' |
Intangible asset balances by major asset class: | ' | ' | ' |
Gross Carrying Amount | 358 | 281 | ' |
Accumulated Amortization | -154 | -127 | ' |
Net Carrying Amount | 204 | 154 | ' |
Other intangible assets | ' | ' | ' |
Intangible asset balances by major asset class: | ' | ' | ' |
Gross Carrying Amount | 7 | 31 | ' |
Accumulated Amortization | -5 | -27 | ' |
Net Carrying Amount | $2 | $3 | ' |
Intangible_Assets_Including_Go3
Intangible Assets Including Goodwill (Details 2) (USD $) | Dec. 31, 2013 |
In Millions, unless otherwise specified | |
Future amortization expense, by year | ' |
2014 | $1,267 |
2015 | 884 |
2016 | 660 |
2017 | 477 |
2018 | 322 |
Capitalized Software | ' |
Future amortization expense, by year | ' |
2014 | 484 |
2015 | 247 |
2016 | 64 |
Acquired Intangibles | ' |
Future amortization expense, by year | ' |
2014 | 784 |
2015 | 637 |
2016 | 595 |
2017 | 477 |
2018 | $322 |
Intangible_Assets_Including_Go4
Intangible Assets Including Goodwill (Details 3) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Changes in Goodwill Balances | ' | ' |
Beginning Balance | $29,247 | $26,213 |
Goodwill Additions | 2,246 | 2,894 |
Purchase Price Adjustments | 61 | -30 |
Divestitures | -7 | -22 |
Foreign Currency Translation and Other Adjustments | -363 | 192 |
Ending Balance | 31,184 | 29,247 |
Goodwill impairment losses | 0 | 0 |
Goodwill accumulated impairment losses | 0 | 0 |
Global Business Services | ' | ' |
Changes in Goodwill Balances | ' | ' |
Beginning Balance | 4,357 | 4,313 |
Goodwill Additions | ' | 5 |
Purchase Price Adjustments | 0 | 0 |
Divestitures | -3 | -2 |
Foreign Currency Translation and Other Adjustments | -21 | 42 |
Ending Balance | 4,334 | 4,357 |
Global Technology Services | ' | ' |
Changes in Goodwill Balances | ' | ' |
Beginning Balance | 2,916 | 2,646 |
Goodwill Additions | 1,246 | 264 |
Purchase Price Adjustments | 17 | ' |
Divestitures | ' | 0 |
Foreign Currency Translation and Other Adjustments | -50 | 6 |
Ending Balance | 4,129 | 2,916 |
Software | ' | ' |
Changes in Goodwill Balances | ' | ' |
Beginning Balance | 20,405 | 18,121 |
Goodwill Additions | 987 | 2,182 |
Purchase Price Adjustments | 11 | -30 |
Divestitures | -4 | -6 |
Foreign Currency Translation and Other Adjustments | -279 | 137 |
Ending Balance | 21,121 | 20,405 |
Systems and Technology | ' | ' |
Changes in Goodwill Balances | ' | ' |
Beginning Balance | 1,568 | 1,133 |
Goodwill Additions | 13 | 443 |
Purchase Price Adjustments | 33 | 0 |
Divestitures | ' | -14 |
Foreign Currency Translation and Other Adjustments | -14 | 6 |
Ending Balance | $1,601 | $1,568 |
Borrowings_Short_Term_Debt_Tab
Borrowings (Short Term Debt Table) (Details 1) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Borrowings | ' | ' |
Commercial paper | $2,458 | $1,800 |
Short-term loans | 551 | 1,789 |
Long-term debt - current maturities | 3,854 | 5,593 |
Short Term Debt | 6,862 | 9,181 |
Debt Disclosure | ' | ' |
Tangible Assets Ratio | 10.00% | ' |
Net Interest Expense Ratio | '2.20 to 1 | ' |
Default provision on credit facility | $500 | ' |
Commercial paper | ' | ' |
Debt Disclosure | ' | ' |
Weighted-average interest rates for short-term loans (as a percent) | 0.10% | 0.10% |
Short-term loans | ' | ' |
Debt Disclosure | ' | ' |
Weighted-average interest rates for short-term loans (as a percent) | 5.10% | 1.80% |
Borrowings_Pre_Swap_Borrowing_
Borrowings (Pre Swap Borrowing Table) (Details2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | ||
In Millions, unless otherwise specified | ||||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $37,036 | $29,660 | ||
Less: Net unamortized discount | 872 | 865 | ||
Add: Fair value adjustment | 546 | [1] | 886 | [1] |
Long-Term Debt, including current portion | 36,710 | 29,680 | ||
Long-term debt - current maturities | 3,854 | 5,593 | ||
Total long-term debt (excluding current portion) | 32,856 | 24,088 | ||
U.S. dollar notes and debentures | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 27,887 | 25,656 | ||
0.70% Notes and Debentures, maturing in 2014-2015 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 6,456 | [2] | 7,131 | |
Debt instrument, stated interest rate percentage (as a percent) | 0.70% | ' | ||
0.70% Notes and Debentures, maturing in 2014-2015 | IBM International Group Capital LLC | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 17 | ' | ||
Percentage of ownership in indirect subsidiary (percent, expressed as a decimal) | 100.00% | ' | ||
3.05% Notes and Debentures, maturing in 2016-2017 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 8,465 | 5,807 | ||
Debt instrument, stated interest rate percentage (as a percent) | 3.05% | ' | ||
3.99% Notes and Debentures, maturing in 2018-2021 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 6,206 | 7,457 | ||
Debt instrument, stated interest rate percentage (as a percent) | 3.99% | ' | ||
1.88% Notes and debentures, maturing in 2022 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 1,000 | 1,000 | ||
Debt instrument, stated interest rate percentage (as a percent) | 1.88% | ' | ||
3.38% Notes and debentures, maturing in 2023 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 1,500 | ' | ||
Debt instrument, stated interest rate percentage (as a percent) | 3.38% | ' | ||
7.00% Notes and Debentures, maturing in 2025 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 600 | 600 | ||
Debt instrument, stated interest rate percentage (as a percent) | 7.00% | ' | ||
6.22% Notes and Debentures, maturing in 2027 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 469 | 469 | ||
Debt instrument, stated interest rate percentage (as a percent) | 6.22% | ' | ||
6.50% Notes and Debentures, maturing in 2028 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 313 | 313 | ||
Debt instrument, stated interest rate percentage (as a percent) | 6.50% | ' | ||
5.88% Notes and Debentures, maturing in 2032 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 600 | 600 | ||
Debt instrument, stated interest rate percentage (as a percent) | 5.88% | ' | ||
8.00% Notes and Debentures, maturing in 2038 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 83 | 83 | ||
Debt instrument, stated interest rate percentage (as a percent) | 8.00% | ' | ||
5.60% Notes and Debentures, maturing in 2039 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 745 | 745 | ||
Debt instrument, stated interest rate percentage (as a percent) | 5.60% | ' | ||
4.00% Notes and Debentures, maturing in 2042 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 1,107 | 1,107 | ||
Debt instrument, stated interest rate percentage (as a percent) | 4.00% | ' | ||
7.00% Notes and Debentures, maturing in 2045 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 27 | 27 | ||
Debt instrument, stated interest rate percentage (as a percent) | 7.00% | ' | ||
7.13% Notes and Debentures, maturing in 2096 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 316 | 316 | ||
Debt instrument, stated interest rate percentage (as a percent) | 7.13% | ' | ||
2.8% Euros maturing in 2014 - 2025 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 5,894 | 2,338 | ||
Debt instrument, stated interest rate percentage (as a percent) | 2.80% | ' | ||
2.75% Pound sterling maturing in 2017 - 2020 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 1,254 | 12 | ||
Debt instrument, stated interest rate percentage (as a percent) | 2.75% | ' | ||
0.6% Japanese yen maturing in 2014-2017 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 1,057 | 878 | ||
Debt instrument, stated interest rate percentage (as a percent) | 0.60% | ' | ||
3.8% Swiss francs maturing in 2015-2020 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 181 | 178 | ||
Debt instrument, stated interest rate percentage (as a percent) | 3.80% | ' | ||
2.2% Canadian Maturing 2017 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | 471 | 502 | ||
Debt instrument, stated interest rate percentage (as a percent) | 2.20% | ' | ||
8.81% Other maturing in 2015-2017 | ' | ' | ||
Debt Disclosure | ' | ' | ||
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $291 | $95 | ||
Debt instrument, stated interest rate percentage (as a percent) | 8.81% | ' | ||
[1] | *B B B B B The portion of the companybs fixed-rate debt obligations that is hedged is reflected in the ConsolidatedStatement of Financial Position as an amount equal to the sum of the debtbs carrying value plus a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates. | |||
[2] | Includes $17 million of debt securities issued by IBM International Group Capital, LLC, which is an indirect, 100 percent owned finance subsidiary of the company and will mature in 2014. Debt securities issued by IBM International Group Capital LLC are fully and unconditionally guaranteed by the company. |
Borrowings_Post_Swap_Borrowing
Borrowings ( Post Swap Borrowing Tables) (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | ||
In Millions, unless otherwise specified | ||||
Borrowings | ' | ' | ||
Fixed-rate debt | $30,123 | $24,049 | ||
Floating-rate debt | 6,587 | [1] | 5,631 | [1] |
Long-Term Debt, including current portion | 36,710 | 29,680 | ||
Fixed-rate debt, Average Rate (as a percent) | 3.07% | 3.43% | ||
Floating-rate debt, Average Rate (as a percent) | 0.87% | 1.91% | ||
Interest rate swaps | ' | ' | ||
Derivative | ' | ' | ||
Notional amount | $3,106 | $4,252 | ||
[1] | Includes $3,106 million in 2013 and $4,252 million in 2012 of notional interest rate swaps that effectively convert the fixed-rate long-term debt into floating-rate debt. (See note D, bFinancial Instruments,b on pagesB 102 through 106. |
Borrowings_PreSwap_annual_cont
Borrowings ( Pre-Swap annual contractual maturities) (Details 4) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Pre-swap annual contractual maturities of long-term debt outstanding | ' | ' |
2014 | $3,854 | ' |
2015 | 4,566 | ' |
2016 | 4,114 | ' |
2017 | 5,386 | ' |
2018 | 2,662 | ' |
2019 and beyond | 16,453 | ' |
Aggregate carrying amount of long-term borrowings before adjusting for unamortized discount and fair value adjustment | $37,036 | $29,660 |
Borrowings_Interest_on_Debt_De
Borrowings (Interest on Debt) (Details 6) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Interest on Debt | ' | ' | ' |
Cost of financing | $587,000,000 | $545,000,000 | $553,000,000 |
Interest expense | 405,000,000 | 470,000,000 | 402,000,000 |
Net investment derivative activity | -3,000,000 | -11,000,000 | 9,000,000 |
Interest capitalized | 22,000,000 | 18,000,000 | 9,000,000 |
Total interest paid and accrued | 1,011,000,000 | 1,022,000,000 | 973,000,000 |
Credit Agreement | ' | ' | ' |
Line of Credit Facility [Line Items] | ' | ' | ' |
Revolving lines of credit, term | '5 years | ' | ' |
Revolving lines of credit, amount | 10,000,000,000 | ' | ' |
Revolving lines or credit, extended term | '1 year | ' | ' |
Lines of credit, expenses | 5,400,000 | 5,300,000 | 5,000,000 |
Revolving lines of credit, additional amount | $2,000,000,000 | ' | ' |
Other_Liabilities_Narratives_D
Other Liabilities (Narratives) (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Non-ARO environmental liabilities | ' | ' |
Environmental Loss | ' | ' |
Accrual for environmental loss contingencies | $245 | $229 |
ARO liabilities | ' | ' |
Environmental Loss | ' | ' |
Accrual for environmental loss contingencies | $160 | $171 |
Other_Liabilities_Other_Liabil
Other Liabilities (Other Liabilities Reconciliation) (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Noncurrent liabilities- | ' | ' |
Income tax reserves | $3,189 | $2,527 |
Excess 401(k) Plus Plan | 1,673 | 1,501 |
Disability benefits | 699 | 890 |
Derivative liabilities | 126 | 78 |
Special restructuring actions | 440 | 430 |
Workforce reductions | 500 | 473 |
Deferred taxes | 1,741 | 448 |
Other taxes payable | 186 | 24 |
Environmental accruals | 231 | 216 |
Warranty accruals | 171 | 167 |
Asset retirement obligations | 129 | 127 |
Aquistition-related accruals | 205 | 35 |
Other | 644 | 691 |
Total | $9,934 | $7,607 |
Other_Liabilities_Current_and_
Other Liabilities (Current and Noncurrent Liabilities Rollforward) (Details3) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2013 |
Restructuring Reserve | ' |
Liability, current, at the beginning of the period | $30 |
Payments | -30 |
Other Adjustments | 28 |
Liability, current, at the end of the period | 27 |
Liability, noncurrent, at the beginning of the period | 430 |
Other Adjustments | 10 |
Liability, noncurrent, at the end of the period | 440 |
Workforce | ' |
Restructuring Reserve | ' |
Liability, current, at the beginning of the period | 28 |
Payments | -29 |
Other Adjustments | 29 |
Liability, current, at the end of the period | 27 |
Liability, noncurrent, at the beginning of the period | 430 |
Other Adjustments | 10 |
Liability, noncurrent, at the end of the period | 440 |
Space | ' |
Restructuring Reserve | ' |
Liability, current, at the beginning of the period | 2 |
Payments | -1 |
Other Adjustments | -1 |
Liability, current, at the end of the period | $0 |
Equity_Activity_Narratives_Det
Equity Activity (Narratives) (Detail 1) (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Equity Activity | ' | ' | ' |
Common stock, Shares authorized (in shares) | 4,687,500,000 | 4,687,500,000 | ' |
Common stock, par value (in dollars per share) | $0.20 | $0.20 | ' |
Common stock, outstanding (in shares) | 1,054,390,937 | ' | ' |
Preferred stock, shares authorized (in shares) | 150,000,000 | ' | ' |
Preferred stock, par value (in dollars per share) | $0.01 | ' | ' |
Common stock repurchased (in shares) | 73,121,942 | 61,246,371 | 88,683,716 |
Common stock repurchased (in dollars) | $13,993 | $12,008 | $15,034 |
Common stock repurchase authorization available (in dollars) | 14,659 | ' | ' |
Common stock issued under employee plans (in shares) | 9,961,389 | 15,091,320 | 20,669,785 |
Issue of treasury shares as a result of exercises of stock options (in shares) | 1,849,883 | 2,746,169 | 4,920,198 |
Purchases of treasury stock under employee plans (in shares) | 1,666,069 | 2,406,007 | 1,717,246 |
Value of common shares remitted by employees in order to satisfy tax withholding requirements | $336 | $468 | $289 |
Equity_Activity_Reclassificati
Equity Activity (Reclassification and Taxes Related Tables) (Details 2) (USD $) | 12 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | ||
Other comprehensive income/(loss), before tax | ' | ' | ' | ||
Foreign currency translation adjustments, before tax | ($1,335) | ($44) | ($693) | ||
Net changes related to available-for-sale securities, before tax | ' | ' | ' | ||
Unrealized gains/(losses) arising during the period, before tax | -4 | 8 | -14 | ||
Reclassification of (gains)/losses to net income, before tax | -8 | -42 | -231 | ||
Subsequent changes in previously impaired securities arising during the period, before tax | 4 | 20 | 4 | ||
Total net changes related to available-for-sale securities | -8 | -14 | -241 | ||
Unrealized gains/(losses) on cash flow hedges, before tax | ' | ' | ' | ||
Unrealized gains/(losses) arising during the period, before tax | 43 | 32 | -266 | ||
Reclassification of (gains)/losses to net income, before tax | -166 | -253 | 511 | ||
Total unrealized gains/(losses) on cash flow hedges | -123 | -220 | 245 | ||
Retirement-related benefit plans, before tax | ' | ' | ' | ||
Prior service costs/(credits), before tax | 16 | ' | -28 | ||
Net (losses)/gains arising during the period, before tax | 5,369 | -7,489 | -5,463 | ||
Curtailments and settlements, before tax | -3 | -2 | 11 | ||
Amortization of prior service (credits)/costs, before tax | -114 | -148 | -157 | ||
Amortization of net (gains)/losses, before tax | 3,499 | 2,457 | 1,847 | ||
Total retirement-related benefit plans | 8,767 | -5,182 | -3,790 | ||
Other Comprehensive Income (Loss), before Tax | 7,301 | -5,460 | -4,479 | ||
Other comprehensive income/(loss), tax | ' | ' | ' | ||
Foreign currency translation adjustments, tax | -66 | 10 | -18 | ||
Net changes related to available-for-sale securities, tax | ' | ' | ' | ||
Unrealized gains/(losses) arising during the period, tax | 2 | -4 | 5 | ||
Subsequent changes in previously impaired securities arising during the period, tax | -1 | -8 | -1 | ||
Total net changes related to available-for-sale securities, tax | 3 | 5 | 91 | ||
Unrealized gains/(losses) on cash flow hedges, tax | ' | ' | ' | ||
Unrealized gains/(losses) arising during the period, tax | -15 | -27 | 105 | ||
Total unrealized gains/(losses) on cash flow hedges, tax | 47 | 59 | -77 | ||
Retirement-related benefit plans, tax | ' | ' | ' | ||
Prior service costs/(credits), tax | 0 | ' | 7 | ||
Net (losses)/gains arising during the period, tax | -1,974 | 2,327 | 1,897 | ||
Curtailments and settlements, tax | 1 | 0 | -3 | ||
Amortization of prior service (credits)/costs, tax | 40 | 59 | 62 | ||
Amortization of net (gains)/losses, tax | -1,195 | -874 | -619 | ||
Total retirement-related benefit plans, tax | -3,128 | 1,513 | 1,343 | ||
Other comprehensive income/(loss), tax | -3,144 | 1,587 | 1,339 | ||
Other comprehensive income/(loss), net of tax | ' | ' | ' | ||
Foreign currency translation adjustments, net of tax | -1,401 | -34 | -711 | ||
Net changes related to available-for-sale securities, net of tax | ' | ' | ' | ||
Unrealized gains/(losses) arising during the period, net of tax | -3 | 4 | -9 | ||
Reclassification of (gains)/losses to net income, net of tax | -5 | [1] | -25 | [1] | -143 |
Subsequent changes in previously impaired securities arising during the period, net of tax | 3 | 12 | 3 | ||
Total net changes related to available-for-sale securities, net of tax | -5 | -9 | -150 | ||
Unrealized gains/(losses) on cash flow hedges, net of tax | ' | ' | ' | ||
Unrealized gains/(losses) arising during the period, net of tax | 28 | 5 | -162 | ||
Total unrealized gains/(losses) on cash flow hedges, net of tax | -76 | -161 | 167 | ||
Retirement-related benefit plans, net of tax | ' | ' | ' | ||
Prior service costs/(credits), net of tax | 16 | ' | -22 | ||
Net (losses)/gains arising during the period, net of tax | 3,395 | -5,162 | -3,566 | ||
Curtailments and settlements, net of tax | -2 | -2 | 7 | ||
Amortization of prior service (credits)/costs, net of tax | -75 | -89 | -94 | ||
Amortization of net (gains)/losses, net of tax | 2,304 | 1,583 | 1,227 | ||
Total retirement-related benefit plans, net of tax | 5,639 | -3,669 | -2,448 | ||
Other comprehensive income/(loss) (Note L) | 4,157 | -3,874 | -3,142 | ||
Cost of sales | ' | ' | ' | ||
Unrealized gains/(losses) on cash flow hedges, before tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, before tax | 34 | -7 | 182 | ||
Unrealized gains/(losses) on cash flow hedges, tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, tax | -14 | -6 | -61 | ||
Unrealized gains/(losses) on cash flow hedges, net of tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, net of tax | 21 | -13 | 121 | ||
SG&A expense | ' | ' | ' | ||
Unrealized gains/(losses) on cash flow hedges, before tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, before tax | -39 | -16 | 75 | ||
Unrealized gains/(losses) on cash flow hedges, tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, tax | 14 | 4 | -23 | ||
Unrealized gains/(losses) on cash flow hedges, net of tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, net of tax | -25 | -12 | 52 | ||
Other (income) and expense | ' | ' | ' | ||
Net changes related to available-for-sale securities, before tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, before tax | -8 | -42 | -231 | ||
Unrealized gains/(losses) on cash flow hedges, before tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, before tax | -162 | -237 | 247 | ||
Net changes related to available-for-sale securities, tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, tax | 2 | 17 | 88 | ||
Unrealized gains/(losses) on cash flow hedges, tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, tax | 62 | 91 | -3 | ||
Net changes related to available-for-sale securities, net of tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, net of tax | -5 | -25 | -143 | ||
Unrealized gains/(losses) on cash flow hedges, net of tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, net of tax | -99 | -146 | 244 | ||
Interest expense | ' | ' | ' | ||
Unrealized gains/(losses) on cash flow hedges, before tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, before tax | 0 | 6 | 8 | ||
Unrealized gains/(losses) on cash flow hedges, tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, tax | 0 | -3 | -95 | ||
Unrealized gains/(losses) on cash flow hedges, net of tax | ' | ' | ' | ||
Reclassification of (gains)/losses to net income, net of tax | $0 | $3 | ($88) | ||
[1] | Includes writedowns of $2.0 million in 2012. |
Equity_Activity_AOCI_Table_Det
Equity Activity (AOCI Table) (Details 3) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ' | ' | ' | |||
Balance at the Beginning of the Period | ($25,759) | ($21,885) | ($18,743) | |||
Other comprehensive income before reclassifications | 2,036 | -5,177 | -4,461 | |||
Amount reclassified from accumulated other comprehensive income | 2,121 | 1,303 | 1,319 | |||
Total change for the period | 4,157 | -3,874 | -3,142 | |||
Balance at the End of the Period | -21,602 | -25,759 | -21,885 | |||
Net Unrealized Gains/(Losses) on Cash Flow Hedges | ' | ' | ' | |||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ' | ' | ' | |||
Balance at the Beginning of the Period | -90 | 71 | -96 | |||
Other comprehensive income before reclassifications | 28 | 5 | -162 | |||
Amount reclassified from accumulated other comprehensive income | -103 | -167 | 329 | |||
Total change for the period | -76 | -161 | 167 | |||
Balance at the End of the Period | -165 | -90 | 71 | |||
Foreign Currency Translation Adjustments | ' | ' | ' | |||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ' | ' | ' | |||
Balance at the Beginning of the Period | 1,733 | [1] | 1,767 | [1] | 2,478 | [1] |
Other comprehensive income before reclassifications | -1,401 | [1] | -34 | [1] | -711 | [1] |
Amount reclassified from accumulated other comprehensive income | 0 | [1] | 0 | [1] | 0 | [1] |
Total change for the period | -1,401 | [1] | -34 | [1] | -711 | [1] |
Balance at the End of the Period | 332 | [1] | 1,733 | [1] | 1,767 | [1] |
Net Change Retirement-Related Benefit Plans | ' | ' | ' | |||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ' | ' | ' | |||
Balance at the Beginning of the Period | -27,406 | -23,737 | -21,289 | |||
Other comprehensive income before reclassifications | 3,409 | -5,164 | -3,581 | |||
Amount reclassified from accumulated other comprehensive income | 2,229 | 1,495 | 1,133 | |||
Total change for the period | 5,639 | -3,669 | -2,448 | |||
Balance at the End of the Period | -21,767 | -27,406 | -23,737 | |||
Net Unrealized Gains/(Losses) on Available-For-Sale Securities | ' | ' | ' | |||
Accumulated Other Comprehensive Income (Loss) Net of Tax | ' | ' | ' | |||
Balance at the Beginning of the Period | 4 | 13 | 164 | |||
Other comprehensive income before reclassifications | 0 | 16 | -7 | |||
Amount reclassified from accumulated other comprehensive income | -5 | -25 | -143 | |||
Total change for the period | -5 | -9 | -150 | |||
Balance at the End of the Period | ($1) | $4 | $13 | |||
[1] | * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. |
Contingencies_and_Commitments_
Contingencies and Commitments (Contingencies) (Details 1) (USD $) | Dec. 31, 2013 | Oct. 12, 2012 | Sep. 30, 2012 | Jul. 10, 2013 | Dec. 31, 2013 | Jul. 25, 2013 | Mar. 31, 2011 | Feb. 13, 2014 | Jul. 18, 2012 |
In Millions, unless otherwise specified | countries | Litigation in United Kingdom regarding defined benefit plans (C Plan) | Litigation in United Kingdom regarding defined benefit plans (C Plan) | SCO Group | Former IBM UK Defined Benefit Plan Participants | Civil enforcement action with the SEC | Civil enforcement action with the SEC | State of Indiana | State of Indiana |
claims | IBM United Kingdom Limited | IBM Korea, LG IBM, IBM (China) Investment Company Limited and IBM Global Services (China) Co., Ltd. | IBM Korea, LG IBM, IBM (China) Investment Company Limited and IBM Global Services (China) Co., Ltd. | Pending Litigation | Pending Litigation | ||||
claims | |||||||||
Contingencies: | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Clients presence in number of countries | 175 | ' | ' | ' | ' | ' | ' | ' | ' |
Loss Contingencies | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of breaches of contract and copyright claims dismissed | ' | ' | ' | 7 | ' | ' | ' | ' | ' |
Number of breaches of contract and copyright claims filed | ' | ' | ' | 10 | ' | ' | ' | ' | ' |
Number of tortious interference claims dismissed | ' | ' | ' | 1 | ' | ' | ' | ' | ' |
Amount of settlement to be paid/(received) | ' | ' | ' | ' | ' | ' | $10 | ($50) | ($52) |
Claims pending | ' | ' | ' | ' | 290 | ' | ' | ' | ' |
Additional pre-tax retirement-related obligation recorded | ' | ' | 162 | ' | ' | ' | ' | ' | ' |
Retirement age of employee under the C Plan | ' | '60 years | ' | ' | ' | ' | ' | ' | ' |
Retirement age of employee under the C Plan before modifications | ' | '63 years | ' | ' | ' | ' | ' | ' | ' |
Profits gained as a result of the conduct alleged in the SEC's complaint | ' | ' | ' | ' | ' | ' | 5.3 | ' | ' |
Prejudgment interest | ' | ' | ' | ' | ' | ' | 2.7 | ' | ' |
Civil penalty | ' | ' | ' | ' | ' | ' | 2 | ' | ' |
Period for which reports are to be submitted to SEC and court on certain matters, including those relating to compliance with the FCPA | ' | ' | ' | ' | ' | '2 years | ' | ' | ' |
Income tax examination - Brazil, total potential liability | $700 | ' | ' | ' | ' | ' | ' | ' | ' |
Contingencies_and_Commitments_1
Contingencies and Commitments (Commitments) (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Extended lines of credit | ' | ' |
Commitments, guarantees: | ' | ' |
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients | $5,028 | $4,719 |
Financing for client purchase agreements | ' | ' |
Commitments, guarantees: | ' | ' |
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients | 1,769 | 1,513 |
Financial guarantees | ' | ' |
Commitments, guarantees: | ' | ' |
Guarantor obligations, maximum exposure | $44 | $65 |
Taxes_Narratives_Details_1
Taxes (Narratives) (Details 1) (USD $) | 12 Months Ended | |||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
Foreign and Domestic Loss Carryforward | ' | ' | ' | ' |
Tax effect of foreign and domestic loss carryforwards | $626,000,000 | ' | ' | ' |
Tax effect of foreign and domestic tax credit carryforwards | 1,007,000,000 | ' | ' | ' |
Unrecognized tax benefit on certain foreign tax losses appealed with taxing authority | 1,141,000,000 | ' | ' | ' |
Offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, state income taxes and timing adjustments benefit | 556,000,000 | ' | ' | ' |
Net unrecognized tax benefit amount that, if recognized, would favorably affect the company's effective tax rate | 3,902,000,000 | 5,099,000,000 | 5,090,000,000 | ' |
Recognized interest expense (benefit) and penalties | -93,000,000 | 134,000,000 | 129,000,000 | ' |
Interest and penalties accrued | 417,000,000 | 533,000,000 | ' | ' |
Significant reduction in unrecognized tax benefits that is reasonably possible in the next 12 months | 101,000,000 | ' | ' | ' |
Undistributed earnings of non-U.S. subsidiaries | 52,300,000,000 | ' | ' | ' |
Increase (decrease) in amount of unrecognized tax benefits | -1,214,000,000 | ' | ' | ' |
Unrecognized Tax Benefits | 4,458,000,000 | 5,672,000,000 | 5,575,000,000 | 5,293,000,000 |
Income Tax Examination [Line Items] | ' | ' | ' | ' |
Prepaid Taxes | 305,000,000 | 459,000,000 | ' | ' |
IRS | ' | ' | ' | ' |
Income Tax Examination [Line Items] | ' | ' | ' | ' |
Effective income tax rate benefitted ( in percent) | 11.50% | ' | ' | ' |
Indian Tax Authorities | ' | ' | ' | ' |
Income Tax Examination [Line Items] | ' | ' | ' | ' |
Tax assessment notice amount | 866,000,000 | ' | ' | ' |
Income Tax Examination, Likelihood of Unfavorable Settlement | 'The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability. | ' | ' | ' |
Income Tax Examination, Year under Examination | '2009 | ' | ' | ' |
Prepaid Taxes | $433,000,000 | ' | ' | ' |
Minimum | ' | ' | ' | ' |
Foreign and Domestic Loss Carryforward | ' | ' | ' | ' |
Number of years for which carryforwards are available | '2 years | ' | ' | ' |
Maximum | ' | ' | ' | ' |
Foreign and Domestic Loss Carryforward | ' | ' | ' | ' |
Number of years for which carryforwards are available | '10 years | ' | ' | ' |
Taxes_Income_before_Income_Tax
Taxes (Income before Income Taxes) (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Income before income taxes | ' | ' | ' |
U.S. operations | $6,857 | $9,668 | $9,716 |
Non-U.S. operations | 12,667 | 12,234 | 11,287 |
Income before income taxes | $19,524 | $21,902 | $21,003 |
Taxes_Provision_for_Income_Tax
Taxes (Provision for Income Taxes) (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Schedule Of Income Tax Expense Benefit By Geographic Operations [Line Items] | ' | ' | ' |
Income Tax Expense (Benefit) | $3,041 | $5,298 | $5,148 |
U.S. Operations | ' | ' | ' |
Schedule Of Income Tax Expense Benefit By Geographic Operations [Line Items] | ' | ' | ' |
Income Tax Expense (Benefit) | 993 | 2,582 | 2,141 |
Non-U.S. Operations | ' | ' | ' |
Schedule Of Income Tax Expense Benefit By Geographic Operations [Line Items] | ' | ' | ' |
Income Tax Expense (Benefit) | $2,048 | $2,716 | $3,007 |
Taxes_Component_of_Income_Tax_
Taxes (Component of Income Tax Provision) (Details 4) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
U.S. federal | ' | ' | ' |
Current | $1,406 | $1,361 | $268 |
Deferred | -652 | 403 | 909 |
Total | 754 | 1,764 | 1,177 |
U.S. state and local | ' | ' | ' |
Current | 178 | 134 | 429 |
Deferred | -321 | 289 | 81 |
Total | -143 | 423 | 510 |
Non-U.S. | ' | ' | ' |
Current | 3,067 | 3,006 | 3,239 |
Deferred | -637 | 105 | 222 |
Total | 2,430 | 3,111 | 3,461 |
Total provision for income taxes | 3,041 | 5,298 | 5,148 |
Provision for social security, real estate, personal property and other taxes | 4,198 | 4,331 | 4,289 |
Total taxes included in net income | $7,239 | $9,629 | $9,437 |
Taxes_Reconciliation_of_Tax_Ra
Taxes (Reconciliation of Tax Rates) (Details 5) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Reconciliation of the statutory U.S. federal tax rate to the company's effective tax rate | ' | ' | ' |
Statutory rate | 35.00% | 35.00% | 35.00% |
Foreign tax differential | -14.00% | -11.00% | -10.00% |
State and local | 0.00% | 1.00% | 2.00% |
Domestic incentives | -3.00% | -1.00% | -1.00% |
Other | -2.00% | 0.00% | -1.00% |
Effective rate | 16.00% | 24.00% | 25.00% |
Taxes_Deferred_Taxes_Details_6
Taxes (Deferred Taxes) (Details 6) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Deferred Tax Assets | ' | ' |
Retirement benefits | $3,704 | $5,870 |
Share-based and other compensation | 1,262 | 1,666 |
Domestic tax loss/credit carryforwards | 982 | 954 |
Deferred income | 964 | 1,018 |
Foreign tax loss/credit carryforwards | 651 | 681 |
Bad debt, inventory and warranty reserves | 592 | 586 |
Depreciation | 382 | 456 |
Other | 1,774 | 1,659 |
Gross deferred tax assets | 10,311 | 12,890 |
Less: valuation allowance | 734 | 1,187 |
Net deferred tax assets | 9,577 | 11,703 |
Deferred Tax Liabilities | ' | ' |
Depreciation | 1,346 | 1,378 |
Retirement benefits | 1,219 | 257 |
Goodwill and intangible assets | 1,173 | 957 |
Leases | 1,119 | 2,216 |
Software development costs | 558 | 542 |
Deferred transition costs | 424 | 440 |
Other | 841 | 993 |
Gross deferred tax liabilities | $6,680 | $6,783 |
Taxes_Unrecognized_Tax_Benefit
Taxes (Unrecognized Tax Benefit) (Details 7) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
A reconciliation of the beginning and ending amount of unrecognized tax benefits | ' | ' | ' |
Balance at January 1 | $5,672 | $5,575 | $5,293 |
Additions based on tax positions related to the current year | 829 | 401 | 672 |
Additions for tax positions of prior years | 417 | 215 | 379 |
Reductions for tax positions of prior years (including impacts due to a lapse in statute) | -2,201 | -425 | -538 |
Settlements | -259 | -94 | -231 |
Balance at December 31 | $4,458 | $5,672 | $5,575 |
Research_Development_and_Engin1
Research, Development and Engineering (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Research and Development [Abstract] | ' | ' | ' |
Scientific research, application of scientific advances, services and application | $5,959 | $6,034 | $5,990 |
Software-related expenses | 3,077 | 3,078 | 3,097 |
Product-related engineering expenses | 267 | 268 | 267 |
RD&E expense | $6,226 | $6,302 | $6,258 |
Earnings_Per_Share_of_Common_S2
Earnings Per Share of Common Stock (Details) (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Weighted-average number of shares on which earnings per share calculations are based | ' | ' | ' |
Basic (in shares) | 1,094,486,604 | 1,142,508,521 | 1,196,951,006 |
Add - incremental shares under stock-based compensation plans | 6,751,240 | 10,868,426 | 14,241,131 |
Add - incremental shares associated with contingently issuable shares | 1,804,313 | 2,072,370 | 2,575,848 |
Assuming dilution | 1,103,042,156 | 1,155,449,317 | 1,213,767,985 |
Net income on which earnings per share calculations are based | ' | ' | ' |
Net income (in dollars) | $16,483 | $16,604 | $15,855 |
Less - net income applicable to contingently issuable shares (in dollars) | -1 | -1 | 0 |
Net income on which diluted earnings per share is calculated (in dollars) | $16,483 | $16,603 | $15,855 |
Earnings/(loss) per share of common stock | ' | ' | ' |
Assuming dilution (in dollars per share) | $14.94 | $14.37 | $13.06 |
Basic (in dollars per share) | $15.06 | $14.53 | $13.25 |
Outstanding stock options not included in the computation of diluted earnings per share (in shares) | 8,797 | 0 | 0 |
Rental_Expense_and_Lease_Commi2
Rental Expense and Lease Commitments (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Rental Expense and Lease Commitments | ' | ' | ' |
Rental expense | $1,759 | $1,767 | $1,836 |
Operating lease commitments | ' | ' | ' |
Gross minimum rental commitments (including vacant space below) for 2014 | 1,492 | ' | ' |
Gross minimum rental commitments (including vacant space below) for 2015 | 1,286 | ' | ' |
Gross minimum rental commitments (including vacant space below) for 2016 | 1,016 | ' | ' |
Gross minimum rental commitments (including vacant space below) for 2017 | 799 | ' | ' |
Gross minimum rental commitments (including vacant space below) for 2018 | 620 | ' | ' |
Gross minimum rental commitments (including vacant space below) beyond 2018 | 778 | ' | ' |
Vacant space for 2014 | 24 | ' | ' |
Vacant space for 2015 | 16 | ' | ' |
Vacant space for 2016 | 6 | ' | ' |
Vacant space for 2017 | 4 | ' | ' |
Vacant space for 2018 | 1 | ' | ' |
Vacant space beyond 2018 | 0 | ' | ' |
Sublease income commitments for 2014 | 22 | ' | ' |
Sublease income commitments for 2015 | 16 | ' | ' |
Sublease income commitments for 2016 | 14 | ' | ' |
Sublease income commitments for 2017 | 9 | ' | ' |
Sublease income commitments for 2018 | 4 | ' | ' |
Sublease income commitments beyond 2018 | 7 | ' | ' |
Capital Leases | ' | ' | ' |
Capital lease commitments for 2014 | 16 | ' | ' |
Capital lease commitments for 2015 | 12 | ' | ' |
Capital lease commitments for 2016 | 13 | ' | ' |
Capital lease commitments for 2017 | 3 | ' | ' |
Capital lease commitments for 2018 | 9 | ' | ' |
Capital lease commitments beyond 2018 | $5 | ' | ' |
StockBased_Compensation_Narrat
Stock-Based Compensation (Narratives) (Details 1) (USD $) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Employee | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' | ' |
Shares authorized under existing stock based compensation plans (in shares) | ' | 274,100,000 | ' | ' |
Additional shares considered authorized under previous stock based compensation plans (in shares) | ' | 66,200,000 | ' | ' |
Unused shares available for purchase (in shares) | ' | 118,600,000 | ' | ' |
Stock-based compensation cost, unrecognized, related to non-vested awards | ' | $995,000,000 | $1,101,000,000 | ' |
Capitalized stock-based compensation cost | ' | 0 | 0 | 0 |
Income tax benefits | ' | -213,000,000 | -240,000,000 | -246,000,000 |
Additional options outstanding in connection with acquisitions (in shares) | ' | 600,000 | ' | ' |
Additional options outstanding, weighted-average exercise price (in dollars per share) | ' | $67 | ' | ' |
Treasury stock, Shares (in shares) | ' | 1,153,131,611 | 1,080,193,483 | ' |
Stock-based compensation cost, unrecognized, related to non-vested awards, weighted average period of recognition | ' | '3 years | ' | ' |
Employee Stock Purchase Plan | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' | ' |
Unused shares available for purchase (in shares) | ' | 2,300,000 | 3,800,000 | 5,400,000 |
Discount on purchase of common stock (as a percent) | ' | 5.00% | ' | ' |
Maximum percentage of payroll deductions on eligible compensation (as a percent) | ' | 10.00% | ' | ' |
Maximum stock purchases by employees, value | ' | 25,000 | ' | ' |
Maximum stock purchases by employees (in shares) | ' | 1,000 | ' | ' |
Employees purchased shares under the ESPP (in shares) | ' | 1,500,000 | 1,600,000 | 1,900,000 |
Stock options | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' | ' |
Percentage of awards vested per year (as a percent) | ' | 25.00% | ' | ' |
Vesting period | ' | '4 years | ' | ' |
Contractual term | ' | '10 years | ' | ' |
Total intrinsic value of options exercised | ' | 614,000,000 | 1,005,000,000 | 1,269,000,000 |
Cash received from exercises of stock options | ' | 505,000,000 | 785,000,000 | 1,786,000,000 |
Tax benefit from exercise of stock options | ' | 199,000,000 | 341,000,000 | 412,000,000 |
Treasury stock, Shares (in shares) | ' | 1,153,000,000 | 1,080,000,000 | ' |
Restricted Stock Units | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' | ' |
Fair value of stock units granted | ' | 481,000,000 | 486,000,000 | 803,000,000 |
Fair value of stock units vested and released | ' | 386,000,000 | 509,000,000 | 373,000,000 |
Stock-based compensation cost, unrecognized, related to non-vested awards | ' | 871,000,000 | 938,000,000 | 1,021,000,000 |
Fair value of stock units granted per non-executive employee, second quarter 2011 | 1,000 | ' | ' | ' |
Number of non-executive employees to receive equity award grant, second quarter 2011 | 400,000 | ' | ' | ' |
Restricted Stock Units | Minimum | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' | ' |
Vesting period | ' | '1 year | ' | ' |
Restricted Stock Units | Maximum | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' | ' |
Vesting period | ' | '5 years | ' | ' |
Performance Share Units | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' | ' |
Vesting period | ' | '3 years | ' | ' |
Fair value of stock units granted | ' | 170,000,000 | 186,000,000 | 165,000,000 |
Fair value of stock units vested and released | ' | 156,000,000 | 203,000,000 | 141,000,000 |
RSUs and PSUs | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' | ' |
Income tax benefits | ' | $312,000,000 | $454,000,000 | $283,000,000 |
StockBased_Compensation_Stockb
Stock-Based Compensation (Stock-based Compensation Table) (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Stock-based compensation cost, allocation of recognized costs | ' | ' | ' |
Pre-tax stock-based compensation cost | $614 | $688 | $697 |
Income tax benefits | -213 | -240 | -246 |
Total Stock-based compensation cost | 402 | 448 | 450 |
Cost | ' | ' | ' |
Stock-based compensation cost, allocation of recognized costs | ' | ' | ' |
Pre-tax stock-based compensation cost | 122 | 132 | 120 |
Selling, general and administrative expense | ' | ' | ' |
Stock-based compensation cost, allocation of recognized costs | ' | ' | ' |
Pre-tax stock-based compensation cost | 435 | 498 | 514 |
Research, development and engineering | ' | ' | ' |
Stock-based compensation cost, allocation of recognized costs | ' | ' | ' |
Pre-tax stock-based compensation cost | 57 | 59 | 62 |
Other (income) and expense | ' | ' | ' |
Stock-based compensation cost, allocation of recognized costs | ' | ' | ' |
Pre-tax stock-based compensation cost | ' | ($1) | ' |
StockBased_Compensation_Option
Stock-Based Compensation (Option Activity Summary) (Details 3) (Stock options, USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Stock options | ' | ' | ' |
Weighted Average Exercise Price | ' | ' | ' |
Outstanding, beginning balance (in dollars per share) | $94 | $90 | $94 |
Options exercised (in dollars per share) | $90 | $86 | $98 |
Options canceled/expired (in dollars per share) | $86 | $75 | $107 |
Outstanding, ending balance (in dollars per share) | $97 | $94 | $90 |
Exercisable at end of period (in dollars per share) | $97 | $94 | $90 |
Number of Shares under Option | ' | ' | ' |
Outstanding, beginning balance (in shares) | 11,389,721 | 20,662,322 | 39,197,728 |
Options exercised (in shares) | -5,585,127 | -9,080,170 | -18,144,309 |
Options canceled/expired (in shares) | -181,643 | -192,431 | -391,097 |
Outstanding, ending balance (in shares) | 5,622,951 | 11,389,721 | 20,662,322 |
Exercisable at end of period (in shares) | 5,622,951 | 11,389,721 | 20,662,322 |
StockBased_Compensation_Exerci
Stock-Based Compensation (Exercise Price Range) (Details 4) (USD $) | 12 Months Ended | |||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
Stock option activity by exercise price ranges | ' | ' | ' | ' |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $97 | $94 | $90 | $94 |
Options Outstanding, Number of Shares under Option (in shares) | 5,622,951 | 11,389,721 | 20,662,322 | 39,197,728 |
Options Outstanding and Exercisable, Aggregate Intrinsic Value | $509,312,330 | ' | ' | ' |
Options Outstanding, Weighted Average Remaining Contractual Life | '1 year 1 month | ' | ' | ' |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $97 | $94 | $90 | ' |
Options Exercisable, Number of Shares under Option (in shares) | 5,622,951 | 11,389,721 | 20,662,322 | ' |
Exercise price range $85 and under | ' | ' | ' | ' |
Stock option activity by exercise price ranges | ' | ' | ' | ' |
Exercise price, lower range limit (in dollars per share) | $85 | ' | ' | ' |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $82 | ' | ' | ' |
Options Outstanding, Number of Shares under Option (in shares) | 468,427 | ' | ' | ' |
Options Outstanding and Exercisable, Aggregate Intrinsic Value | 49,244,658 | ' | ' | ' |
Options Outstanding, Weighted Average Remaining Contractual Life | '2 years 1 month | ' | ' | ' |
Options Exercisable, Number of Shares under Option (in shares) | 468,427 | ' | ' | ' |
Exercise price range $86-$105 | ' | ' | ' | ' |
Stock option activity by exercise price ranges | ' | ' | ' | ' |
Exercise price, lower range limit (in dollars per share) | $86 | ' | ' | ' |
Exercise price, upper range limit (in dollars per share) | $105 | ' | ' | ' |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $98 | ' | ' | ' |
Options Outstanding, Number of Shares under Option (in shares) | 4,908,689 | ' | ' | ' |
Options Outstanding and Exercisable, Aggregate Intrinsic Value | 440,012,196 | ' | ' | ' |
Options Outstanding, Weighted Average Remaining Contractual Life | '1 year 1 month | ' | ' | ' |
Options Exercisable, Number of Shares under Option (in shares) | 4,908,689 | ' | ' | ' |
Exercise price range $106 and over | ' | ' | ' | ' |
Stock option activity by exercise price ranges | ' | ' | ' | ' |
Exercise price, upper range limit (in dollars per share) | $106 | ' | ' | ' |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $106 | ' | ' | ' |
Options Outstanding, Number of Shares under Option (in shares) | 245,835 | ' | ' | ' |
Options Outstanding and Exercisable, Aggregate Intrinsic Value | $20,055,475 | ' | ' | ' |
Options Outstanding, Weighted Average Remaining Contractual Life | '0 years 2 months | ' | ' | ' |
Options Exercisable, Number of Shares under Option (in shares) | 245,835 | ' | ' | ' |
StockBased_Compensation_RSUPSU
Stock-Based Compensation (RSU,PSU) (Details 5) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Restricted Stock Units | ' | ' | ' |
Weighted Average Grant Price | ' | ' | ' |
Weighted Average grant price, beginning balance (in dollars per share) | $148 | $129 | $110 |
Granted (in dollars per share) | $189 | $184 | $154 |
Released (in dollars per share) | $131 | $117 | $106 |
Canceled/forfeited (in dollars per share) | $154 | $139 | $122 |
Weighted Average grant price, ending balance (in dollars per share) | $166 | $148 | $129 |
Number of units | ' | ' | ' |
Beginning balance (in shares) | 9,841,461 | 12,218,601 | 11,196,446 |
Granted (in shares) | 2,541,081 | 2,635,772 | 5,196,802 |
Released (in shares) | -2,952,363 | -4,338,787 | -3,508,700 |
Canceled/forfeited (in shares) | -794,862 | -674,125 | -665,947 |
Ending balance (in shares) | 8,635,317 | 9,841,461 | 12,218,601 |
Performance Share Units | ' | ' | ' |
Weighted Average Grant Price | ' | ' | ' |
Weighted Average grant price, beginning balance (in dollars per share) | $151 | $122 | $111 |
Granted (in dollars per share) | $195 | $185 | $154 |
Additional shares earned above target (in dollars per share) | $118 | $102 | $118 |
Released (in dollars per share) | $118 | $102 | $118 |
Canceled/forfeited (in dollars per share) | $170 | $131 | $118 |
Weighted Average grant price, ending balance (in dollars per share) | $178 | $151 | $122 |
Number of units | ' | ' | ' |
Beginning balance (in shares) | 3,172,201 | 3,686,991 | 3,649,288 |
Granted (in shares) | 869,875 | 1,004,003 | 1,055,687 |
Additional shares earned above target (in shares) | 152,069 | 550,399 | 230,524 |
Released (in shares) | -1,321,784 | -1,998,746 | -1,189,765 |
Canceled/forfeited (in shares) | -48,067 | -70,446 | -58,743 |
Ending balance (in shares) | 2,824,294 | 3,172,201 | 3,686,991 |
RetirementRelated_Benefits_Det
Retirement-Related Benefits (Details) | 12 Months Ended |
Dec. 31, 2013 | |
IBM 401(k) Plus Plan | ' |
Retirement-related Benefits Disclosures | ' |
Maximum percentage, dollar-for-dollar match by entity to employee contribution of eligible compensation for employees hired prior to January 1, 2005 | 6.00% |
Maximum percentage, dollar-for-dollar match by entity to employee contribution of eligible compensation for employees hired after January 1, 2005 | 5.00% |
Employer's automatic contribution as a percentage of eligible compensation, lowest level defined | 1.00% |
Employer's automatic contribution as a percentage of eligible compensation, second level defined | 2.00% |
Employer's automatic contribution as a percentage of eligible compensation, highest level defined | 4.00% |
Service period after which employees receive automatic contributions | '1 year |
IBM Excess 401(k) Plus Plan | ' |
Retirement-related Benefits Disclosures | ' |
Service period after which employees receive automatic contributions | '1 year |
U.S. Nonpension Postretirement Benefit Plans | ' |
Retirement-related Benefits Disclosures | ' |
Minimum years of service remaining from retirement eligibility to participate in Future Health Account (FHA) benefits | '5 years |
Service period for retirement within which employees are covered under the entity's prior health benefits arrangements | '5 years |
RetirementRelated_Benefits_Net
Retirement-Related Benefits (Net Periodic Income Cost) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined contribution plans cost | $1,384 | $1,506 | $1,513 |
Total retirement-related benefits net periodic cost | 2,876 | 2,389 | 1,832 |
Defined Benefit Pension Plans | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined benefit plans (income)/cost | 1,195 | 533 | -25 |
U.S. Defined Benefit Pension Plans | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined benefit plans (income)/cost | -202 | -507 | -759 |
Personal Pension Plan (PPP) | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined benefit plans (income)/cost | -223 | -526 | -774 |
Retention Plan | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined benefit plans (income)/cost | 21 | 18 | 15 |
Non-U.S. Defined Benefit Pension Plans | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined benefit plans (income)/cost | 1,396 | 1,040 | 734 |
PPP and Non-U.S. Defined Benefit Pension Plans | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined benefit plans (income)/cost | 1,173 | 515 | -40 |
U.S. Defined Contribution Plans | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined contribution plans cost | 809 | 885 | 905 |
IBM 401(k) Plus Plan | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined contribution plans cost | 785 | 857 | 875 |
IBM Excess 401(k) Plus Plan | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined contribution plans cost | 24 | 29 | 30 |
Non-U.S. Defined Contribution Plans | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined contribution plans cost | 575 | 621 | 608 |
IBM 401(k) Plus Plan and Non-U.S. Defined Contribution Plans | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined contribution plans cost | 1,361 | 1,478 | 1,483 |
Nonpension Postretirement Plans | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined benefit plans (income)/cost | 298 | 350 | 345 |
U.S. Nonpension Postretirement Benefit Plans | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined benefit plans (income)/cost | 218 | 268 | 269 |
Non-U.S. Nonpension Postretirement Plans | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Defined benefit plans (income)/cost | 79 | 82 | 76 |
U.S. Plans | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Total retirement-related benefits net periodic cost | 826 | 646 | 415 |
Non-U.S. Plans | ' | ' | ' |
Retirement-related Benefits Disclosures | ' | ' | ' |
Total retirement-related benefits net periodic cost | $2,051 | $1,743 | $1,418 |
RetirementRelated_Benefits_PBO
Retirement-Related Benefits (PBO, APBO, FV of Plan Assets, and Funded Status) (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Funded status of plan | ' | ' |
Underfunded plan benefit obligation | $46,458 | $105,473 |
Underfunded plan fair value of plan assets | 29,481 | 84,338 |
Underfunded plan funded status | -16,977 | -21,134 |
Overfunded plan benefit obligation | 58,661 | 6,956 |
Overfunded plan fair value of plan assets | 64,205 | 7,901 |
Overfunded plan funded status | 5,544 | 945 |
U.S. Defined Benefit Plans | ' | ' |
Funded status of plan | ' | ' |
Underfunded plan benefit obligation | 6,352 | 62,092 |
Underfunded plan fair value of plan assets | 177 | 54,063 |
Underfunded plan funded status | -6,175 | -8,029 |
Qualified PPP | ' | ' |
Funded status of plan | ' | ' |
Underfunded plan benefit obligation | ' | 54,907 |
Underfunded plan fair value of plan assets | ' | 53,630 |
Underfunded plan funded status | ' | -1,277 |
Overfunded plan benefit obligation | 49,315 | ' |
Overfunded plan fair value of plan assets | 53,954 | ' |
Overfunded plan funded status | 4,639 | ' |
Percentage of plan funded | 109.00% | ' |
Excess PPP | ' | ' |
Funded status of plan | ' | ' |
Underfunded plan benefit obligation | 1,425 | 1,576 |
Underfunded plan funded status | -1,425 | -1,576 |
Retention Plan | ' | ' |
Funded status of plan | ' | ' |
Underfunded plan benefit obligation | 294 | 327 |
Underfunded plan funded status | -294 | -327 |
U.S. Nonpension Postretirement Benefit Plans | ' | ' |
Funded status of plan | ' | ' |
Underfunded plan benefit obligation | 4,633 | 5,282 |
Underfunded plan fair value of plan assets | 177 | 433 |
Underfunded plan funded status | -4,456 | -4,849 |
Non-U.S. Defined Benefit Plans | ' | ' |
Funded status of plan | ' | ' |
Underfunded plan benefit obligation | 40,106 | 43,381 |
Underfunded plan fair value of plan assets | 29,304 | 30,276 |
Underfunded plan funded status | -10,802 | -13,106 |
Overfunded plan benefit obligation | 9,346 | 6,956 |
Overfunded plan fair value of plan assets | 10,251 | 7,901 |
Overfunded plan funded status | 905 | 945 |
Qualified Non-U.S. Defined Benefit Pension Plans | ' | ' |
Funded status of plan | ' | ' |
Underfunded plan benefit obligation | 32,697 | 35,956 |
Underfunded plan fair value of plan assets | 29,223 | 30,169 |
Underfunded plan funded status | -3,474 | -5,788 |
Overfunded plan benefit obligation | 9,336 | 6,944 |
Overfunded plan fair value of plan assets | 10,240 | 7,889 |
Overfunded plan funded status | 904 | 945 |
Nonqualified Non-U.S. Defined Benefit Pension Plan | ' | ' |
Funded status of plan | ' | ' |
Underfunded plan benefit obligation | 6,587 | 6,418 |
Underfunded plan funded status | -6,587 | -6,418 |
Non-U.S. Nonpension Postretirement Plans | ' | ' |
Funded status of plan | ' | ' |
Underfunded plan benefit obligation | 822 | 1,007 |
Underfunded plan fair value of plan assets | 81 | 107 |
Underfunded plan funded status | -741 | -900 |
Overfunded plan benefit obligation | 10 | 12 |
Overfunded plan fair value of plan assets | 11 | 12 |
Overfunded plan funded status | $1 | $0 |
Defined Benefit Pension Plans | ' | ' |
Funded status of plan | ' | ' |
Percentage of plan funded | 94.00% | ' |
Qualified Defined Benefit Pension Plans | ' | ' |
Funded status of plan | ' | ' |
Percentage of plan funded | 102.00% | ' |
RetirementRelated_Benefits_Com
Retirement-Related Benefits (Components of Net Period Income Cost) (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||||
In Millions, unless otherwise specified | Sep. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Litigation in United Kingdom regarding defined benefit plans (C Plan) | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | U.S. Nonpension Postretirement Benefit Plans | U.S. Nonpension Postretirement Benefit Plans | U.S. Nonpension Postretirement Benefit Plans | Non-U.S. Nonpension Postretirement Plans | Non-U.S. Nonpension Postretirement Plans | Non-U.S. Nonpension Postretirement Plans | |
Litigation in United Kingdom regarding defined benefit plans (C Plan) | ||||||||||||||
Retirement-related plans cost | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Service cost | ' | ' | ' | ' | $501 | $443 | $505 | ' | $35 | $36 | $33 | $10 | $14 | $11 |
Interest cost | ' | 1,980 | 2,196 | 2,456 | 1,524 | 1,779 | 1,843 | ' | 164 | 200 | 236 | 60 | 64 | 67 |
Expected return on plan assets | ' | -3,981 | -4,043 | -4,043 | -2,195 | -2,303 | -2,521 | ' | -1 | ' | ' | -9 | -9 | -10 |
Amortization of transition assets | ' | ' | ' | ' | 0 | 0 | 0 | ' | ' | ' | ' | 0 | 0 | 0 |
Amortization of prior service costs/(credits) | ' | 10 | 10 | 10 | -119 | -154 | -162 | ' | ' | ' | ' | -5 | -4 | -4 |
Recognized actuarial losses | ' | 1,790 | 1,331 | 818 | 1,600 | 1,027 | 957 | ' | 21 | 32 | ' | 23 | 17 | 13 |
Curtailments and settlements | ' | ' | ' | ' | 0 | 0 | 1 | ' | ' | ' | ' | 0 | 0 | ' |
Multi-employer plan/other costs | 162 | ' | ' | ' | 85 | 247 | 111 | 162 | ' | ' | ' | ' | ' | ' |
Total net periodic pension (income)/cost of defined benefit plans | ' | ($202) | ($507) | ($759) | $1,396 | $1,040 | $734 | ' | $218 | $268 | $269 | $79 | $82 | $76 |
RetirementRelated_Benefits_Cha
Retirement-Related Benefits (Changes in Benefit Obliation and Plan Assets, and Funded Status) (Details) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Net funded status recognized in the consolidated statement of financial position | ' | ' | ' | |
Retirement and nonpension postretirement benefit obligations | ($16,242) | ($20,418) | ' | |
U.S. Defined Benefit Pension Plans | ' | ' | ' | |
Changes in benefit obligation | ' | ' | ' | |
Benefit obligation, balance at beginning of period | 56,810 | 54,085 | ' | |
Interest cost | 1,980 | 2,196 | 2,456 | |
Actuarial losses/(gains) | -4,344 | 3,810 | ' | |
Benefits paid from trust | -3,303 | -3,184 | ' | |
Direct benefit payments | -108 | -97 | ' | |
Benefit obligation, balance at end of period | 51,034 | 56,810 | 54,085 | |
Change in plan assets | ' | ' | ' | |
Fair value of plan assets, balance at beginning of period | 53,630 | 51,218 | ' | |
Actual return on plan assets | 3,626 | 5,596 | ' | |
Benefits paid from trust | -3,303 | -3,184 | ' | |
Fair value of plan assets, balance at end of period | 53,954 | 53,630 | 51,218 | |
Funded Status | 2,920 | -3,180 | ' | |
Accumulated benefit obligation | 51,034 | 56,810 | ' | |
Net funded status recognized in the consolidated statement of financial position | ' | ' | ' | |
Prepaid pension assets | 4,639 | 0 | ' | |
Compensation and benefits | -107 | -102 | ' | |
Retirement and nonpension postretirement benefit obligations | -1,612 | -3,078 | ' | |
Funded Status | 2,920 | -3,180 | ' | |
Non-U.S. Defined Benefit Pension Plans | ' | ' | ' | |
Changes in benefit obligation | ' | ' | ' | |
Benefit obligation, balance at beginning of period | 49,319 | 42,861 | ' | |
Service cost | 501 | 443 | 505 | |
Interest cost | 1,524 | 1,779 | 1,843 | |
Plan participants' contributions | 42 | 47 | ' | |
Acquisitions/divestitures, net | 89 | 26 | ' | |
Actuarial losses/(gains) | -362 | 6,365 | ' | |
Benefits paid from trust | -1,920 | -1,987 | ' | |
Direct benefit payments | -464 | -454 | ' | |
Foreign exchange impact | -115 | 77 | ' | |
Amendments/curtailments/settlements/other | 6 | 161 | ' | |
Benefit obligation, balance at end of period | 48,620 | 49,319 | 42,861 | |
Change in plan assets | ' | ' | ' | |
Fair value of plan assets, balance at beginning of period | 38,058 | 35,362 | ' | |
Actual return on plan assets | 2,515 | 3,742 | ' | |
Employer contributions | 449 | 557 | ' | |
Acquisitions/divestitures, net | 35 | 40 | ' | |
Plan participants' contributions | 42 | 47 | ' | |
Benefits paid from trust | -1,920 | -1,987 | ' | |
Foreign exchange impact | 121 | 305 | ' | |
Amendments/curtailments/settlements/other | 164 | [1] | -8 | ' |
Fair value of plan assets, balance at end of period | 39,464 | 38,058 | 35,362 | |
Funded Status | -9,157 | -11,261 | ' | |
Accumulated benefit obligation | 47,806 | 48,369 | ' | |
Net funded status recognized in the consolidated statement of financial position | ' | ' | ' | |
Prepaid pension assets | 912 | 944 | ' | |
Compensation and benefits | -364 | -356 | ' | |
Retirement and nonpension postretirement benefit obligations | -9,705 | -11,849 | ' | |
Funded Status | -9,157 | -11,261 | ' | |
Non-U.S. Defined Benefit Pension Plans | Brazil | ' | ' | ' | |
Change in plan assets | ' | ' | ' | |
Return of Brazil plan assets during 2013 resulting from 2011 and 2013 government rulings | 204 | ' | ' | |
Period for return of plan assets to entity | '3 years | ' | ' | |
U.S. Nonpension Postretirement Benefit Plans | ' | ' | ' | |
Changes in benefit obligation | ' | ' | ' | |
Benefit obligation, balance at beginning of period | 5,282 | 5,273 | ' | |
Service cost | 35 | 36 | 33 | |
Interest cost | 164 | 200 | 236 | |
Plan participants' contributions | 191 | 200 | ' | |
Acquisitions/divestitures, net | -2 | 2 | ' | |
Actuarial losses/(gains) | -481 | 104 | ' | |
Benefits paid from trust | -557 | -551 | ' | |
Direct benefit payments | -43 | -35 | ' | |
Medicare/Government subsidies | 30 | 53 | ' | |
Amendments/curtailments/settlements/other | 15 | ' | ' | |
Benefit obligation, balance at end of period | 4,633 | 5,282 | 5,273 | |
Change in plan assets | ' | ' | ' | |
Fair value of plan assets, balance at beginning of period | 433 | 38 | ' | |
Actual return on plan assets | 0 | 0 | ' | |
Employer contributions | 110 | 746 | ' | |
Plan participants' contributions | 191 | 200 | ' | |
Benefits paid from trust | -557 | -551 | ' | |
Fair value of plan assets, balance at end of period | 177 | 433 | 38 | |
Funded Status | -4,456 | -4,849 | ' | |
Net funded status recognized in the consolidated statement of financial position | ' | ' | ' | |
Prepaid pension assets | 0 | 0 | ' | |
Compensation and benefits | -256 | -239 | ' | |
Retirement and nonpension postretirement benefit obligations | -4,200 | -4,610 | ' | |
Funded Status | -4,456 | -4,849 | ' | |
Non-U.S. Nonpension Postretirement Plans | ' | ' | ' | |
Changes in benefit obligation | ' | ' | ' | |
Benefit obligation, balance at beginning of period | 1,019 | 901 | ' | |
Service cost | 10 | 14 | 11 | |
Interest cost | 60 | 64 | 67 | |
Acquisitions/divestitures, net | 0 | ' | ' | |
Actuarial losses/(gains) | -89 | 76 | ' | |
Benefits paid from trust | -6 | -6 | ' | |
Direct benefit payments | -28 | -27 | ' | |
Foreign exchange impact | -89 | -24 | ' | |
Amendments/curtailments/settlements/other | -44 | 21 | ' | |
Benefit obligation, balance at end of period | 832 | 1,019 | 901 | |
Change in plan assets | ' | ' | ' | |
Fair value of plan assets, balance at beginning of period | 119 | 112 | ' | |
Actual return on plan assets | 5 | 10 | ' | |
Employer contributions | 0 | 1 | ' | |
Acquisitions/divestitures, net | 0 | ' | ' | |
Benefits paid from trust | -6 | -6 | ' | |
Foreign exchange impact | -14 | -8 | ' | |
Amendments/curtailments/settlements/other | -12 | 10 | ' | |
Fair value of plan assets, balance at end of period | 92 | 119 | 112 | |
Funded Status | -740 | -900 | ' | |
Net funded status recognized in the consolidated statement of financial position | ' | ' | ' | |
Prepaid pension assets | 1 | 0 | ' | |
Compensation and benefits | -16 | -20 | ' | |
Retirement and nonpension postretirement benefit obligations | -725 | -880 | ' | |
Funded Status | ($740) | ($900) | ' | |
[1] | *Includes the reinstatement of certain plan assets in Brazil due to government rulings in 2011 and 2013 allowing certain previously restricted plan assets to be returned to IBM. The assets will be returned to IBM monthly over a three-year period, starting June 2011 and September 2013 respectively, with approximately $204 million returned during 2013. The remaining surplus in Brazil at DecemberB 31, 2013 remains excluded from total plan assets due to continued restrictions imposed by the government on the use of those plan assets. |
RetirementRelated_Benefits_OCI
Retirement-Related Benefits (OCI and AOCI) (Details) (USD $) | 12 Months Ended | 12 Months Ended | ||||||||||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 |
U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | U.S. Nonpension Postretirement Benefit Plans | U.S. Nonpension Postretirement Benefit Plans | U.S. Nonpension Postretirement Benefit Plans | U.S. Nonpension Postretirement Benefit Plans | Non-U.S. Nonpension Postretirement Plans | Non-U.S. Nonpension Postretirement Plans | |
Germany, Canada, and the UK | Germany, Canada, and the UK | Germany, Canada, and the UK | Establishment of a Health Reimbursement Arrangement (HRA) for Medicare Eligible Participants | Termination of Life Insurance Eligibility for Employees Who Retire on or after January 1, 2015 | ||||||||||
Changes in AOCI for retirement-related benefits | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net loss at beginning of period | $19,488 | $18,561 | $22,188 | $18,309 | ' | ' | ' | ' | $806 | $734 | ' | ' | $269 | $211 |
Current period loss/(gain) | -3,989 | 2,258 | -814 | 4,905 | ' | ' | ' | ' | -480 | 104 | ' | ' | -85 | 75 |
Curtailments and settlements | ' | ' | 3 | 2 | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' |
Amortization of net loss included in net periodic (income)/cost | -1,790 | -1,331 | -1,600 | -1,027 | ' | ' | ' | ' | -21 | -32 | ' | ' | -23 | -17 |
Net loss at end of period | 13,709 | 19,488 | 19,777 | 22,188 | 18,309 | ' | ' | ' | 304 | 806 | ' | ' | 161 | 269 |
Prior service costs/(credits) at beginning of period | 130 | 139 | -614 | -768 | ' | ' | ' | ' | ' | ' | ' | ' | -6 | -10 |
Current period prior service costs/(credits) | ' | ' | 0 | ' | ' | ' | ' | ' | 15 | ' | ' | ' | -31 | ' |
Amortization of prior service (costs)/credits included in net periodic (income)/cost | -10 | -10 | 119 | 154 | ' | ' | ' | ' | ' | ' | ' | ' | 5 | 4 |
Prior service costs/(credits) at end of period | 120 | 130 | -496 | -614 | -768 | ' | ' | ' | 15 | ' | ' | ' | -32 | -6 |
Transition (assets)/liabilities at beginning of period | ' | ' | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 |
Amortization of transition assets/(liabilities) included in net periodic (income)/cost | ' | ' | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 |
Transition (assets)/liabilities at end of period | ' | ' | 0 | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | 0 | 0 |
Total loss recognized in accumulated other comprehensive income/(loss) | 13,829 | 19,618 | 19,281 | 21,574 | ' | ' | ' | ' | 319 | 806 | ' | ' | 129 | 263 |
Amounts of retirement-related benefit plans that will be amortized from accumulated other comprehensive income/(loss) into net periodic (income)/cost | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated net loss that will be amortized from AOCI into net periodic cost | 1,076 | ' | 1,461 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11 | ' |
Estimated prior service costs/(credits) that will be amortized from AOCI into net periodic (income)/cost | 10 | ' | -127 | ' | ' | ' | ' | ' | -7 | ' | ' | ' | -6 | ' |
Estimated transition (assets)/liabilities that will be amortized from AOCI into net periodic (income)/cost | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' |
Other changes in benefit plans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Entity's payments for mandatory pension insolvency insurance coverage premiums | ' | ' | ' | ' | ' | 14 | 22 | 16 | ' | ' | ' | ' | ' | ' |
Plan amendment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effect of plan amendment on benefit obligation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 91 | -76 | ' | ' |
Retirement-related plans cost | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Multi-employer plan/other costs | ' | ' | $85 | $247 | $111 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
RetirementRelated_Benefits_Ass
Retirement-Related Benefits (Assumptions) (Details) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
Defined Benefit Pension Plans | ' | ' | ' | ' |
Discount Rate | ' | ' | ' | ' |
Period over which changes in fair value of plan assets recognized | '5 years | ' | ' | ' |
U.S. Defined Benefit Pension Plans | ' | ' | ' | ' |
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ' | ' | ' | ' |
Discount rate | 3.60% | 4.20% | 5.00% | ' |
Expected long-term returns on plan assets | 8.00% | 8.00% | 8.00% | ' |
Weighted-average assumptions used to measure benefit obligations at December 31 | ' | ' | ' | ' |
Discount rate | 4.50% | 3.60% | 4.20% | ' |
Discount Rate | ' | ' | ' | ' |
Increase (decrease) in net periodic (income) cost due to change in discount rate | ($162) | ($258) | ($171) | ' |
Increase (decrease) in PBO due to change in discount rate | -4,785 | 3,414 | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Fair Value of plan assets | 53,954 | 53,630 | 51,218 | ' |
U.S. Defined Benefit Pension Plans | European Sovereign Debt Investments | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Fair Value of plan assets | 828 | ' | ' | ' |
Personal Pension Plan (PPP) | ' | ' | ' | ' |
Interest Crediting Rate | ' | ' | ' | ' |
Percentage interest rate added to average interest from August to October of the one-year U.S Treasury Constant Maturity yield for computation of interest crediting rate (as a percent) | 1.00% | ' | ' | ' |
Interest crediting rate | 1.20% | 1.10% | 1.30% | 1.40% |
Increase (decrease) in net periodic income due to change in interest crediting rate | -6 | 10 | 4 | ' |
Qualified PPP | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Fair Value of plan assets | 53,954 | 53,630 | ' | ' |
Qualified PPP | Equity securities | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Target allocation | 42.00% | ' | ' | ' |
Qualified PPP | Fixed income: | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Target allocation | 47.00% | ' | ' | ' |
Qualified PPP | Real estate | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Target allocation | 6.00% | ' | ' | ' |
Qualified PPP | Other investments | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Target allocation | 5.00% | ' | ' | ' |
Qualified PPP | Private equities and private real estate investments | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Commitments for future investments in private markets | 2,830 | ' | ' | ' |
Fair Value of plan assets | 6,809 | ' | ' | ' |
Non-U.S. Defined Benefit Pension Plans | ' | ' | ' | ' |
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ' | ' | ' | ' |
Discount rate | 3.23% | 4.28% | 4.33% | ' |
Expected long-term returns on plan assets | 6.21% | 6.26% | 6.41% | ' |
Rate of compensation increase | 2.51% | 2.43% | 2.37% | ' |
Weighted-average assumptions used to measure benefit obligations at December 31 | ' | ' | ' | ' |
Discount rate | 3.32% | 3.23% | 4.28% | ' |
Rate of compensation increase | 2.52% | 2.51% | 2.43% | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Fair Value of plan assets | 39,464 | 38,058 | 35,362 | ' |
Non-U.S. Defined Benefit Pension Plans | Maximum | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Percentage of board members, elected by employees and retirees for managing investments (as a percent) | 50.00% | ' | ' | ' |
Non-U.S. Defined Benefit Pension Plans | Equity securities | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Target allocation | 33.00% | ' | ' | ' |
Non-U.S. Defined Benefit Pension Plans | Fixed income: | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Target allocation | 54.00% | ' | ' | ' |
Non-U.S. Defined Benefit Pension Plans | European Sovereign Debt Investments | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Fair Value of plan assets | 11,000 | ' | ' | ' |
Non-U.S. Defined Benefit Pension Plans | European Sovereign Debt Investments | Italy Spain and Ireland | Maximum | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Fair value of plan assets as percent of total non-US plan assets | 1.00% | ' | ' | ' |
Non-U.S. Defined Benefit Pension Plans | Real estate | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Target allocation | 2.00% | ' | ' | ' |
Non-U.S. Defined Benefit Pension Plans | Other investments | ' | ' | ' | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Target allocation | 11.00% | ' | ' | ' |
Nonpension Postretirement Plans | ' | ' | ' | ' |
Discount Rate | ' | ' | ' | ' |
Increase (decrease) in net periodic (income) cost due to change in discount rate | 0 | 0 | 0 | ' |
Increase (decrease) in APBO due to changes in discount rate | -298 | 252 | ' | ' |
Healthcare Cost Trend Rate | ' | ' | ' | ' |
Health care cost trend rate assumed for next fiscal year | 6.50% | ' | ' | ' |
Health care cost trend rate assumed over the next three years | 5.00% | ' | ' | ' |
U.S. Nonpension Postretirement Benefit Plans | ' | ' | ' | ' |
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ' | ' | ' | ' |
Discount rate | 3.30% | 3.90% | 4.80% | ' |
Expected long-term returns on plan assets | 0.35% | ' | ' | ' |
Weighted-average assumptions used to measure benefit obligations at December 31 | ' | ' | ' | ' |
Discount rate | 4.10% | 3.30% | 3.90% | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Fair Value of plan assets | 177 | 433 | 38 | ' |
Non-U.S. Nonpension Postretirement Plans | ' | ' | ' | ' |
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ' | ' | ' | ' |
Discount rate | 6.43% | 7.37% | 7.75% | ' |
Expected long-term returns on plan assets | 9.01% | 9.01% | 9.07% | ' |
Weighted-average assumptions used to measure benefit obligations at December 31 | ' | ' | ' | ' |
Discount rate | 7.78% | 6.43% | 7.37% | ' |
Investment Policies And Strategies | ' | ' | ' | ' |
Fair Value of plan assets | $92 | $119 | $112 | ' |
RetirementRelated_Benefits_Pen
Retirement-Related Benefits (Pension Plan Assets) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Pension Contributions | ' | ' | ' |
Cash contribution by employer to defined contribution plans | $1,361,000,000 | $1,478,000,000 | ' |
Estimated future employer contributions to defined contribution plans in next fiscal year | 1,300,000,000 | ' | ' |
Multi-employer Plans - Non-U.S. Plans | ' | ' | ' |
Pension Contributions | ' | ' | ' |
Cash contribution by employer to non-U.S. multi-employer plans | 57,000,000 | 60,000,000 | ' |
Qualified PPP | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 53,784,000,000 | 54,072,000,000 | ' |
Net unsettled transactions, relating primarily to purchases and sales of plan assets | 170,000,000 | -442,000,000 | ' |
Fair Value of plan assets | 53,954,000,000 | 53,630,000,000 | ' |
Qualified PPP | Equity securities | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 15,929,000,000 | 15,163,000,000 | ' |
Value of IBM securities included in plan assets | 83,000,000 | 113,000,000 | ' |
Percentage of IBM securities included in plan assets | 0.20% | 0.20% | ' |
Qualified PPP | Equity commingled/mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 2,809,000,000 | 2,652,000,000 | ' |
Qualified PPP | Government and related | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 7,094,000,000 | 12,951,000,000 | ' |
Qualified PPP | Corporate bonds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 14,644,000,000 | 8,510,000,000 | ' |
Value of IBM securities included in plan assets | 9,000,000 | 6,000,000 | ' |
Percentage of IBM securities included in plan assets | 0.02% | 0.01% | ' |
Qualified PPP | Mortgage and asset-backed securities | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 709,000,000 | 968,000,000 | ' |
Qualified PPP | Fixed income commingled/ mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,211,000,000 | 1,226,000,000 | ' |
Qualified PPP | Cash and short-term investments | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 2,343,000,000 | 3,442,000,000 | ' |
Qualified PPP | Hedge funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 2,228,000,000 | 2,159,000,000 | ' |
Qualified PPP | Private equity | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 3,771,000,000 | 4,085,000,000 | ' |
Qualified PPP | Private real estate | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 3,038,000,000 | 2,861,000,000 | ' |
Qualified PPP | Derivatives | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 7,000,000 | 56,000,000 | ' |
Qualified PPP | Level 1 | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 16,795,000,000 | 15,650,000,000 | ' |
Fair Value of plan assets | 16,795,000,000 | 15,650,000,000 | ' |
Qualified PPP | Level 1 | Equity securities | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 15,929,000,000 | 15,161,000,000 | ' |
Qualified PPP | Level 1 | Equity commingled/mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 216,000,000 | 96,000,000 | ' |
Qualified PPP | Level 1 | Fixed income commingled/ mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 221,000,000 | 155,000,000 | ' |
Qualified PPP | Level 1 | Cash and short-term investments | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 427,000,000 | 244,000,000 | ' |
Qualified PPP | Level 1 | Derivatives | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,000,000 | -6,000,000 | ' |
Qualified PPP | Level 2 | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 29,021,000,000 | 30,390,000,000 | ' |
Fair Value of plan assets | 29,021,000,000 | 30,390,000,000 | ' |
Qualified PPP | Level 2 | Equity securities | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | ' | 1,000,000 | ' |
Qualified PPP | Level 2 | Equity commingled/mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 2,593,000,000 | 2,556,000,000 | ' |
Qualified PPP | Level 2 | Government and related | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 7,093,000,000 | 12,945,000,000 | ' |
Qualified PPP | Level 2 | Corporate bonds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 14,639,000,000 | 8,499,000,000 | ' |
Qualified PPP | Level 2 | Mortgage and asset-backed securities | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 691,000,000 | 922,000,000 | ' |
Qualified PPP | Level 2 | Fixed income commingled/ mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 716,000,000 | 804,000,000 | ' |
Qualified PPP | Level 2 | Cash and short-term investments | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,915,000,000 | 3,198,000,000 | ' |
Qualified PPP | Level 2 | Hedge funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,368,000,000 | 1,402,000,000 | ' |
Qualified PPP | Level 2 | Derivatives | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 6,000,000 | 62,000,000 | ' |
Qualified PPP | Level 3 | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 7,968,000,000 | 8,032,000,000 | ' |
Fair Value of plan assets | 7,968,000,000 | 8,032,000,000 | ' |
Qualified PPP | Level 3 | Government and related | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,000,000 | 6,000,000 | ' |
Qualified PPP | Level 3 | Corporate bonds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 5,000,000 | 11,000,000 | ' |
Qualified PPP | Level 3 | Mortgage and asset-backed securities | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 19,000,000 | 45,000,000 | ' |
Qualified PPP | Level 3 | Fixed income commingled/ mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 274,000,000 | 267,000,000 | ' |
Qualified PPP | Level 3 | Hedge funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 860,000,000 | 756,000,000 | ' |
Qualified PPP | Level 3 | Private equity | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 3,771,000,000 | 4,085,000,000 | ' |
Qualified PPP | Level 3 | Private real estate | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 3,038,000,000 | 2,861,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 39,544,000,000 | 38,124,000,000 | ' |
Net unsettled transactions, relating primarily to purchases and sales of plan assets | -80,000,000 | -66,000,000 | ' |
Fair Value of plan assets | 39,464,000,000 | 38,058,000,000 | 35,362,000,000 |
Pension Contributions | ' | ' | ' |
Cash contribution by employer to non-U.S. defined benefit plans | 449,000,000 | 557,000,000 | ' |
Estimates cash contributions to the defined contribution plans | 600,000,000 | ' | ' |
Non-U.S. Defined Benefit Pension Plans | Equity securities | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 6,489,000,000 | 6,395,000,000 | ' |
Value of IBM securities included in plan assets | 31,000,000 | 40,000,000 | ' |
Percentage of IBM securities included in plan assets | 0.10% | 0.10% | ' |
Non-U.S. Defined Benefit Pension Plans | Equity commingled/mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 8,457,000,000 | 7,779,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Government and related | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 8,724,000,000 | 9,054,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Corporate bonds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,885,000,000 | 1,883,000,000 | ' |
Value of IBM securities included in plan assets | 1,000,000 | 2,000,000 | ' |
Percentage of IBM securities included in plan assets | 0.00% | 0.00% | ' |
Non-U.S. Defined Benefit Pension Plans | Mortgage and asset-backed securities | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 8,000,000 | 9,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Fixed income commingled/ mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 8,670,000,000 | 8,096,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Insurance contracts | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,196,000,000 | 1,019,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Cash and short-term investments | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 605,000,000 | 507,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Hedge funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 740,000,000 | 646,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Private equity | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 410,000,000 | 353,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Private real estate | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 655,000,000 | 609,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Derivatives | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 151,000,000 | 857,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Other commingled/mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,554,000,000 | 919,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 1 | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 6,886,000,000 | 6,757,000,000 | ' |
Fair Value of plan assets | 6,886,000,000 | 6,757,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 1 | Equity securities | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 6,489,000,000 | 6,395,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 1 | Equity commingled/mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 132,000,000 | 138,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 1 | Fixed income commingled/ mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 75,000,000 | 78,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 1 | Cash and short-term investments | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 154,000,000 | 134,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 1 | Derivatives | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,000,000 | 0 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 1 | Other commingled/mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 36,000,000 | 12,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 2 | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 31,547,000,000 | 30,325,000,000 | ' |
Fair Value of plan assets | 31,547,000,000 | 30,325,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 2 | Equity commingled/mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 8,325,000,000 | 7,641,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 2 | Government and related | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 8,682,000,000 | 8,978,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 2 | Corporate bonds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,881,000,000 | 1,878,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 2 | Mortgage and asset-backed securities | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 8,000,000 | 9,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 2 | Fixed income commingled/ mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 8,596,000,000 | 8,018,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 2 | Insurance contracts | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,196,000,000 | 1,019,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 2 | Cash and short-term investments | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 451,000,000 | 373,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 2 | Hedge funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 740,000,000 | 646,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 2 | Derivatives | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 150,000,000 | 856,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 2 | Other commingled/mutual funds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,518,000,000 | 907,000,000 | ' |
Non-U.S. Defined Benefit Pension Plans | Level 3 | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 1,110,000,000 | 1,042,000,000 | ' |
Fair Value of plan assets | 1,110,000,000 | 1,042,000,000 | 977,000,000 |
Non-U.S. Defined Benefit Pension Plans | Level 3 | Government and related | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 42,000,000 | 76,000,000 | ' |
Fair Value of plan assets | 42,000,000 | 76,000,000 | 96,000,000 |
Non-U.S. Defined Benefit Pension Plans | Level 3 | Corporate bonds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 4,000,000 | 5,000,000 | ' |
Fair Value of plan assets | 4,000,000 | 5,000,000 | 39,000,000 |
Non-U.S. Defined Benefit Pension Plans | Level 3 | Private equity | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 410,000,000 | 353,000,000 | ' |
Fair Value of plan assets | 410,000,000 | 353,000,000 | 262,000,000 |
Non-U.S. Defined Benefit Pension Plans | Level 3 | Private real estate | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair value of plan assets, before unsettled transaction | 655,000,000 | 609,000,000 | ' |
Fair Value of plan assets | 655,000,000 | 609,000,000 | 580,000,000 |
Nonpension Postretirement Plans | ' | ' | ' |
Pension Contributions | ' | ' | ' |
Employer contributions, excluding the Medicare-related subsidy | 80,000,000 | 693,000,000 | ' |
U.S. Nonpension Postretirement Benefit Plans | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair Value of plan assets | 177,000,000 | 433,000,000 | 38,000,000 |
Pension Contributions | ' | ' | ' |
Employer voluntary contributions to fund post-2012 benefit payments for Medicare-eligible prescription drugs | ' | 400,000,000 | ' |
U.S. Nonpension Postretirement Benefit Plans | Level 2 | Government and related fixed income securities and corporate bonds | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair Value of plan assets | 92,000,000 | 119,000,000 | ' |
Non-U.S. Nonpension Postretirement Plans | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair Value of plan assets | 92,000,000 | 119,000,000 | 112,000,000 |
Non-U.S. Nonpension Postretirement Plans | Level 1 | Cash | ' | ' | ' |
Defined Benefit Plan Disclosures | ' | ' | ' |
Fair Value of plan assets | $177,000,000 | $433,000,000 | ' |
RetirementRelated_Benefits_Rec
Retirement-Related Benefits (Reconciliation of Level 3 Assets) (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 |
U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | Non-U.S. Defined Benefit Pension Plans | ||||||
Government and related | Government and related | Corporate bonds | Corporate bonds | Mortgage and asset-backed securities | Mortgage and asset-backed securities | Fixed income commingled/ mutual funds | Fixed income commingled/ mutual funds | Hedge funds | Hedge funds | Private equity | Private equity | Private real estate | Private real estate | Government and related | Government and related | Corporate bonds | Corporate bonds | Private equity | Private equity | Private real estate | Private real estate | ||||||||||
Change in plan assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of plan assets, balance at beginning of period | $53,954 | $53,630 | $51,218 | $38,058 | $35,362 | $8,032 | $7,932 | $6 | $29 | $11 | $12 | $45 | $45 | $267 | $246 | $756 | $713 | $4,085 | $4,098 | $2,861 | $2,790 | $1,042 | $977 | $76 | $96 | $5 | $39 | $353 | $262 | $609 | $580 |
Return on assets held at end of year | ' | ' | ' | ' | ' | 2,103 | 1,135 | 0 | 0 | 0 | 0 | -1 | 1 | 7 | 21 | 104 | 56 | 1,104 | 855 | 889 | 202 | 22 | 6 | -12 | 3 | 0 | -1 | 1 | 9 | 33 | -5 |
Return on assets sold during the year | ' | ' | ' | ' | ' | -939 | -359 | 0 | 0 | 0 | 2 | 0 | 1 | ' | ' | 0 | 14 | -528 | -334 | -412 | -41 | 16 | 14 | 1 | 3 | 0 | 1 | 18 | 9 | -3 | 0 |
Purchases, sales and settlements, net | ' | ' | ' | ' | ' | -1,194 | -660 | -5 | -1 | 3 | -2 | 0 | -9 | ' | ' | 0 | -26 | -891 | -533 | -301 | -90 | 1 | 21 | -24 | -26 | -1 | -29 | 26 | 62 | 1 | 14 |
Transfers, net | ' | ' | ' | ' | ' | -33 | -15 | 0 | -22 | -8 | -1 | -26 | 8 | ' | ' | ' | ' | ' | ' | ' | ' | ' | -10 | ' | -2 | ' | -5 | ' | 0 | ' | -3 |
Foreign exchange impact | ' | ' | ' | 121 | 305 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 29 | 34 | 2 | 1 | 0 | 0 | 12 | 11 | 15 | 23 |
Fair value of plan assets, balance at end of period | $53,954 | $53,630 | $51,218 | $39,464 | $38,058 | $7,968 | $8,032 | $1 | $6 | $5 | $11 | $19 | $45 | $274 | $267 | $860 | $756 | $3,771 | $4,085 | $3,038 | $2,861 | $1,110 | $1,042 | $42 | $76 | $4 | $5 | $410 | $353 | $655 | $609 |
RetirementRelated_Benefits_Pen1
Retirement-Related Benefits (Pensions Expected Payments) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Expected Benefit Payments | ' | ' | ' |
Expected benefit payments, 2014 | $5,910 | ' | ' |
Expected benefit payments, 2015 | 5,945 | ' | ' |
Expected benefit payments, 2016 | 6,022 | ' | ' |
Expected benefit payments, 2017 | 6,073 | ' | ' |
Expected benefit payments, 2018 | 6,087 | ' | ' |
Expected benefit payments, 2019-2023 | 31,706 | ' | ' |
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets | ' | ' | ' |
Plans with PBO in excess of plan assets, Benefit Obligation | 46,458 | 105,473 | ' |
Plans with PBO in excess of plan assets, Plan Assets | 29,481 | 84,338 | ' |
Plans with assets in excess of PBO, Benefit Obligation | 58,661 | 6,956 | ' |
Plans with assets in excess of PBO, Plan Assets | 64,205 | 7,901 | ' |
Defined Benefit Pension Plans | ' | ' | ' |
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets | ' | ' | ' |
Plans with PBO in excess of plan assets, Benefit Obligation | 41,003 | 99,184 | ' |
Plans with PBO in excess of plan assets, Plan Assets | 29,223 | 83,799 | ' |
Plans with ABO in excess of plan assets, Benefit Obligation | 40,315 | 98,263 | ' |
Plans with ABO in excess of plan assets, Plan Assets | 29,213 | 83,677 | ' |
Plans with assets in excess of PBO, Benefit Obligation | 58,651 | 6,944 | ' |
Plans with assets in excess of PBO, Plan Assets | 64,194 | 7,889 | ' |
Qualified U.S. Defined Benefit Pension Plans | ' | ' | ' |
Expected Benefit Payments | ' | ' | ' |
Expected benefit payments, 2014 | 3,393 | ' | ' |
Expected benefit payments, 2015 | 3,430 | ' | ' |
Expected benefit payments, 2016 | 3,460 | ' | ' |
Expected benefit payments, 2017 | 3,477 | ' | ' |
Expected benefit payments, 2018 | 3,441 | ' | ' |
Expected benefit payments, 2019-2023 | 17,454 | ' | ' |
Nonqualified U.S. Defined Benefit Pension Plan | ' | ' | ' |
Expected Benefit Payments | ' | ' | ' |
Expected benefit payments, 2014 | 109 | ' | ' |
Expected benefit payments, 2015 | 112 | ' | ' |
Expected benefit payments, 2016 | 114 | ' | ' |
Expected benefit payments, 2017 | 116 | ' | ' |
Expected benefit payments, 2018 | 118 | ' | ' |
Expected benefit payments, 2019-2023 | 600 | ' | ' |
Qualified Non-U.S. Defined Benefit Pension Plans | ' | ' | ' |
Expected Benefit Payments | ' | ' | ' |
Expected benefit payments, 2014 | 2,026 | ' | ' |
Expected benefit payments, 2015 | 2,021 | ' | ' |
Expected benefit payments, 2016 | 2,062 | ' | ' |
Expected benefit payments, 2017 | 2,086 | ' | ' |
Expected benefit payments, 2018 | 2,121 | ' | ' |
Expected benefit payments, 2019-2023 | 11,327 | ' | ' |
Nonqualified Non-U.S. Defined Benefit Pension Plan | ' | ' | ' |
Expected Benefit Payments | ' | ' | ' |
Expected benefit payments, 2014 | 382 | ' | ' |
Expected benefit payments, 2015 | 382 | ' | ' |
Expected benefit payments, 2016 | 385 | ' | ' |
Expected benefit payments, 2017 | 394 | ' | ' |
Expected benefit payments, 2018 | 407 | ' | ' |
Expected benefit payments, 2019-2023 | 2,325 | ' | ' |
Nonpension Postretirement Plans | ' | ' | ' |
Expected Benefit Payments | ' | ' | ' |
Expected benefit payments, 2014 | 467 | ' | ' |
Expected benefit payments, 2015 | 466 | ' | ' |
Expected benefit payments, 2016 | 464 | ' | ' |
Expected benefit payments, 2017 | 461 | ' | ' |
Expected benefit payments, 2018 | 449 | ' | ' |
Expected benefit payments, 2019-2023 | 2,148 | ' | ' |
U.S. Nonpension Postretirement Benefit Plans | ' | ' | ' |
Expected Benefit Payments | ' | ' | ' |
Expected benefit payments before Medicare subsidy, 2014 | 427 | ' | ' |
Expected benefit payments before Medicare subsidy, 2015 | 422 | ' | ' |
Expected benefit payments before Medicare subsidy, 2016 | 416 | ' | ' |
Expected benefit payments before Medicare subsidy, 2017 | 409 | ' | ' |
Expected benefit payments before Medicare subsidy, 2018 | 393 | ' | ' |
Expected benefit payments before Medicare subsidy, 2019-2023 | 1,799 | ' | ' |
Postretirement Medical Plans with Prescription Drug Benefits | ' | ' | ' |
Total Subsidy received by the company under Medicare Prescription Drug Improvement and Modernization Act of 2003 | 30 | 53 | ' |
Impact of the subsidy resulted in a reduction in net periodic cost | 45 | 35 | 37 |
Qualified Non-U.S. Nonpension Postretirement Plan | ' | ' | ' |
Expected Benefit Payments | ' | ' | ' |
Expected benefit payments, 2014 | 8 | ' | ' |
Expected benefit payments, 2015 | 8 | ' | ' |
Expected benefit payments, 2016 | 9 | ' | ' |
Expected benefit payments, 2017 | 10 | ' | ' |
Expected benefit payments, 2018 | 10 | ' | ' |
Expected benefit payments, 2019-2023 | 63 | ' | ' |
Nonqualified Non-U.S. Nonpension Postretirement Plan | ' | ' | ' |
Expected Benefit Payments | ' | ' | ' |
Expected benefit payments, 2014 | 32 | ' | ' |
Expected benefit payments, 2015 | 36 | ' | ' |
Expected benefit payments, 2016 | 39 | ' | ' |
Expected benefit payments, 2017 | 42 | ' | ' |
Expected benefit payments, 2018 | 46 | ' | ' |
Expected benefit payments, 2019-2023 | $286 | ' | ' |
Segments_Segment_Table_Details
Segments (Segment Table) (Details 1) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
BusinessSegment | |||
Segment Information | ' | ' | ' |
Revenue | $99,751 | $104,507 | $106,916 |
Pre-tax income | 19,524 | 21,902 | 21,003 |
Number of business segments | 5 | ' | ' |
Total Segments | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 99,273 | 103,930 | 106,194 |
Global Technology Services | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 38,551 | 40,236 | 40,879 |
Global Business Services | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 18,396 | 18,566 | 19,284 |
Software | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 25,932 | 25,448 | 24,944 |
Systems and Technology | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 14,371 | 17,667 | 18,985 |
Global Financing | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 2,022 | 2,013 | 2,102 |
Business Segments | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 107,115 | 111,826 | 114,440 |
Pre-tax income | 22,967 | 24,015 | 22,904 |
Business Segments | Total Segments | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 107,115 | 111,826 | 114,440 |
Pre-tax income | 22,967 | 24,015 | 22,904 |
Revenue year-to-year change (as a percent) | -4.20% | -2.30% | 7.10% |
Pre-tax income year-to-year change (as a percent) | -4.40% | 4.80% | 9.50% |
Pre-tax income margin (as a percent) | 21.40% | 21.50% | 20.00% |
Business Segments | Global Technology Services | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 39,615 | 41,402 | 42,121 |
Pre-tax income | 6,983 | 6,961 | 6,284 |
Revenue year-to-year change (as a percent) | -4.30% | -1.70% | 6.60% |
Pre-tax income year-to-year change (as a percent) | 0.30% | 10.80% | 14.30% |
Pre-tax income margin (as a percent) | 17.60% | 16.80% | 14.90% |
Business Segments | Global Business Services | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 19,109 | 19,286 | 20,081 |
Pre-tax income | 3,214 | 2,983 | 3,006 |
Revenue year-to-year change (as a percent) | -0.90% | -4.00% | 5.60% |
Pre-tax income year-to-year change (as a percent) | 7.70% | -0.80% | 18.10% |
Pre-tax income margin (as a percent) | 16.80% | 15.50% | 15.00% |
Business Segments | Software | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 29,123 | 28,722 | 28,219 |
Pre-tax income | 11,106 | 10,810 | 9,970 |
Revenue year-to-year change (as a percent) | 1.40% | 1.80% | 10.90% |
Pre-tax income year-to-year change (as a percent) | 2.70% | 8.40% | 5.30% |
Pre-tax income margin (as a percent) | 38.10% | 37.60% | 35.30% |
Business Segments | Systems and Technology | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 14,964 | 18,343 | 19,823 |
Pre-tax income | -507 | 1,227 | 1,633 |
Revenue year-to-year change (as a percent) | -18.40% | -7.50% | 5.60% |
Pre-tax income year-to-year change (as a percent) | -141.30% | -24.90% | 12.20% |
Pre-tax income margin (as a percent) | -3.40% | 6.70% | 8.20% |
Business Segments | Global Financing | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 4,304 | 4,073 | 4,195 |
Pre-tax income | 2,171 | 2,034 | 2,011 |
Revenue year-to-year change (as a percent) | 5.70% | -2.90% | 2.80% |
Pre-tax income year-to-year change (as a percent) | 6.80% | 1.10% | 2.80% |
Pre-tax income margin (as a percent) | 50.40% | 49.90% | 47.90% |
Internal transactions | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | -7,843 | -7,896 | -8,246 |
Pre-tax income | -1,480 | -1,197 | -1,243 |
Internal transactions | Total Segments | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | -7,843 | -7,896 | -8,246 |
Internal transactions | Global Technology Services | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | -1,063 | -1,166 | -1,242 |
Internal transactions | Global Business Services | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | -714 | -719 | -797 |
Internal transactions | Software | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | -3,191 | -3,274 | -3,276 |
Internal transactions | Systems and Technology | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | -593 | -676 | -838 |
Internal transactions | Global Financing | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | ($2,282) | ($2,060) | ($2,092) |
Segments_Revenue_Reconciliatio
Segments (Revenue Reconciliation) (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Revenue | ' | ' | ' |
Revenue | $99,751 | $104,507 | $106,916 |
Total reportable segments | ' | ' | ' |
Revenue | ' | ' | ' |
Revenue | 107,115 | 111,826 | 114,440 |
Internal transactions | ' | ' | ' |
Revenue | ' | ' | ' |
Revenue | -7,843 | -7,896 | -8,246 |
Other revenue adjustments | ' | ' | ' |
Revenue | ' | ' | ' |
Revenue | $478 | $577 | $722 |
Segments_Operating_Profit_Reco
Segments (Operating Profit Reconciliation) (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Pre-tax Income | ' | ' | ' |
Income before income taxes | $19,524 | $21,902 | $21,003 |
Total reportable segments | ' | ' | ' |
Pre-tax Income | ' | ' | ' |
Income before income taxes | 22,967 | 24,015 | 22,904 |
Pre-tax reconciliations items | ' | ' | ' |
Pre-tax Income | ' | ' | ' |
Amortization of acquired intangible assets | -758 | -703 | -629 |
Acquisition-related charges | -46 | -36 | -46 |
Non-operating retirement-related (costs)/income | -1,062 | -538 | 72 |
Internal transactions | ' | ' | ' |
Pre-tax Income | ' | ' | ' |
Income before income taxes | -1,480 | -1,197 | -1,243 |
Unallocated corporate amounts | ' | ' | ' |
Pre-tax Income | ' | ' | ' |
Income before income taxes | ($98) | $361 | ($56) |
Segments_Management_System_Seg
Segments (Management System Segment View) (Details 4) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Segment Information | ' | ' | ' |
Assets | $126,223 | $119,213 | $116,433 |
Interest expense (Note D&J) | 402 | 459 | 411 |
Global Technology Services | ' | ' | ' |
Segment Information | ' | ' | ' |
Assets | 18,048 | 15,884 | 15,475 |
Depreciation/amortization of intangibles | 1,670 | 1,597 | 1,713 |
Capital expenditures/investments in intangibles | 1,938 | 1,760 | 1,838 |
Global Business Services | ' | ' | ' |
Segment Information | ' | ' | ' |
Assets | 8,311 | 8,022 | 8,078 |
Depreciation/amortization of intangibles | 72 | 75 | 83 |
Capital expenditures/investments in intangibles | 69 | 42 | 56 |
Software | ' | ' | ' |
Segment Information | ' | ' | ' |
Assets | 27,101 | 26,291 | 23,926 |
Depreciation/amortization of intangibles | 1,211 | 1,157 | 1,062 |
Capital expenditures/investments in intangibles | 540 | 618 | 469 |
Systems and Technology | ' | ' | ' |
Segment Information | ' | ' | ' |
Assets | 7,960 | 8,232 | 7,649 |
Depreciation/amortization of intangibles | 855 | 786 | 737 |
Capital expenditures/investments in intangibles | 781 | 1,106 | 1,032 |
Global Financing | ' | ' | ' |
Segment Information | ' | ' | ' |
Assets | 40,138 | 38,882 | 36,427 |
Depreciation/amortization of intangibles | 574 | 853 | 1,145 |
Capital expenditures/investments in intangibles | 467 | 708 | 930 |
Interest income | 1,904 | 1,972 | 2,176 |
Interest expense (Note D&J) | 405 | 410 | 538 |
Business Segments | ' | ' | ' |
Segment Information | ' | ' | ' |
Assets | 101,558 | 97,310 | 91,557 |
Depreciation/amortization of intangibles | 4,383 | 4,470 | 4,739 |
Capital expenditures/investments in intangibles | 3,796 | 4,233 | 4,325 |
Interest income | 1,904 | 1,972 | 2,176 |
Interest expense (Note D&J) | $405 | $410 | $538 |
Segments_Asset_Reconciliation_
Segments (Asset Reconciliation) (Details 5) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Millions, unless otherwise specified | |||
Segment Reporting, Asset Reconciling Item | ' | ' | ' |
Assets | $126,223 | $119,213 | $116,433 |
Deferred tax assets | 9,577 | 11,703 | ' |
Plant, other property and equipment | 13,821 | 13,996 | ' |
Pension assets | 5,551 | 945 | ' |
Total reportable segments | ' | ' | ' |
Segment Reporting, Asset Reconciling Item | ' | ' | ' |
Assets | 101,558 | 97,310 | 91,557 |
Elimination of internal transactions | ' | ' | ' |
Segment Reporting, Asset Reconciling Item | ' | ' | ' |
Assets | -4,740 | -4,943 | -5,407 |
Unallocated amounts | ' | ' | ' |
Segment Reporting, Asset Reconciling Item | ' | ' | ' |
Cash and marketable securities | 9,697 | 9,779 | 10,575 |
Notes and accounts receivable | 2,741 | 3,769 | 3,526 |
Deferred tax assets | 4,532 | 5,194 | 4,865 |
Plant, other property and equipment | 2,505 | 2,555 | 2,918 |
Pension assets | 5,551 | 945 | 2,837 |
Other | $4,378 | $4,604 | $5,562 |
Segments_Revenue_and_Plant_Pro
Segments (Revenue and Plant Property Equipment by Countries) (Details 6) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Segment Information | ' | ' | ' |
Revenue | $99,751 | $104,507 | $106,916 |
Net Plant, Property and Equipment | 13,821 | 13,996 | ' |
Plant and Other Property | ' | ' | ' |
Segment Information | ' | ' | ' |
Net Plant, Property and Equipment | 12,979 | 12,854 | 12,457 |
Geographic Information | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 99,751 | 104,507 | 106,916 |
Geographic Information | Plant and Other Property | ' | ' | ' |
Segment Information | ' | ' | ' |
Net Plant, Property and Equipment | 12,979 | 12,854 | 12,457 |
UNITED STATES | Geographic Information | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 34,809 | 36,270 | 37,041 |
UNITED STATES | Geographic Information | Plant and Other Property | ' | ' | ' |
Segment Information | ' | ' | ' |
Net Plant, Property and Equipment | 6,723 | 6,555 | 6,271 |
JAPAN | Geographic Information | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 9,071 | 10,697 | 10,968 |
Other countries | Geographic Information | ' | ' | ' |
Segment Information | ' | ' | ' |
Revenue | 55,871 | 57,540 | 58,906 |
Other countries | Geographic Information | Plant and Other Property | ' | ' | ' |
Segment Information | ' | ' | ' |
Net Plant, Property and Equipment | $6,257 | $6,299 | $6,186 |
Segments_External_Revenue_by_S
Segments (External Revenue by Segments) (Details 7) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Segment Information | ' | ' | ' |
External revenue | $99,751 | $104,507 | $106,916 |
Global Technology Services | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 38,551 | 40,236 | 40,879 |
Global Technology Services | Services | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 29,953 | 31,161 | 31,746 |
Global Technology Services | Maintenance | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 7,111 | 7,343 | 7,515 |
Global Technology Services | Systems | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 1,322 | 1,574 | 1,478 |
Global Technology Services | Software | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 164 | 159 | 140 |
Global Business Services | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 18,396 | 18,566 | 19,284 |
Global Business Services | Services | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 18,065 | 18,216 | 18,956 |
Global Business Services | Systems | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 109 | 142 | 118 |
Global Business Services | Software | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 221 | 208 | 211 |
Software | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 25,932 | 25,448 | 24,944 |
Software | Services | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 2,512 | 2,304 | 2,022 |
Software | Software | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 23,420 | 23,144 | 22,921 |
Systems and Technology | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 14,371 | 17,667 | 18,985 |
Systems and Technology | Servers | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 9,646 | 11,980 | 12,362 |
Systems and Technology | Storage | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 3,041 | 3,411 | 3,619 |
Systems and Technology | Microelectronics OEM | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 1,463 | 1,572 | 1,975 |
Systems and Technology | Retail Store Solutions | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 6 | 357 | 753 |
Systems and Technology | Microelectronics Services | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 215 | 346 | 277 |
Global Financing | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 2,022 | 2,013 | 2,102 |
Global Financing | Financing | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | 1,493 | 1,471 | 1,612 |
Global Financing | Used Equipment Sales | ' | ' | ' |
Segment Information | ' | ' | ' |
External revenue | $529 | $542 | $490 |
Subsequent_Events_Details
Subsequent Events (Details) (Subsequent event, USD $) | 1 Months Ended | 0 Months Ended | ||||
In Millions, except Per Share data, unless otherwise specified | Jan. 28, 2014 | Feb. 06, 2014 | Feb. 06, 2014 | Feb. 06, 2014 | Feb. 06, 2014 | Feb. 06, 2014 |
Two-year floating rate bonds | Five-year floating rate bonds | Five-year fixed rate bonds with 1.95% coupon rate | Ten-year fixed rate bonds with 3.625% coupon rate | |||
Subsequent events: | ' | ' | ' | ' | ' | ' |
Dividend declared (in dollars per share) | $0.95 | ' | ' | ' | ' | ' |
Dividend declared, date | 28-Jan-14 | ' | ' | ' | ' | ' |
Dividend payable, date | 10-Mar-14 | ' | ' | ' | ' | ' |
Shareholders of record, date | 10-Feb-14 | ' | ' | ' | ' | ' |
Bonds issued | ' | $4,500 | $1,000 | $750 | $750 | $2,000 |
Maturity term | ' | ' | '2 years | '5 years | '5 years | '10 years |
Debt instrument, interest rate (as a percent) | ' | ' | ' | ' | 1.95% | 3.63% |
Reference rate | ' | ' | 'three month London Interbank Offered Rate (LIBOR) | 'three month London Interbank Offered Rate (LIBOR) | ' | ' |
Interest rate margin (as a percent) | ' | ' | 0.07% | 0.37% | ' | ' |
Bond issuance date | ' | ' | 6-Feb-14 | 6-Feb-14 | 6-Feb-14 | 6-Feb-14 |
VALUATION_AND_QUALIFYING_ACCOU
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Details) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |||
Allowance For Doubtful Accounts, Current | ' | ' | ' | |||
Movement in Valuation and Qualifying Accounts and Reserves | ' | ' | ' | |||
Balance at the Beginning of the Period | $560 | $578 | $676 | |||
Additions, charged to revenue accounts | 127 | [1] | 41 | [1] | 90 | [1] |
Writeoffs | -60 | -45 | -154 | |||
Other | 9 | [2] | -15 | [2] | -34 | [2] |
Balance at the End of the Period | 636 | 560 | 578 | |||
Allowance For Doubtful Accounts, Noncurrent | ' | ' | ' | |||
Movement in Valuation and Qualifying Accounts and Reserves | ' | ' | ' | |||
Balance at the Beginning of the Period | 66 | 38 | 58 | |||
Additions, charged to revenue accounts | 27 | [1] | 10 | [1] | 1 | [1] |
Writeoffs | 0 | 0 | -17 | |||
Other | -12 | [2] | 17 | [2] | -3 | [2] |
Balance at the End of the Period | 80 | 66 | 38 | |||
Allowance For Inventory Losses | ' | ' | ' | |||
Movement in Valuation and Qualifying Accounts and Reserves | ' | ' | ' | |||
Balance at the Beginning of the Period | 652 | 625 | 674 | |||
Additions, charged to revenue accounts | 201 | [1] | 294 | [1] | 230 | [1] |
Writeoffs | -214 | -240 | -279 | |||
Other | -16 | [2] | -28 | [2] | 1 | [2] |
Balance at the End of the Period | 623 | 652 | 625 | |||
Revenue Based Provisions | ' | ' | ' | |||
Movement in Valuation and Qualifying Accounts and Reserves | ' | ' | ' | |||
Balance at the Beginning of the Period | 777 | 861 | 888 | |||
Additions, charged to revenue accounts | 3,061 | [1] | 3,228 | [1] | 3,157 | [1] |
Writeoffs | -3,004 | -3,345 | -3,132 | |||
Other | -7 | [2] | 33 | [2] | -51 | [2] |
Balance at the End of the Period | $827 | $777 | $861 | |||
[1] | *Additions for Allowance for Doubtful Accounts and Allowance for Inventory Losses are charged to expense and cost accounts, respectively, while Revenue Based Provisions are charged to revenue accounts. | |||||
[2] | **Primarily comprises currency translation adjustments. |