International Business Machines (IBM) 10-Q 25 Apr 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	Mar. 31, 2017shares
Document and Entity Information
Entity Registrant Name	INTERNATIONAL BUSINESS MACHINES CORP
Entity Central Index Key	51,143
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	939,496,884
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Trading Symbol	IBM

CONSOLIDATED STATEMENT OF EARNI

CONSOLIDATED STATEMENT OF EARNINGS - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenue:
Services	$ 12,342	$ 12,391
Sales	5,404	5,879
Financing	409	414
Total revenue	18,155	18,684
Cost:
Services	8,553	8,382
Sales	1,551	1,378
Financing	279	238
Total cost	10,383	9,999
Gross profit	7,772	8,686
Expense and other (income):
Selling, general and administrative	5,152	6,012
Research, development and engineering	1,533	1,458
Intellectual property and custom development income	(445)	(217)
Other (income) and expense	(28)	253
Interest expense	135	147
Total expense and other (income)	6,348	7,652
Income from continuing operations before income taxes	1,424	1,034
Provision for/(benefit from) income taxes	(329)	(983)
Income from continuing operations	1,753	2,016
Loss from discontinued operations, net of tax	(3)	(3)
Net income	$ 1,750	$ 2,014
Assuming dilution:
Continuing operations (in dollars per share)	$ 1.85	$ 2.09
Discontinued operations (in dollars per share)	0	0
Total (in dollars per share)	1.85	2.09
Basic:
Continuing operations (in dollars per share)	1.86	2.09
Discontinued operations (in dollars per share)	0	0
Total (in dollars per share)	$ 1.86	$ 2.09
Weighted-average number of common shares outstanding:
Assuming dilution (in shares)	947.8	964.4
Basic (in shares)	942.4	961.7
Cash dividend per common share	$ 1.40	$ 1.30

CONSOLIDATED STATEMENT OF COMPR

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Net income	$ 1,750	$ 2,014
Other comprehensive income/(loss), before tax:
Foreign currency translation adjustments	161	239
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	(1)	(36)
Reclassification of (gains)/losses to net income	1	37
Total net changes related to available-for-sale securities	0	1
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	(33)	(265)
Reclassification of (gains)/losses to net income	(98)	(91)
Total unrealized gains/(losses) on cash flow hedges	(130)	(356)
Retirement-related benefit plans:
Prior service costs/(credits)	0
Net (losses)/gains arising during the period	61	(147)
Curtailments and settlements	(1)	5
Amortization of prior service (credits)/costs	(21)	(25)
Amortization of net (gains)/losses	710	690
Total retirement-related benefit plans	748	522
Other comprehensive income/(loss), before tax	779	406
Income tax (expense)/benefit related to items of other comprehensive income	(92)	202
Other comprehensive income/(loss)	688	608
Total comprehensive income/(loss)	$ 2,438	$ 2,622

CONSOLIDATED STATEMENT OF FINAN

CONSOLIDATED STATEMENT OF FINANCIAL POSITION - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 10,096	$ 7,826
Marketable securities	599	701
Notes and accounts receivable - trade (net of allowances of $302 in 2017 and $290 in 2016)	8,377	9,182
Short-term financing receivables (net of allowances of $351 in 2017 and $337 in 2016)	16,362	19,006
Other accounts receivable (net of allowances of $38 in 2017 and $48 in 2016)	1,130	1,057
Inventories, at lower of average cost or market:
Finished goods	423	358
Work in process and raw materials	1,186	1,195
Total inventories	1,609	1,553
Prepaid expenses and other current assets	4,715	4,564
Total current assets	42,889	43,888
Property, plant and equipment	30,681	30,133
Less: Accumulated depreciation	19,816	19,303
Property, plant and equipment - net	10,865	10,830
Long-term financing receivables (net of allowances of $99 in 2017 and $101 in 2016)	8,502	9,021
Prepaid pension assets	3,491	3,034
Deferred taxes	6,457	5,224
Goodwill	36,307	36,199
Intangible assets - net	4,436	4,688
Investments and sundry assets	4,549	4,585
Total assets	117,495	117,470
Current liabilities:
Taxes	2,747	3,235
Short-term debt	8,340	7,513
Accounts payable	5,324	6,209
Compensation and benefits	3,197	3,577
Deferred income	12,351	11,035
Other accrued expenses and liabilities	4,522	4,705
Total current liabilities	36,481	36,275
Long-term debt	34,441	34,655
Retirement and nonpension postretirement benefit obligations	16,967	17,070
Deferred income	3,557	3,600
Other liabilities	7,601	7,477
Total liabilities	99,047	99,078
IBM stockholders' equity:
Common stock, par value $0.20 per share, and additional paid-in capital; Shares authorized: 4,687,500,000 Shares issued: 2017 - 2,226,175,975; 2016 - 2,225,116,815	54,104	53,935
Retained earnings	153,292	152,759
Treasury stock - at cost Shares: 2017 - 1,286,679,091; 2016 - 1,279,249,412	(160,359)	(159,050)
Accumulated other comprehensive income/(loss)	(28,710)	(29,398)
Total IBM stockholders' equity	18,327	18,246
Noncontrolling interests	121	146
Total equity	18,448	18,392
Total liabilities and equity	$ 117,495	$ 117,470

CONSOLIDATED STATEMENT OF FINA5

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes and accounts receivable - trade, allowances	$ 302	$ 290
Short-term financing receivables, allowances	351	337
Other accounts receivable, allowances	38	48
Long-term financing receivables, allowances	$ 99	$ 101
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)	2,226,175,975	2,225,116,815
Treasury stock, Shares (in shares)	1,286,679,091	1,279,249,412

CONSOLIDATED STATEMENT OF CASH

CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net income	$ 1,750	$ 2,014
Adjustments to reconcile net income to cash provided by operating activities
Depreciation	709	677
Amortization of intangibles	390	347
Stock-based compensation	129	133
Net (gain)/loss on asset sales and other	13	172
Changes in operating assets and liabilities, net of acquisitions/divestitures	964	2,187	[1],[2]
Net cash provided by operating activities	3,955	5,530	[1],[2]
Cash flows from investing activities:
Payments for property, plant and equipment	(740)	(956)
Proceeds from disposition of property, plant and equipment	58	129
Investment in software	(137)	(144)
Acquisition of businesses, net of cash acquired	(109)	(2,590)
Divestitures of businesses, net of cash transferred	(1)	47
Non-operating finance receivables - net	1,570	1,500	[2]
Purchases of marketable securities and other investments	(1,273)	(1,041)
Proceeds from disposition of marketable securities and other investments	981	1,169
Net cash (used in)/provided by investing activities	350	(1,886)	[2]
Cash flows from financing activities:
Proceeds from new debt	2,887	8,085
Payments to settle debt	(1,531)	(2,211)
Short-term borrowings/(repayments) less than 90 days - net	(880)	(910)
Common stock repurchases	(1,293)	(939)
Common stock repurchases for tax withholdings	(50)	(27)	[1]
Common stock transactions - other	54	59
Cash dividends paid	(1,321)	(1,250)
Net cash (used in)/provided by financing activities	(2,134)	2,806	[1]
Effect of exchange rate changes on cash and cash equivalents	100	217
Net change in cash and cash equivalents	2,270	6,668
Cash and cash equivalents at beginning of period	7,826	7,686
Cash and cash equivalents at end of period	$ 10,096	$ 14,354
[1]	Reclassified to reflect adoption of the FASB guidance on share-based compensation.
[2]	Revised classification of certain financing receivables.

CONSOLIDATED STATEMENT OF CHANG

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Millions		Total IBM Stockholders' Equity	Common Stock and Additional Paid-in Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Income/(Loss)	Non-Controlling Interests	Total
Balance at the Beginning of the Period at Dec. 31, 2015		$ 14,262	$ 53,262	$ 146,124	$ (155,518)	$ (29,607)	$ 162	$ 14,424
Equity
Net income		2,014		2,014				2,014
Other comprehensive income/(loss)		608				608		608
Total comprehensive income/(loss)		2,622						2,622
Cash dividends paid - common stock		(1,250)		(1,250)				(1,250)
Common stock issued under employee plans (Shares - 1,059,160 and 1,049,083 for the three months ended March31, 2017 and 2016 respectively)		185	185					185
Purchases (Shares - 289,364 and 216,803) and sales (Shares - 43,179 and 40,129) of treasury stock under employee plans - net, for the three months ended March 31, 2017 and 2016 respectively		(22)		0	(22)			(22)
Other treasury shares purchased, not retired (Shares - 7,183,494 and 6,639,282 for the three months ended March 31, 2017 and 2016 respectively)		(863)			(863)			(863)
Changes in other equity		(9)	(9)					(9)
Changes in noncontrolling interests							(14)	(14)
Balance at the End of the Period at Mar. 31, 2016		14,925	53,439	146,888	(156,404)	(28,998)	147	15,072
Balance at the Beginning of the Period at Dec. 31, 2016		18,246	53,935	152,759	(159,050)	(29,398)	146	18,392
Equity
Cumulative effect of change in accounting principle	[1]	102		102				102
Net income		1,750		1,750				1,750
Other comprehensive income/(loss)		688				688		688
Total comprehensive income/(loss)		2,438						2,438
Cash dividends paid - common stock		(1,321)		(1,321)				(1,321)
Common stock issued under employee plans (Shares - 1,059,160 and 1,049,083 for the three months ended March31, 2017 and 2016 respectively)		169	169					169
Purchases (Shares - 289,364 and 216,803) and sales (Shares - 43,179 and 40,129) of treasury stock under employee plans - net, for the three months ended March 31, 2017 and 2016 respectively		(44)		1	(45)			(44)
Other treasury shares purchased, not retired (Shares - 7,183,494 and 6,639,282 for the three months ended March 31, 2017 and 2016 respectively)		(1,264)			(1,264)			(1,264)
Changes in noncontrolling interests							(25)	(25)
Balance at the End of the Period at Mar. 31, 2017		$ 18,327	$ 54,104	$ 153,292	$ (160,359)	$ (28,710)	$ 121	$ 18,448
[1]	Reflects the adoption of the FASB guidance on intra-entity transfers of assets.

CONSOLIDATED STATEMENT OF CHAN8

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Common stock issued under employee plans (in shares)	1,059,160	1,049,083
Purchases of treasury stock under employee plans (in shares)	289,364	216,803
Sales of treasury stock under employee plans (in shares)	43,179	40,129
Other treasury shares purchased, not retired (in shares)	7,183,494	6,639,282

Basis of Presentation

Basis of Presentation	3 Months Ended
	Mar. 31, 2017
Basis of Presentation:
Basis of Presentation:	1. Basis of Presentation: The accompanying Consolidated Financial Statements and footnotes of the International Business Machines Corporation (IBM or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The financial statements and footnotes are unaudited. In the opinion of the company’s management, these statements include all adjustments, which are only of a normal recurring nature, necessary to present a fair statement of the company’s results of operations, financial position and cash flows. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) that are reported in the Consolidated Financial Statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates. Refer to the company’s 2016 Annual Report on pages 71 to 74, for a discussion of the company’s critical accounting estimates. The company revised the classification of certain financing receivables for the three months ended March 31, 2016, decreasing net cash provided by operating activities and net cash used in investing activities in the amount of $142 million, which the company concluded to be immaterial to the period presented. The twelve-month revision for the period ended December 31, 2016 was provided in the company’s 2016 Annual Report on page 26. There was no impact to total GAAP cash flows or free cash flow. For the three months ended March 31, 2017, the company’s benefit from income taxes was $329 million, and its effective tax rate was (23.1) percent. This was primarily driven by a discrete tax benefit of $582 million from a first-quarter 2017 transaction accounted for under the new Financial Accounting Standards Board (FASB) guidance related to intra-entity transfers of assets. This benefit was partially offset by a discrete tax charge related to foreign audit activity of $99 million. In the first quarter of 2016, the company reported a benefit from income taxes of $983 million, and its effective tax rate was (95.1) percent, primarily driven by the resolution of a long-standing Japan tax matter in February 2016. Refer to note 2, “Accounting Changes,” and the Taxes section of the Management Discussion for additional information. Noncontrolling interest amounts of $3.6 million and $1.3 million, net of tax, for the three months ended March 31, 2017 and 2016, respectively, are included as a reduction within other (income) and expense in the Consolidated Statement of Earnings. Interim results are not necessarily indicative of financial results for a full year. The information included in this Form 10-Q should be read in conjunction with the company’s 2016 Annual Report. Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior year amounts have been reclassified to conform to the current year presentation. This is annotated where applicable.

Accounting Changes

Accounting Changes	3 Months Ended
	Mar. 31, 2017
Accounting Changes:
Accounting Changes:	2. Accounting Changes: New Standards to be Implemented In March 2017, the FASB issued guidance that impacts the presentation of net periodic pension and postretirement benefit costs. Under the guidance, the service cost component of net benefit cost will continue to be presented in the same line items as other employee compensation costs, unless eligible for capitalization in the Consolidated Statement of Financial Position. The other components of net benefit costs will be presented separately from service cost as non-operating costs in the Consolidated Statement of Earnings or Notes to the Consolidated Financial Statements. The guidance is effective January 1, 2018 with early adoption permitted. The company will adopt the guidance as of the effective date. The guidance is primarily a change in financial statement presentation and is not expected to have a material impact in the consolidated financial results. In June 2016, the FASB issued guidance for credit impairment based on an expected loss model rather than an incurred loss model. The guidance requires the consideration of all available relevant information when estimating expected credit losses, including past events, current conditions and forecasts and their implications for expected credit losses. The guidance is effective January 1, 2020 with a one year early adoption permitted. The company is evaluating the impact of the new guidance. In February 2016, the FASB issued guidance which changes the accounting for leases. The guidance requires lessees to recognize right-of-use assets and lease liabilities for most leases in the Consolidated Statement of Financial Position. The guidance makes some changes to lessor accounting, including the elimination of the use of third-party residual value guarantee insurance in the capital lease test, and overall aligns with the new revenue recognition guidance. The guidance also requires qualitative and quantitative disclosures to assess the amount, timing and uncertainty of cash flows arising from leases. The guidance is effective January 1, 2019 and early adoption is permitted. The company will adopt the guidance as of the effective date. A cross-functional implementation team has been established which is evaluating the lease portfolio, system, process and policy change requirements. The company is currently evaluating the impact of the new guidance on its consolidated financial results and expects it will have a material impact on the Consolidated Statement of Financial Position. The company’s operating lease commitments were $6.9 billion at December 31, 2016. In 2016, the use of third-party residual value guarantee insurance resulted in the company recognizing $220 million of sales-type lease revenue that would otherwise have been recognized over the lease period as operating lease revenue. In January 2016, the FASB issued guidance which addresses aspects of recognition, measurement, presentation and disclosure of financial instruments. Certain equity investments will be measured at fair value with changes recognized in net income. The amendment also simplifies the impairment test of equity investments that lack readily determinable fair value. The guidance is effective January 1, 2018 and early adoption is not permitted except for limited provisions. The guidance is not expected to have a material impact in the consolidated financial results. The FASB issued guidance on the recognition of revenue from contracts with customers in May 2014 with amendments in 2015 and 2016. Revenue recognition will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The guidance was initially effective January 1, 2017 and early adoption was not permitted. The amended guidance provides for a one-year deferral of the effective date to January 1, 2018, with an option of applying the standard on the original effective date. The company will adopt the guidance on January 1, 2018 and apply the cumulative catch-up transition method. Given the scope of work required to implement the recognition and disclosure requirements under the new standard, the company began its assessment process in 2014 and has since made significant progress, including identification of changes to policy, processes, systems and controls. This also includes the assessment of data availability and presentation necessary to meet the additional disclosure requirements of the guidance in the Notes to the Consolidated Financial Statements. The company expects revenue recognition for its broad portfolio of hardware, software and services offerings to remain largely unchanged. However, the guidance is expected to change the timing of revenue recognition in certain areas, including accounting for certain software licenses. These impacts are not expected to be material. The company expects to continue to recognize revenue for term license (recurring license charge) software arrangements on a monthly basis over the period that the client is entitled to use the license due to the contractual terms in these arrangements. Since the company currently expenses sales commissions as incurred, the requirement in the new standard to capitalize certain in-scope sales commissions is being evaluated to determine its potential impact in the consolidated financial statements in the year of adoption. There will be no impact to cash flows. The company continues to assess all potential impacts of the guidance and given normal ongoing business dynamics, preliminary conclusions are subject to change. Standards Implemented In January 2017, the FASB issued guidance which clarifies the definition of a business. The guidance provides a more robust framework to use in determining when a set of assets and activities acquired or sold is a business. The guidance is effective January 1, 2018 and early adoption is permitted. The company adopted the guidance effective January 1, 2017, and it did not have a material impact in the consolidated financial results. In October 2016, the FASB issued guidance which requires an entity to recognize the income tax consequences of intra-entity transfers of assets, other than inventory, at the time of transfer. Assets within the scope of the guidance include intellectual property and property, plant and equipment. The guidance is effective January 1, 2018 and early adoption is permitted. The company adopted the guidance on January 1, 2017 using the required modified retrospective method. At adoption, $95 million and $47 million were reclassified from investments and sundry assets and prepaid expenses and other current assets, respectively into retained earnings. Additionally, net deferred taxes of $244 million were established in deferred taxes in the Consolidated Statement of Financial Position, resulting in a cumulative-effect net credit to retained earnings of $102 million. In January 2017, the company had one transaction that generated a $582 million benefit to income tax expense, income from continuing operations and net income and a benefit to basic and diluted earnings per share of $0.62 and $0.61 per share, respectively, for the three months ended March 31, 2017. The ongoing impact of this guidance will be dependent on any transaction that is within its scope. In March 2016, the FASB issued guidance which changes the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification in the Consolidated Statement of Cash Flows. The guidance was effective and adopted by the company on January 1, 2017, and it did not have a material impact in the Consolidated Statement of Financial Position. The ongoing impact of the guidance could result in increased volatility in the provision for income taxes and earnings per share in the Consolidated Statement of Earnings, depending on the company’s share price at exercise or vesting of share-based awards compared to grant date, however these impacts are not expected to be material. These impacts are recorded on a prospective basis. See note 5, “Stock-Based Compensation,” for additional information. The company continues to estimate forfeitures in conjunction with measuring stock-based compensation cost. The guidance also requires cash payments on behalf of employees for shares directly withheld for taxes to be presented as financing outflows in the Consolidated Statement of Cash Flows. Prior to adoption, the company reported this activity as an operating cash outflow and as a result, prior periods have been reclassified as required. In September 2015, the FASB issued guidance eliminating the requirement that an acquirer in a business combination account for a measurement-period adjustment retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which the amount of the adjustment is determined. In addition, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date should be presented separately on the face of the income statement or disclosed in the notes. The guidance was effective January 1, 2016 on a prospective basis. The guidance did not have a material impact in the consolidated financial results. In May 2015, the FASB issued guidance which removed the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also removed the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. The guidance was effective January 1, 2016. The guidance was a change in disclosure only and did not have an impact in the consolidated financial results. In April 2015, the FASB issued guidance about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a services contract. All software licenses recognized under this guidance will be accounted for consistent with other licenses of intangible assets. The guidance was effective January 1, 2016 and the company adopted it on a prospective basis. The guidance did not have a material impact in the consolidated financial results.

Financial Instruments

Financial Instruments	3 Months Ended
	Mar. 31, 2017
Financial Instruments:
Financial Instruments:	3. Financial Instruments: Fair Value Measurements Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the company is required to classify certain assets and liabilities based on the following fair value hierarchy: · Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date; · Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and · Level 3—Unobservable inputs for the asset or liability. The guidance requires the use of observable market data if such data is available without undue cost and effort. When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items as Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation. The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument. In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calculated using the methodologies described below for several parameters that market participants would consider in determining fair value: · Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument. · Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market. As an example, the fair value of derivatives is derived utilizing a discounted cash flow model that uses observable market inputs such as known notional value amounts, yield curves, spot and forward exchange rates as well as discount rates. These inputs relate to liquid, heavily traded currencies with active markets which are available for the full term of the derivative. Certain financial assets are measured at fair value on a nonrecurring basis. These assets include equity method investments that are recognized at fair value at the measurement date to the extent that they are deemed to be other-than-temporarily impaired. Certain assets that are measured at fair value on a recurring basis can be subject to nonrecurring fair value measurements. These assets include available-for-sale equity investments that are deemed to be other-than-temporarily impaired. In the event of an other-than-temporary impairment of a financial investment, fair value is measured using a model described above. Non-financial assets such as property, plant and equipment, land, goodwill and intangible assets are also subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for nonfinancial assets depend on the type of asset. During the three months ended March 31, 2016, a pre-tax impairment charge related to certain property, plant and equipment of $252 million was recorded. There were no material impairments of non-financial assets for the three months ended March 31, 2017. Accounting guidance permits the measurement of eligible financial assets, financial liabilities and firm commitments at fair value, on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. This election is irrevocable. The company has not applied the fair value option to any eligible assets or liabilities. The following tables present the company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at March 31, 2017 and December 31, 2016. (Dollars in millions) At March 31, 2017 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ $ — $ Money market funds — — Total — (6) Debt securities - current (2) — — (6) Debt securities - noncurrent (3) — Available-for-sale equity investments (3) — — Derivative assets (4) Interest rate contracts — — Foreign exchange contracts — — Equity contracts — — Total — — (7) Total assets $ $ $ — $ (7) Liabilities: Derivative liabilities (5) Foreign exchange contracts $ — $ $ — $ Equity contracts — — Interest rate contracts — — Total liabilities $ — $ $ — $ (7) (1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. (2) U.S. government securities reported as marketable securities in the Consolidated Statement of Financial Position. (3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. (4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Statement of Financial Position at March 31, 2017 were $348 million and $546 million, respectively. (5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Statement of Financial Position at March 31, 2017 were $130 million and $35 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 each would have been reduced by $122 million. (Dollars in millions) At December 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ $ — $ Money market funds — — Total — (6) Debt securities - current (2) — — (6) Debt securities - noncurrent (3) — Available-for-sale equity investments (3) — — Derivative assets (4) Interest rate contracts — — Foreign exchange contracts — — Equity contracts — — Total — — (7) Total assets $ $ $ — $ (7) Liabilities: Derivative liabilities (5) Foreign exchange contracts $ — $ $ — $ Equity contracts — — Interest rate contracts — — Total liabilities $ — $ $ — $ (7) (1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. (2) U.S government securities 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, 2016 were $532 million and $594 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, 2016 were $145 million and $61 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 each would have been reduced by $116 million. There were no transfers between Levels 1 and 2 for the three months ended March 31, 2017 and the year ended December 31, 2016. 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, except for short-term debt, which would be classified as Level 2. Loans and Long-term Receivables Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At March 31, 2017 and December 31, 2016, the difference between the carrying amount and estimated fair value for loans and long-term receivables was immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. Long-Term Debt Fair value of publicly-traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. The carrying amount of long-term debt was $34,441 million and $34,655 million, and the estimated fair value was $36,733 million and $36,838 million at March 31, 2017 and December 31, 2016, 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 following tables summarize the company’s noncurrent debt and marketable equity securities which are considered available-for-sale and recorded at fair value in the Consolidated Statement of Financial Position. Gross Gross (Dollars in millions) Adjusted Unrealized Unrealized Fair At March 31, 2017: Cost Gains Losses Value Debt securities — noncurrent(1) $ $ $ — $ Available-for-sale equity investments(1) $ $ $ $ (1) Included within investments and sundry assets in the Consolidated Statement of Financial Position. Gross Gross (Dollars in millions) Adjusted Unrealized Unrealized Fair At December 31, 2016: Cost Gains Losses Value Debt securities — noncurrent(1) $ $ $ — $ Available-for-sale equity investments(1) $ $ $ $ (1) Included within investments and sundry assets in the Consolidated Statement of Financial Position. During the fourth quarter of 2014, the company acquired equity securities in conjunction with the sale of the System x business which were classified as available-for-sale securities. Based on an evaluation of available evidence as of December 31, 2015, the company recorded an other-than-temporary impairment loss of $86 million resulting in an adjusted cost basis of $185 million as of December 31, 2015. In the first quarter of 2016, the company recorded a gross realized loss of $37 million (before taxes) related to the sale of all the outstanding shares. The loss on this sale was recorded in other (income) and expense in the Consolidated Statement of Earnings. Sales of debt and available-for-sale equity investments during the period were as follows: (Dollars in millions) For the three months ended March 31: 2017 2016 Proceeds $ $ Gross realized gains (before taxes) — Gross realized losses (before taxes) The after-tax net unrealized holding gains/(losses) on available-for-sale debt and marketable equity securities that have been included in other comprehensive income/(loss) for the period and the after-tax net (gains)/losses reclassified from accumulated other comprehensive income/(loss) to net income were as follows: (Dollars in millions) For the three months ended March 31: 2017 2016 Net unrealized gains/(losses) arising during the period $ ) $ ) Net unrealized (gains)/losses reclassified to net income* * There were no writedowns for the three months ended March 31, 2017 and 2016, respectively. The contractual maturities of substantially all available-for-sale debt securities are less than one year at March 31, 2017. Derivative Financial Instruments The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations. As a result of the use of derivative instruments, the company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the company has a policy of only entering into contracts with carefully selected major financial institutions based upon their overall credit profile. The company’s established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. The right of set-off that exists under certain of these arrangements enables the legal entities of the company subject to the arrangement to net amounts due to and from the counterparty reducing the maximum loss from credit risk in the event of counterparty default. The company is also a party to collateral security arrangements with most of its major derivative counterparties. These arrangements require the company to hold or post collateral (cash or U.S. Treasury securities) when the derivative fair values exceed contractually established thresholds. Posting thresholds can be fixed or can vary based on credit default swap pricing or credit ratings received from the major credit agencies. The aggregate fair value of all derivative instruments under these collateralized arrangements that were in a liability position at March 31, 2017 and December 31, 2016 was $4 million and $11 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 asset positions as of March 31, 2017 and December 31, 2016 was $894 million and $1,126 million, respectively. This amount represents the maximum exposure to loss at the reporting date if the counterparties failed to perform as contracted. This exposure was reduced by $122 million and $116 million at March 31, 2017 and December 31, 2016, respectively, of liabilities included in master netting arrangements with those counterparties. Additionally, at March 31, 2017 and December 31, 2016, this exposure was reduced by $91 million and $141 million of cash collateral, respectively, and $35 million of non-cash collateral in U.S. Treasury securities at December 31, 2016. There were no non-cash collateral balances in U.S. Treasury securities at March 31, 2017. At March 31, 2017 and December 31, 2016, the net exposure related to derivative assets recorded in the Consolidated Statement of Financial Position was $681 million and $834 million, respectively. At March 31, 2017 and December 31, 2016, the net exposure related to derivative liabilities recorded in the Consolidated Statement of Financial Position was $44 million and $90 million, respectively. In the Consolidated Statement of Financial Position, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments. No amount was recognized in other receivables at March 31, 2017 or December 31, 2016 for the right to reclaim cash collateral. The amount recognized in accounts payable for the obligation to return cash collateral was $91 million and $141 million at March 31, 2017 and December 31, 2016, respectively. The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in prepaid expenses and other current assets in the Consolidated Statement of Financial Position. No amount was rehypothecated at March 31, 2017 and December 31, 2016. 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, cross-currency swaps, and options depending upon the underlying exposure. The company is not a party to leveraged derivative instruments. A brief description of the major hedging programs, categorized by underlying risk, follows. Interest Rate Risk Fixed and Variable Rate Borrowings The company issues debt in the global capital markets to fund its operations and financing business. Access to cost-effective financing can result in interest rate mismatches with the underlying assets. To manage these mismatches and to reduce overall interest cost, the company uses interest-rate swaps to convert specific fixed-rate debt issuances into variable-rate debt (i.e., fair value hedges) and to convert specific variable-rate debt issuances into fixed-rate debt (i.e., cash flow hedges). At March 31, 2017 and December 31, 2016, the total notional amount of the company’s interest rate swaps was $7.3 billion at both periods. The weighted-average remaining maturity of these instruments at March 31, 2017 and December 31, 2016 was approximately 6.0 years and 6.2 years, respectively. Forecasted Debt Issuance The company is exposed to interest rate volatility on future debt issuances. To manage this risk, the company may use forward starting interest-rate swaps to lock in the rate on the interest payments related to the forecasted debt issuance. These swaps are accounted for as cash flow hedges. The company did not have any derivative instruments relating to this program outstanding at March 31, 2017 and December 31, 2016. At March 31, 2017 and December 31, 2016, net gains of less than $1 million (before taxes), respectively, were recorded in accumulated other comprehensive income/(loss) in connection with cash flow hedges of the company’s borrowings. Within these amounts, 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 March 31, 2017 and December 31, 2016, the total notional amount of derivative instruments designated as net investment hedges was $6.4 billion and $6.7 billion, respectively. At March 31, 2017 and December 31, 2016, the weighted-average remaining maturity of these instruments was approximately 0.2 years at 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 has hedged its exposure to the variability in future cash flows is four years. At March 31, 2017 and December 31, 2016, the total notional amount of forward contracts designated as cash flow hedges of forecasted royalty and cost transactions was $8.1 billion and $8.3 billion, respectively. The weighted-average remaining maturity of these instruments at March 31, 2017 and December 31, 2016 was 0.7 years at both periods. At March 31, 2017 and December 31, 2016, in connection with cash flow hedges of anticipated royalties and cost transactions, the company recorded net gains of $342 million and $462 million (before taxes), respectively, in accumulated other comprehensive income/(loss). Within these amounts, $245 million and $397 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 anticipated transactions. Foreign Currency Denominated Borrowings The company is exposed to exchange rate volatility on foreign currency denominated debt. To manage this risk, the company employs cross-currency swaps to convert fixed-rate foreign currency denominated debt to fixed-rate debt denominated in the functional currency of the borrowing entity. These swaps are accounted for as cash flow hedges. The maximum length of time over which the company has hedged its exposure to the variability in future cash flows is approximately nine years. At March 31, 2017 and December 31, 2016, the total notional amount of cross-currency swaps designated as cash flow hedges of foreign currency denominated debt was $1.4 billion at both periods. At March 31, 2017 and December 31, 2016, in connection with cash flow hedges of foreign currency denominated borrowings, the company recorded net gains of $19 million and net gains of $29 million (before taxes), respectively, in accumulated other comprehensive income/(loss). Within these amounts, $27 million of gains at both periods are expected to be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying exposure. Subsidiary Cash and Foreign Currency Asset/Liability Management The company uses its Global Treasury Centers to manage the cash of its subsidiaries. These centers principally use currency swaps to convert cash flows in a cost-effective manner. In addition, the company uses foreign exchange forward contracts to economically hedge, on a net basis, the foreign currency exposure of a portion of the company’s nonfunctional currency assets and liabilities. The terms of these forward and swap contracts are generally less than one year. The changes in the fair values of these contracts and of the underlying hedged exposures are generally offsetting and are recorded in other (income) and expense in the Consolidated Statement of Earnings. At March 31, 2017 and December 31, 2016, the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $10.1 billion and $12.7 billion, respectively. Equity Risk Management The company is exposed to market price changes in certain broad market indices and in the company’s own stock primarily related to certain obligations to employees. Changes in the overall value of these employee compensation obligations are recorded in selling, general and administrative (SG&A) expense in the Consolidated Statement of Earnings. Although not designated as accounting hedges, the company utilizes derivatives, including equity swaps and futures, to economically hedge the exposures related to its employee compensation obligations. The derivatives are linked to the total return on certain broad market indices or the total return on the company’s common stock, and are recorded at fair value with gains or losses also reported in SG&A expense in the Consolidated Statement of Earnings. At March 31, 2017 and December 31, 2016, the total notional amount of derivative instruments in economic hedges of these compensation obligations was $1.2 billion at both periods. 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 significant warrants qualifying as derivatives outstanding at March 31, 2017 and December 31, 2016. The company is exposed to a potential loss if a client fails to pay amounts due under contractual terms. The company may utilize credit default swaps to economically hedge its credit exposures. The swaps are recorded at fair value with gains and losses reported in other (income) and expense in the Consolidated Statement of Earnings. The company did not have any derivative instruments relating to this program outstanding at March 31, 2017 and December 31, 2016. The company is exposed to market volatility on certain investment securities. The company may utilize options or forwards to economically hedge its market exposure. The derivatives are recorded at fair value with gains and losses reported in other (income) and expense in the Consolidated Statement of Earnings. At March 31, 2017 and December 31, 2016, the company did not have any derivative instruments relating to this program outstanding. The following tables provide a quantitative summary of the derivative and non-derivative instrument-related risk management activity as of March 31, 2017 and December 31, 2016, as well as for the three months ended March 31, 2017 and 2016, respectively. Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position As of March 31, 2017 and December 31, 2016 Fair Value of Derivative Assets Fair Value of Derivative Liabilities Balance Sheet Balance Sheet (Dollars in millions) Classification 3/31/2017 12/31/2016 Classification 3/31/2017 12/31/2016 Designated as hedging instruments: Interest rate contracts: Prepaid expenses and other current assets $ — $ — Other accrued expenses and liabilities $ $ — Investments and sundry assets Other liabilities Foreign exchange contracts: Prepaid expenses and other current assets Other accrued expenses and liabilities Investments and sundry assets Other liabilities Fair value of derivative assets $ $ Fair value of derivative liabilities $ $ Not designated as hedging instruments: Foreign exchange contracts: Prepaid expenses and other current assets $ $ Other accrued expenses and liabilities $ $ Investments and sundry assets Other liabilities — Equity contracts: Prepaid expenses and other current assets Other accrued expenses and liabilities Investments and sundry assets — — Other liabilities — — Fair value of derivative assets $ $ Fair value of derivative liabilities $ $ Total debt designated as hedging instruments: Short-term debt N/A N/A $ $ Long-term debt N/A N/A $ $ Total $ $ $ $ N/A - not applicable The Effect of Derivative Instruments in the Consolidated Statement of Earnings For the three months ended March 31, 2017 and 2016 Gain (Loss) Recognized in Earnings Consolidated Recognized on Attributable to Risk (Dollars in millions) Statement of Derivatives Being Hedged(2) For the three months ended March 31: Earnings Line Item 2017 2016 2017 2016 Derivative instruments in fair value hedges (1) (5): Interest rate contracts Cost of financing $ ) $ $ $ ) Interest expense ) ) Derivative instruments not designated as hedging instruments: Foreign exchange contracts Other (income) and expense ) N/A N/A Interest rate contracts Other (income) and expense — N/A N/A Equity contracts SG&A expense N/A N/A Other (income) and expense — ) N/A N/A Total $ ) $ $ $ ) Gain (Loss) Recognized in Earnings and Other Comprehensive Income Ineffectiveness and (Dollars in millions) Effective Portion Consolidated Effective Portion Reclassified Amounts Excluded from For the three months Recognized in OCI Statement of from AOCI Effectiveness Testing(3) ended March 31: 2017 2016 Earnings Line Item 2017 2016 2017 2016 Derivative instruments in cash flow hedges: Interest rate contracts $ — $ — Interest expense $ ) $ ) $ — $ — Foreign exchange contracts ) ) Other (income) and expense Cost of sales* — — Cost of services* ) — — SG&A expense — — Instruments in net investment hedges(4): Foreign exchange contracts ) ) Interest expense — — Total $ ) $ ) $ $ $ $ * Reclassified to conform to 2017 presentation N/A - not applicable Note: OCI represents other comprehensive income/(loss) in the Consolidated Statement of Comprehensive Income and AOCI represents accumulated other comprehensive income/(loss) in the Consolidated Statement of Changes in Equity. (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. (5) For the three month periods ended March 31, 2017 and March 31, 2016, fair value hedges resulted in a loss of less than $1 million and a gain of $2 million in ineffectiveness, respectively. For the three months ending March 31, 2017 and 2016, 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.

Financing Receivables

Financing Receivables	3 Months Ended
	Mar. 31, 2017
Financing Receivables:
Financing Receivables:	4. Financing Receivables: The following table presents financing receivables, net of allowances for credit losses, including residual values. At March 31, At December 31, (Dollars in millions) 2017 2016 Current: Net investment in sales-type and direct financing leases $ $ Commercial financing receivables Client loan and installment payment receivables (loans) Total $ $ Noncurrent: Net investment in sales-type and direct financing leases $ $ Client loan and installment payment receivables (loans) Total $ $ 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 $574 million and $585 million at March 31, 2017 and December 31, 2016, respectively, and is reflected net of unearned income of $496 million and $513 million, and net of allowance for credit losses of $140 million and $133 million at those dates, respectively. Commercial financing receivables, net of allowance for credit losses of $26 million and $28 million at March 31, 2017 and December 31, 2016, 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 and installment payment receivables (loans), net of allowance for credit losses of $285 million and $276 million at March 31, 2017 and December 31, 2016, respectively, are loans that are provided primarily to clients to finance the purchase of hardware, software and services. Payment terms on these financing arrangements are generally for terms up to seven years. Client loan and installment payment financing contracts are priced independently at competitive market rates. The company has a history of enforcing the terms of these financing agreements. The company utilizes certain of its financing receivables as collateral for nonrecourse borrowings. Financing receivables pledged as collateral for borrowings were $658 million and $689 million at March 31, 2017 and December 31, 2016, respectively. The company did not have any financing receivables held for sale as of March 31, 2017 and December 31, 2016. Financing Receivables by Portfolio Segment The following tables present financing receivables on a gross basis, excluding the allowance for credit losses and residual value, by portfolio segment and by class, excluding commercial financing receivables and other miscellaneous financing receivables at March 31, 2017 and December 31, 2016. The company determines its allowance for credit losses based on two portfolio segments: lease receivables and loan receivables, and further segments the portfolio into three classes: Americas, Europe/Middle East/Africa (EMEA), and Asia Pacific. This portfolio segmentation was changed from growth markets and major markets in 2017 as the company no longer manages the business under those market delineations. There was no impact to segment reporting or the company’s Consolidated Financial Statements. (Dollars in millions) At March 31, 2017 Americas EMEA Asia Pacific Total Financing receivables Lease receivables $ $ $ $ Loan receivables Ending balance $ $ $ $ Collectively evaluated for impairment $ $ $ $ Individually evaluated for impairment $ $ $ $ Allowance for credit losses Beginning balance at January 1, 2017 Lease receivables $ $ $ $ Loan receivables Total $ $ $ $ Write-offs $ ) $ $ $ ) Recoveries Provision ) Other Ending balance at March 31, 2017 $ $ $ $ Lease receivables $ $ $ $ Loan receivables $ $ $ $ Collectively evaluated for impairment $ $ $ $ Individually evaluated for impairment $ $ $ $ (Dollars in millions) At December 31, 2016:* Americas EMEA Asia Pacific Total Financing receivables: Lease receivables $ $ $ $ Loan receivables Ending balance $ $ $ $ Collectively evaluated for impairment $ $ $ $ Individually evaluated for impairment $ $ $ $ Allowance for credit losses Beginning balance at January 1, 2016 Lease receivables $ $ $ $ Loan receivables Total $ $ $ $ Write-offs $ ) $ ) $ ) $ ) Recoveries Provision ) ) Other ) ) ) Ending balance at December 31, 2016 $ $ $ $ Lease receivables $ $ $ $ Loan receivables $ $ $ $ Collectively evaluated for impairment $ $ $ $ Individually evaluated for impairment $ $ $ $ * Reclassified to conform to 2017 presentation. When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For individually evaluated receivables, the company determines the expected cash flow for the receivable and calculates an estimate of the potential loss and the probability of loss. For those accounts in which the loss is probable, the company records a specific reserve. In addition, the company records an unallocated reserve that is determined by applying a reserve rate to its different portfolios, excluding accounts that have been specifically reserved. This reserve rate is based upon credit rating, probability of default, term, characteristics (lease/loan) and loss history. Financing Receivables on Non-Accrual Status The following table presents the recorded investment in financing receivables which were on non-accrual status at March 31, 2017 and December 31, 2016. At March 31, At December 31, (Dollars in millions) 2017 2016* Americas $ $ EMEA Asia Pacific Total lease receivables $ $ Americas $ $ EMEA Asia Pacific Total loan receivables $ $ Total receivables $ $ * Reclassified to conform to 2017 presentation. Impaired Receivables The company considers any receivable with an individually evaluated reserve as an impaired receivable. Depending on the level of impairment, receivables will also be placed on non-accrual status. The following tables present impaired receivables. This presentation now includes both loan and lease receivables. At March 31, 2017 At December 31, 2016* Recorded Related Recorded Related (Dollars in millions) Investment Allowance Investment Allowance Americas $ $ $ $ EMEA Asia Pacific Total $ $ $ $ * Reclassified to conform to 2017 presentation. Interest Average Interest Income (Dollars in millions) Recorded Income Recognized on For the three months ended March 31, 2017: Investment Recognized Cash Basis Americas $ $ $ — EMEA — Asia Pacific — Total $ $ $ — Interest Average Interest Income (Dollars in millions) Recorded Income Recognized on For the three months ended March 31, 2016:* Investment Recognized Cash Basis Americas $ $ $ — EMEA — Asia Pacific — Total $ $ $ — * Reclassified to conform to 2017 presentation. Credit Quality Indicators The company’s credit quality indicators, which are based on rating agency data, publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Moody’s Investors Service credit ratings as shown below. The company uses information provided by Moody’s, where available, as one of many inputs in its determination of customer credit ratings. The following tables present the net recorded investment for each class of receivables, by credit quality indicator, at March 31, 2017 and December 31, 2016. Receivables with a credit quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators do not reflect mitigation actions that the company takes to transfer credit risk to third parties. Lease Receivables Loan Receivables (Dollars in millions) Asia Asia At March 31, 2017: Americas EMEA Pacific Americas EMEA Pacific Credit Ratings: Aaa — Aa3 $ $ $ $ $ $ A1 — A3 Baa1 — Baa3 Ba1 — Ba2 Ba3 — B1 B2 — B3 Caa — D Total $ $ $ $ $ $ At March 31, 2017, the industries which made up Global Financing’s receivables portfolio consisted of: Financial (35 percent), Government (14 percent), Manufacturing (14 percent), Services (11 percent), Retail (8 percent), Communications (7 percent), Healthcare (6 percent) and Other (6 percent). Lease Receivables Loan Receivables (Dollars in millions) Asia Asia At December 31, 2016:* Americas EMEA Pacific Americas EMEA Pacific Credit Ratings: Aaa — Aa3 $ $ $ $ $ $ A1 — A3 Baa1 — Baa3 Ba1 — Ba2 Ba3 — B1 B2 — B3 Caa — D Total $ $ $ $ $ $ * Reclassified to conform to 2017 presentation. At December 31, 2016, the industries which made up Global Financing’s receivables portfolio consisted of: Financial (34 percent), Government (14 percent), Manufacturing (13 percent), Services (12 percent), Retail (8 percent), Communications (7 percent), Healthcare (6 percent) and Other (6 percent). Past Due Financing Receivables Fully <90 Days Recorded Total Reserved or Unbilled Total Investment (Dollars in millions) Past Due Financing Financing Financing > 90 Days and At March 31, 2017: > 90 days (1) Receivables Receivables Receivables Accruing (2) Americas $ $ $ $ $ EMEA Asia Pacific Total lease receivables $ $ $ $ $ Americas $ $ $ $ $ EMEA Asia Pacific Total loan receivables $ $ $ $ $ Total $ $ $ $ $ (1) Only the portion of a financing receivable which is greater than 90 days past due, excluding amounts that are fully reserved. (2) At a contract level, which includes total billed and unbilled amounts for aged financing receivables greater than 90 days. Fully <90 Days Recorded Total Reserved or Unbilled Total Investment (Dollars in millions) Past Due Financing Financing Financing > 90 Days and At December 31, 2016:* > 90 days (1) Receivables Receivables Receivables Accruing (2) Americas $ $ $ $ $ EMEA Asia Pacific Total lease receivables $ $ $ $ $ Americas $ $ $ $ $ EMEA Asia Pacific Total loan receivables $ $ $ $ $ Total $ $ $ $ $ (1) Only the portion of a financing receivable which is greater than 90 days past due, excluding amounts that are fully reserved. (2) At a contract level, which includes total billed and unbilled amounts for aged financing receivables greater than 90 days. * Reclassified to conform with 2017 presentation. Troubled Debt Restructurings The company did not have any significant troubled debt restructurings during the three months ended March 31, 2017 or for the year ended December 31, 2016.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2017
Stock-Based Compensation:
Stock-Based Compensation:	5. Stock-Based Compensation: Stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. The following table presents total stock-based compensation cost included in income from continuing operations. (Dollars in millions) For the three months ended March 31: 2017 2016 Cost $ $ Selling, general and administrative Research, development and engineering Pre-tax stock-based compensation cost Income tax benefits ) ) Total net stock-based compensation cost $ $ Pre-tax stock-based compensation cost for the three months ended March 31, 2017 decreased $4 million compared to the corresponding period in the prior year. This was due to decreases in performance share units ($14 million) and the conversion of stock-based awards previously issued by acquired entities ($6 million), partially offset by increases related to restricted stock units ($16 million). Income tax benefits for the three months ended March 31, 2017 include an $8 million benefit which resulted from the implementation of the new FASB guidance for share-based payment transactions. Refer to note 2, “Accounting Changes,” for additional information. The amount of stock-based compensation cost included in discontinued operations, net of tax, was immaterial in all periods presented. As of March 31, 2017, the total unrecognized compensation cost of $804 million related to non-vested awards was expected to be recognized over a weighted-average period of approximately 2.5 years. There was no significant capitalized stock-based compensation cost at March 31, 2017 and 2016.

Segments

Segments	3 Months Ended
	Mar. 31, 2017
Segments:
Segments:	6. Segments: The table on page 27 reflects the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company. Performance measurement is based on operating pre-tax income from continuing operations. The segments represent components of the company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker (the chief executive officer) in determining how to allocate resources and evaluate performance. SEGMENT INFORMATION Cognitive Solutions & Industry Services Technology Global Services & Cognitive Business Cloud Global Total (Dollars in millions) Solutions Services Platforms Systems Financing Segments For the three months ended March 31, 2017: External revenue $ $ $ $ $ $ Internal revenue Total revenue $ $ $ $ $ $ Pre-tax income from continuing operations $ $ $ $ ) $ $ Revenue year-to-year change % )% )% )% )% )% Pre-tax income year-to-year change % % % nm )% % Pre-tax income margin % % % )% % % For the three months ended March 31, 2016: External revenue $ $ $ $ $ $ Internal revenue Total revenue $ $ $ $ $ $ Pre-tax income from continuing operations $ $ $ $ ) $ $ Pre-tax income margin % % % )% % % nm - not meaningful Reconciliations to IBM as Reported: (Dollars in millions) For the three months ended March 31: 2017 2016 Revenue: Total reportable segments $ $ Eliminations of internal transactions ) ) Other revenue Total consolidated revenue $ $ Pre-tax income from continuing operations: Total reportable segments $ $ Amortization of acquired intangible assets ) ) Acquisition-related (charges)/income ) Non-operating retirement-related (costs)/income ) ) Eliminations of internal transactions ) ) Unallocated corporate amounts ) ) Total pre-tax income from continuing operations $ $

Equity Activity

Equity Activity	3 Months Ended
	Mar. 31, 2017
Equity Activity:
Equity Activity:	7. Equity Activity: Reclassifications and Taxes Related to Items of Other Comprehensive Income (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended March 31, 2017: Amount Benefit Amount Other comprehensive income/(loss): Foreign currency translation adjustments $ $ $ Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period $ ) $ $ ) Reclassification of (gains)/losses to other (income) and expense Total net changes related to available-for-sale securities $ $ $ Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ ) $ $ ) Reclassification of (gains)/losses to: Cost of sales ) ) Cost of services ) ) SG&A expense ) ) Other (income) and expense ) ) Interest expense ) Total unrealized gains/(losses) on cash flow hedges $ ) $ $ ) Retirement-related benefit plans(1): Prior service costs/(credits) $ $ $ Net (losses)/gains arising during the period ) Curtailments and settlements ) ) Amortization of prior service (credits)/costs ) ) Amortization of net (gains)/losses ) Total retirement-related benefit plans $ $ ) $ Other comprehensive income/(loss) $ $ ) $ (1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, “Retirement-Related Benefits,” for additional information.) Reclassifications and Taxes Related to Items of Other Comprehensive Income (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended March 31, 2016: Amount Benefit Amount Other comprehensive income/(loss): Foreign currency translation adjustments $ $ $ Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period $ ) $ $ ) Reclassification of (gains)/losses to other (income) and expense ) Total net changes related to available-for-sale securities $ $ $ Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ ) $ $ ) Reclassification of (gains)/losses to: Cost of sales* ) ) Cost of services* ) SG&A expense ) ) Other (income) and expense ) ) Interest expense ) Total unrealized gains/(losses) on cash flow hedges $ ) $ $ ) Retirement-related benefit plans(1): Net (losses)/gains arising during the period $ ) $ $ ) Curtailments and settlements ) Amortization of prior service (credits)/costs ) ) Amortization of net (gains)/losses ) Total retirement-related benefit plans $ $ ) $ Other comprehensive income/(loss) $ $ $ * Reclassified to conform to 2017 presentation. (1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, “Retirement-Related Benefits,” for additional information.) Accumulated Other Comprehensive Income/(Loss) (net of tax) Net Change Net Unrealized Net Unrealized Foreign Retirement- Gains/(Losses) Accumulated Gains/(Losses) Currency Related on Available- Other on Cash Flow Translation Benefit For-Sale Comprehensive (Dollars in Millions) Hedges Adjustments* Plans Securities Income/(Loss) January 1, 2017 $ $ ) $ ) $ $ ) Other comprehensive income before reclassifications ) ) Amount reclassified from accumulated other comprehensive income ) Total change for the period ) March 31, 2017 $ $ ) $ ) $ $ ) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. Net Change Net Unrealized Net Unrealized Foreign Retirement- Gains/(Losses) Accumulated Gains/(Losses) Currency Related on Available- Other on Cash Flow Translation Benefit For-Sale Comprehensive (Dollars in Millions) Hedges Adjustments* Plans Securities Income/(Loss) January 1, 2016 $ $ ) $ ) $ $ ) Other comprehensive income before reclassifications ) ) ) Amount reclassified from accumulated other comprehensive income ) Total change for the period ) March 31, 2016 $ ) $ ) $ ) $ $ ) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.

Retirement-Related Benefits

Retirement-Related Benefits	3 Months Ended
	Mar. 31, 2017
Retirement-Related Benefits:
Retirement-Related Benefits:	8. Retirement-Related Benefits: The company offers defined benefit pension plans, defined contribution pension plans, as well as nonpension postretirement plans primarily consisting of retiree medical benefits. The following table provides the pre-tax cost for all retirement-related plans. Yr. to Yr. (Dollars in millions) Percent For the three months ended March 31: 2017 2016 Change Retirement-related plans — cost Defined benefit and contribution pension plans — cost $ $ % Nonpension postretirement plans — cost Total $ $ % The following table provides the components of the cost/(income) for the company’s pension plans. Cost/(Income) of Pension Plans (Dollars in millions) U.S. Plans Non-U.S. Plans For the three months ended March 31: 2017 2016 2017 2016 Service cost $ — $ — $ $ Interest cost Expected return on plan assets ) ) ) ) Amortization of prior service costs/(credits) ) ) Recognized actuarial losses Curtailments and settlements — — ) Multi-employer plans/other costs — — Total net periodic pension (income)/cost of defined benefit plans ) Cost of defined contribution plans Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings $ $ $ $ In March 2017, the company initiated a change to the investment strategy of its U.S. defined benefit plan. The 2017 target asset allocation was modified by reducing equity securities from 20 percent to 12 percent, increasing debt securities from 70 percent to 79 percent and other investments largely remained unchanged at 10 percent of total plan assets. This change is designed to reduce the risk associated with the potential negative impact that equity markets might have on the funded status of the U.S. defined benefit plan. The change is expected to reduce the 2018 expected long-term rate of return on assets from 5.75 percent to approximately 5.25 percent. See note S, “Retirement-Related Benefits,” on page 144 in the company’s 2016 Annual Report for additional information regarding the company’s investment strategy. In 2017, the company expects to contribute approximately $500 million to its non-U.S. defined benefit and multi-employer plans, the largest of which will be contributed to the defined benefit pension plans in Japan, Spain and the UK. This amount generally represents the legally mandated minimum contribution. Total contributions to the non-U.S. plans in the first three months of 2017 were $182 million, of which $40 million was in cash and $142 million in U.S. Treasury securities. Total net contributions to the non-U.S. plans in the first three months of 2016 were $107 million, of which $65 million was in cash and $42 million in U.S. Treasury securities. The contribution of U.S. Treasury securities is considered a non-cash transaction in the Consolidated Statement of Cash Flows. The following table provides the components of the cost/(income) for the company’s nonpension postretirement plans. Cost of Nonpension Postretirement Plans (Dollars in millions) U.S. Plan Non-U.S. Plans For the three months ended March 31: 2017 2016 2017 2016 Service cost $ $ $ $ Interest cost Expected return on plan assets — — ) ) Amortization of prior service costs/(credits) ) ) ) Recognized actuarial losses Curtailments and settlements — — — Total nonpension postretirement plan cost recognized in Consolidated Statement of Earnings $ $ $ $ The company contributed $135 million to the U.S. nonpension postretirement benefit plan in U.S. Treasury securities during the three months ended March 31, 2017, and $100 million in U.S. Treasury securities during the three months ended March 31, 2016. The contribution of U.S. Treasury securities is considered a non-cash transaction in the Consolidated Statement of Cash Flows.

Acquisitions_Divestitures

Acquisitions/Divestitures	3 Months Ended
	Mar. 31, 2017
Acquisitions/Divestitures:
Acquisitions/Divestitures:	9. Acquisitions/Divestitures: Acquisitions: During the three months ended March 31, 2017, the company completed the acquisition of 100 percent of Agile 3 Solutions, LLC (Agile 3 Solutions), a privately held business, for cash consideration of $14 million. Agile 3 Solutions is a developer of software used by C-Suite and senior executives to better visualize, understand and manage risks associated with the protection of sensitive data and adds capabilities to the company’s security portfolio. Goodwill of $8 million has been assigned to the Technology Services & Cloud Platforms and Cognitive Solutions segments. The acquisition was accounted for as a business combination using the acquisition method, and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity were recorded at their estimated fair values at the date of acquisition. The acquisition did not have a material impact in the Consolidated Financial Statements. Divestitures: Microelectronics — On October 20, 2014, IBM and GLOBALFOUNDRIES announced a definitive agreement in which GLOBALFOUNDRIES would acquire the company’s Microelectronics business, including existing semiconductor manufacturing assets and operations in East Fishkill, NY and Essex Junction, VT. The commercial OEM business acquired by GLOBALFOUNDRIES includes custom logic and specialty foundry, manufacturing and related operations. The transaction closed on July 1, 2015. At September 30, 2014, the company concluded that the Microelectronics business met the criteria for discontinued operations reporting. The disposal group constituted a component under accounting guidance. The continuing cash inflows and outflows with the discontinued component are related to the manufacturing sourcing arrangement and the transition, packaging and test services. These cash flows are not direct cash flows as they are not significant and the company has no significant continuing involvement. All assets and liabilities of the business, classified as held for sale at June 30, 2015, were transferred at closing. The company transferred $515 million of net cash to GLOBALFOUNDRIES in the third quarter of 2015. This amount included $750 million of cash consideration, adjusted by the amount of working capital due from GLOBALFOUNDRIES and other miscellaneous items. A second cash payment in the amount of $500 million was transferred in December 2016. The remaining cash consideration of $250 million is expected to be transferred in December 2017. Summarized financial information for discontinued operations is shown in the following table. Three Months Ended March 31, (Dollars in millions) 2017 2016 Total revenue $ — $ — Income/(loss) from discontinued operations $ ) $ ) Gain/(loss) on disposal, before tax Total loss from discontinued operations, before income taxes $ ) $ ) Provision for/(benefit from) income taxes ) ) Loss from discontinued operations, net of tax $ ) $ ) Industry Standard Server — On January 23, 2014, IBM and Lenovo Group Limited (Lenovo) announced a definitive agreement in which Lenovo would acquire the company’s industry standard server portfolio (System x) for an adjusted purchase price of $2.1 billion, consisting of approximately $1.8 billion in cash, with the balance in Lenovo common stock. The stock represented less than 5 percent equity ownership in Lenovo. The company sold 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. As of March 31, 2016, all Lenovo common stock was sold. The initial closing was completed on October 1, 2014. A subsequent closing occurred in most other countries in which there was a large business footprint on December 31, 2014. The remaining countries closed on March 31, 2015. An assessment of the ongoing contractual terms of the transaction resulted in the recognition of pre-tax gains of $63 million, $57 million and $9 million in 2015, 2016 and first three months of 2017, respectively. Overall, the company expects to recognize a total pre-tax gain on the sale of approximately $1.6 billion, which does not include associated costs related to transition and performance-based costs. Net of these charges, the pre-tax gain was approximately $1.3 billion, of which the cumulative gain recorded as of March 31, 2017 is $1.2 billion. The balance of the gain is expected to be recognized in 2019 upon conclusion of the maintenance agreement. Others — In the first quarter of 2017, the company completed one research-related divestiture. The financial terms related to this transaction were not material.

Intangible Assets Including Goo

Intangible Assets Including Goodwill	3 Months Ended
	Mar. 31, 2017
Intangible Assets Including Goodwill:
Intangible Assets Including Goodwill:	10. Intangible Assets Including Goodwill: The following table details the company’s intangible asset balances by major asset class: At March 31, 2017 (Dollars in millions) Gross Carrying Accumulated Net Carrying Intangible asset class Amount Amortization Amount Capitalized software $ $ ) $ Client relationships ) Completed technology ) Patents/trademarks ) Other* ) Total $ $ ) $ * Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems. At December 31, 2016 (Dollars in millions) Gross Carrying Accumulated Net Carrying Intangible asset class Amount Amortization Amount Capitalized software $ $ ) $ Client relationships ) Completed technology ) Patents/trademarks ) Other* ) Total $ $ ) $ * Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems. The net carrying amount of intangible assets decreased $252 million during the first quarter of 2017, primarily due to intangible asset amortization, partially offset by additions resulting from capitalized software. The aggregate intangible amortization expense was $390 million and $347 million for the quarters ended March 31, 2017 and 2016, respectively. In addition, in the first three months of 2017, the company retired $289 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount. The amortization expense for each of the five succeeding years relating to intangible assets currently recorded in the Consolidated Statement of Financial Position is estimated to be the following at March 31, 2017: Capitalized Acquired (Dollars in millions) Software Intangibles Total 2017 (for Q2 - Q4) $ $ $ 2018 2019 2020 2021 — The change in the goodwill balances by reportable segment, for the three months ended March 31, 2017 and for the year ended December 31, 2016 are as follows: Foreign Currency Purchase Translation (Dollars in millions) Balance Goodwill Price And Other Balance Segment 01/01/17 Additions Adjustments Divestitures Adjustments* 3/31/17 Cognitive Solutions $ $ $ $ — $ $ Global Business Services — — Technology Services & Cloud Platforms ) — Systems — — — Total $ $ $ $ — $ $ * Primarily driven by foreign currency translation. Foreign Currency Purchase Translation (Dollars in millions) Balance Goodwill Price And Other Balance Segment 01/01/16 Additions Adjustments Divestitures Adjustments* 12/31/16 Cognitive Solutions $ $ $ $ ) $ $ Global Business Services ) ) Technology Services & Cloud Platforms ) ) ) Systems — ) — Total $ $ $ ) $ ) $ ) $ * Primarily driven by foreign currency translation. There were no goodwill impairment losses recorded during the first three months of 2017 or the full year of 2016 and the company has no accumulated impairment losses. Purchase price adjustments recorded in the first three months of 2017 and full year 2016 were related to acquisitions that were completed on or prior to December 31, 2016 or September 30, 2016, 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. Net purchase price adjustments of $3 million were recorded during the first three months of 2017, with the primary driver being deferred tax assets. Net purchase price adjustments of $7 million were recorded during 2016, with the primary drivers being deferred tax assets, accounts receivable, deferred income, inventory and other current liabilities.

Borrowings

Borrowings	3 Months Ended
	Mar. 31, 2017
Borrowings:
Borrowings:	11. Borrowings: Short-Term Debt At March 31, At December 31, (Dollars in millions) 2017 2016 Commercial paper $ — $ Short-term loans Long-term debt — current maturities Total $ $ The weighted-average interest rate for commercial paper at December 31, 2016 was 0.7 percent. The weighted-average interest rate for short-term loans was 7.7 percent and 9.5 percent at March 31, 2017 and December 31, 2016, respectively. Long-Term Debt Pre-Swap Borrowing Balance Balance (Dollars in millions) Maturities 3/31/2017 12/31/2016 U.S. dollar debt (average interest rate at March 31, 2017):* 4.69% $ $ 3.24% 2018-2019 1.86% 2020-2021 1.54% 3.38% 3.63% 7.00% 3.45% 3.01% 6.50% 5.88% 8.00% 5.60% 4.00% 7.00% 4.70% 7.13% $ $ Other currencies (average interest rate at March 31, 2017, in parentheses):* Euros (1.6%) 2019-2028 $ $ Pound sterling (2.7%) 2020-2022 Japanese yen (0.9%) 2017-2026 Canadian (2.2%) — Other (10.0%) 2017-2020 $ $ Less: net unamortized discount Less: net unamortized debt issuance costs Add: fair value adjustment** $ $ Less: current maturities Total $ $ * Includes notes, debentures, bank loans, securitized borrowings and capital lease obligations. ** 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. There are no debt securities issued and outstanding by IBM International Group Capital LLC, which is an indirect, 100 percent owned finance subsidiary of International Business Machines Corporation, the parent. Any debt securities issued by IBM International Group Capital LLC, would be fully and unconditionally guaranteed by the parent. 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. Pre-swap annual contractual maturities of long-term debt outstanding at March 31, 2017, are as follows: (Dollars in millions) Total 2017 (for Q2 - Q4) $ 2018 2019 2020 2021 2022 and beyond Total $ Interest on Debt (Dollars in millions) For the three months ended March 31: 2017 2016 Cost of financing $ $ Interest expense Net investment derivative activity ) ) Interest capitalized Total interest paid and accrued $ $

Contingencies

Contingencies	3 Months Ended
	Mar. 31, 2017
Contingencies:
Contingencies:	12. Contingencies: As a company with a substantial employee population and with clients in more than 175 countries, IBM is involved, either as plaintiff or defendant, in a variety of ongoing claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business. The company is a leader in the information technology industry and, as such, has been and will continue to be subject to claims challenging its IP rights and associated products and offerings, including claims of copyright and patent infringement and violations of trade secrets and other IP rights. In addition, the company enforces its own IP against infringement, through license negotiations, lawsuits or otherwise. Also, as is typical for companies of IBM’s scope and scale, the company is party to actions and proceedings in various jurisdictions involving a wide range of labor and employment issues (including matters related to contested employment decisions, country-specific labor and employment laws, and the company’s pension, retirement and other benefit plans), as well as actions with respect to contracts, product liability, securities, foreign operations, competition law and environmental matters. These actions may be commenced by a number of different parties, including competitors, clients, current or former employees, government and regulatory agencies, stockholders and representatives of the locations in which the company does business. Some of the actions to which the company is party may involve particularly complex technical issues, and some actions may raise novel questions under the laws of the various jurisdictions in which these matters arise. The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any recorded liabilities, including any changes to such liabilities for the quarter ended March 31, 2017 were not material to the Consolidated Financial Statements. In accordance with the relevant accounting guidance, the company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer and employee relations considerations. With respect to certain of the claims, suits, investigations and proceedings discussed herein, the company believes at this time that the likelihood of any material loss is remote, given, for example, the procedural status, court rulings, and/or the strength of the company’s defenses in those matters. With respect to the remaining claims, suits, investigations and proceedings discussed in this note, except as specifically discussed herein, the company is unable to provide estimates of reasonably possible losses or range of losses, including losses in excess of amounts accrued, if any, for the following reasons. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of these matters. It is the company’s experience that damage amounts claimed in litigation against it are unreliable and unrelated to possible outcomes, and as such are not meaningful indicators of the company’s potential liability. Further, the company is unable to provide such an estimate due to a number of other factors with respect to these claims, suits, investigations and proceedings, including considerations of the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. The company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate), to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter. Whether any losses, damages or remedies finally determined in any claim, suit, investigation or proceeding could reasonably have a material effect on the company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including: the timing and amount of such losses or damages; the structure and type of any such remedies; the significance of the impact any such losses, damages or remedies may have in the Consolidated Financial Statements; and the unique facts and circumstances of the particular matter that may give rise to additional factors. While the company will continue to defend itself vigorously, it is possible that the company’s business, financial condition, results of operations or cash flows could be affected in any particular period by the resolution of one or more of these matters. The following is a summary of the more significant legal matters involving the company. The company is a defendant in an action filed on March 6, 2003 in state court in Salt Lake City, Utah by the SCO Group (SCO v. IBM). The company removed the case to Federal Court in Utah. Plaintiff is an alleged successor in interest to some of AT&T’s UNIX IP rights, and alleges copyright infringement, unfair competition, interference with contract and breach of contract with regard to the company’s distribution of AIX and Dynix and contribution of code to Linux and the company has asserted counterclaims. On September 14, 2007, plaintiff filed for bankruptcy protection, and all proceedings in this case were stayed. The court in another suit, the SCO Group, Inc. v. Novell, Inc., held a trial in March 2010. The jury found that Novell is the owner of UNIX and UnixWare copyrights; the judge subsequently ruled that SCO is obligated to recognize Novell’s waiver of SCO’s claims against IBM and Sequent for breach of UNIX license agreements. On August 30, 2011, the Tenth Circuit Court of Appeals affirmed the district court’s ruling and denied SCO’s appeal of this matter. In June 2013, the Federal Court in Utah granted SCO’s motion to reopen the SCO v. IBM case. In February 2016, the Federal Court ruled in favor of IBM on all of SCO’s remaining claims, and in March 2016, SCO filed a notice of appeal to the Tenth Circuit Court of Appeals. On May 13, 2010, IBM and the State of Indiana (acting on behalf of the Indiana Family and Social Services Administration) sued one another in a dispute over a 2006 contract regarding the modernization of social service program processing in Indiana. 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. On March 22, 2016, the Indiana Supreme Court affirmed the outcome of the Indiana Court of Appeals and remanded the case to the Indiana Superior Court. On March 9, 2017, the Commonwealth of Pennsylvania’s Department of Labor and Industry sued IBM in Pennsylvania state court regarding a 2006 contract for the development of a custom software system to manage the Commonwealth’s unemployment insurance benefits programs. The matter is pending in a Pennsylvania court. On October 29, 2013, Bridgestone Americas, Inc. (Bridgestone) sued IBM regarding a 2009 contract for the implementation of an SAP-based, enterprise-wide order management system. IBM counterclaimed against Bridgestone and its parent, Bridgestone Corp. The case is pending in the Middle District of Tennessee. On April 16, 2014, Iusacell SA de C.V. (Iusacell) sued IBM, claiming that IBM made fraudulent misrepresentations that induced Iusacell to enter into an agreement with IBM Mexico. Iusacell claims damages for lost profits. Iusacell’s complaint relates to a contractual dispute in Mexico, which is the subject of a pending arbitration proceeding in Mexico initiated by IBM Mexico against Iusacell for breach of the underlying agreement. On November 14, 2014, the District Court in the Southern District of New York granted IBM’s motion to stay Iusacell’s action against the company pending the arbitration in Mexico between Iusacell and IBM Mexico. IBM United Kingdom Limited (IBM UK) initiated legal proceedings in May 2010 before the High Court in London against the IBM UK Pensions Trust (the UK Trust) and two representative beneficiaries of the UK Trust 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. In April 2014, the High Court acknowledged that the changes made to its UK defined benefit plans were within IBM’s discretion, but ruled that IBM breached its implied duty of good faith both in implementing these changes and in the manner in which it consulted with employees. Proceedings to determine remedies were held in July 2014, and in February 2015 the High Court held that for IBM to make changes to accruals under the plan would require a new consultation of the participants, but other changes (including to early retirement policy) would not require such consultation. IBM UK has appealed both the breach and remedies judgments. If the appeal is unsuccessful, the Court’s rulings would require IBM to reverse the changes made to the UK defined benefit plans retroactive to their effective dates. This could result in an estimated non-operating one-time pre-tax charge of approximately $290 million, plus ongoing defined benefit related accruals. 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. 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 2015, a putative class action was commenced in the United States District Court for the Southern District of New York related to the company’s October 2014 announcement that it was divesting its global commercial semiconductor technology business, alleging violations of the Employee Retirement Income Security Act (“ERISA”). The company, management’s Retirement Plans Committee, and three current or former IBM executives were named as defendants. On September 7, 2016, the Court granted the company’s motion to dismiss the plaintiffs’ claims. On October 21, 2016, the plaintiffs filed an amended complaint, dropping the company as a defendant. The matter remains pending in the United States District Court. In August 2015, IBM learned that the SEC is conducting an investigation relating to revenue recognition with respect to the accounting treatment of certain transactions in the U.S., UK and Ireland. The company is cooperating with the SEC in this matter. The company is party to, or otherwise involved in, proceedings brought by U.S. federal or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), known as “Superfund,” or laws similar to CERCLA. Such statutes require potentially responsible parties to participate in remediation activities regardless of fault or ownership of sites. The company is also conducting environmental investigations, assessments or remediations at or in the vicinity of several current or former operating sites globally pursuant to permits, administrative orders or agreements with country, state or local environmental agencies, and is involved in lawsuits and claims concerning certain current or former operating sites. The company is also subject to ongoing tax examinations and governmental assessments in various jurisdictions. Along with many other U.S. companies doing business in Brazil, the company is involved in various challenges with Brazilian tax authorities regarding non-income tax assessments and non-income tax litigation matters. The total potential amount related to all these matters for all applicable years is approximately $1 billion, with the increase since the last quarter driven primarily by currency fluctuations and interest. The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability.

Commitments

Commitments	3 Months Ended
	Mar. 31, 2017
Commitments:
Commitments:	13. Commitments: The company’s extended lines of credit to third-party entities include unused amounts of $7,860 million and $6,542 million at March 31, 2017 and December 31, 2016, respectively. A portion of these amounts was available to the company’s business partners to support their working capital needs. In addition, the company has committed to provide future financing to its clients in connection with client purchase agreements for approximately $2,341 million and $2,463 million at March 31, 2017 and December 31, 2016, respectively. The company has applied the guidance requiring a guarantor to disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s performance is remote. The following is a description of arrangements in which the company is the guarantor. The company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party with respect to certain matters. Typically, these obligations arise in the context of contracts entered into by the company, under which the company customarily agrees to hold the party harmless against losses arising from a breach of representations and covenants related to such matters as title to the assets sold, certain intellectual property (IP) rights, specified environmental matters, third-party performance of nonfinancial contractual obligations and certain income taxes. In each of these circumstances, payment by the company is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, the procedures of which typically allow the company to challenge the other party’s claims. While typically indemnification provisions do not include a contractual maximum on the company’s payment, the company’s obligations under these agreements may be limited in terms of time and/or nature of claim, and in some instances, the company may have recourse against third parties for certain payments made by the company. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the company under these agreements have not had a material effect on the company’s business, financial condition or results of operations. In addition, the company guarantees certain loans and financial commitments. The maximum potential future payment under these financial guarantees was $23 million and $34 million at March 31, 2017 and December 31, 2016, respectively. The fair value of the guarantees recognized in the Consolidated Statement of Financial Position is not material. Changes in the company’s warranty liability for standard warranties and deferred income for extended warranty contracts are presented in the following tables. Standard Warranty Liability (Dollars in millions) 2017 2016 Balance at January 1 $ $ Current period accruals Accrual adjustments to reflect actual experience ) Charges incurred ) ) Balance at March 31 $ $ Extended Warranty Liability (Dollars in millions) 2017 2016 Aggregate deferred revenue at January 1 $ $ Revenue deferred for new extended warranty contracts Amortization of deferred revenue ) ) Other* Aggregate deferred revenue at March 31 $ $ Current portion $ $ Noncurrent portion $ $ * Other primarily consists of foreign currency translation adjustments.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2017
Subsequent Events:
Subsequent Events:	14. Subsequent Events : On April 25, 2017, the company announced that the Board of Directors approved a quarterly dividend of $1.50 per common share. The dividend is payable June 10, 2017 to shareholders of record on May 10, 2017. The dividend declaration represents an increase of $0.10 per common share, which is 7 percent higher than the prior quarterly dividend of $1.40 per common share.

Basis of Presentation (Policies

Basis of Presentation (Policies)	3 Months Ended
	Mar. 31, 2017
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). The financial statements and footnotes are unaudited. In the opinion of the company’s management, these statements include all adjustments, which are only of a normal recurring nature, necessary to present a fair statement of the company’s results of operations, financial position and cash flows. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) that are reported in the Consolidated Financial Statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates. Refer to the company’s 2016 Annual Report on pages 71 to 74, for a discussion of the company’s critical accounting estimates. Interim results are not necessarily indicative of financial results for a full year. The information included in this Form 10-Q should be read in conjunction with the company’s 2016 Annual Report. Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior year amounts have been reclassified to conform to the current year presentation. This is annotated where applicable.
Accounting Changes	New Standards to be Implemented In March 2017, the FASB issued guidance that impacts the presentation of net periodic pension and postretirement benefit costs. Under the guidance, the service cost component of net benefit cost will continue to be presented in the same line items as other employee compensation costs, unless eligible for capitalization in the Consolidated Statement of Financial Position. The other components of net benefit costs will be presented separately from service cost as non-operating costs in the Consolidated Statement of Earnings or Notes to the Consolidated Financial Statements. The guidance is effective January 1, 2018 with early adoption permitted. The company will adopt the guidance as of the effective date. The guidance is primarily a change in financial statement presentation and is not expected to have a material impact in the consolidated financial results. In June 2016, the FASB issued guidance for credit impairment based on an expected loss model rather than an incurred loss model. The guidance requires the consideration of all available relevant information when estimating expected credit losses, including past events, current conditions and forecasts and their implications for expected credit losses. The guidance is effective January 1, 2020 with a one year early adoption permitted. The company is evaluating the impact of the new guidance. In February 2016, the FASB issued guidance which changes the accounting for leases. The guidance requires lessees to recognize right-of-use assets and lease liabilities for most leases in the Consolidated Statement of Financial Position. The guidance makes some changes to lessor accounting, including the elimination of the use of third-party residual value guarantee insurance in the capital lease test, and overall aligns with the new revenue recognition guidance. The guidance also requires qualitative and quantitative disclosures to assess the amount, timing and uncertainty of cash flows arising from leases. The guidance is effective January 1, 2019 and early adoption is permitted. The company will adopt the guidance as of the effective date. A cross-functional implementation team has been established which is evaluating the lease portfolio, system, process and policy change requirements. The company is currently evaluating the impact of the new guidance on its consolidated financial results and expects it will have a material impact on the Consolidated Statement of Financial Position. The company’s operating lease commitments were $6.9 billion at December 31, 2016. In 2016, the use of third-party residual value guarantee insurance resulted in the company recognizing $220 million of sales-type lease revenue that would otherwise have been recognized over the lease period as operating lease revenue. In January 2016, the FASB issued guidance which addresses aspects of recognition, measurement, presentation and disclosure of financial instruments. Certain equity investments will be measured at fair value with changes recognized in net income. The amendment also simplifies the impairment test of equity investments that lack readily determinable fair value. The guidance is effective January 1, 2018 and early adoption is not permitted except for limited provisions. The guidance is not expected to have a material impact in the consolidated financial results. The FASB issued guidance on the recognition of revenue from contracts with customers in May 2014 with amendments in 2015 and 2016. Revenue recognition will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The guidance was initially effective January 1, 2017 and early adoption was not permitted. The amended guidance provides for a one-year deferral of the effective date to January 1, 2018, with an option of applying the standard on the original effective date. The company will adopt the guidance on January 1, 2018 and apply the cumulative catch-up transition method. Given the scope of work required to implement the recognition and disclosure requirements under the new standard, the company began its assessment process in 2014 and has since made significant progress, including identification of changes to policy, processes, systems and controls. This also includes the assessment of data availability and presentation necessary to meet the additional disclosure requirements of the guidance in the Notes to the Consolidated Financial Statements. The company expects revenue recognition for its broad portfolio of hardware, software and services offerings to remain largely unchanged. However, the guidance is expected to change the timing of revenue recognition in certain areas, including accounting for certain software licenses. These impacts are not expected to be material. The company expects to continue to recognize revenue for term license (recurring license charge) software arrangements on a monthly basis over the period that the client is entitled to use the license due to the contractual terms in these arrangements. Since the company currently expenses sales commissions as incurred, the requirement in the new standard to capitalize certain in-scope sales commissions is being evaluated to determine its potential impact in the consolidated financial statements in the year of adoption. There will be no impact to cash flows. The company continues to assess all potential impacts of the guidance and given normal ongoing business dynamics, preliminary conclusions are subject to change. Standards Implemented In January 2017, the FASB issued guidance which clarifies the definition of a business. The guidance provides a more robust framework to use in determining when a set of assets and activities acquired or sold is a business. The guidance is effective January 1, 2018 and early adoption is permitted. The company adopted the guidance effective January 1, 2017, and it did not have a material impact in the consolidated financial results. In October 2016, the FASB issued guidance which requires an entity to recognize the income tax consequences of intra-entity transfers of assets, other than inventory, at the time of transfer. Assets within the scope of the guidance include intellectual property and property, plant and equipment. The guidance is effective January 1, 2018 and early adoption is permitted. The company adopted the guidance on January 1, 2017 using the required modified retrospective method. At adoption, $95 million and $47 million were reclassified from investments and sundry assets and prepaid expenses and other current assets, respectively into retained earnings. Additionally, net deferred taxes of $244 million were established in deferred taxes in the Consolidated Statement of Financial Position, resulting in a cumulative-effect net credit to retained earnings of $102 million. In January 2017, the company had one transaction that generated a $582 million benefit to income tax expense, income from continuing operations and net income and a benefit to basic and diluted earnings per share of $0.62 and $0.61 per share, respectively, for the three months ended March 31, 2017. The ongoing impact of this guidance will be dependent on any transaction that is within its scope. In March 2016, the FASB issued guidance which changes the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification in the Consolidated Statement of Cash Flows. The guidance was effective and adopted by the company on January 1, 2017, and it did not have a material impact in the Consolidated Statement of Financial Position. The ongoing impact of the guidance could result in increased volatility in the provision for income taxes and earnings per share in the Consolidated Statement of Earnings, depending on the company’s share price at exercise or vesting of share-based awards compared to grant date, however these impacts are not expected to be material. These impacts are recorded on a prospective basis. See note 5, “Stock-Based Compensation,” for additional information. The company continues to estimate forfeitures in conjunction with measuring stock-based compensation cost. The guidance also requires cash payments on behalf of employees for shares directly withheld for taxes to be presented as financing outflows in the Consolidated Statement of Cash Flows. Prior to adoption, the company reported this activity as an operating cash outflow and as a result, prior periods have been reclassified as required. In September 2015, the FASB issued guidance eliminating the requirement that an acquirer in a business combination account for a measurement-period adjustment retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which the amount of the adjustment is determined. In addition, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date should be presented separately on the face of the income statement or disclosed in the notes. The guidance was effective January 1, 2016 on a prospective basis. The guidance did not have a material impact in the consolidated financial results. In May 2015, the FASB issued guidance which removed the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also removed the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. The guidance was effective January 1, 2016. The guidance was a change in disclosure only and did not have an impact in the consolidated financial results. In April 2015, the FASB issued guidance about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a services contract. All software licenses recognized under this guidance will be accounted for consistent with other licenses of intangible assets. The guidance was effective January 1, 2016 and the company adopted it on a prospective basis. The guidance did not have a material impact in the consolidated financial results.
Fair Value Measurements	Fair Value Measurements Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the company is required 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 as Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation. The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument. In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calculated using the methodologies described below for several parameters that market participants would consider in determining fair value: · Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument. · Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market. As an example, the fair value of derivatives is derived utilizing a discounted cash flow model that uses observable market inputs such as known notional value amounts, yield curves, spot and forward exchange rates as well as discount rates. These inputs relate to liquid, heavily traded currencies with active markets which are available for the full term of the derivative. Certain financial assets are measured at fair value on a nonrecurring basis. These assets include equity method investments that are recognized at fair value at the measurement date to the extent that they are deemed to be other-than-temporarily impaired. Certain assets that are measured at fair value on a recurring basis can be subject to nonrecurring fair value measurements. These assets include available-for-sale equity investments that are deemed to be other-than-temporarily impaired. In the event of an other-than-temporary impairment of a financial investment, fair value is measured using a model described above. Non-financial assets such as property, plant and equipment, land, goodwill and intangible assets are also subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for nonfinancial assets depend on the type of asset. During the three months ended March 31, 2016, a pre-tax impairment charge related to certain property, plant and equipment of $252 million was recorded. There were no material impairments of non-financial assets for the three months ended March 31, 2017. Accounting guidance permits the measurement of eligible financial assets, financial liabilities and firm commitments at fair value, on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. This election is irrevocable. The company has not applied the fair value option to any eligible assets or liabilities.
Fair Value of Financial Instruments	Short-Term Receivables and Payables Notes and other accounts receivable and other investments are financial assets with carrying values that approximate fair value. Accounts payable, other accrued expenses and short-term debt (excluding the current portion of long-term debt) are financial liabilities with carrying values that approximate fair value. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy, except for short-term debt, which would be classified as Level 2. Loans and Long-term Receivables Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. Long-Term Debt Fair value of publicly-traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy.
Debt and Marketable Equity Securities	The 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.
Derivative Financial Instruments	Derivative Financial Instruments The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations. 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. Full collateralization of these agreements would be required in the event that the company’s credit rating falls below investment grade or if its credit default swap spread exceeds 250 basis points, as applicable, pursuant to the terms of the collateral security arrangements. In the Consolidated Statement of Financial Position, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments. The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in prepaid expenses and other current assets in the Consolidated Statement of Financial Position. The company may employ derivative instruments to hedge the volatility in stockholders’ equity resulting from changes in currency exchange rates of significant foreign 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, cross-currency swaps, and options depending upon the underlying exposure. The company is not a party to leveraged derivative instruments. The company issues debt in the global capital markets to fund its operations and financing business. Access to cost-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). 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. A large portion of the company’s foreign currency denominated debt portfolio is designated as a hedge of net investment in foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates in the functional currency of major foreign subsidiaries with respect to the U.S. dollar. The company also uses cross-currency swaps and foreign exchange forward contracts for this risk management purpose. The company’s operations generate significant nonfunctional currency, third-party vendor payments and intercompany payments for royalties and goods and services among the company’s non-U.S. subsidiaries and with the parent company. In anticipation of these foreign currency cash flows and in view of the volatility of the currency markets, the company selectively employs foreign exchange forward contracts to manage its currency risk. These forward contracts are accounted for as cash flow hedges. The maximum length of time over which the company has hedged its exposure to the variability in future cash flows is four years. The company is exposed to exchange rate volatility on foreign currency denominated debt. To manage this risk, the company employs cross-currency swaps to convert fixed-rate foreign currency denominated debt to fixed-rate debt denominated in the functional currency of the borrowing entity. These swaps are accounted for as cash flow hedges. The maximum length of time over which the company has hedged its exposure to the variability in future cash flows is approximately nine years. The company uses 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. The company is exposed to market price changes in certain broad market indices and in the company’s own stock primarily related to certain obligations to employees. Changes in the overall value of these employee compensation obligations are recorded in selling, general and administrative (SG&A) expense in the Consolidated Statement of Earnings. Although not designated as accounting hedges, the company utilizes derivatives, including equity swaps and futures, to economically hedge the exposures related to its employee compensation obligations. The derivatives are linked to the total return on certain broad market indices or the total return on the company’s common stock, and are recorded at fair value with gains or losses also reported in SG&A expense in the Consolidated Statement of Earnings. 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 is exposed to a potential loss if a client fails to pay amounts due under contractual terms. The company may utilize credit default swaps to economically hedge its credit exposures. The swaps are recorded at fair value with gains and losses reported in other (income) and expense in the Consolidated Statement of Earnings. The company is exposed to market volatility on certain investment securities. The company may utilize options or forwards to economically hedge its market exposure. The derivatives are recorded at fair value with gains and losses reported in other (income) and expense in the Consolidated Statement of Earnings.
Financing Receivables	The company determines its allowance for credit losses based on two portfolio segments: lease receivables and loan receivables, and further segments the portfolio into three classes: Americas, Europe/Middle East/Africa (EMEA), and Asia Pacific. When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For individually evaluated receivables, the company determines the expected cash flow for the receivable and calculates an estimate of the potential loss and the probability of loss. For those accounts in which the loss is probable, the company records a specific reserve. In addition, the company records an unallocated reserve that is determined by applying a reserve rate to its different portfolios, excluding accounts that have been specifically reserved. This reserve rate is based upon credit rating, probability of default, term, characteristics (lease/loan) and loss history.
Impaired Loans and Credit Quality Indicators	The company considers any receivable with an individually evaluated reserve as an impaired receivable. Depending on the level of impairment, receivables will also be placed on non-accrual status. The company’s credit quality indicators, which are based on rating agency data, publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Moody’s Investors Service credit ratings as shown below. The company uses information provided by Moody’s, where available, as one of many inputs in its determination of customer credit ratings. Receivables with a credit quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators do not reflect mitigation actions that the company takes to transfer credit risk to third parties.
Stock-Based Compensation	Stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period.
Segments	Performance measurement is based on operating pre-tax income from continuing operations. The segments represent components of the company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker (the chief executive officer) in determining how to allocate resources and evaluate performance.
Acquisitions	The acquisition was accounted for as a business combination using the acquisition method, and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity were recorded at their estimated fair values at the date of acquisition.
Commitments and Contingencies	The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In accordance with the relevant accounting guidance, the company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer and employee relations considerations. With respect to certain of the claims, suits, investigations and proceedings discussed herein, the company believes at this time that the likelihood of any material loss is remote, given, for example, the procedural status, court rulings, and/or the strength of the company’s defenses in those matters. With respect to the remaining claims, suits, investigations and proceedings discussed in this note, except as specifically discussed herein, the company is unable to provide estimates of reasonably possible losses or range of losses, including losses in excess of amounts accrued, if any, for the following reasons. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of these matters. It is the company’s experience that damage amounts claimed in litigation against it are unreliable and unrelated to possible outcomes, and as such are not meaningful indicators of the company’s potential liability. Further, the company is unable to provide such an estimate due to a number of other factors with respect to these claims, suits, investigations and proceedings, including considerations of the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. The company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate), to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter. The company has applied the guidance requiring a guarantor to disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s performance is remote.

Financial Instruments (Tables)

Financial Instruments (Tables)	3 Months Ended
	Mar. 31, 2017
Financial Instruments:
Financial assets and financial liabilities measured at fair value on a recurring basis	(Dollars in millions) At March 31, 2017 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ $ — $ Money market funds — — Total — (6) Debt securities - current (2) — — (6) Debt securities - noncurrent (3) — Available-for-sale equity investments (3) — — Derivative assets (4) Interest rate contracts — — Foreign exchange contracts — — Equity contracts — — Total — — (7) Total assets $ $ $ — $ (7) Liabilities: Derivative liabilities (5) Foreign exchange contracts $ — $ $ — $ Equity contracts — — Interest rate contracts — — Total liabilities $ — $ $ — $ (7) (1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. (2) U.S. government securities reported as marketable securities in the Consolidated Statement of Financial Position. (3) Included within investments and sundry assets in the Consolidated Statement of Financial Position. (4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Statement of Financial Position at March 31, 2017 were $348 million and $546 million, respectively. (5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Statement of Financial Position at March 31, 2017 were $130 million and $35 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 each would have been reduced by $122 million. (Dollars in millions) At December 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ $ — $ Money market funds — — Total — (6) Debt securities - current (2) — — (6) Debt securities - noncurrent (3) — Available-for-sale equity investments (3) — — Derivative assets (4) Interest rate contracts — — Foreign exchange contracts — — Equity contracts — — Total — — (7) Total assets $ $ $ — $ (7) Liabilities: Derivative liabilities (5) Foreign exchange contracts $ — $ $ — $ Equity contracts — — Interest rate contracts — — Total liabilities $ — $ $ — $ (7) (1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. (2) U.S government securities 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, 2016 were $532 million and $594 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, 2016 were $145 million and $61 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 each would have been reduced by $116 million.
Noncurrent debt and marketable equity securities available-for-sale and recorded at fair value	Gross Gross (Dollars in millions) Adjusted Unrealized Unrealized Fair At March 31, 2017: Cost Gains Losses Value Debt securities — noncurrent(1) $ $ $ — $ Available-for-sale equity investments(1) $ $ $ $ (1) Included within investments and sundry assets in the Consolidated Statement of Financial Position. Gross Gross (Dollars in millions) Adjusted Unrealized Unrealized Fair At December 31, 2016: Cost Gains Losses Value Debt securities — noncurrent(1) $ $ $ — $ Available-for-sale equity investments(1) $ $ $ $ (1) Included within investments and sundry assets in the Consolidated Statement of Financial Position.
Sales of debt and available-for-sale equity investments	(Dollars in millions) For the three months ended March 31: 2017 2016 Proceeds $ $ Gross realized gains (before taxes) — Gross realized losses (before taxes)
Unrealized gains/(losses) on available-for-sale debt and equity securities	(Dollars in millions) For the three months ended March 31: 2017 2016 Net unrealized gains/(losses) arising during the period $ ) $ ) Net unrealized (gains)/losses reclassified to net income* * There were no writedowns for the three months ended March 31, 2017 and 2016, respectively.
Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position	Fair Value of Derivative Assets Fair Value of Derivative Liabilities Balance Sheet Balance Sheet (Dollars in millions) Classification 3/31/2017 12/31/2016 Classification 3/31/2017 12/31/2016 Designated as hedging instruments: Interest rate contracts: Prepaid expenses and other current assets $ — $ — Other accrued expenses and liabilities $ $ — Investments and sundry assets Other liabilities Foreign exchange contracts: Prepaid expenses and other current assets Other accrued expenses and liabilities Investments and sundry assets Other liabilities Fair value of derivative assets $ $ Fair value of derivative liabilities $ $ Not designated as hedging instruments: Foreign exchange contracts: Prepaid expenses and other current assets $ $ Other accrued expenses and liabilities $ $ Investments and sundry assets Other liabilities — Equity contracts: Prepaid expenses and other current assets Other accrued expenses and liabilities Investments and sundry assets — — Other liabilities — — Fair value of derivative assets $ $ Fair value of derivative liabilities $ $ Total debt designated as hedging instruments: Short-term debt N/A N/A $ $ Long-term debt N/A N/A $ $ Total $ $ $ $ N/A - not applicable
Effect of Derivative Instruments in the Consolidated Statement of Earnings	Gain (Loss) Recognized in Earnings Consolidated Recognized on Attributable to Risk (Dollars in millions) Statement of Derivatives Being Hedged(2) For the three months ended March 31: Earnings Line Item 2017 2016 2017 2016 Derivative instruments in fair value hedges (1) (5): Interest rate contracts Cost of financing $ ) $ $ $ ) Interest expense ) ) Derivative instruments not designated as hedging instruments: Foreign exchange contracts Other (income) and expense ) N/A N/A Interest rate contracts Other (income) and expense — N/A N/A Equity contracts SG&A expense N/A N/A Other (income) and expense — ) N/A N/A Total $ ) $ $ $ ) Gain (Loss) Recognized in Earnings and Other Comprehensive Income Ineffectiveness and (Dollars in millions) Effective Portion Consolidated Effective Portion Reclassified Amounts Excluded from For the three months Recognized in OCI Statement of from AOCI Effectiveness Testing(3) ended March 31: 2017 2016 Earnings Line Item 2017 2016 2017 2016 Derivative instruments in cash flow hedges: Interest rate contracts $ — $ — Interest expense $ ) $ ) $ — $ — Foreign exchange contracts ) ) Other (income) and expense Cost of sales* — — Cost of services* ) — — SG&A expense — — Instruments in net investment hedges(4): Foreign exchange contracts ) ) Interest expense — — Total $ ) $ ) $ $ $ $ * Reclassified to conform to 2017 presentation N/A - not applicable Note: OCI represents other comprehensive income/(loss) in the Consolidated Statement of Comprehensive Income and AOCI represents accumulated other comprehensive income/(loss) in the Consolidated Statement of Changes in Equity. (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. (5) For the three month periods ended March 31, 2017 and March 31, 2016, fair value hedges resulted in a loss of less than $1 million and a gain of $2 million in ineffectiveness, respectively.

Financing Receivables (Tables)

Financing Receivables (Tables)	3 Months Ended
	Mar. 31, 2017
Financing Receivables:
Financing receivables, net of allowances for credit losses, including residual values	At March 31, At December 31, (Dollars in millions) 2017 2016 Current: Net investment in sales-type and direct financing leases $ $ Commercial financing receivables Client loan and installment payment receivables (loans) Total $ $ Noncurrent: Net investment in sales-type and direct financing leases $ $ Client loan and installment payment receivables (loans) Total $ $
Schedule of financing receivables and allowance for credit losses by portfolio segment	(Dollars in millions) At March 31, 2017 Americas EMEA Asia Pacific Total Financing receivables Lease receivables $ $ $ $ Loan receivables Ending balance $ $ $ $ Collectively evaluated for impairment $ $ $ $ Individually evaluated for impairment $ $ $ $ Allowance for credit losses Beginning balance at January 1, 2017 Lease receivables $ $ $ $ Loan receivables Total $ $ $ $ Write-offs $ ) $ $ $ ) Recoveries Provision ) Other Ending balance at March 31, 2017 $ $ $ $ Lease receivables $ $ $ $ Loan receivables $ $ $ $ Collectively evaluated for impairment $ $ $ $ Individually evaluated for impairment $ $ $ $ (Dollars in millions) At December 31, 2016:* Americas EMEA Asia Pacific Total Financing receivables: Lease receivables $ $ $ $ Loan receivables Ending balance $ $ $ $ Collectively evaluated for impairment $ $ $ $ Individually evaluated for impairment $ $ $ $ Allowance for credit losses Beginning balance at January 1, 2016 Lease receivables $ $ $ $ Loan receivables Total $ $ $ $ Write-offs $ ) $ ) $ ) $ ) Recoveries Provision ) ) Other ) ) ) Ending balance at December 31, 2016 $ $ $ $ Lease receivables $ $ $ $ Loan receivables $ $ $ $ Collectively evaluated for impairment $ $ $ $ Individually evaluated for impairment $ $ $ $ * Reclassified to conform to 2017 presentation.
Schedule of recorded investment in financing receivables which are on non-accrual status	At March 31, At December 31, (Dollars in millions) 2017 2016* Americas $ $ EMEA Asia Pacific Total lease receivables $ $ Americas $ $ EMEA Asia Pacific Total loan receivables $ $ Total receivables $ $ * Reclassified to conform to 2017 presentation.
Schedule of impaired client loan and lease receivables	At March 31, 2017 At December 31, 2016* Recorded Related Recorded Related (Dollars in millions) Investment Allowance Investment Allowance Americas $ $ $ $ EMEA Asia Pacific Total $ $ $ $ * Reclassified to conform to 2017 presentation. Interest Average Interest Income (Dollars in millions) Recorded Income Recognized on For the three months ended March 31, 2017: Investment Recognized Cash Basis Americas $ $ $ — EMEA — Asia Pacific — Total $ $ $ — Interest Average Interest Income (Dollars in millions) Recorded Income Recognized on For the three months ended March 31, 2016:* Investment Recognized Cash Basis Americas $ $ $ — EMEA — Asia Pacific — Total $ $ $ — * Reclassified to conform to 2017 presentation.
Schedule of net recorded investment by credit quality indicator	Lease Receivables Loan Receivables (Dollars in millions) Asia Asia At March 31, 2017: Americas EMEA Pacific Americas EMEA Pacific Credit Ratings: Aaa — Aa3 $ $ $ $ $ $ A1 — A3 Baa1 — Baa3 Ba1 — Ba2 Ba3 — B1 B2 — B3 Caa — D Total $ $ $ $ $ $ Lease Receivables Loan Receivables (Dollars in millions) Asia Asia At December 31, 2016:* Americas EMEA Pacific Americas EMEA Pacific Credit Ratings: Aaa — Aa3 $ $ $ $ $ $ A1 — A3 Baa1 — Baa3 Ba1 — Ba2 Ba3 — B1 B2 — B3 Caa — D Total $ $ $ $ $ $ * Reclassified to conform to 2017 presentation.
Schedule of past due financing receivables	Fully <90 Days Recorded Total Reserved or Unbilled Total Investment (Dollars in millions) Past Due Financing Financing Financing > 90 Days and At March 31, 2017: > 90 days (1) Receivables Receivables Receivables Accruing (2) Americas $ $ $ $ $ EMEA Asia Pacific Total lease receivables $ $ $ $ $ Americas $ $ $ $ $ EMEA Asia Pacific Total loan receivables $ $ $ $ $ Total $ $ $ $ $ (1) Only the portion of a financing receivable which is greater than 90 days past due, excluding amounts that are fully reserved. (2) At a contract level, which includes total billed and unbilled amounts for aged financing receivables greater than 90 days. Fully <90 Days Recorded Total Reserved or Unbilled Total Investment (Dollars in millions) Past Due Financing Financing Financing > 90 Days and At December 31, 2016:* > 90 days (1) Receivables Receivables Receivables Accruing (2) Americas $ $ $ $ $ EMEA Asia Pacific Total lease receivables $ $ $ $ $ Americas $ $ $ $ $ EMEA Asia Pacific Total loan receivables $ $ $ $ $ Total $ $ $ $ $ (1) Only the portion of a financing receivable which is greater than 90 days past due, excluding amounts that are fully reserved. (2) At a contract level, which includes total billed and unbilled amounts for aged financing receivables greater than 90 days. * Reclassified to conform with 2017 presentation.

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2017
Stock-Based Compensation:
Stock-based compensation cost included in income from continuing operations	(Dollars in millions) For the three months ended March 31: 2017 2016 Cost $ $ Selling, general and administrative Research, development and engineering Pre-tax stock-based compensation cost Income tax benefits ) ) Total net stock-based compensation cost $ $

Segments (Tables)

Segments (Tables)	3 Months Ended
	Mar. 31, 2017
Segments:
Revenue and Pre-tax Income by Segment	Cognitive Solutions & Industry Services Technology Global Services & Cognitive Business Cloud Global Total (Dollars in millions) Solutions Services Platforms Systems Financing Segments For the three months ended March 31, 2017: External revenue $ $ $ $ $ $ Internal revenue Total revenue $ $ $ $ $ $ Pre-tax income from continuing operations $ $ $ $ ) $ $ Revenue year-to-year change % )% )% )% )% )% Pre-tax income year-to-year change % % % nm )% % Pre-tax income margin % % % )% % % For the three months ended March 31, 2016: External revenue $ $ $ $ $ $ Internal revenue Total revenue $ $ $ $ $ $ Pre-tax income from continuing operations $ $ $ $ ) $ $ Pre-tax income margin % % % )% % % nm - not meaningful
Reconciliation of segment revenue to IBM as reported	(Dollars in millions) For the three months ended March 31: 2017 2016 Revenue: Total reportable segments $ $ Eliminations of internal transactions ) ) Other revenue Total consolidated revenue $ $
Reconciliation of segment pre-tax income to IBM as reported	(Dollars in millions) For the three months ended March 31: 2017 2016 Pre-tax income from continuing operations: Total reportable segments $ $ Amortization of acquired intangible assets ) ) Acquisition-related (charges)/income ) Non-operating retirement-related (costs)/income ) ) Eliminations of internal transactions ) ) Unallocated corporate amounts ) ) Total pre-tax income from continuing operations $ $

Equity Activity (Tables)

Equity Activity (Tables)	3 Months Ended
	Mar. 31, 2017
Equity Activity:
Reclassifications and Taxes Related to Items of Other Comprehensive Income	(Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended March 31, 2017: Amount Benefit Amount Other comprehensive income/(loss): Foreign currency translation adjustments $ $ $ Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period $ ) $ $ ) Reclassification of (gains)/losses to other (income) and expense Total net changes related to available-for-sale securities $ $ $ Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ ) $ $ ) Reclassification of (gains)/losses to: Cost of sales ) ) Cost of services ) ) SG&A expense ) ) Other (income) and expense ) ) Interest expense ) Total unrealized gains/(losses) on cash flow hedges $ ) $ $ ) Retirement-related benefit plans(1): Prior service costs/(credits) $ $ $ Net (losses)/gains arising during the period ) Curtailments and settlements ) ) Amortization of prior service (credits)/costs ) ) Amortization of net (gains)/losses ) Total retirement-related benefit plans $ $ ) $ Other comprehensive income/(loss) $ $ ) $ (1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, “Retirement-Related Benefits,” for additional information.) (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended March 31, 2016: Amount Benefit Amount Other comprehensive income/(loss): Foreign currency translation adjustments $ $ $ Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period $ ) $ $ ) Reclassification of (gains)/losses to other (income) and expense ) Total net changes related to available-for-sale securities $ $ $ Unrealized gains/(losses) on cash flow hedges: Unrealized gains/(losses) arising during the period $ ) $ $ ) Reclassification of (gains)/losses to: Cost of sales* ) ) Cost of services* ) SG&A expense ) ) Other (income) and expense ) ) Interest expense ) Total unrealized gains/(losses) on cash flow hedges $ ) $ $ ) Retirement-related benefit plans(1): Net (losses)/gains arising during the period $ ) $ $ ) Curtailments and settlements ) Amortization of prior service (credits)/costs ) ) Amortization of net (gains)/losses ) Total retirement-related benefit plans $ $ ) $ Other comprehensive income/(loss) $ $ $ * Reclassified to conform to 2017 presentation. (1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, “Retirement-Related Benefits,” for additional information.)
Accumulated Other Comprehensive Income/(Loss) (net of tax)	Net Change Net Unrealized Net Unrealized Foreign Retirement- Gains/(Losses) Accumulated Gains/(Losses) Currency Related on Available- Other on Cash Flow Translation Benefit For-Sale Comprehensive (Dollars in Millions) Hedges Adjustments* Plans Securities Income/(Loss) January 1, 2017 $ $ ) $ ) $ $ ) Other comprehensive income before reclassifications ) ) Amount reclassified from accumulated other comprehensive income ) Total change for the period ) March 31, 2017 $ $ ) $ ) $ $ ) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. Net Change Net Unrealized Net Unrealized Foreign Retirement- Gains/(Losses) Accumulated Gains/(Losses) Currency Related on Available- Other on Cash Flow Translation Benefit For-Sale Comprehensive (Dollars in Millions) Hedges Adjustments* Plans Securities Income/(Loss) January 1, 2016 $ $ ) $ ) $ $ ) Other comprehensive income before reclassifications ) ) ) Amount reclassified from accumulated other comprehensive income ) Total change for the period ) March 31, 2016 $ ) $ ) $ ) $ $ ) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.

Retirement-Related Benefits (Ta

Retirement-Related Benefits (Tables)	3 Months Ended
	Mar. 31, 2017
Retirement-Related Benefits:
Pre-tax cost for all retirement-related plans	Yr. to Yr. (Dollars in millions) Percent For the three months ended March 31: 2017 2016 Change Retirement-related plans — cost Defined benefit and contribution pension plans — cost $ $ % Nonpension postretirement plans — cost Total $ $ %
Components of the cost/(income) for the company's pension plans	(Dollars in millions) U.S. Plans Non-U.S. Plans For the three months ended March 31: 2017 2016 2017 2016 Service cost $ — $ — $ $ Interest cost Expected return on plan assets ) ) ) ) Amortization of prior service costs/(credits) ) ) Recognized actuarial losses Curtailments and settlements — — ) Multi-employer plans/other costs — — Total net periodic pension (income)/cost of defined benefit plans ) Cost of defined contribution plans Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings $ $ $ $
Components of the cost/(income) for the company's nonpension postretirement plans	(Dollars in millions) U.S. Plan Non-U.S. Plans For the three months ended March 31: 2017 2016 2017 2016 Service cost $ $ $ $ Interest cost Expected return on plan assets — — ) ) Amortization of prior service costs/(credits) ) ) ) Recognized actuarial losses Curtailments and settlements — — — Total nonpension postretirement plan cost recognized in Consolidated Statement of Earnings $ $ $ $

Acquisitions_Divestitures (Tabl

Acquisitions/Divestitures (Tables)	3 Months Ended
	Mar. 31, 2017
Acquisitions/Divestitures:
Discontinued operation, summarized financial information	Three Months Ended March 31, (Dollars in millions) 2017 2016 Total revenue $ — $ — Income/(loss) from discontinued operations $ ) $ ) Gain/(loss) on disposal, before tax Total loss from discontinued operations, before income taxes $ ) $ ) Provision for/(benefit from) income taxes ) ) Loss from discontinued operations, net of tax $ ) $ )

Intangible Assets Including G31

Intangible Assets Including Goodwill (Tables)	3 Months Ended
	Mar. 31, 2017
Intangible Assets Including Goodwill:
Intangible asset balances by major asset class	At March 31, 2017 (Dollars in millions) Gross Carrying Accumulated Net Carrying Intangible asset class Amount Amortization Amount Capitalized software $ $ ) $ Client relationships ) Completed technology ) Patents/trademarks ) Other* ) Total $ $ ) $ * Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems. At December 31, 2016 (Dollars in millions) Gross Carrying Accumulated Net Carrying Intangible asset class Amount Amortization Amount Capitalized software $ $ ) $ Client relationships ) Completed technology ) Patents/trademarks ) Other* ) Total $ $ ) $ * Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems.
Intangible assets, future amortization expense	Capitalized Acquired (Dollars in millions) Software Intangibles Total 2017 (for Q2 - Q4) $ $ $ 2018 2019 2020 2021 —
Changes in goodwill balances by reportable segment	Foreign Currency Purchase Translation (Dollars in millions) Balance Goodwill Price And Other Balance Segment 01/01/17 Additions Adjustments Divestitures Adjustments* 3/31/17 Cognitive Solutions $ $ $ $ — $ $ Global Business Services — — Technology Services & Cloud Platforms ) — Systems — — — Total $ $ $ $ — $ $ * Primarily driven by foreign currency translation. Foreign Currency Purchase Translation (Dollars in millions) Balance Goodwill Price And Other Balance Segment 01/01/16 Additions Adjustments Divestitures Adjustments* 12/31/16 Cognitive Solutions $ $ $ $ ) $ $ Global Business Services ) ) Technology Services & Cloud Platforms ) ) ) Systems — ) — Total $ $ $ ) $ ) $ ) $ * Primarily driven by foreign currency translation.

Borrowings (Tables)

Borrowings (Tables)	3 Months Ended
	Mar. 31, 2017
Borrowings:
Short-Term Debt	At March 31, At December 31, (Dollars in millions) 2017 2016 Commercial paper $ — $ Short-term loans Long-term debt — current maturities Total $ $
Long-Term Debt	Balance Balance (Dollars in millions) Maturities 3/31/2017 12/31/2016 U.S. dollar debt (average interest rate at March 31, 2017):* 4.69% $ $ 3.24% 2018-2019 1.86% 2020-2021 1.54% 3.38% 3.63% 7.00% 3.45% 3.01% 6.50% 5.88% 8.00% 5.60% 4.00% 7.00% 4.70% 7.13% $ $ Other currencies (average interest rate at March 31, 2017, in parentheses):* Euros (1.6%) 2019-2028 $ $ Pound sterling (2.7%) 2020-2022 Japanese yen (0.9%) 2017-2026 Canadian (2.2%) — Other (10.0%) 2017-2020 $ $ Less: net unamortized discount Less: net unamortized debt issuance costs Add: fair value adjustment** $ $ Less: current maturities Total $ $ * Includes notes, debentures, bank loans, securitized borrowings and capital lease obligations. ** 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. There are no debt securities issued and outstanding by IBM International Group Capital LLC, which is an indirect, 100 percent owned finance subsidiary of International Business Machines Corporation, the parent. Any debt securities issued by IBM International Group Capital LLC, would be fully and unconditionally guaranteed by the parent.
Pre-swap annual contractual maturities of long-term debt outstanding	(Dollars in millions) Total 2017 (for Q2 - Q4) $ 2018 2019 2020 2021 2022 and beyond Total $
Interest on Debt	(Dollars in millions) For the three months ended March 31: 2017 2016 Cost of financing $ $ Interest expense Net investment derivative activity ) ) Interest capitalized Total interest paid and accrued $ $

Commitments (Tables)

Commitments (Tables)	3 Months Ended
	Mar. 31, 2017
Commitments:
Changes in warranty liabilities	Standard Warranty Liability (Dollars in millions) 2017 2016 Balance at January 1 $ $ Current period accruals Accrual adjustments to reflect actual experience ) Charges incurred ) ) Balance at March 31 $ $ Extended Warranty Liability (Dollars in millions) 2017 2016 Aggregate deferred revenue at January 1 $ $ Revenue deferred for new extended warranty contracts Amortization of deferred revenue ) ) Other* Aggregate deferred revenue at March 31 $ $ Current portion $ $ Noncurrent portion $ $ * Other primarily consists of foreign currency translation adjustments.

Basis of Presentation - Reclass

Basis of Presentation - Reclassification (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Net cash provided by operating activities	$ 3,955	$ 5,530	[1],[2]
Net cash (used in)/provided by investing activities	350	(1,886)	[2]
Total cash flows	$ 2,270	6,668
Reclassification of certain financing receivables
Net cash provided by operating activities		(142)
Net cash (used in)/provided by investing activities		142
Total cash flows		$ 0
[1]	Reclassified to reflect adoption of the FASB guidance on share-based compensation.
[2]	Revised classification of certain financing receivables.

Basis of Presentation - Income

Basis of Presentation - Income Taxes and Noncontrolling Interest (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Provision for/(benefit from) income taxes	$ (329)	$ (983)
Effective tax rate (as a percent)	(23.10%)	(95.10%)
Discrete tax charge related to foreign audit activity	$ 99
Other (income) and expense
Noncontrolling interest amounts, net of tax	3.6	$ 1.3
Accounting Standards Update 2016-16, Intra-Entity Transfers of Assets Other Than Inventory | Early adoption
Provision for/(benefit from) income taxes	$ (582)

Accounting Changes (Details)

Accounting Changes (Details) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended		12 Months Ended
	Jan. 31, 2017item	Mar. 31, 2017USD ($)$ / shares	Mar. 31, 2016USD ($)$ / shares	Dec. 31, 2018USD ($)	Dec. 31, 2016USD ($)	Jan. 01, 2017USD ($)
Accounting Changes
Operating lease commitments					$ 6,900
Sales-type lease revenue recognized based on use of residual value guarantee insurance					220
Impact to cash flows		$ 2,270	$ 6,668
Investments and sundry assets		4,549			4,585
Prepaid expenses and other current assets		4,715			4,564
Deferred tax assets		6,457			5,224
Retained earnings		153,292			$ 152,759
Provision for/(benefit from) income taxes		(329)	(983)
Income from continuing operations		1,753	2,016
Net income		$ 1,750	$ 2,014
Earnings per share, basic (in dollars per share) | $ / shares		$ 1.86	$ 2.09
Earnings per share, diluted (in dollars per share) | $ / shares		$ 1.85	$ 2.09
Accounting Standards Update 2016-16, Intra-Entity Transfers of Assets Other Than Inventory | Early adoption
Accounting Changes
Investments and sundry assets						$ (95)
Prepaid expenses and other current assets						(47)
Deferred tax assets						244
Retained earnings						$ 102
Number of transactions within scope of new guidance | item	1
Provision for/(benefit from) income taxes		$ (582)
Income from continuing operations		582
Net income		$ 582
Earnings per share, basic (in dollars per share) | $ / shares		$ 0.62
Earnings per share, diluted (in dollars per share) | $ / shares		$ 0.61
Accounting Standards Update 2014-09, Revenue from Contracts with Customers | Expected
Accounting Changes
Impact to cash flows				$ 0

Financial Instruments - Fair Va

Financial Instruments - Fair Value Measurements (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2017	Dec. 31, 2016
Financial assets and financial liabilities measured at fair value on a recurring basis:
Pre-tax impairment charge related to certain property, plant and equipment	$ 252
Debt securities - noncurrent		$ 7	$ 8
Available-for-sale equity investments		5	7
Derivative assets		894	1,126
Potential reduction in net position of total derivative assets		122	116
Fair value assets, Level 2 to Level 1 transfer		0	0
Fair value assets, Level 1 to Level 2 transfer		0	0
Fair value liabilities, Level 2 to Level 1 transfer		0	0
Fair value liabilities, Level 1 to Level 2 transfer		0	0
Recurring
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		7,160	4,832
Debt securities - current		599	699
Debt securities - noncurrent		7	8
Available-for-sale equity investments		5	7
Derivative assets		894	1,126
Total Assets		8,665	6,672
Total Liabilities		166	206
Potential reduction in net position of total derivative assets		122	116
Potential reduction in net position of total derivative liabilities		122	116
Recurring | Prepaid expenses and other current assets
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		348	532
Recurring | Investments and sundry assets
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		546	594
Recurring | Other accrued expenses and liabilities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative liabilities		130	145
Recurring | Other liabilities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative liabilities		35	61
Recurring | Interest rate contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		498	555
Derivative liabilities		5	8
Recurring | Foreign exchange contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		389	560
Derivative liabilities		155	188
Recurring | Equity contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		6	11
Derivative liabilities		6	10
Recurring | Time deposits and certificates of deposit
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		5,720	3,629
Recurring | Money market funds
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		1,440	1,204
Recurring | Level 1
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		1,440	1,204
Debt securities - noncurrent		1	1
Available-for-sale equity investments		5	7
Total Assets		1,447	1,212
Recurring | Level 1 | Money market funds
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		1,440	1,204
Recurring | Level 2
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		5,720	3,629
Debt securities - current		599	699
Debt securities - noncurrent		6	6
Derivative assets		894	1,126
Total Assets		7,218	5,460
Total Liabilities		166	206
Recurring | Level 2 | Interest rate contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		498	555
Derivative liabilities		5	8
Recurring | Level 2 | Foreign exchange contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		389	560
Derivative liabilities		155	188
Recurring | Level 2 | Equity contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		6	11
Derivative liabilities		6	10
Recurring | Level 2 | Time deposits and certificates of deposit
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		$ 5,720	$ 3,629

Financial Instruments - Not Mea

Financial Instruments - Not Measured at Fair Value (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Long-Term Debt
Carrying amount of long-term debt	$ 34,441	$ 34,655
Fair value of long-term debt	$ 36,733	$ 36,838

Financial Instruments - Debt an

Financial Instruments - Debt and Equity Securities (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2015	Dec. 31, 2016
Debt and Marketable Equity Securities
Debt securities - noncurrent, Adjusted Cost	$ 5			$ 5
Debt securities - noncurrent, Gross Unrealized Gains	2			3
Debt securities - noncurrent, Fair Value	7			8
Available-for-sale equity investments, Adjusted Cost	1			3
Available-for-sale equity investments, Gross Unrealized Gains	4			5
Available-for-sale equity investments, Gross Unrealized Losses	0			0
Available-for-sale equity investments, Fair Value	5			$ 7
Sales of debt and available-for-sale equity investments
Proceeds	5	$ 148
Gross realized gains (before taxes)	1
Gross realized losses (before taxes)	2	37
Unrealized holding gains/(losses) on available-for-sale debt and marketable equity securities
Net unrealized gains/(losses) arising during the period	(1)	(22)
Net unrealized (gains)/losses reclassified to net income	1	23
Writedowns included in net income for the period	$ 0	0
Maximum contractual maturities of substantially all available-for-sale debt securities	1 year
Lenovo's common stock
Debt and Marketable Equity Securities
Available-for-sale equity investments, Adjusted Cost			$ 185
Other-than-temporary impairment loss			$ 86
Sales of debt and available-for-sale equity investments
Gross realized losses (before taxes)		$ 37

Financial Instruments - Derivat

Financial Instruments - Derivatives, Offsetting (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Derivative Financial Instruments
Fair value of derivative instruments under collateralized arrangements in a liability position	$ 4	$ 11
Collateral posted on derivative instruments	$ 0	0
Maximum spread on credit default swap agreements before full collateralization is required	2.50%
Fair value of total derivative instruments, Assets	$ 894	1,126
Liabilities included in master netting arrangements	122	116
Obligation to return cash collateral	91	141
Non-cash collateral received	0	35
Net exposure related to derivative assets recorded in the Statement of Financial Position	681	834
Net exposure related to derivative liabilities recorded in the Statement of Financial Position	44	90
Cash collateral rehypothecated	0	0
Other receivables
Derivative Financial Instruments
Right to reclaim cash collateral	0	0
Accounts payable
Derivative Financial Instruments
Obligation to return cash collateral	$ 91	$ 141

Financial Instruments - Deriv41

Financial Instruments - Derivatives, Other Information (Details) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2017USD ($)instrument	Dec. 31, 2016USD ($)instrument
Derivative instruments in cash flow hedging relationships | Forward-starting interest rate swaps
Derivative Financial Instruments
Number of derivative instruments outstanding | instrument	0	0
Derivative instruments in cash flow hedging relationships | Forward-starting interest rate swaps | Maximum
Derivative Financial Instruments
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges	$ 1	$ 1
Gains (losses) expected to be reclassified to net income within the next 12 months	$ 1	1
Derivative instruments in cash flow hedging relationships | Foreign exchange forward contracts
Derivative Financial Instruments
Maximum length of time hedged	4 years
Notional amount	$ 8,100	$ 8,300
Average remaining maturity	8 months 12 days	8 months 12 days
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges	$ 342	$ 462
Gains (losses) expected to be reclassified to net income within the next 12 months	$ 245	397
Derivative instruments in cash flow hedging relationships | Cross-currency swaps
Derivative Financial Instruments
Maximum length of time hedged	9 years
Notional amount	$ 1,400	1,400
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges	19	29
Gains (losses) expected to be reclassified to net income within the next 12 months	27	27
Net investment hedge
Derivative Financial Instruments
Notional amount	$ 6,400	$ 6,700
Average remaining maturity	2 months 12 days	2 months 12 days
Designated as hedging instruments | Interest rate swaps
Derivative Financial Instruments
Notional amount	$ 7,300	$ 7,300
Average remaining maturity	6 years	6 years 2 months 12 days
Derivative instruments not designated as hedging instruments | Foreign exchange contracts
Derivative Financial Instruments
Notional amount	$ 10,100	$ 12,700
Derivative instruments not designated as hedging instruments | Foreign exchange contracts | Maximum
Derivative Financial Instruments
Term of contract	1 year
Derivative instruments not designated as hedging instruments | Economic hedge of compensation obligations
Derivative Financial Instruments
Notional amount	$ 1,200	$ 1,200
Derivative instruments not designated as hedging instruments | Warrants qualifying as derivatives
Derivative Financial Instruments
Number of derivative instruments outstanding | instrument
Derivative instruments not designated as hedging instruments | Credit default swaps
Derivative Financial Instruments
Number of derivative instruments outstanding | instrument	0	0
Derivative instruments not designated as hedging instruments | Economic hedge of investment securities
Derivative Financial Instruments
Number of derivative instruments outstanding | instrument	0	0

Financial Instruments - Deriv42

Financial Instruments - Derivatives, Fair Value (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	$ 894	$ 1,126
Short-term debt	8,340	7,513
Long-term debt (excluding current portion)	34,441	34,655
Fair value of total derivative liabilities and debt	8,931	9,175
Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	841	993
Fair value of total derivative instruments, Liabilities	97	89
Designated as hedging instruments | Net investment hedge
Fair Values of Derivative Instruments
Short-term debt	788	1,125
Long-term debt (excluding current portion)	7,977	7,844
Derivative instruments not designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	53	133
Fair value of total derivative instruments, Liabilities	68	117
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	295	421
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	47	100
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	6	11
Investments and sundry assets | Interest rate contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	498	555
Investments and sundry assets | Foreign exchange contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	47	17
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	0	22
Other accrued expenses and liabilities | Interest rate contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities	1
Other accrued expenses and liabilities | Foreign exchange contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities	61	46
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	63	89
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	6	10
Other liabilities | Interest rate contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities	4	8
Other liabilities | Foreign exchange contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities	$ 31	35
Other liabilities | Foreign exchange contracts | Derivative instruments not designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities		$ 18

Financial Instruments - Deriv43

Financial Instruments - Derivatives, Gains and Losses (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	$ (32)	$ 426
Gain (loss) recognized in earnings attributable to risk being hedged	42	(233)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI	(315)	(959)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings	98	91
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing	20	11
Gain (loss) on fair value hedges ineffectiveness		2
Gains (losses) excluded from the assessment of hedge effectiveness for fair value hedges
Gains (losses) associated with underlying exposure that did not occur or was not expected to occur for cash flow hedges
Maximum
Derivative Instruments, Gain (Loss)
Gain (loss) on fair value hedges ineffectiveness	(1)
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	(33)	(265)
Foreign exchange contracts | Net investment hedge
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI	(282)	(693)
Cost of financing | Interest rate contracts | Derivative instruments in fair value hedging relationships
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	(1)	137
Gain (loss) recognized in earnings attributable to risk being hedged	23	(112)
Interest expense | Interest rate contracts | Derivative instruments in fair value hedging relationships
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	(1)	147
Gain (loss) recognized in earnings attributable to risk being hedged	20	(120)
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	(7)	(2)
Interest expense | Foreign exchange contracts | Net investment hedge
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing	19	10
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	20	3
SG&A expense | Equity contracts | Derivative instruments not designated as hedging instruments
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	46	21
Other (income) and expense | Interest rate contracts | Derivative instruments not designated as hedging instruments
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives		0
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	65	87
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing	1	1
Other (income) and expense | Foreign exchange contracts | Derivative instruments not designated as hedging instruments
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	(76)	121
Other (income) and expense | Equity contracts | Derivative instruments not designated as hedging instruments
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives		(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	11	9
Cost of services | 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	$ 8	$ (6)

Financing Receivables - Net of

Financing Receivables - Net of Allowances (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financing receivables
Financing receivables, net, current	$ 16,362	$ 19,006
Financing receivables, net, noncurrent	8,502	9,021
Lease receivables
Financing receivables
Financing receivables, net, current	2,875	2,909
Financing receivables, net, noncurrent	3,733	3,950
Sales-type and direct financing leases, unguaranteed residual value	574	585
Sales-type and direct financing leases, unearned income	496	513
Allowance for credit losses	$ 140	133	$ 213
Lease receivables | Minimum
Financing receivables
Financing receivable, payment terms	2 years
Lease receivables | Maximum
Financing receivables
Financing receivable, payment terms	6 years
Commercial financing receivables
Financing receivables
Financing receivables, net, current	$ 7,460	9,706
Allowance for credit losses	$ 26	28
Commercial financing receivables | Minimum
Financing receivables
Financing receivable, payment terms	30 days
Commercial financing receivables | Maximum
Financing receivables
Financing receivable, payment terms	90 days
Loan receivables
Financing receivables
Financing receivables, net, current	$ 6,027	6,390
Financing receivables, net, noncurrent	4,769	5,071
Allowance for credit losses	$ 285	$ 276	$ 377
Loan receivables | Maximum
Financing receivables
Financing receivable, payment terms	7 years

Financing Receivables - By Port

Financing Receivables - By Portfolio Segment (Details) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2017USD ($)item	Dec. 31, 2016USD ($)
Financing receivables
Financing receivables pledged as collateral for borrowings	$ 658	$ 689
Financing receivables held for sale	$ 0	0
Total Lease Receivable and Loan Receivable Portfolio Segments
Financing receivables
Number of portfolio segments | item	2
Number of classes of financing receivable | item	3
Financing receivables on a gross basis	$ 17,179	18,073
Collectively evaluated for impairment	16,811	17,726
Individually evaluated for impairment	368	347
Allowance for credit losses:
Allowance for credit losses, beginning balance	410	590
Write-offs	(9)	(237)
Recoveries	0	2
Provision	12	58
Other	11	(3)
Allowance for credit losses, ending balance	424	410
Collectively evaluated for impairment	80	90
Individually evaluated for impairment	344	320
Total Lease Receivable and Loan Receivable Portfolio Segments | Americas
Financing receivables
Financing receivables on a gross basis	9,428	10,015
Collectively evaluated for impairment	9,250	9,847
Individually evaluated for impairment	179	168
Allowance for credit losses:
Allowance for credit losses, beginning balance	223	175
Write-offs	(9)	(36)
Recoveries	0	2
Provision	6	65
Other	2	17
Allowance for credit losses, ending balance	223	223
Collectively evaluated for impairment	54	62
Individually evaluated for impairment	169	161
Total Lease Receivable and Loan Receivable Portfolio Segments | EMEA
Financing receivables
Financing receivables on a gross basis	4,216	4,480
Collectively evaluated for impairment	4,190	4,460
Individually evaluated for impairment	26	20
Allowance for credit losses:
Allowance for credit losses, beginning balance	22	72
Write-offs	0	(48)
Recoveries	0	0
Provision	7	(1)
Other	1	(1)
Allowance for credit losses, ending balance	29	22
Collectively evaluated for impairment	11	13
Individually evaluated for impairment	18	9
Total Lease Receivable and Loan Receivable Portfolio Segments | Asia Pacific
Financing receivables
Financing receivables on a gross basis	3,535	3,578
Collectively evaluated for impairment	3,371	3,419
Individually evaluated for impairment	164	159
Allowance for credit losses:
Allowance for credit losses, beginning balance	165	343
Write-offs	0	(154)
Recoveries	0	0
Provision	(1)	(6)
Other	8	(18)
Allowance for credit losses, ending balance	172	165
Collectively evaluated for impairment	14	15
Individually evaluated for impairment	157	150
Lease receivables
Financing receivables
Financing receivables on a gross basis	6,098	6,336
Allowance for credit losses:
Allowance for credit losses, beginning balance	133	213
Allowance for credit losses, ending balance	140	133
Lease receivables | Americas
Financing receivables
Financing receivables on a gross basis	3,602	3,830
Allowance for credit losses:
Allowance for credit losses, beginning balance	54	52
Allowance for credit losses, ending balance	61	54
Lease receivables | EMEA
Financing receivables
Financing receivables on a gross basis	1,154	1,171
Allowance for credit losses:
Allowance for credit losses, beginning balance	4	17
Allowance for credit losses, ending balance	4	4
Lease receivables | Asia Pacific
Financing receivables
Financing receivables on a gross basis	1,342	1,335
Allowance for credit losses:
Allowance for credit losses, beginning balance	76	143
Allowance for credit losses, ending balance	75	76
Loan receivables
Financing receivables
Financing receivables on a gross basis	11,081	11,737
Allowance for credit losses:
Allowance for credit losses, beginning balance	276	377
Allowance for credit losses, ending balance	285	276
Loan receivables | Americas
Financing receivables
Financing receivables on a gross basis	5,826	6,185
Allowance for credit losses:
Allowance for credit losses, beginning balance	169	122
Allowance for credit losses, ending balance	162	169
Loan receivables | EMEA
Financing receivables
Financing receivables on a gross basis	3,062	3,309
Allowance for credit losses:
Allowance for credit losses, beginning balance	18	55
Allowance for credit losses, ending balance	26	18
Loan receivables | Asia Pacific
Financing receivables
Financing receivables on a gross basis	2,193	2,243
Allowance for credit losses:
Allowance for credit losses, beginning balance	89	200
Allowance for credit losses, ending balance	$ 97	$ 89

Financing Receivables - Non-Acc

Financing Receivables - Non-Accrual Status (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Total Lease Receivable and Loan Receivable Portfolio Segments
Financing Receivables on Non-accrual Status
Total Receivables	$ 241	$ 185
Lease receivables
Financing Receivables on Non-accrual Status
Total Receivables	68	40
Lease receivables | Americas
Financing Receivables on Non-accrual Status
Total Receivables	28	23
Lease receivables | EMEA
Financing Receivables on Non-accrual Status
Total Receivables	27	2
Lease receivables | Asia Pacific
Financing Receivables on Non-accrual Status
Total Receivables	14	14
Loan receivables
Financing Receivables on Non-accrual Status
Total Receivables	172	145
Loan receivables | Americas
Financing Receivables on Non-accrual Status
Total Receivables	133	128
Loan receivables | EMEA
Financing Receivables on Non-accrual Status
Total Receivables	31	5
Loan receivables | Asia Pacific
Financing Receivables on Non-accrual Status
Total Receivables	$ 8	$ 12

Financing Receivables - Impaire

Financing Receivables - Impaired Loans (Details) - Total Lease Receivable and Loan Receivable Portfolio Segments - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Impaired client loan receivables
Recorded Investment	$ 368		$ 347
Related Allowance	344		320
Average Recorded Investment	357	$ 544
Interest Income Recognized	1	0
Americas
Impaired client loan receivables
Recorded Investment	179		168
Related Allowance	169		161
Average Recorded Investment	173	133
Interest Income Recognized	0	0
EMEA
Impaired client loan receivables
Recorded Investment	26		20
Related Allowance	18		9
Average Recorded Investment	23	69
Interest Income Recognized	0	0
Asia Pacific
Impaired client loan receivables
Recorded Investment	164		159
Related Allowance	157		$ 150
Average Recorded Investment	161	342
Interest Income Recognized	$ 1	$ 0

Financing Receivables - Credit

Financing Receivables - Credit Quality Indicators (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Lease receivables | Americas
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	$ 3,541	$ 3,776
Lease receivables | Americas | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	397	447
Lease receivables | Americas | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	703	782
Lease receivables | Americas | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	699	772
Lease receivables | Americas | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	776	822
Lease receivables | Americas | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	547	574
Lease receivables | Americas | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	354	297
Lease receivables | Americas | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	65	83
Lease receivables | EMEA
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,150	1,167
Lease receivables | EMEA | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	48	51
Lease receivables | EMEA | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	99	113
Lease receivables | EMEA | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	355	366
Lease receivables | EMEA | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	355	350
Lease receivables | EMEA | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	207	208
Lease receivables | EMEA | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	74	71
Lease receivables | EMEA | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	12	9
Lease receivables | Asia Pacific
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,267	1,259
Lease receivables | Asia Pacific | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	57	53
Lease receivables | Asia Pacific | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	550	486
Lease receivables | Asia Pacific | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	313	330
Lease receivables | Asia Pacific | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	180	185
Lease receivables | Asia Pacific | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	88	106
Lease receivables | Asia Pacific | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	62	84
Lease receivables | Asia Pacific | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	17	15
Loan receivables | Americas
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	5,664	6,016
Loan receivables | Americas | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	635	712
Loan receivables | Americas | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,125	1,246
Loan receivables | Americas | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,117	1,230
Loan receivables | Americas | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,241	1,309
Loan receivables | Americas | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	875	914
Loan receivables | Americas | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	566	472
Loan receivables | Americas | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	104	133
Loan receivables | EMEA
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	3,036	3,291
Loan receivables | EMEA | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	127	143
Loan receivables | EMEA | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	261	318
Loan receivables | EMEA | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	937	1,032
Loan receivables | EMEA | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	937	987
Loan receivables | EMEA | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	546	585
Loan receivables | EMEA | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	197	201
Loan receivables | EMEA | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	32	25
Loan receivables | Asia Pacific
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	2,096	2,154
Loan receivables | Asia Pacific | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	95	90
Loan receivables | Asia Pacific | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	910	832
Loan receivables | Asia Pacific | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	517	565
Loan receivables | Asia Pacific | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	297	316
Loan receivables | Asia Pacific | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	146	182
Loan receivables | Asia Pacific | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	103	143
Loan receivables | Asia Pacific | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	$ 28	$ 25

Financing Receivables - Industr

Financing Receivables - Industries (Details) - Global Financing - Financing Receivable Portfolio	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Financial Industry
Financing receivables
Financing receivables (as a percent)	35.00%	34.00%
Government Industry
Financing receivables
Financing receivables (as a percent)	14.00%	14.00%
Manufacturing Industry
Financing receivables
Financing receivables (as a percent)	14.00%	13.00%
Services Industry
Financing receivables
Financing receivables (as a percent)	11.00%	12.00%
Retail Industry
Financing receivables
Financing receivables (as a percent)	8.00%	8.00%
Communications Industry
Financing receivables
Financing receivables (as a percent)	7.00%	7.00%
Healthcare Industry
Financing receivables
Financing receivables (as a percent)	6.00%	6.00%
Other industries
Financing receivables
Financing receivables (as a percent)	6.00%	6.00%

Financing Receivables - Past Du

Financing Receivables - Past Due (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Past Due Financing Receivable
Troubled debt restructurings of financing receivables
Total Lease Receivable and Loan Receivable Portfolio Segments
Past Due Financing Receivable
Fully Reserved Financing Receivables	300	271
Less than 90 Days or Unbilled Financing Receivables	16,794	17,740
Total Financing Receivables	17,179	18,073
Recorded Investment > 90 Days and Accruing	321	253
Total Lease Receivable and Loan Receivable Portfolio Segments | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	85	62
Total Lease Receivable and Loan Receivable Portfolio Segments | Americas
Past Due Financing Receivable
Total Financing Receivables	9,428	10,015
Total Lease Receivable and Loan Receivable Portfolio Segments | EMEA
Past Due Financing Receivable
Total Financing Receivables	4,216	4,480
Total Lease Receivable and Loan Receivable Portfolio Segments | Asia Pacific
Past Due Financing Receivable
Total Financing Receivables	3,535	3,578
Lease receivables
Past Due Financing Receivable
Fully Reserved Financing Receivables	100	89
Less than 90 Days or Unbilled Financing Receivables	5,961	6,216
Total Financing Receivables	6,098	6,336
Recorded Investment > 90 Days and Accruing	130	111
Lease receivables | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	38	31
Lease receivables | Americas
Past Due Financing Receivable
Fully Reserved Financing Receivables	27	20
Less than 90 Days or Unbilled Financing Receivables	3,554	3,793
Total Financing Receivables	3,602	3,830
Recorded Investment > 90 Days and Accruing	102	66
Lease receivables | Americas | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	21	17
Lease receivables | EMEA
Past Due Financing Receivable
Fully Reserved Financing Receivables	8	10
Less than 90 Days or Unbilled Financing Receivables	1,140	1,159
Total Financing Receivables	1,154	1,171
Recorded Investment > 90 Days and Accruing	13	6
Lease receivables | EMEA | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	6	2
Lease receivables | Asia Pacific
Past Due Financing Receivable
Fully Reserved Financing Receivables	64	59
Less than 90 Days or Unbilled Financing Receivables	1,267	1,264
Total Financing Receivables	1,342	1,335
Recorded Investment > 90 Days and Accruing	16	40
Lease receivables | Asia Pacific | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	11	12
Loan receivables
Past Due Financing Receivable
Fully Reserved Financing Receivables	200	182
Less than 90 Days or Unbilled Financing Receivables	10,833	11,524
Total Financing Receivables	11,081	11,737
Recorded Investment > 90 Days and Accruing	191	141
Loan receivables | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	47	31
Loan receivables | Americas
Past Due Financing Receivable
Fully Reserved Financing Receivables	97	90
Less than 90 Days or Unbilled Financing Receivables	5,704	6,075
Total Financing Receivables	5,826	6,185
Recorded Investment > 90 Days and Accruing	141	80
Loan receivables | Americas | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	25	19
Loan receivables | EMEA
Past Due Financing Receivable
Fully Reserved Financing Receivables	10	5
Less than 90 Days or Unbilled Financing Receivables	3,037	3,299
Total Financing Receivables	3,062	3,309
Recorded Investment > 90 Days and Accruing	34	15
Loan receivables | EMEA | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	15	5
Loan receivables | Asia Pacific
Past Due Financing Receivable
Fully Reserved Financing Receivables	93	87
Less than 90 Days or Unbilled Financing Receivables	2,093	2,150
Total Financing Receivables	2,193	2,243
Recorded Investment > 90 Days and Accruing	16	46
Loan receivables | Asia Pacific | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	$ 8	$ 6

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	$ 129	$ 133
Income tax benefits	(48)	(43)
Total net stock-based compensation cost	81	90
Pre-tax stock-based compensation cost increase (decrease)	(4)
Pre-tax stock-based compensation cost increase related to conversion of stock-based awards of acquired entities	(6)
Stock-based compensation cost, unrecognized, related to non-vested awards	$ 804
Stock-based compensation cost, unrecognized, related to non-vested awards, weighted average period of recognition	2 years 6 months
Accounting Standards Update 2016-09, Stock Compensation
Stock-based compensation cost, allocation of recognized costs
Income tax benefits	$ (8)
Performance Share Units
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost increase (decrease)	(14)
Restricted Stock Units
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost increase (decrease)	16
Cost
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	23	21
SG&A expense
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	91	99
Research, development and engineering
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	$ 15	$ 13

Segments - Results of Continuin

Segments - Results of Continuing Operations (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Segment Information
Revenue (excluding other revenue not allocated to segments)	$ 18,083	$ 18,619
Revenue	18,155	18,684
Pre-tax income from continuing operations	1,424	1,034
Cognitive Solutions
Segment Information
Revenue (excluding other revenue not allocated to segments)	4,062	3,979
Global Business Services
Segment Information
Revenue (excluding other revenue not allocated to segments)	4,006	4,131
Technology Services & Cloud Platforms
Segment Information
Revenue (excluding other revenue not allocated to segments)	8,216	8,424
Systems
Segment Information
Revenue (excluding other revenue not allocated to segments)	1,395	1,675
Global Financing
Segment Information
Revenue (excluding other revenue not allocated to segments)	405	410
Business Segments
Segment Information
Revenue	19,576	20,264
Pre-tax income from continuing operations	$ 2,377	$ 1,837
Revenue year-to-year change (as a percent)	(3.40%)
Pre-tax income year-to-year change (as a percent)	29.40%
Pre-tax income margin (as a percent)	12.10%	9.10%
Business Segments | Cognitive Solutions
Segment Information
Revenue	$ 4,778	$ 4,647
Pre-tax income from continuing operations	$ 1,274	$ 1,013
Revenue year-to-year change (as a percent)	2.80%
Pre-tax income year-to-year change (as a percent)	25.70%
Pre-tax income margin (as a percent)	26.70%	21.80%
Business Segments | Global Business Services
Segment Information
Revenue	$ 4,092	$ 4,245
Pre-tax income from continuing operations	$ 291	$ 190
Revenue year-to-year change (as a percent)	(3.60%)
Pre-tax income year-to-year change (as a percent)	53.40%
Pre-tax income margin (as a percent)	7.10%	4.50%
Business Segments | Technology Services & Cloud Platforms
Segment Information
Revenue	$ 8,376	$ 8,589
Pre-tax income from continuing operations	$ 687	$ 258
Revenue year-to-year change (as a percent)	(2.50%)
Pre-tax income year-to-year change (as a percent)	166.10%
Pre-tax income margin (as a percent)	8.20%	3.00%
Business Segments | Systems
Segment Information
Revenue	$ 1,562	$ 1,888
Pre-tax income from continuing operations	$ (186)	$ (10)
Revenue year-to-year change (as a percent)	(17.30%)
Pre-tax income margin (as a percent)	(11.90%)	(0.50%)
Business Segments | Global Financing
Segment Information
Revenue	$ 768	$ 896
Pre-tax income from continuing operations	$ 311	$ 386
Revenue year-to-year change (as a percent)	(14.30%)
Pre-tax income year-to-year change (as a percent)	(19.50%)
Pre-tax income margin (as a percent)	40.50%	43.10%
Internal transactions
Segment Information
Revenue	$ (1,492)	$ (1,645)
Pre-tax income from continuing operations	(227)	(355)
Internal transactions | Cognitive Solutions
Segment Information
Revenue	(716)	(668)
Internal transactions | Global Business Services
Segment Information
Revenue	(86)	(113)
Internal transactions | Technology Services & Cloud Platforms
Segment Information
Revenue	(160)	(165)
Internal transactions | Systems
Segment Information
Revenue	(167)	(212)
Internal transactions | Global Financing
Segment Information
Revenue	$ (363)	$ (486)

Segments - Revenue Reconciliati

Segments - Revenue Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenue
Revenue	$ 18,155	$ 18,684
Business Segments
Revenue
Revenue	19,576	20,264
Internal transactions
Revenue
Revenue	(1,492)	(1,645)
Other revenue
Revenue
Revenue	$ 71	$ 66

Segments - Pre-Tax Income Recon

Segments - Pre-Tax Income Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Pre-tax Income from continuing operations
Amortization of acquired intangible assets	$ (249)	$ (211)
Acquisition-related (charges)/income	(13)	27
Non-operating retirement-related (costs)/income	(378)	(142)
Income from continuing operations before income taxes	1,424	1,034
Business Segments
Pre-tax Income from continuing operations
Income from continuing operations before income taxes	2,377	1,837
Internal transactions
Pre-tax Income from continuing operations
Income from continuing operations before income taxes	(227)	(355)
Unallocated corporate amounts
Pre-tax Income from continuing operations
Income from continuing operations before income taxes	$ (87)	$ (122)

Equity Activity - Reclassificat

Equity Activity - Reclassifications and Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost of sales	$ 1,551	$ 1,378
Cost of services	8,553	8,382
SG&A expense	5,152	6,012
Other (income) and expense	(28)	253
Interest expense	135	147
Provision for/(benefit from) income taxes	(329)	(983)
Net (income) loss	(1,750)	(2,014)
Other comprehensive income/(loss)	688	608
Accumulated Other Comprehensive Income/(Loss)
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Unrealized gains/(losses) arising during the period, Net of Tax Amount	284	218
Reclassification/amortization, Net of Tax Amount	404	391
Other comprehensive income/(loss), Before Tax Amount	779	406
Other comprehensive income/(loss), Tax (Expense)/Benefit	(92)	202
Other comprehensive income/(loss)	688	608
Foreign Currency Translation Adjustments
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Unrealized gains/(losses) arising during the period, Net of Tax Amount	270	505
Reclassification/amortization, Net of Tax Amount	0	0
Other comprehensive income/(loss), Before Tax Amount	161	239
Other comprehensive income/(loss), Tax (Expense)/Benefit	108	266
Other comprehensive income/(loss)	270	505
Net Unrealized Gains/(Losses) on Available-For-Sale Securities
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Unrealized gains/(losses) arising during the period, Before Tax Amount	(1)	(36)
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	0	14
Unrealized gains/(losses) arising during the period, Net of Tax Amount	(1)	(22)
Reclassification/amortization, Net of Tax Amount	1	23
Other comprehensive income/(loss), Before Tax Amount	0	1
Other comprehensive income/(loss), Tax (Expense)/Benefit	0	0
Other comprehensive income/(loss)	0	0
Net Unrealized Gains/(Losses) on Available-For-Sale Securities | Reclassifications
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Other (income) and expense	1	37
Provision for/(benefit from) income taxes	0	(14)
Net (income) loss	1	23
Net Unrealized Gains/(Losses) on Cash Flow Hedges
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Unrealized gains/(losses) arising during the period, Before Tax Amount	(33)	(265)
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	8	91
Unrealized gains/(losses) arising during the period, Net of Tax Amount	(25)	(174)
Reclassification/amortization, Net of Tax Amount	(64)	(58)
Other comprehensive income/(loss), Before Tax Amount	(130)	(356)
Other comprehensive income/(loss), Tax (Expense)/Benefit	41	124
Other comprehensive income/(loss)	(89)	(232)
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost of sales	(11)	(9)
Cost of services	(8)	6
SG&A expense	(20)	(3)
Other (income) and expense	(65)	(87)
Interest expense	7	2
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Cost of sales
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Provision for/(benefit from) income taxes	3	2
Net (income) loss	(8)	(7)
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Cost of services
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Provision for/(benefit from) income taxes	3	(3)
Net (income) loss	(5)	4
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | SG&A expense
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Provision for/(benefit from) income taxes	5	0
Net (income) loss	(15)	(3)
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Other (income) and expense
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Provision for/(benefit from) income taxes	25	33
Net (income) loss	(40)	(53)
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Interest expense
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Provision for/(benefit from) income taxes	(3)	(1)
Net (income) loss	5	1
Net Change Retirement-Related Benefit Plans
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Unrealized gains/(losses) arising during the period, Net of Tax Amount	40	(91)
Reclassification/amortization, Net of Tax Amount	466	426
Other comprehensive income/(loss), Before Tax Amount	748	522
Other comprehensive income/(loss), Tax (Expense)/Benefit	(241)	(187)
Other comprehensive income/(loss)	507	335
Retirement-Related Benefit Plans, Prior Service Costs/(Credits)
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Unrealized gains/(losses) arising during the period, Before Tax Amount	0
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	0
Unrealized gains/(losses) arising during the period, Net of Tax Amount	0
Reclassification/amortization, Before Tax Amount	(21)	(25)
Reclassification/amortization, Tax (Expense)/Benefit	7	9
Reclassification/amortization, Net of Tax Amount	(15)	(16)
Retirement-Related Benefit Plans, Net Gains/(Losses)
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Unrealized gains/(losses) arising during the period, Before Tax Amount	61	(147)
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	(20)	53
Unrealized gains/(losses) arising during the period, Net of Tax Amount	41	(94)
Reclassification/amortization, Before Tax Amount	710	690
Reclassification/amortization, Tax (Expense)/Benefit	(229)	(248)
Reclassification/amortization, Net of Tax Amount	481	442
Retirement-Related Benefit Plans, Curtailments and Settlements
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Unrealized gains/(losses) arising during the period, Before Tax Amount	(1)	5
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	0	(2)
Unrealized gains/(losses) arising during the period, Net of Tax Amount	$ (1)	$ 3

Equity Activity - AOCI Rollforw

Equity Activity - AOCI Rollforward (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period	$ 18,392	$ 14,424
Other comprehensive income/(loss)	688	608
Balance at the End of the Period	18,448	15,072
Accumulated Other Comprehensive Income/(Loss)
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period	(29,398)	(29,607)
Other comprehensive income before reclassifications	284	218
Amount reclassified from accumulated other comprehensive income	404	391
Other comprehensive income/(loss)	688	608
Balance at the End of the Period	(28,710)	(28,998)
Net Unrealized Gains/(Losses) on Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period	319	100
Other comprehensive income before reclassifications	(25)	(174)
Amount reclassified from accumulated other comprehensive income	(64)	(58)
Other comprehensive income/(loss)	(89)	(232)
Balance at the End of the Period	230	(133)
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period	(3,603)	(3,463)
Other comprehensive income before reclassifications	270	505
Amount reclassified from accumulated other comprehensive income	0	0
Other comprehensive income/(loss)	270	505
Balance at the End of the Period	(3,333)	(2,958)
Net Change Retirement-Related Benefit Plans
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period	(26,116)	(26,248)
Other comprehensive income before reclassifications	40	(91)
Amount reclassified from accumulated other comprehensive income	466	426
Other comprehensive income/(loss)	507	335
Balance at the End of the Period	(25,609)	(25,913)
Net Unrealized Gains/(Losses) on Available-For-Sale Securities
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period	2	5
Other comprehensive income before reclassifications	(1)	(22)
Amount reclassified from accumulated other comprehensive income	1	23
Other comprehensive income/(loss)	0	0
Balance at the End of the Period	$ 2	$ 5

Retirement-Related Benefits - A

Retirement-Related Benefits - All Retirement Plans Cost (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Retirement-Related Benefits:
Defined benefit and contribution pension plans - cost	$ 664	$ 439
Nonpension postretirement plans - cost	61	60
Total	$ 725	$ 499
Year-to-year percent change, defined benefit and contribution pension plans cost (as a percent)	51.30%
Year-to-year percent change, nonpension postretirement plans cost (as a percent)	2.30%
Year-to-year percent change, total (as a percent)	45.40%

Retirement-Related Benefits - C

Retirement-Related Benefits - Cost of Pension Plans (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cost/(Income) of Pension Plans
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings	$ 664	$ 439
U.S.
Cost/(Income) of Pension Plans
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings	228	91
Non-U.S.
Cost/(Income) of Pension Plans
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings	436	348
U.S. Pension Plans
Cost/(Income) of Pension Plans
Cost of defined contribution plans	162	165
Non-US Pension Plans
Cost/(Income) of Pension Plans
Cost of defined contribution plans	101	106
U.S. Pension Plans
Cost/(Income) of Pension Plans
Interest cost	479	513
Expected return on plan assets	(754)	(922)
Amortization of prior service costs/(credits)	4	3
Recognized actuarial losses	337	333
Total net periodic pension / nonpension (income)/cost of defined benefit plans	67	(74)
Non-US Pension Plans
Cost/(Income) of Pension Plans
Service cost	101	104
Interest cost	201	262
Expected return on plan assets	(317)	(470)
Amortization of prior service costs/(credits)	(24)	(25)
Recognized actuarial losses	361	347
Curtailments and settlements	(1)	5
Multi-employer plans/other costs	14	18
Total net periodic pension / nonpension (income)/cost of defined benefit plans	$ 335	$ 241

Retirement-Related Benefits - I

Retirement-Related Benefits - Investment Strategy (Details) - U.S. Pension Plans	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Expected
Retirement-Related Benefits
Expected long-term returns on plan assets		5.25%	5.75%
Equity securities
Retirement-Related Benefits
Target allocation (as a percent)	12.00%			20.00%
Debt securities
Retirement-Related Benefits
Target allocation (as a percent)	79.00%			70.00%
Other investments
Retirement-Related Benefits
Target allocation (as a percent)	10.00%			10.00%

Retirement-Related Benefits - N

Retirement-Related Benefits - Non-US and Multi-Employer Contributions (Details) - Non-U.S. Defined Benefit and Multi-employer Plans - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Retirement-Related Benefits
Expected current year contributions to non-U.S. defined benefit plans	$ 500
Total net contributions by employer	182	$ 107
Contributions by employer - Cash	40	65
Contributions by employer - Noncash	$ 142	$ 42

Retirement-Related Benefits -61

Retirement-Related Benefits - Nonpension Postretirement Cost (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
U.S. Nonpension Postretirement Benefit Plan
Retirement-related plans cost
Service cost	$ 4	$ 5
Interest cost	38	41
Amortization of prior service costs/(credits)	(2)	(2)
Recognized actuarial losses	5	5
Total net periodic pension / nonpension (income)/cost of defined benefit plans	46	49
Non-U.S. Nonpension Postretirement Benefit Plans
Retirement-related plans cost
Service cost	1	1
Interest cost	14	10
Expected return on plan assets	(2)	(1)
Amortization of prior service costs/(credits)	0	(1)
Recognized actuarial losses	2	2
Curtailments and settlements	0
Total net periodic pension / nonpension (income)/cost of defined benefit plans	$ 16	$ 11

Retirement-Related Benefits -62

Retirement-Related Benefits - Nonpension Postretirement Contributions (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
U.S. Nonpension Postretirement Benefit Plan
Retirement-Related Benefits
Contributions by employer - Noncash	$ 135	$ 100

Acquisitions_Divestitures - Bus

Acquisitions/Divestitures - Businesses Acquired (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
ACQUISITIONS
Goodwill	$ 36,307	$ 36,199	$ 32,021
Agile 3 Solutions
ACQUISITIONS
Percentage of business acquired (as a percent)	100.00%
Businesses acquired, cash consideration	$ 14
Goodwill	$ 8

Acquisitions_Divestitures - Mic

Acquisitions/Divestitures - Microelectronics Disposal Group (Details) - Microelectronics business - Discontinued Operations, Disposed of by Means Other than Sale - USD ($) $ in Millions	1 Months Ended		3 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Sep. 30, 2015
Discontinued Operations
Net cash transferred		$ 500	$ 515
Cash consideration transferred, before adjustments			$ 750
Expected
Discontinued Operations
Net cash transferred	$ 250

Acquisitions_Divestitures - Dis

Acquisitions/Divestitures - Discontinued Operations Financial Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Statement Disclosures
Loss from discontinued operations, net of tax	$ (3)	$ (3)
Microelectronics business | Discontinued Operations, Disposed of by Means Other than Sale
Income Statement Disclosures
Income/(loss) from discontinued operations	(6)	(5)
Gain/(loss) on disposal, before tax	2	1
Total loss from discontinued operations, before income taxes	(4)	(5)
Provision for/(benefit from) income taxes	(2)	(2)
Loss from discontinued operations, net of tax	$ (3)	$ (3)

Acquisitions_Divestitures - Oth

Acquisitions/Divestitures - Other Disposal Groups (Details) $ in Millions	Jan. 23, 2014USD ($)	Mar. 31, 2017USD ($)item	Dec. 31, 2016USD ($)	Dec. 31, 2015USD ($)
Industry Standard x86 Server Portfolio | Disposal group disposed of by sale, not discontinued operations
Divestitures
Transaction price for sale of business	$ 2,100
Approximate amount of transaction price received in cash	$ 1,800
Pre-tax gain on sale of business		$ 9	$ 57	$ 63
Expected pre-tax gain on sale of business		1,600
Disposal group expected total gain on sale, net of associated costs		1,300
Cumulative gain on sale of business, net of transition and performance-based costs		$ 1,200
Industry Standard x86 Server Portfolio | Maximum | Disposal group disposed of by sale, not discontinued operations
Divestitures
Disposal group equity consideration ownership (as a percent)	5.00%
Others
Divestitures
Number of divestitures | item		1

Intangible Assets Including G67

Intangible Assets Including Goodwill - Intangible Assets by Class (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Intangible asset balances by major asset class:
Gross Carrying Amount	$ 8,314	$ 8,466
Accumulated Amortization	(3,879)	(3,778)
Net Carrying Amount	4,436	4,688
Capitalized software
Intangible asset balances by major asset class:
Gross Carrying Amount	1,557	1,537
Accumulated Amortization	(691)	(661)
Net Carrying Amount	865	876
Client relationships
Intangible asset balances by major asset class:
Gross Carrying Amount	2,751	2,831
Accumulated Amortization	(1,254)	(1,228)
Net Carrying Amount	1,497	1,602
Completed technology
Intangible asset balances by major asset class:
Gross Carrying Amount	3,231	3,322
Accumulated Amortization	(1,688)	(1,668)
Net Carrying Amount	1,542	1,654
Patents/trademarks
Intangible asset balances by major asset class:
Gross Carrying Amount	725	730
Accumulated Amortization	(228)	(205)
Net Carrying Amount	496	525
Other intangible assets
Intangible asset balances by major asset class:
Gross Carrying Amount	52	46
Accumulated Amortization	(17)	(15)
Net Carrying Amount	$ 35	$ 31

Intangible Assets Including G68

Intangible Assets Including Goodwill - Intangible Assets Activity (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Intangible Assets Including Goodwill:
Net carrying amount decrease	$ 252
Intangible asset amortization expense	390	$ 347
Retirement of fully amortized intangible assets	$ 289

Intangible Assets Including G69

Intangible Assets Including Goodwill - Future Amortization (Details) $ in Millions	Mar. 31, 2017USD ($)
Future amortization expense, by year
2017 (for Q2 - Q4)	$ 1,098
2,018	1,158
2,019	768
2,020	557
2,021	437
Capitalized software
Future amortization expense, by year
2017 (for Q2 - Q4)	391
2,018	347
2,019	119
2,020	8
Acquired Intangibles
Future amortization expense, by year
2017 (for Q2 - Q4)	707
2,018	811
2,019	648
2,020	549
2,021	$ 437

Intangible Assets Including G70

Intangible Assets Including Goodwill - Goodwill by Segment (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Changes in Goodwill Balances
Beginning Balance	$ 36,199	$ 32,021
Goodwill Additions	8	4,244
Purchase Price Adjustments	3	(7)
Divestitures		(18)
Foreign Currency Translation and Other Adjustments	97	(42)
Ending Balance	36,307	36,199
Goodwill impairment losses	0	0
Goodwill accumulated impairment losses	0	0
Cognitive Solutions
Changes in Goodwill Balances
Beginning Balance	19,484	15,621
Goodwill Additions	3	3,821
Purchase Price Adjustments	4	5
Divestitures		(12)
Foreign Currency Translation and Other Adjustments	26	48
Ending Balance	19,518	19,484
Global Business Services
Changes in Goodwill Balances
Beginning Balance	4,607	4,396
Goodwill Additions		303
Purchase Price Adjustments	2	4
Divestitures		(1)
Foreign Currency Translation and Other Adjustments	35	(95)
Ending Balance	4,643	4,607
Technology Services & Cloud Platforms
Changes in Goodwill Balances
Beginning Balance	10,258	10,156
Goodwill Additions	5	119
Purchase Price Adjustments	(3)	(12)
Divestitures		(5)
Foreign Currency Translation and Other Adjustments	35	(1)
Ending Balance	10,295	10,258
Systems
Changes in Goodwill Balances
Beginning Balance	1,850	1,848
Purchase Price Adjustments		(4)
Foreign Currency Translation and Other Adjustments	1	5
Ending Balance	$ 1,851	$ 1,850

Borrowings - Short-Term Debt (D

Borrowings - Short-Term Debt (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Short-term debt disclosures
Long-term debt - current maturities	$ 8,055	$ 6,239
Total short-term debt	8,340	7,513
Commercial paper
Short-term debt disclosures
Short-term debt		$ 899
Weighted-average interest rates for short-term loans (as a percent)		0.70%
Short-term loans
Short-term debt disclosures
Short-term debt	$ 285	$ 375
Weighted-average interest rates for short-term loans (as a percent)	7.70%	9.50%

Borrowings - Long-Term Debt, Co

Borrowings - Long-Term Debt, Components (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Borrowings
Long-term debt, gross	$ 42,792	$ 41,145
Less: net unamortized discount	838	839
Less: net unamortized debt issuance cost	84	82
Add: fair value adjustment	627	669
Long-term debt (including current maturities)	42,498	40,893
Less: current maturities	8,055	6,239
Long-term debt (excluding current portion)	34,441	34,655
IBM International Group Capital, LLC
Borrowings
Long-term debt, gross	$ 0
Ownership interest in subsidiary (as a percent)	100.00%
U.S. dollars
Borrowings
Long-term debt, gross	$ 32,309	30,563
Euros
Borrowings
Long-term debt, gross	$ 7,217	7,122
Debt instrument, average interest rate percentage (as a percent)	1.60%
Pound sterling
Borrowings
Long-term debt, gross	$ 1,312	1,296
Debt instrument, average interest rate percentage (as a percent)	2.70%
Japanese yen
Borrowings
Long-term debt, gross	$ 1,649	1,576
Debt instrument, average interest rate percentage (as a percent)	0.90%
Canadian
Borrowings
Long-term debt, gross		$ 373
Debt instrument, average interest rate percentage (as a percent)		2.20%
Other
Borrowings
Long-term debt, gross	$ 305	$ 215
Debt instrument, average interest rate percentage (as a percent)	10.00%
Maturing 2017 | U.S. dollars
Borrowings
Long-term debt, gross	$ 3,980	5,104
Debt instrument, average interest rate percentage (as a percent)	4.69%
Maturing 2018 Through 2019 | U.S. dollars
Borrowings
Long-term debt, gross	$ 8,967	8,856
Debt instrument, average interest rate percentage (as a percent)	3.24%
Maturing 2020 Through 2021 | U.S. dollars
Borrowings
Long-term debt, gross	$ 6,198	4,941
Debt instrument, average interest rate percentage (as a percent)	1.86%
Maturing 2022 | U.S. dollars
Borrowings
Long-term debt, gross	$ 2,903	1,901
Debt instrument, average interest rate percentage (as a percent)	1.54%
Maturing 2023 | U.S. dollars
Borrowings
Long-term debt, gross	$ 1,500	1,500
Debt instrument, average interest rate percentage (as a percent)	3.38%
Maturing 2024 | U.S. dollars
Borrowings
Long-term debt, gross	$ 2,000	2,000
Debt instrument, average interest rate percentage (as a percent)	3.63%
Maturing 2025 | U.S. dollars
Borrowings
Long-term debt, gross	$ 600	600
Debt instrument, average interest rate percentage (as a percent)	7.00%
Maturing 2026 | U.S. dollars
Borrowings
Long-term debt, gross	$ 1,350	1,350
Debt instrument, average interest rate percentage (as a percent)	3.45%
Maturing 2027 | U.S. dollars
Borrowings
Long-term debt, gross	$ 969	469
Debt instrument, average interest rate percentage (as a percent)	3.01%
Maturing 2028 | U.S. dollars
Borrowings
Long-term debt, gross	$ 313	313
Debt instrument, average interest rate percentage (as a percent)	6.50%
Maturing 2032 | U.S. dollars
Borrowings
Long-term debt, gross	$ 600	600
Debt instrument, average interest rate percentage (as a percent)	5.88%
Maturing 2038 | U.S. dollars
Borrowings
Long-term debt, gross	$ 83	83
Debt instrument, average interest rate percentage (as a percent)	8.00%
Maturing 2039 | U.S. dollars
Borrowings
Long-term debt, gross	$ 745	745
Debt instrument, average interest rate percentage (as a percent)	5.60%
Maturing 2042 | U.S. dollars
Borrowings
Long-term debt, gross	$ 1,107	1,107
Debt instrument, average interest rate percentage (as a percent)	4.00%
Maturing 2045 | U.S. dollars
Borrowings
Long-term debt, gross	$ 27	27
Debt instrument, average interest rate percentage (as a percent)	7.00%
Maturing 2046 | U.S. dollars
Borrowings
Long-term debt, gross	$ 650	650
Debt instrument, average interest rate percentage (as a percent)	4.70%
Maturing 2096 | U.S. dollars
Borrowings
Long-term debt, gross	$ 316	$ 316
Debt instrument, average interest rate percentage (as a percent)	7.13%

Borrowings - Long-Term Debt, 73

Borrowings - Long-Term Debt, Covenants (Details) $ in Millions	3 Months Ended
	Mar. 31, 2017USD ($)
Borrowings:
Limit based on net tangible assets	10.00%
Minimum net interest expense ratio	2.20
Default provision on credit facility	$ 500

Borrowings - Pre-Swap Maturitie

Borrowings - Pre-Swap Maturities (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Pre-swap annual contractual maturities of long-term debt outstanding
2017 (for Q2 - Q4)	$ 4,845
2,018	4,995
2,019	5,256
2,020	5,889
2,021	3,933
2022 and beyond	17,875
Total	$ 42,792	$ 41,145

Borrowings - Interest on Debt (

Borrowings - Interest on Debt (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Interest on Debt
Cost of financing	$ 158	$ 138
Interest expense	155	157
Net investment derivative activity	(19)	(10)
Interest capitalized	0	1
Total interest paid and accrued	$ 293	$ 286

Contingencies (Details)

Contingencies (Details) $ in Millions	Feb. 13, 2014USD ($)	Jul. 18, 2012USD ($)	May 31, 2015defendant	May 31, 2010defendant	Mar. 31, 2017USD ($)countryclaim
IBM v. State Of Indiana
Loss Contingencies
Duration of trial		42 days
Amount of settlement to be (paid)/received	$ 50	$ 52
IBM United Kingdom Limited vs. IBM UK Pension Trusts
Loss Contingencies
Number of representative beneficiaries of the UK Trust membership | defendant				2
Loss contingency, estimate of possible loss					$ 290
Individual Participants Of Defined Benefit Plans vs. IBM United Kingdom
Loss Contingencies
Claims pending | claim					290
Litigation Case In United States District Court regarding divesting Microelectronics business, alleging violations of the Employee Retirement Income Security Act
Loss Contingencies
Number of officers or executives named as defendants | defendant			3
Brazil Tax Matters
Loss Contingencies
Damages sought, value					$ 1,000
Minimum
Loss Contingencies
Clients' presence in number of countries | country					175

Commitments - Extensions of Cre

Commitments - Extensions of Credit (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Extended lines of credit
Commitments, guarantees:
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients	$ 7,860	$ 6,542
Financing for client purchase agreements
Commitments, guarantees:
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients	$ 2,341	$ 2,463

Commitments - Financial Guarant

Commitments - Financial Guarantees (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Financial guarantees
Guarantor obligations
Guarantor obligations, maximum exposure	$ 23	$ 34

Commitments - Standard Warranty

Commitments - Standard Warranty Liability (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Movement in standard warranty liability
Beginning Balance	$ 156	$ 181
Current period accruals	32	27
Accrual adjustments to reflect actual experience	1	(2)
Charges incurred	(41)	(41)
Ending Balance	$ 147	$ 164

Commitments - Extended Warranty

Commitments - Extended Warranty Liability (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Deferred revenue:
Current portion	$ 12,351		$ 11,035
Noncurrent portion	3,557		$ 3,600
Extended Warranty Liability (Deferred Income)
Movement in extended warranty liability
Beginning Balance	531	$ 538
Revenue deferred for new extended warranty contracts	58	49
Amortization of deferred revenue	(68)	(66)
Other	7	9
Ending Balance	528	531
Deferred revenue:
Current portion	250	247
Noncurrent portion	$ 278	$ 284

Subsequent Events (Details)

Subsequent Events (Details) - $ / shares	Apr. 25, 2017	Jan. 31, 2017
Subsequent Events:
Dividend declared (in dollars per share)		$ 1.40
Subsequent events
Subsequent Events:
Dividend declared (in dollars per share)	$ 1.50
Dividend declared, date	Apr. 25, 2017
Dividend payable, date	Jun. 10, 2017
Shareholders of record, date	May 10, 2017
Dividend per share increase (in dollars per share)	$ 0.10
Dividend per share increase (as a percent)	7.00%