International Business Machines (IBM) 10-Q 31 Oct 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	9 Months Ended
	Sep. 30, 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	Sep. 30, 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	925,791,378
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q3
Trading Symbol	IBM

CONSOLIDATED STATEMENT OF EARNI

CONSOLIDATED STATEMENT OF EARNINGS - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenue:
Services	$ 12,703	$ 12,938	$ 37,592	$ 38,347
Sales	6,017	5,872	17,744	18,542
Financing	433	417	1,260	1,260
Total revenue	19,153	19,226	56,597	58,149
Cost:
Services	8,426	8,418	25,502	25,492
Sales	1,605	1,536	4,839	4,496
Financing	322	259	890	760
Total cost	10,353	10,213	31,232	30,748
Gross profit	8,800	9,013	25,365	27,401
Expense and other (income):
Selling, general and administrative	4,648	4,732	14,959	16,093
Research, development and engineering	1,342	1,397	4,360	4,320
Intellectual property and custom development income	(308)	(528)	(1,118)	(1,110)
Other (income) and expense	(114)	(8)	(218)	281
Interest expense	168	158	451	473
Total expense and other (income)	5,735	5,751	18,434	20,056
Income from continuing operations before income taxes	3,065	3,263	6,931	7,345
Provision for/(benefit from) income taxes	339	409	120	(31)
Income from continuing operations	2,726	2,854	6,811	7,375
Loss from discontinued operations, net of tax	0	(1)	(3)	(4)
Net income	$ 2,726	$ 2,853	$ 6,807	$ 7,371
Assuming dilution:
Continuing operations (in dollars per share)	$ 2.92	$ 2.98	$ 7.24	$ 7.67
Discontinued operations (in dollars per share)	0	0	0	0
Total (in dollars per share)	2.92	2.98	7.24	7.67
Basic:
Continuing operations (in dollars per share)	2.93	2.99	7.28	7.70
Discontinued operations (in dollars per share)	0	0	0	0
Total (in dollars per share)	$ 2.93	$ 2.99	$ 7.28	$ 7.70
Weighted-average number of common shares outstanding:
Assuming dilution (in shares)	933,227,429	957,317,284	940,209,466	960,724,182
Basic (in shares)	929,437,441	953,995,828	935,600,777	957,693,385
Cash dividend per common share	$ 1.50	$ 1.40	$ 4.40	$ 4.10

CONSOLIDATED STATEMENT OF COMPR

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Net income	$ 2,726	$ 2,853	$ 6,807	$ 7,371
Other comprehensive income/(loss), before tax:
Foreign currency translation adjustments	89	(99)	213	(109)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	(1)	(1)	2	(36)
Reclassification of (gains)/losses to net income	0	(1)	1	36
Total net changes related to available-for-sale securities	(2)	(2)	2	0
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	(70)	35	(198)	(221)
Reclassification of (gains)/losses to net income	(73)	15	(347)	26
Total unrealized gains/(losses) on cash flow hedges	(143)	50	(545)	(195)
Retirement-related benefit plans:
Prior service costs/(credits)	0		0
Net (losses)/gains arising during the period	1	11	106	(57)
Curtailments and settlements	2	4	3	19
Amortization of prior service (credits)/costs	(22)	(28)	(66)	(81)
Amortization of net (gains)/losses	733	696	2,156	2,079
Total retirement-related benefit plans	713	683	2,200	1,960
Other comprehensive income/(loss), before tax	658	632	1,869	1,656
Income tax (expense)/benefit related to items of other comprehensive income	11	(192)	7	(213)
Other comprehensive income/(loss)	669	440	1,877	1,442
Total comprehensive income/(loss)	$ 3,394	$ 3,293	$ 8,684	$ 8,813

CONSOLIDATED STATEMENT OF FINAN

CONSOLIDATED STATEMENT OF FINANCIAL POSITION - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 10,915	$ 7,826
Marketable securities	600	701
Notes and accounts receivable - trade (net of allowances of $296 in 2017 and $290 in 2016)	8,150	9,182
Short-term financing receivables (net of allowances of $270 in 2017 and $337 in 2016)	18,050	19,006
Other accounts receivable (net of allowances of $39 in 2017 and $48 in 2016)	926	1,057
Inventories, at lower of average cost or market:
Finished goods	430	358
Work in process and raw materials	1,281	1,195
Total inventories	1,711	1,553
Prepaid expenses and other current assets	4,389	4,564
Total current assets	44,742	43,888
Property, plant and equipment	31,937	30,133
Less: Accumulated depreciation	20,880	19,303
Property, plant and equipment - net	11,057	10,830
Long-term financing receivables (net of allowances of $84 in 2017 and $101 in 2016)	8,459	9,021
Prepaid pension assets	4,521	3,034
Deferred taxes	7,289	5,224
Goodwill	36,782	36,199
Intangible assets - net	3,981	4,688
Investments and sundry assets	4,806	4,585
Total assets	121,636	117,470
Current liabilities:
Taxes	3,038	3,235
Short-term debt	4,299	7,513
Accounts payable	5,442	6,209
Compensation and benefits	3,918	3,577
Deferred income	10,649	11,035
Other accrued expenses and liabilities	4,352	4,705
Total current liabilities	31,697	36,275
Long-term debt	41,327	34,655
Retirement and nonpension postretirement benefit obligations	17,554	17,070
Deferred income	3,579	3,600
Other liabilities	7,723	7,477
Total liabilities	101,879	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 - 2,228,489,401; 2016 - 2,225,116,815	54,395	53,935
Retained earnings	155,565	152,759
Treasury stock - at cost Shares: 2017 - 1,302,698,023; 2016 - 1,279,249,412	(162,812)	(159,050)
Accumulated other comprehensive income/(loss)	(27,521)	(29,398)
Total IBM stockholders' equity	19,627	18,246
Noncontrolling interests	130	146
Total equity	19,757	18,392
Total liabilities and equity	$ 121,636	$ 117,470

CONSOLIDATED STATEMENT OF FINA5

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes and accounts receivable - trade, allowances	$ 296	$ 290
Short-term financing receivables, allowances	270	337
Other accounts receivable, allowances	39	48
Long-term financing receivables, allowances	$ 84	$ 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)	2,228,489,401	2,225,116,815
Treasury stock, Shares (in shares)	1,302,698,023	1,279,249,412

CONSOLIDATED STATEMENT OF CASH

CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net income	$ 6,807	$ 7,371
Adjustments to reconcile net income to cash provided by operating activities
Depreciation	2,231	2,106
Amortization of intangibles	1,161	1,148
Stock-based compensation	388	403
Net (gain)/loss on asset sales and other	92	100
Changes in operating assets and liabilities, net of acquisitions/divestitures	312	1,978	[1],[2]
Net cash provided by operating activities	10,991	13,105	[1],[2]
Cash flows from investing activities:
Payments for property, plant and equipment	(2,273)	(2,594)
Proceeds from disposition of property, plant and equipment	337	234
Investment in software	(411)	(441)
Acquisition of businesses, net of cash acquired	(442)	(5,445)
Divestitures of businesses, net of cash transferred	35	35
Non-operating finance receivables - net	469	1,441	[2]
Purchases of marketable securities and other investments	(3,770)	(4,021)
Proceeds from disposition of marketable securities and other investments	2,778	3,501
Net cash used in investing activities	(3,278)	(7,289)	[2]
Cash flows from financing activities:
Proceeds from new debt	9,355	8,368
Payments to settle debt	(6,252)	(5,616)
Short-term borrowings/(repayments) less than 90 days - net	(794)	(864)
Common stock repurchases	(3,674)	(2,632)
Common stock repurchases for tax withholdings	(153)	(115)	[1]
Common stock transactions - other	137	166
Cash dividends paid	(4,119)	(3,927)
Net cash used in financing activities	(5,499)	(4,619)	[1]
Effect of exchange rate changes on cash and cash equivalents	875	155
Net change in cash and cash equivalents	3,089	1,352
Cash and cash equivalents at beginning of period	7,826	7,686
Cash and cash equivalents at end of period	$ 10,915	$ 9,039
[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		7,371		7,371				7,371
Other comprehensive income/(loss)		1,442				1,442		1,442
Total comprehensive income/(loss)		8,813						8,813
Cash dividends paid - common stock		(3,927)		(3,927)				(3,927)
Common stock issued under employee plans (Shares - 3,372,586 and 3,370,992 for the nine months ended September 30, 2017 and 2016 respectively)		513	513					513
Purchases (Shares - 960,186 and 787,805) and sales (Shares - 363,335 and 336,480) of treasury stock under employee plans - net, for the nine months ended September 30, 2017 and 2016 respectively		(56)		16	(72)			(56)
Other treasury shares purchased, not retired (Shares - 22,851,760 and 17,793,841 for the nine months ended September 30, 2017 and 2016 respectively)		(2,579)			(2,579)			(2,579)
Changes in other equity		(17)	(16)	0				(17)
Changes in noncontrolling interests							(12)	(12)
Balance at the End of the Period at Sep. 30, 2016		17,010	53,759	149,585	(158,170)	(28,164)	149	17,159
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		6,807		6,807				6,807
Other comprehensive income/(loss)		1,877				1,877		1,877
Total comprehensive income/(loss)		8,684						8,684
Cash dividends paid - common stock		(4,119)		(4,119)				(4,119)
Common stock issued under employee plans (Shares - 3,372,586 and 3,370,992 for the nine months ended September 30, 2017 and 2016 respectively)		460	460					460
Purchases (Shares - 960,186 and 787,805) and sales (Shares - 363,335 and 336,480) of treasury stock under employee plans - net, for the nine months ended September 30, 2017 and 2016 respectively		(91)		15	(106)			(91)
Other treasury shares purchased, not retired (Shares - 22,851,760 and 17,793,841 for the nine months ended September 30, 2017 and 2016 respectively)		(3,655)			(3,655)			(3,655)
Changes in noncontrolling interests							(16)	(16)
Balance at the End of the Period at Sep. 30, 2017		$ 19,627	$ 54,395	$ 155,565	$ (162,812)	$ (27,521)	$ 130	$ 19,757
[1]	Reflects the adoption of the FASB guidance on intra-entity transfers of assets in the first-quarter 2017.

CONSOLIDATED STATEMENT OF CHAN8

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) - shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Common stock issued under employee plans (in shares)	3,372,586	3,370,992
Purchases of treasury stock under employee plans (in shares)	960,186	787,805
Sales of treasury stock under employee plans (in shares)	363,335	336,480
Other treasury shares purchased, not retired (in shares)	22,851,760	17,793,841

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 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 and nine months ended September 30, 2016, decreasing net cash provided by operating activities and net cash used in investing activities in the amount of $99 million and $311 million, respectively, which the company concluded to be immaterial to the periods 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. In the first quarter of 2017, the company reported a benefit from income taxes of $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. The company had additional discrete tax benefits of $170 million in second-quarter 2017. For the nine months ended September 30, 2017, the company reported a provision for income taxes of $120 million and its effective tax rate was 1.7 percent, primarily as a result of the first and second quarter discrete items. For the nine months ended September 30, 2016, the company reported a benefit from income taxes of $31 million and its effective tax rate was (0.4) percent. The negative effective tax rate in the comparable period of 2016 was due to 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 $4.4 million and $3.1 million, net of tax, for the three months ended September 30, 2017 and 2016, respectively, and $11.5 million and $7.5 million, net of tax, for the nine months ended September 30, 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	9 Months Ended
	Sep. 30, 2017
Accounting Changes:
Accounting Changes:	2. Accounting Changes: New Standards to be Implemented In August 2017, the FASB issued guidance to simplify the application of current hedge accounting in certain areas, better portray the economic results of an entity’s risk management activities in its financial statements and make targeted improvements to presentation and disclosure requirements. The guidance is effective January 1, 2019 with early adoption permitted. The company plans to adopt the guidance as of January 1, 2018. The guidance is not expected to have a material impact in the consolidated financial results. 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 company will adopt the guidance on January 1, 2018 and apply the cumulative catch-up transition method. The transition adjustment to be recorded to stockholders’ equity upon adoption of the new standard is not expected to be material. 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 identified 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 will result in an accounting change for the company. However, the impact to the consolidated financial statements is not expected to be material, with 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 both basic and diluted earnings per share of $0.62 per share for the nine months ended September 30, 2017. There was no impact in the consolidated financial results for the three months ended September 30, 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. The FASB also issued guidance in May 2017, which relates to the accounting for modifications of share-based payment awards. The company adopted the guidance in the second quarter of 2017. The guidance had no impact in the consolidated financial results. 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	9 Months Ended
	Sep. 30, 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 nine months ended September 30, 2016, a pre-tax impairment charge related to certain property, plant and equipment of $218 million was recorded. There were no material impairments of non-financial assets for the nine months ended September 30, 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 September 30, 2017 and December 31, 2016. (Dollars in millions) At September 30, 2017 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ $ — $ Money market funds — — U.S. government securities — — Canadian government securities — — 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 September 30, 2017 were $269 million and $687 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 September 30, 2017 were $332 million and $20 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 $274 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 nine months ended September 30, 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 September 30, 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 $41,327 million and $34,655 million, and the estimated fair value was $43,623 million and $36,838 million at September 30, 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 September 30, 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 during the period were as follows: (Dollars in millions) For the three months ended September 30: 2017 2016 Proceeds $ $ Gross realized gains (before taxes) Gross realized losses (before taxes) — — (Dollars in millions) For the nine months ended September 30: 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 equity securities that have been included in other comprehensive income/(loss) for the period and 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 September 30: 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 September 30, 2017 and 2016, respectively. (Dollars in millions) For the nine months ended September 30: 2017 2016 Net unrealized gains/(losses) arising during the period $ $ ) Net unrealized (gains)/losses reclassified to net income* * There were no writedowns for the nine months ended September 30, 2017 and 2016, respectively. The contractual maturities of substantially all available-for-sale debt securities are less than one year at September 30, 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 September 30, 2017 and December 31, 2016 was $45 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 September 30, 2017 and December 31, 2016 was $957 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 $274 million and $116 million at September 30, 2017 and December 31, 2016, respectively, of liabilities included in master netting arrangements with those counterparties. Additionally, at September 30, 2017 and December 31, 2016, this exposure was reduced by $123 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 September 30, 2017. At September 30, 2017 and December 31, 2016, the net exposure related to derivative assets recorded in the Consolidated Statement of Financial Position was $559 million and $834 million, respectively. At September 30, 2017 and December 31, 2016, the net position related to derivative liabilities recorded in the Consolidated Statement of Financial Position was $78 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 September 30, 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 $123 million and $141 million at September 30, 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 September 30, 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 September 30, 2017 and December 31, 2016, the total notional amount of the company’s interest rate swaps was $9.1 billion and $7.3 billion, respectively. The weighted-average remaining maturity of these instruments at September 30, 2017 and December 31, 2016 was approximately 5.0 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 September 30, 2017 and December 31, 2016. At December 31, 2016, net gains of less than $1 million (before taxes) were recorded in accumulated other comprehensive income/(loss) in connection with cash flow hedges of the company’s borrowings. During 2017, all gains and losses associated with this program that were recorded in other comprehensive income/(loss) were reclassified to net income and there are no gains and losses remaining in accumulated other comprehensive income/(loss) at September 30, 2017. 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 September 30, 2017 and December 31, 2016, the total notional amount of derivative instruments designated as net investment hedges was $8.8 billion and $6.7 billion, respectively. At September 30, 2017 and December 31, 2016, the weighted-average remaining maturity of these instruments was approximately 0.1 years and 0.2 years, respectively. Anticipated Royalties and Cost Transactions The company’s operations generate significant nonfunctional currency, third-party vendor payments and intercompany payments for royalties and goods and services among the company’s non-U.S. subsidiaries and with the company. In anticipation of these foreign currency cash flows and in view of the volatility of the currency markets, the company selectively employs foreign exchange forward contracts to manage its currency risk. These forward contracts are accounted for as cash flow hedges. The maximum length of time over which the company has hedged its exposure to the variability in future cash flows is four years. At September 30, 2017 and December 31, 2016, the total notional amount of forward contracts designated as cash flow hedges of forecasted royalty and cost transactions was $7.9 billion and $8.3 billion, respectively. The weighted-average remaining maturity of these instruments at September 30, 2017 and December 31, 2016 was 0.7 years at both periods. At September 30, 2017 and December 31, 2016, in connection with cash flow hedges of anticipated royalties and cost transactions, the company recorded net losses of $70 million and net gains of $462 million (before taxes), respectively, in accumulated other comprehensive income/(loss). Within these amounts, $161 million of losses 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 September 30, 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 September 30, 2017 and December 31, 2016, in connection with cash flow hedges of foreign currency denominated borrowings, the company recorded net gains of $16 million and net gains of $29 million (before taxes), respectively, in accumulated other comprehensive income/(loss). Within these amounts, $34 million of gains and $27 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 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 September 30, 2017 and December 31, 2016, the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $10.8 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 September 30, 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 warrants qualifying as derivatives outstanding at September 30, 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 September 30, 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 September 30, 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 September 30, 2017 and December 31, 2016, as well as for the three and nine months ended September 30, 2017 and 2016, respectively. Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position As of September 30, 2017 and December 31, 2016 Fair Value of Derivative Assets Fair Value of Derivative Liabilities Balance Sheet Balance Sheet (Dollars in millions) Classification 9/30/2017 12/31/2016 Classification 9/30/2017 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 Derivatives $ $ $ $ Total debt designated as hedging instruments(1): Short-term debt N/A N/A $ $ Long-term debt N/A N/A N/A N/A $ $ Total $ $ $ $ N/A - not applicable (1) Debt designated as hedging instruments are reported at carrying value. The Effect of Derivative Instruments in the Consolidated Statement of Earnings For the three months ended September 30, 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 September 30: 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 September 30: 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 ) ) Cost of financing — — — 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 September 30, 2017 and 2016, fair value hedges resulted in a loss of less than $1 million and a loss of $3 million in ineffectiveness, respectively. The Effect of Derivative Instruments in the Consolidated Statement of Earnings For the nine months ended September 30, 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 nine months ended September 30: 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 co

Financing Receivables

Financing Receivables	9 Months Ended
	Sep. 30, 2017
Financing Receivables:
Financing Receivables:	4. Financing Receivables: The following table presents financing receivables, net of allowances for credit losses, including residual values. At September 30, 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 $567 million and $585 million at September 30, 2017 and December 31, 2016, respectively, and is reflected net of unearned income of $459 million and $513 million, and net of allowance for credit losses of $118 million and $133 million at those dates, respectively. Commercial financing receivables, net of allowance for credit losses of $21 million and $28 million at September 30, 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 $215 million and $276 million at September 30, 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 $640 million and $689 million at September 30, 2017 and December 31, 2016, respectively. The company did not have any financing receivables held for sale as of September 30, 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 September 30, 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 September 30, 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 September 30, 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 $ 3,830 $ $ $ Loan receivables Ending balance $ 10,015 $ $ $ Collectively evaluated for impairment $ 9,847 $ $ $ Individually evaluated for impairment $ 168 $ $ $ Allowance for credit losses Beginning balance at January 1, 2016 Lease receivables $ 52 $ $ $ Loan receivables Total $ 175 $ $ $ Write-offs $ (36 ) $ ) $ ) $ ) Recoveries Provision ) ) Other ) ) ) Ending balance at December 31, 2016 $ 223 $ $ $ Lease receivables $ 54 $ $ $ Loan receivables $ 169 $ $ $ Collectively evaluated for impairment $ 62 $ $ $ Individually evaluated for impairment $ 161 $ $ $ * 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 September 30, 2017 and December 31, 2016. At September 30, 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 includes both loan and lease receivables. At September 30, 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 September 30, 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 September 30, 2016:* Investment Recognized Cash Basis Americas $ $ $ — EMEA — Asia Pacific — Total $ $ $ — * Reclassified to conform to 2017 presentation. Interest Average Interest Income (Dollars in millions) Recorded Income Recognized on For the nine months ended September 30, 2017: Investment Recognized Cash Basis Americas $ $ $ — EMEA — Asia Pacific — Total $ $ $ — Interest Average Interest Income (Dollars in millions) Recorded Income Recognized on For the nine months ended September 30, 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 September 30, 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 September 30, 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 September 30, 2017, the industries which made up Global Financing’s receivables portfolio consisted of: Financial (33 percent), Government (14 percent), Manufacturing (14 percent), Services (13 percent), Retail (8 percent), Communications (7 percent), Healthcare (6 percent) and Other (5 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 September 30, 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 finance ing 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 to 2017 presentation. Troubled Debt Restructurings The company did not have any significant troubled debt restructurings during the nine months ended September 30, 2017 or for the year ended December 31, 2016.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Sep. 30, 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. Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2017 2016 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 September 30, 2017 decreased $19 million compared to the corresponding period in the prior year. This was due to decreases related to performance share units ($11 million), the conversion of stock-based awards previously issued by acquired entities ($7 million) and restricted stock units ($2 million). Pre-tax stock-based compensation cost for the nine months ended September 30, 2017 decreased $15 million compared to the corresponding period in the prior year. This was due to decreases related to the conversion of stock-based awards previously issued by acquired entities ($20 million) and performance share units ($17 million), partially offset by an increase in restricted stock units ($22 million). The implementation of the new FASB guidance for share-based payment transactions resulted in an immaterial impact to income tax benefits as of the three months and nine months ended September 30, 2017. Refer to note 2, “Accounting Changes,” for additional information. As of September 30, 2017, the total unrecognized compensation cost of $905 million related to non-vested awards was expected to be recognized over a weighted-average period of approximately 2.6 years. There was no significant capitalized stock-based compensation cost at September 30, 2017 and 2016.

Segments

Segments	9 Months Ended
	Sep. 30, 2017
Segments:
Segments:	6. Segments: The tables on pages 29 and 30 reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company. Performance measurement is based on 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 & Technology Global Services & Cognitive Business Cloud Global Total (Dollars in millions) Solutions Services Platforms Systems Financing Segments For the three months ended September 30, 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 % )% )% % )% )% Pre-tax income margin % % % % % % For the three months ended September 30, 2016: External revenue $ $ $ $ $ $ Internal revenue Total revenue $ $ $ $ $ $ Pre-tax income from continuing operations $ $ $ $ $ $ Pre-tax income margin % % % % % % Reconciliations to IBM as Reported: (Dollars in millions) For the three months ended September 30: 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 $ $ SEGMENT INFORMATION Cognitive Solutions & Technology Global Services & Cognitive Business Cloud Global Total (Dollars in millions) Solutions Services Platforms Systems Financing Segments For the nine months ended September 30, 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 % )% % )% )% )% Pre-tax income margin % % % % % % For the nine months ended September 30, 2016: External revenue $ $ $ $ $ $ Internal revenue Total revenue $ $ $ $ $ $ Pre-tax income from continuing operations $ $ $ $ $ $ Pre-tax income margin % % % % % % Reconciliations to IBM as Reported: (Dollars in millions) For the nine months ended September 30: 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	9 Months Ended
	Sep. 30, 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 September 30, 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 September 30, 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.) Reclassifications and Taxes Related to Items of Other Comprehensive Income (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the nine months ended September 30, 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 nine months ended September 30, 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 ) September 30, 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 ) September 30, 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	9 Months Ended
	Sep. 30, 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 tables provide the pre-tax cost for all retirement-related plans. Yr. to Yr. (Dollars in millions) Percent For the three months ended September 30: 2017 2016 Change Retirement-related plans — cost Defined benefit and contribution pension plans — cost $ $ % Nonpension postretirement plans — cost ) Total $ $ % Yr. to Yr. (Dollars in millions) Percent For the nine months ended September 30: 2017 2016 Change Retirement-related plans — cost Defined benefit and contribution pension plans — cost $ $ % Nonpension postretirement plans — cost ) Total $ $ % The following tables provide the components of the cost/(income) for the company’s pension plans. Cost/(Income) of Pension Plans (Dollars in millions) U.S. Plans Non-U.S. Plans For the three months ended September 30: 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 — — ) 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 $ $ $ $ (Dollars in millions) U.S. Plans Non-U.S. Plans For the nine months ended September 30: 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 plan/other — — ) 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 $ $ $ $ On October 12, 2012, the High Court in London issued a ruling against IBM United Kingdom Limited and IBM United Kingdom Holdings Limited, both wholly-owned subsidiaries of the company, in litigation involving one of IBM UK’s defined benefit plans. As a result of the ruling, the company recorded a pre-tax retirement-related obligation of $162 million in the fourth quarter of 2012 in selling, general and administrative expense in the Consolidated Statement of Earnings. As a result of the final Court of Appeal ruling received in August 2017, the company adjusted its obligation under the plan. This adjustment resulted in a gain of $91 million recorded in selling, general and administrative expense in the Consolidated Statement of Earnings for the three and nine months ended September 30, 2017. This gain is reflected in “Non-U.S. Plans - Multi-employer plans/other” in the tables above. See note 12, “Contingencies” for additional information. 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 was 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 $400 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 nine months of 2017 were $301 million, of which $124 million was in cash and $176 million in U.S. Treasury securities. Total net contributions to the non-U.S. plans in the first nine months of 2016 were $261 million, of which $97 million was in cash and $164 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 tables provide 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 September 30: 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 $ $ $ $ (Dollars in millions) U.S. Plan Non-U.S. Plans For the nine months ended September 30: 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 $259 million in U.S. Treasury securities to the U.S. nonpension postretirement benefit plan during the nine months ended September 30, 2017, and $200 million in U.S. Treasury securities and $40 million in cash during the nine months ended September 30, 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	9 Months Ended
	Sep. 30, 2017
Acquisitions/Divestitures:
Acquisitions/Divestitures:	9. Acquisitions/Divestitures: Acquisitions: During the nine months ended September 30, 2017, the company completed four acquisitions at an aggregate cost of $128 million. The Technology Services & Cloud Platforms segment completed acquisitions of three businesses: in the first quarter, Agile 3 Solutions, LLC (Agile 3 Solutions), a privately held business; in the third quarter, the cloud and managed hosting services business from a large U.S. telecommunications company, and Cloudigo Ltd. (Cloudigo), a privately held business. The Cognitive Solutions segment completed the acquisition of one privately held business: in the second quarter, XCC Web Content & Custom Apps Extension (XCC) from TIMETOACT Software & Consulting GmbH. Each acquisition is expected to enhance the company’s portfolio of product and services capabilities. 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. The acquisition of the cloud and managed hosting services business strengthens the company’s services portfolio and aligns with its cloud strategy. Cloudigo brings talent and technology that aligns closely with the company’s cloud platform investments in advanced network processing. XCC’s technology enhances IBM’s Connections Cloud platform by providing a single, accessible engagement center for sharing content. Purchase price consideration for all acquisitions as reflected in the following table, was paid in cash. All acquisitions are reported in the Consolidated Statement of Cash Flows net of acquired cash and cash equivalents. The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of September 30, 2017. Amortization Total (Dollars in millions) Life (in yrs.) Acquisitions Current assets $ Fixed assets/noncurrent assets Intangible assets: Goodwill N/A Completed technology 5 Client relationships 7 Patents/trademarks 1-5 Total assets acquired Current liabilities ) Total liabilities assumed ) Total purchase price $ N/A - not applicable The acquisitions were accounted for as business combinations using the acquisition method, and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity were recorded at their estimated fair values at the date of acquisition. The primary items that generated the goodwill are the value of the synergies between the acquired businesses and IBM and the acquired assembled workforce, neither of which qualify as an amortizable intangible asset. The overall weighted-average life of the identified amortizable intangible assets acquired is 6.6 years. These identified intangible assets will be amortized on a straight-line basis over their useful lives. Goodwill of $13 million has been assigned to the Technology Services & Cloud Platforms segment and goodwill of $3 million has been assigned to the Cognitive Solutions segment. It is expected that approximately 50 percent of the goodwill will be deductible for tax purposes. Each of the acquisitions was for 100 percent of the acquired businesses. On October 4, 2017, the company announced its intent to acquire Vivant Digital (Vivant), a boutique digital and innovation agency. The acquisition extends the strategy and design expertise of IBM Interactive Experience (IBM iX) and will help accelerate clients’ digital transformations. The transaction is expected to close in the fourth quarter of 2017 and the business will be integrated within the GBS segment. 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 immaterial. 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 $13 million in 2015, 2016 and the first nine 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 September 30, 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 company completed two Cognitive Solutions divestitures in the second quarter of 2017 and one Cognitive Solutions divestiture in the third quarter of 2017. The financial terms related to these transactions were not material. Overall, the company recognized a pre-tax gain of $25 million related to these transactions in 2017.

Intangible Assets Including Goo

Intangible Assets Including Goodwill	9 Months Ended
	Sep. 30, 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 September 30, 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 $707 million during the first nine months of 2017, primarily due to intangible asset amortization, partially offset by additions resulting from capitalized software. The aggregate intangible amortization expense was $383 million and $1,161 million for the third quarter and first nine months of 2017, respectively, versus $403 million and $1,148 million for the third quarter and first nine months of 2016, respectively. In addition, in the first nine months of 2017, the company retired $1,255 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 September 30, 2017: Capitalized Acquired (Dollars in millions) Software Intangibles Total 2017 (for Q4) $ $ $ 2018 2019 2020 2021 — The change in the goodwill balances by reportable segment, for the nine months ended September 30, 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* 9/30/17 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 nine months of 2017 or the full year of 2016 and the company has no accumulated impairment losses. Purchase price adjustments recorded in the first nine months of 2017 and full year 2016 were related to acquisitions completed on or prior to June 30, 2017 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 $36 million were recorded during the first nine months of 2017, with the primary drivers being deferred tax assets, other taxes payable and other current liabilities associated with the Truven Health Analytics, Inc. and The Weather Company acquisitions. 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	9 Months Ended
	Sep. 30, 2017
Borrowings:
Borrowings:	11. Borrowings: Short-Term Debt At September 30, 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 5.4 percent and 9.5 percent at September 30, 2017 and December 31, 2016, respectively. Long-Term Debt Pre-Swap Borrowing Balance Balance (Dollars in millions) Maturities 9/30/2017 12/31/2016 U.S. dollar debt (average interest rate at September 30, 2017):* 2.7% $ $ 3.0% 2018–2019 2.0% 2020–2021 2.4% 3.4% 3.6% 7.0% 3.5% 4.7% 6.5% 5.9% 8.0% 5.6% 4.0% 7.0% 4.7% 7.1% $ $ Other currencies (average interest rate at September 30, 2017, in parentheses):* Euros (1.5%) 2019–2029 $ $ Pound sterling (2.7%) 2020–2022 Japanese yen (0.9%) 2017–2026 Canadian (2.2%) — Other (7.4%) 2018–2020 $ $ Less: net unamortized discount Less: net unamortized debt issuance costs Add: fair value adjustment** $ $ Less: current maturities Total $ $ * Includes notes, debentures, bank loans, secured 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 and 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. During the third quarter of 2017, IBM Credit LLC, a wholly owned subsidiary of the company, filed a shelf registration statement with the Securities and Exchange Commission (SEC) allowing it to offer for sale public debt securities. IBM Credit LLC issued fixed and floating rate debt securities in the aggregate amount of $3.0 billion with maturity dates ranging from 2019 to 2022. This debt is included in the long-term debt table above. 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 September 30, 2017, are as follows: (Dollars in millions) Total 2017 (for Q4) $ 2018 2019 2020 2021 2022 and beyond Total $ Interest on Debt (Dollars in millions) For the nine months ended September 30: 2017 2016 Cost of financing $ $ Interest expense Net investment derivative activity ) ) Interest capitalized ) Total interest paid and accrued $ $ Lines of Credit In 2016, the company increased the size of its five-year Credit Agreement (the “Credit Agreement”) from $10 billion to $10.25 billion and extended the term by one year to November 10, 2021. The Credit Agreement permits the company and its Subsidiary Borrowers to borrow up to $10.25 billion on a revolving basis. Borrowings of the Subsidiary Borrowers will be unconditionally backed by the company. The company may also, upon the agreement of either existing lenders, or of the additional banks not currently party to the Credit Agreement, increase the commitments under the Credit Agreement up to an additional $1.75 billion. Subject to certain terms of the Credit Agreement, the company and Subsidiary Borrowers may borrow, prepay and reborrow amounts under the Credit Agreement at any time during the Credit Agreement term. Interest rates on borrowings under the Credit Agreement will be based on prevailing market interest rates, as further described in the Credit Agreement. The Credit Agreement contains customary representations and warranties, covenants, events of default, and indemnification provisions. The company believes that circumstances that might give rise to breach of these covenants or an event of default, as specified in the Credit Agreement, are remote. As of September 30, 2017, there were no borrowings by the company, or its subsidiaries, under the Credit Agreement. The company also has other committed lines of credit in some of the geographies which are not significant in the aggregate. Interest rates and other terms of borrowing under these lines of credit vary from country to country, depending on local market conditions. On July 20, 2017, the company and IBM Credit LLC, (the Borrowers), entered into a $2.5 billion 364-Day Credit Agreement, and a $2.5 billion Three-Year Credit Agreement (the New Credit Agreements, and together with the Credit Agreement, the Credit Facilities). IBM also entered into the Third Amendment to its Credit Agreement. The New Credit Agreements permit the Borrowers to borrow up to an aggregate of $5 billion on a revolving basis. Neither Borrower is a guarantor or co-obligor of the other Borrower under the New Credit Agreements. Subject to certain conditions stated in the New Credit Agreements, the Borrowers may borrow, prepay and re-borrow amounts under the New Credit Agreements at any time during the term of the New Credit Agreements. Funds borrowed may be used for the general corporate purposes of the Borrowers. Interest rates on borrowings under the New Credit Agreements will be based on prevailing market interest rates, as further described in the New Credit Agreements. The New Credit Agreements contain customary representations and warranties, covenants, events of default, and indemnification provisions. The Amendment to the Credit Agreement adds and restates various provisions in order to provide the company with the opportunity in 2018 to request that the lenders extend the termination date of the Credit Agreement to July 20, 2023.

Contingencies

Contingencies	9 Months Ended
	Sep. 30, 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 September 30, 2017 were not material to the Consolidated Financial Statements. In accordance with the relevant accounting guidance, the company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer and employee relations considerations. With respect to certain of the claims, suits, investigations and proceedings discussed herein, the company believes at this time that the likelihood of any material loss is remote, given, for example, the procedural status, court rulings, and/or the strength of the company’s defenses in those matters. With respect to the remaining claims, suits, investigations and proceedings discussed in this note, except as specifically discussed herein, the company is unable to provide estimates of reasonably possible losses or range of losses, including losses in excess of amounts accrued, if any, for the following reasons. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of these matters. It is the company’s experience that damage amounts claimed in litigation against it are unreliable and unrelated to possible outcomes, and as such are not meaningful indicators of the company’s potential liability. Further, the company is unable to provide such an estimate due to a number of other factors with respect to these claims, suits, investigations and proceedings, including considerations of the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. The company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate), to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter. Whether any losses, damages or remedies finally determined in any claim, suit, investigation or proceeding could reasonably have a material effect on the company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including: the timing and amount of such losses or damages; the structure and type of any such remedies; the significance of the impact any such losses, damages or remedies may have in the Consolidated Financial Statements; and the unique facts and circumstances of the particular matter that may give rise to additional factors. While the company will continue to defend itself vigorously, it is possible that the company’s business, financial condition, results of operations or cash flows could be affected in any particular period by the resolution of one or more of these matters. The following is a summary of the more significant legal matters involving the company. The company is a defendant in an action filed on March 6, 2003 in state court in Salt Lake City, Utah by the SCO Group (SCO v. IBM). The company removed the case to Federal Court in Utah. Plaintiff is an alleged successor in interest to some of AT&T’s UNIX IP rights, and alleges copyright infringement, unfair competition, interference with contract and breach of contract with regard to the company’s distribution of AIX and Dynix and contribution of code to Linux and the company has asserted counterclaims. On September 14, 2007, plaintiff filed for bankruptcy protection, and all proceedings in this case were stayed. The court in another suit, the SCO Group, Inc. v. Novell, Inc., held a trial in March 2010. The jury found that Novell is the owner of UNIX and UnixWare copyrights; the judge subsequently ruled that SCO is obligated to recognize Novell’s waiver of SCO’s claims against IBM and Sequent for breach of UNIX license agreements. On August 30, 2011, the Tenth Circuit Court of Appeals affirmed the district court’s ruling and denied SCO’s appeal of this matter. In June 2013, the Federal Court in Utah granted SCO’s motion to reopen the SCO v. IBM case. In February 2016, the Federal Court ruled in favor of IBM on all of SCO’s remaining claims and SCO appealed. On October 30, 2017, the Tenth Circuit Court of Appeals affirmed the dismissal of all but one of SCO’s remaining claims, which was remanded to the Federal Court in Utah. On 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 August 7, 2017, the Indiana Superior Court awarded the State $128 million, which it then offset against IBM’s previously affirmed award of $50 million, resulting in a $78 million award to the State, plus interest. IBM appealed to the Indiana Court of Appeals and the matter remains pending. 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 claimed damages for lost profits. Iusacell’s complaint related to a contractual dispute in Mexico, which was the subject of a pending arbitration proceeding in Mexico initiated by IBM Mexico against Iusacell for breach of the underlying agreement. On August 31, 2017, the parties entered into an agreement releasing all claims against each other, resolving both the lawsuit and the arbitration proceeding. 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 sought 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 appealed both the breach and remedies judgments. In August 2017, the Appeal Court reversed the High Court, holding that IBM UK was not in breach of its implied duties of good faith and that the changes made to the plans were lawful. The time to appeal has expired and the Appeal Court judgment is final. 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 cooperated with the SEC and Polish authorities in this matter. In April 2013, IBM learned that the U.S. Department of Justice (DOJ) was also investigating allegations related to the Poland matter, as well as allegations relating to transactions in Argentina, Bangladesh and Ukraine. The DOJ was seeking information regarding the company’s global FCPA compliance program and its public sector business. The company cooperated with the DOJ in this matter. In June 2017, the DOJ and the SEC each informed IBM that based on the information to date, they closed their respective investigations into these matters without pursuing any enforcement action against the company. 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. On September 29, 2017, the Court granted the defendants’ motion to dismiss. Plaintiffs have filed a notice of appeal to the Second Circuit Court of Appeals and the matter remains pending. 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 $1.1 billion. The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability.

Commitments

Commitments	9 Months Ended
	Sep. 30, 2017
Commitments:
Commitments:	13. Commitments: The company’s extended lines of credit to third-party entities include unused amounts of $8,016 million and $6,542 million at September 30, 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 $3,063 million and $2,463 million at September 30, 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 $21 million and $34 million at September 30, 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 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 September 30 $ $ 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 September 30 $ $ Current portion $ $ Noncurrent portion $ $ * Other primarily consists of foreign currency translation adjustments.

Earnings Per Share of Common St

Earnings Per Share of Common Stock	9 Months Ended
	Sep. 30, 2017
Earnings Per Share of Common Stock:
Earnings Per Share of Common Stock:	14. Earnings Per Share of Common Stock: The following tables provide the computation of basic and diluted earnings per share of common stock for the three and nine months ended September 30, 2017 and 2016. For the Three Months Ended September 30, 2017 September 30, 2016 Number of shares on which basic earnings per share is calculated: Weighted-average shares outstanding during period Add — Incremental shares under stock-based compensation plans Add — Incremental shares associated with contingently issuable shares Number of shares on which diluted earnings per share is calculated Income from continuing operations (millions) $ $ Loss from discontinued operations, net of tax (millions) ) Net income on which basic earnings per share is calculated (millions) $ $ Income from continuing operations (millions) $ $ Net income applicable to contingently issuable shares (millions) — Income from continuing operations on which diluted earnings per share is calculated (millions) $ $ Loss from discontinued operations, net of tax, on which basic and diluted earnings per share is calculated (millions) ) Net income on which diluted earnings per share is calculated (millions) $ $ Earnings/(loss) per share of common stock: Assuming dilution Continuing operations $ $ Discontinued operations Total $ $ Basic Continuing operations $ $ Discontinued operations Total $ $ Stock options to purchase 399,844 shares and 29,033 shares were outstanding as of September 30, 2017 and 2016, respectively, but were not included in the computation of diluted earnings per share because the options’ exercise price during the respective period was greater than the average market price of the common shares, and, therefore, the effect would have been antidilutive. For the Nine Months Ended September 30, 2017 September 30, 2016 Number of shares on which basic earnings per share is calculated: Weighted-average shares outstanding during period Add — Incremental shares under stock compensation plans Add — Incremental shares associated with contingently issuable shares Number of shares on which diluted earnings per share is calculated Income from continuing operations (millions) $ $ Loss from discontinued operations, net of tax (millions) ) ) Net income on which basic earnings per share is calculated (millions) $ $ Income from continuing operations (millions) $ $ Net income applicable to contingently issuable shares (millions) ) — Income from continuing operations on which diluted earnings per share is calculated (millions) $ $ Loss from discontinued operations, net of tax, on which basic and diluted earnings per share is calculated (millions) ) ) Net income on which diluted earnings per share is calculated (millions) $ $ Earnings/(loss) per share of common stock: Assuming dilution Continuing operations $ $ Discontinued operations Total $ $ Basic Continuing operations $ $ Discontinued operations Total $ $ Stock options to purchase 146,795 shares and 533,089 shares (average of first, second and third quarter share amounts) were outstanding as of September 30, 2017 and 2016, respectively, but were not included in the computation of diluted earnings per share because the options’ exercise price during the respective periods was greater than the average market price of the common shares, and, therefore, the effect would have been antidilutive.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2017
Subsequent Events:
Subsequent Events:	15. Subsequent Events : On October 31, 2017, the company announced that the Board of Directors approved a quarterly dividend of $1.50 per common share. The dividend is payable December 9, 2017 to shareholders of record on November 10, 2017. On October 31, 2017, the company announced that the Board of Directors authorized $3.0 billion in additional funds for use in the company’s stock repurchase program.

Basis of Presentation (Policies

Basis of Presentation (Policies)	9 Months Ended
	Sep. 30, 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 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 August 2017, the FASB issued guidance to simplify the application of current hedge accounting in certain areas, better portray the economic results of an entity’s risk management activities in its financial statements and make targeted improvements to presentation and disclosure requirements. The guidance is effective January 1, 2019 with early adoption permitted. The company plans to adopt the guidance as of January 1, 2018. The guidance is not expected to have a material impact in the consolidated financial results. 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 company will adopt the guidance on January 1, 2018 and apply the cumulative catch-up transition method. The transition adjustment to be recorded to stockholders’ equity upon adoption of the new standard is not expected to be material. 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 identified 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 will result in an accounting change for the company. However, the impact to the consolidated financial statements is not expected to be material, with 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 both basic and diluted earnings per share of $0.62 per share for the nine months ended September 30, 2017. There was no impact in the consolidated financial results for the three months ended September 30, 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. The FASB also issued guidance in May 2017, which relates to the accounting for modifications of share-based payment awards. The company adopted the guidance in the second quarter of 2017. The guidance had no impact in the consolidated financial results. 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	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. 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	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 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. 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. 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 acquisitions were accounted for as business combinations using the acquisition method, and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity 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)	9 Months Ended
	Sep. 30, 2017
Financial Instruments:
Financial assets and financial liabilities measured at fair value on a recurring basis	(Dollars in millions) At September 30, 2017 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ $ — $ Money market funds — — U.S. government securities — — Canadian government securities — — 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 September 30, 2017 were $269 million and $687 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 September 30, 2017 were $332 million and $20 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 $274 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 September 30, 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 September 30: 2017 2016 Proceeds $ $ Gross realized gains (before taxes) Gross realized losses (before taxes) — — (Dollars in millions) For the nine months ended September 30: 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 September 30: 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 September 30, 2017 and 2016, respectively. (Dollars in millions) For the nine months ended September 30: 2017 2016 Net unrealized gains/(losses) arising during the period $ $ ) Net unrealized (gains)/losses reclassified to net income* * There were no writedowns for the nine months ended September 30, 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 9/30/2017 12/31/2016 Classification 9/30/2017 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 Derivatives $ $ $ $ Total debt designated as hedging instruments(1): Short-term debt N/A N/A $ $ Long-term debt N/A N/A N/A N/A $ $ Total $ $ $ $ N/A - not applicable (1) Debt designated as hedging instruments are reported at carrying value.
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 September 30: 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 September 30: 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 ) ) Cost of financing — — — 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 September 30, 2017 and 2016, fair value hedges resulted in a loss of less than $1 million and a loss of $3 million in ineffectiveness, respectively. Gain (Loss) Recognized in Earnings Consolidated Recognized on Attributable to Risk (Dollars in millions) Statement of Derivatives Being Hedged(2) For the nine months ended September 30: 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 nine months Recognized in OCI Statement of from AOCI Effectiveness Testing(3) ended September 30: 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 ) ) Cost of financing — — — 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 nine month periods ended September 30, 2017 and 2016, fair value hedges resulted in a loss of less than $1 million and a gain of less than $1 million in ineffectiveness, respectively.

Financing Receivables (Tables)

Financing Receivables (Tables)	9 Months Ended
	Sep. 30, 2017
Financing Receivables:
Financing receivables, net of allowances for credit losses, including residual values	At September 30, 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 September 30, 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 September 30, 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 $ 3,830 $ $ $ Loan receivables Ending balance $ 10,015 $ $ $ Collectively evaluated for impairment $ 9,847 $ $ $ Individually evaluated for impairment $ 168 $ $ $ Allowance for credit losses Beginning balance at January 1, 2016 Lease receivables $ 52 $ $ $ Loan receivables Total $ 175 $ $ $ Write-offs $ (36 ) $ ) $ ) $ ) Recoveries Provision ) ) Other ) ) ) Ending balance at December 31, 2016 $ 223 $ $ $ Lease receivables $ 54 $ $ $ Loan receivables $ 169 $ $ $ Collectively evaluated for impairment $ 62 $ $ $ Individually evaluated for impairment $ 161 $ $ $ * Reclassified to conform to 2017 presentation.
Schedule of recorded investment in financing receivables which are on non-accrual status	At September 30, 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 September 30, 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 September 30, 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 September 30, 2016:* Investment Recognized Cash Basis Americas $ $ $ — EMEA — Asia Pacific — Total $ $ $ — * Reclassified to conform to 2017 presentation. Interest Average Interest Income (Dollars in millions) Recorded Income Recognized on For the nine months ended September 30, 2017: Investment Recognized Cash Basis Americas $ $ $ — EMEA — Asia Pacific — Total $ $ $ — Interest Average Interest Income (Dollars in millions) Recorded Income Recognized on For the nine months ended September 30, 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 September 30, 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 September 30, 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 to 2017 presentation.

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2017
Stock-Based Compensation:
Stock-based compensation cost included in income from continuing operations	Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2017 2016 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)	9 Months Ended
	Sep. 30, 2017
Segments:
Revenue and Pre-tax Income by Segment	Cognitive Solutions & Technology Global Services & Cognitive Business Cloud Global Total (Dollars in millions) Solutions Services Platforms Systems Financing Segments For the three months ended September 30, 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 % )% )% % )% )% Pre-tax income margin % % % % % % For the three months ended September 30, 2016: External revenue $ $ $ $ $ $ Internal revenue Total revenue $ $ $ $ $ $ Pre-tax income from continuing operations $ $ $ $ $ $ Pre-tax income margin % % % % % % Cognitive Solutions & Technology Global Services & Cognitive Business Cloud Global Total (Dollars in millions) Solutions Services Platforms Systems Financing Segments For the nine months ended September 30, 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 % )% % )% )% )% Pre-tax income margin % % % % % % For the nine months ended September 30, 2016: External revenue $ $ $ $ $ $ Internal revenue Total revenue $ $ $ $ $ $ Pre-tax income from continuing operations $ $ $ $ $ $ Pre-tax income margin % % % % % %
Reconciliation of segment revenue to IBM as reported	(Dollars in millions) For the three months ended September 30: 2017 2016 Revenue: Total reportable segments $ $ Eliminations of internal transactions ) ) Other revenue Total consolidated revenue $ $ (Dollars in millions) For the nine months ended September 30: 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 September 30: 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 $ $ (Dollars in millions) For the nine months ended September 30: 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)	9 Months Ended
	Sep. 30, 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 September 30, 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 September 30, 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.) Reclassifications and Taxes Related to Items of Other Comprehensive Income (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the nine months ended September 30, 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 nine months ended September 30, 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 ) September 30, 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 ) September 30, 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)	9 Months Ended
	Sep. 30, 2017
Retirement-Related Benefits:
Pre-tax cost for all retirement-related plans	Yr. to Yr. (Dollars in millions) Percent For the three months ended September 30: 2017 2016 Change Retirement-related plans — cost Defined benefit and contribution pension plans — cost $ $ % Nonpension postretirement plans — cost ) Total $ $ % Yr. to Yr. (Dollars in millions) Percent For the nine months ended September 30: 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 September 30: 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 — — ) 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 $ $ $ $ (Dollars in millions) U.S. Plans Non-U.S. Plans For the nine months ended September 30: 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 plan/other — — ) 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 September 30: 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 $ $ $ $ (Dollars in millions) U.S. Plan Non-U.S. Plans For the nine months ended September 30: 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)	9 Months Ended
	Sep. 30, 2017
Acquisitions/Divestitures:
Business acquisitions, purchase price allocations	The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of September 30, 2017. Amortization Total (Dollars in millions) Life (in yrs.) Acquisitions Current assets $ Fixed assets/noncurrent assets Intangible assets: Goodwill N/A Completed technology 5 Client relationships 7 Patents/trademarks 1-5 Total assets acquired Current liabilities ) Total liabilities assumed ) Total purchase price $ N/A - not applicable

Intangible Assets Including G32

Intangible Assets Including Goodwill (Tables)	9 Months Ended
	Sep. 30, 2017
Intangible Assets Including Goodwill:
Intangible asset balances by major asset class	At September 30, 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 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* 9/30/17 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)	9 Months Ended
	Sep. 30, 2017
Borrowings:
Short-Term Debt	At September 30, 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 9/30/2017 12/31/2016 U.S. dollar debt (average interest rate at September 30, 2017):* 2.7% $ $ 3.0% 2018–2019 2.0% 2020–2021 2.4% 3.4% 3.6% 7.0% 3.5% 4.7% 6.5% 5.9% 8.0% 5.6% 4.0% 7.0% 4.7% 7.1% $ $ Other currencies (average interest rate at September 30, 2017, in parentheses):* Euros (1.5%) 2019–2029 $ $ Pound sterling (2.7%) 2020–2022 Japanese yen (0.9%) 2017–2026 Canadian (2.2%) — Other (7.4%) 2018–2020 $ $ Less: net unamortized discount Less: net unamortized debt issuance costs Add: fair value adjustment** $ $ Less: current maturities Total $ $ * Includes notes, debentures, bank loans, secured 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 and 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	Pre-swap annual contractual maturities of long-term debt outstanding at September 30, 2017, are as follows: (Dollars in millions) Total 2017 (for Q4) $ 2018 2019 2020 2021 2022 and beyond Total $
Interest on Debt	(Dollars in millions) For the nine months ended September 30: 2017 2016 Cost of financing $ $ Interest expense Net investment derivative activity ) ) Interest capitalized ) Total interest paid and accrued $ $

Commitments (Tables)

Commitments (Tables)	9 Months Ended
	Sep. 30, 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 September 30 $ $ 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 September 30 $ $ Current portion $ $ Noncurrent portion $ $ * Other primarily consists of foreign currency translation adjustments.

Earnings Per Share of Common 35

Earnings Per Share of Common Stock (Tables)	9 Months Ended
	Sep. 30, 2017
Earnings Per Share of Common Stock:
Computation of basic and diluted earnings per share	For the Three Months Ended September 30, 2017 September 30, 2016 Number of shares on which basic earnings per share is calculated: Weighted-average shares outstanding during period Add — Incremental shares under stock-based compensation plans Add — Incremental shares associated with contingently issuable shares Number of shares on which diluted earnings per share is calculated Income from continuing operations (millions) $ $ Loss from discontinued operations, net of tax (millions) ) Net income on which basic earnings per share is calculated (millions) $ $ Income from continuing operations (millions) $ $ Net income applicable to contingently issuable shares (millions) — Income from continuing operations on which diluted earnings per share is calculated (millions) $ $ Loss from discontinued operations, net of tax, on which basic and diluted earnings per share is calculated (millions) ) Net income on which diluted earnings per share is calculated (millions) $ $ Earnings/(loss) per share of common stock: Assuming dilution Continuing operations $ $ Discontinued operations Total $ $ Basic Continuing operations $ $ Discontinued operations Total $ $ For the Nine Months Ended September 30, 2017 September 30, 2016 Number of shares on which basic earnings per share is calculated: Weighted-average shares outstanding during period Add — Incremental shares under stock compensation plans Add — Incremental shares associated with contingently issuable shares Number of shares on which diluted earnings per share is calculated Income from continuing operations (millions) $ $ Loss from discontinued operations, net of tax (millions) ) ) Net income on which basic earnings per share is calculated (millions) $ $ Income from continuing operations (millions) $ $ Net income applicable to contingently issuable shares (millions) ) — Income from continuing operations on which diluted earnings per share is calculated (millions) $ $ Loss from discontinued operations, net of tax, on which basic and diluted earnings per share is calculated (millions) ) ) Net income on which diluted earnings per share is calculated (millions) $ $ Earnings/(loss) per share of common stock: Assuming dilution Continuing operations $ $ Discontinued operations Total $ $ Basic Continuing operations $ $ Discontinued operations Total $ $

Basis of Presentation - Reclass

Basis of Presentation - Reclassification (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net cash provided by operating activities		$ 10,991	$ 13,105	[1],[2]
Net cash (used in)/provided by investing activities		(3,278)	(7,289)	[2]
Total cash flows		$ 3,089	1,352
Reclassification of certain financing receivables
Net cash provided by operating activities	$ (99)		(311)
Net cash (used in)/provided by investing activities	99		311
Total cash flows	$ 0		$ 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				9 Months Ended
	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Provision for/(benefit from) income taxes	$ 339		$ (329)	$ 409	$ 120	$ (31)
Effective tax rate (as a percent)			(23.10%)		1.70%	(0.40%)
Discrete tax benefits (charges)		$ 170	$ (99)
Other (income) and expense
Noncontrolling interest amounts, net of tax	$ 4.4			$ 3.1	$ 11.5	$ 7.5
Accounting Standards Update 2016-16, Intra-Entity Transfers of Assets Other Than Inventory | Early adoption
Provision for/(benefit from) income taxes			$ (582)		$ (582)

Accounting Changes (Details)

Accounting Changes (Details) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended			9 Months Ended		12 Months Ended
	Jan. 31, 2017item	Sep. 30, 2017USD ($)$ / shares	Mar. 31, 2017USD ($)	Sep. 30, 2016USD ($)$ / shares	Sep. 30, 2017USD ($)$ / shares	Sep. 30, 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					$ 3,089	$ 1,352
Investments and sundry assets		$ 4,806			4,806			4,585
Prepaid expenses and other current assets		4,389			4,389			4,564
Deferred tax assets		7,289			7,289			5,224
Retained earnings		155,565			155,565			$ 152,759
Provision for/(benefit from) income taxes		339	$ (329)	$ 409	120	(31)
Income from continuing operations		2,726		2,854	6,811	7,375
Net income		$ 2,726		$ 2,853	$ 6,807	$ 7,371
Earnings per share, basic (in dollars per share) | $ / shares		$ 2.93		$ 2.99	$ 7.28	$ 7.70
Earnings per share, diluted (in dollars per share) | $ / shares		$ 2.92		$ 2.98	$ 7.24	$ 7.67
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)		$ (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					$ 0.62
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	9 Months Ended
	Sep. 30, 2016	Sep. 30, 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	$ 218
Debt securities - noncurrent		$ 11	$ 8
Available-for-sale equity investments		5	7
Derivative assets		957	1,126
Derivative liabilities		352	206
Potential reduction in net position of total derivative assets		274	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		7,589	4,832
Debt securities - current		599	699
Debt securities - noncurrent		11	8
Available-for-sale equity investments		5	7
Derivative assets		957	1,126
Total Assets		9,159	6,672
Total Liabilities		352	206
Potential reduction in net position of total derivative assets		274	116
Potential reduction in net position of total derivative liabilities		274	116
Recurring | Prepaid expenses and other current assets
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		269	532
Recurring | Investments and sundry assets
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		687	594
Recurring | Other accrued expenses and liabilities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative liabilities		332	145
Recurring | Other liabilities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative liabilities		20	61
Recurring | Interest rate contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		517	555
Derivative liabilities		15	8
Recurring | Foreign exchange contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		416	560
Derivative liabilities		333	188
Recurring | Equity contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		23	11
Derivative liabilities		4	10
Recurring | Time deposits and certificates of deposit
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		5,553	3,629
Recurring | Money market funds
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		1,375	1,204
Recurring | U.S. government securities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		200
Recurring | Canadian government securities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		460
Recurring | Level 1
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		1,375	1,204
Debt securities - noncurrent		4	1
Available-for-sale equity investments		5	7
Total Assets		1,384	1,212
Recurring | Level 1 | Money market funds
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		1,375	1,204
Recurring | Level 2
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		6,214	3,629
Debt securities - current		599	699
Debt securities - noncurrent		7	6
Derivative assets		957	1,126
Total Assets		7,775	5,460
Total Liabilities		352	206
Recurring | Level 2 | Interest rate contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		517	555
Derivative liabilities		15	8
Recurring | Level 2 | Foreign exchange contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		416	560
Derivative liabilities		333	188
Recurring | Level 2 | Equity contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets		23	11
Derivative liabilities		4	10
Recurring | Level 2 | Time deposits and certificates of deposit
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		5,553	$ 3,629
Recurring | Level 2 | U.S. government securities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		200
Recurring | Level 2 | Canadian government securities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents		$ 460

Financial Instruments - Not Mea

Financial Instruments - Not Measured at Fair Value (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Long-Term Debt
Carrying amount of long-term debt	$ 41,327	$ 34,655
Fair value of long-term debt	$ 43,623	$ 36,838

Financial Instruments - Debt an

Financial Instruments - Debt and Equity Securities (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Financial Instruments:
Debt securities - noncurrent, Adjusted Cost	$ 7		$ 7		$ 5
Debt securities - noncurrent, Gross Unrealized Gains	3		3		3
Debt securities - noncurrent, Fair Value	11		11		8
Available-for-sale equity investments, Adjusted Cost	1		1		3
Available-for-sale equity investments, Gross Unrealized Gains	4		4		5
Available-for-sale equity investments, Gross Unrealized Losses	0		0		0
Available-for-sale equity investments, Fair Value	5		5		$ 7
Sales of debt and available-for-sale equity investments
Proceeds	0	$ 1	5	$ 150
Gross realized gains (before taxes)	0	1	1	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	(1)	1	(22)
Net unrealized (gains)/losses reclassified to net income	0	(1)	0	22
Writedowns included in net income for the period	$ 0	$ 0	$ 0	$ 0
Maximum contractual maturities of substantially all available-for-sale debt securities			1 year

Financial Instruments - Derivat

Financial Instruments - Derivatives, Offsetting (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Derivative Financial Instruments
Fair value of derivative instruments under collateralized arrangements in a liability position	$ 45	$ 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	$ 957	1,126
Liabilities included in master netting arrangements	274	116
Obligation to return cash collateral	123	141
Non-cash collateral received	0	35
Net exposure related to derivative assets recorded in the Statement of Financial Position	559	834
Net position related to derivative liabilities recorded in the Statement of Financial Position	78	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	$ 123	$ 141

Financial Instruments - Deriv43

Financial Instruments - Derivatives, Other Information (Details) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 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
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges	$ 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
Derivative instruments in cash flow hedging relationships | Foreign exchange forward contracts
Derivative Financial Instruments
Maximum length of time hedged	4 years
Notional amount	$ 7,900	$ 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	$ (70)	$ 462
Gains (losses) expected to be reclassified to net income within the next 12 months	$ (161)	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	16	29
Gains (losses) expected to be reclassified to net income within the next 12 months	34	27
Net investment hedges
Derivative Financial Instruments
Notional amount	$ 8,800	$ 6,700
Average remaining maturity	1 month 6 days	2 months 12 days
Designated as hedging instruments | Interest rate swaps
Derivative Financial Instruments
Notional amount	$ 9,100	$ 7,300
Average remaining maturity	5 years	6 years 2 months 12 days
Not designated as hedging instruments - economic hedges | Foreign exchange contracts
Derivative Financial Instruments
Notional amount	$ 10,800	$ 12,700
Not designated as hedging instruments - economic hedges | Foreign exchange contracts | Maximum
Derivative Financial Instruments
Term of contract	1 year
Not designated as hedging instruments - economic hedges | Equity contracts hedging employee compensation obligations
Derivative Financial Instruments
Notional amount	$ 1,200	$ 1,200
Not designated as hedging instruments - economic hedges | Equity contracts hedging investment securities
Derivative Financial Instruments
Number of derivative instruments outstanding | instrument	0	0
Not designated as hedging instruments - economic hedges | Warrants qualifying as derivatives
Derivative Financial Instruments
Number of derivative instruments outstanding | instrument	0	0
Not designated as hedging instruments - economic hedges | Credit default swaps
Derivative Financial Instruments
Number of derivative instruments outstanding | instrument	0	0

Financial Instruments - Deriv44

Financial Instruments - Derivatives, Fair Value (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	$ 957	$ 1,126
Fair value of total derivative instruments, Liabilities	352	206
Short-term debt	4,299	7,513
Long-term debt (excluding current portion)	41,327	34,655
Fair value of total derivative liabilities and debt	12,198	9,175
Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	896	993
Fair value of total derivative instruments, Liabilities	292	89
Designated as hedging instruments | Net investment hedges
Fair Values of Derivative Instruments
Short-term debt	377	1,125
Long-term debt (excluding current portion)	11,469	7,844
Total debt designated as hedging instruments	11,846	8,969
Not designated as hedging instruments - economic hedges
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	61	133
Fair value of total derivative instruments, Liabilities	60	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	208	421
Prepaid expenses and other current assets | Foreign exchange contracts | Not designated as hedging instruments - economic hedges
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	38	100
Prepaid expenses and other current assets | Equity contracts | Not designated as hedging instruments - economic hedges
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	23	11
Investments and sundry assets | Interest rate contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	517	555
Investments and sundry assets | Foreign exchange contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	170	17
Investments and sundry assets | Foreign exchange contracts | Not designated as hedging instruments - economic hedges
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets		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	272	46
Other accrued expenses and liabilities | Foreign exchange contracts | Not designated as hedging instruments - economic hedges
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities	56	89
Other accrued expenses and liabilities | Equity contracts | Not designated as hedging instruments - economic hedges
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities	4	10
Other liabilities | Interest rate contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities	15	8
Other liabilities | Foreign exchange contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities	$ 5	35
Other liabilities | Foreign exchange contracts | Not designated as hedging instruments - economic hedges
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities		$ 18

Financial Instruments - Deriv45

Financial Instruments - Derivatives, Gains and Losses (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	$ (10)	$ 34	$ 233	$ 830
Gain (loss) recognized in earnings attributable to risk being hedged	41	83	42	(267)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI	(577)	(96)	(1,712)	(1,292)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Reclassified from AOCI to Earnings	73	(15)	347	(26)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing	7	24	37	49
Gain (loss) on fair value hedges ineffectiveness		(3)
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)		(1)	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	(70)	35	(198)	(221)
Foreign exchange contracts | Net investment hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, Effective Portion Recognized in OCI	(507)	(131)	(1,513)	(1,071)
Cost of financing | Interest rate contracts | Derivative instruments in fair value hedging relationships
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	(3)	(20)	37	195
Gain (loss) recognized in earnings attributable to risk being hedged	20	40	22	(127)
Cost of financing | Foreign exchange contracts | Net investment hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing	0		0
Interest expense | Interest rate contracts | Derivative instruments in fair value hedging relationships
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	(3)	(21)	34	214
Gain (loss) recognized in earnings attributable to risk being hedged	20	43	20	(140)
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)	(7)	(21)	(17)
Interest expense | Foreign exchange contracts | Net investment hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing	8	25	34	51
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	(6)	2	23	(1)
SG&A expense | Equity contracts | Not designated as hedging instruments - economic hedges
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	31	45	88	87
Other (income) and expense | Interest rate contracts | Not designated as hedging instruments - economic hedges
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives		0		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	64	(6)	275	6
Gain (Loss) Recognized in Earnings and Other Comprehensive Income, (Ineffectiveness) and Amounts Excluded from Effectiveness Testing	(1)	(1)	2	(1)
Other (income) and expense | Foreign exchange contracts | Not designated as hedging instruments - economic hedges
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	(35)	30	74	335
Other (income) and expense | Equity contracts | Not designated as hedging instruments - economic hedges
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives		0		(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	1	(7)	23	(5)
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	$ 20	$ 3	$ 47	$ (9)

Financing Receivables - Net of

Financing Receivables - Net of Allowances (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Dec. 31, 2015
Financing receivables
Financing receivables, net, current	$ 18,050	$ 19,006
Financing receivables, net, noncurrent	8,459	9,021
Lease receivables
Financing receivables
Financing receivables, net, current	3,092	2,909
Financing receivables, net, noncurrent	3,579	3,950
Sales-type and direct financing leases, unguaranteed residual value	567	585
Sales-type and direct financing leases, unearned income	459	513
Allowance for credit losses	$ 118	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	$ 8,563	9,706
Allowance for credit losses	$ 21	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	$ 6,395	6,390
Financing receivables, net, noncurrent	4,879	5,071
Allowance for credit losses	$ 215	$ 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	9 Months Ended	12 Months Ended
	Sep. 30, 2017USD ($)item	Dec. 31, 2016USD ($)
Financing receivables
Financing receivables pledged as collateral for borrowings	$ 640	$ 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	$ 17,631	18,073
Collectively evaluated for impairment	17,358	17,726
Individually evaluated for impairment	273	347
Allowance for credit losses:
Allowance for credit losses, beginning balance	410	590
Write-offs	(112)	(237)
Recoveries	0	2
Provision	16	58
Other	19	(3)
Allowance for credit losses, ending balance	333	410
Collectively evaluated for impairment	85	90
Individually evaluated for impairment	248	320
Total Lease Receivable and Loan Receivable Portfolio Segments | Americas
Financing receivables
Financing receivables on a gross basis	9,721	10,015
Collectively evaluated for impairment	9,581	9,847
Individually evaluated for impairment	140	168
Allowance for credit losses:
Allowance for credit losses, beginning balance	223	175
Write-offs	(49)	(36)
Recoveries	0	2
Provision	11	65
Other	12	17
Allowance for credit losses, ending balance	197	223
Collectively evaluated for impairment	66	62
Individually evaluated for impairment	131	161
Total Lease Receivable and Loan Receivable Portfolio Segments | EMEA
Financing receivables
Financing receivables on a gross basis	4,417	4,480
Collectively evaluated for impairment	4,386	4,460
Individually evaluated for impairment	31	20
Allowance for credit losses:
Allowance for credit losses, beginning balance	22	72
Write-offs	0	(48)
Recoveries	0	0
Provision	9	(1)
Other	5	(1)
Allowance for credit losses, ending balance	36	22
Collectively evaluated for impairment	12	13
Individually evaluated for impairment	23	9
Total Lease Receivable and Loan Receivable Portfolio Segments | Asia Pacific
Financing receivables
Financing receivables on a gross basis	3,493	3,578
Collectively evaluated for impairment	3,391	3,419
Individually evaluated for impairment	102	159
Allowance for credit losses:
Allowance for credit losses, beginning balance	165	343
Write-offs	(63)	(154)
Recoveries	0	0
Provision	(4)	(6)
Other	2	(18)
Allowance for credit losses, ending balance	100	165
Collectively evaluated for impairment	6	15
Individually evaluated for impairment	94	150
Lease receivables
Financing receivables
Financing receivables on a gross basis	6,142	6,336
Allowance for credit losses:
Allowance for credit losses, beginning balance	133	213
Allowance for credit losses, ending balance	118	133
Lease receivables | Americas
Financing receivables
Financing receivables on a gross basis	3,541	3,830
Allowance for credit losses:
Allowance for credit losses, beginning balance	54	52
Allowance for credit losses, ending balance	77	54
Lease receivables | EMEA
Financing receivables
Financing receivables on a gross basis	1,297	1,171
Allowance for credit losses:
Allowance for credit losses, beginning balance	4	17
Allowance for credit losses, ending balance	6	4
Lease receivables | Asia Pacific
Financing receivables
Financing receivables on a gross basis	1,304	1,335
Allowance for credit losses:
Allowance for credit losses, beginning balance	76	143
Allowance for credit losses, ending balance	35	76
Loan receivables
Financing receivables
Financing receivables on a gross basis	11,489	11,737
Allowance for credit losses:
Allowance for credit losses, beginning balance	276	377
Allowance for credit losses, ending balance	215	276
Loan receivables | Americas
Financing receivables
Financing receivables on a gross basis	6,180	6,185
Allowance for credit losses:
Allowance for credit losses, beginning balance	169	122
Allowance for credit losses, ending balance	120	169
Loan receivables | EMEA
Financing receivables
Financing receivables on a gross basis	3,120	3,309
Allowance for credit losses:
Allowance for credit losses, beginning balance	18	55
Allowance for credit losses, ending balance	29	18
Loan receivables | Asia Pacific
Financing receivables
Financing receivables on a gross basis	2,189	2,243
Allowance for credit losses:
Allowance for credit losses, beginning balance	89	200
Allowance for credit losses, ending balance	$ 65	$ 89

Financing Receivables - Non-Acc

Financing Receivables - Non-Accrual Status (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Total Lease Receivable and Loan Receivable Portfolio Segments
Financing Receivables on Non-accrual Status
Total Receivables	$ 172	$ 185
Lease receivables
Financing Receivables on Non-accrual Status
Total Receivables	30	40
Lease receivables | Americas
Financing Receivables on Non-accrual Status
Total Receivables	25	23
Lease receivables | EMEA
Financing Receivables on Non-accrual Status
Total Receivables	0	2
Lease receivables | Asia Pacific
Financing Receivables on Non-accrual Status
Total Receivables	4	14
Loan receivables
Financing Receivables on Non-accrual Status
Total Receivables	142	145
Loan receivables | Americas
Financing Receivables on Non-accrual Status
Total Receivables	79	128
Loan receivables | EMEA
Financing Receivables on Non-accrual Status
Total Receivables	53	5
Loan receivables | Asia Pacific
Financing Receivables on Non-accrual Status
Total Receivables	$ 10	$ 12

Financing Receivables - Impaire

Financing Receivables - Impaired Loans (Details) - Total Lease Receivable and Loan Receivable Portfolio Segments - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Impaired client loan receivables
Recorded Investment	$ 273		$ 273		$ 347
Related Allowance	248		248		320
Average Recorded Investment	288	$ 545	323	$ 545
Interest Income Recognized	0	0	0	0
Americas
Impaired client loan receivables
Recorded Investment	140		140		168
Related Allowance	131		131		161
Average Recorded Investment	156	182	165	158
Interest Income Recognized	0	0	0	0
EMEA
Impaired client loan receivables
Recorded Investment	31		31		20
Related Allowance	23		23		9
Average Recorded Investment	31	61	27	65
Interest Income Recognized	0	0	0	0
Asia Pacific
Impaired client loan receivables
Recorded Investment	102		102		159
Related Allowance	94		94		$ 150
Average Recorded Investment	101	302	131	322
Interest Income Recognized	$ 0	$ 0	$ 0	$ 0

Financing Receivables - Credit

Financing Receivables - Credit Quality Indicators (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Lease receivables | Americas
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	$ 3,465	$ 3,776
Lease receivables | Americas | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	358	447
Lease receivables | Americas | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	715	782
Lease receivables | Americas | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	807	772
Lease receivables | Americas | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	762	822
Lease receivables | Americas | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	421	574
Lease receivables | Americas | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	345	297
Lease receivables | Americas | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	56	83
Lease receivables | EMEA
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,290	1,167
Lease receivables | EMEA | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	52	51
Lease receivables | EMEA | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	126	113
Lease receivables | EMEA | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	404	366
Lease receivables | EMEA | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	415	350
Lease receivables | EMEA | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	197	208
Lease receivables | EMEA | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	83	71
Lease receivables | EMEA | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	13	9
Lease receivables | Asia Pacific
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,269	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	56	53
Lease receivables | Asia Pacific | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	543	486
Lease receivables | Asia Pacific | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	329	330
Lease receivables | Asia Pacific | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	172	185
Lease receivables | Asia Pacific | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	86	106
Lease receivables | Asia Pacific | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	69	84
Lease receivables | Asia Pacific | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	15	15
Loan receivables | Americas
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	6,059	6,016
Loan receivables | Americas | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	626	712
Loan receivables | Americas | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,251	1,246
Loan receivables | Americas | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,412	1,230
Loan receivables | Americas | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,333	1,309
Loan receivables | Americas | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	736	914
Loan receivables | Americas | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	604	472
Loan receivables | Americas | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	98	133
Loan receivables | EMEA
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	3,091	3,291
Loan receivables | EMEA | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	124	143
Loan receivables | EMEA | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	302	318
Loan receivables | EMEA | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	968	1,032
Loan receivables | EMEA | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	993	987
Loan receivables | EMEA | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	473	585
Loan receivables | EMEA | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	200	201
Loan receivables | EMEA | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	31	25
Loan receivables | Asia Pacific
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	2,124	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	94	90
Loan receivables | Asia Pacific | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	908	832
Loan receivables | Asia Pacific | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	550	565
Loan receivables | Asia Pacific | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	289	316
Loan receivables | Asia Pacific | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	143	182
Loan receivables | Asia Pacific | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	116	143
Loan receivables | Asia Pacific | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	$ 25	$ 25

Financing Receivables - Industr

Financing Receivables - Industries (Details) - Global Financing - Financing Receivable Portfolio	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Financial Industry
Financing receivables
Financing receivables (as a percent)	33.00%	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)	13.00%	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)	5.00%	6.00%

Financing Receivables - Past Du

Financing Receivables - Past Due (Details) - USD ($) $ in Millions	Sep. 30, 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	247	271
Less than 90 Days or Unbilled Financing Receivables	17,267	17,740
Total Financing Receivables	17,631	18,073
Recorded Investment > 90 Days and Accruing	746	253
Total Lease Receivable and Loan Receivable Portfolio Segments | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	117	62
Total Lease Receivable and Loan Receivable Portfolio Segments | Americas
Past Due Financing Receivable
Total Financing Receivables	9,721	10,015
Total Lease Receivable and Loan Receivable Portfolio Segments | EMEA
Past Due Financing Receivable
Total Financing Receivables	4,417	4,480
Total Lease Receivable and Loan Receivable Portfolio Segments | Asia Pacific
Past Due Financing Receivable
Total Financing Receivables	3,493	3,578
Lease receivables
Past Due Financing Receivable
Fully Reserved Financing Receivables	87	89
Less than 90 Days or Unbilled Financing Receivables	6,012	6,216
Total Financing Receivables	6,142	6,336
Recorded Investment > 90 Days and Accruing	290	111
Lease receivables | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	42	31
Lease receivables | Americas
Past Due Financing Receivable
Fully Reserved Financing Receivables	51	20
Less than 90 Days or Unbilled Financing Receivables	3,463	3,793
Total Financing Receivables	3,541	3,830
Recorded Investment > 90 Days and Accruing	255	66
Lease receivables | Americas | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	28	17
Lease receivables | EMEA
Past Due Financing Receivable
Fully Reserved Financing Receivables	4	10
Less than 90 Days or Unbilled Financing Receivables	1,283	1,159
Total Financing Receivables	1,297	1,171
Recorded Investment > 90 Days and Accruing	15	6
Lease receivables | EMEA | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	9	2
Lease receivables | Asia Pacific
Past Due Financing Receivable
Fully Reserved Financing Receivables	32	59
Less than 90 Days or Unbilled Financing Receivables	1,266	1,264
Total Financing Receivables	1,304	1,335
Recorded Investment > 90 Days and Accruing	19	40
Lease receivables | Asia Pacific | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	5	12
Loan receivables
Past Due Financing Receivable
Fully Reserved Financing Receivables	160	182
Less than 90 Days or Unbilled Financing Receivables	11,255	11,524
Total Financing Receivables	11,489	11,737
Recorded Investment > 90 Days and Accruing	456	141
Loan receivables | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	75	31
Loan receivables | Americas
Past Due Financing Receivable
Fully Reserved Financing Receivables	80	90
Less than 90 Days or Unbilled Financing Receivables	6,057	6,075
Total Financing Receivables	6,180	6,185
Recorded Investment > 90 Days and Accruing	401	80
Loan receivables | Americas | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	43	19
Loan receivables | EMEA
Past Due Financing Receivable
Fully Reserved Financing Receivables	19	5
Less than 90 Days or Unbilled Financing Receivables	3,076	3,299
Total Financing Receivables	3,120	3,309
Recorded Investment > 90 Days and Accruing	46	15
Loan receivables | EMEA | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	26	5
Loan receivables | Asia Pacific
Past Due Financing Receivable
Fully Reserved Financing Receivables	61	87
Less than 90 Days or Unbilled Financing Receivables	2,122	2,150
Total Financing Receivables	2,189	2,243
Recorded Investment > 90 Days and Accruing	9	46
Loan receivables | Asia Pacific | Total Past Due > 90 days
Past Due Financing Receivable
Total Past Due > 90 days	$ 6	$ 6

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	$ 123	$ 142	$ 388	$ 403
Income tax benefits	(41)	(47)	(128)	(131)
Total net stock-based compensation cost	82	95	260	272
Pre-tax stock-based compensation cost increase (decrease)	(19)		(15)
Pre-tax stock-based compensation cost increase related to conversion of stock-based awards of acquired entities	(7)		(20)
Stock-based compensation cost, unrecognized, related to non-vested awards	905		$ 905
Stock-based compensation cost, unrecognized, related to non-vested awards, weighted average period of recognition			2 years 7 months 6 days
Performance Share Units
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost increase (decrease)	(11)		$ (17)
Restricted Stock Units
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost increase (decrease)	(2)		22
Cost
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	22	23	68	67
SG&A expense
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	88	105	277	295
Research, development and engineering
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	$ 13	$ 14	$ 43	$ 41

Segments - Results of Continuin

Segments - Results of Continuing Operations (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Segment Information
Revenue (excluding other revenue not allocated to segments)	$ 19,098	$ 19,145	$ 56,405	$ 57,926
Revenue	19,153	19,226	56,597	58,149
Pre-tax income from continuing operations	3,065	3,263	6,931	7,345
Cognitive Solutions
Segment Information
Revenue (excluding other revenue not allocated to segments)	4,400	4,235	13,021	12,889
Global Business Services
Segment Information
Revenue (excluding other revenue not allocated to segments)	4,093	4,191	12,196	12,578
Technology Services & Cloud Platforms
Segment Information
Revenue (excluding other revenue not allocated to segments)	8,457	8,748	25,079	26,029
Systems
Segment Information
Revenue (excluding other revenue not allocated to segments)	1,721	1,558	4,863	5,184
Global Financing
Segment Information
Revenue (excluding other revenue not allocated to segments)	427	412	1,246	1,245
Business Segments
Segment Information
Revenue	20,482	20,613	60,670	62,599
Pre-tax income from continuing operations	$ 3,876	$ 3,897	$ 9,555	$ 9,636
Revenue year-to-year change (as a percent)	(0.60%)		(3.10%)
Pre-tax income year-to-year change (as a percent)	(0.50%)		(0.80%)
Pre-tax income margin (as a percent)	18.90%	18.90%	15.70%	15.40%
Business Segments | Cognitive Solutions
Segment Information
Revenue	$ 5,030	$ 4,902	$ 15,022	$ 14,818
Pre-tax income from continuing operations	$ 1,649	$ 1,574	$ 4,539	$ 4,039
Revenue year-to-year change (as a percent)	2.60%		1.40%
Pre-tax income year-to-year change (as a percent)	4.80%		12.40%
Pre-tax income margin (as a percent)	32.80%	32.10%	30.20%	27.30%
Business Segments | Global Business Services
Segment Information
Revenue	$ 4,185	$ 4,284	$ 12,467	$ 12,888
Pre-tax income from continuing operations	$ 453	$ 544	$ 1,065	$ 1,210
Revenue year-to-year change (as a percent)	(2.30%)		(3.30%)
Pre-tax income year-to-year change (as a percent)	(16.80%)		(12.00%)
Pre-tax income margin (as a percent)	10.80%	12.70%	8.50%	9.40%
Business Segments | Technology Services & Cloud Platforms
Segment Information
Revenue	$ 8,621	$ 8,929	$ 25,576	$ 26,530
Pre-tax income from continuing operations	$ 1,192	$ 1,288	$ 2,888	$ 2,825
Revenue year-to-year change (as a percent)	(3.40%)		(3.60%)
Pre-tax income year-to-year change (as a percent)	(7.50%)		2.20%
Pre-tax income margin (as a percent)	13.80%	14.40%	11.30%	10.60%
Business Segments | Systems
Segment Information
Revenue	$ 1,948	$ 1,734	$ 5,434	$ 5,778
Pre-tax income from continuing operations	$ 339	$ 136	$ 227	$ 354
Revenue year-to-year change (as a percent)	12.30%		(6.00%)
Pre-tax income year-to-year change (as a percent)	149.70%		(35.90%)
Pre-tax income margin (as a percent)	17.40%	7.80%	4.20%	6.10%
Business Segments | Global Financing
Segment Information
Revenue	$ 698	$ 763	$ 2,171	$ 2,585
Pre-tax income from continuing operations	$ 244	$ 355	$ 836	$ 1,208
Revenue year-to-year change (as a percent)	(8.50%)		(16.00%)
Pre-tax income year-to-year change (as a percent)	(31.40%)		(30.70%)
Pre-tax income margin (as a percent)	34.90%	46.50%	38.50%	46.70%
Internal transactions
Segment Information
Revenue	$ (1,384)	$ (1,468)	$ (4,265)	$ (4,673)
Pre-tax income from continuing operations	(126)	(185)	(515)	(873)
Internal transactions | Cognitive Solutions
Segment Information
Revenue	(629)	(667)	(2,001)	(1,929)
Internal transactions | Global Business Services
Segment Information
Revenue	(92)	(93)	(271)	(310)
Internal transactions | Technology Services & Cloud Platforms
Segment Information
Revenue	(164)	(180)	(497)	(501)
Internal transactions | Systems
Segment Information
Revenue	(227)	(176)	(571)	(594)
Internal transactions | Global Financing
Segment Information
Revenue	$ (272)	$ (352)	$ (925)	$ (1,340)

Segments - Revenue Reconciliati

Segments - Revenue Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenue
Revenue	$ 19,153	$ 19,226	$ 56,597	$ 58,149
Business Segments
Revenue
Revenue	20,482	20,613	60,670	62,599
Internal transactions
Revenue
Revenue	(1,384)	(1,468)	(4,265)	(4,673)
Other revenue
Revenue
Revenue	$ 56	$ 81	$ 192	$ 223

Segments - Pre-Tax Income Recon

Segments - Pre-Tax Income Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Pre-tax Income from continuing operations
Amortization of acquired intangible assets	$ (238)	$ (265)	$ (731)	$ (742)
Acquisition-related (charges)/income	0	(4)	(19)	(1)
Non-operating retirement-related (costs)/income	(306)	(139)	(1,065)	(444)
Income from continuing operations before income taxes	3,065	3,263	6,931	7,345
Business Segments
Pre-tax Income from continuing operations
Income from continuing operations before income taxes	3,876	3,897	9,555	9,636
Internal transactions
Pre-tax Income from continuing operations
Income from continuing operations before income taxes	(126)	(185)	(515)	(873)
Unallocated corporate amounts
Pre-tax Income from continuing operations
Income from continuing operations before income taxes	$ (141)	$ (42)	$ (294)	$ (230)

Equity Activity - Reclassificat

Equity Activity - Reclassifications and Taxes (Details) - USD ($) $ in Millions	3 Months Ended			9 Months Ended
	Sep. 30, 2017	Mar. 31, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost of sales	$ 1,605		$ 1,536	$ 4,839	$ 4,496
Cost of services	8,426		8,418	25,502	25,492
SG&A expense	4,648		4,732	14,959	16,093
Other (income) and expense	(114)		(8)	(218)	281
Interest expense	168		158	451	473
Provision for/(benefit from) income taxes	339	$ (329)	409	120	(31)
Net (income) loss	(2,726)		(2,853)	(6,807)	(7,371)
Other comprehensive income/(loss)				1,877	1,442
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				721	117
Reclassification/amortization, Net of Tax Amount				1,155	1,326
Other comprehensive income/(loss), Before Tax Amount	658		632	1,869	1,656
Other comprehensive income/(loss), Tax (Expense)/Benefit	11		(192)	7	(213)
Other comprehensive income/(loss)	669		440	1,877	1,442
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				794	303
Reclassification/amortization, Net of Tax Amount				0	0
Other comprehensive income/(loss), Before Tax Amount	89		(99)	213	(109)
Other comprehensive income/(loss), Tax (Expense)/Benefit	195		50	581	411
Other comprehensive income/(loss)	284		(49)	794	303
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)		(1)	2	(36)
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	1		0	0	14
Unrealized gains/(losses) arising during the period, Net of Tax Amount	0		(1)	1	(22)
Reclassification/amortization, Net of Tax Amount				0	22
Other comprehensive income/(loss), Before Tax Amount	(2)		(2)	2	0
Other comprehensive income/(loss), Tax (Expense)/Benefit	1		1	0	0
Other comprehensive income/(loss)	(1)		(1)	2	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	0		(1)	1	36
Provision for/(benefit from) income taxes	0		0	0	(14)
Net (income) loss	0		(1)	0	22
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	(70)		35	(198)	(221)
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	20		(14)	53	82
Unrealized gains/(losses) arising during the period, Net of Tax Amount	(50)		21	(146)	(139)
Reclassification/amortization, Net of Tax Amount				(219)	12
Other comprehensive income/(loss), Before Tax Amount	(143)		50	(545)	(195)
Other comprehensive income/(loss), Tax (Expense)/Benefit	49		(22)	180	68
Other comprehensive income/(loss)	(94)		29	(365)	(127)
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost of sales	(1)		7	(23)	5
Cost of services	(20)		(3)	(47)	9
SG&A expense	6		(2)	(23)	1
Other (income) and expense	(64)		6	(275)	(6)
Interest expense	7		7	21	17
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	1		(3)	6	(4)
Net (income) loss	(1)		4	(17)	2
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	8		1	18	(3)
Net (income) loss	(12)		(2)	(29)	5
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	(1)		(1)	6	(3)
Net (income) loss	4		(3)	(17)	(1)
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		(2)	106	2
Net (income) loss	(39)		4	(169)	(4)
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)		(3)	(8)	(6)
Net (income) loss	4		4	13	10
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				72	(25)
Reclassification/amortization, Net of Tax Amount				1,374	1,292
Other comprehensive income/(loss), Before Tax Amount	713		683	2,200	1,960
Other comprehensive income/(loss), Tax (Expense)/Benefit	(235)		(222)	(754)	(693)
Other comprehensive income/(loss)	479		461	1,446	1,267
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			0
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	0			0
Unrealized gains/(losses) arising during the period, Net of Tax Amount	0			0
Reclassification/amortization, Before Tax Amount	(22)		(28)	(66)	(81)
Reclassification/amortization, Tax (Expense)/Benefit	7		9	23	29
Reclassification/amortization, Net of Tax Amount	(15)		(19)	(43)	(52)
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	1		11	106	(57)
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	0		(5)	(36)	20
Unrealized gains/(losses) arising during the period, Net of Tax Amount	1		6	70	(37)
Reclassification/amortization, Before Tax Amount	733		696	2,156	2,079
Reclassification/amortization, Tax (Expense)/Benefit	(242)		(225)	(739)	(735)
Reclassification/amortization, Net of Tax Amount	491		471	1,417	1,344
Retirement-Related Benefit Plans, Curtailments and Settlements
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Unrealized gains/(losses) arising during the period, Before Tax Amount	2		4	3	19
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	(1)		(1)	(1)	(7)
Unrealized gains/(losses) arising during the period, Net of Tax Amount	$ 1		$ 3	$ 2	$ 12

Equity Activity - AOCI Rollforw

Equity Activity - AOCI Rollforward (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period			$ 18,392	$ 14,424
Other comprehensive income/(loss)			1,877	1,442
Balance at the End of the Period	$ 19,757	$ 17,159	19,757	17,159
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			721	117
Amount reclassified from accumulated other comprehensive income			1,155	1,326
Other comprehensive income/(loss)	669	440	1,877	1,442
Balance at the End of the Period	(27,521)	(28,164)	(27,521)	(28,164)
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	(50)	21	(146)	(139)
Amount reclassified from accumulated other comprehensive income			(219)	12
Other comprehensive income/(loss)	(94)	29	(365)	(127)
Balance at the End of the Period	(46)	(28)	(46)	(28)
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			794	303
Amount reclassified from accumulated other comprehensive income			0	0
Other comprehensive income/(loss)	284	(49)	794	303
Balance at the End of the Period	(2,809)	(3,161)	(2,809)	(3,161)
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			72	(25)
Amount reclassified from accumulated other comprehensive income			1,374	1,292
Other comprehensive income/(loss)	479	461	1,446	1,267
Balance at the End of the Period	(24,670)	(24,981)	(24,670)	(24,981)
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	0	(1)	1	(22)
Amount reclassified from accumulated other comprehensive income			0	22
Other comprehensive income/(loss)	(1)	(1)	2	0
Balance at the End of the Period	$ 4	$ 4	$ 4	$ 4

Retirement-Related Benefits - A

Retirement-Related Benefits - All Retirement Plans Cost (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Retirement-Related Benefits:
Defined benefit and contribution pension plans - cost	$ 592	$ 421	$ 1,915	$ 1,315
Nonpension postretirement plans - cost	61	64	182	185
Total	$ 653	$ 486	$ 2,097	$ 1,500
Year-to-year percent change, defined benefit and contribution pension plans cost (as a percent)	40.60%		45.60%
Year-to-year percent change, nonpension postretirement plans cost (as a percent)	(5.90%)		(1.60%)
Year-to-year percent change, total (as a percent)	34.40%		39.80%

Retirement-Related Benefits - C

Retirement-Related Benefits - Cost of Pension Plans (Details) - USD ($) $ in Millions	3 Months Ended			9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2012	Sep. 30, 2017	Sep. 30, 2016
Cost/(Income) of Pension Plans
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings	$ 592	$ 421		$ 1,915	$ 1,315
U.S.
Cost/(Income) of Pension Plans
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings	219	79		665	246
U.S. | Pension Plans
Cost/(Income) of Pension Plans
Interest cost	478	512		1,435	1,536
Expected return on plan assets	(753)	(922)		(2,260)	(2,767)
Amortization of prior service costs/(credits)	4	3		12	8
Recognized actuarial losses	334	328		1,003	985
Total net periodic pension / nonpension (income)/cost of defined benefit plans	63	(79)		190	(238)
Cost of defined contribution plans	156	159		475	484
Non-US
Cost/(Income) of Pension Plans
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings	373	342		1,250	1,069
Non-US | Pension Plans
Cost/(Income) of Pension Plans
Service cost	106	108		308	318
Interest cost	215	257		622	787
Expected return on plan assets	(340)	(468)		(985)	(1,419)
Amortization of prior service costs/(credits)	(25)	(28)		(73)	(79)
Recognized actuarial losses	387	357		1,120	1,062
Curtailments and settlements	2	4		3	19
Multi-employer plans/other	(74)	8		(46)	64
Total net periodic pension / nonpension (income)/cost of defined benefit plans	271	239		950	751
Cost of defined contribution plans	102	$ 103		301	$ 318
Non-US | Pension Plans | Litigation in United Kingdom regarding defined benefit plans | SG&A expense
Cost/(Income) of Pension Plans
Multi-employer plans/other	$ (91)		$ 162	$ (91)

Retirement-Related Benefits - I

Retirement-Related Benefits - Investment Strategy (Details) - U.S. - Pension Plans	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Mar. 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) - Pension Plans, Including Multiemployer Plans - Non-US - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Retirement-Related Benefits
Expected current year contributions to non-U.S. defined benefit plans	$ 400
Total net contributions by employer	301	$ 261
Contributions by employer - Cash	124	97
Contributions by employer - Noncash	$ 176	$ 164

Retirement-Related Benefits -63

Retirement-Related Benefits - Nonpension Postretirement Cost (Details) - Nonpension Postretirement Plans - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
U.S.
Retirement-related plans cost
Service cost	$ 4	$ 4	$ 11	$ 13
Interest cost	38	41	115	124
Amortization of prior service costs/(credits)	(2)	(2)	(6)	(6)
Recognized actuarial losses	5	5	15	15
Total net periodic pension / nonpension (income)/cost of defined benefit plans	45	49	135	146
Non-US
Retirement-related plans cost
Service cost	1	1	4	4
Interest cost	14	15	43	37
Expected return on plan assets	(2)	(2)	(6)	(5)
Amortization of prior service costs/(credits)	0	(1)	0	(4)
Recognized actuarial losses	2	2	5	7
Curtailments and settlements	0	0	0	0
Total net periodic pension / nonpension (income)/cost of defined benefit plans	$ 16	$ 16	$ 47	$ 39

Retirement-Related Benefits -64

Retirement-Related Benefits - Nonpension Postretirement Contributions (Details) - Nonpension Postretirement Plans - U.S. - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Retirement-Related Benefits
Contributions by employer - Noncash	$ 259	$ 200
Contributions by employer - Cash		$ 40

Acquisitions_Divestitures - Bus

Acquisitions/Divestitures - Businesses Acquired (Details) $ in Millions	3 Months Ended	9 Months Ended
	Jun. 30, 2017entity	Sep. 30, 2017USD ($)entity	Dec. 31, 2016USD ($)	Dec. 31, 2015USD ($)
ACQUISITIONS
Goodwill		$ 36,782	$ 36,199	$ 32,021
Technology Services & Cloud Platforms
ACQUISITIONS
Goodwill		10,444	10,258	10,156
Cognitive Solutions
ACQUISITIONS
Goodwill		$ 19,679	$ 19,484	$ 15,621
2017 Acquisitions
ACQUISITIONS
Businesses acquired, number (in entities) | entity		4
Businesses acquired, aggregate cost		$ 128
Goodwill		$ 16
Percentage of the goodwill deductible for tax		50.00%
Percentage of business acquired (as a percent)		100.00%
2017 Acquisitions | Technology Services & Cloud Platforms
ACQUISITIONS
Businesses acquired, number (in entities) | entity		3
Goodwill		$ 13
2017 Acquisitions | Cognitive Solutions
ACQUISITIONS
Businesses acquired, number (in entities) | entity	1
Goodwill		$ 3

Acquisitions_Divestitures - Pur

Acquisitions/Divestitures - Purchase Price Allocation (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Dec. 31, 2015
ACQUISITIONS
Goodwill	$ 36,782	$ 36,199	$ 32,021
2017 Acquisitions
ACQUISITIONS
Current assets	18
Fixed assets/noncurrent assets	69
Goodwill	16
Total assets acquired	175
Current liabilities	(47)
Total liabilities assumed	(47)
Total purchase price	$ 128
Acquired intangible asset, weighted average useful life	6 years 7 months 6 days
2017 Acquisitions | Completed technology
ACQUISITIONS
Intangible assets	$ 9
Acquired intangible asset, weighted average useful life	5 years
2017 Acquisitions | Client relationships
ACQUISITIONS
Intangible assets	$ 62
Acquired intangible asset, weighted average useful life	7 years
2017 Acquisitions | Patents/trademarks
ACQUISITIONS
Intangible assets	$ 1
Minimum | 2017 Acquisitions | Patents/trademarks
ACQUISITIONS
Acquired intangible asset, weighted average useful life	1 year
Maximum | 2017 Acquisitions | Patents/trademarks
ACQUISITIONS
Acquired intangible asset, weighted average useful life	5 years

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 - Oth

Acquisitions/Divestitures - Other Disposal Groups (Details) $ in Millions	Jan. 23, 2014USD ($)	Sep. 30, 2017USD ($)item	Jun. 30, 2017item	Mar. 31, 2017item	Sep. 30, 2017USD ($)	Dec. 31, 2016USD ($)	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					$ 13	$ 57	$ 63
Expected pre-tax gain on sale of business		$ 1,600			1,600
Disposal group expected total gain on sale, net of associated costs		1,300			1,300
Cumulative gain on sale of business, net of transition and performance-based costs		$ 1,200			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
Pre-tax gain on sale of business					$ 25
Number of divestitures | item		1	2	1

Intangible Assets Including G69

Intangible Assets Including Goodwill - Intangible Assets by Class (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Intangible asset balances by major asset class:
Gross Carrying Amount	$ 7,633	$ 8,466
Accumulated Amortization	(3,652)	(3,778)
Net Carrying Amount	3,981	4,688
Capitalized software
Intangible asset balances by major asset class:
Gross Carrying Amount	1,586	1,537
Accumulated Amortization	(750)	(661)
Net Carrying Amount	835	876
Client relationships
Intangible asset balances by major asset class:
Gross Carrying Amount	2,416	2,831
Accumulated Amortization	(1,054)	(1,228)
Net Carrying Amount	1,363	1,602
Completed technology
Intangible asset balances by major asset class:
Gross Carrying Amount	2,872	3,322
Accumulated Amortization	(1,562)	(1,668)
Net Carrying Amount	1,310	1,654
Patents/trademarks
Intangible asset balances by major asset class:
Gross Carrying Amount	707	730
Accumulated Amortization	(267)	(205)
Net Carrying Amount	440	525
Other intangible assets
Intangible asset balances by major asset class:
Gross Carrying Amount	52	46
Accumulated Amortization	(19)	(15)
Net Carrying Amount	$ 32	$ 31

Intangible Assets Including G70

Intangible Assets Including Goodwill - Intangible Assets Activity (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Intangible Assets Including Goodwill:
Net carrying amount decrease			$ 707
Intangible asset amortization expense	$ 383	$ 403	1,161	$ 1,148
Retirement of fully amortized intangible assets			$ 1,255

Intangible Assets Including G71

Intangible Assets Including Goodwill - Future Amortization (Details) $ in Millions	Sep. 30, 2017USD ($)
Future amortization expense, by year
2017 (for Q4)	$ 359
2,018	1,252
2,019	873
2,020	607
2,021	446
Capitalized software
Future amortization expense, by year
2017 (for Q4)	144
2,018	441
2,019	202
2,020	48
Acquired Intangibles
Future amortization expense, by year
2017 (for Q4)	216
2,018	811
2,019	671
2,020	559
2,021	$ 446

Intangible Assets Including G72

Intangible Assets Including Goodwill - Goodwill by Segment (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Changes in Goodwill Balances
Beginning Balance	$ 36,199	$ 32,021
Goodwill Additions	16	4,244
Purchase Price Adjustments	(36)	(7)
Divestitures	(15)	(18)
Foreign Currency Translation and Other Adjustments	618	(42)
Ending Balance	36,782	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	(36)	5
Divestitures	(15)	(12)
Foreign Currency Translation and Other Adjustments	243	48
Ending Balance	19,679	19,484
Global Business Services
Changes in Goodwill Balances
Beginning Balance	4,607	4,396
Goodwill Additions		303
Purchase Price Adjustments	4	4
Divestitures		(1)
Foreign Currency Translation and Other Adjustments	186	(95)
Ending Balance	4,797	4,607
Technology Services & Cloud Platforms
Changes in Goodwill Balances
Beginning Balance	10,258	10,156
Goodwill Additions	13	119
Purchase Price Adjustments	(3)	(12)
Divestitures		(5)
Foreign Currency Translation and Other Adjustments	175	(1)
Ending Balance	10,444	10,258
Systems
Changes in Goodwill Balances
Beginning Balance	1,850	1,848
Purchase Price Adjustments		(4)
Foreign Currency Translation and Other Adjustments	13	5
Ending Balance	$ 1,863	$ 1,850

Borrowings - Short-Term Debt (D

Borrowings - Short-Term Debt (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Short-term debt disclosures
Long-term debt - current maturities	$ 3,892	$ 6,239
Total short-term debt	4,299	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	$ 407	$ 375
Weighted-average interest rates for short-term loans (as a percent)	5.40%	9.50%

Borrowings - Long-Term Debt, Co

Borrowings - Long-Term Debt, Components (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Borrowings
Long-term debt, gross	$ 45,522	$ 41,145
Less: net unamortized discount	833	839
Less: net unamortized debt issuance cost	99	82
Add: fair value adjustment	627	669
Long-term debt (including current maturities)	45,218	40,893
Less: current maturities	3,892	6,239
Long-term debt (excluding current portion)	41,327	34,655
IBM International Group Capital, LLC
Borrowings
Long-term debt, gross	0
IBM Credit LLC
Borrowings
Fixed and floating rate debt securities issued	$ 3,000
IBM International Group Capital, LLC
Borrowings
Ownership interest in subsidiary (as a percent)	100.00%
U.S. dollars
Borrowings
Long-term debt, gross	$ 31,408	30,563
Euros
Borrowings
Long-term debt, gross	$ 10,342	7,122
Debt instrument, average interest rate percentage (as a percent)	1.50%
Pound sterling
Borrowings
Long-term debt, gross	$ 1,409	1,296
Debt instrument, average interest rate percentage (as a percent)	2.70%
Japanese yen
Borrowings
Long-term debt, gross	$ 1,669	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	$ 694	215
Debt instrument, average interest rate percentage (as a percent)	7.40%
Maturing 2017 | U.S. dollars
Borrowings
Long-term debt, gross	$ 2	5,104
Debt instrument, average interest rate percentage (as a percent)	2.70%
Maturing 2018 Through 2019 | U.S. dollars
Borrowings
Long-term debt, gross	$ 10,208	8,856
Debt instrument, average interest rate percentage (as a percent)	3.00%
Maturing 2020 Through 2021 | U.S. dollars
Borrowings
Long-term debt, gross	$ 7,416	4,941
Debt instrument, average interest rate percentage (as a percent)	2.00%
Maturing 2022 | U.S. dollars
Borrowings
Long-term debt, gross	$ 3,492	1,901
Debt instrument, average interest rate percentage (as a percent)	2.40%
Maturing 2023 | U.S. dollars
Borrowings
Long-term debt, gross	$ 1,529	1,500
Debt instrument, average interest rate percentage (as a percent)	3.40%
Maturing 2024 | U.S. dollars
Borrowings
Long-term debt, gross	$ 2,000	2,000
Debt instrument, average interest rate percentage (as a percent)	3.60%
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)	3.50%
Maturing 2027 | U.S. dollars
Borrowings
Long-term debt, gross	$ 969	469
Debt instrument, average interest rate percentage (as a percent)	4.70%
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)	5.90%
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)	7.10%

Borrowings - Long-Term Debt, 75

Borrowings - Long-Term Debt, Covenants (Details) $ in Millions	9 Months Ended
	Sep. 30, 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	Sep. 30, 2017	Dec. 31, 2016
Pre-swap annual contractual maturities of long-term debt outstanding
2017 (for Q4)	$ 468
2,018	5,140
2,019	7,034
2,020	6,155
2,021	5,155
2022 and beyond	21,569
Total	$ 45,522	$ 41,145

Borrowings - Interest on Debt (

Borrowings - Interest on Debt (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Interest on Debt
Cost of financing	$ 496	$ 432
Interest expense	485	523
Net investment derivative activity	(34)	(51)
Interest capitalized		3
Interest capitalized	(1)
Total interest paid and accrued	$ 947	$ 907

Borrowings - Lines of Credit (D

Borrowings - Lines of Credit (Details) - Lines of Credit - USD ($) $ in Millions	Jul. 20, 2017	Sep. 30, 2017	Dec. 31, 2016	Dec. 31, 2015
Credit Agreement
Lines of Credit
Revolving line of credit, term			5 years
Revolving line of credit, amount		$ 10,250	$ 10,250	$ 10,000
Revolving line of credit, term extension			1 year
Revolving line of credit, expiration date			Nov. 10, 2021
Revolving line of credit, additional amount		1,750
Revolving line of credit, borrowings outstanding		$ 0
New Credit Agreements
Lines of Credit
Revolving line of credit, amount	$ 5,000
364-Day Credit Agreement
Lines of Credit
Revolving line of credit, term	364 days
Revolving line of credit, amount	$ 2,500
Three-Year Credit Agreement
Lines of Credit
Revolving line of credit, term	3 years
Revolving line of credit, amount	$ 2,500

Contingencies (Details)

Contingencies (Details) $ in Millions	Aug. 07, 2017USD ($)	Feb. 13, 2014USD ($)	Jul. 18, 2012USD ($)	May 31, 2015defendant	May 31, 2010defendant	Sep. 30, 2017USD ($)countryclaim	Oct. 30, 2017claim
SCO v. IBM
Loss Contingencies
Number of remaining claims | claim							1
IBM v. State Of Indiana
Loss Contingencies
Duration of trial			42 days
Amount of award to IBM		$ 50	$ 52
Amount of award against IBM	$ 128
Net amount awarded against IBM	$ 78
IBM United Kingdom Limited vs. IBM UK Pension Trusts
Loss Contingencies
Number of representative beneficiaries of the UK Trust membership | defendant					2
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						$ 1,100
Minimum
Loss Contingencies
Clients' presence in number of countries | country						175

Commitments - Extensions of Cre

Commitments - Extensions of Credit (Details) - USD ($) $ in Millions	Sep. 30, 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	$ 8,016	$ 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	$ 3,063	$ 2,463

Commitments - Financial Guarant

Commitments - Financial Guarantees (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Financial guarantees
Guarantor obligations
Guarantor obligations, maximum exposure	$ 21	$ 34

Commitments - Standard Warranty

Commitments - Standard Warranty Liability (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Movement in standard warranty liability
Beginning Balance	$ 156	$ 181
Current period accruals	107	107
Accrual adjustments to reflect actual experience	(3)	4
Charges incurred	(126)	(132)
Ending Balance	$ 134	$ 160

Commitments - Extended Warranty

Commitments - Extended Warranty Liability (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Deferred revenue:
Current portion	$ 10,649		$ 11,035
Noncurrent portion	3,579		$ 3,600
Extended Warranty Liability (Deferred Income)
Movement in extended warranty liability
Beginning Balance	531	$ 538
Revenue deferred for new extended warranty contracts	175	176
Amortization of deferred revenue	(198)	(198)
Other	24	12
Ending Balance	533	528
Deferred revenue:
Current portion	258	287
Noncurrent portion	$ 275	$ 241

Earnings Per Share of Common 84

Earnings Per Share of Common Stock - Computation (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Number of shares on which basic earnings per share is calculated:
Weighted-average shares outstanding during period	929,437,441	953,995,828	935,600,777	957,693,385
Add - Incremental shares under stock-based compensation plans (in shares)	2,236,234	2,357,365	3,213,758	2,258,854
Add - Incremental shares associated with contingently issuable shares (in shares)	1,553,754	964,091	1,394,930	771,943
Number of shares on which diluted earnings per share is calculated	933,227,429	957,317,284	940,209,466	960,724,182
Net income on which basic earnings per share is calculated:
Income from continuing operations	$ 2,726	$ 2,854	$ 6,811	$ 7,375
Loss from discontinued operations, net of tax	0	(1)	(3)	(4)
Net income on which basic earnings per share is calculated	2,726	2,853	6,807	7,371
Net income on which diluted earnings per share is calculated:
Income from continuing operations	2,726	2,854	6,811	7,375
Net income applicable to contingently issuable shares	0		(2)
Income from continuing operations on which diluted earnings per share is calculated	2,726	2,854	6,809	7,375
Loss from discontinued operations, net of tax, on which basic and diluted earnings per share is calculated	0	(1)	(3)	(4)
Net income on which diluted earnings per share is calculated	$ 2,726	$ 2,853	$ 6,806	$ 7,371
Assuming dilution
Continuing operations (in dollars per share)	$ 2.92	$ 2.98	$ 7.24	$ 7.67
Discontinued operations (in dollars per share)	0	0	0	0
Total (in dollars per share)	2.92	2.98	7.24	7.67
Basic
Continuing operations (in dollars per share)	2.93	2.99	7.28	7.70
Discontinued operations (in dollars per share)	0	0	0	0
Total (in dollars per share)	$ 2.93	$ 2.99	$ 7.28	$ 7.70

Earnings Per Share of Common 85

Earnings Per Share of Common Stock - Antidilutive Stock Options (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Stock Options
Antidilutive stock options
Outstanding stock options not included in the computation of diluted earnings per share (in shares)	399,844	29,033	146,795	533,089

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent events $ / shares in Units, $ in Billions	Oct. 31, 2017USD ($)$ / shares
Subsequent Events:
Dividend declared (in dollars per share) | $ / shares	$ 1.50
Dividend declared, date	Oct. 31, 2017
Dividend payable, date	Dec. 9, 2017
Shareholders of record, date	Nov. 10, 2017
Additional funds authorized for use in the stock repurchase program | $	$ 3