International Business Machines (IBM) 10-Q 30 Apr 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	Mar. 31, 2019shares
Document and Entity Information
Entity Registrant Name	INTERNATIONAL BUSINESS MACHINES CORP
Entity Central Index Key	0000051143
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding	886,642,873
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	IBM

CONSOLIDATED STATEMENT OF EARNI

CONSOLIDATED STATEMENT OF EARNINGS - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue	$ 18,182	$ 19,072
Cost	10,139	10,825
Gross profit	8,043	8,247
Expense and other (income):
Selling, general and administrative	4,691	5,445
Research, development and engineering	1,433	1,405
Intellectual property and custom development income	(101)	(317)
Other (income) and expense	(73)	413
Interest expense	210	165
Total expense and other (income)	6,160	7,111
Income from continuing operations before income taxes	1,883	1,136
Provision for/(benefit from) income taxes	289	(540)
Income from continuing operations	1,593	1,675
Income/(loss) from discontinued operations, net of tax	(2)	4
Net income	$ 1,591	$ 1,679
Assuming dilution:
Continuing operations (in dollars per share)	$ 1.78	$ 1.81
Discontinued operations (in dollars per share)	0	0
Total (in dollars per share)	1.78	1.81
Basic:
Continuing operations (in dollars per share)	1.79	1.82
Discontinued operations (in dollars per share)	0	0
Total (in dollars per share)	$ 1.79	$ 1.82
Weighted-average number of common shares outstanding:
Assuming dilution (in shares)	893,910,526	925,409,434
Basic (in shares)	889,581,542	920,680,222
Services
Revenue	$ 12,423	$ 12,961
Cost	8,359	8,835
Sales
Revenue	5,354	5,700
Cost	1,516	1,722
Financing
Revenue	404	410
Cost	$ 264	$ 269

CONSOLIDATED STATEMENT OF COMPR

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Net income	$ 1,591	$ 1,679
Other comprehensive income/(loss), before tax:
Foreign currency translation adjustments	171	(167)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	(1)	(2)
Reclassification of (gains)/losses to net income		0
Total net changes related to available-for-sale securities	(1)	(3)
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	(352)	61
Reclassification of (gains)/losses to net income	98	(54)
Total unrealized gains/(losses) on cash flow hedges	(254)	7
Retirement-related benefit plans:
Prior service costs/(credits)		(1)
Net (losses)/gains arising during the period	(4)	2
Curtailments and settlements	1	0
Amortization of prior service (credits)/costs	(3)	(19)
Amortization of net (gains)/losses	464	753
Total retirement-related benefit plans	458	735
Other comprehensive income/(loss), before tax	375	573
Income tax (expense)/benefit related to items of other comprehensive income	(67)	(143)
Other comprehensive income/(loss), net of tax	308	430
Total comprehensive income/(loss)	$ 1,899	$ 2,109

CONSOLIDATED STATEMENT OF FINAN

CONSOLIDATED STATEMENT OF FINANCIAL POSITION - USD ($) $ in Millions		Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents		$ 17,134	$ 11,379
Restricted cash		137	225
Marketable securities		872	618
Notes and accounts receivable - trade (net of allowances of $316 in 2019 and $309 in 2018)		6,987	7,432
Short-term financing receivables (net of allowances of $248 in 2019 and $244 in 2018)		20,287	22,388
Other accounts receivable (net of allowances of $33 in 2019 and $38 in 2018)		671	743
Inventories, at lower of average cost or net realizable value:
Finished goods		369	266
Work in process and raw materials		1,402	1,415
Total inventories		1,771	1,682
Deferred costs		2,368	2,300
Prepaid expenses and other current assets		2,478	2,378
Total current assets		52,705	49,146
Property, plant and equipment		32,692	32,460
Less: Accumulated depreciation		22,017	21,668
Property, plant and equipment - net		10,675	10,792
Operating right-of-use assets - net	[1]	4,634
Long-term financing receivables (net of allowances of $38 in 2019 and $48 in 2018)		8,361	9,148
Prepaid pension assets		4,966	4,666
Deferred costs		2,663	2,676
Deferred taxes		5,284	5,216
Goodwill		36,281	36,265
Intangible assets - net		2,956	3,087
Investments and sundry assets		2,403	2,386
Total assets		130,926	123,382
Current liabilities:
Taxes		2,484	3,046
Short-term debt		10,250	10,207
Accounts payable		5,711	6,558
Compensation and benefits		3,027	3,310
Deferred income		12,134	11,165
Operating lease liabilities	[1]	1,313
Other accrued expenses and liabilities		3,952	3,941
Total current liabilities		38,871	38,227
Long-term debt		39,727	35,605
Retirement and nonpension postretirement benefit obligations		16,467	17,002
Deferred income		3,481	3,445
Operating lease liabilities	[1]	3,590
Other liabilities		12,184	12,174
Total liabilities		114,320	106,452
IBM stockholders' equity:
Common stock, par value $.20 per share, and additional paid-in capital; Shares authorized: 4,687,500,000; Shares issued: 2019 - 2,234,819,047; 2018 - 2,233,427,058		55,287	55,151
Retained earnings		159,396	159,206
Treasury stock, at cost; Shares 2019 - 1,348,176,174; 2018 - 1,340,947,648		(169,021)	(168,071)
Accumulated other comprehensive income/(loss)		(29,182)	(29,490)
Total IBM stockholders' equity		16,481	16,796
Noncontrolling interests		126	134
Total equity		16,607	16,929
Total liabilities and equity		$ 130,926	$ 123,382
[1]	Reflects the adoption of the FASB guidance on leases. Refer to note 2, "Accounting Changes" and note 5, "Leases.”

CONSOLIDATED STATEMENT OF FIN_2

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes and accounts receivable - trade, allowances	$ 316	$ 309
Short-term financing receivables, allowances	248	244
Other accounts receivable, allowances	33	38
Long-term financing receivables, allowances	$ 38	$ 48
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)	2,234,819,047	2,233,427,058
Treasury stock, Shares (in shares)	1,348,176,174	1,340,947,648

CONSOLIDATED STATEMENT OF CASH

CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net income	$ 1,591	$ 1,679
Adjustments to reconcile net income to cash provided by operating activities
Depreciation	1,143	774
Amortization of intangibles	303	340
Stock-based compensation	113	116
Net (gain)/loss on asset sales and other	(176)	34
Changes in operating assets and liabilities, net of acquisitions/divestitures	1,785	1,658
Net cash provided by operating activities	4,759	4,602
Cash flows from investing activities:
Payments for property, plant and equipment	(539)	(870)
Proceeds from disposition of property, plant and equipment	81	103
Investment in software	(156)	(126)
Acquisition of businesses, net of cash acquired	(1)	(71)
Divestitures of businesses, net of cash transferred	33
Non-operating finance receivables - net	193	(89)
Purchases of marketable securities and other investments	(1,138)	(1,521)
Proceeds from disposition of marketable securities and other investments	674	810
Net cash used in investing activities	(853)	(1,764)
Cash flows from financing activities:
Proceeds from new debt	5,979	2,170
Payments to settle debt	(1,768)	(3,295)
Short-term borrowings/(repayments) less than 90 days - net	21	412
Common stock repurchases	(920)	(777)
Common stock repurchases for tax withholdings	(61)	(53)
Financing - other	9	16
Cash dividends paid	(1,397)	(1,382)
Net cash provided by (used in) financing activities	1,863	(2,909)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(102)	100
Net change in cash, cash equivalents and restricted cash	5,668	28
Cash, cash equivalents and restricted cash at beginning of period	11,604	12,234
Cash, cash equivalents and restricted cash at end of period	$ 17,272	$ 12,262

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, 2017	$ 17,594	$ 54,566	$ 153,126	$ (163,507)	$ (26,592)	$ 131	$ 17,725
Equity
Cumulative effect of change in accounting principle | Accounting Standards Update 2014-09, Revenue from Contracts with Customers	524		524				524
Cumulative effect of change in accounting principle | Accounting Standards Updates 2016-01 (Financial Instruments), 2017-12 (Hedging) and 2018-02 (Stranded Tax Effects)			2,422		(2,422)
Net income plus other comprehensive income/(loss)
Net income	1,679		1,679				1,679
Other comprehensive income/(loss)	430				430		430
Total comprehensive income/(loss)	2,109						2,109
Cash dividends paid - common stock ($1.57 and $1.50 per share for 2019 and 2018, respectively)	(1,382)		(1,382)				(1,382)
Common stock issued under employee plans (Shares - 1,391,989 and 1,037,255 for 2019 and 2018, respectively)	146	146					146
Purchases (Shares - 454,710 and 325,635) and sales (Shares - 82,862 and 45,878 ) of treasury stock under employee plans - net, for 2019 and 2018, respectively	(45)		1	(47)			(45)
Other treasury shares purchased, not retired (Shares - 6,856,678 and 4,968,417 for 2019 and 2018, respectively)	(780)			(780)			(780)
Changes in noncontrolling interests						(7)	(7)
Balance at the End of the Period at Mar. 31, 2018	18,166	54,712	156,371	(164,334)	(28,583)	124	18,290
Balance at the Beginning of the Period at Dec. 31, 2017	17,594	54,566	153,126	(163,507)	(26,592)	131	17,725
Balance at the End of the Period at Dec. 31, 2018	16,796	55,151	159,206	(168,071)	(29,490)	134	16,929
Net income plus other comprehensive income/(loss)
Net income	1,591		1,591				1,591
Other comprehensive income/(loss)	308				308		308
Total comprehensive income/(loss)	1,899						1,899
Cash dividends paid - common stock ($1.57 and $1.50 per share for 2019 and 2018, respectively)	(1,397)		(1,397)				(1,397)
Common stock issued under employee plans (Shares - 1,391,989 and 1,037,255 for 2019 and 2018, respectively)	137	137					137
Purchases (Shares - 454,710 and 325,635) and sales (Shares - 82,862 and 45,878 ) of treasury stock under employee plans - net, for 2019 and 2018, respectively	(48)		2	(50)			(48)
Other treasury shares purchased, not retired (Shares - 6,856,678 and 4,968,417 for 2019 and 2018, respectively)	(900)			(900)			(900)
Changes in other equity	(5)		(5)				(5)
Changes in noncontrolling interests						(8)	(8)
Balance at the End of the Period at Mar. 31, 2019	$ 16,481	$ 55,287	$ 159,396	$ (169,021)	$ (29,182)	$ 126	$ 16,607

CONSOLIDATED STATEMENT OF CHA_2

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Cash dividend per common share	$ 1.57	$ 1.50
Common stock issued under employee plans (in shares)	1,391,989	1,037,255
Purchases of treasury stock under employee plans (in shares)	454,710	325,635
Sales of treasury stock under employee plans (in shares)	82,862	45,878
Other treasury shares purchased, not retired (in shares)	6,856,678	4,968,417

Basis of Presentation

Basis of Presentation	3 Months Ended
	Mar. 31, 2019
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. In the first quarter of 2019, the company made a number of changes to its organizational structure and management system. These changes impacted the company’s reportable segments, but did not impact the company’s Consolidated Financial Statements. Refer to note 8, “Segments,” for additional information on the changes in reportable segments. The periods presented in this Form 10-Q are reported on a comparable basis. The company provided recast historical segment information reflecting these changes in a Form 8-K dated April 4, 2019. For the three months ended March 31, 2019, the company recorded a provision for income taxes of $289 million and its effective tax rate was 15.4 percent. The rate was primarily driven by the geographical mix of income and foreign and domestic audit activity, partially offset by a discrete tax charge of $129 million related to the January 2019 additional tax reform guidance issued by the U.S. Treasury. In the first quarter of 2018, the company reported a benefit from income taxes of $540 million and its effective tax rate was (47.5) percent. This benefit was primarily driven by audit resolutions partially offset by a discrete provisional charge related to U.S. tax reform guidance. Noncontrolling interest amounts of $7.0 million and $7.8 million, net of tax, for the three months ended March 31, 2019 and 2018, 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 2018 Annual Report. Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior year amounts have been reclassified to conform to the current year presentation. This is annotated where applicable.

Accounting Changes

Accounting Changes	3 Months Ended
	Mar. 31, 2019
Accounting Changes
Accounting Changes	2. Accounting Changes: New Standards to be Implemented In August 2018, the Financial Accounting Standards Board (FASB) issued guidance which changed the disclosure requirements for fair value measurements and defined benefit plans. The guidance is effective for each of the topics on January 1, 2020 and December 31, 2020, respectively, with early adoption of certain provisions permitted. The company early adopted the provision in the fair value guidance that removed the Level 1/Level 2 transfer disclosures. The company is evaluating the adoption date for the remaining changes. As the guidance is a change to disclosures only, the company does not expect the guidance to have a material impact in the consolidated financial results. In January 2017, the FASB issued guidance that simplifies the goodwill impairment test by removing Step 2. The guidance also changes the requirements for reporting units with zero or negative carrying amounts and requires additional disclosures for these reporting units. The guidance is effective January 1, 2020 and early adoption is permitted. The company expects to adopt the guidance on a prospective basis on the effective date. The company is evaluating the impact of the guidance. In June 2016, with amendments in 2018, 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. A cross-functional team was established that is evaluating the financial instruments portfolio and the system, process and policy change requirements and continues to make substantial progress. The new guidance expands the scope of financial instruments subject to impairment, including off-balance sheet commitments and residual value. The guidance is effective January 1, 2020 with one-year early adoption permitted. The company will adopt the guidance as of the effective date and is continuing to evaluate the impact. Standards Implemented The FASB issued guidance in February 2016, with amendments in 2018 and 2019, which changed 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 also made some changes to lessor accounting, including elimination of the use of third-party residual value guarantee insurance in the lease classification test, and overall aligns with the new revenue recognition guidance. The guidance requires qualitative and quantitative disclosures to assess the amount, timing and uncertainty of cash flows arising from leases. The company adopted the guidance effective January 1, 2019, using the transition option whereby prior comparative periods were not retrospectively presented in the Consolidated Financial Statements. The company elected the package of practical expedients not to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and the lessee practical expedient to combine lease and nonlease components for all asset classes. The company made a policy election to not recognize right-of-use assets and lease liabilities for short-term leases for all asset classes. The guidance had a material impact on the Consolidated Statement of Financial Position as of the effective date. As a lessee, at adoption, the company recognized operating and financing right-of-use (ROU) assets of $4.8 billion and $0.2 billion, respectively, and operating and financing lease liabilities of $5.1 billion and $0.2 billion, respectively. The transition adjustment recognized in retained earnings at January 1, 2019 was not material. From a lessor perspective, the changes in lease termination guidance and removal of third-party residual value guarantee insurance in the lease classification test did not have a material impact in the consolidated financial results. Refer to note 5, “Leases,” for additional information, including further discussion on the impact of adoption. In August 2018, the FASB issued guidance on a customer’s accounting for implementation costs incurred in cloud-computing arrangements that are hosted by a vendor. Certain types of implementation costs should be capitalized and amortized over the term of the hosting arrangement. The guidance is effective January 1, 2020 and early adoption is permitted. The company adopted the guidance on January 1, 2019 on a prospective basis. The guidance did not have a material impact in the consolidated financial results. In February 2018, the FASB issued guidance that allows entities to elect an option to reclassify the stranded tax effects related to the application of U.S. tax reform from accumulated other comprehensive income/(loss) (AOCI) to retained earnings. The guidance was effective January 1, 2019 with early adoption permitted, and can be applied either in the period of adoption or retrospectively to all applicable periods. The company adopted the guidance effective January 1, 2018, and elected not to reclassify prior periods. In accordance with its accounting policy, the company releases income tax effects from AOCI once the reason the tax effects were established cease to exist (e.g., when available-for-sale debt securities are sold or if a pension plan is liquidated). This guidance allows for the reclassification of stranded tax effects as a result of the change in tax rates from U.S. tax reform to be recorded upon adoption of the guidance rather than at the actual cessation date. At adoption on January 1, 2018, $2.4 billion was reclassified from AOCI to retained earnings, primarily comprised of amounts relating to retirement-related benefit plans. In August 2017, the FASB issued guidance to simplify the application of 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 was effective January 1, 2019 with early adoption permitted. The company adopted the guidance as of January 1, 2018, and it did not 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 (net benefit cost). Under the guidance, the service cost component of net benefit cost continues to be presented within cost, SG&A expense and RD&E expense in the Consolidated Statement of Earnings, unless eligible for capitalization. The other components of net benefit cost are presented separately from service cost within other (income) and expense in the Consolidated Statement of Earnings. The guidance was effective January 1, 2018 with early adoption permitted. The company adopted the guidance as of the effective date. The guidance is primarily a change in financial statement presentation and did not have a material impact in the consolidated financial results. This presentation change was applied retrospectively upon adoption. In January 2016, the FASB issued guidance which addresses aspects of recognition, measurement, presentation and disclosure of financial instruments. The guidance was effective January 1, 2018 and early adoption was not permitted except for limited provisions. The company adopted the guidance on the effective date. The guidance required certain equity investments to be measured at fair value with changes recognized in net income. The amendment also simplified the impairment test of equity investments that lack readily determinable fair value. The guidance did not 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 depicts 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 specific disclosures relating to revenue recognition. The company adopted the guidance effective January 1, 2018 using the modified retrospective transition method. At adoption, $557 million was reclassified from notes and accounts receivable—trade and deferred income—current to prepaid expenses and other current assets to establish the opening balance for net contract assets. In-scope sales commission costs previously recorded in the Consolidated Statement of Earnings were capitalized in deferred costs in accordance with the transition guidance, in the amount of $737 million. Deferred income of $29 million was recorded for certain software licenses that will be recognized over time versus at point in time under previous guidance. Additionally, net deferred taxes were reduced by $184 million in the Consolidated Statement of Financial Position, resulting in a cumulative-effect net increase to retained earnings of $524 million. In the fourth quarter of 2018, the company recognized an additional impact to net deferred taxes and retained earnings of $56 million, resulting in a total net increase to retained earnings of $580 million. The decrease to net deferred taxes was the result of the company’s election to include Global Intangible Low-Taxed Income (GILTI) in measuring deferred taxes. The revenue guidance did not have a material impact in the company’s consolidated financial results. Refer to note 3, “Revenue Recognition,” for additional information. In March 2016, the FASB issued guidance which changed 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. 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. The FASB also issued guidance in May 2017 and June 2018, which relates to the accounting for modifications of share-based payment awards and accounting for share-based payments issued to non-employees, respectively. The company adopted the guidance for modifications in the second quarter of 2017, and guidance for non-employees’ payments in the second quarter of 2018. The guidance had no impact in the consolidated financial results.

Revenue Recognition

Revenue Recognition	3 Months Ended
	Mar. 31, 2019
Revenue Recognition
Revenue Recognition	3. Revenue Recognition: Disaggregation of Revenue The following tables provide details of revenue by major products/service offerings and by geography. Revenue by Major Products/Service Offerings (Dollars in millions) Cloud & Global Global For the three months Cognitive Business Technology Global Total ended March 31, 2019: Software Services Services Systems Financing Other Revenue Cognitive Applications $ $ — $ — $ — $ — $ — $ Cloud & Data Platforms — — — — — Transaction Processing Platforms — — — — — Consulting — — — — — Application Management — — — — — Global Process Services — — — — — Infrastructure & Cloud Services — — — — — Technology Support Services — — — — — Systems Hardware — — — — — Operating Systems Software — — — — — Global Financing* — — — — — Other Revenue — — — — — Total $ $ $ $ $ $ $ * Contains lease and loan/working capital financing arrangements which are not subject to the guidance on revenue from contracts with customers. Revenue by Geography (Dollars in millions) For the three months Total ended March 31, 2019: Revenue Americas $ Europe/Middle East/Africa Asia Pacific Total $ Revenue by Major Products/Service Offerings (Dollars in millions) Cloud & Global Global For the three months Cognitive Business Technology Global Total ended March 31, 2018: Software* Services* Services* Systems Financing Other* Revenue Cognitive Applications $ $ — $ — $ — $ — $ — $ Cloud & Data Platforms — — — — — Transaction Processing Platforms — — — — — Consulting — — — — — Application Management — — — — — Global Process Services — — — — — Infrastructure & Cloud Services — — — — — Technology Support Services — — — — — Systems Hardware — — — — — Operating Systems Software — — — — — Global Financing** — — — — — Other Revenue — — — — — Total $ $ $ $ $ $ $ * Recast to conform to 2019 presentation. ** Contains lease and loan/working capital financing arrangements which are not subject to the guidance on revenue from contracts with customers. Revenue by Geography (Dollars in millions) For the three months Total ended March 31, 2018: Revenue Americas $ Europe/Middle East/Africa Asia Pacific Total $ Remaining Performance Obligations The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not include contracts that have an original duration of one year or less. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency. At March 31, 2019, the aggregate amount of the transaction price allocated to RPO related to customer contracts that are unsatisfied or partially unsatisfied was $118 billion. Given the profile of contract terms, approximately 60 percent of this amount is expected to be recognized as revenue over the next two years, approximately 35 percent between three and five years and the balance (mostly Infrastructure & Cloud Services) thereafter. At December 31, 2018, the aggregate amount of the transaction price allocated to RPO related to customer contracts that were unsatisfied or partially unsatisfied was $124 billion. Given the profile of contract terms, approximately 60 percent of this amount was expected to be recognized as revenue over the next two years, approximately 35 percent between three and five years and the balance (mostly Infrastructure & Cloud Services) thereafter. Revenue Recognized for Performance Obligations Satisfied (or Partially Satisfied) in Prior Periods For the three months ending March 31, 2019, the impact to revenue from performance obligations satisfied (or partially satisfied) in previous periods was immaterial. For the three months ending March 31, 2018, revenue was reduced by $22 million for performance obligations satisfied (or partially satisfied) in previous periods, mainly due to changes in estimates on percentage-of-completion based contracts. Refer to note A, “Significant Accounting Policies,” in the company’s 2018 Annual Report for additional information on percentage-of-completion contracts and estimates of costs to complete. Reconciliation of Contract Balances The following table provides information about notes and accounts receivables — trade, contract assets and deferred income balances: At March 31, At December 31, (Dollars in millions) 2019 2018 Notes and accounts receivable—trade (net of allowances of $316 and $309 at March 31, 2019 and December 31, 2018, respectively) $ $ Contract assets (1) Deferred income (current) Deferred income (noncurrent) (1) Included within prepaid expenses and other current assets in the Consolidated Statement of Financial Position. The amount of revenue recognized during the three months ended March 31, 2019 that was included within the deferred income balance at December 31, 2018 was $3.5 billion and primarily related to services and software. The amount of revenue recognized during the three months ended March 31, 2018 that was included within the deferred income balance at January 1, 2018 was $3.5 billion and was also primarily related to services and software.

Financial Instruments

Financial Instruments	3 Months Ended
	Mar. 31, 2019
Financial Instruments
Financial Instruments	4. 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 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 debt securities that are deemed to be other-than-temporarily impaired. In the event of an other-than-temporary impairment of a debt security, fair value is measured using a model described above. Certain non-financial assets such as property, plant and equipment, operating right-of-use assets, 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 non-financial assets depend on the type of asset. There were no material impairments of non-financial assets for the three months ended March 31, 2019 and 2018, respectively. Accounting guidance permits the measurement of eligible financial assets, financial liabilities and firm commitments at fair value, on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. This election is irrevocable. The company has not applied the fair value option to any eligible assets or liabilities. Effective January 1, 2018, the company adopted the new FASB guidance on recognition, measurement, presentation and disclosure of financial instruments using the cumulative catch-up transition method. Since adoption, the company measures equity investments at fair value with changes recognized in net income. Refer to note 2, “Accounting Changes,” for further information. The following tables present the company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at March 31, 2019 and December 31, 2018. (Dollars in millions) At March 31, 2019 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ $ — $ (6) Money market funds — — U.S. government securities — — (6) Total $ $ $ — $ Equity investments (2) — — Debt securities - current (3) — — (6) Derivative assets (4) — (7) Total assets $ $ $ — $ Liabilities: Derivative liabilities (5) $ — $ $ — $ (7) (1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. (2) Included within investments and sundry assets in the Consolidated Statement of Financial Position. (3) Included within marketable securities in the Consolidated Statement of Financial Position. (4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Statement of Financial Position at March 31, 2019 were $346 million and $348 million, respectively. (5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Statement of Financial Position at March 31, 2019 were $316 million and $389 million, respectively. (6) Available-for-sale debt 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 $353 million. (Dollars in millions) At December 31, 2018 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ $ — $ (6) Money market funds — — Total $ $ $ — $ Equity investments (2) — — Debt securities - current (3) — — (6) Derivative assets (4) — (7) Total assets $ $ $ — $ Liabilities: Derivative liabilities (5) $ $ $ — $ (7) (1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. (2) Included within investments and sundry assets in the Consolidated Statement of Financial Position. (3) Included within marketable securities 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, 2018 were $385 million and $347 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, 2018 were $177 million and $206 million, respectively. (6) Available-for-sale debt 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 $267 million. 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 and including short-term finance lease liabilities) are financial liabilities with carrying values that approximate fair value. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy, except for short-term debt which would be classified as Level 2. Loans and Long-Term Receivables Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At March 31, 2019 and December 31, 2018, the difference between the carrying amount and estimated fair value for loans and long-term receivables was immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. Long-Term Debt Fair value of publicly-traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt (including long-term finance lease liabilities) for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. The carrying amount of long-term debt was $39,727 million and $35,605 million, and the estimated fair value was $41,675 million and $36,599 million at March 31, 2019 and December 31, 2018, 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. Available-for-Sale Securities Gross realized gains/losses from the sale of available-for-sale securities during the three month periods ended March 31, 2019 and 2018 were immaterial. After-tax net unrealized holding gains/losses on available-for-sale securities that have been included in other comprehensive income/loss for the three month periods ended March 31, 2019 and 2018 were immaterial. The contractual maturities of substantially all available-for-sale debt securities are less than one year at March 31, 2019. Derivative Financial Instruments The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations. As a result of the use of derivative instruments, the company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the company has a policy of only entering into contracts with carefully selected major financial institutions based upon their overall credit profile. The company’s established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. The right of set-off that exists under certain of these arrangements enables the legal entities of the company subject to the arrangement to net amounts due to and from the counterparty reducing the maximum loss from credit risk in the event of counterparty default. The company is also a party to collateral security arrangements with most of its major derivative counterparties. These arrangements require the company to hold or post collateral (cash or U.S. Treasury securities) when the derivative fair values exceed contractually established thresholds. Posting thresholds can be fixed or can vary based on credit default swap pricing or credit ratings received from the major credit agencies. The aggregate fair value of all derivative instruments under these collateralized arrangements that were in a liability position at March 31, 2019 and December 31, 2018 was $359 million and $74 million, respectively, for which $14 million of collateral was posted and reduced the position at March 31, 2019 and no collateral was posted at December 31, 2018. 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 at March 31, 2019 and December 31, 2018 was $694 million and $731 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 $353 million and $267 million at March 31, 2019 and December 31, 2018, respectively, of liabilities included in master netting arrangements with those counterparties. Additionally, at March 31, 2019 and December 31, 2018, this exposure was reduced by $20 million and $70 million of cash collateral, respectively. There were no non-cash collateral balances in U.S. Treasury securities at March 31, 2019 and December 31, 2018. At March 31, 2019 and December 31, 2018, the net exposure related to derivative assets recorded in the Consolidated Statement of Financial Position was $321 million and $395 million, respectively. At March 31, 2019 and December 31, 2018, the net position related to derivative liabilities recorded in the Consolidated Statement of Financial Position was $338 million and $116 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. The amount recognized in other receivables for the right to reclaim cash collateral was $14 million at March 31, 2019. No amount was recognized in other receivables at December 31, 2018 for the right to reclaim cash collateral. The amount recognized in accounts payable for the obligation to return cash collateral was $20 million and $70 million at March 31, 2019 and December 31, 2018, respectively. The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in restricted cash in the Consolidated Statement of Financial Position. The company rehypothecated $14 million of cash collateral received at March 31, 2019 and no amount was rehypothecated at December 31, 2018. 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 may use forward contracts, futures contracts, interest-rate swaps, cross-currency swaps, equity swaps, and options depending upon the underlying exposure. The company is not a party to leveraged derivative instruments. A brief description of the major hedging programs, categorized by underlying risk, follows. Interest Rate Risk Fixed and Variable Rate Borrowings The company issues debt in the global capital markets to fund its operations and financing business. Access to cost-effective financing can result in interest rate mismatches with the underlying assets. To manage these mismatches and to reduce overall interest cost, the company may use interest-rate swaps to convert specific fixed-rate debt issuances into variable-rate debt (i.e., fair value hedges) and to convert specific variable-rate debt issuances into fixed-rate debt (i.e., cash flow hedges). At March 31, 2019 and December 31, 2018, the total notional amount of the company’s interest-rate swaps was $6.8 billion and $7.6 billion, respectively. The weighted-average remaining maturity of these instruments at March 31, 2019 and December 31, 2018 was approximately 3.6 years and 3.5 years, respectively. These interest-rate contracts were accounted for as fair value hedges. The company did not have any cash flow hedges relating to this program outstanding at March 31, 2019 and December 31, 2018. Forecasted Debt Issuance The company is exposed to interest rate volatility on future debt issuances. To manage this risk, the company may use instruments such as forward starting interest-rate swaps to lock in the rate on the interest payments related to the forecasted debt issuances. At March 31, 2019 and December 31, 2018, the total notional amount of forward starting interest-rate swaps outstanding was $5.5 billion at both periods. These swaps are linked to future interest payments on anticipated U.S. dollar debt issuances forecasted to occur throughout 2019 and 2020. The maximum length of time over which the company has hedged its exposure to the variability in future cash flows is 30 years. These swaps are accounted for as cash flow hedges. In connection with cash flow hedges of forecasted interest payments related to the company’s borrowings, the company recorded net losses of $206 million and net losses of $35 million (before taxes) at March 31, 2019 and December 31, 2018, respectively, in AOCI. The company estimates that $11 million (before taxes) of the deferred net losses on derivatives in AOCI at March 31, 2019 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions. Foreign Exchange Risk Long-Term Investments in Foreign Subsidiaries (Net Investment) A large portion of the company’s foreign currency denominated debt portfolio is designated as a hedge of net investment in foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates in the functional currency of major foreign subsidiaries with respect to the U.S. dollar. The company also uses cross-currency swaps and foreign exchange forward contracts for this risk management purpose. At March 31, 2019 and December 31, 2018, the total notional amount of derivative instruments designated as net investment hedges was $6.0 billion and $6.4 billion, respectively. At March 31, 2019 and December 31, 2018, the weighted-average remaining maturity of these instruments was approximately 0.2 years at both periods. Anticipated Royalties and Cost Transactions The company’s operations generate significant nonfunctional currency, third-party vendor payments and intercompany payments for royalties and goods and services among the company’s non-U.S. subsidiaries and with the company. In anticipation of these foreign currency cash flows and in view of the volatility of the currency markets, the company selectively employs foreign exchange forward contracts to manage its currency risk. These forward contracts are accounted for as cash flow hedges. The maximum length of time over which the company has hedged its exposure to the variability in future cash flows is four years. At March 31, 2019 and December 31, 2018, the total notional amount of forward contracts designated as cash flow hedges of forecasted royalty and cost transactions was $10.0 billion and $9.8 billion, respectively. At March 31, 2019 and December 31, 2018, the weighted-average remaining maturity of these instruments was approximately 0.8 years at both periods. At March 31, 2019 and December 31, 2018, in connection with cash flow hedges of anticipated royalties and cost transactions, the company recorded net gains of $356 million and net gains of $342 million (before taxes), respectively, in AOCI. The company estimates that $256 million (before taxes) of deferred net gains on derivatives in AOCI at March 31, 2019 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions. Foreign Currency Denominated Borrowings The company is exposed to exchange rate volatility on foreign currency denominated debt. To manage this risk, the company 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 12 years. At March 31, 2019 and December 31, 2018, the total notional amount of cross-currency swaps designated as cash flow hedges of foreign currency denominated debt was $12.2 billion and $6.5 billion, respectively. At March 31, 2019 and December 31, 2018, in connection with cash flow hedges of foreign currency denominated borrowings, the company recorded net losses of $21 million and net gains of $75 million (before taxes), respectively, in AOCI. The company estimates that $346 million (before taxes) of deferred net gains on derivatives in AOCI at March 31, 2019 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying exposure. Subsidiary Cash and Foreign Currency Asset/Liability Management The company uses its Global Treasury Centers to manage the cash of its subsidiaries. These centers principally use currency swaps to convert cash flows in a cost-effective manner. In addition, the company uses foreign exchange forward contracts to economically hedge, on a net basis, the foreign currency exposure of a portion of the company’s nonfunctional currency assets and liabilities. The terms of these forward and swap contracts are generally less than one year. The changes in the fair values of these contracts and of the underlying hedged exposures are generally offsetting and are recorded in other (income) and expense in the Consolidated Statement of Earnings. At March 31, 2019 and December 31, 2018, the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $5.0 billion and $5.2 billion, respectively. Equity Risk Management The company is exposed to market price changes in certain broad market indices and in the company’s own stock primarily related to certain obligations to employees. Changes in the overall value of these employee compensation obligations are recorded in SG&A expense in the Consolidated Statement of Earnings. Although not designated as accounting hedges, the company utilizes derivatives, including equity swaps and futures, to economically hedge the exposures related to its employee compensation obligations. The derivatives are linked to the total return on certain broad market indices or the total return on the company’s common stock, and are recorded at fair value with gains or losses also reported in SG&A expense in the Consolidated Statement of Earnings. At March 31, 2019 and December 31, 2018, 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 March 31, 2019 and December 31, 2018. The company is exposed to a potential loss if a client fails to pay amounts due under contractual terms. The company may utilize credit default swaps to economically hedge its credit exposures. The swaps are recorded at fair value with gains and losses reported in other (income) and expense in the Consolidated Statement of Earnings. The company did not have any derivative instruments relating to this program outstanding at March 31, 2019 and December 31, 2018. The company is exposed to market volatility on certain investment securities. The company may utilize options or forwards to economically hedge its market exposure. The derivatives are recorded at fair value with gains and losses reported in other (income) and expense in the Consolidated Statement of Earnings. At March 31, 2019 and December 31, 2018, 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 at March 31, 2019 and December 31, 2018, as well as for the three months ended March 31, 2019 and 2018, respectively. Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position Fair Value of Derivative Assets Fair Value of Derivative Liabilities Balance Sheet Balance Sheet (Dollars in millions) Classification 3/31/2019 12/31/2018 Classification 3/31/2019 12/31/2018 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 $ $ Equity contracts Prepaid expenses and other current assets Other accrued expenses and 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 $ $ $ $ (1) Debt designated as hedging instruments are reported at carrying value. N/A - not applicable At March 31, 2019 and December 31, 2018, the following amounts were recorded in the Consolidated Statement of Financial Position related to cumulative basis adjustments for fair value hedges: March 31, December 31, (Dollars in millions) 2019 2018 Short-term debt: Carrying amount of the hedged item $ ) $ ) Cumulative hedging adjustments included in the carrying amount - assets/(liabilities) )(1) )(1) Long-term debt: Carrying amount of the hedged item $ ) $ ) Cumulative hedging adjustments included in the carrying amount - assets/(liabilities) )(2) )(2) (1) Includes ($4) million and ($6) million of hedging adjustments on discontinued hedging relationships at March 31, 2019 and December 31, 2018, respectively. (2) Includes ($209) million and ($213) million of hedging adjustments on discontinued hedging relationships at March 31, 2019 and December 31, 2018, respectively. The Effect of Derivative Instruments in the Consolidated Statement of Earnings The total amounts of income and expense line items presented in the Consolidated Statement of Earnings in which the effects of fair value hedges, cash flow hedges, net investment hedges and derivatives not designated as hedging instruments are recorded and the total effect of hedge activity on these income and expense line items are as follows: Gains/(Losses) of (Dollars in millions) Total Total Hedge Activity For the three months ended March 31: 2019 2018 2019 2018 Cost of services $ $ $ $ Cost of sales ) Cost of financing ) * SG&A expense ) Other (income) and expense ) ) Interest expense ) * * Reclassified to conform to 2019 presentation. Gain (Loss) Recognized in Earnings Consolidated Recognized on Attributable to Risk (Dollars in millions) Statement of Derivatives Being Hedged(2) For the three months ended March 31: Earnings Line Item 2019 2018 2019 2018 Derivative instruments in fair value hedges(1): 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 Equity contracts SG&A expense ) N/A N/A Total $ $ ) $ ) $ Gain (Loss) Recognized in Earnings and Other Comprehensive Income (Dollars in millions) Consolidated Reclassified Amounts Excluded from For the three months Recognized in OCI Statement of from AOCI Effectiveness Testing(3) ended March 31: 2019 2018 Earnings Line Item 2019 2018 2019 2018 Derivative instruments in cash flow hedges: Interest rate contracts $ ) $ — Cost of financing $ — $ — $ — $ — Interest expense — — — — Foreign exchange contracts ) Cost of services — — Cost of sales ) — — Cost of financing ) )* SG&A expense ) — — Other (income) and expense ) — — Interest expense ) )* Instruments in net investment hedges(4): Foreign exchange contracts Cost of financing — — * ) Interest expense — — * Total $ ) $ ) $ ) $ $ $ * Reclassified to conform to 2019 presentation. (1) The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. (2) The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. (3) The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing in net income each period. (4) Instruments in net investment hedges include derivative and non-derivative instruments. N/A - not applicable For the three months ending March 31, 2019 and 2018, there were no material gains or losses excluded from the assessment of hedge effectiveness (for fair value or cash flow hedges), or associated with an underlying exposure that did not or was not expected to occur (for cash flow hedges); nor are there any anticipated in the normal course of business.

Leases

Leases	3 Months Ended
	Mar. 31, 2019
Leases
Leases	5. Leases: The company conducts business as both a lessee and a lessor. In its ordinary course of business, the company enters into leases as a lessee for property, plant and equipment. The company is also the lessor of certain equipment, mainly through its Global Financing segment. When procuring goods or services, or upon entering into a contract with its clients, the company determines whether an arrangement contains a lease at its inception. As part of that evaluation, the company considers whether there is an implicitly or explicitly identified asset in the arrangement and whether the company, as the lessee, or the client, if the company is the lessor, has the right to control that asset. The company determines whether there is a right to control the use of the asset by assessing its rights, as the lessee, or the client’s rights, if the company is the lessor, to obtain substantially all of the economic benefits from the use of the identified asset and the rights to direct the use of the identified asset. If there is either an explicit or embedded lease within a contract, the company determines the classification of the lease (e.g., finance, operating, sales-type lease) at the lease commencement date. Accounting for leases as a lessee Effective January 1, 2019, when the company is the lessee, all leases with a term of more than 12 months are recognized as right-of-use (ROU) assets and associated lease liabilities in the Consolidated Statement of Financial Position. The lease liabilities are measured at the lease commencement date and determined using the present value of the minimum lease payments not yet paid and the company’s incremental borrowing rate, which approximates the rate at which the company would borrow, on a secured basis, in the country where the lease was executed. The interest rate implicit in the lease is generally not determinable in transactions where the company is the lessee. The ROU asset equals the lease liability adjusted for any initial direct costs (IDCs), prepaid rent, and lease incentives. Fixed and in-substance fixed payments are included in the recognition of ROU assets and lease liabilities, however, variable lease payments, other than those based on a rate or index, are recognized in the Consolidated Statement of Earnings in the period in which the obligation for those payments is incurred. The company’s variable lease payments generally relate to payments tied to various indexes, non-lease components and payments above a contractual minimum fixed payment. ROU assets represent the company’s right to control the underlying assets under lease, and the lease liability is the obligation to make the lease payments related to the underlying assets under lease. Operating leases are included in operating right-of-use assets — net, current operating lease liabilities and operating lease liabilities in the Consolidated Statement of Financial Position. Finance leases are included in property, plant and equipment, short-term debt and long-term debt in the Consolidated Statement of Financial Position. At March 31, 2019, the total amount of ROU assets and lease liabilities for finance leases recognized in the Consolidated Statement of Financial Position in property, plant and equipment, short-term debt and long-term debt was $149 million, $13 million, and $144 million, respectively. Finance lease ROU assets are generally amortized on a straight-line basis over the lease term with the interest expense on the lease liability recorded using the interest method. The amortization and interest expense are recorded separately in the Consolidated Statement of Earnings. For operating leases, the amortization of the ROU asset and the interest expense on the lease liability are not separately recorded; rather, the lease cost is recognized on a straight-line basis over the lease term as a single-line item in the Consolidated Statement of Earnings, unless the ROU asset is impaired. The company has elected to not recognize leases with a lease term of less than 12 months in the Consolidated Statement of Financial Position, including those acquired in a business combination, and lease costs for those short-term leases are recognized on a straight-line basis over the lease term in the Consolidated Statement of Earnings. For all asset classes, the company has elected the lessee practical expedient to combine lease and non-lease components (e.g., maintenance services) and account for the combined unit as a single lease component. A significant portion of the company’s lease portfolio is real estate, which are mainly accounted for as operating leases, and are primarily used for corporate offices and data centers. The average term of the real estate leases is approximately five years. Certain real estate leases have renewal and/or termination options, which are assessed to determine if those options would affect the duration of the lease term. The company also has equipment leases, such as IT equipment and vehicles, which have lease terms that range from two to five years. For certain equipment leases, the company applies a portfolio approach to account for the operating lease ROU assets and lease liabilities. The following table presents the various components of lease costs: (Dollars in millions) For the three months ended March 31: 2019 Finance lease cost: Amortization of ROU assets $ Interest on lease liabilities Operating lease cost Short-term lease cost Variable lease cost Sublease income ) Total lease cost $ The following table presents supplemental information relating to the cash flows arising from lease transactions. Cash payments made from variable lease costs and short-term leases are not included in the measurement of operating and finance lease liabilities, and, as such, are excluded from the amounts below: (Dollars in millions except for lease term and discount rate values) For the three months ended March 31: 2019 (Gains) and losses on sale and leaseback transactions, net $ ) Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from finance leases $ Financing cash outflows from finance leases $ Operating cash outflows from operating leases $ ROU assets obtained in exchange for new finance lease liabilities $ * ROU assets obtained in exchange for new operating lease liabilities $ * Weighted-average remaining lease term — finance leases yrs. Weighted-average remaining lease term — operating leases yrs. Weighted-average discount rate — finance leases % Weighted-average discount rate — operating leases % * Includes opening balance additions as a result of the adoption of the new lease guidance effective January 1, 2019. The post adoption addition of leases was $156 million for operating leases and immaterial for finance leases. The following maturity analysis presents expected undiscounted cash out flows for operating and finance leases on an annual basis for the next five years, with the exception of 2019, which presents the expected undiscounted cash out flows for operating and finance leases for the remaining nine months of the year. Beyond Imputed (Dollars in millions) 2019 2020 2021 2022 2023 2023 Interest * Total Finance leases $ $ $ $ $ $ $ ) $ Operating leases $ $ $ $ $ $ $ ) $ * Imputed interest represents the difference between undiscounted cash flows and discounted cash flows. Prior to the adoption of the new lease guidance on January 1, 2019, ROU assets and lease liabilities for operating leases were not recognized in the Consolidated Statement of Financial Position. The company has elected the practical expedient to not provide comparable presentation in the Consolidated Statement of Financial Position for periods prior to adoption. Rental expense, including amounts charged to inventories and fixed assets, and excluding amounts previously reserved, was $1,944 million for the year ended December 31, 2018. Rental expense in agreements with rent holidays and scheduled rent increases was previously recognized on a straight-line basis over the lease term. Contingent rentals were included in the determination of rental expense as accruable. The following table, which was included in the company’s 2018 Annual Report, depicts gross minimum rental commitments under noncancelable leases, amounts related to vacant space associated with workforce transformation, sublease income commitments and capital lease commitments at December 31, 2018. Beyond (Dollars in millions) 2019 2020 2021 2022 2023 2023 Operating lease commitments Gross minimum rental commitments (including vacant space below) $ $ $ $ $ $ Vacant space $ $ $ $ $ $ Sublease income commitments $ $ $ $ $ $ Capital lease commitments $ $ $ $ $ $ The difference between the company’s total lease commitments as reported at December 31, 2018 compared to the January 1, 2019 ROU asset balance in the Consolidated Statement of Financial Position is primarily due to the required use of a discount factor (imputed interest) under the new lease guidance and certain amounts that are not included in the ROU asset under the new lease guidance (e.g., tenant incentives and vacant space). Accounting for leases as a lessor The company typically enters into leases as an alternative means of realizing value from equipment that it would otherwise sell. Assets under lease include new and used IBM equipment and certain OEM products. Equipment generally consists of IBM Z, Power Systems and Storage Systems. Lease payments due to IBM are typically fixed and paid in equal installments over the lease term. The majority of the company’s leases do not contain variable payments that are dependent on an index or a rate. Variable lease payments that do not depend on an index or a rate (e.g., property taxes), that are paid directly by the company and are reimbursed by the client, are recorded as revenue, along with the related cost, in the period in which collection of these payments is probable. Payments that are made directly by the client to a third party, including certain property taxes and insurance, are not considered part of variable payments and therefore are not recorded by the company. The company has made a policy election to exclude from consideration in contracts all collections from sales and other similar taxes. The company’s payment terms for leases are typically unconditional. Therefore, while the client could terminate the lease prior to the end of the lease term, the client would be required to pay the remaining lease payments in full. At the end of the lease term, the company allows the client to either return the equipment, purchase the equipment or renew the lease based on mutually agreed upon terms. With respect to a client purchase of leased assets, the lease agreement would include an option to purchase the equipment at either a stated price or at the then-current fair market value of the equipment at the end of the lease. When lease arrangements include multiple performance obligations, the company allocates the consideration in the contract between the lease components and the non-lease components on a relative standalone selling price basis. The following table presents amounts included in the Consolidated Statement of Earnings related to lessor activity: (Dollars in millions) For the three months ended March 31: 2019 Lease income — sales-type and direct financing leases Sales-type lease selling price $ Less: Carrying value of underlying assets, excluding unguaranteed residual value Gross profit Interest income on lease receivables Total sales-type and direct financing lease income $ Lease income — operating leases Variable lease income Total lease income $ Sales-Type and Direct Financing Leases If a lease is classified as a sales-type or direct financing lease, the carrying amount of the asset is derecognized from inventory and a net investment in the lease is recorded. For a sales-type lease, the net investment in the lease is measured at commencement date as the sum of the lease receivable, the estimated guaranteed and unguaranteed residual value of the equipment less unearned income and allowance for credit losses. At March 31, 2019, the unguaranteed residual value of sales-type and direct financing leases was $566 million. For further information on the company’s net investment in leases, including guaranteed and unguaranteed residual values, refer to note 6, “Financing Receivables.” Any selling profit or loss arising from a sales-type lease is recorded at lease commencement. Selling profit or loss is presented on a gross basis when the company enters into a lease to realize value from a product that it would otherwise sell in its ordinary course of business, whereas in transactions where the company enters into a lease for the purpose of generating revenue by providing financing, the selling profit or loss is presented on a net basis. Under a sales-type lease, initial direct costs are expensed at lease commencement. The company recognizes finance income over the term of a sales-type lease on the net investment in the lease and any variable lease payments, which are not included in the net investment in the lease. For a direct financing lease, the investment in the lease is measured similarly to a sales-type lease, however, the net investment in the lease is reduced by any selling profit. In a direct financing lease, the selling profit and initial direct costs are deferred at commencement and recognized over the lease term. The company rarely enters into direct financing leases. The estimated residual value represents the estimated fair value of the equipment under lease at the end of the lease. Estimating residual value is a risk unique to financing activities, and management of this risk is dependent upon the ability to accurately project future equipment values at lease inception. The company has insight into product plans and cycles for the IBM products under lease. The company estimates the future fair value of leased equipment by using historical models, analyzing the current market for new and used equipment and obtaining forward-looking product information such as marketing plans and technology innovations. The company optimizes the recovery of residual values by extending lease arrangements with existing clients. The company has historically managed residual value risk both through insight into its own product cycles and monitoring of OEM IT product announcements. The company periodically reassesses the realizable value of its lease residual values. Anticipated decreases in specific future residual values that are considered to be other-than-temporary are recognized immediately upon identification and are recorded as an adjustment to the residual value estimate. For sales-type and direct financing leases, this reduction lowers the recorded net investment and is recognized as a loss charged to finance income in the period in which the estimate is changed, as well as an adjustment to unearned income to reduce future-period financing activities. For the three months ended March 31, 2019, impairment of residual values was immaterial. The following table provides a maturity analysis of the lease payments due to IBM on sales-type and direct financing leases over the next five years and thereafter, with the exception of 2019, which presents the expected undiscounted cash flows for the remaining nine months of the year, as well as a reconciliation of the undiscounted cash flows to the financing receivables recognized in the Consolidated Statement of Financial Position at March 31, 2019: (Dollars in millions) Total 2019 $ 2020 2021 2022 2023 Thereafter Total undiscounted cash flows $ Present value of lease payments (recognized as financing receivables) * Difference between undiscounted cash flows and discounted cash flows $ * The present value of the lease payments will not equal the financing receivables balances in the Statement of Financial Position, due to certain items including IDC’s, allowance for credit losses and residual values, which are included in the financing receivables balance, but are not included in the future lease payments. Operating Leases Equipment provided to clients under an operating lease is carried at cost within property, plant and equipment in the Consolidated Statement of Financial Position and depreciated over the lease term using the straight-line method, generally ranging from one to six years. The depreciable basis is the original cost of the equipment less the estimated residual value of the equipment at the end of the lease term. At March 31, 2019, the unguaranteed residual value of operating leases was $103 million. At commencement of an operating lease, initial direct costs are deferred. As lease payments are made, the company records sales revenue over the lease term. Initial direct costs are expensed over the lease term on the same basis as lease income is recorded. The following table provides a maturity analysis of the undiscounted lease payments due to IBM on operating leases over the next five years and thereafter, at March 31, 2019, with the exception of 2019, which presents the expected undiscounted cash flows for the remaining nine months of the year: (Dollars in millions) Total 2019 $ 2020 2021 2022 2023 Thereafter Total undiscounted cash flows $ Assets under operating leases are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The impairment test is based on undiscounted cash flows, and, if impaired, the asset is written down to fair value based on either discounted cash flows or appraised values. There were no material impairment losses incurred during the period for assets under operating leases. These assets are included in “Property, plant and equipment — net” in the Consolidated Statement of Financial Position.

Financing Receivables

Financing Receivables	3 Months Ended
	Mar. 31, 2019
Financing Receivables
Financing Receivables	6. Financing Receivables: Financing receivables primarily consist of investment in sales-type and direct financing leases, commercial financing receivables and client loan and installment payment receivables (loans). 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. Commercial financing receivables 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) 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 loans and installment payment financing contracts are priced independently at competitive market rates. A summary of the components of the company’s financing receivables is presented as follows: Investment in Client Loan and Sales-Type and Commercial Installment Payment (Dollars in millions) Direct Financing Financing Receivables/ At March 31, 2019: Leases Receivables (Loans) Total Financing receivables, gross $ $ $ $ Unearned income ) ) ) ) Recorded investment $ $ $ $ Allowance for credit losses ) ) ) ) Unguaranteed residual value — — Guaranteed residual value — — Total financing receivables, net $ $ $ $ Current portion $ $ $ $ Noncurrent portion $ $ — $ $ Investment in Client Loan and Sales-Type and Commercial Installment Payment (Dollars in millions) Direct Financing Financing Receivables/ At December 31, 2018: Leases Receivables (Loans) Total Financing receivables, gross $ $ $ $ Unearned income ) ) ) ) Recorded investment $ $ $ $ Allowance for credit losses ) ) ) ) Unguaranteed residual value — — Guaranteed residual value — — Total financing receivables, net $ $ $ $ Current portion $ $ $ $ Noncurrent portion $ $ — $ $ The company utilizes certain of its financing receivables as collateral for nonrecourse borrowings. Financing receivables pledged as collateral for borrowings were $868 million and $710 million at March 31, 2019 and December 31, 2018, respectively. The company did not have any financing receivables held for sale as of March 31, 2019 and December 31, 2018. Financing Receivables by Portfolio Segment The following tables present the recorded investment by portfolio segment and by class, excluding commercial financing receivables and other miscellaneous financing receivables at March 31, 2019 and December 31, 2018. Commercial financing receivables are excluded from the presentation of financing receivables by portfolio segment, as they are short term in nature and the current estimated risk of loss and resulting impact to the company’s financing results are not material. 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. (Dollars in millions) At March 31, 2019: Americas EMEA Asia Pacific Total Recorded investment Lease receivables $ $ $ $ Loan receivables Ending balance $ $ $ $ Recorded investment collectively evaluated for impairment $ $ $ $ Recorded investment individually evaluated for impairment $ $ $ $ Allowance for credit losses Beginning balance at January 1, 2019 Lease receivables $ $ $ $ Loan receivables Total $ $ $ $ Write-offs $ ) $ ) $ ) $ ) Recoveries Provision ) ) Other * ) ) Ending balance at March 31, 2019 $ $ $ $ Lease receivables $ $ $ $ Loan receivables $ $ $ $ Related allowance, collectively evaluated for impairment $ $ $ $ Related allowance, individually evaluated for impairment $ $ $ $ * Primarily represents translation adjustments. Write-offs of lease receivables and loan receivables were $3 million and $5 million, respectively, for the three months ended March 31, 2019. Provisions for credit losses recorded for lease receivables and loan receivables were immaterial, for the three months ended March 31, 2019. The average recorded investment of impaired leases and loans for Americas, EMEA and Asia Pacific was $147 million, $50 million and $51 million, respectively, for the three months ended March 31, 2019 and $130 million, $55 million and $81 million, respectively, for the three months ended March 31, 2018. Both interest income recognized and interest income recognized on a cash basis on impaired leases and loans were immaterial for the three months ended March 31, 2019 and 2018. (Dollars in millions) At December 31, 2018: Americas EMEA Asia Pacific Total Recorded investment Lease receivables $ $ $ $ Loan receivables Ending balance $ $ $ $ Recorded investment collectively evaluated for impairment $ $ $ $ Recorded investment individually evaluated for impairment $ $ $ $ Allowance for credit losses Beginning balance at January 1, 2018 Lease receivables $ $ $ $ Loan receivables Total $ $ $ $ Write-offs $ ) $ ) $ ) $ ) Recoveries Provision Other* ) ) ) ) Ending balance at December 31, 2018 $ $ $ $ Lease receivables $ $ $ $ Loan receivables $ $ $ $ Related allowance, collectively evaluated for impairment $ $ $ $ Related allowance, individually evaluated for impairment $ $ $ $ * Primarily represents translation adjustments. Write-offs of lease receivables and loan receivables were $15 million and $20 million, respectively, for the year ended December 31, 2018. Provisions for credit losses recorded for lease receivables and loan receivables were $14 million and $2 million, respectively, for the year ended December 31, 2018. 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. The company considers any receivable with an individually evaluated reserve as an impaired receivable. 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. Past Due Financing Receivables The company considers a client’s financing receivable balance past due when any installment is aged over 90 days. The following table summarizes information about the recorded investment in lease and loan financing receivables, including recorded investments aged over 90 days and still accruing, billed invoices aged over 90 days and still accruing, and recorded investment not accruing. Recorded Billed Recorded Total Recorded Investment Invoices Investment (Dollars in millions) Recorded Investment > 90 Days and > 90 Days and Not At March 31, 2019: Investment > 90 Days (1) Accruing (1) Accruing Accruing (2) Americas $ $ $ $ $ EMEA Asia Pacific Total lease receivables $ $ $ $ $ Americas $ $ $ $ $ EMEA Asia Pacific Total loan receivables $ $ $ $ $ Total $ $ $ $ $ (1) At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days. (2) Of the recorded investment not accruing, $247 million is individually evaluated for impairment with a related allowance of $217 million. Recorded Billed Recorded Total Recorded Investment Invoices Investment (Dollars in millions) Recorded Investment > 90 Days and > 90 Days and Not At December 31, 2018: Investment > 90 Days (1) Accruing (1) Accruing Accruing (2) Americas $ $ $ $ $ EMEA Asia Pacific Total lease receivables $ $ $ $ $ Americas $ $ $ $ $ EMEA Asia Pacific Total loan receivables $ $ $ $ $ Total $ $ $ $ $ (1) At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days. (2) Of the recorded investment not accruing, $249 million is individually evaluated for impairment with a related allowance of $219 million. 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 recorded investment net of allowance for credit losses for each class of receivables, by credit quality indicator, at March 31, 2019 and December 31, 2018. 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. (Dollars in millions) Lease Receivables Loan Receivables At March 31, 2019: Americas EMEA Asia Pacific Americas EMEA Asia Pacific Credit ratings: Aaa – Aa3 $ $ $ $ $ $ A1 – A3 Baa1 – Baa3 Ba1 – Ba2 Ba3 – B1 B2 – B3 Caa – D Total $ $ $ $ $ $ (Dollars in millions) Lease Receivables Loan Receivables At December 31, 2018: Americas EMEA Asia Pacific Americas EMEA Asia Pacific Credit ratings: Aaa – Aa3 $ $ $ $ $ $ A1 – A3 Baa1 – Baa3 Ba1 – Ba2 Ba3 – B1 B2 – B3 Caa – D Total $ $ $ $ $ $ Troubled Debt Restructurings The company did not have any significant troubled debt restructurings during the three months ended March 31, 2019 or for the year ended December 31, 2018.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2019
Stock-Based Compensation
Stock-Based Compensation	7. Stock-Based Compensation: Stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. The following table presents total stock-based compensation cost included in income from continuing operations. (Dollars in millions) For the three months ended March 31: 2019 2018 Cost $ $ Selling, general and administrative Research, development and engineering Pre-tax stock-based compensation cost $ $ Income tax benefits ) ) Total net stock-based compensation cost $ $ Pre-tax stock-based compensation cost for the three months ended March 31, 2019 decreased $3 million compared to the corresponding period in the prior year. This was due to decreases related to performance share units, the conversion of stock-based compensation previously issued by acquired entities and stock options, partially offset by an increase in restricted stock units. All changes were immaterial. As of March 31, 2019, the total unrecognized compensation cost of $671 million related to non-vested awards was expected to be recognized over a weighted-average period of approximately 2.5 years. There was no significant capitalized stock-based compensation cost at March 31, 2019 and 2018.

Segments

Segments	3 Months Ended
	Mar. 31, 2019
Segments
Segments	8. Segments: In the first quarter of 2019, the company made a number of changes to its organizational structure and management system that brought cloud and cognitive software under one organization to more effectively address evolving client needs and to prepare for the pending acquisition of Red Hat, Inc. (Red Hat). With these changes, the company has revised its reportable segments, but did not impact its Consolidated Financial Statements. In addition, the company is presenting the results of its announced divestitures in an “Other” segment, as the realignment of these businesses allows for a better representation of management’s view of the company, as well as the ongoing operational performance of the reportable segments. The company’s segments are as follows: 2018 Segments Changes (+/-) 2019 Segments Cognitive Solutions + Integration Software Cloud & Cognitive Software Global Business Services - Divested Mortgage Servicing** Global Business Services Technology Services & Cloud Platforms - Security Services Global Technology Services Systems Systems Global Financing Global Financing Other + Divested Mortgage Servicing** Other * IBM announced sales of select software assets expected to close mid-2019. Refer to note 11, “Acquisitions/Divestitures,” for additional information. **IBM completed the sale of the mortgage servicing business on February 28, 2019. The tables below reflect the continuing operations results 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. The tables reflect the segment recast for the prior-year period. SEGMENT INFORMATION Cloud & Global Global Cognitive Business Technology Global Total (Dollars in millions) Software Services Services Systems Financing Segments For the three months ended March 31, 2019: External revenue $ $ $ $ $ $ Internal revenue Total revenue $ $ $ $ $ $ Pre-tax income/(loss) from continuing operations $ $ $ $ ) $ $ Revenue year-to-year change )% )% )% )% )% )% Pre-tax income year-to-year change % % % )% )% % Pre-tax income/(loss) margin % % % )% % % For the three months ended March 31, 2018: External revenue $ * $ * $ * $ $ $ * Internal revenue * * Total revenue $ * $ * $ * $ $ $ * Pre-tax income/(loss) from continuing operations $ * $ * $ * $ ) $ $ * Pre-tax income/(loss) margin %* %* %* )% % %* * Recast to conform to 2019 presentation. Reconciliations to IBM as Reported: (Dollars in millions) For the three months ended March 31: 2019 2018 Revenue: Total reportable segments $ $ * Other — divested businesses * Other revenue Eliminations of internal transactions ) )* 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 ) )* Other — divested businesses ) * Unallocated corporate amounts ) ) Total pre-tax income from continuing operations $ $ * Recast to conform to 2019 presentation.

Equity Activity

Equity Activity	3 Months Ended
	Mar. 31, 2019
Equity Activity
Equity Activity	9. Equity Activity: Reclassifications and Taxes Related to Items of Other Comprehensive Income (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended March 31, 2019: 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 services ) ) Cost of sales ) ) Cost of financing ) 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) $ $ ) $ (1) These AOCI components are included in the computation of net periodic pension cost. Refer to note 10, “Retirement-Related Benefits,” for additional information. Reclassifications and Taxes Related to Items of Other Comprehensive Income (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended March 31, 2018: 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 services ) ) Cost of sales ) Cost of financing* ) 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) $ $ ) $ * Reclassified to conform to current period presentation. (1) These AOCI components are included in the computation of net periodic pension cost. Refer to note 10, “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, 2019 $ $ ) $ ) $ $ ) Other comprehensive income before reclassifications ) ) ) ) Amount reclassified from accumulated other comprehensive income — — Total change for the period $ ) $ $ $ ) $ March 31, 2019 $ $ ) $ ) $ ) $ ) * 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, 2018 $ $ ) $ ) $ $ ) Cumulative effect of a change in accounting principle ** ) ) ) Other comprehensive income before reclassifications ) ) ) Amount reclassified from accumulated other comprehensive income ) Total change for the period $ $ ) $ $ ) $ March 31, 2018 $ $ ) $ ) $ ) $ ) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. ** Reflects the adoption of the FASB guidance on stranded tax effects, hedging and financial instruments. Refer to note 2, “Accounting Changes.”

Retirement-Related Benefits

Retirement-Related Benefits	3 Months Ended
	Mar. 31, 2019
Retirement-Related Benefits
Retirement-Related Benefits	10. Retirement-Related Benefits: The company offers defined benefit pension plans, defined contribution pension plans, as well as nonpension postretirement plans primarily consisting of retiree medical benefits. The following table provides the pre-tax cost for all retirement-related plans. Yr. to Yr. (Dollars in millions) Percent For the three months ended March 31: 2019 2018 Change Retirement-related plans — cost Defined benefit and contribution pension plans — cost $ $ )% Nonpension postretirement plans — cost Total $ $ )% The following table provides the components of the cost/(income) for the company’s pension plans. Cost/(Income) of Pension Plans (Dollars in millions) U.S. Plans Non-U.S. Plans For the three months ended March 31: 2019 2018 2019 2018 Service cost $ — $ — $ $ Interest cost (1) Expected return on plan assets (1) ) ) ) ) Amortization of prior service costs/(credits) (1) ) ) Recognized actuarial losses (1) Curtailments and settlements (1) — — Multi-employer plans — — Other costs/(credits) (1) — — Total net periodic pension (income)/cost of defined benefit plans $ ) $ $ $ Cost of defined contribution plans Total defined benefit and contribution pension plans cost recognized in the Consolidated Statement of Earnings $ $ $ $ (1) These components of net periodic pension cost are included in other (income) and expense in the Consolidated Statement of Earnings. As of 2019, substantially all the plan participants in the U.S. Qualified IBM Personal Pension Plan (PPP) are considered inactive. As required by U.S. GAAP, this resulted in a change in the amortization period of unrecognized actuarial losses to the average remaining life expectancy of inactive plan participants, which was 18 years as of December 31, 2018. Recognized actuarial losses decreased by approximately $240 million for the three months ended March 31, 2019, compared to the corresponding period in the prior year, primarily driven by the change in amortization period. There was no impact to funded status, retiree benefit payments or funding requirements of the U.S. Qualified PPP as a result of this change. In 2019, 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 Belgium. This amount generally represents the legally mandated minimum contribution. Total net contributions to the non-U.S. plans in the first three months of 2019 were $94 million, of which $33 million was in cash and $61 million in U.S. Treasury securities. Total contributions to the non-U.S. plans in the first three months of 2018 were $191 million, of which $44 million was in cash and $147 million in U.S. Treasury securities. The contribution of U.S. Treasury securities is considered a non-cash transaction in the Consolidated Statement of Cash Flows. The following table provides the components of the cost for the company’s nonpension postretirement plans. Cost of Nonpension Postretirement Plans (Dollars in millions) U.S. Plan Non-U.S. Plans For the three months ended March 31: 2019 2018 2019 2018 Service cost $ $ $ $ Interest cost (1) Expected return on plan assets (1) — — ) ) Amortization of prior service costs/(credits) (1) ) ) Recognized actuarial losses (1) Curtailments and settlements (1) — — Total nonpension postretirement plans cost recognized in Consolidated Statement of Earnings $ $ $ $ (1) These components of net periodic pension cost are included in other (income) and expense in the Consolidated Statement of Earnings. The company contributed $194 million in U.S. Treasury securities to the U.S. nonpension postretirement benefit plan during the three months ended March 31, 2019, and $120 million in U.S. Treasury securities during the three months ended March 31, 2018. The contribution of U.S. Treasury securities is considered a non-cash transaction in the Consolidated Statement of Cash Flows.

Acquisitions_Divestitures

Acquisitions/Divestitures	3 Months Ended
	Mar. 31, 2019
Acquisitions/Divestitures
Acquisitions/Divestitures	11. Acquisitions/Divestitures: Acquisitions: The company did not enter into any acquisition transactions during the three months ended March 31, 2019. Red Hat — On October 28, 2018, the company announced its intent to acquire all of the outstanding shares of Red Hat. The combination of Red Hat’s vast portfolio of open-source technologies, innovative cloud development platform and developer community, combined with IBM’s innovative hybrid cloud technology, industry expertise, and commitment to data, trust and security, will deliver the hybrid capabilities required to address the next chapter of cloud implementations. Under the terms of the definitive agreement, Red Hat shareholders will receive $190 per share in cash, representing a total enterprise value of approximately $34 billion. On January 16, 2019, Red Hat stockholders voted to approve the merger with IBM. The transaction is subject to customary closing conditions, including regulatory reviews and is expected to close in the second half of 2019. The company intends to fund the transaction through a combination of cash and debt. Refer to note 13, “Borrowings”, for additional details on the commitment letter for a bridge term loan facility that IBM entered into in support of this transaction. Divestitures: Select IBM Software Products — On December 6, 2018, IBM and HCL Technologies Limited (HCL) announced a definitive agreement, in which HCL will acquire select standalone Cognitive Solutions software products for $1,775 million, inclusive of contingent consideration. The software products in-scope include AppScan, BigFix, Unica, Commerce, Portal, Notes, Domino and Connections. The transaction is expected to close in mid-2019, subject to the satisfaction of applicable regulatory requirements and customary closing conditions. IBM will receive cash consideration, with approximately half at closing and the remainder within 12 to 15 months of closing. At March 31, 2019, the company concluded that the business did not meet the held for sale classification. Select IBM Marketing Platform and Commerce Offerings — On April 4, 2019, IBM and Centerbridge Partners, L.P. (Centerbridge) announced a definitive agreement, in which Centerbridge will acquire select marketing platform and commerce offerings from IBM, including Customer Experience Analytics, Content Hub and Marketing Assistant, among others. The transaction is expected to close in mid-2019, subject to the satisfaction of applicable regulatory requirements and customary closing conditions. The financial terms related to this transaction are not expected to have a material impact to IBM’s consolidated financial statements. At March 31, 2019, the company concluded that the business did not meet the held for sale classification. Seterus — On January 3, 2019, IBM and Mr. Cooper Group announced a definitive agreement, in which Mr. Cooper Group acquired IBM’s Seterus home mortgage servicing platform business. The transaction closed in the first quarter of 2019. The financial terms related to this transaction were not material. Under the company’s new segment reporting structure, the above three divested businesses are reported in “Other — divested businesses.” Refer to note 8, “Segments,” for additional information. Overall, the company expects to recognize a total pre-tax gain on these transactions in the range of $500 million to $700 million. Other — In the fourth quarter of 2018, the Global Financing segment entered into a definitive agreement to sell certain commercial financing capabilities and assign a number of its commercial financing contracts, excluding related receivables which will be collected as they become due in the normal course of business. These commercial financing capabilities and contracts have been reported within IBM’s Global Financing segment. The transaction closed in the first quarter of 2019. The financial terms related to this transaction were not material.

Intangible Assets Including Goo

Intangible Assets Including Goodwill	3 Months Ended
	Mar. 31, 2019
Intangible Assets Including Goodwill
Intangible Assets Including Goodwill	12. Intangible Assets Including Goodwill: Intangible Assets The following table details the company’s intangible asset balances by major asset class. At March 31, 2019 (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, 2018 (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 $131 million during the first quarter of 2019, primarily due to intangible asset amortization, partially offset by additions resulting from capitalized software. The aggregate intangible amortization expense was $303 million and $340 million for the quarters ended March 31, 2019 and 2018, respectively. In addition, in the first three months of 2019, the company retired $273 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount. The amortization expense for each of the five succeeding years relating to intangible assets currently recorded in the Consolidated Statement of Financial Position is estimated to be the following at March 31, 2019: Capitalized Acquired (Dollars in millions) Software Intangibles Total 2019 (for Q2 - Q4) $ $ $ 2020 2021 2022 2023 — Goodwill The change in the goodwill balances by segment, for the three months ended March 31, 2019 and for the year ended December 31, 2018 are as follows: Foreign Currency Purchase Translation (Dollars in millions) Balance Goodwill Price And Other Balance Segment 1/1/2019 Additions Adjustments Divestitures Adjustments* 3/31/2019 Cloud & Cognitive Software $ $ — $ $ — $ $ Global Business Services — — ) Global Technology Services — — — Systems — — — Other — divested businesses — — ) — Total $ $ — $ $ ) $ $ * Primarily driven by foreign currency translation. Foreign Currency Purchase Translation (Dollars in millions) Balance Goodwill Price And Other Balance Segment 1/1/2018 Additions Adjustments Divestitures Adjustments** 12/31/2018 Cloud & Cognitive Software* $ $ $ $ ) $ ) $ Global Business Services* ) — ) Global Technology Services* — — ) Systems — — ) Other — divested businesses* ) Total $ $ $ ) $ ) $ ) $ * Recast to conform to 2019 presentation. ** Primarily driven by foreign currency translation. In the first quarter of 2019, the company made a number of changes to its organizational structure and management system. With these changes, the company revised its reportable segments. Goodwill was reallocated to the new reporting segments, and as a result, an impairment assessment was performed. There were no goodwill impairment losses recorded during the first three months of 2019 or the full year of 2018 and the company has no accumulated impairment losses. For further information regarding the segment change, refer to note 8, “Segments.” Purchase price adjustments recorded in the first three months of 2019 and full year 2018 were related to acquisitions that were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. Net purchase price adjustments recorded during the first three months of 2019 and full year 2018 were not material.

Borrowings

Borrowings	3 Months Ended
	Mar. 31, 2019
Borrowings
Borrowings	13. Borrowings: Short-Term Debt At March 31, At December 31, (Dollars in millions) 2019 2018 Commercial paper $ $ Short-term loans Long-term debt — current maturities Total $ $ The weighted-average interest rate for commercial paper at March 31, 2019 and December 31, 2018 was 2.5 percent at both periods. The weighted-average interest rate for short-term loans was 5.8 percent and 4.3 percent at March 31, 2019 and December 31, 2018, respectively. Long-Term Debt Pre-Swap Borrowing Balance Balance (Dollars in millions) Maturities 3/31/2019 12/31/2018 U.S. dollar debt (weighted-average interest rate at March 31, 2019):* 3.2% $ $ 2.6% 2.9% 2.5% 3.2% 3.6% 7.0% 3.5% 4.7% 6.5% 3.7% 5.9% 8.0% 5.6% 4.0% 7.0% 4.7% 7.1% $ $ Other currencies (weighted-average interest rate at March 31, 2019, in parentheses):* Euros (1.3%) 2019–2031 $ $ Pound sterling (2.7%) 2020–2022 Japanese yen (0.3%) 2022–2026 Other (6.5%) 2019–2022 $ $ 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 finance 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 IBM, the parent. Any debt securities issued by IBM International Group Capital LLC, would be fully and unconditionally guaranteed by the parent. The company’s indenture governing its debt securities and its various credit facilities each contain significant covenants which obligate the company to promptly pay principal and interest, limit the aggregate amount of secured indebtedness and sale and leaseback transactions to 10 percent of the company’s consolidated net tangible assets, and restrict the company’s ability to merge or consolidate unless certain conditions are met. The credit facilities also include a covenant on the company’s consolidated net interest expense ratio, which cannot be less than 2.20 to 1.0, as well as a cross default provision with respect to other defaulted indebtedness of at least $500 million. The company is in compliance with all of its significant debt covenants and provides periodic certifications to its lenders. The failure to comply with its debt covenants could constitute an event of default with respect to the debt to which such provisions apply. If certain events of default were to occur, the principal and interest on the debt to which such event of default applied would become immediately due and payable. Pre-swap annual contractual obligations of long-term debt outstanding at March 31, 2019, are as follows: (Dollars in millions) Total 2019 (for Q2 - Q4) $ 2020 2021 2022 2023 2024 and beyond Total $ Interest on Debt (Dollars in millions) For the three months ended March 31: 2019 2018 Cost of financing $ $ Interest expense Interest capitalized Total interest paid and accrued $ $ Lines of Credit On October 28, 2018, the company announced its intent to acquire all of the outstanding shares of Red Hat. In connection with this acquisition, IBM entered into a commitment letter under which certain banks committed to provide the company with a 364-day unsecured bridge term loan facility in an aggregate principal amount of up to $20 billion to fund the acquisition. The company also entered into a fee letter in connection with the 364-day bridge facility, under which the company incurred $60 million in fees. These fees were capitalized and are being amortized to SG&A in the Consolidated Statement of Earnings over the expected term of the bridge term loan facility. For additional information on this transaction, see note 11, “Acquisitions/Divestitures.”

Contingencies

Contingencies	3 Months Ended
	Mar. 31, 2019
Contingencies
Contingencies	14. Contingencies: As a company with a substantial employee population and with clients in more than 175 countries, IBM is involved, either as plaintiff or defendant, in a variety of ongoing claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business. The company is a leader in the information technology industry and, as such, has been and will continue to be subject to claims challenging its IP rights and associated products and offerings, including claims of copyright and patent infringement and violations of trade secrets and other IP rights. In addition, the company enforces its own IP against infringement, through license negotiations, lawsuits or otherwise. Also, as is typical for companies of IBM’s scope and scale, the company is party to actions and proceedings in various jurisdictions involving a wide range of labor and employment issues (including matters related to contested employment decisions, country-specific labor and employment laws, and the company’s pension, retirement and other benefit plans), as well as actions with respect to contracts, product liability, securities, foreign operations, competition law and environmental matters. These actions may be commenced by a number of different parties, including competitors, clients, current or former employees, government and regulatory agencies, stockholders and representatives of the locations in which the company does business. Some of the actions to which the company is party may involve particularly complex technical issues, and some actions may raise novel questions under the laws of the various jurisdictions in which these matters arise. The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any recorded liabilities, including any changes to such liabilities for the quarter ended March 31, 2019 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. On September 28, 2018, the Indiana Court of Appeals affirmed the Superior Court’s $78 million award to the State, but reversed the Superior Court by awarding IBM prejudgment interest on its previously affirmed $50 million award. In February 2019, the Indiana Supreme Court heard both parties’ appeals. 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. Following the 2017 final judgment of the Appeal Court in London holding that IBM UK acted lawfully in 2010 in closing its UK defined benefit plans to future accruals for most participants and in implementing a new retirement policy, the Employment Tribunal in Southampton UK is expected to address approximately 290 individual actions alleging constructive dismissal and age discrimination brought against IBM UK in 2010 by employees who left the company at that time. The individual actions were previously stayed. 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). Management’s Retirement Plans Committee and three current or former IBM executives are named as defendants. On September 29, 2017, the Court granted the defendants’ motion to dismiss the first amended complaint. On December 10, 2018, the Second Circuit Court of Appeals reversed the District Court order and the matter remains pending. 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 $900 million. The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability.

Commitments

Commitments	3 Months Ended
	Mar. 31, 2019
Commitments
Commitments	15. Commitments: The company’s extended lines of credit to third-party entities include unused amounts of $7,902 million and $7,368 million at March 31, 2019 and December 31, 2018, 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 $4,165 million and $4,432 million at March 31, 2019 and December 31, 2018, 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 $24 million and $26 million at March 31, 2019 and December 31, 2018, 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) 2019 2018 Balance at January 1 $ $ Current period accruals Accrual adjustments to reflect actual experience ) ) Charges incurred ) ) Balance at March 31 $ $ Extended Warranty Liability (Dollars in millions) 2019 2018 Aggregate deferred revenue at January 1 $ $ Revenue deferred for new extended warranty contracts Amortization of deferred revenue ) ) Other* ) Aggregate deferred revenue at March 31 $ $ Current portion $ $ Noncurrent portion $ $ * Other primarily consists of foreign currency translation adjustments.

Earnings Per Share of Common St

Earnings Per Share of Common Stock	3 Months Ended
	Mar. 31, 2019
Earnings Per Share of Common Stock
Earnings Per Share of Common Stock	16. 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 months ended March 31, 2019 and 2018. For the Three Months Ended March 31, 2019 March 31, 2018 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) $ $ Income/(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) $ $ Income/(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 1,137,019 shares and 16,869 shares were outstanding as of March 31, 2019 and 2018, 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.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2019
Subsequent Events
Subsequent Events	17. Subsequent Events : On April 30, 2019, the company announced that the Board of Directors approved a quarterly dividend of $1.62 per common share. The dividend is payable June 10, 2019 to shareholders of record on May 10, 2019. The dividend declaration represents an increase of $0.05 per common share, which is 3 percent higher than the prior quarterly dividend of $1.57 per common share.

Basis of Presentation (Policies

Basis of Presentation (Policies)	3 Months Ended
	Mar. 31, 2019
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. In the first quarter of 2019, the company made a number of changes to its organizational structure and management system. These changes impacted the company’s reportable segments, but did not impact the company’s Consolidated Financial Statements. Refer to note 8, “Segments,” for additional information on the changes in reportable segments. The periods presented in this Form 10-Q are reported on a comparable basis. The company provided recast historical segment information reflecting these changes in a Form 8-K dated April 4, 2019. 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 2018 Annual Report. Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior year amounts have been reclassified to conform to the current year presentation. This is annotated where applicable.
Accounting Changes	New Standards to be Implemented In August 2018, the Financial Accounting Standards Board (FASB) issued guidance which changed the disclosure requirements for fair value measurements and defined benefit plans. The guidance is effective for each of the topics on January 1, 2020 and December 31, 2020, respectively, with early adoption of certain provisions permitted. The company early adopted the provision in the fair value guidance that removed the Level 1/Level 2 transfer disclosures. The company is evaluating the adoption date for the remaining changes. As the guidance is a change to disclosures only, the company does not expect the guidance to have a material impact in the consolidated financial results. In January 2017, the FASB issued guidance that simplifies the goodwill impairment test by removing Step 2. The guidance also changes the requirements for reporting units with zero or negative carrying amounts and requires additional disclosures for these reporting units. The guidance is effective January 1, 2020 and early adoption is permitted. The company expects to adopt the guidance on a prospective basis on the effective date. The company is evaluating the impact of the guidance. In June 2016, with amendments in 2018, 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. A cross-functional team was established that is evaluating the financial instruments portfolio and the system, process and policy change requirements and continues to make substantial progress. The new guidance expands the scope of financial instruments subject to impairment, including off-balance sheet commitments and residual value. The guidance is effective January 1, 2020 with one-year early adoption permitted. The company will adopt the guidance as of the effective date and is continuing to evaluate the impact. Standards Implemented The FASB issued guidance in February 2016, with amendments in 2018 and 2019, which changed 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 also made some changes to lessor accounting, including elimination of the use of third-party residual value guarantee insurance in the lease classification test, and overall aligns with the new revenue recognition guidance. The guidance requires qualitative and quantitative disclosures to assess the amount, timing and uncertainty of cash flows arising from leases. The company adopted the guidance effective January 1, 2019, using the transition option whereby prior comparative periods were not retrospectively presented in the Consolidated Financial Statements. The company elected the package of practical expedients not to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and the lessee practical expedient to combine lease and nonlease components for all asset classes. The company made a policy election to not recognize right-of-use assets and lease liabilities for short-term leases for all asset classes. The guidance had a material impact on the Consolidated Statement of Financial Position as of the effective date. As a lessee, at adoption, the company recognized operating and financing right-of-use (ROU) assets of $4.8 billion and $0.2 billion, respectively, and operating and financing lease liabilities of $5.1 billion and $0.2 billion, respectively. The transition adjustment recognized in retained earnings at January 1, 2019 was not material. From a lessor perspective, the changes in lease termination guidance and removal of third-party residual value guarantee insurance in the lease classification test did not have a material impact in the consolidated financial results. Refer to note 5, “Leases,” for additional information, including further discussion on the impact of adoption. In August 2018, the FASB issued guidance on a customer’s accounting for implementation costs incurred in cloud-computing arrangements that are hosted by a vendor. Certain types of implementation costs should be capitalized and amortized over the term of the hosting arrangement. The guidance is effective January 1, 2020 and early adoption is permitted. The company adopted the guidance on January 1, 2019 on a prospective basis. The guidance did not have a material impact in the consolidated financial results. In February 2018, the FASB issued guidance that allows entities to elect an option to reclassify the stranded tax effects related to the application of U.S. tax reform from accumulated other comprehensive income/(loss) (AOCI) to retained earnings. The guidance was effective January 1, 2019 with early adoption permitted, and can be applied either in the period of adoption or retrospectively to all applicable periods. The company adopted the guidance effective January 1, 2018, and elected not to reclassify prior periods. In accordance with its accounting policy, the company releases income tax effects from AOCI once the reason the tax effects were established cease to exist (e.g., when available-for-sale debt securities are sold or if a pension plan is liquidated). This guidance allows for the reclassification of stranded tax effects as a result of the change in tax rates from U.S. tax reform to be recorded upon adoption of the guidance rather than at the actual cessation date. At adoption on January 1, 2018, $2.4 billion was reclassified from AOCI to retained earnings, primarily comprised of amounts relating to retirement-related benefit plans. In August 2017, the FASB issued guidance to simplify the application of 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 was effective January 1, 2019 with early adoption permitted. The company adopted the guidance as of January 1, 2018, and it did not 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 (net benefit cost). Under the guidance, the service cost component of net benefit cost continues to be presented within cost, SG&A expense and RD&E expense in the Consolidated Statement of Earnings, unless eligible for capitalization. The other components of net benefit cost are presented separately from service cost within other (income) and expense in the Consolidated Statement of Earnings. The guidance was effective January 1, 2018 with early adoption permitted. The company adopted the guidance as of the effective date. The guidance is primarily a change in financial statement presentation and did not have a material impact in the consolidated financial results. This presentation change was applied retrospectively upon adoption. In January 2016, the FASB issued guidance which addresses aspects of recognition, measurement, presentation and disclosure of financial instruments. The guidance was effective January 1, 2018 and early adoption was not permitted except for limited provisions. The company adopted the guidance on the effective date. The guidance required certain equity investments to be measured at fair value with changes recognized in net income. The amendment also simplified the impairment test of equity investments that lack readily determinable fair value. The guidance did not 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 depicts 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 specific disclosures relating to revenue recognition. The company adopted the guidance effective January 1, 2018 using the modified retrospective transition method. At adoption, $557 million was reclassified from notes and accounts receivable—trade and deferred income—current to prepaid expenses and other current assets to establish the opening balance for net contract assets. In-scope sales commission costs previously recorded in the Consolidated Statement of Earnings were capitalized in deferred costs in accordance with the transition guidance, in the amount of $737 million. Deferred income of $29 million was recorded for certain software licenses that will be recognized over time versus at point in time under previous guidance. Additionally, net deferred taxes were reduced by $184 million in the Consolidated Statement of Financial Position, resulting in a cumulative-effect net increase to retained earnings of $524 million. In the fourth quarter of 2018, the company recognized an additional impact to net deferred taxes and retained earnings of $56 million, resulting in a total net increase to retained earnings of $580 million. The decrease to net deferred taxes was the result of the company’s election to include Global Intangible Low-Taxed Income (GILTI) in measuring deferred taxes. The revenue guidance did not have a material impact in the company’s consolidated financial results. Refer to note 3, “Revenue Recognition,” for additional information. In March 2016, the FASB issued guidance which changed 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. 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. The FASB also issued guidance in May 2017 and June 2018, which relates to the accounting for modifications of share-based payment awards and accounting for share-based payments issued to non-employees, respectively. The company adopted the guidance for modifications in the second quarter of 2017, and guidance for non-employees’ payments in the second quarter of 2018. The guidance had no impact in the consolidated financial results.
Revenue Recognition	Remaining Performance Obligations The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not include contracts that have an original duration of one year or less. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency.
Financial Instruments and Fair Value Measurement	Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the company is required to classify certain assets and liabilities based on the following fair value hierarchy: · Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date; · Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and · Level 3—Unobservable inputs for the asset or liability. The guidance requires the use of observable market data if such data is available without undue cost and effort. When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items 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 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 debt securities that are deemed to be other-than-temporarily impaired. In the event of an other-than-temporary impairment of a debt security, fair value is measured using a model described above. Certain non-financial assets such as property, plant and equipment, operating right-of-use assets, 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 non-financial 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. Effective January 1, 2018, the company adopted the new FASB guidance on recognition, measurement, presentation and disclosure of financial instruments using the cumulative catch-up transition method. Since adoption, the company measures equity investments at fair value with changes recognized in net income. Refer to note 2, “Accounting Changes,” for further information. 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 and including short-term finance lease liabilities) are financial liabilities with carrying values that approximate fair value. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy, except for short-term debt which would be classified as Level 2. Loans and Long-Term Receivables Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At March 31, 2019 and December 31, 2018, the difference between the carrying amount and estimated fair value for loans and long-term receivables was immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. Long-Term Debt Fair value of publicly-traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt (including long-term finance lease liabilities) for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. 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.
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 restricted cash 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 may use forward contracts, futures contracts, interest-rate swaps, cross-currency swaps, equity swaps, and options depending upon the underlying exposure. The company is not a party to leveraged derivative instruments. The company issues debt in the global capital markets to fund its operations and financing business. Access to cost-effective financing can result in interest rate mismatches with the underlying assets. To manage these mismatches and to reduce overall interest cost, the company may use interest-rate swaps to convert specific fixed-rate debt issuances into variable-rate debt (i.e., fair value hedges) and to convert specific variable-rate debt issuances into fixed-rate debt (i.e., cash flow hedges). The company is exposed to interest rate volatility on future debt issuances. To manage this risk, the company may use instruments such as forward starting interest-rate swaps to lock in the rate on the interest payments related to the forecasted debt issuances. The maximum length of time over which the company has hedged its exposure to the variability in future cash flows is 30 years. 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 12 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 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. The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing in net income each period.
Accounting for leases as a lessee	The company conducts business as both a lessee and a lessor. In its ordinary course of business, the company enters into leases as a lessee for property, plant and equipment. The company is also the lessor of certain equipment, mainly through its Global Financing segment. When procuring goods or services, or upon entering into a contract with its clients, the company determines whether an arrangement contains a lease at its inception. As part of that evaluation, the company considers whether there is an implicitly or explicitly identified asset in the arrangement and whether the company, as the lessee, or the client, if the company is the lessor, has the right to control that asset. The company determines whether there is a right to control the use of the asset by assessing its rights, as the lessee, or the client’s rights, if the company is the lessor, to obtain substantially all of the economic benefits from the use of the identified asset and the rights to direct the use of the identified asset. If there is either an explicit or embedded lease within a contract, the company determines the classification of the lease (e.g., finance, operating, sales-type lease) at the lease commencement date. Accounting for leases as a lessee Effective January 1, 2019, when the company is the lessee, all leases with a term of more than 12 months are recognized as right-of-use (ROU) assets and associated lease liabilities in the Consolidated Statement of Financial Position. The lease liabilities are measured at the lease commencement date and determined using the present value of the minimum lease payments not yet paid and the company’s incremental borrowing rate, which approximates the rate at which the company would borrow, on a secured basis, in the country where the lease was executed. The interest rate implicit in the lease is generally not determinable in transactions where the company is the lessee. The ROU asset equals the lease liability adjusted for any initial direct costs (IDCs), prepaid rent, and lease incentives. Fixed and in-substance fixed payments are included in the recognition of ROU assets and lease liabilities, however, variable lease payments, other than those based on a rate or index, are recognized in the Consolidated Statement of Earnings in the period in which the obligation for those payments is incurred. The company’s variable lease payments generally relate to payments tied to various indexes, non-lease components and payments above a contractual minimum fixed payment. ROU assets represent the company’s right to control the underlying assets under lease, and the lease liability is the obligation to make the lease payments related to the underlying assets under lease. Operating leases are included in operating right-of-use assets — net, current operating lease liabilities and operating lease liabilities in the Consolidated Statement of Financial Position. Finance leases are included in property, plant and equipment, short-term debt and long-term debt in the Consolidated Statement of Financial Position. Finance lease ROU assets are generally amortized on a straight-line basis over the lease term with the interest expense on the lease liability recorded using the interest method. The amortization and interest expense are recorded separately in the Consolidated Statement of Earnings. For operating leases, the amortization of the ROU asset and the interest expense on the lease liability are not separately recorded; rather, the lease cost is recognized on a straight-line basis over the lease term as a single-line item in the Consolidated Statement of Earnings, unless the ROU asset is impaired. The company has elected to not recognize leases with a lease term of less than 12 months in the Consolidated Statement of Financial Position, including those acquired in a business combination, and lease costs for those short-term leases are recognized on a straight-line basis over the lease term in the Consolidated Statement of Earnings. For all asset classes, the company has elected the lessee practical expedient to combine lease and non-lease components (e.g., maintenance services) and account for the combined unit as a single lease component. A significant portion of the company’s lease portfolio is real estate, which are mainly accounted for as operating leases, and are primarily used for corporate offices and data centers. The average term of the real estate leases is approximately five years. Certain real estate leases have renewal and/or termination options, which are assessed to determine if those options would affect the duration of the lease term. The company also has equipment leases, such as IT equipment and vehicles, which have lease terms that range from two to five years. For certain equipment leases, the company applies a portfolio approach to account for the operating lease ROU assets and lease liabilities. Cash payments made from variable lease costs and short-term leases are not included in the measurement of operating and finance lease liabilities. Prior to the adoption of the new lease guidance on January 1, 2019, ROU assets and lease liabilities for operating leases were not recognized in the Consolidated Statement of Financial Position. The company has elected the practical expedient to not provide comparable presentation in the Consolidated Statement of Financial Position for periods prior to adoption. Rental expense, including amounts charged to inventories and fixed assets, and excluding amounts previously reserved, was $1,944 million for the year ended December 31, 2018. Rental expense in agreements with rent holidays and scheduled rent increases was previously recognized on a straight-line basis over the lease term. Contingent rentals were included in the determination of rental expense as accruable.
Accounting for leases as a lessor	The company conducts business as both a lessee and a lessor. In its ordinary course of business, the company enters into leases as a lessee for property, plant and equipment. The company is also the lessor of certain equipment, mainly through its Global Financing segment. When procuring goods or services, or upon entering into a contract with its clients, the company determines whether an arrangement contains a lease at its inception. As part of that evaluation, the company considers whether there is an implicitly or explicitly identified asset in the arrangement and whether the company, as the lessee, or the client, if the company is the lessor, has the right to control that asset. The company determines whether there is a right to control the use of the asset by assessing its rights, as the lessee, or the client’s rights, if the company is the lessor, to obtain substantially all of the economic benefits from the use of the identified asset and the rights to direct the use of the identified asset. If there is either an explicit or embedded lease within a contract, the company determines the classification of the lease (e.g., finance, operating, sales-type lease) at the lease commencement date. Accounting for leases as a lessor The company typically enters into leases as an alternative means of realizing value from equipment that it would otherwise sell. Assets under lease include new and used IBM equipment and certain OEM products. Equipment generally consists of IBM Z, Power Systems and Storage Systems. Lease payments due to IBM are typically fixed and paid in equal installments over the lease term. The majority of the company’s leases do not contain variable payments that are dependent on an index or a rate. Variable lease payments that do not depend on an index or a rate (e.g., property taxes), that are paid directly by the company and are reimbursed by the client, are recorded as revenue, along with the related cost, in the period in which collection of these payments is probable. Payments that are made directly by the client to a third party, including certain property taxes and insurance, are not considered part of variable payments and therefore are not recorded by the company. The company has made a policy election to exclude from consideration in contracts all collections from sales and other similar taxes. The company’s payment terms for leases are typically unconditional. Therefore, while the client could terminate the lease prior to the end of the lease term, the client would be required to pay the remaining lease payments in full. At the end of the lease term, the company allows the client to either return the equipment, purchase the equipment or renew the lease based on mutually agreed upon terms. With respect to a client purchase of leased assets, the lease agreement would include an option to purchase the equipment at either a stated price or at the then-current fair market value of the equipment at the end of the lease. When lease arrangements include multiple performance obligations, the company allocates the consideration in the contract between the lease components and the non-lease components on a relative standalone selling price basis. Sales-Type and Direct Financing Leases If a lease is classified as a sales-type or direct financing lease, the carrying amount of the asset is derecognized from inventory and a net investment in the lease is recorded. For a sales-type lease, the net investment in the lease is measured at commencement date as the sum of the lease receivable, the estimated guaranteed and unguaranteed residual value of the equipment less unearned income and allowance for credit losses. For further information on the company’s net investment in leases, including guaranteed and unguaranteed residual values, refer to note 6, “Financing Receivables.” Any selling profit or loss arising from a sales-type lease is recorded at lease commencement. Selling profit or loss is presented on a gross basis when the company enters into a lease to realize value from a product that it would otherwise sell in its ordinary course of business, whereas in transactions where the company enters into a lease for the purpose of generating revenue by providing financing, the selling profit or loss is presented on a net basis. Under a sales-type lease, initial direct costs are expensed at lease commencement. The company recognizes finance income over the term of a sales-type lease on the net investment in the lease and any variable lease payments, which are not included in the net investment in the lease. For a direct financing lease, the investment in the lease is measured similarly to a sales-type lease, however, the net investment in the lease is reduced by any selling profit. In a direct financing lease, the selling profit and initial direct costs are deferred at commencement and recognized over the lease term. The company rarely enters into direct financing leases. The estimated residual value represents the estimated fair value of the equipment under lease at the end of the lease. Estimating residual value is a risk unique to financing activities, and management of this risk is dependent upon the ability to accurately project future equipment values at lease inception. The company has insight into product plans and cycles for the IBM products under lease. The company estimates the future fair value of leased equipment by using historical models, analyzing the current market for new and used equipment and obtaining forward-looking product information such as marketing plans and technology innovations. The company optimizes the recovery of residual values by extending lease arrangements with existing clients. The company has historically managed residual value risk both through insight into its own product cycles and monitoring of OEM IT product announcements. The company periodically reassesses the realizable value of its lease residual values. Anticipated decreases in specific future residual values that are considered to be other-than-temporary are recognized immediately upon identification and are recorded as an adjustment to the residual value estimate. For sales-type and direct financing leases, this reduction lowers the recorded net investment and is recognized as a loss charged to finance income in the period in which the estimate is changed, as well as an adjustment to unearned income to reduce future-period financing activities. Operating Leases Equipment provided to clients under an operating lease is carried at cost within property, plant and equipment in the Consolidated Statement of Financial Position and depreciated over the lease term using the straight-line method, generally ranging from one to six years. The depreciable basis is the original cost of the equipment less the estimated residual value of the equipment at the end of the lease term. At commencement of an operating lease, initial direct costs are deferred. As lease payments are made, the company records sales revenue over the lease term. Initial direct costs are expensed over the lease term on the same basis as lease income is recorded. Assets under operating leases are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The impairment test is based on undiscounted cash flows, and, if impaired, the asset is written down to fair value based on either discounted cash flows or appraised values. These assets are included in “Property, plant and equipment — net” in the Consolidated Statement of Financial Position.
Financing Receivables	Commercial financing receivables are excluded from the presentation of financing receivables by portfolio segment, as they are short term in nature and the current estimated risk of loss and resulting impact to the company’s financing results are not material. The company determines its allowance for credit losses based on two portfolio segments: lease receivables and loan receivables, and further segments the portfolio into three classes: Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific. When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For individually evaluated receivables, the company determines the expected cash flow for the receivable and calculates an estimate of the potential loss and the probability of loss. For those accounts in which the loss is probable, the company records a specific reserve. The company considers any receivable with an individually evaluated reserve as an impaired receivable. 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. The company considers a client’s financing receivable balance past due when any installment is aged over 90 days. The company’s credit quality indicators, which are based on rating agency data, publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Moody’s Investors Service credit ratings as shown below. The company uses information provided by Moody’s, where available, as one of many inputs in its determination of customer credit ratings. The credit quality 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	In the first quarter of 2019, the company made a number of changes to its organizational structure and management system that brought cloud and cognitive software under one organization to more effectively address evolving client needs and to prepare for the pending acquisition of Red Hat, Inc. (Red Hat). With these changes, the company has revised its reportable segments, but did not impact its Consolidated Financial Statements. In addition, the company is presenting the results of its announced divestitures in an “Other” segment, as the realignment of these businesses allows for a better representation of management’s view of the company, as well as the ongoing operational performance of the reportable 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.
Retirement-Related Benefits	As of 2019, substantially all the plan participants in the U.S. Qualified IBM Personal Pension Plan (PPP) are considered inactive. As required by U.S. GAAP, this resulted in a change in the amortization period of unrecognized actuarial losses to the average remaining life expectancy of inactive plan participants, which was 18 years as of December 31, 2018.There was no impact to funded status, retiree benefit payments or funding requirements of the U.S. Qualified PPP as a result of this change.
Goodwill	In the first quarter of 2019, the company made a number of changes to its organizational structure and management system. With these changes, the company revised its reportable segments. Goodwill was reallocated to the new reporting segments, and as a result, an impairment assessment was performed. There were no goodwill impairment losses recorded during the first three months of 2019 or the full year of 2018 and the company has no accumulated impairment losses. For further information regarding the segment change, refer to note 8, “Segments.”
Commitments and Contingencies	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 andproceedings 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. Commitments 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.

Revenue Recognition (Tables)

Revenue Recognition (Tables)	3 Months Ended
	Mar. 31, 2019
Revenue Recognition
Schedule of disaggregation of revenue	Revenue by Major Products/Service Offerings (Dollars in millions) Cloud & Global Global For the three months Cognitive Business Technology Global Total ended March 31, 2019: Software Services Services Systems Financing Other Revenue Cognitive Applications $ $ — $ — $ — $ — $ — $ Cloud & Data Platforms — — — — — Transaction Processing Platforms — — — — — Consulting — — — — — Application Management — — — — — Global Process Services — — — — — Infrastructure & Cloud Services — — — — — Technology Support Services — — — — — Systems Hardware — — — — — Operating Systems Software — — — — — Global Financing* — — — — — Other Revenue — — — — — Total $ $ $ $ $ $ $ * Contains lease and loan/working capital financing arrangements which are not subject to the guidance on revenue from contracts with customers. Revenue by Geography (Dollars in millions) For the three months Total ended March 31, 2019: Revenue Americas $ Europe/Middle East/Africa Asia Pacific Total $ Revenue by Major Products/Service Offerings (Dollars in millions) Cloud & Global Global For the three months Cognitive Business Technology Global Total ended March 31, 2018: Software* Services* Services* Systems Financing Other* Revenue Cognitive Applications $ $ — $ — $ — $ — $ — $ Cloud & Data Platforms — — — — — Transaction Processing Platforms — — — — — Consulting — — — — — Application Management — — — — — Global Process Services — — — — — Infrastructure & Cloud Services — — — — — Technology Support Services — — — — — Systems Hardware — — — — — Operating Systems Software — — — — — Global Financing** — — — — — Other Revenue — — — — — Total $ $ $ $ $ $ $ * Recast to conform to 2019 presentation. ** Contains lease and loan/working capital financing arrangements which are not subject to the guidance on revenue from contracts with customers. Revenue by Geography (Dollars in millions) For the three months Total ended March 31, 2018: Revenue Americas $ Europe/Middle East/Africa Asia Pacific Total $
Schedule of reconciliation of contract balances	At March 31, At December 31, (Dollars in millions) 2019 2018 Notes and accounts receivable—trade (net of allowances of $316 and $309 at March 31, 2019 and December 31, 2018, respectively) $ $ Contract assets (1) Deferred income (current) Deferred income (noncurrent) (1) Included within prepaid expenses and other current assets in the Consolidated Statement of Financial Position.

Financial Instruments (Tables)

Financial Instruments (Tables)	3 Months Ended
	Mar. 31, 2019
Financial Instruments
Financial assets and financial liabilities measured at fair value on a recurring basis	(Dollars in millions) At March 31, 2019 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ $ — $ (6) Money market funds — — U.S. government securities — — (6) Total $ $ $ — $ Equity investments (2) — — Debt securities - current (3) — — (6) Derivative assets (4) — (7) Total assets $ $ $ — $ Liabilities: Derivative liabilities (5) $ — $ $ — $ (7) (1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. (2) Included within investments and sundry assets in the Consolidated Statement of Financial Position. (3) Included within marketable securities in the Consolidated Statement of Financial Position. (4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Statement of Financial Position at March 31, 2019 were $346 million and $348 million, respectively. (5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Statement of Financial Position at March 31, 2019 were $316 million and $389 million, respectively. (6) Available-for-sale debt 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 $353 million. (Dollars in millions) At December 31, 2018 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) Time deposits and certificates of deposit $ — $ $ — $ (6) Money market funds — — Total $ $ $ — $ Equity investments (2) — — Debt securities - current (3) — — (6) Derivative assets (4) — (7) Total assets $ $ $ — $ Liabilities: Derivative liabilities (5) $ $ $ — $ (7) (1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position. (2) Included within investments and sundry assets in the Consolidated Statement of Financial Position. (3) Included within marketable securities 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, 2018 were $385 million and $347 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, 2018 were $177 million and $206 million, respectively. (6) Available-for-sale debt 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 $267 million.
Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position	Fair Value of Derivative Assets Fair Value of Derivative Liabilities Balance Sheet Balance Sheet (Dollars in millions) Classification 3/31/2019 12/31/2018 Classification 3/31/2019 12/31/2018 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 $ $ Equity contracts Prepaid expenses and other current assets Other accrued expenses and 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 $ $ $ $ (1) Debt designated as hedging instruments are reported at carrying value. N/A – not applicable
Amounts related to cumulative basis adjustments for fair value hedges	March 31, December 31, (Dollars in millions) 2019 2018 Short-term debt: Carrying amount of the hedged item $ ) $ ) Cumulative hedging adjustments included in the carrying amount - assets/(liabilities) )(1) )(1) Long-term debt: Carrying amount of the hedged item $ ) $ ) Cumulative hedging adjustments included in the carrying amount - assets/(liabilities) )(2) )(2) (1) Includes ($4) million and ($6) million of hedging adjustments on discontinued hedging relationships at March 31, 2019 and December 31, 2018, respectively. (2) Includes ($209) million and ($213) million of hedging adjustments on discontinued hedging relationships at March 31, 2019 and December 31, 2018, respectively.
Effect of Derivative Instruments in the Consolidated Statement of Earnings	Gains/(Losses) of (Dollars in millions) Total Total Hedge Activity For the three months ended March 31: 2019 2018 2019 2018 Cost of services $ $ $ $ Cost of sales ) Cost of financing ) * SG&A expense ) Other (income) and expense ) ) Interest expense ) * * Reclassified to conform to 2019 presentation. Gain (Loss) Recognized in Earnings Consolidated Recognized on Attributable to Risk (Dollars in millions) Statement of Derivatives Being Hedged(2) For the three months ended March 31: Earnings Line Item 2019 2018 2019 2018 Derivative instruments in fair value hedges(1): 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 Equity contracts SG&A expense ) N/A N/A Total $ $ ) $ ) $ Gain (Loss) Recognized in Earnings and Other Comprehensive Income (Dollars in millions) Consolidated Reclassified Amounts Excluded from For the three months Recognized in OCI Statement of from AOCI Effectiveness Testing(3) ended March 31: 2019 2018 Earnings Line Item 2019 2018 2019 2018 Derivative instruments in cash flow hedges: Interest rate contracts $ ) $ — Cost of financing $ — $ — $ — $ — Interest expense — — — — Foreign exchange contracts ) Cost of services — — Cost of sales ) — — Cost of financing ) )* SG&A expense ) — — Other (income) and expense ) — — Interest expense ) )* Instruments in net investment hedges(4): Foreign exchange contracts Cost of financing — — * ) Interest expense — — * Total $ ) $ ) $ ) $ $ $ * Reclassified to conform to 2019 presentation. (1) The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts. (2) The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period. (3) The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing in net income each period. (4) Instruments in net investment hedges include derivative and non-derivative instruments. N/A - not applicable

Leases (Tables)

Leases (Tables)	3 Months Ended
	Mar. 31, 2019
Leases
Schedule of various components of lease costs	(Dollars in millions) For the three months ended March 31: 2019 Finance lease cost: Amortization of ROU assets $ Interest on lease liabilities Operating lease cost Short-term lease cost Variable lease cost Sublease income ) Total lease cost $
Schedule of supplemental information relating to the cash flows arising from lease transactions	(Dollars in millions except for lease term and discount rate values) For the three months ended March 31: 2019 (Gains) and losses on sale and leaseback transactions, net $ ) Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from finance leases $ Financing cash outflows from finance leases $ Operating cash outflows from operating leases $ ROU assets obtained in exchange for new finance lease liabilities $ * ROU assets obtained in exchange for new operating lease liabilities $ * Weighted-average remaining lease term — finance leases yrs. Weighted-average remaining lease term — operating leases yrs. Weighted-average discount rate — finance leases % Weighted-average discount rate — operating leases % * Includes opening balance additions as a result of the adoption of the new lease guidance effective January 1, 2019. The post adoption addition of leases was $156 million for operating leases and immaterial for finance leases.
Schedule of expected undiscounted cash flows for operating and finance leases	The following maturity analysis presents expected undiscounted cash out flows for operating and finance leases on an annual basis for the next five years, with the exception of 2019, which presents the expected undiscounted cash out flows for operating and finance leases for the remaining nine months of the year. Beyond Imputed (Dollars in millions) 2019 2020 2021 2022 2023 2023 Interest * Total Finance leases $ $ $ $ $ $ $ ) $ Operating leases $ $ $ $ $ $ $ ) $ * Imputed interest represents the difference between undiscounted cash flows and discounted cash flows.
Operating lease commitments	The following table, which was included in the company’s 2018 Annual Report, depicts gross minimum rental commitments under noncancelable leases, amounts related to vacant space associated with workforce transformation, sublease income commitments and capital lease commitments at December 31, 2018. Beyond (Dollars in millions) 2019 2020 2021 2022 2023 2023 Operating lease commitments Gross minimum rental commitments (including vacant space below) $ $ $ $ $ $ Vacant space $ $ $ $ $ $ Sublease income commitments $ $ $ $ $ $ Capital lease commitments $ $ $ $ $ $
Capital lease commitments	The following table, which was included in the company’s 2018 Annual Report, depicts gross minimum rental commitments under noncancelable leases, amounts related to vacant space associated with workforce transformation, sublease income commitments and capital lease commitments at December 31, 2018. Beyond (Dollars in millions) 2019 2020 2021 2022 2023 2023 Operating lease commitments Gross minimum rental commitments (including vacant space below) $ $ $ $ $ $ Vacant space $ $ $ $ $ $ Sublease income commitments $ $ $ $ $ $ Capital lease commitments $ $ $ $ $ $
Schedule of amounts included in the Consolidated Statement of Earnings related to lessor activity	(Dollars in millions) For the three months ended March 31: 2019 Lease income — sales-type and direct financing leases Sales-type lease selling price $ Less: Carrying value of underlying assets, excluding unguaranteed residual value Gross profit Interest income on lease receivables Total sales-type and direct financing lease income $ Lease income — operating leases Variable lease income Total lease income $
Schedule of maturity analysis of the lease payments due to IBM on sales-type and direct financing leases	The following table provides a maturity analysis of the lease payments due to IBM on sales-type and direct financing leases over the next five years and thereafter, with the exception of 2019, which presents the expected undiscounted cash flows for the remaining nine months of the year, as well as a reconciliation of the undiscounted cash flows to the financing receivables recognized in the Consolidated Statement of Financial Position at March 31, 2019: (Dollars in millions) Total 2019 $ 2020 2021 2022 2023 Thereafter Total undiscounted cash flows $ Present value of lease payments (recognized as financing receivables) * Difference between undiscounted cash flows and discounted cash flows $ * The present value of the lease payments will not equal the financing receivables balances in the Statement of Financial Position, due to certain items including IDC’s, allowance for credit losses and residual values, which are included in the financing receivables balance, but are not included in the future lease payments.
Schedule of maturity analysis of the undiscounted lease payments due to IBM on operating leases	The following table provides a maturity analysis of the undiscounted lease payments due to IBM on operating leases over the next five years and thereafter, at March 31, 2019, with the exception of 2019, which presents the expected undiscounted cash flows for the remaining nine months of the year: (Dollars in millions) Total 2019 $ 2020 2021 2022 2023 Thereafter Total undiscounted cash flows $

Financing Receivables (Tables)

Financing Receivables (Tables)	3 Months Ended
	Mar. 31, 2019
Financing Receivables
Summary of the components of financing receivables	Investment in Client Loan and Sales-Type and Commercial Installment Payment (Dollars in millions) Direct Financing Financing Receivables/ At March 31, 2019: Leases Receivables (Loans) Total Financing receivables, gross $ $ $ $ Unearned income ) ) ) ) Recorded investment $ $ $ $ Allowance for credit losses ) ) ) ) Unguaranteed residual value — — Guaranteed residual value — — Total financing receivables, net $ $ $ $ Current portion $ $ $ $ Noncurrent portion $ $ — $ $ Investment in Client Loan and Sales-Type and Commercial Installment Payment (Dollars in millions) Direct Financing Financing Receivables/ At December 31, 2018: Leases Receivables (Loans) Total Financing receivables, gross $ $ $ $ Unearned income ) ) ) ) Recorded investment $ $ $ $ Allowance for credit losses ) ) ) ) Unguaranteed residual value — — Guaranteed residual value — — Total financing receivables, net $ $ $ $ Current portion $ $ $ $ Noncurrent portion $ $ — $ $
Schedule of financing receivables and allowance for credit losses by portfolio segment	(Dollars in millions) At March 31, 2019: Americas EMEA Asia Pacific Total Recorded investment Lease receivables $ $ $ $ Loan receivables Ending balance $ $ $ $ Recorded investment collectively evaluated for impairment $ $ $ $ Recorded investment individually evaluated for impairment $ $ $ $ Allowance for credit losses Beginning balance at January 1, 2019 Lease receivables $ $ $ $ Loan receivables Total $ $ $ $ Write-offs $ ) $ ) $ ) $ ) Recoveries Provision ) ) Other * ) ) Ending balance at March 31, 2019 $ $ $ $ Lease receivables $ $ $ $ Loan receivables $ $ $ $ Related allowance, collectively evaluated for impairment $ $ $ $ Related allowance, individually evaluated for impairment $ $ $ $ * Primarily represents translation adjustments. (Dollars in millions) At December 31, 2018: Americas EMEA Asia Pacific Total Recorded investment Lease receivables $ $ $ $ Loan receivables Ending balance $ $ $ $ Recorded investment collectively evaluated for impairment $ $ $ $ Recorded investment individually evaluated for impairment $ $ $ $ Allowance for credit losses Beginning balance at January 1, 2018 Lease receivables $ $ $ $ Loan receivables Total $ $ $ $ Write-offs $ ) $ ) $ ) $ ) Recoveries Provision Other* ) ) ) ) Ending balance at December 31, 2018 $ $ $ $ Lease receivables $ $ $ $ Loan receivables $ $ $ $ Related allowance, collectively evaluated for impairment $ $ $ $ Related allowance, individually evaluated for impairment $ $ $ $ * Primarily represents translation adjustments.
Schedule of past due financing receivables	Recorded Billed Recorded Total Recorded Investment Invoices Investment (Dollars in millions) Recorded Investment > 90 Days and > 90 Days and Not At March 31, 2019: Investment > 90 Days (1) Accruing (1) Accruing Accruing (2) Americas $ $ $ $ $ EMEA Asia Pacific Total lease receivables $ $ $ $ $ Americas $ $ $ $ $ EMEA Asia Pacific Total loan receivables $ $ $ $ $ Total $ $ $ $ $ (1) At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days. (2) Of the recorded investment not accruing, $247 million is individually evaluated for impairment with a related allowance of $217 million. Recorded Billed Recorded Total Recorded Investment Invoices Investment (Dollars in millions) Recorded Investment > 90 Days and > 90 Days and Not At December 31, 2018: Investment > 90 Days (1) Accruing (1) Accruing Accruing (2) Americas $ $ $ $ $ EMEA Asia Pacific Total lease receivables $ $ $ $ $ Americas $ $ $ $ $ EMEA Asia Pacific Total loan receivables $ $ $ $ $ Total $ $ $ $ $ (1) At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days. (2) Of the recorded investment not accruing, $249 million is individually evaluated for impairment with a related allowance of $219 million.
Schedule of net recorded investment by credit quality indicator	(Dollars in millions) Lease Receivables Loan Receivables At March 31, 2019: Americas EMEA Asia Pacific Americas EMEA Asia Pacific Credit ratings: Aaa – Aa3 $ $ $ $ $ $ A1 – A3 Baa1 – Baa3 Ba1 – Ba2 Ba3 – B1 B2 – B3 Caa – D Total $ $ $ $ $ $ (Dollars in millions) Lease Receivables Loan Receivables At December 31, 2018: Americas EMEA Asia Pacific Americas EMEA Asia Pacific Credit ratings: Aaa – Aa3 $ $ $ $ $ $ A1 – A3 Baa1 – Baa3 Ba1 – Ba2 Ba3 – B1 B2 – B3 Caa – D Total $ $ $ $ $ $

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2019
Stock-Based Compensation
Stock-based compensation cost included in income from continuing operations	(Dollars in millions) For the three months ended March 31: 2019 2018 Cost $ $ Selling, general and administrative Research, development and engineering Pre-tax stock-based compensation cost $ $ Income tax benefits ) ) Total net stock-based compensation cost $ $

Segments (Tables)

Segments (Tables)	3 Months Ended
	Mar. 31, 2019
Segments
Revenue and Pre-tax Income by Segment	Cloud & Global Global Cognitive Business Technology Global Total (Dollars in millions) Software Services Services Systems Financing Segments For the three months ended March 31, 2019: External revenue $ $ $ $ $ $ Internal revenue Total revenue $ $ $ $ $ $ Pre-tax income/(loss) from continuing operations $ $ $ $ ) $ $ Revenue year-to-year change )% )% )% )% )% )% Pre-tax income year-to-year change % % % )% )% % Pre-tax income/(loss) margin % % % )% % % For the three months ended March 31, 2018: External revenue $ * $ * $ * $ $ $ * Internal revenue * * Total revenue $ * $ * $ * $ $ $ * Pre-tax income/(loss) from continuing operations $ * $ * $ * $ ) $ $ * Pre-tax income/(loss) margin %* %* %* )% % %* * Recast to conform to 2019 presentation.
Reconciliation of segment revenue to IBM as reported	(Dollars in millions) For the three months ended March 31: 2019 2018 Revenue: Total reportable segments $ $ * Other — divested businesses * Other revenue Eliminations of internal transactions ) )* Total consolidated revenue $ $ * Recast to conform to 2019 presentation.
Reconciliation of segment pre-tax income to IBM as reported	(Dollars in millions) For the three months ended March 31: 2019 2018 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 ) )* Other — divested businesses ) * Unallocated corporate amounts ) ) Total pre-tax income from continuing operations $ $ * Recast to conform to 2019 presentation.

Equity Activity (Tables)

Equity Activity (Tables)	3 Months Ended
	Mar. 31, 2019
Equity Activity
Reclassifications and Taxes Related to Items of Other Comprehensive Income	(Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended March 31, 2019: 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 services ) ) Cost of sales ) ) Cost of financing ) 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) $ $ ) $ (1) These AOCI components are included in the computation of net periodic pension cost. Refer to note 10, “Retirement-Related Benefits,” for additional information. (Dollars in millions) Before Tax Tax (Expense)/ Net of Tax For the three months ended March 31, 2018: 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 services ) ) Cost of sales ) Cost of financing* ) 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) $ $ ) $ * Reclassified to conform to current period presentation. (1) These AOCI components are included in the computation of net periodic pension cost. Refer to note 10, “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, 2019 $ $ ) $ ) $ $ ) Other comprehensive income before reclassifications ) ) ) ) Amount reclassified from accumulated other comprehensive income — — Total change for the period $ ) $ $ $ ) $ March 31, 2019 $ $ ) $ ) $ ) $ ) * 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, 2018 $ $ ) $ ) $ $ ) Cumulative effect of a change in accounting principle ** ) ) ) Other comprehensive income before reclassifications ) ) ) Amount reclassified from accumulated other comprehensive income ) Total change for the period $ $ ) $ $ ) $ March 31, 2018 $ $ ) $ ) $ ) $ ) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. ** Reflects the adoption of the FASB guidance on stranded tax effects, hedging and financial instruments. Refer to note 2, “Accounting Changes.”

Retirement-Related Benefits (Ta

Retirement-Related Benefits (Tables)	3 Months Ended
	Mar. 31, 2019
Retirement-Related Benefits
Pre-tax cost for all retirement-related plans	Yr. to Yr. (Dollars in millions) Percent For the three months ended March 31: 2019 2018 Change Retirement-related plans — cost Defined benefit and contribution pension plans — cost $ $ )% Nonpension postretirement plans — cost Total $ $ )%
Components of the cost/(income) for the company's pension plans	(Dollars in millions) U.S. Plans Non-U.S. Plans For the three months ended March 31: 2019 2018 2019 2018 Service cost $ — $ — $ $ Interest cost (1) Expected return on plan assets (1) ) ) ) ) Amortization of prior service costs/(credits) (1) ) ) Recognized actuarial losses (1) Curtailments and settlements (1) — — Multi-employer plans — — Other costs/(credits) (1) — — Total net periodic pension (income)/cost of defined benefit plans $ ) $ $ $ Cost of defined contribution plans Total defined benefit and contribution pension plans cost recognized in the Consolidated Statement of Earnings $ $ $ $ (1) These components of net periodic pension cost are included in other (income) and expense in the Consolidated Statement of Earnings.
Components of the cost/(income) for the company's nonpension postretirement plans	(Dollars in millions) U.S. Plan Non-U.S. Plans For the three months ended March 31: 2019 2018 2019 2018 Service cost $ $ $ $ Interest cost (1) Expected return on plan assets (1) — — ) ) Amortization of prior service costs/(credits) (1) ) ) Recognized actuarial losses (1) Curtailments and settlements (1) — — Total nonpension postretirement plans cost recognized in Consolidated Statement of Earnings $ $ $ $ (1) These components of net periodic pension cost are included in other (income) and expense in the Consolidated Statement of Earnings.

Intangible Assets Including G_2

Intangible Assets Including Goodwill (Tables)	3 Months Ended
	Mar. 31, 2019
Intangible Assets Including Goodwill
Intangible asset balances by major asset class	At March 31, 2019 (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, 2018 (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 2019 (for Q2 - Q4) $ $ $ 2020 2021 2022 2023 —
Changes in goodwill balances by reportable segment	Foreign Currency Purchase Translation (Dollars in millions) Balance Goodwill Price And Other Balance Segment 1/1/2019 Additions Adjustments Divestitures Adjustments* 3/31/2019 Cloud & Cognitive Software $ $ — $ $ — $ $ Global Business Services — — ) Global Technology Services — — — Systems — — — Other — divested businesses — — ) — Total $ $ — $ $ ) $ $ * Primarily driven by foreign currency translation. Foreign Currency Purchase Translation (Dollars in millions) Balance Goodwill Price And Other Balance Segment 1/1/2018 Additions Adjustments Divestitures Adjustments** 12/31/2018 Cloud & Cognitive Software* $ $ $ $ ) $ ) $ Global Business Services* ) — ) Global Technology Services* — — ) Systems — — ) Other — divested businesses* ) Total $ $ $ ) $ ) $ ) $ * Recast to conform to 2019 presentation. ** Primarily driven by foreign currency translation.

Borrowings (Tables)

Borrowings (Tables)	3 Months Ended
	Mar. 31, 2019
Borrowings
Short-Term Debt	At March 31, At December 31, (Dollars in millions) 2019 2018 Commercial paper $ $ Short-term loans Long-term debt — current maturities Total $ $
Long-Term Debt, Pre-Swap Borrowing	Balance Balance (Dollars in millions) Maturities 3/31/2019 12/31/2018 U.S. dollar debt (weighted-average interest rate at March 31, 2019):* 3.2% $ $ 2.6% 2.9% 2.5% 3.2% 3.6% 7.0% 3.5% 4.7% 6.5% 3.7% 5.9% 8.0% 5.6% 4.0% 7.0% 4.7% 7.1% $ $ Other currencies (weighted-average interest rate at March 31, 2019, in parentheses):* Euros (1.3%) 2019–2031 $ $ Pound sterling (2.7%) 2020–2022 Japanese yen (0.3%) 2022–2026 Other (6.5%) 2019–2022 $ $ 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 finance 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 IBM, 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 obligations of long-term debt outstanding	Pre-swap annual contractual obligations of long-term debt outstanding at March 31, 2019, are as follows: (Dollars in millions) Total 2019 (for Q2 - Q4) $ 2020 2021 2022 2023 2024 and beyond Total $
Interest on Debt	(Dollars in millions) For the three months ended March 31: 2019 2018 Cost of financing $ $ Interest expense Interest capitalized Total interest paid and accrued $ $

Commitments (Tables)

Commitments (Tables)	3 Months Ended
	Mar. 31, 2019
Commitments
Changes in warranty liabilities	Standard Warranty Liability (Dollars in millions) 2019 2018 Balance at January 1 $ $ Current period accruals Accrual adjustments to reflect actual experience ) ) Charges incurred ) ) Balance at March 31 $ $ Extended Warranty Liability (Dollars in millions) 2019 2018 Aggregate deferred revenue at January 1 $ $ Revenue deferred for new extended warranty contracts Amortization of deferred revenue ) ) Other* ) Aggregate deferred revenue at March 31 $ $ Current portion $ $ Noncurrent portion $ $ * Other primarily consists of foreign currency translation adjustments.

Earnings Per Share of Common _2

Earnings Per Share of Common Stock (Tables)	3 Months Ended
	Mar. 31, 2019
Earnings Per Share of Common Stock
Computation of basic and diluted earnings per share	For the Three Months Ended March 31, 2019 March 31, 2018 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) $ $ Income/(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) $ $ Income/(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 - Noncont

Basis of Presentation - Noncontrolling Interest (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Provision for/(benefit from) income taxes	$ 289	$ (540)
Effective tax rate (as a percent)	15.40%	(47.50%)
Tax charge resulting from additional U.S. tax reform guidelines	$ 129
Other (income) and expense
Noncontrolling interest amounts, net of tax	$ 7	$ 7.8

Accounting Changes - Tax Reform

Accounting Changes - Tax Reform and Leases (Details) - USD ($) $ in Millions	Jan. 01, 2018	Mar. 31, 2019		Jan. 01, 2019
Leases
Package of practical expedients		true
Operating right-of-use assets		$ 4,634	[1]	$ 4,800
Financing right-of-use assets				200
Operating lease liabilities		4,903		5,100
Financing lease liabilities		$ 156		$ 200
Stranded tax effects
Reclassification from AOCI to retained earnings for stranded tax effects of U.S. tax reform	$ (2,400)
[1]	Reflects the adoption of the FASB guidance on leases. Refer to note 2, "Accounting Changes" and note 5, "Leases.”

Accounting Changes - Revenue Re

Accounting Changes - Revenue Recognition (Details) - USD ($) $ in Millions	Jan. 01, 2018	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2018	Mar. 31, 2019
Accounting Changes
Deferred tax assets		$ 5,216		$ 5,216	$ 5,284
Liability for taxes		3,046		3,046	$ 2,484
Accounting Standards Update 2014-09, Revenue from Contracts with Customers
Accounting Changes
Cumulative-effect net change in retained earnings			$ 524
Accounting Standards Update 2014-09, Revenue from Contracts with Customers | Adjustments from Prior GAAP
Accounting Changes
Net contract assets	$ 557
Deferred costs	737
Deferred income	29
Deferred tax assets	(184)
Liability for taxes		(56)		(56)
Cumulative-effect net change in retained earnings	$ 524	$ 56		$ 580

Revenue Recognition - Disaggreg

Revenue Recognition - Disaggregation of Revenue by Major Products/Service Offerings (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue by Major Products/Service Offerings
Total Revenue	$ 18,182	$ 19,072
Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Total Revenue	17,765	18,557
Other
Revenue by Major Products/Service Offerings
Total Revenue	417	515
Cloud & Cognitive Software | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Total Revenue	5,037	5,116
Global Business Services | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Total Revenue	4,119	4,115
Global Technology Services | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Total Revenue	6,875	7,421
Systems | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Total Revenue	1,328	1,500
Global Financing | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Total Revenue	406	405
Cognitive Applications
Revenue by Major Products/Service Offerings
Total Revenue	1,308	1,286
Cognitive Applications | Cloud & Cognitive Software | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Revenue	1,308	1,286
Cloud & Data Platforms
Revenue by Major Products/Service Offerings
Total Revenue	1,917	1,950
Cloud & Data Platforms | Cloud & Cognitive Software | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Revenue	1,917	1,950
Transaction Processing Platforms
Revenue by Major Products/Service Offerings
Total Revenue	1,812	1,880
Transaction Processing Platforms | Cloud & Cognitive Software | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Revenue	1,812	1,880
Consulting
Revenue by Major Products/Service Offerings
Total Revenue	1,964	1,867
Consulting | Global Business Services | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Revenue	1,964	1,867
Global Process Services
Revenue by Major Products/Service Offerings
Total Revenue	247	246
Global Process Services | Global Business Services | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Revenue	247	246
Application Management
Revenue by Major Products/Service Offerings
Total Revenue	1,908	2,002
Application Management | Global Business Services | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Revenue	1,908	2,002
Infrastructure & Cloud Services
Revenue by Major Products/Service Offerings
Total Revenue	5,209	5,639
Infrastructure & Cloud Services | Global Technology Services | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Revenue	5,209	5,639
Technology Support Services
Revenue by Major Products/Service Offerings
Total Revenue	1,665	1,782
Technology Support Services | Global Technology Services | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Revenue	1,665	1,782
Systems Hardware
Revenue by Major Products/Service Offerings
Total Revenue	914	1,093
Systems Hardware | Systems | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Revenue	914	1,093
Operating Systems Software
Revenue by Major Products/Service Offerings
Total Revenue	414	407
Operating Systems Software | Systems | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Revenue	414	407
Global Financing
Revenue by Major Products/Service Offerings
Total Revenue	406	405
Global Financing | Global Financing | Business Segments, Excluding Intersegment Revenue
Revenue by Major Products/Service Offerings
Financial Services Revenue	406	405
Other Revenue
Revenue by Major Products/Service Offerings
Total Revenue	417	515
Other Revenue | Other
Revenue by Major Products/Service Offerings
Revenue	$ 417	$ 515

Revenue Recognition - Disaggr_2

Revenue Recognition - Disaggregation of Revenue by Geography (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue by Geography
Revenues	$ 18,182	$ 19,072
Americas
Revenue by Geography
Revenues	8,493	8,707
EMEA
Revenue by Geography
Revenues	5,727	6,176
Asia Pacific
Revenue by Geography
Revenues	$ 3,961	$ 4,188

Revenue Recognition - Remaining

Revenue Recognition - Remaining Performance Obligations (Details) - USD ($) $ in Billions	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Revenue Recognition
Practical expedient, remaining performance obligations	true	true
Remaining performance obligations related to customer contracts that are unsatisfied or partially unsatisfied	$ 118	$ 124

Revenue Recognition - Remaini_2

Revenue Recognition - Remaining Performance Obligations, Expected Timing of Satisfaction (Details)	Mar. 31, 2019	Dec. 31, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Remaining Performance Obligations
Percentage of remaining performance obligation expected to be recognized		60.00%
Duration of expected recognition period for remaining performance obligation		2 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01
Remaining Performance Obligations
Percentage of remaining performance obligation expected to be recognized	60.00%
Duration of expected recognition period for remaining performance obligation	2 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Remaining Performance Obligations
Percentage of remaining performance obligation expected to be recognized		35.00%
Duration of expected recognition period for remaining performance obligation		3 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01
Remaining Performance Obligations
Percentage of remaining performance obligation expected to be recognized	35.00%
Duration of expected recognition period for remaining performance obligation	3 years

Revenue Recognition - Performan

Revenue Recognition - Performance Obligations Satisfied or Partially Satisfied in Prior Periods (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue Recognition
Impact to revenue from performance obligations satisfied (or partially satisfied) in previous periods		$ (22)

Revenue Recognition - Reconcili

Revenue Recognition - Reconciliation of Contract Balances (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Reconciliation of Contract Balances
Notes and accounts receivable - trade (net of allowances)	$ 6,987		$ 7,432
Notes and accounts receivable - trade, allowances	316		309
Contract assets	528		470
Deferred income (current)	12,134		11,165
Deferred income (noncurrent)	3,481		$ 3,445
Revenue recognized that was included in deferred income at the beginning of the period	$ 3,500	$ 3,500

Financial Instruments - Fair Va

Financial Instruments - Fair Value Measurements (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Financial assets and financial liabilities measured at fair value on a recurring basis:
Debt securities - current	$ 872	$ 618
Derivative assets	694	731
Derivative liabilities	705	383
Potential reduction in net position of total derivative assets	353	267
Recurring
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents	14,209	7,704
Equity investments	0	0
Debt securities - current	872	618
Derivative assets	694	731
Total assets	15,776	9,053
Derivative liabilities	705	383
Potential reduction in net position of total derivative assets	353	267
Potential reduction in net position of total derivative liabilities	353	267
Recurring | Prepaid expenses and other current assets
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets	346	385
Recurring | Investments and sundry assets
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets	348	347
Recurring | Other accrued expenses and liabilities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative liabilities	316	177
Recurring | Other liabilities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative liabilities	389	206
Recurring | Time deposits and certificates of deposit
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents	12,686	7,679
Recurring | Money market funds
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents	25	25
Recurring | U.S. government securities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents	1,498
Recurring | Level 1
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents	25	25
Equity investments	0	0
Derivative assets	4	1
Total assets	29	26
Derivative liabilities		40
Recurring | Level 1 | Money market funds
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents	25	25
Recurring | Level 2
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents	14,184	7,679
Debt securities - current	872	618
Derivative assets	690	731
Total assets	15,747	9,028
Derivative liabilities	705	343
Recurring | Level 2 | Time deposits and certificates of deposit
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents	12,686	$ 7,679
Recurring | Level 2 | U.S. government securities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents	$ 1,498

Financial Instruments - Not Mea

Financial Instruments - Not Measured at Fair Value (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Long-Term Debt
Carrying amount of long-term debt	$ 39,727	$ 35,605
Estimated fair value of long-term debt	$ 41,675	$ 36,599

Financial Instruments - Availab

Financial Instruments - Available-For-Sale Securities (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Sales of available-for-sale securities
Gross realized gains (before taxes)
Gross realized losses (before taxes)
Maximum contractual maturities of substantially all available-for-sale debt securities	1 year
Net changes related to available-for-sale securities, net of tax:
Net unrealized gains/(losses) arising during the period

Financial Instruments - Derivat

Financial Instruments - Derivatives, Offsetting (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Derivative Financial Instruments
Fair value of derivative instruments under collateralized arrangements in a liability position	$ 359	$ 74
Collateral posted on derivative instruments	$ 14	0
Maximum spread on credit default swap agreements before full collateralization is required	2.50%
Fair value of total derivative instruments, Assets	$ 694	731
Liabilities included in master netting arrangements	353	267
Obligation to return cash collateral	20	70
Non-cash collateral received	0	0
Net exposure related to derivative assets recorded in the Statement of Financial Position	321	395
Net position related to derivative liabilities recorded in the Statement of Financial Position	338	116
Cash collateral rehypothecated	14	0
Other receivables
Derivative Financial Instruments
Right to reclaim cash collateral	14	0
Accounts payable
Derivative Financial Instruments
Obligation to return cash collateral	$ 20	$ 70

Financial Instruments - Deriv_2

Financial Instruments - Derivatives, Hedging Programs (Details) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2019USD ($)instrument	Dec. 31, 2018USD ($)instrument
Derivative instruments in fair value hedges | Interest rate swaps
Derivative Financial Instruments
Notional amount	$ 6,800	$ 7,600
Average remaining maturity	3 years 7 months 6 days	3 years 6 months
Derivative instruments in cash flow hedges | Interest rate swaps
Derivative Financial Instruments
Notional amount	$ 0	$ 0
Derivative instruments in cash flow hedges | Forward-starting interest rate swaps
Derivative Financial Instruments
Maximum length of time hedged	30 years
Notional amount	$ 5,500	5,500
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges	(206)	(35)
Gains (losses) expected to be reclassified to net income within the next 12 months	$ (11)
Derivative instruments in cash flow hedges | Foreign exchange forward contracts
Derivative Financial Instruments
Maximum length of time hedged	4 years
Notional amount	$ 10,000	$ 9,800
Average remaining maturity	9 months 18 days	9 months 18 days
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges	$ 356	$ 342
Gains (losses) expected to be reclassified to net income within the next 12 months	$ 256
Derivative instruments in cash flow hedges | Cross-currency swaps
Derivative Financial Instruments
Maximum length of time hedged	12 years
Notional amount	$ 12,200	6,500
Net gains (losses) before taxes in other comprehensive income/(loss), cash flow hedges	(21)	75
Gains (losses) expected to be reclassified to net income within the next 12 months	346
Instruments in net investment hedges
Derivative Financial Instruments
Notional amount	$ 6,000	$ 6,400
Average remaining maturity	2 months 12 days	2 months 12 days
Not designated as hedging instruments - economic hedges | Foreign exchange contracts
Derivative Financial Instruments
Notional amount	$ 5,000	$ 5,200
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 - Deriv_3

Financial Instruments - Derivatives, Fair Value (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	$ 694	$ 731
Fair value of total derivative instruments, Liabilities	705	383
Short-term debt	10,250	10,207
Long-term debt (excluding current portion)	39,727	35,605
Fair value of total derivative liabilities and debt	6,880	6,644
Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	662	704
Fair value of total derivative instruments, Liabilities	699	320
Designated as hedging instruments | Instruments in net investment hedges
Fair Values of Derivative Instruments
Long-term debt (excluding current portion)	6,175	6,261
Total debt designated as hedging instruments	6,175	6,261
Not designated as hedging instruments - economic hedges
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	32	28
Fair value of total derivative instruments, Liabilities	6	63
Prepaid expenses and other current assets | Interest rate contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	12	9
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	301	348
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	22	26
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	10	2
Investments and sundry assets | Interest rate contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	245	212
Investments and sundry assets | Foreign exchange contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Assets	104	135
Other accrued expenses and liabilities | Interest rate contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities	211	4
Other accrued expenses and liabilities | Foreign exchange contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities	99	110
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	5	13
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	0	51
Other liabilities | Interest rate contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities	24	76
Other liabilities | Foreign exchange contracts | Designated as hedging instruments
Fair Values of Derivative Instruments
Fair value of total derivative instruments, Liabilities	$ 365	$ 129

Financial Instruments - Cumulat

Financial Instruments - Cumulative Basis Adjustments for Fair Value Hedges (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Short-term debt
Amounts recorded in the Consolidated Statement of Financial Position related to cumulative basis adjustments for fair value hedges
Carrying amount of the hedged item	$ (1,129)	$ (1,878)
Cumulative hedging adjustment included in the carrying amount - assets/(liabilities)	(4)	(4)
Hedging adjustments on discontinued hedging relationships	(4)	(6)
Long-term debt
Amounts recorded in the Consolidated Statement of Financial Position related to cumulative basis adjustments for fair value hedges
Carrying amount of the hedged item	(6,073)	(6,004)
Cumulative hedging adjustment included in the carrying amount - assets/(liabilities)	(402)	(333)
Hedging adjustments on discontinued hedging relationships	$ (209)	$ (213)

Financial Instruments - Effect

Financial Instruments - Effect of Hedge Activity on Income and Expense (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Derivative Instruments, Gain (Loss)
Cost	$ 10,139	$ 10,825
SG&A expense	4,691	5,445
Other (income) and expense	(73)	413
Interest expense	210	165
Cost of services
Derivative Instruments, Gain (Loss)
Gains/(losses) of total hedge activity	10	19
Cost of sales
Derivative Instruments, Gain (Loss)
Gains/(losses) of total hedge activity	18	(17)
Cost of financing
Derivative Instruments, Gain (Loss)
Gains/(losses) of total hedge activity	(18)	4
SG&A expense
Derivative Instruments, Gain (Loss)
Gains/(losses) of total hedge activity	141	(33)
Other (income) and expense
Derivative Instruments, Gain (Loss)
Gains/(losses) of total hedge activity	(69)	49
Interest expense
Derivative Instruments, Gain (Loss)
Gains/(losses) of total hedge activity	(20)	4
Services
Derivative Instruments, Gain (Loss)
Cost	8,359	8,835
Sales
Derivative Instruments, Gain (Loss)
Cost	1,516	1,722
Financing
Derivative Instruments, Gain (Loss)
Cost	$ 264	$ 269

Financial Instruments - Deriv_4

Financial Instruments - Derivatives, Gains and Losses (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	$ 212	$ (222)
Gain (loss) recognized in earnings attributable to risk being hedged	(69)	182
Cash flow hedges and net investment hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI	(333)	(143)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	(98)	54
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing	17	12
Interest rate contracts | Derivative instruments in cash flow hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI	(171)
Foreign exchange contracts | Derivative instruments in cash flow hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI	(181)	61
Foreign exchange contracts | Instruments in net investment hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI	19	(204)
Cost of services | Foreign exchange contracts | Derivative instruments in cash flow hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	10	19
Cost of sales | Foreign exchange contracts | Derivative instruments in cash flow hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	18	(17)
Cost of financing | Interest rate contracts | Derivative instruments in fair value hedges
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	36	(80)
Gain (loss) recognized in earnings attributable to risk being hedged	(33)	96
Cost of financing | Foreign exchange contracts | Derivative instruments in cash flow hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	(29)	(18)
Cost of financing | Foreign exchange contracts | Instruments in net investment hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing	8	6
SG&A expense | Foreign exchange contracts | Derivative instruments in cash flow hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	22	(18)
SG&A expense | Equity contracts | Not designated as hedging instruments - economic hedges
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	119	(14)
Other (income) and expense | Foreign exchange contracts | Derivative instruments in cash flow hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	(87)	104
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	18	(55)
Interest expense | Interest rate contracts | Derivative instruments in fair value hedges
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	39	(72)
Gain (loss) recognized in earnings attributable to risk being hedged	(36)	87
Interest expense | Foreign exchange contracts | Derivative instruments in cash flow hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	(33)	(16)
Interest expense | Foreign exchange contracts | Instruments in net investment hedges
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing	$ 9	$ 6

Financial Instruments - Deriv_5

Financial Instruments - Derivatives, Other Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Financial Instruments
Gains (losses) excluded from the assessment of hedge effectiveness for fair value hedges
Gains (losses) excluded from the assessment of hedge effectiveness for cash flow hedges
Gains (losses) associated with underlying exposure that did not occur or was not expected to occur for cash flow hedges

Leases - Components of Lease Co

Leases - Components of Lease Costs (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Jan. 01, 2019
Lessee, Lease, Description [Line Items]
ROU assets		$ 200
Lease liabilities	$ 156	$ 200
Finance lease cost
Amortization of ROU assets	4
Interest on lease liabilities	1
Operating lease cost	386
Short-term lease cost	9
Variable lease cost	128
Sublease income	(2)
Total lease cost	$ 526
Real estate
Lessee, Lease, Description [Line Items]
Average term (in years)	5 years
Equipment leases | Minimum
Lessee, Lease, Description [Line Items]
Average term (in years)	2 years
Equipment leases | Maximum
Lessee, Lease, Description [Line Items]
Average term (in years)	5 years
Property, plant and equipment
Lessee, Lease, Description [Line Items]
ROU assets	$ 149
Short-term debt
Lessee, Lease, Description [Line Items]
Lease liabilities	13
Long-term debt
Lessee, Lease, Description [Line Items]
Lease liabilities	$ 144

Leases - Cash Flow From Lease T

Leases - Cash Flow From Lease Transactions (Details) - USD ($) $ in Millions	Jan. 01, 2019	Mar. 31, 2019
Leases
(Gains) and losses on sale and leaseback transactions, net		$ (36)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows from finance leases		1
Financing cash outflows from finance leases		3
Operating cash outflows from operating leases		380
ROU assets obtained in exchange for new finance lease liabilities		153
ROU assets obtained in exchange for new operating lease liabilities	$ 156	$ 4,958
Weighted-average remaining lease term - finance leases		10 years 8 months 12 days
Weighted-average remaining lease term - operating leases		5 years 1 month 6 days
Weighted-average discount rate - finance leases		3.64%
Weighted-average discount rate - operating leases		3.34%

Leases - Maturity Analysis of U

Leases - Maturity Analysis of Undiscounted Cash Flows (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Mar. 31, 2019	Jan. 01, 2019
Finance leases
2019		$ 13
2020		18
2021		18
2022		18
2023		16
Beyond 2023		105
Imputed Interest		(33)
Total		156	$ 200
Operating leases
2019		1,192
2020		1,258
2021		937
2022		655
2023		435
Beyond 2023		829
Imputed Interest		(403)
Total		$ 4,903	$ 5,100
Rental Expense	$ 1,944

Leases - Gross Minimum Rental C

Leases - Gross Minimum Rental Commitments (Details) $ in Millions	Dec. 31, 2018USD ($)
Operating lease commitments
Gross minimum rental commitments (including vacant space below) for 2019	$ 1,581
Gross minimum rental commitments (including vacant space below) for 2020	1,233
Gross minimum rental commitments (including vacant space below) for 2021	914
Gross minimum rental commitments (including vacant space below) for 2022	640
Gross minimum rental commitments (including vacant space below) for 2023	445
Gross minimum rental commitments (including vacant space below) beyond 2023	815
Vacant space for 2019	29
Vacant space for 2020	23
Vacant space for 2021	14
Vacant space for 2022	9
Vacant space for 2023	5
Vacant space beyond 2023	8
Sublease income commitments for 2019	11
Sublease income commitments for 2020	7
Sublease income commitments for 2021	5
Sublease income commitments for 2022	4
Sublease income commitments for 2023	4
Sublease income commitments beyond 2023	2
Capital lease commitments
Capital lease commitments for 2019	3
Capital lease commitments for 2020	3
Capital lease commitments for 2021	3
Capital lease commitments for 2022	3
Capital lease commitments for 2023	2
Capital lease commitments beyond 2023	$ 28

Leases - Lease Amounts Included

Leases - Lease Amounts Included in Consolidated Statement of Earnings (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019USD ($)
Lease income - sales-type and direct financing leases
Sales-type lease selling price	$ 149
Less: Carrying value of underlying assets, excluding unguaranteed residual value	55
Gross profit	94
Interest income on lease receivables	79
Total sales-type and direct financing lease income	172
Lease income - operating leases	90
Variable lease income	18
Total lease income	$ 280

Leases - Maturity Analysis of L

Leases - Maturity Analysis of Lease Payments Due on Sales-type and Direct Financing Leases (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Leases
Unguaranteed residual value of sales-type and direct financing leases	$ 566	$ 589
Maturity analysis of the lease payments due on sales-type and direct financing leases
2019	2,167
2020	2,173
2021	1,353
2022	616
2023	145
Thereafter	9
Total undiscounted cash flows	6,462
Present value of lease payments (recognized as financing receivables)	5,965
Difference between undiscounted cash flows and discounted cash flows	$ 497

Leases - Maturity Analysis of_2

Leases - Maturity Analysis of Undiscounted Lease Payments on Operating Leases (Details) $ in Millions	Mar. 31, 2019USD ($)
Operating leases
Unguaranteed residual value for operating leases	$ 103
Maturity analysis of the undiscounted lease payments
2019	183
2020	136
2021	43
2022	2
2023	0
Thereafter	0
Total undiscounted cash flows	$ 364
Equipment provided to customers under operating lease | Minimum
Operating leases
Lease term	1 year
Equipment provided to customers under operating lease | Maximum
Operating leases
Lease term	6 years

Financing Receivables - Payment

Financing Receivables - Payment Terms (Details)	3 Months Ended
	Mar. 31, 2019
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 | Minimum
Financing receivables
Financing receivable, payment terms	30 days
Commercial Financing Receivables | Maximum
Financing receivables
Financing receivable, payment terms	90 days
Loan receivables | Maximum
Financing receivables
Financing receivable, payment terms	7 years

Financing Receivables - Compone

Financing Receivables - Components of Financing Receivables (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Components of the company's financing receivables
Financing receivables, gross	$ 29,444	$ 32,348
Unearned income	(1,148)	(1,195)
Recorded Investment	28,296	31,153
Allowance for credit losses	(287)	(292)
Unguaranteed residual value	566	589
Guaranteed residual value	72	85
Total financing receivables, net	28,648	31,536
Current portion	20,287	22,388
Noncurrent portion	8,361	9,148
Financing receivables pledged as collateral for borrowings	868	710
Financing receivables held for sale	0	0
Lease receivables
Components of the company's financing receivables
Financing receivables, gross	6,477	6,846
Unearned income	(497)	(526)
Recorded Investment	5,980	6,320
Allowance for credit losses	(95)	(99)	$ (103)
Unguaranteed residual value	566	589
Guaranteed residual value	72	85
Total financing receivables, net	6,523	6,895
Current portion	2,712	2,834
Noncurrent portion	3,811	4,061
Commercial Financing Receivables
Components of the company's financing receivables
Financing receivables, gross	10,385	11,889
Unearned income	(34)	(37)
Recorded Investment	10,351	11,852
Allowance for credit losses	(18)	(13)
Total financing receivables, net	10,333	11,838
Current portion	10,333	11,838
Loan receivables
Components of the company's financing receivables
Financing receivables, gross	12,582	13,614
Unearned income	(617)	(632)
Recorded Investment	11,965	12,981
Allowance for credit losses	(174)	(179)	$ (211)
Total financing receivables, net	11,791	12,802
Current portion	7,241	7,716
Noncurrent portion	$ 4,550	$ 5,086

Financing Receivables - By Port

Financing Receivables - By Portfolio Segment (Details) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2019USD ($)item	Mar. 31, 2018USD ($)	Dec. 31, 2018USD ($)
Financing receivables
Recorded investment	$ 28,296		$ 31,153
Allowance for credit losses:
Allowance for credit losses, beginning balance	292
Allowance for credit losses, ending balance	$ 287		292
Total Lease Receivable and Loan Receivable Portfolio Segments
Financing receivables
Number of portfolio segments | item	2
Number of classes of financing receivable | item	3
Recorded investment	$ 17,945		19,301
Recorded investment collectively evaluated for impairment	17,699		19,052
Recorded investment individually evaluated for impairment	247		249
Allowance for credit losses:
Allowance for credit losses, beginning balance	279	$ 314	314
Write-offs	(8)		(35)
Recoveries	0		2
Provision	(1)		16
Other	(1)		(19)
Allowance for credit losses, ending balance	269		279
Related allowance, collectively evaluated for impairment	52		59
Related allowance, individually evaluated for impairment	217		219
Interest income recognized on impaired leases and loans
Interest income recognized on a cash basis
Total Lease Receivable and Loan Receivable Portfolio Segments | Americas
Financing receivables
Recorded investment	9,820		10,644
Recorded investment collectively evaluated for impairment	9,672		10,498
Recorded investment individually evaluated for impairment	148		146
Allowance for credit losses:
Allowance for credit losses, beginning balance	158	172	172
Write-offs	(4)		(10)
Recoveries	0		0
Provision	3		7
Other	(1)		(11)
Allowance for credit losses, ending balance	155		158
Related allowance, collectively evaluated for impairment	33		39
Related allowance, individually evaluated for impairment	122		119
Average recorded investment of impaired leases and loans	147	130
Total Lease Receivable and Loan Receivable Portfolio Segments | EMEA
Financing receivables
Recorded investment	4,603		5,016
Recorded investment collectively evaluated for impairment	4,555		4,964
Recorded investment individually evaluated for impairment	48		52
Allowance for credit losses:
Allowance for credit losses, beginning balance	65	61	61
Write-offs	(1)		(2)
Recoveries	0		0
Provision	(5)		9
Other	0		(3)
Allowance for credit losses, ending balance	59		65
Related allowance, collectively evaluated for impairment	14		16
Related allowance, individually evaluated for impairment	45		49
Average recorded investment of impaired leases and loans	50	55
Total Lease Receivable and Loan Receivable Portfolio Segments | Asia Pacific
Financing receivables
Recorded investment	3,522		3,641
Recorded investment collectively evaluated for impairment	3,471		3,590
Recorded investment individually evaluated for impairment	50		51
Allowance for credit losses:
Allowance for credit losses, beginning balance	56	82	82
Write-offs	(2)		(23)
Recoveries	0		2
Provision	0		0
Other	1		(4)
Allowance for credit losses, ending balance	55		56
Related allowance, collectively evaluated for impairment	5		5
Related allowance, individually evaluated for impairment	50		51
Average recorded investment of impaired leases and loans	51	81
Lease receivables
Financing receivables
Recorded investment	5,980		6,320
Allowance for credit losses:
Allowance for credit losses, beginning balance	99	103	103
Write-offs	(3)		(15)
Provision			14
Allowance for credit losses, ending balance	95		99
Lease receivables | Americas
Financing receivables
Recorded investment	3,617		3,827
Allowance for credit losses:
Allowance for credit losses, beginning balance	53	63	63
Allowance for credit losses, ending balance	49		53
Lease receivables | EMEA
Financing receivables
Recorded investment	1,230		1,341
Allowance for credit losses:
Allowance for credit losses, beginning balance	22	9	9
Allowance for credit losses, ending balance	22		22
Lease receivables | Asia Pacific
Financing receivables
Recorded investment	1,133		1,152
Allowance for credit losses:
Allowance for credit losses, beginning balance	24	31	31
Allowance for credit losses, ending balance	24		24
Loan receivables
Financing receivables
Recorded investment	11,965		12,981
Allowance for credit losses:
Allowance for credit losses, beginning balance	179	211	211
Write-offs	(5)		(20)
Provision			2
Allowance for credit losses, ending balance	174		179
Loan receivables | Americas
Financing receivables
Recorded investment	6,203		6,817
Allowance for credit losses:
Allowance for credit losses, beginning balance	105	108	108
Allowance for credit losses, ending balance	106		105
Loan receivables | EMEA
Financing receivables
Recorded investment	3,374		3,675
Allowance for credit losses:
Allowance for credit losses, beginning balance	43	52	52
Allowance for credit losses, ending balance	37		43
Loan receivables | Asia Pacific
Financing receivables
Recorded investment	2,388		2,489
Allowance for credit losses:
Allowance for credit losses, beginning balance	32	$ 51	51
Allowance for credit losses, ending balance	$ 31		$ 32

Financing Receivables - Past Du

Financing Receivables - Past Due (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Past Due Financing Receivable
Total Recorded Investment	$ 28,296	$ 31,153
Total Lease Receivable and Loan Receivable Portfolio Segments
Past Due Financing Receivable
Total Recorded Investment	17,945	19,301
Recorded Investment Not Accruing	291	300
Recorded investment, impaired financing receivables with related allowance	247	249
Impaired financing receivables, related allowance	217	219
Total Lease Receivable and Loan Receivable Portfolio Segments | Total Past Due > 90 days
Past Due Financing Receivable
Recorded Investment > 90 Days	717	782
Recorded Investment > 90 Days and Accruing	426	494
Billed Invoices > 90 Days and Accruing	47	52
Total Lease Receivable and Loan Receivable Portfolio Segments | Americas
Past Due Financing Receivable
Total Recorded Investment	9,820	10,644
Total Lease Receivable and Loan Receivable Portfolio Segments | EMEA
Past Due Financing Receivable
Total Recorded Investment	4,603	5,016
Total Lease Receivable and Loan Receivable Portfolio Segments | Asia Pacific
Past Due Financing Receivable
Total Recorded Investment	3,522	3,641
Lease receivables
Past Due Financing Receivable
Total Recorded Investment	5,980	6,320
Recorded Investment Not Accruing	94	97
Lease receivables | Total Past Due > 90 days
Past Due Financing Receivable
Recorded Investment > 90 Days	370	385
Recorded Investment > 90 Days and Accruing	276	292
Billed Invoices > 90 Days and Accruing	18	24
Lease receivables | Americas
Past Due Financing Receivable
Total Recorded Investment	3,617	3,827
Recorded Investment Not Accruing	54	57
Lease receivables | Americas | Total Past Due > 90 days
Past Due Financing Receivable
Recorded Investment > 90 Days	294	310
Recorded Investment > 90 Days and Accruing	240	256
Billed Invoices > 90 Days and Accruing	13	19
Lease receivables | EMEA
Past Due Financing Receivable
Total Recorded Investment	1,230	1,341
Recorded Investment Not Accruing	17	16
Lease receivables | EMEA | Total Past Due > 90 days
Past Due Financing Receivable
Recorded Investment > 90 Days	40	25
Recorded Investment > 90 Days and Accruing	22	9
Billed Invoices > 90 Days and Accruing	3	1
Lease receivables | Asia Pacific
Past Due Financing Receivable
Total Recorded Investment	1,133	1,152
Recorded Investment Not Accruing	23	24
Lease receivables | Asia Pacific | Total Past Due > 90 days
Past Due Financing Receivable
Recorded Investment > 90 Days	37	49
Recorded Investment > 90 Days and Accruing	13	27
Billed Invoices > 90 Days and Accruing	2	3
Loan receivables
Past Due Financing Receivable
Total Recorded Investment	11,965	12,981
Recorded Investment Not Accruing	197	203
Loan receivables | Total Past Due > 90 days
Past Due Financing Receivable
Recorded Investment > 90 Days	347	397
Recorded Investment > 90 Days and Accruing	150	202
Billed Invoices > 90 Days and Accruing	29	29
Loan receivables | Americas
Past Due Financing Receivable
Total Recorded Investment	6,203	6,817
Recorded Investment Not Accruing	101	99
Loan receivables | Americas | Total Past Due > 90 days
Past Due Financing Receivable
Recorded Investment > 90 Days	232	259
Recorded Investment > 90 Days and Accruing	131	166
Billed Invoices > 90 Days and Accruing	23	24
Loan receivables | EMEA
Past Due Financing Receivable
Total Recorded Investment	3,374	3,675
Recorded Investment Not Accruing	68	73
Loan receivables | EMEA | Total Past Due > 90 days
Past Due Financing Receivable
Recorded Investment > 90 Days	83	98
Recorded Investment > 90 Days and Accruing	14	25
Billed Invoices > 90 Days and Accruing	4	3
Loan receivables | Asia Pacific
Past Due Financing Receivable
Total Recorded Investment	2,388	2,489
Recorded Investment Not Accruing	28	31
Loan receivables | Asia Pacific | Total Past Due > 90 days
Past Due Financing Receivable
Recorded Investment > 90 Days	32	40
Recorded Investment > 90 Days and Accruing	4	11
Billed Invoices > 90 Days and Accruing	$ 2	$ 1

Financing Receivables - Credit

Financing Receivables - Credit Quality Indicators (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Net recorded investment for each class of receivables, by credit quality indicator
Troubled debt restructurings of financing receivables
Lease receivables | Americas
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	3,568	3,774
Lease receivables | Americas | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	454	593
Lease receivables | Americas | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	804	678
Lease receivables | Americas | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	932	892
Lease receivables | Americas | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	679	852
Lease receivables | Americas | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	454	433
Lease receivables | Americas | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	198	299
Lease receivables | Americas | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	47	26
Lease receivables | EMEA
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,208	1,319
Lease receivables | EMEA | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	15	45
Lease receivables | EMEA | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	136	158
Lease receivables | EMEA | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	386	417
Lease receivables | EMEA | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	437	426
Lease receivables | EMEA | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	147	171
Lease receivables | EMEA | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	69	90
Lease receivables | EMEA | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	18	10
Lease receivables | Asia Pacific
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,109	1,128
Lease receivables | Asia Pacific | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	67	85
Lease receivables | Asia Pacific | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	540	413
Lease receivables | Asia Pacific | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	199	297
Lease receivables | Asia Pacific | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	135	191
Lease receivables | Asia Pacific | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	99	84
Lease receivables | Asia Pacific | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	54	50
Lease receivables | Asia Pacific | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	15	7
Loan receivables | Americas
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	6,097	6,712
Loan receivables | Americas | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	916	1,055
Loan receivables | Americas | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	892	1,206
Loan receivables | Americas | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,602	1,587
Loan receivables | Americas | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,459	1,516
Loan receivables | Americas | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	604	770
Loan receivables | Americas | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	521	531
Loan receivables | Americas | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	104	47
Loan receivables | EMEA
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	3,337	3,633
Loan receivables | EMEA | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	127	125
Loan receivables | EMEA | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	238	436
Loan receivables | EMEA | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	1,233	1,148
Loan receivables | EMEA | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	944	1,175
Loan receivables | EMEA | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	481	472
Loan receivables | EMEA | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	284	249
Loan receivables | EMEA | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	31	28
Loan receivables | Asia Pacific
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	2,358	2,457
Loan receivables | Asia Pacific | Aaa - Aa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	159	185
Loan receivables | Asia Pacific | A1 - A3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	792	901
Loan receivables | Asia Pacific | Baa1 - Baa3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	653	648
Loan receivables | Asia Pacific | Ba1 - Ba2
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	535	417
Loan receivables | Asia Pacific | Ba3 - B1
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	126	184
Loan receivables | Asia Pacific | B2 - B3
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	75	109
Loan receivables | Asia Pacific | Caa - D
Net recorded investment for each class of receivables, by credit quality indicator
Financing receivables, net recorded investment	$ 19	$ 15

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	$ 113	$ 116
Income tax benefits	(25)	(35)
Net stock-based compensation cost	88	81
Pre-tax stock-based compensation cost increase (decrease)	(3)
Unrecognized compensation cost related to non-vested awards	$ 671
Unrecognized compensation cost related to non-vested awards, weighted average period of recognition	2 years 6 months
Cost
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	$ 20	20
SG&A expense
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	74	81
Research, development and engineering
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	$ 19	$ 16

Segments - Results of Continuin

Segments - Results of Continuing Operations (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segments
Revenue	$ 18,182	$ 19,072
Pre-tax income/(loss) from continuing operations	1,883	1,136
Business Segments, Excluding Intersegment Revenue
Segments
Revenue	17,765	18,557
Business Segments, Excluding Intersegment Revenue | Cloud & Cognitive Software
Segments
Revenue	5,037	5,116
Business Segments, Excluding Intersegment Revenue | Global Business Services
Segments
Revenue	4,119	4,115
Business Segments, Excluding Intersegment Revenue | Global Technology Services
Segments
Revenue	6,875	7,421
Business Segments, Excluding Intersegment Revenue | Systems
Segments
Revenue	1,328	1,500
Business Segments, Excluding Intersegment Revenue | Global Financing
Segments
Revenue	406	405
Internal transactions
Segments
Revenue	(1,668)	(1,743)
Pre-tax income/(loss) from continuing operations	(89)	(190)
Internal transactions | Cloud & Cognitive Software
Segments
Revenue	(841)	(931)
Internal transactions | Global Business Services
Segments
Revenue	(74)	(89)
Internal transactions | Global Technology Services
Segments
Revenue	(290)	(141)
Internal transactions | Systems
Segments
Revenue	(163)	(153)
Internal transactions | Global Financing
Segments
Revenue	(300)	(429)
Business Segments
Segments
Revenue	19,433	20,299
Pre-tax income/(loss) from continuing operations	$ 2,444	$ 2,045
Revenue year-to-year change (as a percent)	(4.30%)
Pre-tax income year-to-year change (as a percent)	19.50%
Pre-tax income/(loss) margin (as a percent)	12.60%	10.10%
Business Segments | Cloud & Cognitive Software
Segments
Revenue	$ 5,879	$ 6,047
Pre-tax income/(loss) from continuing operations	$ 1,767	$ 1,680
Revenue year-to-year change (as a percent)	(2.80%)
Pre-tax income year-to-year change (as a percent)	5.20%
Pre-tax income/(loss) margin (as a percent)	30.10%	27.80%
Business Segments | Global Business Services
Segments
Revenue	$ 4,193	$ 4,204
Pre-tax income/(loss) from continuing operations	$ 315	$ 125
Revenue year-to-year change (as a percent)	(0.30%)
Pre-tax income year-to-year change (as a percent)	152.10%
Pre-tax income/(loss) margin (as a percent)	7.50%	3.00%
Business Segments | Global Technology Services
Segments
Revenue	$ 7,164	$ 7,562
Pre-tax income/(loss) from continuing operations	$ 275	$ 66
Revenue year-to-year change (as a percent)	(5.30%)
Pre-tax income year-to-year change (as a percent)	315.10%
Pre-tax income/(loss) margin (as a percent)	3.80%	0.90%
Business Segments | Systems
Segments
Revenue	$ 1,491	$ 1,653
Pre-tax income/(loss) from continuing operations	$ (202)	$ (203)
Revenue year-to-year change (as a percent)	(9.80%)
Pre-tax income year-to-year change (as a percent)	(0.40%)
Pre-tax income/(loss) margin (as a percent)	(13.50%)	(12.30%)
Business Segments | Global Financing
Segments
Revenue	$ 706	$ 834
Pre-tax income/(loss) from continuing operations	$ 288	$ 377
Revenue year-to-year change (as a percent)	(15.40%)
Pre-tax income year-to-year change (as a percent)	(23.40%)
Pre-tax income/(loss) margin (as a percent)	40.80%	45.10%

Segments - Revenue Reconciliati

Segments - Revenue Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue
Revenue	$ 18,182	$ 19,072
Business Segments
Revenue
Revenue	19,433	20,299
Other
Revenue
Other - divested businesses	343	446
Other revenue	74	69
Revenue	417	515
Internal transactions
Revenue
Revenue	$ (1,668)	$ (1,743)

Segments - Pre-Tax Income Recon

Segments - Pre-Tax Income Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Pre-tax income from continuing operations
Amortization of acquired intangible assets	$ (173)	$ (203)
Acquisition-related (charges)/income	(39)	0
Non-operating retirement-related (costs)/income	(138)	(402)
Other - divested businesses	(55)	14
Income from continuing operations before income taxes	1,883	1,136
Business Segments
Pre-tax income from continuing operations
Income from continuing operations before income taxes	2,444	2,045
Internal transactions
Pre-tax income from continuing operations
Income from continuing operations before income taxes	(89)	(190)
Unallocated corporate amounts
Pre-tax income from continuing operations
Income from continuing operations before income taxes	$ (67)	$ (130)

Equity Activity - Reclassificat

Equity Activity - Reclassifications and Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	$ 10,139	$ 10,825
SG&A expense	4,691	5,445
Other (income) and expense	(73)	413
Interest expense	210	165
Provision for/(benefit from) income taxes	289	(540)
Net (income) loss	(1,591)	(1,679)
Other comprehensive income/(loss)	308	430
Services
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	8,359	8,835
Sales
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	1,516	1,722
Financing
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	264	269
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	(99)	(65)
Reclassification/amortization, Net of Tax Amount	407	495
Other comprehensive income/(loss), Before Tax Amount	375	573
Other comprehensive income/(loss), Tax (Expense)/Benefit	(67)	(143)
Other comprehensive income/(loss)	308	430
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	172	(115)
Reclassification/amortization, Net of Tax Amount		0
Other comprehensive income/(loss), Before Tax Amount	171	(167)
Other comprehensive income/(loss), Tax (Expense)/Benefit	0	51
Other comprehensive income/(loss)	172	(115)
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)	(2)
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	0	1
Unrealized gains/(losses) arising during the period, Net of Tax Amount	(1)	(2)
Reclassification/amortization, Net of Tax Amount		0
Other comprehensive income/(loss), Before Tax Amount	(1)	(3)
Other comprehensive income/(loss), Tax (Expense)/Benefit	0	1
Other comprehensive income/(loss)	(1)	(2)
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
Provision for/(benefit from) income taxes		0
Net (income) loss		0
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	(352)	61
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	84	(9)
Unrealized gains/(losses) arising during the period, Net of Tax Amount	(268)	51
Reclassification/amortization, Net of Tax Amount	75	(41)
Other comprehensive income/(loss), Before Tax Amount	(254)	7
Other comprehensive income/(loss), Tax (Expense)/Benefit	61	3
Other comprehensive income/(loss)	(193)	10
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications
Reclassifications and Taxes Related to Items of Other Comprehensive Income
SG&A expense	(22)	18
Other (income) and expense	87	(104)
Interest expense	33	16
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Services
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	(10)	(19)
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Sales
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	(18)	17
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Financing
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	29	18
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Cost of services
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Provision for/(benefit from) income taxes	3	5
Net (income) loss	(7)	(14)
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	5	(5)
Net (income) loss	(13)	12
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Cost of financing
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Provision for/(benefit from) income taxes	(7)	(4)
Net (income) loss	22	13
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	6	(5)
Net (income) loss	(16)	13
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	(22)	26
Net (income) loss	65	(78)
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	(8)	(4)
Net (income) loss	24	12
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	(2)	0
Reclassification/amortization, Net of Tax Amount	333	537
Other comprehensive income/(loss), Before Tax Amount	458	735
Other comprehensive income/(loss), Tax (Expense)/Benefit	(128)	(199)
Other comprehensive income/(loss)	330	537
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		(1)
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit		0
Unrealized gains/(losses) arising during the period, Net of Tax Amount		(1)
Reclassification/amortization, Before Tax Amount	(3)	(19)
Reclassification/amortization, Tax (Expense)/Benefit	1	5
Reclassification/amortization, Net of Tax Amount	(2)	(14)
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	(4)	2
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	1	(1)
Unrealized gains/(losses) arising during the period, Net of Tax Amount	(2)	1
Reclassification/amortization, Before Tax Amount	464	753
Reclassification/amortization, Tax (Expense)/Benefit	(130)	(203)
Reclassification/amortization, Net of Tax Amount	334	550
Retirement-Related Benefit Plans, Curtailments and Settlements
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Unrealized gains/(losses) arising during the period, Before Tax Amount	1	0
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	0	0
Unrealized gains/(losses) arising during the period, Net of Tax Amount	$ 1	$ 0

Equity Activity - AOCI Rollforw

Equity Activity - AOCI Rollforward (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period	$ 16,929	$ 17,725
Other comprehensive income/(loss)	308	430
Balance at the End of the Period	16,607	18,290
Accumulated Other Comprehensive Income/(Loss)
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period	(29,490)	(26,592)
Other comprehensive income before reclassifications	(99)	(65)
Amount reclassified from accumulated other comprehensive income	407	495
Other comprehensive income/(loss)	308	430
Balance at the End of the Period	(29,182)	(28,583)
Accumulated Other Comprehensive Income/(Loss) | Accounting Standards Updates 2016-01 (Financial Instruments), 2017-12 (Hedging) and 2018-02 (Stranded Tax Effects)
Accumulated Other Comprehensive Income (Loss) (net of tax)
Cumulative Effect Of Prospective Application Of New Accounting Principle, Net Of Tax		(2,422)
Net Unrealized Gains/(Losses) on Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period	284	35
Other comprehensive income before reclassifications	(268)	51
Amount reclassified from accumulated other comprehensive income	75	(41)
Other comprehensive income/(loss)	(193)	10
Balance at the End of the Period	90	50
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Accounting Standards Updates 2016-01 (Financial Instruments), 2017-12 (Hedging) and 2018-02 (Stranded Tax Effects)
Accumulated Other Comprehensive Income (Loss) (net of tax)
Cumulative Effect Of Prospective Application Of New Accounting Principle, Net Of Tax		5
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period	(3,690)	(2,834)
Other comprehensive income before reclassifications	172	(115)
Amount reclassified from accumulated other comprehensive income		0
Other comprehensive income/(loss)	172	(115)
Balance at the End of the Period	(3,519)	(2,903)
Foreign Currency Translation Adjustments | Accounting Standards Updates 2016-01 (Financial Instruments), 2017-12 (Hedging) and 2018-02 (Stranded Tax Effects)
Accumulated Other Comprehensive Income (Loss) (net of tax)
Cumulative Effect Of Prospective Application Of New Accounting Principle, Net Of Tax		46
Net Change Retirement-Related Benefit Plans
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period	(26,083)	(23,796)
Other comprehensive income before reclassifications	(2)	0
Amount reclassified from accumulated other comprehensive income	333	537
Other comprehensive income/(loss)	330	537
Balance at the End of the Period	(25,753)	(25,730)
Net Change Retirement-Related Benefit Plans | Accounting Standards Updates 2016-01 (Financial Instruments), 2017-12 (Hedging) and 2018-02 (Stranded Tax Effects)
Accumulated Other Comprehensive Income (Loss) (net of tax)
Cumulative Effect Of Prospective Application Of New Accounting Principle, Net Of Tax		(2,471)
Net Unrealized Gains/(Losses) on Available-For-Sale Securities
Accumulated Other Comprehensive Income (Loss) (net of tax)
Balance at the Beginning of the Period	0	3
Other comprehensive income before reclassifications	(1)	(2)
Amount reclassified from accumulated other comprehensive income		0
Other comprehensive income/(loss)	(1)	(2)
Balance at the End of the Period	$ (1)	(1)
Net Unrealized Gains/(Losses) on Available-For-Sale Securities | Accounting Standards Updates 2016-01 (Financial Instruments), 2017-12 (Hedging) and 2018-02 (Stranded Tax Effects)
Accumulated Other Comprehensive Income (Loss) (net of tax)
Cumulative Effect Of Prospective Application Of New Accounting Principle, Net Of Tax		$ (2)

Retirement-Related Benefits - A

Retirement-Related Benefits - All Retirement Plans Cost (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Retirement-Related Benefits
Defined benefit and contribution pension plans - cost	$ 437	$ 738
Nonpension postretirement plans - cost	54	51
Total	$ 491	$ 788
Year-to-year percent change, defined benefit and contribution pension plans cost (as a percent)	(40.80%)
Year-to-year percent change, nonpension postretirement plans cost (as a percent)	6.40%
Year-to-year percent change, total (as a percent)	(37.70%)

Retirement-Related Benefits - C

Retirement-Related Benefits - Cost of Pension Plans (Details) - USD ($) $ in Millions	Dec. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Cost/(Income) of Pension Plans
Total defined benefit and contribution pension plans cost recognized in the Consolidated Statement of Earnings		$ 437	$ 738
U.S.
Cost/(Income) of Pension Plans
Total defined benefit and contribution pension plans cost recognized in the Consolidated Statement of Earnings		115	303
U.S. | Pension Plans
Cost/(Income) of Pension Plans
Interest cost		$ 472	$ 430
Interest cost - income statement location		ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Expected return on plan assets		$ (650)	$ (676)
Expected return on plan assets - income statement location		ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Amortization of prior service costs/(credits)		$ 4	$ 4
Amortization of prior service costs/(credits) - income statement location		ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Recognized actuarial losses		$ 140	$ 384
Recognized actuarial losses - income statement location		ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Total net periodic (income)/cost recognized for defined benefit plans		$ (34)	$ 143
Cost of defined contribution plans		149	160
Average remaining life expectancy of inactive plan participants	18 years
Decrease in recognized actuarial losses due to substantially all plan participants considered inactive as of 2019		240
Non-U.S.
Cost/(Income) of Pension Plans
Total defined benefit and contribution pension plans cost recognized in the Consolidated Statement of Earnings		322	434
Non-U.S. | Pension Plans
Cost/(Income) of Pension Plans
Service cost		93	104
Interest cost		$ 208	$ 215
Interest cost - income statement location		ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Expected return on plan assets		$ (399)	$ (348)
Expected return on plan assets - income statement location		ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Amortization of prior service costs/(credits)		$ (6)	$ (21)
Amortization of prior service costs/(credits) - income statement location		ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Recognized actuarial losses		$ 314	$ 359
Recognized actuarial losses - income statement location		ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Curtailments and settlements		$ 1	$ 0
Curtailments and settlements - income statement location		ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Multi-employer plans		$ 9	$ 10
Other costs		$ 5	$ 7
Other costs - income statement location		ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Total net periodic (income)/cost recognized for defined benefit plans		$ 223	$ 327
Cost of defined contribution plans		$ 98	$ 108

Retirement-Related Benefits - N

Retirement-Related Benefits - Non-US and Multi-Employer Contributions (Details) - Pension Plans, Including Multi-employer Plans - Non-U.S. - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Retirement-Related Benefits
Expected current year contributions to non-U.S. defined benefit plans	$ 400
Contributions by employer to defined benefit plans	94	$ 191
Contributions by employer - Cash	33	44
Contributions by employer - Noncash	$ 61	$ 147

Retirement-Related Benefits -_2

Retirement-Related Benefits - Nonpension Postretirement Cost (Details) - Nonpension Postretirement Plans - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
U.S.
Retirement-related plans cost
Service cost	$ 3	$ 3
Interest cost	$ 36	$ 33
Interest cost - income statement location	ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Amortization of prior service costs/(credits)	$ (1)	$ (2)
Amortization of prior service costs/(credits) - income statement location	ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Recognized actuarial losses	$ 1	$ 2
Recognized actuarial losses - income statement location	ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Total net periodic (income)/cost recognized for defined benefit plans	$ 39	$ 37
Non-U.S.
Retirement-related plans cost
Service cost	1	1
Interest cost	$ 12	$ 13
Interest cost - income statement location	ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Expected return on plan assets	$ (1)	$ (1)
Expected return on plan assets - income statement location	ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Amortization of prior service costs/(credits)	$ 0	$ 0
Amortization of prior service costs/(credits) - income statement location	ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Recognized actuarial losses	$ 3	$ 1
Recognized actuarial losses - income statement location	ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Curtailments and settlements	$ 0	$ 0
Curtailments and settlements - income statement location	ibm:OtherIncomeAndExpense	ibm:OtherIncomeAndExpense
Total net periodic (income)/cost recognized for defined benefit plans	$ 15	$ 14

Retirement-Related Benefits -_3

Retirement-Related Benefits - Nonpension Postretirement Contributions (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Nonpension Postretirement Plans | U.S.
Retirement-Related Benefits
Contributions by employer - Noncash	$ 194	$ 120

Acquisitions_Divestitures - Bus

Acquisitions/Divestitures - Businesses Acquired (Details) $ / shares in Units, $ in Millions	3 Months Ended	6 Months Ended
	Mar. 31, 2019entity	Dec. 31, 2019USD ($)$ / shares
2019 Acquisitions
Acquisitions
Number of acquisitions | entity	0
Red Hat, Inc. | Expected
Acquisitions
Percentage of business acquired (as a percent)		100.00%
Cash to be paid to acquiree shareholders (in dollars per share) | $ / shares		$ 190
Aggregate acquisitions cost | $		$ 34,000

Acquisitions_Divestitures - Div

Acquisitions/Divestitures - Divestitures (Details) - Expected $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2019USD ($)	Jun. 30, 2019USD ($)entity
Other
Divestitures
Number of divestitures | entity		3
Other | Minimum
Divestitures
Pre-tax gain on sale of business		$ 500
Other | Maximum
Divestitures
Pre-tax gain on sale of business		$ 700
Select Standalone Cognitive Solutions Software Products
Divestitures
Cash consideration	$ 1,775
Consideration receivable at closing (as a percent)	50.00%
Select Standalone Cognitive Solutions Software Products | Minimum
Divestitures
Period after closing for receipt of remaining consideration	12 months
Select Standalone Cognitive Solutions Software Products | Maximum
Divestitures
Period after closing for receipt of remaining consideration	15 months

Intangible Assets Including G_3

Intangible Assets Including Goodwill - Intangible Assets by Class (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Intangible asset balances by major asset class
Gross Carrying Amount	$ 6,410	$ 6,489
Accumulated Amortization	(3,454)	(3,402)
Net Carrying Amount	2,956	3,087
Capitalized software
Intangible asset balances by major asset class
Gross Carrying Amount	1,665	1,568
Accumulated Amortization	(683)	(629)
Net Carrying Amount	982	939
Client relationships
Intangible asset balances by major asset class
Gross Carrying Amount	2,022	2,068
Accumulated Amortization	(1,150)	(1,123)
Net Carrying Amount	872	945
Completed technology
Intangible asset balances by major asset class
Gross Carrying Amount	2,032	2,156
Accumulated Amortization	(1,248)	(1,296)
Net Carrying Amount	784	860
Patents/trademarks
Intangible asset balances by major asset class
Gross Carrying Amount	635	641
Accumulated Amortization	(348)	(330)
Net Carrying Amount	287	311
Other intangible assets
Intangible asset balances by major asset class
Gross Carrying Amount	56	56
Accumulated Amortization	(25)	(23)
Net Carrying Amount	$ 30	$ 32

Intangible Assets Including G_4

Intangible Assets Including Goodwill - Intangible Assets Activity (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Intangible assets
Net carrying amount decrease	$ 131
Intangible asset amortization expense	303	$ 340
Retirement of fully amortized intangible assets	$ 273

Intangible Assets Including G_5

Intangible Assets Including Goodwill - Future Amortization (Details) $ in Millions	Mar. 31, 2019USD ($)
Future amortization expense, by year
2019 (for Q2 - Q4)	$ 885
2020	944
2021	659
2022	393
2023	64
Capitalized software
Future amortization expense, by year
2019 (for Q2 - Q4)	383
2020	379
2021	209
2022	11
Acquired intangibles
Future amortization expense, by year
2019 (for Q2 - Q4)	501
2020	565
2021	450
2022	382
2023	$ 64

Intangible Assets Including G_6

Intangible Assets Including Goodwill - Goodwill by Segment (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Changes in Goodwill Balances
Beginning Balance	$ 36,265	$ 36,788
Goodwill Additions		34
Purchase Price Adjustments	0	(3)
Divestitures	(32)	(1)
Foreign Currency Translation and Other Adjustments	47	(553)
Ending Balance	36,281	36,265
Goodwill impairment losses	0
Goodwill accumulated impairment losses	0
Business Segments | Cloud & Cognitive Software
Changes in Goodwill Balances
Beginning Balance	24,594	24,973
Goodwill Additions		9
Purchase Price Adjustments	0	0
Divestitures		(1)
Foreign Currency Translation and Other Adjustments	31	(388)
Ending Balance	24,625	24,594
Business Segments | Global Business Services
Changes in Goodwill Balances
Beginning Balance	4,711	4,782
Goodwill Additions		24
Purchase Price Adjustments	0	(3)
Foreign Currency Translation and Other Adjustments	(3)	(92)
Ending Balance	4,708	4,711
Business Segments | Global Technology Services
Changes in Goodwill Balances
Beginning Balance	3,988	4,044
Purchase Price Adjustments		0
Foreign Currency Translation and Other Adjustments	16	(56)
Ending Balance	4,003	3,988
Business Segments | Systems
Changes in Goodwill Balances
Beginning Balance	1,847	1,862
Purchase Price Adjustments		0
Foreign Currency Translation and Other Adjustments	3	(15)
Ending Balance	1,851	1,847
Other | Divested businesses
Changes in Goodwill Balances
Beginning Balance	1,126	1,127
Goodwill Additions		1
Purchase Price Adjustments		0
Divestitures	(32)	0
Foreign Currency Translation and Other Adjustments		(2)
Ending Balance	$ 1,094	$ 1,126

Borrowings - Short-Term Debt (D

Borrowings - Short-Term Debt (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Short-term debt disclosures
Long-term debt - current maturities	$ 7,106	$ 7,051
Total short-term debt	10,250	10,207
Commercial paper
Short-term debt disclosures
Short-term debt	$ 2,993	$ 2,995
Weighted-average interest rates for short-term debt (as a percent)	2.50%	2.50%
Short-term loans
Short-term debt disclosures
Short-term debt	$ 150	$ 161
Weighted-average interest rates for short-term debt (as a percent)	5.80%	4.30%

Borrowings - Long-Term Debt, Co

Borrowings - Long-Term Debt, Components (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Borrowings
Long-term debt, gross	$ 47,346	$ 43,196
Less: net unamortized discount	831	802
Less: net unamortized debt issuance cost	88	76
Add: fair value adjustment	406	337
Long-term debt (including current maturities)	46,833	42,656
Less: current maturities	7,106	7,051
Total long-term debt (excluding current portion)	39,727	35,605
IBM International Group Capital, LLC
Borrowings
Long-term debt, gross	$ 0
IBM International Group Capital, LLC
Borrowings
Ownership interest in subsidiary (as a percent)	100.00%
U.S. dollars
Borrowings
Long-term debt, gross	$ 28,726	30,131
Euros
Borrowings
Long-term debt, gross	$ 15,438	10,011
Debt instrument, weighted-average interest rate (as a percent)	1.30%
Pound sterling
Borrowings
Long-term debt, gross	$ 1,368	1,338
Debt instrument, weighted-average interest rate (as a percent)	2.70%
Japanese yen
Borrowings
Long-term debt, gross	$ 1,314	1,325
Debt instrument, weighted-average interest rate (as a percent)	0.30%
Other
Borrowings
Long-term debt, gross	$ 500	391
Debt instrument, weighted-average interest rate (as a percent)	6.50%
Maturing 2019 | U.S. dollars
Borrowings
Long-term debt, gross	$ 3,959	5,465
Debt instrument, weighted-average interest rate (as a percent)	3.20%
Maturing 2020 | U.S. dollars
Borrowings
Long-term debt, gross	$ 4,338	4,344
Debt instrument, weighted-average interest rate (as a percent)	2.60%
Maturing 2021 | U.S. dollars
Borrowings
Long-term debt, gross	$ 5,531	5,529
Debt instrument, weighted-average interest rate (as a percent)	2.90%
Maturing 2022 | U.S. dollars
Borrowings
Long-term debt, gross	$ 3,529	3,536
Debt instrument, weighted-average interest rate (as a percent)	2.50%
Maturing 2023 | U.S. dollars
Borrowings
Long-term debt, gross	$ 2,413	2,428
Debt instrument, weighted-average interest rate (as a percent)	3.20%
Maturing 2024 | U.S. dollars
Borrowings
Long-term debt, gross	$ 2,046	2,037
Debt instrument, weighted-average interest rate (as a percent)	3.60%
Maturing 2025 | U.S. dollars
Borrowings
Long-term debt, gross	$ 600	600
Debt instrument, weighted-average interest rate (as a percent)	7.00%
Maturing 2026 | U.S. dollars
Borrowings
Long-term debt, gross	$ 1,350	1,350
Debt instrument, weighted-average interest rate (as a percent)	3.50%
Maturing 2027 | U.S. dollars
Borrowings
Long-term debt, gross	$ 969	969
Debt instrument, weighted-average interest rate (as a percent)	4.70%
Maturing 2028 | U.S. dollars
Borrowings
Long-term debt, gross	$ 313	313
Debt instrument, weighted-average interest rate (as a percent)	6.50%
Maturing 2030 | U.S. dollars
Borrowings
Long-term debt, gross	$ 149	32
Debt instrument, weighted-average interest rate (as a percent)	3.70%
Maturing 2032 | U.S. dollars
Borrowings
Long-term debt, gross	$ 600	600
Debt instrument, weighted-average interest rate (as a percent)	5.90%
Maturing 2038 | U.S. dollars
Borrowings
Long-term debt, gross	$ 83	83
Debt instrument, weighted-average interest rate (as a percent)	8.00%
Maturing 2039 | U.S. dollars
Borrowings
Long-term debt, gross	$ 745	745
Debt instrument, weighted-average interest rate (as a percent)	5.60%
Maturing 2042 | U.S. dollars
Borrowings
Long-term debt, gross	$ 1,107	1,107
Debt instrument, weighted-average interest rate (as a percent)	4.00%
Maturing 2045 | U.S. dollars
Borrowings
Long-term debt, gross	$ 27	27
Debt instrument, weighted-average interest rate (as a percent)	7.00%
Maturing 2046 | U.S. dollars
Borrowings
Long-term debt, gross	$ 650	650
Debt instrument, weighted-average interest rate (as a percent)	4.70%
Maturing 2096 | U.S. dollars
Borrowings
Long-term debt, gross	$ 316	$ 316
Debt instrument, weighted-average interest rate (as a percent)	7.10%

Borrowings - Long-Term Debt, _2

Borrowings - Long-Term Debt, Covenants (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019USD ($)
Borrowings
Limit based on net tangible assets	10.00%
Credit Facilities
Borrowings
Minimum net interest expense ratio	2.20
Cross default provision on credit facility	$ 500

Borrowings - Pre-Swap Obligatio

Borrowings - Pre-Swap Obligations (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Pre-swap annual contractual obligations of long-term debt outstanding
2019 (for Q2- Q4)	$ 5,459
2020	7,374
2021	6,700
2022	4,354
2023	5,358
2024 and beyond	18,102
Total	$ 47,346	$ 43,196

Borrowings - Interest on Debt (

Borrowings - Interest on Debt (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Interest on Debt
Interest capitalized	$ 2	$ 3
Total interest paid and accrued	391	349
Cost of financing
Interest on Debt
Interest paid	179	182
Interest expense
Interest on Debt
Interest paid	$ 210	$ 165

Borrowings - Lines of Credit (D

Borrowings - Lines of Credit (Details) - 364-Day Bridge Facility $ in Millions	Oct. 28, 2018USD ($)
Lines of Credit
Credit facility term	364 days
Amount of credit facility	$ 20,000
Fees related to the credit facility	$ 60

Contingencies (Details)

Contingencies (Details) $ in Millions	Aug. 07, 2017USD ($)	Feb. 13, 2014USD ($)	Jul. 18, 2012USD ($)	May 31, 2015defendant	Mar. 31, 2019USD ($)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
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					$ 900
Minimum
Loss Contingencies
Clients' presence in number of countries | country					175

Commitments - Extensions of Cre

Commitments - Extensions of Credit (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Extended lines of credit
Commitments, guarantees:
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients	$ 7,902	$ 7,368
Financing for client purchase agreements
Commitments, guarantees:
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients	$ 4,165	$ 4,432

Commitments - Financial Guarant

Commitments - Financial Guarantees (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Financial guarantees
Guarantor obligations
Guarantor obligations, maximum exposure	$ 24	$ 26

Commitments - Standard Warranty

Commitments - Standard Warranty Liability (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Movement in standard warranty liability
Beginning Balance	$ 118	$ 152
Current period accruals	110	25
Accrual adjustments to reflect actual experience	(9)	(14)
Charges incurred	(111)	(32)
Ending Balance	$ 107	$ 130

Commitments - Extended Warranty

Commitments - Extended Warranty Liability (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Movement in deferred income
Amortization of deferred revenue	$ (3,500)	$ (3,500)
Current portion	12,134		$ 11,165
Noncurrent portion	3,481		$ 3,445
Extended Warranty
Movement in deferred income
Beginning Balance	533	566
Revenue deferred for new extended warranty contracts	36	46
Amortization of deferred revenue	(64)	(69)
Other	(3)	5
Ending Balance	503	548
Current portion	242	260
Noncurrent portion	$ 261	$ 288

Earnings Per Share of Common _3

Earnings Per Share of Common Stock - Computation (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Number of shares on which basic earnings per share is calculated:
Weighted-average shares outstanding during period (in shares)	889,581,542	920,680,222
Add - Incremental shares under stock-based compensation plans (in shares)	3,372,460	3,553,104
Add - Incremental shares associated with contingently issuable shares (in shares)	956,524	1,176,108
Number of shares on which diluted earnings per share is calculated (in shares)	893,910,526	925,409,434
Net income on which basic earnings per share is calculated
Income from continuing operations	$ 1,593	$ 1,675
Income/(loss) from discontinued operations, net of tax	(2)	4
Net income on which basic earnings per share is calculated	1,591	1,679
Net income on which diluted earnings per share is calculated
Income from continuing operations	1,593	1,675
Income from continuing operations on which diluted earnings per share is calculated	1,593	1,675
Income/(loss) from discontinued operations, net of tax, on which basic and diluted earnings per share is calculated	(2)	4
Net income on which diluted earnings per share is calculated	$ 1,591	$ 1,679
Assuming dilution
Continuing operations (in dollars per share)	$ 1.78	$ 1.81
Discontinued operations (in dollars per share)	0	0
Total (in dollars per share)	1.78	1.81
Basic
Continuing operations (in dollars per share)	1.79	1.82
Discontinued operations (in dollars per share)	0	0
Total (in dollars per share)	$ 1.79	$ 1.82

Earnings Per Share of Common _4

Earnings Per Share of Common Stock - Antidilutive Stock Options (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Stock options
Antidilutive stock options
Outstanding stock options not included in the computation of diluted earnings per share (in shares)	1,137,019	16,869

Subsequent Events (Details)

Subsequent Events (Details) - $ / shares	Apr. 30, 2019	Jan. 31, 2019
Subsequent Events
Dividend declared (in dollars per share)		$ 1.57
Subsequent event
Subsequent Events
Dividend declared, date	Apr. 30, 2019
Dividend declared (in dollars per share)	$ 1.62
Dividend payable, date	Jun. 10, 2019
Shareholders of record, date	May 10, 2019
Dividend per share increase (in dollars per share)	$ 0.05
Dividend per share increase (as a percent)	3.00%