Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 11, 2022 | Jun. 30, 2021 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Entity File Number | 1-2360 | ||
Entity Registrant Name | INTERNATIONAL BUSINESS MACHINES CORPORATION | ||
Entity Incorporation, State or Country Code | NY | ||
Entity Tax Identification Number | 13-0871985 | ||
Entity Address, Address Line One | One New Orchard Road | ||
Entity Address, City or Town | Armonk | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 10504 | ||
City Area Code | 914 | ||
Local Phone Number | 499-1900 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Central Index Key | 0000051143 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 899,309,986 | ||
Entity Public Float | $ 131.4 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Auditor Name | PricewaterhouseCoopers LLP | ||
Auditor Firm ID | 238 | ||
Auditor Location | New York, New York | ||
New York Stock Exchange | Common Stock | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Capital stock, par value $.20 per share | ||
Trading Symbol | IBM | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 2.625% Notes due 2022 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 2.625% Notes due 2022 | ||
Trading Symbol | IBM 22A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.250% Notes due 2023 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.250% Notes due 2023 | ||
Trading Symbol | IBM 23A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.375% Notes due 2023 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.375% Notes due 2023 | ||
Trading Symbol | IBM 23B | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.125% Notes due 2024 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.125% Notes due 2024 | ||
Trading Symbol | IBM 24A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 2.875% Notes due 2025 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 2.875% Notes due 2025 | ||
Trading Symbol | IBM 25A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.950% Notes due 2025 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.950% Notes due 2025 | ||
Trading Symbol | IBM 25B | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.875% Notes due 2025 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.875% Notes due 2025 | ||
Trading Symbol | IBM 25C | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.300% Notes due 2026 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.300% Notes due 2026 | ||
Trading Symbol | IBM 26B | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.250% Notes due 2027 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.250% Notes due 2027 | ||
Trading Symbol | IBM 27B | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.300% Notes due 2028 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.300% Notes due 2028 | ||
Trading Symbol | IBM 28B | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.750% Notes due 2028 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.750% Notes due 2028 | ||
Trading Symbol | IBM 28A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.500% Notes due 2029 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.500% Notes due 2029 | ||
Trading Symbol | IBM 29 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.875% Notes due 2030 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.875% Notes due 2030 | ||
Trading Symbol | IBM 30 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.750% Notes due 2031 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.750% Notes due 2031 | ||
Trading Symbol | IBM 31 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 0.650% Notes due 2032 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 0.650% Notes due 2032 | ||
Trading Symbol | IBM 32A | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.250% Notes due 2034 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.250% Notes due 2034 | ||
Trading Symbol | IBM 34 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 1.200% Notes due 2040 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 1.200% Notes due 2040 | ||
Trading Symbol | IBM 40 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 7.00% Debentures due 2025 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 7.00% Debentures due 2025 | ||
Trading Symbol | IBM 25 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 6.22% Debentures due 2027 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 6.22% Debentures due 2027 | ||
Trading Symbol | IBM 27 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 6.50% Debentures due 2028 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 6.50% Debentures due 2028 | ||
Trading Symbol | IBM 28 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 7.00% Debentures due 2045 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 7.00% Debentures due 2045 | ||
Trading Symbol | IBM 45 | ||
Security Exchange Name | NYSE | ||
New York Stock Exchange | 7.125% Debentures due 2096 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | 7.125% Debentures due 2096 | ||
Trading Symbol | IBM 96 | ||
Security Exchange Name | NYSE | ||
Chicago Stock Exchange | Common Stock | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Capital stock, par value $.20 per share | ||
Trading Symbol | IBM | ||
Security Exchange Name | CHX |
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED INCOME STATEMENT - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue (Note D) | $ 57,350 | $ 55,179 | $ 57,714 |
Cost | 25,865 | 24,314 | 26,181 |
Gross profit | 31,486 | 30,865 | 31,533 |
Expense and other (income) | |||
Selling, general and administrative | 18,745 | 20,561 | 18,724 |
Research, development and engineering (Note G) | 6,488 | 6,262 | 5,910 |
Intellectual property and custom development income | (612) | (620) | (639) |
Other (income) and expense | 873 | 802 | (1,012) |
Interest expense (Note Q&U) | 1,155 | 1,288 | 1,344 |
Total expense and other (income) | 26,649 | 28,293 | 24,327 |
Income from continuing operations before income taxes | 4,837 | 2,572 | 7,206 |
Provision for/(benefit from) income taxes (Note H) | 124 | (1,360) | 60 |
Income from continuing operations | 4,712 | 3,932 | 7,146 |
Income/(loss) from discontinued operations, net of tax (Note C) | 1,030 | 1,658 | 2,285 |
Net income | $ 5,743 | $ 5,590 | $ 9,431 |
Assuming dilution | |||
Continuing operations (in dollars per share) (Note I) | $ 5.21 | $ 4.38 | $ 8 |
Discontinued operations (in dollars per share) (Note I) | 1.14 | 1.85 | 2.56 |
Total (in dollars per share) (Note I) | 6.35 | 6.23 | 10.56 |
Basic | |||
Continuing operations (in dollars per share) (Note I) | 5.26 | 4.42 | 8.05 |
Discontinued operations (in dollars per share) (Note I) | 1.15 | 1.86 | 2.58 |
Total (in dollars per share) (Note I) | $ 6.41 | $ 6.28 | $ 10.63 |
Weighted-average number of common shares outstanding | |||
Assuming dilution (in shares) | 904,641,001 | 896,563,971 | 892,813,376 |
Basic (in shares) | 895,990,771 | 890,348,679 | 887,235,105 |
Services. | |||
Revenue (Note D) | $ 29,225 | $ 27,626 | $ 29,141 |
Cost | 19,147 | 17,689 | 19,009 |
Sales | |||
Revenue (Note D) | 27,346 | 26,569 | 27,357 |
Cost | 6,184 | 6,048 | 6,467 |
Financing. | |||
Revenue (Note D) | 780 | 984 | 1,216 |
Cost | $ 534 | $ 577 | $ 704 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||
Net income | $ 5,743 | $ 5,590 | $ 9,431 |
Other comprehensive income/(loss), before tax | |||
Foreign currency translation adjustments (Note T) | 987 | (1,500) | (39) |
Net changes related to available-for-sale securities (Note T) | |||
Unrealized gains/(losses) arising during the period | 0 | (1) | 1 |
Total net changes related to available-for-sale securities | 0 | (1) | 1 |
Unrealized gains/(losses) on cash flow hedges (Note T) | |||
Unrealized gains/(losses) arising during the period | 344 | (349) | (689) |
Reclassification of (gains)/losses to net income | 243 | (21) | 75 |
Total unrealized gains/(losses) on cash flow hedges | 587 | (370) | (614) |
Retirement-related benefit plans (Note T) | |||
Prior service costs/(credits) | (51) | (37) | (73) |
Net (losses)/gains arising during the period | 2,433 | (1,678) | (120) |
Curtailments and settlements | 94 | 52 | 41 |
Amortization of prior service (credits)/costs | 9 | 13 | (9) |
Amortization of net (gains)/losses | 2,484 | 2,314 | 1,843 |
Total retirement-related benefit plans | 4,969 | 664 | 1,681 |
Other comprehensive income/(loss), before tax (Note T) | 6,542 | (1,206) | 1,029 |
Income tax (expense)/benefit related to items of other comprehensive income (Note T) | (1,703) | 466 | (136) |
Other comprehensive income/(loss) (Note T) | (740) | 893 | |
Other comprehensive income/(loss) (Note T) | 4,839 | ||
Total comprehensive income | $ 4,850 | $ 10,324 | |
Total comprehensive income | $ 10,582 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 6,650 | $ 13,188 |
Restricted cash | 307 | 463 |
Marketable securities (Note J) | 600 | 600 |
Notes and accounts receivable - trade (net of allowances of $218 in 2021 and $260 in 2020) | 6,754 | 5,790 |
Short-term financing receivables, held for investment (net of allowances of $176 in 2021 and $218 in 2020) (Note L) | 7,221 | 10,509 |
Short-term financing receivables, held for sale (Note L) | 793 | 383 |
Other accounts receivable (net of allowances of $24 in 2021 and $25 in 2020) | 1,002 | 695 |
Inventory (Note K) | 1,649 | 1,812 |
Deferred costs (Note D) | 1,097 | 1,018 |
Prepaid expenses and other current assets | 3,466 | 2,089 |
Current assets of discontinued operations (Note C) | 2,618 | |
Total current assets | 29,539 | 39,165 |
Property, plant and equipment (Note M) | 20,085 | 20,100 |
Less: Accumulated depreciation (Note M) | 14,390 | 13,895 |
Property, plant and equipment - net (Note M) | 5,694 | 6,205 |
Operating right-of-use assets-net (Note N) | 3,222 | 3,566 |
Long-term financing receivables (net of allowances of $25 in 2021 and $45 in 2020) (Note L) | 5,425 | 7,086 |
Prepaid pension assets (Note W) | 9,850 | 7,557 |
Deferred costs (Note D) | 924 | 1,150 |
Deferred taxes (Note H) | 7,370 | 8,404 |
Goodwill (Note O) | 55,643 | 53,765 |
Intangible assets-net (Note O) | 12,511 | 13,739 |
Investments and sundry assets (Note P) | 1,823 | 2,187 |
Non-current assets of discontinued operations (Note C) | 13,147 | |
Total assets | 132,001 | 155,971 |
Current liabilities | ||
Taxes (Note H) | 2,289 | 3,198 |
Short-term debt (Note J&Q) | 6,787 | 7,116 |
Accounts payable | 3,955 | 4,033 |
Compensation and benefits | 3,204 | 3,056 |
Deferred income | 12,518 | 11,980 |
Operating lease liabilities (Note N) | 974 | 1,035 |
Other accrued expenses and liabilities | 3,892 | 5,632 |
Current liabilities of discontinued operations (Note C) | 3,820 | |
Total current liabilities | 33,619 | 39,869 |
Long-term debt (Note J&Q) | 44,917 | 54,217 |
Retirement and nonpension postretirement benefit obligations (Note W) | 14,435 | 17,184 |
Deferred income | 3,577 | 3,758 |
Operating lease liabilities (Note N) | 2,462 | 2,720 |
Other liabilities (Note R) | 13,996 | 14,180 |
Non-current liabilities of discontinued operations (Note C) | 3,317 | |
Total liabilities | 113,005 | 135,244 |
Commitments and Contingencies (Note S) | ||
IBM stockholders' equity | ||
Common stock, par value $.20 per share, and additional paid-in capital Shares authorized: 4,687,500,000 Shares issued (2021-2,248,577,848; 2020-2,242,969,004) | 57,319 | 56,556 |
Retained earnings | 154,209 | 162,717 |
Treasury stock, at cost (shares: 2021-1,350,509,249; 2020-1,350,315,580) | (169,392) | (169,339) |
Accumulated other comprehensive income/(loss) | (23,234) | (29,337) |
Total IBM stockholders' equity | 18,901 | 20,597 |
Noncontrolling interests (Note A) | 95 | 129 |
Total equity | 18,996 | 20,727 |
Total liabilities and equity | $ 132,001 | $ 155,971 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
CONSOLIDATED BALANCE SHEET | ||
Notes and accounts receivable - trade, allowances | $ 218 | $ 260 |
Short-term financing receivables, allowances | 176 | 218 |
Other accounts receivable, allowances | 24 | 25 |
Long-term financing receivables, allowances | $ 25 | $ 45 |
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) | 2,248,577,848 | 2,242,969,004 |
Treasury stock, Shares (in shares) | 1,350,509,249 | 1,350,315,580 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities | |||
Net income | $ 5,743 | $ 5,590 | $ 9,431 |
Adjustments to reconcile net income to cash provided by operating activities | |||
Depreciation | 3,888 | 4,227 | 4,209 |
Amortization of intangibles | 2,529 | 2,468 | 1,850 |
Stock-based compensation | 982 | 937 | 679 |
Deferred taxes | (2,001) | (3,203) | (1,527) |
Net (gain)/loss on asset sales and other | (307) | (70) | (1,096) |
Change in operating assets and liabilities, net of acquisitions/divestitures | |||
Receivables (including financing receivables) | 1,372 | 5,297 | 502 |
Retirement related | 1,038 | 936 | 301 |
Inventory | 138 | (209) | 67 |
Other assets/other liabilities | (671) | 2,087 | 858 |
Accounts payable | 85 | 138 | (503) |
Net cash provided by operating activities | 12,796 | 18,197 | 14,770 |
Cash flows from investing activities | |||
Payments for property, plant and equipment | (2,062) | (2,618) | (2,286) |
Proceeds from disposition of property, plant and equipment | 387 | 188 | 537 |
Investment in software | (706) | (612) | (621) |
Purchases of marketable securities and other investments | (3,561) | (6,246) | (3,693) |
Proceeds from disposition of marketable securities and other investments | 3,147 | 5,618 | 3,961 |
Non-operating finance receivables - net | 0 | 475 | 6,720 |
Acquisition of businesses, net of cash acquired | (3,293) | (336) | (32,630) |
Divestiture of businesses, net of cash transferred | 114 | 503 | 1,076 |
Net cash provided by/(used in) investing activities | (5,975) | (3,028) | (26,936) |
Cash flows from financing activities | |||
Proceeds from new debt | 522 | 10,504 | 31,825 |
Payments to settle debt | (8,597) | (13,365) | (12,944) |
Short-term borrowings/(repayments) less than 90 days - net | (40) | (853) | (2,597) |
Common stock repurchases | (1,361) | ||
Common stock repurchases for tax withholdings | (319) | (302) | (272) |
Financing - other | 70 | 92 | 99 |
Distribution from Kyndryl | 879 | ||
Cash dividends paid | (5,869) | (5,797) | (5,707) |
Net cash provided by/(used in) financing activities | (13,354) | (9,721) | 9,042 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (185) | (87) | (167) |
Net change in cash, cash equivalents and restricted cash | (6,718) | 5,361 | (3,290) |
Cash, cash equivalents and restricted cash at January 1 | 13,675 | 8,314 | 11,604 |
Cash, cash equivalents and restricted cash at December 31 | 6,957 | 13,675 | 8,314 |
Supplemental data | |||
Income taxes paid-net of refunds received | 2,103 | 2,253 | 2,091 |
Interest paid on debt | $ 1,512 | $ 1,830 | $ 1,685 |
CONSOLIDATED STATEMENT OF CAS_2
CONSOLIDATED STATEMENT OF CASH FLOWS (Parenthetical) $ in Millions | Dec. 31, 2020USD ($) |
Cash and cash equivalents of discontinued operations | $ 24 |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Millions | Total IBM Stockholders' EquityCumulative Effect, Period of Adoption, Adjustment | Total IBM Stockholders' Equity | Common Stock and Additional Paid-in Capital | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income/(Loss) | Non-Controlling Interests | Cumulative Effect, Period of Adoption, Adjustment | Total |
Balance at the Beginning 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 | 9,431 | 9,431 | 9,431 | |||||||
Other comprehensive income/(loss) | 893 | 893 | 893 | |||||||
Total comprehensive income/(loss) | 10,324 | 10,324 | ||||||||
Cash dividends paid - common stock | (5,707) | (5,707) | (5,707) | |||||||
Common stock issued under employee plans | 745 | 745 | 745 | |||||||
Purchases and sales of treasury stock under employee plans - net | 19 | 30 | (11) | 19 | ||||||
Other treasury shares purchased, not retired | (1,331) | (1,331) | (1,331) | |||||||
Changes in other equity | (5) | (5) | (5) | |||||||
Changes in noncontrolling interests | 10 | 10 | ||||||||
Balance at the End of the Period at Dec. 31, 2019 | 20,841 | 55,895 | 162,954 | (169,413) | (28,597) | 144 | 20,985 | |||
Net income plus other comprehensive income/(loss): | ||||||||||
Net income | 5,590 | 5,590 | 5,590 | |||||||
Other comprehensive income/(loss) | (740) | (740) | (740) | |||||||
Total comprehensive income/(loss) | 4,850 | 4,850 | ||||||||
Cash dividends paid - common stock | (5,797) | (5,797) | (5,797) | |||||||
Common stock issued under employee plans | 661 | 661 | 661 | |||||||
Purchases and sales of treasury stock under employee plans - net | 110 | 36 | 74 | 110 | ||||||
Changes in noncontrolling interests | (15) | (15) | ||||||||
Balance at the End of the Period at Dec. 31, 2020 | 20,597 | 56,556 | 162,717 | (169,339) | (29,337) | 129 | 20,727 | |||
Equity | ||||||||||
Cumulative effect of change in accounting principle | $ (66) | $ (66) | $ (66) | 162,717 | ||||||
Net income plus other comprehensive income/(loss): | ||||||||||
Net income | 5,743 | 5,743 | 5,743 | |||||||
Other comprehensive income/(loss) | 4,839 | 4,839 | 4,839 | |||||||
Other comprehensive income/(loss) | 6,103 | |||||||||
Total comprehensive income | 10,582 | 10,582 | ||||||||
Cash dividends paid - common stock | (5,869) | (5,869) | (5,869) | |||||||
Common stock issued under employee plans | 762 | 762 | 762 | |||||||
Purchases and sales of treasury stock under employee plans - net | (31) | 22 | (53) | (31) | ||||||
Separation of Kyndryl | (7,140) | (8,404) | 1,264 | (62) | (7,203) | |||||
Changes in noncontrolling interests | 28 | 28 | ||||||||
Balance at the End of the Period at Dec. 31, 2021 | $ 18,901 | $ 57,319 | $ 154,209 | $ (169,392) | $ (23,234) | $ 95 | 18,996 | |||
Equity | ||||||||||
Cumulative effect of change in accounting principle | $ 154,209 |
CONSOLIDATED STATEMENT OF EQU_2
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENT OF EQUITY | |||
Cash dividend per common share | $ 6.55 | $ 6.51 | $ 6.43 |
Common stock issued under employee plans (in shares) | 5,608,845 | 4,972,028 | 4,569,917 |
Purchases of treasury stock under employee plans (in shares) | 2,286,912 | 2,363,966 | 2,000,704 |
Sales of treasury stock under employee plans (in shares) | 2,093,243 | 2,934,907 | 2,041,347 |
Other treasury shares purchased, not retired (in shares) | 9,979,516 |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Significant Accounting Policies | |
Significant Accounting Policies | NOTE A. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying Consolidated Financial Statements and footnotes of the International Business Machines Corporation (IBM or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior-year amounts have been reclassified to conform to the current year presentation. This is annotated where applicable. On November 3, 2021, the company completed the previously announced separation of its managed infrastructure services unit into a new public company with the distribution of 80.1 percent of the outstanding common stock of Kyndryl Holdings, Inc. (Kyndryl) to IBM stockholders on a pro rata basis. To effect the separation, IBM stockholders received one The accounting requirements for reporting the separation of Kyndryl as a discontinued operation were met when the separation was completed. Accordingly, the historical results of Kyndryl are presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. Refer to note C, “Separation of Kyndryl,” for additional information. Effective immediately prior to the separation of Kyndryl, the company made a number of changes to its organizational structure and management system. These changes impacted the company’s reportable segments beginning in the fourth quarter of 2021 but did not impact the company’s Consolidated Financial Statements. Refer to note E, “Segments,” for additional information on the company’s reportable segments. The segments presented in this Annual Report are reported on a comparable basis for all periods. On July 9, 2019, the company completed the acquisition of all the outstanding The benefit from income taxes for the year ended December 31, 2020 includes the tax impacts of an intra-entity sale of certain of the company’s intellectual property, which resulted in a net benefit of $0.9 billion in the first quarter of 2020 and a benefit of $0.2 billion related to a foreign tax law change. Refer to note H, “Taxes,” for additional information. Noncontrolling interest amounts of $19 million, $13 million and $16 million, net of tax, for the years ended December 31, 2021, 2020 and 2019, respectively, are included as a reduction within other (income) and expense in the Consolidated Income Statement. Principles of Consolidation The Consolidated Financial Statements include the accounts of IBM and its controlled subsidiaries, which are primarily majority owned. Any noncontrolling interest in the equity of a subsidiary is reported as a component of total equity in the Consolidated Balance Sheet. Net income and losses attributable to the noncontrolling interest is reported as described above in the Consolidated Income Statement. The accounts of variable interest entities (VIEs) are included in the Consolidated Financial Statements, if required. Investments in business entities in which the company does not have control but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method and the company’s proportionate share of income or loss is recorded in other (income) and expense. The accounting policy for other investments in equity securities is described within the “Marketable Securities” section of this note. Equity investments in non-publicly traded entities lacking controlling financial interest or significant influence are primarily measured at cost, absent other indicators of fair value, net of impairment, if any. All intercompany transactions and accounts have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts that are reported in the Consolidated Financial Statements and accompanying disclosures. Estimates are made for the following, among others: revenue, costs to complete service contracts, income taxes, pension assumptions, valuation of assets including goodwill and intangible assets, loss contingencies, allowance for credit losses and other matters. 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, including the macroeconomic impacts of the COVID-19 pandemic. Actual results may be different from these estimates. Revenue The company accounts for a contract with a client when it has written approval, the contract is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection. Revenue is recognized when, or as, control of a promised product or service transfers to a client, in an amount that reflects the consideration to which the company expects to be entitled in exchange for transferring those products or services. If the consideration promised in a contract includes a variable amount, the company estimates the amount to which it expects to be entitled using either the expected value or most likely amount method. The company’s contracts may include terms that could cause variability in the transaction price, including, for example, rebates, volume discounts, service-level penalties, and performance bonuses or other forms of contingent revenue. The company only includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The company may not be able to reliably estimate contingent revenue in certain long-term arrangements due to uncertainties that are not expected to be resolved for a long period of time or when the company’s experience with similar types of contracts is limited. The company’s arrangements infrequently include contingent revenue. Changes in estimates of variable consideration are included in note D, “Revenue Recognition.” The company’s standard billing terms are that payment is due upon receipt of invoice, payable within 30 days. Invoices are generally issued as control transfers and/or as services are rendered. Additionally, in determining the transaction price, the company adjusts the promised amount of consideration for the effects of the time value of money if the billing terms are not standard and the timing of payments agreed to by the parties to the contract provide the client or the company with a significant benefit of financing, in which case the contract contains a significant financing component. As a practical expedient, the company does not account for significant financing components if the period between when the company transfers the promised product or service to the client and when the client pays for that product or service will be one year or less. Most arrangements that contain a financing component are financed through the company’s Financing business and include explicit financing terms. The company may include subcontractor services or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from sales of third-party vendor products or services is recorded net of costs when the company is acting as an agent between the client and the vendor, and gross when the company is the principal for the transaction. To determine whether the company is an agent or principal, the company considers whether it obtains control of the products or services before they are transferred to the customer. In making this evaluation, several factors are considered, most notably whether the company has primary responsibility for fulfillment to the client, as well as inventory risk and pricing discretion. The company recognizes revenue on sales to solution providers, resellers and distributors (herein referred to as resellers) when the reseller has economic substance apart from the company and the reseller is considered the principal for the transaction with the end-user client. The company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. In addition to the aforementioned general policies, the following are the specific revenue recognition policies for arrangements with multiple performance obligations and for each major category of revenue. Arrangements with Multiple Performance Obligations The company’s global capabilities as a hybrid cloud platform and AI company include services, software, hardware and related financing. The company enters into revenue arrangements that may consist of any combination of these products and services based on the needs of its clients. The company continues to develop new products and offerings and their associated consumption and delivery methods, including the use of cloud and as-a-Service models. These are not separate businesses; they are offerings across the segments that address market opportunities in areas such as analytics, data, cloud and security. Revenue from these offerings follows the specific revenue recognition policies for arrangements with multiple performance obligations and for each major category of revenue, depending on the type of offering, which are comprised of services, software and/or hardware. To the extent that a product or service in multiple performance obligation arrangements is subject to other specific accounting guidance, such as leasing guidance, that product or service is accounted for in accordance with such specific guidance. For all other products or services in these arrangements, the company determines if the products or services are distinct and allocates the consideration to each distinct performance obligation on a relative standalone selling price basis. When products and services are not distinct, the company determines an appropriate measure of progress based on the nature of its overall promise for the single performance obligation. The revenue policies in the Services, Hardware and/or Software sections below are applied to each performance obligation, as applicable. Services The company’s primary services offerings include consulting services, including business transformation; technology consulting and application operations including the design and development of complex IT environments to a client’s specifications (e.g., design and build); cloud services; business process outsourcing; and infrastructure support. Many of these services can be delivered entirely or partially through cloud or as-a-Service delivery models. The company’s services are provided on a time-and-material basis, as a fixed-price contract or as a fixed-price per measure of output contract and the contract terms range from less than one year to over 10 years. In services arrangements, the company typically satisfies the performance obligation and recognizes revenue over time. In design and build arrangements, the performance obligation is satisfied over time either because the client controls the asset as it is created (e.g., when the asset is built at the customer site) or because the company’s performance does not create an asset with an alternative use and the company has an enforceable right to payment plus a reasonable profit for performance completed to date. In most other services arrangements, the performance obligation is satisfied over time because the client simultaneously receives and consumes the benefits provided as the company performs the services. Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred. Revenue from as-a-Service type contracts, such as Infrastructure-as-a-Service, is recognized either on a straight-line basis or on a usage basis, depending on the terms of the arrangement (such as whether the company is standing ready to perform or whether the contract has usage-based metrics). If an as-a-Service contract includes setup activities, those promises in the arrangement are evaluated to determine if they are distinct. In areas such as application management, business process outsourcing and other cloud-based services arrangements, the company determines whether the services performed during the initial phases of the arrangement, such as setup activities, are distinct. In most cases, the arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The company applies a measure of progress (typically time-based) to any fixed consideration and allocates variable consideration to the distinct periods of service based on usage. As a result, revenue is generally recognized over the period the services are provided on a usage basis. This results in revenue recognition that corresponds with the value to the client of the services transferred to date relative to the remaining services promised. Revenue related to maintenance and technology support and extended warranty is recognized on a straight-line basis over the period of performance because the company is standing ready to provide services. In design and build contracts, revenue is recognized based on progress toward completion of the performance obligation using a cost-to-cost measure of progress. Revenue is recognized based on the labor costs incurred to date as a percentage of the total estimated labor costs to fulfill the contract. Due to the nature of the work performed in these arrangements, the estimation of cost at completion is complex, subject to many variables and requires significant judgment. Key factors reviewed by the company to estimate costs to complete each contract are future labor and product costs and expected productivity efficiencies. Changes in original estimates are reflected in revenue on a cumulative catch-up basis in the period in which the circumstances that gave rise to the revision become known by the company. Refer to note D, “Revenue Recognition,” for the amount of revenue recognized in the reporting period on a cumulative catch-up basis (i.e., from performance obligations satisfied, or partially satisfied, in previous periods). The company performs ongoing profitability analyses of its design and build services contracts accounted for using a cost-to-cost measure of progress in order to determine whether the latest estimates of revenues, costs and profits require updating. If at any time these estimates indicate that the contract will be unprofitable, the entire estimated loss for the remainder of the contract is recorded immediately. For other types of services contracts, any losses are recorded as incurred. In some services contracts, the company bills the client prior to recognizing revenue from performing the services. Deferred income of $3,460 million and $3,604 million at December 31, 2021 and 2020, respectively, is included in the Consolidated Balance Sheet. In other services contracts, the company performs the services prior to billing the client. When the company performs services prior to billing the client in design and build contracts, the right to consideration is typically subject to milestone completion or client acceptance and the unbilled accounts receivable is classified as a contract asset. At December 31, 2021 and 2020, contract assets for services contracts of $430 million and $376 million, respectively, are included in prepaid expenses and other current assets in the Consolidated Balance Sheet. The remaining amount of unbilled accounts receivable of $723 million and $650 million at December 31, 2021 and 2020, respectively, is included in notes and accounts receivable–trade in the Consolidated Balance Sheet. Billings usually occur in the month after the company performs the services or in accordance with specific contractual provisions. Hardware The company’s hardware offerings include the sale or lease of Hybrid Infrastructure solutions including Z systems as well as Distributed Infrastructure solutions such as Power and storage solutions. The capabilities of these products can also be delivered through as-a-Service or cloud delivery models, such as Infrastructure-as-a-Service and Storage-as-a-Service. The company also offers installation services for its more complex hardware products. Hardware offerings are often sold with distinct maintenance services, described in the Services section above. Revenue from hardware sales is recognized when control has transferred to the customer which typically occurs when the hardware has been shipped to the client, risk of loss has transferred to the client and the company has a present right to payment for the hardware. In limited circumstances when a hardware sale includes client acceptance provisions, revenue is recognized either when client acceptance has been obtained, client acceptance provisions have lapsed, or the company has objective evidence that the criteria specified in the client acceptance provisions have been satisfied. Revenue from hardware sales-type leases is recognized at the beginning of the lease term. Revenue from rentals and operating leases is recognized on a straight-line basis over the term of the rental or lease. Revenue from as-a-Service arrangements is recognized either on a straight-line basis or on a usage basis as described in the Services section above. Installation services are accounted for as distinct performance obligations with revenue recognized as the services are performed. Shipping and handling activities that occur after the client has obtained control of a product are accounted for as an activity to fulfill the promise to transfer the product rather than as an additional promised service and, therefore, no revenue is deferred and recognized over the shipping period. Software The company’s software offerings include hybrid platform software solutions, which contain many of the company’s strategic areas including Red Hat, automation, data and AI, and security; transaction processing, which primarily supports mission-critical systems for clients; and, distributed infrastructure software, which provides operating systems for IBM Z and Power Systems hardware. These offerings include proprietary software and open source software, and many can be delivered entirely or partially through as-a-Service or cloud delivery models, while others are delivered as on-premise software licenses. Revenue from proprietary perpetual (one-time charge) license software is recognized at a point in time at the inception of the arrangement when control transfers to the client, if the software license is distinct from the post-contract support (PCS) offered by the company. Revenue from proprietary term license software is recognized at a point in time for the committed term of the contract, unless consideration depends on client usage, in which case revenue is recognized when the usage occurs. Proprietary term licenses often have a one-month contract term due to client termination rights, in which case, revenue would be recognized in that month for both the license and PCS. Clients may contract to convert their existing IBM term license software into perpetual license software plus PCS. When proprietary term license software is converted to perpetual license software, the consideration becomes fixed with no cancellability and, therefore, revenue for the perpetual license is recognized upon conversion, consistent with the accounting for other perpetual licenses, as described above. PCS revenue is recognized as described below. The company also has open source software offerings. Since open source software is offered under an open source licensing model and therefore, the license is available for free, the standalone selling price is zero. As such, when the license is sold with PCS or other products and services, no consideration is allocated to the license when it is a distinct performance obligation and therefore no revenue is recognized when control of the license transfers to the client. Revenue is recognized over the PCS period. In certain cases, open source software is bundled with proprietary software and, if the open source software is not considered distinct, the software bundle (e.g., Cloud Pak) is accounted for under a proprietary software model. Cloud Paks can be sold either as perpetual or committed-term software licenses, both of which are described above. Revenue from PCS is recognized over the contract term on a straight-line basis because the company is providing a service of standing ready to provide support, when-and-if needed, and is providing unspecified software upgrades on a when-and-if available basis over the contract term. Revenue from software hosting or Software-as-a-Service arrangements is recognized either on a straight-line basis or on a usage basis as described in the Services section above. In software hosting arrangements, the rights provided to the client (e.g., ownership of a license, contract termination provisions and the feasibility of the client to operate the software) are considered in determining whether the arrangement includes a license. In arrangements that include a software license, the associated revenue is recognized in accordance with the software license recognition policy above rather than over time as a service. Financing Financing income attributable to sales-type leases, direct financing leases and loans is recognized on the accrual basis using the effective interest method. Operating lease income is recognized on a straight-line basis over the term of the lease. Standalone Selling Price The company allocates the transaction price to each performance obligation on a relative standalone selling price basis. The standalone selling price (SSP) is the price at which the company would sell a promised product or service separately to a client. In most cases, the company is able to establish SSP based on the observable prices of products or services sold separately in comparable circumstances to similar clients. The company typically establishes SSP ranges for its products and services which are reassessed on a periodic basis or when facts and circumstances change. In certain instances, the company may not be able to establish a SSP range based on observable prices and the company estimates SSP. The company estimates SSP by considering multiple factors including, but not limited to, overall market conditions, including geographic or regional specific factors, competitive positioning, competitor actions, internal costs, profit objectives and pricing practices. Additionally, in certain circumstances, the company may estimate SSP for a product or service by applying the residual approach. Estimating SSP is a formal process that includes review and approval by the company’s management. Services Costs Recurring operating costs for services contracts are recognized as incurred. For fixed-price design and build contracts, the costs of external hardware and software accounted for under the cost-to-cost measure of progress are deferred and recognized based on the labor costs incurred to date (i.e., the measure of progress), as a percentage of the total estimated labor costs to fulfill the contract as control transfers over time for these performance obligations. Certain eligible, nonrecurring costs (i.e., setup costs) incurred in the initial phases of business process outsourcing contracts and other cloud-based services contracts, including Software-as-a-Service arrangements, are capitalized when the costs relate directly to the contract, the costs generate or enhance resources of the company that will be used in satisfying the performance obligation in the future, and the costs are expected to be recovered. These costs consist of transition and setup costs related to the provisioning, configuring, implementation and training and other deferred fulfillment costs, including, for example, prepaid assets used in services contracts (i.e., prepaid software or prepaid maintenance). Capitalized costs are amortized on a straight-line basis over the expected period of benefit, which includes anticipated contract renewals or extensions, consistent with the transfer to the client of the services to which the asset relates. Additionally, fixed assets associated with these contracts are capitalized and depreciated on a straight-line basis over the expected useful life of the asset. If an asset is contract specific, then the depreciation period is the shorter of the useful life of the asset or the contract term. Amounts paid to clients in excess of the fair value of acquired assets used in business process outsourcing arrangements are deferred and amortized on a straight-line basis as a reduction of revenue over the expected period of benefit. The company performs periodic reviews to assess the recoverability of deferred contract transition and setup costs. If the carrying amount is deemed not recoverable, an impairment loss is recognized. Refer to note D, “Revenue Recognition,” for the amount of deferred costs to fulfill a contract at December 31, 2021 and 2020. In situations in which a business process outsourcing or other cloud-based services contract is terminated, the terms of the contract may require the client to reimburse the company for the recovery of unbilled accounts receivable, unamortized deferred contract costs and additional costs incurred by the company to transition the services. Software Costs Costs that are related to the conceptual formulation and design of licensed software programs are expensed as incurred to research, development and engineering expense; costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. Capitalized amounts are amortized on a straight-line basis over periods ranging up to three years and are recorded in software cost within cost of sales. The company performs periodic reviews to ensure that unamortized program costs remain recoverable from future revenue. Costs to support or service licensed programs are charged to software cost within cost of sales as incurred. The company capitalizes certain costs that are incurred to purchase or develop internal-use software. Internal-use software programs also include software used by the company to deliver Software-as-a-Service when the client does not receive a license to the software and the company has no substantive plans to market the software externally. Capitalized costs are amortized on a straight-line basis over periods ranging up to three years and are recorded in selling, general and administrative expense or cost of sales, depending on whether the software is used by the company in revenue generating transactions. Additionally, the company may capitalize certain types of implementation costs and amortize them over the term of the arrangement when the company is a customer in a cloud-computing arrangement. Incremental Costs of Obtaining a Contract Incremental costs of obtaining a contract (e.g., sales commissions) are capitalized and amortized on a straight-line basis over the expected customer relationship period if the company expects to recover those costs. The expected customer relationship period is determined based on the average customer relationship period, including expected renewals, for each offering type and ranges from three Product Warranties The company offers warranties for its hardware products that generally range up to three years, with the majority being either one Revenue from extended warranty contracts is initially recorded as deferred income and subsequently recognized on a straight-line basis over the delivery period because the company is providing a service of standing ready to provide services over such term. Refer to note S, “Commitments & Contingencies,” for additional information. Shipping and Handling Costs related to shipping and handling are recognized as incurred and included in cost in the Consolidated Income Statement. Expense and Other Income Selling, General and Administrative Selling, general and administrative (SG&A) expense is charged to income as incurred, except for certain sales commissions, which are capitalized and amortized. For further information regarding capitalizing sales commissions, see “Incremental Costs of Obtaining a Contract” above. Expenses of promoting and selling products and services are classified as selling expense and, in addition to sales commissions, include such items as compensation, advertising and travel. General and administrative expense includes such items as compensation, legal costs, office supplies, non-income taxes, insurance and office rental. In addition, general and administrative expense includes other operating items such as an allowance for credit losses, workforce rebalancing charges for contractually obligated payments to employees terminated in the ongoing course of business, acquisition costs related to business combinations, amortization of certain intangible assets and environmental remediation costs. Advertising and Promotional Expense The company expenses advertising and promotional costs as incurred. Cooperative advertising reimbursements from vendors are recorded net of advertising and promotional expense in the period in which the related advertising and promotional expense is incurred. Advertising and promotional expense, which includes media, agency and promotional expense, was $1,413 million, $1,509 million and $1,591 million in 2021, 2020 and 2019, respectively, and is recorded in SG&A expense in the Consolidated Income Statement. Research, Development and Engineering Research, development and engineering (RD&E) costs are expensed as incurred. Software costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. Intellectual Property and Custom Development Income The company licenses and sells the rights to certain of its intellectual property (IP) including internally developed patents, trade secrets and technological know-how. Certain IP transactions to third parties are licensing/royalty-based and others are transaction-based sales/other transfers. Income from licensing arrangements is recognized at the inception of the license term if the nature of the company’s promise is to provide a right to use the company’s intellectual property as it exists at that point in time (i.e., the license is functional intellectual property) and control has transferred to the client. Income is recognized over time if the nature of the company’s promise is to provide a right to access the company’s intellectual property throughout the license period (i.e., the license is symbolic intellectual property), such as a trademark license. Income from royalty-based fee arrangements is recognized at the later of when the subsequent sale or usage occurs or the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). The company also enters into cross-licensing arrangements of patents, and income from these arrangements is recognized when control transfers to the customer. In addition, the company earns income from certain custom development projects with strategic technology partners and specific clients. The company records the income from these projects over time as the company satisfies the performance obligation if the fee is nonrefundable and is not dependent upon the ultimate success of the project. Other (Income) and Expense Other (income) and expense includes interest income (other than from Financing external transactions), gains and losses on certain derivative instruments, gains and losses from securities and other investments including the changes in fair value associated with the company’s retained interest in Kyndryl common stock, gains and losses from certain real estate transactions, foreign currency transaction gains and losses, gains and losses from the sale of financial assets, gains and losses from the sale of businesses, other than reported as discontinued opera |
Accounting Changes
Accounting Changes | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Changes | |
Accounting Changes | NOTE B. ACCOUNTING CHANGES New Standards to be Implemented Disclosures about Government Assistance Standard/Description– Effective Date and Adoption Considerations– Effect on Financial Statements or Other Significant Matters– Lessors–Certain Leases with Variable Lease Payments Standard/Description– Effective Date and Adoption Considerations– Effect on Financial Statements or Other Significant Matters– Standards Implemented Revenue Contracts with Customers Acquired in a Business Combination Standard/Description– Effective Date and Adoption Considerations– Effect on Financial Statements or Other Significant Matters– Simplifying the Accounting for Income Taxes Standard/Description– Effective Date and Adoption Considerations – Effect on Financial Statements or Other Significant Matters– Reference Rate Reform Standard/Description– Effective Date and Adoption Considerations– Effect on Financial Statements or Other Significant Matters – Simplifying the Test for Goodwill Impairment Standard/Description– Effective Date and Adoption Considerations– Effect on Financial Statements or Other Significant Matters – Financial Instruments–Credit Losses Standard/Description– Effective Date and Adoption Considerations– Effect on Financial Statements or Other Significant Matters– For all other standards that the company adopted in the periods presented, there was no material impact in the consolidated financial results. |
Separation of Kyndryl
Separation of Kyndryl | 12 Months Ended |
Dec. 31, 2021 | |
Separation of Kyndryl | |
Separation of Kyndryl | NOTE C. SEPARATION OF KYNDRYL On November 3, 2021, the company completed the separation of its managed infrastructure services unit into a new public company with the distribution of 80.1 percent of the outstanding shares of Kyndryl to IBM stockholders on a pro rata basis. To effect the separation, IBM stockholders received one The company’s presentation of discontinued operations excludes general corporate overhead costs which were historically allocated to Kyndryl, consistent with the company’s management system, that do not meet the requirements to be presented in discontinued operations. Such allocations include labor and non-labor expenses related to IBM’s corporate support functions (e.g., finance, accounting, tax, treasury, IT, HR, legal, among others) that historically provided support to Kyndryl and transferred to Kyndryl at separation. In addition, discontinued operations excludes the historical intercompany purchases and sales between IBM and Kyndryl that were eliminated in consolidation. In the fourth quarter of 2021, prior to separation, Kyndryl completed the offering of $2.4 billion in aggregate principal amount of senior unsecured fixed-rate notes and entered into a $500 million three-year variable rate term loan. Cash raised from the debt issuance and term loan was used to fund Kyndryl’s opening cash balance, with the remaining net cash proceeds of $879 million paid by Kyndryl to IBM in the form of a dividend at separation which is included in cash flows from financing activities in the Consolidated Statement of Cash Flows. Following completion of the Kyndryl separation on November 3, 2021, the notes and term loan are no longer obligations of IBM. Separation costs of $1,042 million and $21 million incurred during the years ended December 31, 2021 and 2020, respectively, are included in income from discontinued operations, net of taxes in the Consolidated Income Statement. These charges primarily relate to transaction and third-party support costs, business separation and applicable employee retention fees, pension settlement charges and tax charges related to the Kyndryl separation. There were no separation costs incurred in 2019. IBM and Kyndryl entered into various agreements to effect the separation and provide a framework for their on-going relationship, including a separation and distribution agreement, transition services agreement, employee matters agreement, tax matters agreement, intellectual property agreement, real estate matters agreement, client relationship agreement, master subcontracting agreement and a stockholder’s and registration rights agreement. The transition services predominantly consist of information technology services that IBM will provide to Kyndryl for a period no longer than two years after the separation. The impact of these transition services on the company’s Consolidated Financial Statements for the year ended December 31, 2021 was not material. IBM and Kyndryl entered into various commercial agreements pursuant to which Kyndryl will purchase hardware, software and services from IBM for use in the delivery of Kyndryl services agreements and under which IBM will receive services from Kyndryl, related to hosting data centers and servicing IBM’s information infrastructure. As part of the separation, IBM has committed to provide Kyndryl upgraded hardware at no cost to Kyndryl over a two-year period after the separation. IBM recorded $265 million for the total estimate of IBM’s obligation under the agreement to other accrued expenses and liabilities in the Consolidated Balance Sheet. The following table presents the major categories of income from discontinued operations: ($ in millions) For the year ended December 31: 2021 * È 2020 * 2019 * Revenue $ 14,994 $ 18,441 $ 19,433 Cost of sales 11,270 13,651 14,478 Selling, general and administrative expense 1,865 1,638 1,726 Workforce rebalancing charges 35 887 158 RD&E and Other (income) and expense 80 124 116 Income from discontinued operations before income taxes $ 1,744 $ 2,142 $ 2,954 Provision for income taxes 714 ** 484 670 Income from discontinued operations, net of tax È È $ 1,030 $ 1,658 $ 2,285 * Excludes intercompany transactions between IBM and Kyndryl and general corporate overhead costs transferred to Kyndryl as discussed above. ** Includes tax charges related to the Kyndryl separation. È Represents 10 months of Kyndryl operations in 2021, versus a full year of Kyndryl operations in 2020 and 2019. È È Includes $(1) million, $89 million and $(4) million in 2021, 2020 and 2019, respectively, related to discontinued operations of Microelectronics, divested in 2015. The following table presents the major classes of assets and liabilities of discontinued operations: ($ in millions) At December 31: 2020 Assets Current assets Notes and accounts receivable (net of allowances of $94) $ 1,361 Deferred costs 1,089 Prepaid expenses and other current assets 168 Total current assets of discontinued operations 2,618 Plant, rental machines and other property, net 3,835 Operating right-of-use assets, net 1,120 Deferred costs 1,300 Deferred taxes 837 Goodwill* 5,851 Other assets 203 Total non-current assets of discontinued operations 13,147 Total assets of discontinued operations $ 15,764 Liabilities Current liabilities Accounts payable $ 875 Compensation and benefits 384 Workforce reductions 449 Deferred income 854 Operating lease liabilities 322 Other accrued expenses and liabilities 936 Total current liabilities of discontinued operations 3,820 Long-term debt 138 Retirement and nonpension postretirement benefit obligations 1,063 Deferred income 543 Operating lease liabilities 854 Other liabilities 718 Total non-current liabilities of discontinued operations 3,317 Total liabilities of discontinued operations $ 7,136 * Goodwill allocated to discontinued operations represents the amount of goodwill attributable to Kyndryl which was determined on a relative fair value basis. The total net impact to stockholder’s equity as a result of the separation was a reduction of $7,203 million, which has been reflected as a reduction of $8,404 million, $1,264 million and $62 million to retained earnings, accumulated other comprehensive income/(loss) and noncontrolling interest, respectively, in the Consolidated Statement of Equity as of December 31, 2021. The company retained 19.9 percent of the shares of Kyndryl common stock which had a net book value of $681 million as of November 3, 2021, the separation date. Refer to note A, “Significant Accounting Policies,” and note J, “Financial Assets & Liabilities,” for additional information on the retained shares. The following table presents selected financial information related to cash flows from discontinued operations: ($ in millions) For the year ended December 31: 2021 * 2020 2019 Net cash provided by/(used in) operating activities $ 1,612 $ 4,403 $ 4,535 Net cash provided by/(used in) investing activities (380) (935) (1,113) * |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2021 | |
Revenue Recognition | |
Revenue Recognition | NOTE D. REVENUE RECOGNITION Disaggregation of Revenue The following tables provide details of revenue by major products/service offerings, hybrid cloud revenue, and revenue by geography. Revenue by Major Products/Service Offerings ($ in millions) For the year ended December 31: 2021 2020 * 2019 * Hybrid Platform & Solutions $ 17,751 $ 16,321 $ 14,472 Transaction Processing 6,390 6,606 7,936 Total Software $ 24,141 $ 22,927 $ 22,408 Business Transformation $ 8,284 $ 7,193 $ 7,569 Technology Consulting 3,466 3,133 2,821 Application Operations 6,095 5,931 6,549 Total Consulting $ 17,844 $ 16,257 $ 16,939 Hybrid Infrastructure $ 8,167 $ 8,415 $ 9,176 Infrastructure Support 6,021 6,118 6,599 Total Infrastructure $ 14,188 $ 14,533 $ 15,774 Financing** $ 774 $ 975 $ 1,215 Other $ 404 $ 488 $ 1,378 Total Revenue $ 57,350 $ 55,179 $ 57,714 * Recast to reflect segment changes. ** Contains lease and loan/working capital financing arrangements which are not subject to the guidance on revenue from contracts with customers. Hybrid Cloud Revenue by Segment ($ in millions) For the year ended December 31: 2021 2020 2019 Software $ 8,713 $ 6,907 $ 4,099 Consulting 7,852 5,861 5,274 Infrastructure 3,645 4,039 4,183 Other—divested businesses — 32 279 Total $ 20,210 $ 16,838 $ 13,834 Revenue by Geography ($ in millions) For the year ended December 31: 2021 2020 2019 Americas $ 28,299 $ 27,119 $ 28,704 Europe/Middle East/Africa 17,447 16,767 17,282 Asia Pacific 11,604 11,293 11,728 Total $ 57,350 $ 55,179 $ 57,714 Remaining Performance Obligations The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not include contracts that have an original duration of one year or less. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency. At December 31, 2021, the aggregate amount of the transaction price allocated to RPO related to customer contracts that are unsatisfied or partially unsatisfied was $62 billion. Approximately 68 percent of the amount is expected to be recognized as revenue in the subsequent two years, approximately 28 percent in the subsequent three Revenue Recognized for Performance Obligations Satisfied (or Partially Satisfied) in Prior Periods For the year ended December 31, 2021, revenue was reduced by $61 million for performance obligations satisfied (or partially satisfied) in previous periods mainly due to changes in estimates on contracts with cost-to-cost measures of progress. Refer to note A, “Significant Accounting Policies,” for additional information on these contracts and estimates of costs to complete. Reconciliation of Contract Balances The following table provides information about notes and accounts receivable—trade, contract assets and deferred income balances. ($ in millions) At December 31: 2021 2020 Notes and accounts receivable—trade (net of allowances of $218 in 2021 and $260 in 2020) $ 6,754 $ 5,790 Contract assets* 471 425 Deferred income (current) 12,518 11,980 Deferred income (noncurrent) 3,577 3,758 * Included within prepaid expenses and other current assets in the Consolidated Balance Sheet. The amount of revenue recognized during the year ended December 31, 2021 that was included within the deferred income balance at December 31, 2020 was $10.2 billion and primarily related to services and software. The following table provides roll forwards of the notes and accounts receivable—trade allowance for expected credit losses for the years ended December 31, 2021 and 2020. ($ in millions) January 1, 2021 Additions/(Releases) Write-offs Other * December 31, 2021 $ 260 $ (15) $ (28) $ 1 $ 218 January 1, 2020 Additions/(Releases) Write-offs Other * December 31, 2020 $ 235 $ 63 $ (39) $ 1 $ 260 * Primarily represents translation adjustments. The contract assets allowance for expected credit losses was not material in the years ended December 31, 2021 and 2020. Deferred Costs ($ in millions) At December 31: 2021 2020 Capitalized costs to obtain a contract $ 476 $ 572 Deferred costs to fulfill a contract Deferred setup costs 546 591 Other deferred fulfillment costs 1,000 1,004 Total deferred costs* $ 2,022 $ 2,168 * Of the total deferred costs, $1,097 million was current and $924 million was noncurrent at December 31, 2021 and $1,018 million was current and $1,150 million was noncurrent at December 31, 2020. The amount of total deferred costs amortized during the year ended December 31, 2021 was $1,872 million and there were no material impairment losses incurred. Refer to note A, “Significant Accounting Policies,” for additional information on deferred costs to fulfill a contract and capitalized costs of obtaining a contract. |
Segments
Segments | 12 Months Ended |
Dec. 31, 2021 | |
Segments | |
Segments | NOTE E. SEGMENTS In the fourth quarter of 2021, immediately prior to the separation of Kyndryl, the company made a number of changes to its organizational structure and management system to align the company’s operating model to its platform-centric approach to hybrid cloud and AI. With these changes, the company revised its reportable segments, but did not impact its Consolidated Financial Statements. The following table displays the segment updates: Previous Segments Changes New Segments Cloud & Cognitive Software ● Software Global Business Services ● Consulting Global Technology Services - Separated managed infrastructure services** N/A - Technology Support Services - IBM Cloud IaaS - Managed infrastructure services retained JV È Systems ● Infrastructure + Technology Support Services + IBM Cloud IaaS + Global asset recovery service Global Financing - Global asset recovery service Financing Other + Managed infrastructure services retained JV È Other * Does not include minor mission moves. ** IBM completed the separation of its managed infrastructure services business to Kyndryl on November 3, 2021. È Represents a joint venture relationship that was historically managed by the managed infrastructure services business that was not transferred to Kyndryl as part of the separation. N/A–Not applicable 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 segments are determined based on several factors, including client base, homogeneity of products, technology, delivery channels and similar economic characteristics. With this organizational and management system change, the segments no longer include internal revenue. Certain transactions between the segments are recorded to other income and expense and are reflected in segment pre-tax income. After the Kyndryl separation, these transactions predominately represent loans between Financing and Infrastructure segments to facilitate the acquisition of equipment and software used in IBM IaaS services arrangements. The prior period revenue and pre-tax income presented in the tables below are reported on a comparable basis. The company utilizes globally integrated support organizations to realize economies of scale and efficient use of resources. As a result, a considerable amount of expense is shared by all of the segments. This shared expense includes sales coverage, certain marketing functions and support functions such as Accounting, Treasury, Procurement, Legal, Human Resources and Billing and Collections. Where practical, shared expenses are allocated based on measurable drivers of expense, e.g., headcount. When a clear and measurable driver cannot be identified, shared expenses are allocated on a financial basis that is consistent with the company’s management system, e.g., advertising expense is allocated based on the gross profits of the segments. A portion of the shared expenses, which are recorded in net income, are not allocated to the segments. These expenses are associated with the elimination of internal transactions and other miscellaneous items. The following tables reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company and have been recast for the prior-year periods due to the company’s segment changes in the fourth quarter of 2021. Performance measurement is based on pre-tax income from continuing operations, consistent with the company’s management and measurement system. These results are used, by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments. Management System Segment View ($ in millions) Total For the year ended December 31: Software Consulting Infrastructure Financing Segments 2021 Revenue $ 24,141 $ 17,844 $ 14,188 $ 774 $ 56,946 Pre-tax income from continuing operations 4,722 1,449 2,025 441 8,637 Revenue year-to-year change 5.3 % 9.8 % (2.4) % (20.6) % 4.1 % Pre-tax income year-to-year change 41.3 % 40.1 % 22.4 % (1.8) % 33.3 % Pre-tax income margin 19.6 % 8.1 % 14.3 % 57.0 % 15.2 % 2020* Revenue $ 22,927 $ 16,257 $ 14,533 $ 975 $ 54,691 Pre-tax income from continuing operations** 3,341 1,034 1,654 449 6,479 Revenue year-to-year change 2.3 % (4.0) % (7.9) % (19.8) % (2.9) % Pre-tax income year-to-year change (33.5) % (23.0) % (33.3) % (31.2) % (31.8) % Pre-tax income margin 14.6 % 6.4 % 11.4 % 46.1 % 11.8 % 2019* Revenue $ 22,408 $ 16,939 $ 15,774 $ 1,215 $ 56,336 Pre-tax income from continuing operations 5,025 1,344 2,481 652 9,502 * Recast to conform to 2021 presentation. ** Includes the impact of a $1.5 billion pre-tax charge for structural actions in the fourth quarter of 2020. The impact by segment was as follows: Software ($0.7 billion), Consulting ($0.4 billion), Infrastructure ($0.4 billion). The impact to Financing was immaterial. Reconciliations of IBM as Reported ($ in millions) For the year ended December 31: 2021 2020 * 2019 * Revenue Total reportable segments $ 56,946 $ 54,691 $ 56,336 Other—divested businesses 70 101 1,010 Other revenue 335 387 368 Total revenue $ 57,350 $ 55,179 $ 57,714 0 0 ($ in millions) For the year ended December 31: 2021 2020 * 2019 * Pre-tax income from continuing operations Total reportable segments $ 8,637 $ 6,479 ** $ 9,502 Amortization of acquired intangible assets (1,838) (1,832) (1,271) Acquisition-related charges (43) (13) (423) Non-operating retirement-related (costs)/income (1,282) (1,073) (576) Kyndryl-related impacts 118 — — Elimination of internal transactions (7) (28) (21) Other—divested businesses 25 12 580 Unallocated corporate amounts and other (774) (973) (586) Total pre-tax income from continuing operations $ 4,837 $ 2,572 ** $ 7,206 * Recast to conform to 2021 presentation. Includes the impact of a $1.5 billion pre-tax charge for structural actions in the fourth quarter of 2020. Immaterial Items Investment in Equity Alliances and Equity Alliances Gains/(Losses) The investments in equity alliances and the resulting gains and (losses) from these investments that are attributable to the segments did not have a material effect on the financial position or the financial results of the segments. Segment Assets and Other Items Software assets are mainly goodwill, acquired intangible assets and accounts receivable. Consulting assets are primarily goodwill and accounts receivable. Infrastructure assets are primarily goodwill, plant, property and equipment, and manufacturing inventory. Financing assets are primarily financing receivables, and cash and marketable securities. To ensure the efficient use of the company’s space and equipment, several segments may share leased or owned plant, property and equipment assets. Where assets are shared, landlord ownership of the assets is assigned to one segment and is not allocated to each user segment. This is consistent with the company’s management system and is reflected accordingly in the table below. In those cases, there will not be a precise correlation between segment pre-tax income and segment assets. Depreciation expense and capital expenditures that are reported by each segment also are consistent with the landlord ownership basis of asset assignment. Financing amounts for interest income reflect the income associated with Financing's external client transactions, as well as the income from investment in cash and marketable securities. Financing amounts for interest expense reflect the expense associated with the arm's length terms of the intercompany loans supporting Financing's external client transactions. Intercompany financing activities are recorded to other income and expense and are reflected in segment pre-tax income. Management System Segment View ($ in millions) Total For the year ended December 31: Software Consulting Infrastructure Financing Segments 2021 Assets $ 59,336 $ 11,914 $ 11,766 $ 16,880 $ 99,896 Depreciation/amortization of intangibles** 1,204 250 1,399 49 2,902 Capital expenditures/investments in intangibles 565 55 792 33 1,444 Interest income — — — 628 628 Interest expense — — — 129 129 2020* Assets $ 58,558 $ 10,548 $ 12,378 $ 24,974 $ 106,458 Depreciation/amortization of intangibles** 1,237 207 1,419 120 2,983 Capital expenditures/investments in intangibles 548 26 1,093 41 1,709 Interest income — — — 834 834 Interest expense — — — 307 307 2019* Assets $ 58,230 $ 10,421 $ 12,002 $ 29,460 $ 110,113 Depreciation/amortization of intangibles** 676 179 1,348 186 2,389 Capital expenditures/investments in intangibles 517 45 612 57 1,230 Interest income — — — 1,133 1,133 Interest expense — — — 512 512 * Recast to conform to 2021 presentation. ** Segment pre-tax income from continuing operations does not include the amortization of acquired intangible assets. Reconciliations of IBM as Reported ($ in millions) At December 31: 2021 2020 * 2019 * Assets Total reportable segments $ 99,896 $ 106,458 $ 110,113 Elimination of internal transactions (1,608) (4,686) (4,317) Other—divested businesses 193 254 1,942 Unallocated amounts Cash and marketable securities 6,222 12,463 7,271 Notes and accounts receivable 1,622 1,655 1,601 Deferred tax assets 7,158 8,175 4,917 Plant, other property and equipment 2,196 2,449 2,488 Operating right-of-use assets 1,945 2,368 2,531 Pension assets 9,848 7,557 6,819 Other 4,530 3,514 3,184 Total assets of discontinued operations** — 15,764 15,638 Total IBM consolidated assets $ 132,001 $ 155,971 $ 152,186 * Recast to conform to 2021 presentation. ** Refer to note C, “Separation of Kyndryl,” for additional information. Major Clients No single client represented 10 percent or more of the company’s total revenue in 2021, 2020 or 2019. Geographic Information The following tables provide information for those countries that are 10 percent or more of the specific category. Revenue È ($ in millions) For the year ended December 31: 2021 2020 * 2019 * United States $ 22,893 $ 22,258 $ 23,389 Japan 5,648 5,680 5,755 Other countries 28,810 27,241 28,570 Total revenue $ 57,350 $ 55,179 $ 57,714 È Revenues are attributed to countries based on the location of the client. * Recast to conform to 2021 presentation. Plant and Other Property–Net ($ in millions) At December 31: 2021 2020 * 2019 * United States $ 3,375 $ 3,452 $ 3,513 Other countries 2,293 2,656 2,273 Total $ 5,668 $ 6,108 $ 5,785 * Recast to conform to 2021 presentation. Operating Right-of-Use Assets–Net ($ in millions) At December 31: 2021 2020 * 2019 * United States $ 1,148 $ 1,165 $ 1,305 Japan 398 532 599 Other countries 1,676 1,870 1,947 Total $ 3,222 $ 3,566 $ 3,850 * Recast to conform to 2021 presentation. Revenue by Classes of Similar Products or Services The following table presents external revenue for similar classes of products or services within the company’s reportable segments. Client solutions often include IBM software and systems and other suppliers’ products if the client solution requires it. For each of the segments that include services, Software-as-a-Service, consulting, education, training and other product-related services are included as services. For each of these segments, software includes product license charges and ongoing subscriptions. ($ in millions) For the year ended December 31: 2021 2020 * 2019 * Software Software $ 20,098 $ 19,046 $ 18,574 Services 3,934 3,770 3,670 Systems 109 110 165 Consulting Services $ 17,563 $ 15,986 $ 16,663 Software 173 183 160 Systems 108 89 116 Infrastructure Maintenance $ 4,743 $ 4,804 $ 5,171 Servers 3,363 3,549 3,829 Services 2,616 2,656 2,927 Storage 1,908 1,813 1,936 Software 1,426 1,563 1,725 Used Equipment Sales** 131 149 186 Financing Financing $ 628 $ 834 $ 1,120 Used Equipment Sales 145 140 95 * Recast to conform to 2021 presentation. ** Represents Global Asset Recovery Service transferred from Financing segment. |
Acquisitions & Divestitures
Acquisitions & Divestitures | 12 Months Ended |
Dec. 31, 2021 | |
Acquisitions & Divestitures | |
Acquisitions & Divestitures | NOTE F. ACQUISITIONS & DIVESTITURES Acquisitions Purchase price consideration for all acquisitions was paid primarily in cash. All acquisitions, except otherwise stated, were for 100 percent of the acquired business and are reported in the Consolidated Statement of Cash Flows, net of acquired cash and cash equivalents. 2021 In 2021, the company completed fifteen acquisitions at an aggregate cost of $3,342 million. Each acquisition is expected to enhance the company’s portfolio of products and services capabilities and further advance IBM’s hybrid cloud and AI strategy. Acquisition Segment Description of Acquired Business First Quarter Nordcloud Consulting Consulting company providing services in cloud implementation, application transformation and managed services Taos Mountain, LLC (Taos) Consulting Leading cloud professional and managed services provider StackRox Software Innovator in container and Kubernetes-native security Second Quarter Turbonomic, Inc. (Turbonomic) Software Application Resource Management and Network Performance Management software provider ECX Copy Data Management business from Catalogic Software, Inc. Software Smart data protection solution Waeg Consulting Leading Salesforce consulting partner myInvenio Software Process mining software company Third Quarter VEVRE Software business from Volta, Inc. Software Cloud-native virtual routing engine BoxBoat Technologies Consulting Premier DevOps consultancy and enterprise Kubernetes certified service provider Bluetab Solutions Group Consulting Data solutions service provider Fourth Quarter SXiQ Digital Pty Ltd Consulting Digital transformation services company specializing in cloud applications, cloud platforms, and cloud cybersecurity McD Tech Labs from McDonald’s Software Asset purchase to accelerate the development and deployment of McDonald’s Automated Order Taking (AOT) technology ReaQta Software Provider of endpoint security solutions designed to leverage AI to automatically identify and manage threats Adobe Workfront practice from Rego Consulting Corporation Consulting Work management software consulting for enterprise clients Phlyt Software Cloud-native development consultancy The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of December 31, 2021. ($ in millions) Amortization Other Life (in Years) Turbonomic Acquisitions Current assets $ 126 $ 108 Property, plant and equipment/noncurrent assets — 12 Intangible assets Goodwill N/A 1,439 1,110 Client relationships 4 — 10 290 200 Completed technology 4 — 7 117 196 Trademarks 1 — 6 18 30 Total assets acquired $ 1,990 $ 1,656 Current liabilities 49 59 Noncurrent liabilities 113 84 Total liabilities assumed $ 161 $ 143 Total purchase price $ 1,829 $ 1,513 N/A–Not applicable The goodwill generated is primarily attributable to the assembled workforce of the acquired businesses and the increased synergies expected to be achieved from the integration of the acquired businesses into the company’s various integrated solutions and services neither of which qualifies as an amortizable intangible asset. The valuation of the assets acquired and liabilities assumed is subject to revision. If additional information becomes available, the company may further revise the purchase price allocation as soon as practical, but no later than one year from the acquisition date; however, material changes are not expected. Turbonomic – Other acquisitions – The identified intangible assets will be amortized on a straight-line basis over their useful lives, which approximates the pattern that the assets’ economic benefits are expected to be consumed over time. Transactions Closed in 2022 – 2020 In 2020, the company completed seven acquisitions at an aggregate cost of $723 million. Acquisition Segment Description of Acquired Business First Quarter Stratoss Lifecycle Manager business (Stratoss) from Accanto Systems Oy Software Cloud native business designed to deliver web-scale levels of operational automation for the cloud-based networking world Second Quarter Automated Security Assurance Platform business (ASAP) from Spanugo Inc. Software Cloud cybersecurity platform, integrated into the IBM public cloud to further meet the security demands of clients in highly regulated industries Third Quarter WDG Soluções Em Sistemas E Automação De Processos LTDA (WDG Automation) Software Provider of robotic process automation Fourth Quarter Instana Software Application performance monitoring and observability company which helps businesses better manage applications that span the hybrid cloud landscape TruQua Enterprises, LLC (TruQua) Consulting IT services provider and SAP development partner Expertus Technologies Inc. (Expertus) Consulting Provider of cloud solutions for the financial services industry 7Summits LLC (7Summits) Consulting Leading Salesforce partner that delivers transformative digital experiences across industries At December 31, 2020, the remaining cash to be remitted by the company related to certain fourth-quarter acquisitions was $323 million. This amount was classified as restricted cash in the Consolidated Balance Sheet, most of which was paid in the first quarter of 2021. The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of December 31, 2020. ($ in millions) Amortization Allocated Life (in Years) Amount Current assets $ 35 Property, plant and equipment/noncurrent assets 7 Intangible assets Goodwill N/A 575 Client relationships 5—7 84 Completed technology 2—7 73 Trademarks 1—7 11 Total assets acquired $ 784 Current liabilities 19 Noncurrent liabilities 41 Total liabilities assumed $ 61 Total purchase price $ 723 N/A—Not applicable The goodwill generated is primarily attributable to the assembled workforce of the acquired businesses and the increased synergies expected to be achieved from the integration of the acquired businesses into the company’s various integrated solutions and services neither of which qualifies as an amortizable intangible asset. The overall weighted-average useful life of the identified amortizable intangible assets acquired was 6.8 years. These identified intangible assets will be amortized on a straight-line basis over their useful lives, which approximates the pattern that the assets’ economic benefits are expected to be consumed over time. Goodwill of $362 million, $205 million and $8 million was assigned to the Software, Consulting and Infrastructure segments, respectively. The goodwill recorded as a result of these acquisitions was not deductible for tax purposes. 2019 In 2019, the company completed one acquisition at an aggregate cost of $35 billion. Red Hat– all On the acquisition date, Red Hat shareholders received $190 per share in cash, representing a total equity value of approximately $34 billion. The company funded the transaction through a combination of cash on hand and proceeds from debt issuances. The following table reflects the purchase price and the resulting purchase price allocation as of December 31, 2020. The net purchase price adjustments recorded during 2020 were primarily related to noncurrent tax assets and liabilities. ($ in millions) Amortization Allocated Life (in Years) Amount Current assets* $ 3,186 Property, plant and equipment/noncurrent assets 948 Intangible assets Goodwill N/A 22,985 Client relationships 10 7,215 Completed technology 9 4,571 Trademarks 20 1,686 Total assets acquired $ 40,592 Current liabilities** 1,395 Noncurrent liabilities 4,117 Total liabilities assumed $ 5,512 Total purchase price $ 35,080 * Includes $2.2 billion of cash and cash equivalents. ** Includes $485 million of short-term debt related to the convertible notes acquired from Red Hat that were recognized at their fair value on the acquisition date, which was fully settled as of October 1, 2019. N/A—Not applicable The goodwill generated was primarily attributable to the assembled workforce of Red Hat and the increased synergies expected to be achieved from the integration of Red Hat products into the company’s various integrated solutions neither of which qualify as an amortizable intangible asset. The overall weighted-average useful life of the identified amortizable intangible assets acquired was 10.9 years. These identified intangible assets will be amortized on a straight-line basis over their useful lives, which approximates the pattern that the assets’ economic benefits are expected to be consumed over time. The following table presents the goodwill allocated to the segments as of December 31, 2021: ($ in billions) Goodwill Segment Allocated * Software $ 18.4 Consulting 1.1 Infrastructure 0.8 Total $ 20.3 ** * Approximately seven percent of the goodwill was determined to be deductible for tax purposes. ** Goodwill of approximately $2.7 billion related to the Red Hat acquisition was derecognized at the time of the Kyndryl separation. Refer to note A, “Significant Accounting Policies,” and note C, “Separation of Kyndryl,” for additional details. The following table presents the supplemental consolidated financial results of the company as of December 31, 2019 on an unaudited pro forma basis, as if the acquisition had been consummated on January 1, 2018. The primary adjustments reflected in the pro forma results relate to: (1) the debt used to fund the acquisition, (2) changes driven by acquisition accounting, including amortization of intangible assets and the deferred revenue fair value adjustment, (3) employee retention plans, (4) elimination of intercompany transactions between IBM and Red Hat, and (5) the presentation of acquisition-related costs. The unaudited pro forma financial information presented below does not purport to represent the actual results of operations that IBM and Red Hat would have achieved had the companies been combined during the periods presented, and was not intended to project the future results of operations that the combined company could achieve after the acquisition. Historical fiscal periods are not aligned under this presentation. The unaudited pro forma financial information did not reflect any potential cost savings, operating efficiencies, long-term debt pay down estimates, suspension of IBM’s share repurchase program, financial synergies or other strategic benefits as a result of the acquisition or any restructuring costs to achieve those benefits. (Unaudited) ($ in millions) For the year ended December 31: 2019 Revenue $ 60,195 * Net income $ 7,438 * * Adjusted to reflect the Kyndryl separation. Refer to note A, “Significant Accounting Policies,” and note C, “Separation of Kyndryl,” for additional information. Divestitures 2021 Kyndryl– Other Divestitures– Transactions Announced – 2020 There were no divestitures completed during the year ended December 31, 2020. 2019 Select IBM Software Products– The company received cash of $812 million at closing and $812 million in the second quarter of 2020. The company also received $140 million of contingent consideration as of December 31, 2021. In addition, IBM remits payment to HCL predominantly for servicing certain customer contracts until such contracts are terminated or entitlements are assumed by HCL, related to deferred revenue that existed prior to closing. IBM made cash payments to HCL of $38 million, $288 million, and $174 million in 2021, 2020 and 2019, respectively, for such contracts. Select IBM Marketing Platform and Commerce Offerings– A subsequent closing occurred in most other countries on March 31, 2020. The closing of all remaining countries occurred as of June 30, 2020. The pre-tax gain recognized on this transaction as of December 31, 2021 was $79 million. IBM Risk Analytics and Regulatory Offerings– Sales Performance Management Offerings– The above 2019 divested businesses are reported in Other–divested businesses as described in note E, "Segments." In addition to the above, the company completed three divestitures reported in the Financing segment, the Consulting segment and the Other–divested businesses in 2019. The financial terms related to each of these transactions were not material. The pre-tax gains recognized on the divestitures above were recorded in other (income) and expense in the Consolidated Income Statement. |
Research, Development & Enginee
Research, Development & Engineering | 12 Months Ended |
Dec. 31, 2021 | |
Research, Development & Engineering | |
Research, Development & Engineering | NOTE G. RESEARCH, DEVELOPMENT & ENGINEERING RD&E expense was $6,488 million in 2021, $6,262 million in 2020 and $5,910 million in 2019. The company incurred total expense of $6,216 million, $5,968 million and $5,578 million in 2021, 2020 and 2019, respectively, for scientific research and the application of scientific advances to the development of new and improved products and their uses, as well as services and their application. Within these amounts, software-related expense was $3,922 million, $3,682 million and $3,497 million in 2021, 2020 and 2019, respectively. Expense for product-related engineering was $272 million, $295 million and $334 million in 2021, 2020 and 2019, respectively. |
Taxes
Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Taxes | |
Taxes | NOTE H. TAXES ($ in millions) For the year ended December 31: 2021 2020 2019 Income/(loss) from continuing operations before income taxes U.S. operations $ (2,654) $ (2,349) $ (874) Non-U.S. operations 7,491 4,921 8,080 Total income from continuing operations before income taxes $ 4,837 $ 2,572 $ 7,206 The income from continuing operations provision for/(benefit from) income taxes by geographic operations was as follows: ($ in millions) For the year ended December 31: 2021 2020 2019 U.S. operations $ (969) $ 1,913 $ (419) Non-U.S. operations 1,093 (3,273) 479 Total continuing operations provision for/(benefit from) income taxes $ 124 $ (1,360) $ 60 The components of the income from continuing operations provision for/(benefit from) income taxes by taxing jurisdiction were as follows: ($ in millions) For the year ended December 31: 2021 2020 2019 U.S. federal Current $ 374 $ 312 $ 327 Deferred (1,358) 1,102 (873) $ (984) $ 1,414 $ (546) U.S. state and local Current $ 161 $ 345 $ (55) Deferred (370) (358) (85) $ (209) $ (13) $ (140) Non-U.S. Current $ 1,342 $ 1,208 $ 1,376 Deferred (25) (3,969) (630) $ 1,317 $ (2,761) $ 746 Total continuing operations provision for/(benefit from) income taxes $ 124 $ (1,360) $ 60 Discontinued operations provision for/(benefit from) income taxes 714 484 670 Provision for social security, real estate, personal property and other taxes 3,227 3,199 3,304 Total taxes included in net income $ 4,065 $ 2,322 $ 4,034 A reconciliation of the statutory U.S. federal tax rate to the company’s effective tax rate from continuing operations was as follows: For the year ended December 31: 2021 2020 2019 Statutory rate 21 % 21 % 21 % Enactment of U.S. tax reform — — 2 Tax differential on foreign income (10) (31) (14) Intra-entity IP sale — (37) — Domestic incentives (5) (9) (6) State and local (3) 0 (2) Other 0 3 0 Effective rate 3 % (53) % 1 % Percentages rounded for disclosure purposes. The significant components reflected within the tax rate reconciliation labeled “Tax differential on foreign income” include the effects of foreign subsidiaries’ earnings taxed at rates other than the U.S. statutory rate, U.S. taxes on foreign income and any net impacts of intercompany transactions. These items also reflect audit settlements or changes in the amount of unrecognized tax benefits associated with each of these items. The continuing operations effective rate for 2021 was 2.6 percent compared to (52.9) percent in 2020. The current year effective tax rate was primarily driven by tax benefits related to audit settlements in multiple jurisdictions. The prior-year effective tax rate was primarily driven by an intra-entity sale of certain of the company’s intellectual property in the first quarter of 2020 which required the recognition of a $3.4 billion deferred tax asset. The recognition of this non-U.S. deferred tax asset and its related GILTI impacts in the U.S. resulted in a net tax benefit of $0.9 billion in the first quarter of 2020. In addition, a change in foreign tax law resulted in a $0.2 billion tax benefit in the prior year. The effect of tax law changes on deferred tax assets and liabilities did not have a material impact on the company’s 2021 effective tax rate. Deferred Tax Assets ($ in millions) At December 31: 2021 2020 Retirement benefits $ 3,142 $ 3,700 Leases 1,061 1,149 Share-based and other compensation 661 579 Domestic tax loss/credit carryforwards 1,619 1,746 Deferred income 630 661 Foreign tax loss/credit carryforwards 983 818 Bad debt, inventory and warranty reserves 390 324 Depreciation 249 139 Hedging losses 26 576 Restructuring charges 216 253 Accruals 305 483 Intangible assets 2,929 3,540 Capitalized research and development 2,161 1,387 Other 1,280 1,352 Gross deferred tax assets 15,652 16,707 Less: valuation allowance 883 850 Net deferred tax assets $ 14,769 $ 15,857 * Deferred Tax Liabilities ($ in millions) At December 31: 2021 2020 Goodwill and intangible assets $ 2,290 $ 2,635 GILTI deferred taxes 3,257 4,119 Leases and right-of-use assets 1,314 1,584 Depreciation 518 646 Retirement benefits 1,971 1,209 Software development costs 1,016 1,007 Deferred transition costs 42 200 Undistributed foreign earnings 131 276 Other 817 734 Gross deferred tax liabilities $ 11,356 $ 12,410 For financial reporting purposes, the company had foreign and domestic loss carryforwards, the tax effect of which was $773 million, as well as foreign and domestic credit carryforwards of $1,829 million. Substantially all of these carryforwards are available for at least two years and the majority are available for 10 years or more. The valuation allowances as of December 31, 2021, 2020 and 2019 were $883 million, $850 million and $608 million, respectively. The amounts principally apply to certain foreign and domestic loss carryforwards and credits. In the opinion of management, it is more likely than not that these assets will not be realized. However, to the extent that tax benefits related to these carryforwards are realized in the future, the reduction in the valuation allowance will reduce income tax expense. The amount of unrecognized tax benefits at December 31, 2021 increased by $141 million in 2021 to $8,709 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows: ($ in millions) 2021 2020 2019 Balance at January 1 $ 8,568 $ 7,146 $ 6,759 Additions based on tax positions related to the current year 934 1,690 816 Additions for tax positions of prior years 247 159 779 Reductions for tax positions of prior years (including impacts due to a lapse of statute) (688) (408) (922) Settlements (352) (19) (286) Balance at December 31 $ 8,709 $ 8,568 $ 7,146 The additions to unrecognized tax benefits related to the current and prior years were primarily attributable to non-U.S. tax matters, including transfer pricing, as well as U.S. federal and state tax matters, credits and incentives. The settlements and reductions to unrecognized tax benefits for tax positions of prior years were primarily attributable to non-U.S. audits, U.S. federal and state tax matters, impacts due to lapse of statute of limitations and foreign currency translation adjustments. The unrecognized tax benefits at December 31, 2021 of $8,709 million can be reduced by $546 million associated with timing adjustments, U.S. tax credits, potential transfer pricing adjustments and state income taxes. The net amount of $8,163 million, if recognized, would favorably affect the company’s effective tax rate. The net amounts at December 31, 2020 and 2019 were $7,994 million and $6,562 million, respectively. Interest and penalties related to income tax liabilities are included in income tax expense. During the year ended December 31, 2021, the company recognized $125 million in interest expense and penalties; in 2020, the company recognized $117 million in interest expense and penalties; and, in 2019, the company recognized $13 million in interest expense and penalties. The company had $935 million for the payment of interest and penalties accrued at December 31, 2021, and had $843 million accrued at December 31, 2020. Within the next 12 months, the company believes it is reasonably possible that the total amount of unrecognized tax benefits associated with certain positions may be reduced. The potential decrease in the amount of unrecognized tax benefits is associated with certain non-U.S. positions that are expected to be recognized due to a lapse in statute of limitations, as well as anticipated resolution of various non-U.S. audits. The company estimates that the unrecognized tax benefits at December 31, 2021 could be reduced by $166 million. During the fourth quarter of 2020, the U.S. Internal Revenue Service (IRS) concluded its examination of the company’s U.S. income tax returns for 2013 and 2014, which had a specific focus on certain cross-border transactions that occurred in 2013 and issued a final Revenue Agent’s Report (RAR). The IRS’ proposed adjustments relative to these cross-border transactions, if sustained, would result in additional taxable income of approximately $4.5 billion. The company strongly disagrees with the IRS on these specific matters and filed its IRS Appeals protest in the first quarter of 2021. In the third quarter of 2018, the IRS commenced its audit of the company’s U.S. tax returns for 2015 and 2016. The company anticipates that this audit will be completed in 2022. In the fourth quarter of 2021, the IRS commenced its audit of the company’s U.S. tax returns for 2017 and 2018. With respect to major U.S. state and foreign taxing jurisdictions, the company is generally no longer subject to tax examinations for years prior to 2015. The company is no longer subject to income tax examination of its U.S. federal tax return for years prior to 2013. The open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as it relates to the amount and/or timing of income, deductions, and tax credits. Although the outcome of tax audits is always uncertain, the company believes that adequate amounts of tax, interest and penalties have been provided for any adjustments that are expected to result for these years. The company is involved in a number of income tax-related matters in India challenging tax assessments issued by the India Tax Authorities. As of December 31, 2021, the company had recorded $727 million as prepaid income taxes in India. A significant portion of this balance represents cash tax deposits paid over time to protect the company’s right to appeal various income tax assessments made by the India Tax Authorities. Although the outcome of tax audits are always uncertain, the company believes that adequate amounts of tax, interest and penalties have been provided for any adjustments that are expected to result for these years. Within consolidated retained earnings at December 31, 2021 were undistributed after-tax earnings from certain non-U.S. subsidiaries that were not indefinitely reinvested. At December 31, 2021, the company had a deferred tax liability of $131 million for the estimated taxes associated with the repatriation of these earnings. Quantification of the deferred tax liability associated with indefinitely reinvested non-earnings related outside basis differences, if any, was not practicable. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share | |
Earnings Per Share | NOTE I. EARNINGS PER SHARE The following table presents the computation of basic and diluted earnings per share of common stock. ($ in millions except per share amounts) For the year ended December 31: 2021 2020 2019 Weighted-average number of shares on which earnings per share calculations are based Basic 895,990,771 890,348,679 887,235,105 Add—incremental shares under stock-based compensation plans 6,883,290 4,802,940 4,199,440 Add—incremental shares associated with contingently issuable shares 1,766,940 1,412,352 1,378,831 Assuming dilution 904,641,001 896,563,971 892,813,376 Income from continuing operations $ 4,712 $ 3,932 $ 7,146 Income/(loss) from discontinued operations, net of tax 1,030 1,658 2,285 Net income on which basic earnings per share is calculated $ 5,743 $ 5,590 $ 9,431 Income from continuing operations $ 4,712 $ 3,932 $ 7,146 Net income applicable to contingently issuable shares — (2) 0 Income from continuing operations on which diluted earnings per share is calculated $ 4,712 $ 3,930 $ 7,146 Income/(loss) from discontinued operations, net of tax, on which basic and diluted earnings per share is calculated 1,030 1,658 2,285 Net income on which diluted earnings per share is calculated $ 5,743 $ 5,588 $ 9,431 Earnings/(loss) per share of common stock Assuming dilution Continuing operations $ 5.21 $ 4.38 $ 8.00 Discontinued operations 1.14 1.85 2.56 Total $ 6.35 $ 6.23 $ 10.56 Basic Continuing operations $ 5.26 $ 4.42 $ 8.05 Discontinued operations 1.15 1.86 2.58 Total $ 6.41 $ 6.28 $ 10.63 Weighted-average stock options to purchase 980,505 common shares in 2021, 1,417,665 common shares in 2020 and 855,679 common shares in 2019 were outstanding, but were not included in the computation of diluted earnings per share because the exercise price of the options was greater than the average market price of the common shares for the full year, and therefore, the effect would have been antidilutive. |
Financial Assets & Liabilities
Financial Assets & Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Financial Assets & Liabilities | |
Financial Assets & Liabilities | NOTE J. FINANCIAL ASSETS & LIABILITIES Fair Value Measurements Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents the company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at December 31, 2021 and 2020. ($ in millions) Fair Value 2021 2020 At December 31: Hierarchy Level Assets (7) Liabilities (8) Assets (7) Liabilities (8) Cash equivalents (1) Time deposits and certificates of deposit (2) 2 $ 1,903 N/A $ 7,658 N/A Money market funds 1 263 N/A 148 N/A U.S. government securities (2) 2 599 N/A 500 N/A Total cash equivalents $ 2,766 N/A $ 8,306 N/A Equity investments (3) 1 0 N/A 2 N/A Kyndryl common stock 1 807 N/A — N/A Debt securities–current (2)(4) 2 600 N/A 600 N/A Debt securities–noncurrent (2)(5) 1,2,3 37 N/A 7 N/A Derivatives designated as hedging instruments Interest rate contracts 2 12 — 100 — Foreign exchange contracts 2 359 117 111 580 Derivatives not designated as hedging instruments Foreign exchange contracts 2 21 42 13 47 Equity contracts (6) 1,2 6 4 12 — Total $ 4,608 $ 162 $ 9,151 $ 627 (1) (2) (3) (4) (5) (6) (7) (8) N/A–Not applicable Kyndryl Common Stock On November 3, 2021, IBM completed the separation of Kyndryl and retained 19.9 percent of the shares of Kyndryl common stock with the intent to dispose of the shares within twelve months of the separation. The company accounts for the Kyndryl shares as a fair value investment. The fair value of the shares at December 31, 2021 of $807 million is included within prepaid expenses and other current assets in the Consolidated Balance Sheet. An unrealized gain of $126 million representing the difference between the book value of the Kyndryl shares as of the date of separation and the fair value of the shares as of December 31, 2021 was recorded in other (income) and expense in the Consolidated Income Statement for the year ended December 31, 2021. Refer to note C, “Separation of Kyndryl,” for additional information. 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 December 31, 2021 and 2020, 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 $44,917 million and $54,217 million, and the estimated fair value was $49,465 million and $61,460 million at December 31, 2021 and 2020, respectively. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2021 | |
Inventory | |
Inventory | NOTE K. INVENTORY ($ in millions) At December 31: 2021 2020 Finished goods $ 208 $ 163 Work in process and raw materials 1,442 1,649 Total $ 1,649 $ 1,812 |
Financing Receivables
Financing Receivables | 12 Months Ended |
Dec. 31, 2021 | |
Financing Receivables | |
Financing Receivables | NOTE L. FINANCING RECEIVABLES Financing receivables primarily consist of client loan and installment payment receivables (loans) and investment in sales-type and direct financing leases (collectively referred to as client financing receivables) and commercial financing receivables. Loans are provided primarily to clients to finance the purchase of hardware, software and services. Payment terms on these financing arrangements are generally for terms up to seven years. Investment in sales-type and direct financing leases relate principally to the company’s Infrastructure products and are for terms ranging generally from two A summary of the components of the company’s financing receivables is presented as follows: ($ in millions) Client Financing Receivables Commercial Financing Receivables Client Loan and Investment in Installment Payment Sales-Type and Receivables/ Direct Financing Held for Held for At December 31, 2021: (Loans) Leases Investment Sale * Total Financing receivables, gross $ 9,303 $ 3,336 $ 450 $ 793 $ 13,881 Unearned income (353) (223) — — (576) Residual value** — 335 — — 335 Amortized cost $ 8,949 $ 3,448 $ 450 $ 793 $ 13,640 Allowance for credit losses (131) (64) (6) — (201) Total financing receivables, net $ 8,818 $ 3,384 $ 444 $ 793 $ 13,439 Current portion $ 5,371 $ 1,406 $ 444 $ 793 $ 8,014 Noncurrent portion $ 3,447 $ 1,978 $ — $ — $ 5,425 ($ in millions) Client Financing Receivables Commercial Financing Receivables È Client Loan and Investment in Installment Payment Sales-Type and Receivables/ Direct Financing Held for Held for At December 31, 2020: (Loans) Leases Investment Sale * Total Financing receivables, gross $ 12,159 $ 4,001 $ 2,036 $ 383 $ 18,580 Unearned income (488) (335) 0 — (823) Residual value** — 485 — — 485 Amortized cost $ 11,671 $ 4,151 $ 2,036 $ 383 $ 18,242 Allowance for credit losses (173) (82) (8) — (263) Total financing receivables, net $ 11,498 $ 4,069 $ 2,028 $ 383 $ 17,979 Current portion $ 6,955 $ 1,525 $ 2,028 $ 383 $ 10,892 Noncurrent portion $ 4,542 $ 2,544 $ — $ — $ 7,086 * The carrying value of the receivables classified as held for sale approximates fair value. ** Includes guaranteed and unguaranteed residual value. È Recast to conform to 2021 presentation. The company has a long-standing practice of taking mitigation actions, in certain circumstances, to transfer credit risk to third parties. These actions may include credit insurance, financial guarantees, nonrecourse borrowings, transfers of receivables recorded as true sales in accordance with accounting guidance or sales of equipment under operating lease. Sale of receivables arrangements are also utilized in the normal course of business as part of the company’s cash and liquidity management. Financing receivables pledged as collateral for nonrecourse borrowings were $408 million and $482 million at December 31, 2021 and 2020, respectively. These borrowings are included in note Q, “Borrowings.” Transfer of Financial Assets The company has entered into agreements with third-party financial institutions to sell certain of its client financing receivables, including both loan and lease receivables, for cash proceeds. In addition, on December 24, 2020, the company entered into an agreement with a third-party investor to sell up to $3.0 billion of IBM short-term commercial financing receivables, at any one time, on a revolving basis, starting in the U.S., and Canada in 2020, and expanding to other countries within Europe and Asia Pacific in 2021, including Germany and the UK. The following table presents the total amount of client and commercial financing receivables transferred: ($ in millions) 2021 2020 Client financing receivables for the year ended December 31 Lease receivables $ 819 $ 1,152 Loan receivables 2,224 1,410 Total client financing receivables transferred* $ 3,043 $ 2,562 Commercial financing receivables Receivables transferred for the year ended December 31 $ 7,359 $ 515 Receivables transferred and uncollected as of December 31** 1,653 510 * More than half of the client financing receivables sold were classified as current assets at the time of sale. ** Of the total amount of commercial financing receivables sold and derecognized from the Consolidated Balance Sheet, the amounts presented remained uncollected from business partners as of December 31, 2021 and 2020. The transfer of these receivables qualified as true sales and therefore reduced financing receivables. The cash proceeds from the sales are included in cash flows from operating activities and the impacts to the Consolidated Income Statement, including fees and net gain or loss associated with the transfers of these receivables for the years ended December 31, 2021 and 2020 were not material. Financing Receivables by Portfolio Segment The following tables present the amortized cost basis for client financing receivables at December 31, 2021 and 2020, further segmented by three classes: Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific. The commercial financing receivables portfolio segment is excluded from the tables in the sections below as the receivables are short term in nature and the current estimated risk of loss and resulting impact to the company’s financial results are not material. ($ in millions) At December 31, 2021: Americas EMEA Asia Pacific Total Amortized cost $ 6,573 $ 3,793 $ 2,031 $ 12,397 Allowance for credit losses Beginning balance at January 1, 2021 $ 141 $ 77 $ 37 $ 255 Write-offs (8) (2) (7) (17) Recoveries 0 0 1 1 Additions/(releases) (19) (11) (7) (38) Other* (3) (3) 0 (7) Ending balance at December 31, 2021 $ 111 $ 61 $ 23 $ 195 * Primarily represents translation adjustments. ($ in millions) At December 31, 2020: Americas EMEA Asia Pacific Total Amortized cost $ 7,758 $ 5,023 $ 3,042 $ 15,822 Allowance for credit losses Beginning balance at January 1, 2020 142 69 41 252 Write-offs (28) (3) (3) (34) Recoveries 0 0 2 3 Additions/(releases) 33 5 (4) 34 Other* (6) 6 1 1 Ending balance at December 31, 2020 $ 141 $ 77 $ 37 $ 255 * Primarily represents translation adjustments. When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For the company’s policy on determining allowances for credit losses, refer to note A, “Significant Accounting Policies.” Past Due Financing Receivables The company summarizes information about the amortized cost basis for client financing receivables, including amortized cost aged over 90 days and still accruing, billed invoices aged over 90 days and still accruing, and amortized cost not accruing. ($ in millions) Amortized Billed Amortized Total Amortized Cost Invoices Cost Amortized Cost > 90 Days and > 90 Days and Not At December 31, 2021: Cost > 90 Days (1) Accruing (1) Accruing Accruing (2) Americas $ 6,573 $ 188 $ 100 $ 6 $ 90 EMEA 3,793 99 7 2 95 Asia Pacific 2,031 25 5 2 20 Total client financing receivables $ 12,397 $ 312 $ 112 $ 10 $ 205 ($ in millions) Amortized Billed Amortized Total Amortized Cost Invoices Cost Amortized Cost > 90 Days and > 90 Days and Not At December 31, 2020: Cost > 90 Days (1) Accruing (1) Accruing Accruing (2) Americas $ 7,758 $ 295 $ 200 $ 12 $ 96 EMEA 5,023 119 28 5 95 Asia Pacific 3,042 42 12 4 32 Total client financing receivables $ 15,822 $ 456 $ 241 $ 20 $ 223 (1) At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days. (2) Of the amortized cost not accruing, there was a related allowance of $ 153 million and $ 178 million at December 31, 2021 and 2020, respectively. Financing income recognized on these receivables was immaterial for the years ended December 31, 2021 and 2020, respectively. Credit Quality Indicators The company’s credit quality indicators, which are based on rating agency data, publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Moody’s Investors Service credit ratings as shown below. The company uses information provided by Moody’s, where available, as one of many inputs in its determination of customer credit ratings. The credit quality of the customer is evaluated based on these indicators and is assigned the same risk rating whether the receivable is a lease or a loan. The following tables present the amortized cost basis for client financing receivables by credit quality indicator at December 31, 2021 and 2020, respectively. Receivables with a credit quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators reflect mitigating credit enhancement actions taken by customers which reduce the risk to IBM. ($ in millions) Americas EMEA Asia Pacific At December 31, 2021: Aaa - Baa3 Ba1 - D Aaa - Baa3 Ba1 - D Aaa - Baa3 Ba1 - D Vintage year 2021 $ 2,556 $ 1,147 $ 1,181 $ 778 $ 565 $ 226 2020 1,013 392 506 342 381 86 2019 544 236 287 291 297 51 2018 338 117 189 85 211 64 2017 108 50 15 52 74 17 2016 and prior 20 53 21 46 38 20 Total $ 4,579 $ 1,994 $ 2,198 $ 1,595 $ 1,567 $ 464 ($ in millions) Americas EMEA Asia Pacific At December 31, 2020: Aaa - Baa3 Ba1 - D Aaa - Baa3 Ba1 - D Aaa - Baa3 Ba1 - D Vintage year 2020 $ 2,818 $ 1,449 $ 1,513 $ 1,427 $ 958 $ 351 2019 988 623 668 519 564 123 2018 829 360 329 245 419 167 2017 285 154 70 128 205 52 2016 90 52 33 46 114 33 2015 and prior 28 81 22 22 38 18 Total $ 5,038 $ 2,720 $ 2,635 $ 2,387 $ 2,298 $ 743 Troubled Debt Restructurings The company did not have any significant troubled debt restructurings for the years ended December 31, 2021 and 2020. |
Property, Plant & Equipment
Property, Plant & Equipment | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant & Equipment | |
Property, Plant & Equipment | NOTE M. PROPERTY, PLANT & EQUIPMENT ($ in millions) At December 31: 2021 2020 Land and land improvements $ 224 $ 234 Buildings and building and leasehold improvements 6,049 6,407 Information technology equipment 10,515 9,840 Production, engineering, office and other equipment 3,222 3,354 Plant and other property—gross 20,010 19,836 Less: Accumulated depreciation 14,343 13,728 Plant and other property—net 5,668 6,108 Rental machines 74 265 Less: Accumulated depreciation 48 168 Rental machines—net 27 97 Total—net $ 5,694 $ 6,205 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases | |
Leases | NOTE N. LEASES Accounting for Leases as a Lessee The following table presents the various components of lease costs: ($ in millions) For the year ended December 31: 2021 2020 2019 Finance lease cost $ 52 $ 35 $ 14 Operating lease cost 1,126 1,181 1,257 Short-term lease cost 21 28 24 Variable lease cost 336 343 364 Sublease income (46) (28) (22) Total lease cost $ 1,489 $ 1,558 $ 1,637 The company recorded net gains on sale and leaseback transactions of $7 million and $36 million for the years ended December 31, 2021 and 2019, respectively. The company had no sale and leaseback transactions in 2020. The following table presents supplemental information relating to the cash flows arising from lease transactions. Cash payments related to variable lease costs and short-term leases are not included in the measurement of operating and finance lease liabilities, and, as such, are excluded from the amounts below. ($ in millions) For the year ended December 31: 2021 2020 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash outflows from finance leases $ 8 $ 8 $ 7 Financing cash outflows from finance leases 42 25 4 Operating cash outflows from operating leases 1,135 1,212 1,154 ROU assets obtained in exchange for new finance lease liabilities 46 50 68 * ROU assets obtained in exchange for new operating lease liabilities 779 785 5,102 * * 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 for the year ended December 31, 2019 was $1,383 million for operating leases and immaterial for finance leases. The following table presents the weighted-average lease term and discount rate for finance and operating leases. At December 31: 2021 2020 Finance leases Weighted-average remaining lease term 4.1 yrs. 4.9 yrs. Weighted-average discount rate 0.88 % 1.08 % Operating leases Weighted-average remaining lease term 4.5 yrs. 4.7 yrs. Weighted-average discount rate 3.01 % 3.25 % The following table presents a maturity analysis of expected undiscounted cash flows for operating and finance leases on an annual basis for the next five years and thereafter. ($ in millions) Imputed 2022 2023 2024 2025 2026 Thereafter Interest * Total ** Finance leases $ 43 $ 30 $ 18 $ 9 $ 8 $ 28 $ (36) $ 99 Operating leases 1,047 845 685 424 313 356 (234) 3,435 * Imputed interest represents the difference between undiscounted cash flows and discounted cash flows. ** The company entered into lease agreements for certain facilities and equipment with payments totaling approximately $202 million that have not yet commenced as of December 31, 2021, and therefore are not included in this table. The following table presents information on the company’s finance leases recognized in the Consolidated Balance Sheet: ($ in millions) At December 31: 2021 2020 ROU Assets—Property, plant and equipment $ 86 $ 84 Lease Liabilities Short-term debt 36 30 Long-term debt 63 60 Accounting for Leases as a Lessor The following table presents amounts included in the Consolidated Income Statement related to lessor activity: ($ in millions) For the year ended December 31: 2021 2020 2019 Lease income—sales-type and direct financing leases Sales-type lease selling price $ 1,355 $ 1,321 $ 1,360 Less: Carrying value of underlying assets* (300) (410) (476) Gross profit 1,055 911 884 Interest income on lease receivables 179 249 303 Total sales-type and direct financing lease income 1,234 1,160 1,187 Lease income—operating leases 169 255 322 Variable lease income 120 115 56 Total lease income $ 1,523 $ 1,530 $ 1,565 * Excludes unguaranteed residual value. Sales-Type and Direct Financing Leases At December 31, 2021 and 2020, the unguaranteed residual values of sales-type and direct financing leases were $335 million and $469 million, respectively. For further information on the company’s net investment in leases, including guaranteed and unguaranteed residual values, refer to note L, “Financing Receivables.” For the years ended December 31, 2021 and 2020, impairment of residual values was immaterial. The following table presents a maturity analysis of the lease payments due to IBM on sales-type and direct financing leases over the next five years and thereafter, as well as a reconciliation of the undiscounted cash flows to the financing receivables recognized in the Consolidated Balance Sheet at December 31, 2021: ($ in millions) Total 2022 $ 1,528 2023 1,014 2024 555 2025 209 2026 27 Thereafter 1 Total undiscounted cash flows $ 3,336 Present value of lease payments (recognized as financing receivables) 3,113 * Difference between undiscounted cash flows and discounted cash flows $ 223 * The present value of the lease payments will not equal the financing receivables balances in the Consolidated Balance Sheet due to certain items including IDCs, allowance for credit losses and residual values, which are included in the financing receivable balance, but are not included in the future lease payments. Operating Leases The following table presents a maturity analysis of the undiscounted lease payments due to IBM on operating leases over the next five years and thereafter at December 31, 2021: ($ in millions) Total 2022 $ 13 2023 4 2024 0 2025 0 2026 — Thereafter — Total undiscounted cash flows $ 17 There were no material impairment losses incurred for equipment provided to clients under an operating lease for the years ended December 31, 2021 and 2020. At December 31, 2021 and 2020, the unguaranteed residual values of operating leases were $13 million and $48 million, respectively. |
Intangible Assets Including Goo
Intangible Assets Including Goodwill | 12 Months Ended |
Dec. 31, 2021 | |
Intangible Assets Including Goodwill | |
Intangible Assets Including Goodwill | NOTE O. INTANGIBLE ASSETS INCLUDING GOODWILL Intangible Assets The following table presents the company’s intangible asset balances by major asset class: ($ in millions) Gross Carrying Accumulated Net Carrying At December 31, 2021: Amount Amortization Amount * Intangible asset class Capitalized software $ 1,696 $ (751) $ 945 Client relationships 9,021 (2,889) 6,132 Completed technology 6,074 (2,259) 3,815 Patents/trademarks 2,196 (586) 1,610 Other** 44 (35) 9 Total $ 19,031 $ (6,520) $ 12,511 * Includes a decrease in net intangible asset balance of $221 million due to foreign currency translation. ** Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. ($ in millions) Gross Carrying Accumulated Net Carrying At December 31, 2020: Amount Amortization Amount * Intangible asset class Capitalized software $ 1,777 $ (814) $ 963 Client relationships 8,708 (1,976) 6,732 Completed technology 5,937 (1,655) 4,283 Patents/trademarks 2,244 (499) 1,744 Other** 56 (39) 16 Total $ 18,722 $ (4,983) $ 13,739 * Includes an increase in net intangible asset balance of $279 million due to foreign currency translation. ** Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. There was no impairment of intangible assets recorded in 2021 and 2020. The net carrying amount of intangible assets decreased $1,228 million during the year ended December 31, 2021, primarily due to intangible asset amortization, partially offset by additions of acquired intangibles and capitalized software. The aggregate intangible amortization expense was $2,506 million and $2,441 million for the years ended December 31, 2021 and 2020, respectively. In addition, in 2021 and 2020, respectively, the company retired $904 million and $1,461 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount. The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet is estimated to be the following at December 31, 2021: Capitalized Acquired ($ in millions) Software Intangibles Total 2022 $ 512 $ 1,818 $ 2,329 2023 313 1,513 1,826 2024 120 1,467 1,587 2025 0 1,450 1,450 2026 0 1,433 1,433 Thereafter — 3,886 3,886 Goodwill The changes in the goodwill balances by reportable segment, for the years ended December 31, 2021 and 2020, are as follows: ($ in millions) Foreign Currency Purchase Translation Balance at Goodwill Price and Other Balance at Segment* January 1, 2021 Additions Adjustments Divestitures Adjustments ** December 31, 2021 Software $ 43,149 $ 1,836 $ 23 $ (13) $ (545) $ 44,450 Consulting 6,145 713 (21) — (40) 6,797 Infrastructure 4,436 — 0 — (39) 4,396 Other—divested businesses 36 — — (37) 1 — Total $ 53,765 $ 2,549 $ 2 $ (50) $ (623) $ 55,643 ($ in millions) Foreign Currency Purchase Translation Balance at Goodwill Price and Other Balance at Segment* January 1, 2020 Additions Adjustments Divestitures Adjustments ** December 31, 2020 Software $ 42,275 $ 362 $ (139) $ — $ 651 $ 43,149 Consulting 5,775 205 — — 165 6,145 Infrastructure 4,386 8 — — 42 4,436 Other—divested businesses 35 — — — 1 36 Total $ 52,471 $ 575 $ (139) $ — $ 859 $ 53,765 * Recast to reflect segment changes. ** Primarily driven by foreign currency translation. The company performed its annual goodwill impairment test for all reporting units during the fourth quarter of 2021. Following the changes to the organizational structure, goodwill was reassigned to the reporting units using a relative fair value allocation approach. As a result, the company performed the quantitative goodwill impairment test for all affected reporting units. There were no goodwill impairment losses recorded during 2021 or 2020 and the company has no accumulated impairment losses. Purchase price adjustments recorded in 2021 and 2020 were related to acquisitions that were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. Net purchase price adjustments recorded in 2021 were not material. During 2020, net purchase price adjustments recorded to noncurrent tax assets and liabilities were related to the Red Hat acquisition. |
Investments & Sundry Assets
Investments & Sundry Assets | 12 Months Ended |
Dec. 31, 2021 | |
Investments & Sundry Assets | |
Investments & Sundry Assets | NOTE P. INVESTMENTS & SUNDRY ASSETS ($ in millions) At December 31: 2021 2020 Derivatives—noncurrent $ 40 $ 151 Alliance investments Equity method 159 170 Non-equity method 47 46 Long-term deposits 205 231 Other receivables 181 423 Employee benefit-related 210 237 Prepaid income taxes 743 777 Other assets 237 153 Total $ 1,823 $ 2,187 |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2021 | |
Borrowings | |
Borrowings | NOTE Q. BORROWINGS Short-Term Debt ($ in millions) At December 31: 2021 2020 Short-term loans $ 22 $ 130 Long-term debt—current maturities 6,764 6,986 Total $ 6,787 $ 7,116 The weighted-average interest rate for short-term loans was 6.7 percent and 5.7 percent at December 31, 2021 and 2020, respectively. Long-Term Debt Pre-Swap Borrowing ($ in millions) At December 31: Maturities 2021 2020 U.S. dollar debt (weighted-average interest rate at December 31, 2021):* 1.3% 2021 $ — $ 5,499 2.6% 2022 5,673 6,233 3.4% 2023 1,573 2,395 3.3% 2024 5,016 5,029 6.9% 2025 608 631 3.3% 2026 4,356 4,370 3.0% 2027 2,221 2,219 6.5% 2028 313 313 3.5% 2029 3,250 3,250 2.0% 2030 1,350 1,350 5.9% 2032 600 600 8.0% 2038 83 83 4.5% 2039 2,745 2,745 2.9% 2040 650 650 4.0% 2042 1,107 1,107 7.0% 2045 27 27 4.7% 2046 650 650 4.3% 2049 3,000 3,000 3.0% 2050 750 750 7.1% 2096 316 316 $ 34,290 $ 41,218 Other currencies (weighted-average interest rate at December 31, 2021, in parentheses):* Euro (1.1%) 2023-2040 $ 15,903 $ 18,355 Pound sterling (2.6%) 2022 406 411 Japanese yen (0.3%) 2022-2026 1,263 1,409 Other (11.3%) 2022-2025 378 324 $ 52,240 $ 61,718 Finance lease obligations (1.8%) 2022-2030 99 91 $ 52,339 $ 61,808 Less: net unamortized discount 839 875 Less: net unamortized debt issuance costs 130 156 Add: fair value adjustment** 311 426 $ 51,681 $ 61,203 Less: current maturities 6,764 6,986 Total $ 44,917 $ 54,217 * Includes notes, debentures, bank loans and secured borrowings. ** The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Balance Sheet as an amount equal to the sum of the debt’s carrying value and a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates. The company’s indenture governing its debt securities and its various credit facilities each contain significant covenants which obligate the company to promptly pay principal and interest, limit the aggregate amount of secured indebtedness and sale and leaseback transactions to 10 percent of the company’s consolidated net tangible assets, and restrict the company’s ability to merge or consolidate unless certain conditions are met. The credit facilities also include a covenant on the company’s consolidated net interest expense ratio, which cannot be less than 2.20 to 1.0, as well as a cross default provision with respect to other defaulted indebtedness of at least $500 million. The company is in compliance with all of its debt covenants and provides periodic certifications to its lenders. The failure to comply with its debt covenants could constitute an event of default with respect to the debt to which such provisions apply. If certain events of default were to occur, the principal and interest on the debt to which such event of default applied would become immediately due and payable. In the first quarter of 2020, the company issued an aggregate of $4.1 billion of Euro fixed-rate notes and the proceeds were primarily used to early redeem outstanding fixed-rate debt which was due in 2021 in the aggregate amount of $2.9 billion. The notes were redeemed at a price equal to 100 percent of the aggregate principal plus a make-whole premium and accrued interest. The company incurred a loss of $49 million upon redemption that was recorded in other (income) and expense in the Consolidated Income Statement. In the first quarter of 2021, IBM Credit LLC early redeemed all of its outstanding fixed-rate debt in the aggregate amount of $1.75 billion with maturity dates ranging from 2021 to 2023 and deregistered with the U.S. Securities and Exchange Commission. The notes were redeemed at a price equal to 100 percent of the aggregate principal plus a make-whole premium and accrued interest. The company incurred a loss of approximately $22 million upon redemption that was recorded in other (income) and expense in the Consolidated Income Statement. Post-Swap Borrowing (Long-Term Debt, Including Current Portion) ($ in millions) 2021 2020 Weighted-Average Weighted-Average For the year ended December 31: Amount Interest Rate Amount Interest Rate Fixed-rate debt $ 49,976 2.8 % $ 53,237 2.7 % Floating-rate debt* 1,705 2.6 % 7,966 1.1 % Total $ 51,681 $ 61,203 * Includes $425 million and $2,975 million in 2021 and 2020, respectively, of notional interest-rate swaps that effectively convert fixed-rate long-term debt into floating-rate debt. Refer to note U, “Derivative Financial Instruments,” for additional information. Pre-swap annual contractual obligations of long-term debt outstanding at December 31, 2021, are as follows: ($ in millions) Total 2022 $ 6,765 2023 4,848 2024 6,391 2025 4,015 2026 4,719 Thereafter 25,601 Total $ 52,339 Interest on Debt ($ in millions) For the year ended December 31: 2021 2020 2019 Cost of financing $ 392 $ 451 $ 608 Interest expense 1,155 1,288 1,344 Interest capitalized 3 5 4 Total interest paid and accrued $ 1,550 $ 1,743 $ 1,956 Refer to the related discussion in note E, “Segments,” for interest expense of the Financing segment. Refer to note U, “Derivative Financial Instruments,” for a discussion of the use of foreign currency denominated debt designated as a hedge of net investment, as well as a discussion of the use of currency and interest-rate swaps in the company’s debt risk management program. Lines of Credit On June 22, 2021, the company entered into a new $2.5 billion Three-Year Credit Agreement and $7.5 billion Five-Year Credit Agreement to replace the existing $2.5 billion Three-Year and $10.25 billion Five-Year Credit Agreements. The maturity dates for the new Three-Year and Five-Year Credit Agreements (the Credit Agreements) are June 21, 2024, and June 22, 2026, respectively. The Credit Agreements permit the company and its subsidiary borrowers to borrow up to $10 billion on a revolving basis. In connection with entering into the Credit Agreements, the company also terminated its $2.5 billion 364-Day Credit Agreement which was scheduled to expire on July 1, 2021. . Subject to certain conditions stated in the Credit Agreements, the borrower may borrow, prepay and re-borrow amounts under the Credit Agreements at any time during the term of such agreements. Funds borrowed may be used for the general corporate purposes of the borrower. Interest rates on borrowings under the Credit Agreements will be based on prevailing market interest rates, as further described in the Credit Agreements. The Credit Agreements contain customary representations and warranties, covenants, events of default, and indemnification provisions. The company believes that circumstances that might give rise to breach of these covenants or an event of default, as specified in the Credit Agreements, are remote. The company also has other committed lines of credit in some of the geographies which are not significant in the aggregate. Interest rates and other terms of borrowing under these lines of credit vary from country to country, depending on local market conditions. As of December 31, 2021, there were no borrowings by the company, or its subsidiaries, under these credit facilities. |
Other Liabilities
Other Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Other Liabilities | |
Other Liabilities | NOTE R. OTHER LIABILITIES ($ in millions) At December 31: 2021 2020 Income tax reserves $ 6,179 $ 5,274 Excess 401(k) Plus Plan 1,686 1,635 Disability benefits 359 385 Derivative liabilities 103 40 Workforce reductions 752 886 Deferred taxes 3,956 4,958 Other taxes payable 72 253 Environmental accruals 224 246 Warranty accruals 29 33 Asset retirement obligations 92 84 Acquisition related 218 60 Divestiture related 47 63 Other 278 263 Total $ 13,996 $ 14,180 In response to changing business needs, the company periodically takes workforce reduction actions to improve productivity, cost competitiveness and to rebalance skills. The noncurrent contractually obligated future payments associated with these activities are reflected in the workforce reductions caption in the previous table. The noncurrent liabilities are workforce accruals primarily related to terminated employees who are no longer working for the company who were granted annual payments to supplement their incomes in certain countries. Depending on the individual country’s legal requirements, these required payments will continue until the former employee begins receiving pension benefits or passes away. The total amounts accrued for workforce reductions, including amounts classified as other accrued expenses and liabilities in the Consolidated Balance Sheet were $1,359 million and $2,631 million at December 31, 2021 and 2020, respectively. The decrease is primarily due to cash payments made in 2021 for the workforce reduction action in the fourth quarter of 2020 for which the company recorded a charge of $1,472 million in selling, general and administrative expense in the Consolidated Income Statement for severance and employee related benefits in accordance with the accounting guidance for ongoing benefit arrangements. The company employs extensive internal environmental protection programs that primarily are preventive in nature. The company also participates in environmental assessments and cleanups at a number of locations, including operating facilities, previously owned facilities and Superfund sites. The company’s maximum exposure for all environmental liabilities cannot be estimated and no amounts have been recorded for non-ARO environmental liabilities that are not probable or estimable. The total amounts accrued for non-ARO environmental liabilities, including amounts classified as current in the Consolidated Balance Sheet, that do not reflect actual or anticipated insurance recoveries, were $248 million and $266 million at December 31, 2021 and 2020, respectively. Estimated environmental costs are not expected to materially affect the consolidated financial position or consolidated results of the company’s operations in future periods. However, estimates of future costs are subject to change due to protracted cleanup periods and changing environmental remediation regulations. As of December 31, 2021, the company was unable to estimate the range of settlement dates and the related probabilities for certain asbestos remediation AROs. These conditional AROs are primarily related to the encapsulated structural fireproofing that is not subject to abatement unless the buildings are demolished and non-encapsulated asbestos that the company would remediate only if it performed major renovations of certain existing buildings. Because these conditional obligations have indeterminate settlement dates, the company could not develop a reasonable estimate of their fair values. The company will continue to assess its ability to estimate fair values at each future reporting date. The related liability will be recognized once sufficient additional information becomes available. The total amounts accrued for ARO liabilities, including amounts classified as current in the Consolidated Balance Sheet, were $119 million and $122 million at December 31, 2021 and 2020, respectively. |
Commitments & Contingencies
Commitments & Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments & Contingencies | |
Commitments & Contingencies | NOTE S. COMMITMENTS & CONTINGENCIES Commitments The company’s extended lines of credit to third-party entities include unused amounts of $1.7 billion and $2.1 billion at December 31, 2021 and 2020, 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 $3.2 billion and $3.4 billion at December 31, 2021 and 2020, respectively. The company collectively evaluates the allowance for these arrangements using a provision methodology consistent with the portfolio of the commitments. Refer to note A, “Significant Accounting Policies,” for additional information. The allowance for these commitments is recorded in other liabilities in the Consolidated Balance Sheet and was not material at December 31, 2021 and 2020. The company has applied the guidance requiring a guarantor to disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s performance is remote. The following is a description of arrangements in which the company is the guarantor. The company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party with respect to certain matters. Typically, these obligations arise in the context of contracts entered into by the company, under which the company customarily agrees to hold the party harmless against losses arising from a breach of representations and covenants related to such matters as title to the assets sold, certain intellectual property rights, specified environmental matters, third-party performance of nonfinancial contractual obligations and certain income taxes. In each of these circumstances, payment by the company is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, the procedures of which typically allow the company to challenge the other party’s claims. While indemnification provisions typically do not include a contractual maximum on the company’s payment, the company’s obligations under these agreements may be limited in terms of time and/or nature of claim, and in some instances, the company may have recourse against third parties for certain payments made by the company. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the company under these agreements have not had a material effect on the company’s business, financial condition or results of operations. In addition, the company guarantees certain loans and financial commitments. The maximum potential future payment under these financial guarantees and the fair value of these guarantees recognized in the Consolidated Balance Sheet at December 31, 2021 and 2020 was not material. Changes in the company’s warranty liability for standard warranties, which are included in other accrued expenses and liabilities and other liabilities in the Consolidated Balance Sheet, and for extended warranty contracts, which are included in deferred income in the Consolidated Balance Sheet, are presented in the following tables. Standard Warranty Liability ($ in millions) 2021 2020 Balance at January 1 $ 83 $ 113 Current period accruals 82 83 Accrual adjustments to reflect experience (1) (16) Charges incurred (86) (96) Balance at December 31 $ 77 $ 83 Extended Warranty Liability (Deferred Income) ($ in millions) 2021 2020 Balance at January 1 $ 425 $ 477 Revenue deferred for new extended warranty contracts 133 166 Amortization of deferred revenue (198) (224) Other* (10) 6 Balance at December 31 $ 350 $ 425 Current portion $ 163 $ 204 Noncurrent portion $ 186 $ 221 * Other consists primarily of foreign currency translation adjustments. Contingencies As a company with a substantial employee population and with clients in more than 175 countries, IBM is involved, either as plaintiff or defendant, in a variety of ongoing claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business. The company is a leader in the information technology industry and, as such, has been and will continue to be subject to claims challenging its IP rights and associated products and offerings, including claims of copyright and patent infringement and violations of trade secrets and other IP rights. In addition, the company enforces its own IP against infringement, through license negotiations, lawsuits or otherwise. Further, given the rapidly evolving external landscape of cybersecurity, privacy and data protection laws, regulations and threat actors, the company and its clients have been and will continue to be subject to actions or proceedings in various jurisdictions. Also, as is typical for companies of IBM’s scope and scale, the company is party to actions and proceedings in various jurisdictions involving a wide range of labor and employment issues (including matters related to contested employment decisions, country-specific labor and employment laws, and the company’s pension, retirement and other benefit plans), as well as actions with respect to contracts, product liability, securities, foreign operations, competition law and environmental matters. These actions may be commenced by a number of different parties, including competitors, clients, current or former employees, government and regulatory agencies, stockholders and representatives of the locations in which the company does business. Some of the actions to which the company is party may involve particularly complex technical issues, and some actions may raise novel questions under the laws of the various jurisdictions in which these matters arise. The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any recorded liabilities, including any changes to such liabilities for the years ended December 31, 2021, 2020 and 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. In December 2017, CIS General Insurance Limited (CISGIL) sued IBM UK regarding a contract entered into by IBM UK and CISGIL in 2015 to implement and operate an IT insurance platform. The contract was terminated by IBM UK in July 2017 for non-payment by CISGIL. CISGIL alleges wrongful termination, breach of contract and breach of warranty. In February 2021, the Technology & Construction Court in London rejected the majority of CISGIL’s claims and ruled in IBM’s favor on its counterclaim. The court’s decision required IBM to pay approximately $20 million in damages, plus interest and litigation costs. CISGIL was granted permission to appeal and the matter is now pending at the Court of Appeal in London. On June 8, 2021, IBM sued GlobalFoundries U.S. Inc. (GF) in New York State Supreme Court for claims including fraud and breach of contract relating to a long-term strategic relationship between IBM and GF for researching, developing, and manufacturing advanced semiconductor chips for IBM. GF walked away from its obligations and IBM is now suing to recover amounts paid to GF, and other compensatory and punitive damages, totaling more than $1.5 billion. On September 14, 2021, the court ruled on GF’s motion to dismiss. IBM’s claims for breaches of contract and promissory estoppel are proceeding. The company is party to, or otherwise involved in, proceedings brought by U.S. federal or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), known as “Superfund,” or laws similar to CERCLA. Such statutes require potentially responsible parties to participate in remediation activities regardless of fault or ownership of sites. The company is also conducting environmental investigations, assessments or remediations at or in the vicinity of several current or former operating sites globally pursuant to permits, administrative orders or agreements with country, state or local environmental agencies, and is involved in lawsuits and claims concerning certain current or former operating sites. The company is also subject to ongoing tax examinations and governmental assessments in various jurisdictions. Along with many other U.S. companies doing business in Brazil, the company is involved in various challenges with Brazilian tax authorities regarding non-income tax assessments and non-income tax litigation matters. The total potential amount related to all these matters for all applicable years is approximately $400 million. The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability. |
Equity Activity
Equity Activity | 12 Months Ended |
Dec. 31, 2021 | |
Equity Activity | |
Equity Activity | NOTE T. EQUITY ACTIVITY The authorized capital stock of IBM consists of (i) 4,687,500,000 shares of common stock with a $.20 per share par value, of which 898,068,600 shares were outstanding at December 31, 2021, and (ii) 150,000,000 shares of preferred stock with a $.01 per share par value, whereby 75,000,000 shares have been designated as Series A Preferred Stock, of which 57,916,244 shares of Series A Preferred Stock were issued to a wholly owned subsidiary of the company but were not outstanding Stock Repurchases The Board of Directors authorizes the company to repurchase IBM common stock. The company suspended its share repurchase program effective with the close of the Red Hat acquisition on July 9, 2019 in order to focus on reducing debt related to the acquisition. The company repurchased 9,979,516 common shares at a cost of $1,331 million in 2019. Actual cash disbursements for repurchased shares may differ due to varying settlement dates for these transactions. At December 31, 2021, $2,008 million of Board common stock repurchase authorization was available. Other Stock Transactions The company issued the following shares of common stock as part of its stock-based compensation plans and employees stock purchase plan: 5,608,845 shares in 2021, 4,972,028 shares in 2020, and 4,569,917 shares in 2019. The company issued 2,093,243 treasury shares in 2021, 2,934,907 treasury shares in 2020 and 2,041,347 treasury shares in 2019, as a result of restricted stock unit releases and exercises of stock options by employees of certain acquired businesses and by non-U.S. employees. Also, as part of the company’s stock-based compensation plans, 2,286,912 common shares at a cost of $319 million, 2,363,966 common shares at a cost of $302 million, and 2,000,704 common shares at a cost of $272 million in 2021, 2020 and 2019, respectively, were remitted by employees to the company in order to satisfy minimum statutory tax withholding requirements. These amounts are included in the treasury stock balance in the Consolidated Balance Sheet and the Consolidated Statement of Equity. Reclassifications and Taxes Related to Items of Other Comprehensive Income ($ in millions) Before Tax Tax (Expense)/ Net of Tax For the year ended December 31, 2021: Amount Benefit Amount Other comprehensive income/(loss) Foreign currency translation adjustments $ 987 $ (414) $ 573 Net changes related to available-for-sale securities Unrealized gains/(losses) arising during the period $ 0 $ 0 $ 0 Reclassification of (gains)/losses to other (income) and expense — — — Total net changes related to available-for-sale securities $ 0 $ 0 $ 0 Unrealized gains/(losses) on cash flow hedges Unrealized gains/(losses) arising during the period $ 344 $ (89) $ 256 Reclassification of (gains)/losses to: Cost of services (43) 11 (32) Cost of sales 16 (3) 13 Cost of financing 22 (6) 17 SG&A expense 24 (6) 19 Other (income) and expense 157 (40) 118 Interest expense 65 (16) 49 Total unrealized gains/(losses) on cash flow hedges $ 587 $ (149) $ 438 Retirement-related benefit plans (1) Prior service costs/(credits) $ (51) $ (1) $ (52) Net (losses)/gains arising during the period 2,433 (601) 1,832 Curtailments and settlements 94 (11) 83 Amortization of prior service (credits)/costs 9 0 9 Amortization of net (gains)/losses 2,484 (528) 1,956 Total retirement-related benefit plans $ 4,969 $ (1,140) $ 3,828 Other comprehensive income/(loss) $ 6,542 $ (1,703) $ 4,839 (1) ($ in millions) Before Tax Tax (Expense)/ Net of Tax For the year ended December 31, 2020: Amount Benefit Amount Other comprehensive income/(loss) Foreign currency translation adjustments $ (1,500) $ 535 $ (965) Net changes related to available-for-sale securities Unrealized gains/(losses) arising during the period $ (1) $ 0 $ 0 Reclassification of (gains)/losses to other (income) and expense — — — Total net changes related to available-for-sale securities $ (1) $ 0 $ 0 Unrealized gains/(losses) on cash flow hedges Unrealized gains/(losses) arising during the period $ (349) $ 89 $ (261) Reclassification of (gains)/losses to: Cost of services (23) 6 (18) Cost of sales (2) 1 (2) Cost of financing 27 (7) 20 SG&A expense 0 0 0 Other (income) and expense (101) 25 (75) Interest expense 78 (20) 58 Total unrealized gains/(losses) on cash flow hedges $ (370) $ 94 $ (277) Retirement-related benefit plans (1) Prior service costs/(credits) $ (37) $ 7 $ (29) Net (losses)/gains arising during the period (1,678) 295 (1,383) Curtailments and settlements 52 (14) 38 Amortization of prior service (credits)/costs 13 (1) 12 Amortization of net (gains)/losses 2,314 (451) 1,863 Total retirement-related benefit plans $ 664 $ (163) $ 501 Other comprehensive income/(loss) $ (1,206) $ 466 $ (740) (1) ($ in millions) Before Tax Tax (Expense)/ Net of Tax For the year ended December 31, 2019: Amount Benefit Amount Other comprehensive income/(loss) Foreign currency translation adjustments $ (39) $ 29 $ (10) Net changes related to available-for-sale securities Unrealized gains/(losses) arising during the period $ 1 $ 0 $ 1 Reclassification of (gains)/losses to other (income) and expense — — — Total net changes related to available-for-sale securities $ 1 $ 0 $ 1 Unrealized gains/(losses) on cash flow hedges Unrealized gains/(losses) arising during the period $ (689) $ 167 $ (522) Reclassification of (gains)/losses to: Cost of services (68) 17 (50) Cost of sales (51) 15 (37) Cost of financing 89 (22) 67 SG&A expense (53) 14 (39) Other (income) and expense (39) 10 (29) Interest expense 197 (50) 148 Total unrealized gains/(losses) on cash flow hedges $ (614) $ 151 $ (463) Retirement-related benefit plans (1) Prior service costs/(credits) $ (73) $ 10 $ (63) Net (losses)/gains arising during the period (120) 52 (68) Curtailments and settlements 41 (12) 29 Amortization of prior service (credits)/costs (9) 5 (4) Amortization of net (gains)/losses 1,843 (371) 1,471 Total retirement-related benefit plans $ 1,681 $ (316) $ 1,365 Other comprehensive income/(loss) $ 1,029 $ (136) $ 893 (1) Accumulated Other Comprehensive Income/(Loss) (net of tax) ($ in millions) Net Change Net Unrealized Net Unrealized Foreign Retirement- Gains/(Losses) Accumulated Gains/(Losses) Currency Related on Available- Other on Cash Flow Translation Benefit For-Sale Comprehensive Hedges Adjustments * Plans Securities Income/(Loss) December 31, 2018 $ 284 $ (3,690) $ (26,083) $ 0 $ (29,490) Other comprehensive income before reclassifications (522) (10) (131) 1 (663) Amount reclassified from accumulated other comprehensive income 59 — 1,496 — 1,556 Total change for the period (463) (10) 1,365 1 893 December 31, 2019 (179) (3,700) (24,718) 0 (28,597) Other comprehensive income before reclassifications (261) (965) (1,412) 0 (2,638) Amount reclassified from accumulated other comprehensive income (16) — 1,914 — 1,898 Total change for the period (277) (965) 501 0 (740) December 31, 2020 (456) (4,665) (24,216) 0 (29,337) Other comprehensive income before reclassifications 256 573 1,780 0 2,608 Amount reclassified from accumulated other comprehensive income 183 — 2,049 — 2,231 Separation of Kyndryl** — 730 534 — 1,264 Total change for the period 438 1,303 4,362 0 6,103 December 31, 2021 $ (18) $ (3,362) $ (19,854) $ (1) $ (23,234) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. ** Refer to note C, “Separation of Kyndryl,” for additional information. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2021 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | NOTE U. DERIVATIVE FINANCIAL INSTRUMENTS The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations. In the Consolidated Balance Sheet, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments. The amount recognized in other accounts receivable for the right to reclaim cash collateral was $2 million at December 31, 2021 and no amount was recognized at December 31, 2020. The amount recognized in accounts payable for the obligation to return cash collateral at December 31, 2021 was $38 million and no amount was recognized at December 31, 2020. The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in restricted cash in the Consolidated Balance Sheet. At December 31, 2021, $2 million was rehypothecated and no amount was rehypothecated at December 31, 2020. Additionally, if derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated Balance Sheet at December 31, 2021 2020 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 December 31, 2021 and 2020, the total notional amount of the company’s interest-rate swaps was $0.4 billion and $3.0 billion respectively. In the first quarter of 2021, in addition to the scheduled swap maturities, the company terminated $1.3 billion of interest-rate swaps concurrent with the early redemption of the underlying hedged fixed-rate debt. The weighted-average remaining maturity of these instruments at both December 31, 2021 and 2020 was approximately 1.2 years. 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 December 31, 2021 and 2020. Forecasted Debt Issuance The company is exposed to interest rate volatility on future debt issuances. To manage this risk, the company may use instruments such as forward starting interest-rate swaps to lock in the rate on the interest payments related to the forecasted debt issuances. There were no instruments outstanding at December 31, 2021 and 2020. In connection with cash flow hedges of forecasted interest payments related to the company’s borrowings, the company recorded net losses of $157 million and $174 million (before taxes) at December 31, 2021 and 2020, respectively, in AOCI. The company estimates that $18 million (before taxes) of the deferred net losses on derivatives in AOCI at December 31, 2021 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying interest payments. Foreign Exchange Risk Long-Term Investments in Foreign Subsidiaries (Net Investment) A large portion of the company’s foreign currency denominated debt portfolio is designated as a hedge of net investment in foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates in the functional currency of major foreign subsidiaries with respect to the U.S. dollar. At December 31, 2021 and 2020, the carrying value of debt designated as hedging instruments was $14.1 billion and $16.4 billion, respectively. The company also uses cross-currency swaps and foreign exchange forward contracts for this risk management purpose. At December 31, 2021 and 2020, the total notional amount of derivative instruments designated as net investment hedges was $6.8 billion and $7.2 billion, respectively. At December 31, 2021 and 2020, the weighted-average remaining maturity of these instruments was approximately 0.1 years and 0.3 years, respectively. Anticipated Royalties and Cost Transactions The company’s operations generate significant nonfunctional currency, third-party vendor payments and intercompany payments for royalties and goods and services among the company’s non-U.S. subsidiaries and with the company. In anticipation of these foreign currency cash flows and in view of the volatility of the currency markets, the company selectively employs foreign exchange forward contracts to manage its currency risk. These forward contracts are accounted for as cash flow hedges. At December 31, 2021, the maximum remaining length of time over which the company has hedged its exposure to the variability in future cash flows is approximately three years. At December 31, 2021 and 2020, the total notional amount of forward contracts designated as cash flow hedges of forecasted royalty and cost transactions was $7.2 billion and $8.0 billion, respectively. At December 31, 2021 and 2020, the weighted-average remaining maturity of these instruments was approximately 0.6 years and 0.7 years, respectively. At December 31, 2021 and 2020, in connection with cash flow hedges of anticipated royalties and cost transactions, the company recorded net gains of $315 million and net losses of $192 million (before taxes), respectively, in AOCI. The company estimates that $236 million (before taxes) of deferred net gains on derivatives in AOCI at December 31, 2021 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. At December 31, 2021, the maximum length of time remaining over which the company has hedged its exposure was approximately six years. At December 31, 2021 and 2020, the total notional amount of cross-currency swaps designated as cash flow hedges of foreign currency denominated debt was $2.0 billion and $1.5 billion, respectively. At December 31, 2021 and 2020, in connection with cash flow hedges of foreign currency denominated borrowings, the company recorded net losses of $174 million and $236 million (before taxes), respectively, in AOCI. The company estimates that $15 million (before taxes) of deferred net losses on derivatives in AOCI at December 31, 2021 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 Income Statement. At both December 31, 2021 and 2020, the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $6.8 billion. Equity Risk Management The company is exposed to market price changes in certain broad market indices and in the company’s own stock primarily related to certain obligations to employees. Changes in the overall value of these employee compensation obligations are recorded in SG&A expense in the Consolidated Income Statement. Although not designated as accounting hedges, the company utilizes derivatives, including equity swaps and futures, to economically hedge the exposures related to its employee compensation obligations. The derivatives are linked to the total return on certain broad market indices or the total return on the company’s common stock, and are recorded at fair value with gains or losses also reported in SG&A expense in the Consolidated Income Statement. At December 31, 2021 and 2020, the total notional amount of derivative instruments in economic hedges of these compensation obligations was $1.4 billion and $1.3 billion, respectively. Cumulative Basis Adjustments for Fair Value Hedges At December 31, 2021 and 2020, the following amounts were recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges: ($ in millions) At December 31: 2021 2020 Short-term debt Carrying amount of the hedged item $ (227) $ (1,302) Cumulative hedging adjustments included in the carrying amount—assets/(liabilities) (2) (2) Long-term debt Carrying amount of the hedged item (508) (2,097) Cumulative hedging adjustments included in the carrying amount—assets/(liabilities)* (309) (424) * Includes ($302) million and ($353) million of hedging adjustments on discontinued hedging relationships at December 31, 2021 and 2020, respectively. The Effect of Derivative Instruments in the Consolidated Income Statement The total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value hedges, cash flow hedges, net investment hedges and derivatives not designated as hedging instruments are recorded and the total effect of hedge activity on these income and expense line items are as follows: ($ in millions) Gains/(Losses) of Total Total Hedge Activity For the year ended December 31: 2021 2020 2019 2021 2020 2019 Cost of services $ 19,147 $ 17,689 $ 19,009 $ 43 $ 23 $ 68 Cost of sales 6,184 6,048 * 6,467 * (16) 2 51 Cost of financing 534 577 * 704 * 1 12 (42) SG&A expense 18,745 20,561 18,724 176 141 267 Other (income) and expense 873 802 (1,012) (205) 101 (15) Interest expense 1,155 1,288 1,344 3 35 (93) * Reclassifed to conform to 2021 presentation. ($ in millions) Gain/(Loss) Recognized in Consolidated Income Statement Consolidated Recognized on Attributable to Risk Income Statement Derivatives Being Hedged (2) For the year ended December 31: Line Item 2021 2020 2019 2021 2020 2019 Derivative instruments in fair value hedges (1) Interest rate contracts Cost of financing $ (1) $ 20 $ 44 $ 18 $ 4 $ (32) Interest expense (2) 58 98 53 11 (71) Derivative instruments not designated as hedging instruments Foreign exchange contracts Other (income) (48) 1 (53) N/A N/A N/A Equity contracts SG&A expense 201 142 214 N/A N/A N/A Total $ 150 $ 220 $ 302 $ 71 $ 14 $ (103) ($ in millions) Gain/(Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income Consolidated Reclassified Amounts Excluded from For the year ended Recognized in OCI Income Statement from AOCI Effectiveness Testing (3) December 31: 2021 2020 2019 Line Item 2021 2020 2019 2021 2020 2019 Derivative instruments in cash flow hedges Interest rate contracts $ — $ — $ (168) Cost of financing $ (4) $ (5) $ (3) $ — $ — $ — Interest expense (13) (13) (8) — — — Foreign exchange contracts 344 (349) (521) Cost of services 43 23 68 — — — Cost of sales (16) 2 51 — — — Cost of financing (18) (23) (86) — — — SG&A expense (24) 0 53 — — — Other (income) (157) 101 39 — — — Interest expense (52) (65) (190) — — — Instruments in net investment hedges (4) Foreign exchange contracts 1,644 (2,127) (95) Cost of financing — — — 6 16 35 Interest expense — — — 17 45 77 Total $ 1,989 $ (2,477) $ (784) $ (243) $ 21 $ (75) $ 23 $ 60 $ 112 (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 with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries. N/A–Not applicable For the years ending December 31, 2021, 2020 and 2019, 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. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Stock-Based Compensation | |
Stock-Based Compensation | NOTE V. STOCK-BASED COMPENSATION The following table presents total stock-based compensation cost included in income from continuing operations. ($ in millions) For the year ended December 31: 2021 2020 2019 Cost $ 145 $ 126 $ 85 SG&A expense 555 550 419 RD&E expense 218 197 125 Pre-tax stock-based compensation cost 919 873 628 Income tax benefits (223) (198) (143) Net stock-based compensation cost $ 695 $ 675 $ 484 Red Hat was acquired on July 9, 2019. The 2021 and 2020 results include a full year of compensation expense for issuances and conversions of stock-based compensation for Red Hat compared to six months in 2019. The company’s total unrecognized compensation cost related to non-vested awards at December 31, 2021 was $1.4 billion and is expected to be recognized over a weighted-average period of approximately 2.4 years. Capitalized stock-based compensation cost was not material at December 31, 2021, 2020 and 2019. Incentive Awards Stock-based incentive awards are provided to employees under the terms of the company’s long-term performance plans (the Plans). The Plans are administered by the Executive Compensation and Management Resources Committee of the Board of Directors. Awards available under the Plans principally include restricted stock units, performance share units, stock options or any combination thereof. There were 293 million shares originally authorized to be awarded under the company's existing Plans and 66 million shares granted under previous plans that, if and when those awards were cancelled, could be reissued under the existing Plans. At December 31, 2021, 96 million unused shares were available to be granted. Separation of Kyndryl In connection with the separation of Kyndryl, as required by the Company’s stock-based incentive award plans, the number of shares underlying remaining unvested stock awards was adjusted. The company also adjusted the exercise price and number of shares underlying outstanding stock options. All adjustments were made with the intent to preserve the intrinsic value of each award immediately before and after the separation. The adjustments to the number of shares and exercise price, as applicable, were determined using a ratio of 1.03 which was calculated by using the IBM share price based on the market closing price before and market opening price after the separation. The number of stock awards issued as a result of the adjustment was 0.8 million. The number of stock options issued and the respective decrease in exercise price as a result of the adjustment was immaterial. The terms of the outstanding awards remain the same and continue to vest over the original vesting periods. Any unvested stock awards held by employees of Kyndryl were cancelled at the time of separation. The adjustments to shares underlying unvested stock awards did not result in material stock-based compensation cost. Stock Awards Stock awards for the period presented were made in the form of Restricted Stock Units (RSUs), including Retention Restricted Stock Units (RRSUs), or Performance Share Units (PSUs). The following table summarizes RSU and PSU activity under the Plans during the years ended December 31, 2021, 2020 and 2019. RSUs PSUs Weighted-Average Weighted-Average Grant Price Number of Units Grant Price Number of Units Balance at January 1, 2019 $ 130 9,802,704 $ 136 2,419,695 Awards granted 119 5,650,861 117 1,395,534 Awards released 136 (3,145,016) 140 (846,672) Awards canceled/forfeited/performance adjusted 128 (981,921) 131 (112,107) * Balance at December 31, 2019 $ 123 11,326,628 $ 126 2,856,450 ** Awards granted 115 10,651,955 117 1,582,666 Awards released 126 (3,781,240) 137 (630,974) Awards canceled/forfeited/performance adjusted 121 (1,300,639) 125 (256,642) * Balance at December 31, 2020 $ 117 16,896,704 $ 120 3,551,500 ** Awards granted 125 9,566,307 129 1,561,120 Awards released 120 (4,582,159) 129 (581,397) Awards canceled/forfeited/performance adjusted 119 (2,072,800) 124 (453,178) * Kyndryl separation - adjustment — 660,089 — 120,428 Kyndryl separation - cancellation 119 (1,429,661) 119 (469,616) Balance at December 31, 2021 $ 116 19,038,480 $ 118 3,728,857 ** * Includes adjustments of (223,397), (70,089) and (8,544) PSUs for 2021, 2020 and 2019, respectively, because final performance metrics were above or below specified targets. ** Represents the number of shares expected to be issued based on achievement of grant date performance targets. The actual number of shares issued will depend on final performance against specified targets over the vesting period. The total fair value of RSUs and PSUs granted and vested during the years ended December 31, 2021, 2020 and 2019 were as follows: ($ in millions) For the year ended December 31: 2021 2020 2019 RSUs Granted $ 1,195 $ 1,220 $ 674 Vested 549 478 428 PSUs Granted $ 201 $ 186 $ 164 Vested 75 86 118 In connection with vesting and release of RSUs and PSUs, the tax benefits realized by the company for the years ended December 31, 2021, 2020 and 2019 were $175 million, $139 million and $131 million, respectively. Stock Options In 2016, the company made one grant of 1.5 million premium-priced stock options. As of December 31, 2021, these options were vested with a weighted-average exercise price of $135 per share and had a remaining weighted-average contractual life of approximately 4.1 years. The options are exercisable within a range of $125 to $149. These vested options have an intrinsic value of $4.5 million as of December 31, 2021. The company has not granted options The company settles employee stock option exercises primarily with newly issued common shares and, occasionally, with treasury shares. Total treasury shares held at December 31, 2021 and 2020 were approximately 1,351 million and 1,350 million shares, respectively. Acquisitions In connection with the acquisition of Red Hat in July 2019, the company issued and assumed 6.4 million stock awards with a fair value of $845 million. A share conversion ratio of 1.35 was applied to convert Red Hat’s outstanding equity awards for Red Hat’s common stock into IBM stock awards. At December 31, 2021, there were 0.7 million of these stock awards outstanding with a weighted-average grant price of $127 per share. In connection with various other acquisition transactions, there was an additional 0.6 million stock options outstanding at December 31, 2021, as a result of the company’s conversion of stock-based awards previously granted by acquired entities. The weighted-average exercise price of these awards was $26 per share. IBM Employees Stock Purchase Plan The company maintains a non-compensatory Employees Stock Purchase Plan (ESPP). The ESPP enables eligible participants to purchase shares of IBM common stock at a 5 percent discount off the average market price on the day of purchase through payroll deductions of up to 10 percent of eligible compensation. Eligible compensation includes any compensation received by the employee during the year. The ESPP provides for semi-annual offering periods during which shares may be purchased and continues as long as shares remain available under the ESPP, unless terminated earlier at the discretion of the Board of Directors. Individual ESPP participants are restricted from purchasing more than $25,000 of common stock in one calendar year or 1,000 shares in an offering period. Employees purchased approximately one million shares under the ESPP during each year ended December 31, 2021, 2020 and 2019. Cash dividends declared and paid by the company on its common stock also include cash dividends on the company stock purchased through the ESPP. Dividends are paid on full and fractional shares and can be reinvested. The company stock purchased through the ESPP is considered outstanding and is included in the weighted-average outstanding shares for purposes of computing basic and diluted earnings per share. Approximately 16.8 million shares were available for purchase under the ESPP at December 31, 2021. Effective April 1, 2022, the company will increase the discount from 5 percent to 15 percent off the average market price on the date of purchase for eligible participants under its ESPP. This change is expected to result in the ESPP being considered compensatory under the accounting requirements for stock-based compensation. |
Retirement-Related Benefits
Retirement-Related Benefits | 12 Months Ended |
Dec. 31, 2021 | |
Retirement-Related Benefits | |
Retirement-Related Benefits | NOTE W. RETIREMENT-RELATED BENEFITS Description of Plans IBM sponsors the following retirement-related plans/benefits: Plan Eligibility Funding Benefit Calculation Other U.S. Defined Benefit (DB) Pension Plans Qualified Personal Pension Plan (PPP) U.S. regular, full-time and part-time employees hired prior to January 1, 2005 Company contributes to irrevocable trust fund, held for sole benefit of participants and beneficiaries Vary based on the participant: Five-year , final pay formula based on salary, years of service, mortality and other participant-specific factors Cash balance formula based on percentage of employees’ annual salary, as well as an interest crediting rate Benefit accruals ceased December 31, 2007 Excess Personal Pension Plan (PPP) Unfunded, provides benefits in excess of IRS limitations for qualified plans Supplemental Executive Retention Plan (Retention Plan) Eligible U.S. executives Unfunded Based on average earnings, years of service and age at termination of employment U.S. Defined Contribution (DC) Plans (1) 401(k) Plus U.S. regular, full-time and part-time employees All contributions are made in cash and invested in accordance with participants’ investment elections Dollar-for-dollar match, generally 5 or 6 percent of eligible compensation and automatic matching of 1, 2 or 4 percent of eligible compensation, depending on date of hire Employees generally receive contributions after one year of service Excess 401(k) Plus U.S. employees whose eligible compensation is expected to exceed IRS compensation limit for qualified plans Unfunded, non-qualified amounts deferred are record-keeping (notional) accounts and are not held in trust for the participants, but may be invested in accordance with participants’ investment elections (under the 401(k) Plus Plan options) Company match and automatic contributions (at the same rate under 401(k) Plus Plan) on eligible compensation deferred and on compensation earned in excess of the IRC pay limit. The percentage varies depending on eligibility and years of service Employees generally receive contributions after one year of service. Amounts deferred into the Plan, including company contributions, are recorded as liabilities U.S. Nonpension Postretirement Benefit Plan Nonpension Postretirement Plan Medical and dental benefits for eligible U.S. retirees and eligible dependents, as well as life insurance for eligible U.S. retirees Company contributes to irrevocable trust fund, held for the sole benefit of participants and beneficiaries Varies based on plan design formulas and eligibility requirements Since January 1, 2004, new hires are not eligible for these benefits Non-U.S. Plans DB or DC Eligible regular employees in certain non-U.S. subsidiaries or branches Company deposits funds under various fiduciary-type arrangements, purchases annuities under group contracts or provides reserves for these plans Based either on years of service and the employee’s compensation (generally during a fixed number of years immediately before retirement) or on annual credits In certain countries, benefit accruals have ceased and/or have been closed to new hires as of various dates Nonpension Postretirement Plan Medical and dental benefits for eligible non-U.S. retirees and eligible dependents, as well as life insurance for certain eligible non-U.S. retirees Primarily unfunded except for a few select countries where the company contributes to irrevocable trust funds held for the sole benefit of participants and beneficiaries Varies based on plan design formulas and eligibility requirements by country Most non-U.S. retirees are covered by local government sponsored and administered programs (1) Matching and automatic contributions are made once at the end of the year for employees that are employed as of December 15 of the plan year. Contributions may be made for certain types of separations that occur prior to December 15. Plan Financial Information Summary of Financial Information The following table presents a summary of the total retirement-related benefits net periodic (income)/cost recorded in the Consolidated Income Statement. ($ in millions) U.S. Plans Non-U.S. Plans Total For the year ended December 31: 2021 2020 2019 2021 2020 2019 2021 2020 2019 Defined benefit pension plans $ 303 $ 167 $ (153) $ 1,119 $ 1,057 $ 842 $ 1,422 $ 1,224 $ 689 Retention Plan 16 11 11 — — — 16 11 11 Total defined benefit pension plans (income)/cost $ 319 $ 178 $ (142) $ 1,119 $ 1,057 $ 842 $ 1,438 $ 1,235 $ 700 IBM 401(k) Plus Plan and non-U.S. plans $ 561 $ 585 $ 588 $ 409 $ 403 $ 389 $ 971 $ 988 $ 976 Excess 401(k) 21 27 26 — — — 21 27 26 Total defined contribution plans cost $ 582 $ 612 $ 613 $ 409 $ 403 $ 389 $ 992 $ 1,015 $ 1,002 Nonpension postretirement benefit plans cost $ 127 $ 145 $ 154 $ 44 $ 57 $ 64 $ 172 $ 202 $ 218 Total retirement-related benefits net periodic cost $ 1,029 $ 934 $ 624 $ 1,573 $ 1,517 $ 1,295 $ 2,601 $ 2,451 $ 1,920 The following table presents a summary of the total PBO for defined benefit pension plans, APBO for nonpension postretirement benefit plans, fair value of plan assets and the associated funded status recorded in the Consolidated Balance Sheet. ($ in millions) Benefit Obligations Fair Value of Plan Assets Funded Status * At December 31: 2021 2020 2021 2020 2021 2020 U.S. Plans Overfunded plans Qualified PPP $ 46,458 $ 50,375 $ 51,852 $ 54,386 $ 5,395 $ 4,011 Underfunded plans Excess PPP $ 1,441 $ 1,556 $ — $ — $ (1,441) $ (1,556) Retention Plan 283 306 — — (283) (306) Nonpension postretirement benefit plan 3,404 3,791 8 15 (3,395) (3,776) Total underfunded U.S. plans $ 5,128 $ 5,652 $ 8 $ 15 $ (5,119) $ (5,638) Non-U.S. Plans Overfunded plans Qualified defined benefit pension plans** $ 21,617 $ 20,504 $ 26,071 $ 24,051 $ 4,454 $ 3,546 Nonpension postretirement benefit plans — 9 — 9 — 0 Total overfunded non-U.S. plans $ 21,617 $ 20,513 $ 26,071 $ 24,060 $ 4,454 $ 3,546 Underfunded plans Qualified defined benefit pension plans** $ 17,360 $ 23,207 $ 13,908 $ 18,257 $ (3,452) $ (4,950) Nonqualified defined benefit pension plans 6,120 6,736 — — (6,120) (6,736) Nonpension postretirement benefit plans 638 747 31 31 (607) (716) Total underfunded non-U.S. plans $ 24,118 $ 30,690 $ 13,939 $ 18,288 $ (10,179) $ (12,402) Total overfunded plans $ 68,075 $ 70,888 $ 77,924 $ 78,445 $ 9,850 $ 7,557 Total underfunded plans $ 29,246 $ 36,342 $ 13,947 $ 18,302 $ (15,300) $ (18,040) * Funded status is recognized in the Consolidated Balance Statement as follows: Asset amounts as prepaid pension assets; (Liability) amounts as compensation and benefits (current liability) and retirement and nonpension postretirement benefit obligations (noncurrent liability). ** Non-U.S. qualified plans represent plans funded outside of the U.S. Non-U.S. nonqualified plans are unfunded. At December 31, 2021, the company’s qualified defined benefit pension plans worldwide were 107 percent funded compared to the benefit obligations, with the U.S. Qualified PPP 112 percent funded. Overall, including nonqualified plans, the company’s defined benefit pension plans worldwide were 98 percent funded. Defined Benefit Pension and Nonpension Postretirement Benefit Plan Financial Information The following tables through page 128 represent financial information for the company’s retirement-related benefit plans, excluding defined contribution plans. The defined benefit pension plans under U.S. Plans consist of the Qualified PPP, the Excess PPP and the Retention Plan. The defined benefit pension plans and the nonpension postretirement benefit plans under non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. The nonpension postretirement benefit plan under U.S. Plan consists of only the U.S. Nonpension Postretirement Benefit Plan. The following tables present the components of net periodic (income)/cost of the retirement-related benefit plans recognized in the Consolidated Income Statement, excluding defined contribution plans. ($ in millions) Defined Benefit Pension Plans U.S. Plans Non-U.S. Plans For the year ended December 31: 2021 2020 2019 2021 2020 2019 Service cost $ — $ — $ — $ 300 $ 328 $ 304 Interest cost (1) 1,109 1,501 1,882 424 541 814 Expected return on plan assets (1) (1,802) (2,169) (2,599) (1,115) (1,229) (1,530) Amortization of transition assets (1) — — — — — 0 Amortization of prior service costs/(credits) (1) 16 16 16 (12) (9) (25) Recognized actuarial losses (1) 996 829 559 1,392 1,336 1,190 Curtailments and settlements (1) — — — 94 49 38 Multi-employer plans — — — 17 23 23 Other costs/(credits) — — — 18 18 28 Total net periodic (income)/cost $ 319 $ 178 $ (142) $ 1,119 $ 1,057 $ 842 ($ in millions) Nonpension Postretirement Benefit Plans U.S. Plan Non-U.S. Plans For the year ended December 31: 2021 2020 2019 2021 2020 2019 Service cost $ 7 $ 9 $ 10 $ 4 $ 4 $ 4 Interest cost (1) 65 103 145 27 35 54 Expected return on plan assets (1) — — — (3) (4) (5) Amortization of transition assets (1) — — — — — — Amortization of prior service costs/(credits) (1) 4 4 (2) 0 0 0 Recognized actuarial losses (1) 52 29 1 15 21 10 Curtailments and settlements (1) — — — 0 0 0 Other costs/(credits) — — — 0 0 — Total net periodic cost $ 127 $ 145 $ 154 $ 44 $ 57 $ 64 (1) These components of net periodic pension costs are included in other (income) and expense in the Consolidated Income Statement. The following table presents the changes in benefit obligations and plan assets of the company’s retirement-related benefit plans, excluding DC plans. ($ in millions) Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans 2021 2020 2021 2020 2021 2020 2021 2020 Change in benefit obligation Benefit obligation at January 1 $ 52,237 $ 50,232 $ 50,447 $ 45,947 $ 3,791 $ 3,857 $ 756 $ 830 Service cost — — 300 328 7 9 4 4 Interest cost 1,109 1,501 424 541 65 103 27 35 Plan participants' contributions — — 19 18 50 56 — — Acquisitions/divestitures, net — 1 (70) 63 — — 6 0 Actuarial losses/(gains) (1,582) 4,071 (876) 2,794 (141) 135 (78) (2) Benefits paid from trust (3,459) (3,445) (2,090) (1,908) (369) (369) (6) (4) Direct benefit payments (125) (123) (516) (391) (1) 0 (28) (24) Foreign exchange impact — — (2,548) 3,085 — — (42) (83) Amendments/curtailments/ settlements/other 1 0 7 (29) 3 — (1) (1) Benefit obligation at December 31 $ 48,182 $ 52,237 $ 45,097 $ 50,447 $ 3,404 $ 3,791 $ 638 $ 756 Change in plan assets Fair value of plan assets at January 1 $ 54,386 $ 51,784 $ 42,308 $ 38,891 $ 15 $ 3 $ 40 $ 52 Actual return on plan assets 924 6,046 1,686 2,559 — 0 (14) 2 Employer contributions — — 86 166 313 325 6 — Acquisitions/divestitures, net — 1 (87) 106 — — — — Plan participants' contributions — — 19 18 50 56 — — Benefits paid from trust (3,459) (3,445) (2,090) (1,908) (369) (369) (6) (4) Foreign exchange impact — — (1,939) 2,479 — — 6 (10) Amendments/curtailments/ settlements/other 1 — (4) (2) 0 0 0 0 Fair value of plan assets at December 31 $ 51,852 $ 54,386 $ 39,979 $ 42,308 $ 8 $ 15 $ 31 $ 40 Funded status at December 31 $ 3,671 $ 2,149 $ (5,118) $ (8,140) $ (3,395) $ (3,776) $ (607) $ (716) Accumulated benefit obligation* $ 48,182 $ 52,237 $ 44,628 $ 50,019 N/A N/A N/A N/A * Represents the benefit obligation assuming no future participant compensation increases. N/A–Not applicable The following table presents the net funded status recognized in the Consolidated Balance Sheet. ($ in millions) Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans At December 31: 2021 2020 2021 2020 2021 2020 2021 2020 Prepaid pension assets $ 5,395 $ 4,011 $ 4,455 $ 3,546 $ 0 $ 0 $ 0 $ 0 Current liabilities—compensation and benefits (123) (122) (359) (342) (364) (346) (19) (46) Noncurrent liabilities—retirement and nonpension postretirement benefit obligations (1,601) (1,740) (9,215) (11,344) (3,031) (3,430) (588) (670) Funded status—net $ 3,671 $ 2,149 $ (5,118) $ (8,140) $ (3,395) $ (3,776) $ (607) $ (716) The following table presents the pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in OCI and the changes in the pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in AOCI for the retirement-related benefit plans. ($ in millions) Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans 2021 2020 2021 2020 2021 2020 2021 2020 Net loss at January 1 $ 15,972 $ 16,608 $ 16,310 $ 16,361 $ 656 $ 551 $ 263 $ 284 Current period loss/(gain) (704) 194 (1,411) 1,334 (141) 135 (65) 0 Curtailments and settlements — — (94) (49) — — 0 0 Amortization of net loss included in net periodic (income)/cost (996) (829) (1,392) (1,336) (52) (29) (15) (21) Net loss at December 31 $ 14,273 $ 15,972 $ 13,412 $ 16,310 $ 464 $ 656 $ 183 $ 263 Prior service costs/(credits) at January 1 $ 24 $ 41 $ 325 $ 280 $ 30 $ 34 $ (4) $ (4) Current period prior service costs/(credits) — — 60 36 — — 0 — Curtailments, settlements and other — — — 0 — — — — Amortization of prior service (costs)/credits included in net periodic (income)/cost (16) (16) 12 9 (4) (4) 0 0 Prior service costs/(credits) at December 31 $ 8 $ 24 $ 397 $ 325 $ 26 $ 30 $ (4) $ (4) Transition (assets)/liabilities at January 1 $ — $ — $ 0 $ 0 $ — $ — $ 0 $ 0 Amortization of transition assets/(liabilities) included in net periodic (income)/cost — — — 0 — — 0 0 Transition (assets)/liabilities at December 31 $ — $ — $ 0 $ 0 $ — $ — $ 0 $ 0 Total loss recognized in accumulated other comprehensive income/(loss)* $ 14,281 $ 15,997 $ 13,809 $ 16,635 $ 490 $ 687 $ 179 $ 259 * Refer to note T, “Equity Activity,” for the total change in AOCI, and the Consolidated Statement of Comprehensive Income for the components of net periodic (income)/cost, including the related tax effects, recognized in OCI for the retirement-related benefit plans. Assumptions Used to Determine Plan Financial Information Underlying both the measurement of benefit obligations and net periodic (income)/cost are actuarial valuations. These valuations use participant-specific information such as salary, age and years of service, as well as certain assumptions, the most significant of which include estimates of discount rates, expected return on plan assets, rate of compensation increases, interest crediting rates and mortality rates. The company evaluates these assumptions, at a minimum, annually, and makes changes as necessary. The following tables present the assumptions used to measure the net periodic (income)/cost and the year-end benefit obligations for retirement-related benefit plans. Defined Benefit Pension Plans U.S. Plans Non-U.S. Plans 2021 2020 2019 2021 2020 2019 Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 Discount rate 2.20 % 3.10 % 4.10 % 0.87 % 1.20 % 1.86 % Expected long-term returns on plan assets 3.75 % 4.50 % 5.25 % 2.85 % 3.36 % 4.38 % Rate of compensation increase N/A N/A N/A 2.59 % 2.32 % 2.20 % Interest crediting rate 1.10 % 2.70 % 3.60 % 0.26 % 0.28 % 0.30 % Weighted-average assumptions used to measure benefit obligations at December 31 Discount rate 2.60 % 2.20 % 3.10 % 1.26 % 0.87 % 1.20 % Rate of compensation increase N/A N/A N/A 3.02 % 2.59 % 2.32 % Interest crediting rate 1.10 % 1.10 % 2.70 % 0.26 % 0.26 % 0.28 % N/A–Not applicable Nonpension Postretirement Benefit Plans U.S. Plan Non-U.S. Plans 2021 2020 2019 2021 2020 2019 Weighted-average assumptions used to measure net periodic cost for the year ended December 31 Discount rate 1.80 % 2.80 % 3.90 % 4.55 % 5.08 % 4.88 % Expected long-term returns on plan assets N/A N/A N/A 6.62 % 7.73 % 7.70 % Interest crediting rate 1.10 % 2.70 % 3.60 % N/A N/A N/A Weighted-average assumptions used to measure benefit obligations at December 31 Discount rate 2.30 % 1.80 % 2.80 % 5.35 % 4.55 % 5.08 % Interest crediting rate 1.10 % 1.10 % 2.70 % N/A N/A N/A N/A–Not applicable Item Description of Assumptions Discount Rate Changes in discount rate assumptions impact net periodic (income)/cost and the PBO. For the U.S. and certain non-U.S. countries, a portfolio of high-quality corporate bonds is used to construct a yield curve. Cash flows from the company’s expected benefit obligation payments are matched to the yield curve to derive the discount rates. In other non-U.S. countries where the markets for high-quality long-term bonds are not as well developed, a portfolio of long-term government bonds is used as a base, and a credit spread is added to simulate corporate bond yields at these maturities in the jurisdiction of each plan. This is the benchmark for developing the respective discount rates. Expected Long-Term Returns on Plan Assets Represents the expected long-term returns on plan assets based on the calculated market-related value of plan assets and considers long-term expectations for future returns and the investment policies and strategies discussed on pages 129 to 130. These rates of return are developed and tested for reasonableness against historical returns by the company. The use of expected returns may result in pension income that is greater or less than the actual return of those plan assets in a given year. Over time, however, the expected long-term returns are designed to approximate the actual long-term returns, and therefore result in a pattern of income or loss recognition that more closely matches the pattern of the services provided by the employees. The difference between actual and expected returns is recognized as a component of net loss or gain in AOCI, which is amortized as a component of net periodic (income)/cost over the service lives or life expectancy of the plan participants, depending on the plan, provided such amounts exceed certain thresholds provided by accounting standards. The market-related value of plan assets recognizes changes in the fair value of plan assets systematically over a five-year period in the expected return on plan assets line in net periodic (income)/cost. The projected long-term rate of return on plan assets for 2022 is 4.0 percent for U.S. and 2.97 percent for non-U.S. DB Plans. Rate of Compensation Increases and Mortality Assumptions Compensation rate increases are determined based on the company’s long-term plans for such increases. These rate increases are not applicable to the U.S. DB pension plans as benefit accruals ceased December 31, 2007. Mortality assumptions are based on life expectancy and death rates for different types of participants and are periodically updated based on actual experience. Interest Crediting Rate Benefits for certain participants in the PPP are calculated using a cash balance formula. An assumption underlying this formula is an interest crediting rate, which impacts both net periodic (income)/cost and the PBO. This provides the basis for projecting the expected interest rate that plan participants will earn on the benefits that they are expected to receive in the following year and is based on the average from August to October of the one-year U.S. Treasury Constant Maturity yield plus one percent. Healthcare Cost Trend Rate For nonpension postretirement benefit plans, the company reviews external data and its own historical trends for healthcare costs to determine the healthcare cost trend rates. The healthcare cost trend rate has an insignificant effect on plan costs or the benefit obligation due to the terms of the plan which limit the company’s obligation to the participants. The company’s U.S. healthcare cost trend rate assumption for 2022 is 6.0 percent. The company assumes that trend rate will decrease to 5.0 percent over the next six years. Plan Assets Retirement-related benefit plan assets are recognized and measured at fair value. Because of the inherent uncertainty of valuations, these fair value measurements may not necessarily reflect the amounts the company could realize in current market transactions. Investment Policies and Strategies The investment objectives of the Qualified PPP portfolio are designed to generate returns that will enable the plan to meet its future obligations. The precise amount for which these obligations will be settled depends on future events, including the retirement dates and life expectancy of the plans’ participants. The obligations are estimated using actuarial assumptions, based on the current economic environment and other pertinent factors described above. The Qualified PPP portfolio’s investment strategy balances the requirement to generate returns, using potentially higher yielding assets such as equity securities, with the need to control risk in the portfolio with less volatile assets, such as fixed-income securities. Risks include, among others, inflation, volatility in equity values and changes in interest rates that could cause the plan to become underfunded, thereby increasing its dependence on contributions from the company. To mitigate any potential concentration risk, careful consideration is given to balancing the portfolio among industry sectors, companies and geographies, taking into account interest rate sensitivity, dependence on economic growth, currency and other factors that affect investment returns. There were no significant changes to investment strategy made in 2021 and none are planned for 2022. The Qualified PPP portfolio’s target allocation is 10 percent equity securities, 82 percent fixed-income securities, 3 percent real estate and 4 percent other investments. The assets are managed by professional investment firms and investment professionals who are employees of the company. They are bound by investment mandates determined by the company’s management and are measured against specific benchmarks. Among these managers, consideration is given, but not limited to, balancing security concentration, issuer concentration, investment style and reliance on particular active and passive investment strategies. Market liquidity risks are tightly controlled, with $4,049 million of the Qualified PPP portfolio as of December 31, 2021 invested in private market assets consisting of private equities and private real estate investments, which are less liquid than publicly traded securities. In addition, the Qualified PPP portfolio had $1,066 million in commitments for future investments in private markets to be made over a number of years. These commitments are expected to be funded from plan assets. Derivatives are used as an effective means to achieve investment objectives and/or as a component of the plan’s risk management strategy. The primary reasons for the use of derivatives are fixed income management, including duration, interest rate management and credit exposure, cash equitization and to manage currency strategies. Outside the U.S., the investment objectives are similar to those described previously, subject to local regulations. The weighted-average target allocation for the non-U.S. plans is 16 percent equity securities, 71 percent fixed-income securities, 3 percent real estate and 10 percent other investments, which is consistent with the allocation decisions made by the company’s management. In some countries, a higher percentage allocation to fixed income is required to manage solvency and funding risks. In others, the responsibility for managing the investments typically lies with a board that may include up to 50 percent of members elected by employees and retirees. This can result in slight differences compared with the strategies previously described. The percentage of non-U.S. plans investment in assets that are less liquid is consistent with the U.S. plan. The use of derivatives is also consistent with the U.S. plan and mainly for currency hedging, interest rate risk management, credit exposure and alternative investment strategies. The company’s nonpension postretirement benefit plans are underfunded or unfunded. For some plans, the company maintains a nominal, highly liquid trust fund balance to ensure timely benefit payments. Defined Benefit Pension Plan Assets The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2021. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. ($ in millions) U.S. Plan Non-U.S. Plans Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Equity Equity securities (1) $ 2,023 $ 0 $ — $ 2,023 $ 485 $ — $ — $ 485 Equity mutual funds (2) 133 — — 133 0 — — 0 Fixed income Government and related (3) — 21,751 — 21,751 — 9,900 — 9,900 Corporate bonds (4) — 16,246 598 16,844 — 3,842 — 3,842 Mortgage and asset-backed securities — 660 — 660 — 3 — 3 Fixed income mutual funds (5) 281 — — 281 — — — — Insurance contracts (6) — — — — — 5,662 — 5,662 Cash and short-term investments (7) 104 1,269 — 1,373 324 403 — 728 Real estate — — — — — — 174 174 Derivatives (8) 3 3 — 5 61 489 — 550 Other mutual funds (9) — — — — 30 — — 30 Subtotal 2,543 39,930 598 43,070 900 20,300 174 21,374 Investments measured at net asset value using the NAV practical expedient (10) — — — 9,078 — — — 18,652 Other (11) — — — (296) — — — (47) Fair value of plan assets $ 2,543 $ 39,930 $ 598 $ 51,852 $ 900 $ 20,300 $ 174 $ 39,979 (1) Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $2 million. Non-U.S. Plans include IBM common stock of $2 million. (2) Invests in predominantly equity securities. (3) Includes debt issued by national, state and local governments and agencies. (4) The U.S. Plans include IBM corporate bonds of $19 million. Non-U.S. Plans include IBM corporate bonds of $4 million. (5) Invests predominantly in fixed-income securities. (6) Primarily represents insurance policy contracts (Buy-In) in certain non-U.S. plans. (7) Includes cash, cash equivalents and short-term marketable securities. (8) Includes interest-rate derivatives, forwards, exchange-traded and other over-the-counter derivatives. (9) Invests in both equity and fixed-income securities. (10) (11) The U.S. nonpension postretirement benefit plan assets of $8 million were invested primarily in cash equivalents, categorized as Level 1 in the fair value hierarchy. The non-U.S. nonpension postretirement benefit plan assets of $31 million, primarily in Brazil, and, to a lesser extent, in Mexico and South Africa, were invested primarily in government and related fixed-income securities and corporate bonds, categorized as Level 2 in the fair value hierarchy. The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2020. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. ($ in millions) U.S. Plan Non-U.S. Plans Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Equity Equity securities (1) $ 2,714 $ 0 $ — $ 2,714 $ 466 $ 0 $ — $ 466 Equity mutual funds (2) 105 — — 105 0 — — 0 Fixed income Government and related (3) — 21,375 — 21,375 — 9,599 2 9,601 Corporate bonds (4) — 18,217 542 18,759 — 3,690 — 3,690 Mortgage and asset-backed securities — 612 — 612 — 3 — 3 Fixed income mutual funds (5) 470 — — 470 — — — — Insurance contracts (6) — — — — — 6,378 — 6,378 Cash and short-term investments (7) 76 1,001 — 1,077 337 651 — 988 Real estate — — — — — — 298 298 Derivatives (8) (3) 18 — 15 66 510 — 575 Other mutual funds (9) — — — — 21 — — 21 Subtotal 3,363 41,222 542 45,128 891 20,832 300 22,023 Investments measured at net asset value using the NAV practical expedient (10) — — — 9,579 — — — 20,321 Other (11) — — — (321) — — — (37) Fair value of plan assets $ 3,363 $ 41,222 $ 542 $ 54,386 $ 891 $ 20,832 $ 300 $ 42,308 (1) Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $6 million. Non-U.S. Plans include IBM common stock |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events | |
Subsequent Events | NOTE X. SUBSEQUENT EVENTS On February 1, 2022, the company announced that the Board of Directors approved a quarterly dividend of $1.64 per common share. The dividend is payable March 10, 2022 to shareholders of record on February 11, 2022. On February 9, 2022, the company issued $2.3 billion of Euro fixed-rate notes in tranches with maturities ranging from 8 to 12 years and coupons ranging from 0.875 to 1.25 percent and $1.8 billion of U.S. dollar fixed-rate notes with maturities ranging from 5 to 30 years and coupons ranging from 2.20 to 3.43 percent. |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | 12 Months Ended |
Dec. 31, 2021 | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | SCHEDULE II INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the Years Ended December 31: (Dollars in Millions) Balance at Balance at Beginning of Additions/ End of Description Period (Deductions) Write-offs Other Period Allowance For Credit Losses 2021 –Current $ 503 $ (35) $ (46) $ (4) $ 418 –Noncurrent $ 47 $ (21) $ 0 $ (2) $ 25 2020 –Current $ 471 * $ 91 $ (78) $ 19 $ 503 –Noncurrent $ 56 * $ 4 $ (0) $ (13) $ 47 2019 –Current $ 477 $ 47 $ (96) $ 8 $ 437 –Noncurrent $ 48 $ (10) $ (4) $ (1) $ 33 Allowance For Inventory Losses 2021 $ 514 $ 240 $ (118) $ (3) $ 633 2020 $ 490 $ 135 $ (125) $ 15 $ 514 2019 $ 530 $ 115 $ (166) $ 11 $ 490 Revenue Based Provisions 2021 $ 372 $ 627 $ (574) $ 10 $ 435 2020 $ 383 $ 689 $ (712) $ 13 $ 372 2019 $ 384 $ 735 $ (731) $ (5) $ 383 Schedule II balances above are presented on a continuing operations basis and the prior year amounts have been recast to remove Kyndryl, which is presented within discontinued operations. Refer to note C, “Separation of Kyndryl,” for additional information related to Kyndryl discontinued operations. * Opening balance does not equal the allowance at December 31, 2019 due to the adoption of the guidance for current expected credit losses. Additions/(Deductions) to the allowances represent changes in estimates of unrecoverable amounts in receivables and inventory and are recorded to expense and cost accounts, respectively. Amounts are written-off when they are deemed unrecoverable by the company. Additions/(Deductions) to Revenue Based Provisions represent changes in estimated reductions to revenue, primarily as a result of revenue-related programs, including customer and business partner rebates. Write-offs for Revenue Based Provisions represent reductions in the provision due to amounts remitted to customers and business partners. Other primarily comprises currency translation adjustments |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying Consolidated Financial Statements and footnotes of the International Business Machines Corporation (IBM or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior-year amounts have been reclassified to conform to the current year presentation. This is annotated where applicable. On November 3, 2021, the company completed the previously announced separation of its managed infrastructure services unit into a new public company with the distribution of 80.1 percent of the outstanding common stock of Kyndryl Holdings, Inc. (Kyndryl) to IBM stockholders on a pro rata basis. To effect the separation, IBM stockholders received one The accounting requirements for reporting the separation of Kyndryl as a discontinued operation were met when the separation was completed. Accordingly, the historical results of Kyndryl are presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. Refer to note C, “Separation of Kyndryl,” for additional information. Effective immediately prior to the separation of Kyndryl, the company made a number of changes to its organizational structure and management system. These changes impacted the company’s reportable segments beginning in the fourth quarter of 2021 but did not impact the company’s Consolidated Financial Statements. Refer to note E, “Segments,” for additional information on the company’s reportable segments. The segments presented in this Annual Report are reported on a comparable basis for all periods. On July 9, 2019, the company completed the acquisition of all the outstanding The benefit from income taxes for the year ended December 31, 2020 includes the tax impacts of an intra-entity sale of certain of the company’s intellectual property, which resulted in a net benefit of $0.9 billion in the first quarter of 2020 and a benefit of $0.2 billion related to a foreign tax law change. Refer to note H, “Taxes,” for additional information. Noncontrolling interest amounts of $19 million, $13 million and $16 million, net of tax, for the years ended December 31, 2021, 2020 and 2019, respectively, are included as a reduction within other (income) and expense in the Consolidated Income Statement. |
Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of IBM and its controlled subsidiaries, which are primarily majority owned. Any noncontrolling interest in the equity of a subsidiary is reported as a component of total equity in the Consolidated Balance Sheet. Net income and losses attributable to the noncontrolling interest is reported as described above in the Consolidated Income Statement. The accounts of variable interest entities (VIEs) are included in the Consolidated Financial Statements, if required. Investments in business entities in which the company does not have control but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method and the company’s proportionate share of income or loss is recorded in other (income) and expense. The accounting policy for other investments in equity securities is described within the “Marketable Securities” section of this note. Equity investments in non-publicly traded entities lacking controlling financial interest or significant influence are primarily measured at cost, absent other indicators of fair value, net of impairment, if any. All intercompany transactions and accounts have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts that are reported in the Consolidated Financial Statements and accompanying disclosures. Estimates are made for the following, among others: revenue, costs to complete service contracts, income taxes, pension assumptions, valuation of assets including goodwill and intangible assets, loss contingencies, allowance for credit losses and other matters. 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, including the macroeconomic impacts of the COVID-19 pandemic. Actual results may be different from these estimates. |
Revenue | Revenue The company accounts for a contract with a client when it has written approval, the contract is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection. Revenue is recognized when, or as, control of a promised product or service transfers to a client, in an amount that reflects the consideration to which the company expects to be entitled in exchange for transferring those products or services. If the consideration promised in a contract includes a variable amount, the company estimates the amount to which it expects to be entitled using either the expected value or most likely amount method. The company’s contracts may include terms that could cause variability in the transaction price, including, for example, rebates, volume discounts, service-level penalties, and performance bonuses or other forms of contingent revenue. The company only includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The company may not be able to reliably estimate contingent revenue in certain long-term arrangements due to uncertainties that are not expected to be resolved for a long period of time or when the company’s experience with similar types of contracts is limited. The company’s arrangements infrequently include contingent revenue. Changes in estimates of variable consideration are included in note D, “Revenue Recognition.” The company’s standard billing terms are that payment is due upon receipt of invoice, payable within 30 days. Invoices are generally issued as control transfers and/or as services are rendered. Additionally, in determining the transaction price, the company adjusts the promised amount of consideration for the effects of the time value of money if the billing terms are not standard and the timing of payments agreed to by the parties to the contract provide the client or the company with a significant benefit of financing, in which case the contract contains a significant financing component. As a practical expedient, the company does not account for significant financing components if the period between when the company transfers the promised product or service to the client and when the client pays for that product or service will be one year or less. Most arrangements that contain a financing component are financed through the company’s Financing business and include explicit financing terms. The company may include subcontractor services or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from sales of third-party vendor products or services is recorded net of costs when the company is acting as an agent between the client and the vendor, and gross when the company is the principal for the transaction. To determine whether the company is an agent or principal, the company considers whether it obtains control of the products or services before they are transferred to the customer. In making this evaluation, several factors are considered, most notably whether the company has primary responsibility for fulfillment to the client, as well as inventory risk and pricing discretion. The company recognizes revenue on sales to solution providers, resellers and distributors (herein referred to as resellers) when the reseller has economic substance apart from the company and the reseller is considered the principal for the transaction with the end-user client. The company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. In addition to the aforementioned general policies, the following are the specific revenue recognition policies for arrangements with multiple performance obligations and for each major category of revenue. Arrangements with Multiple Performance Obligations The company’s global capabilities as a hybrid cloud platform and AI company include services, software, hardware and related financing. The company enters into revenue arrangements that may consist of any combination of these products and services based on the needs of its clients. The company continues to develop new products and offerings and their associated consumption and delivery methods, including the use of cloud and as-a-Service models. These are not separate businesses; they are offerings across the segments that address market opportunities in areas such as analytics, data, cloud and security. Revenue from these offerings follows the specific revenue recognition policies for arrangements with multiple performance obligations and for each major category of revenue, depending on the type of offering, which are comprised of services, software and/or hardware. To the extent that a product or service in multiple performance obligation arrangements is subject to other specific accounting guidance, such as leasing guidance, that product or service is accounted for in accordance with such specific guidance. For all other products or services in these arrangements, the company determines if the products or services are distinct and allocates the consideration to each distinct performance obligation on a relative standalone selling price basis. When products and services are not distinct, the company determines an appropriate measure of progress based on the nature of its overall promise for the single performance obligation. The revenue policies in the Services, Hardware and/or Software sections below are applied to each performance obligation, as applicable. Services The company’s primary services offerings include consulting services, including business transformation; technology consulting and application operations including the design and development of complex IT environments to a client’s specifications (e.g., design and build); cloud services; business process outsourcing; and infrastructure support. Many of these services can be delivered entirely or partially through cloud or as-a-Service delivery models. The company’s services are provided on a time-and-material basis, as a fixed-price contract or as a fixed-price per measure of output contract and the contract terms range from less than one year to over 10 years. In services arrangements, the company typically satisfies the performance obligation and recognizes revenue over time. In design and build arrangements, the performance obligation is satisfied over time either because the client controls the asset as it is created (e.g., when the asset is built at the customer site) or because the company’s performance does not create an asset with an alternative use and the company has an enforceable right to payment plus a reasonable profit for performance completed to date. In most other services arrangements, the performance obligation is satisfied over time because the client simultaneously receives and consumes the benefits provided as the company performs the services. Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred. Revenue from as-a-Service type contracts, such as Infrastructure-as-a-Service, is recognized either on a straight-line basis or on a usage basis, depending on the terms of the arrangement (such as whether the company is standing ready to perform or whether the contract has usage-based metrics). If an as-a-Service contract includes setup activities, those promises in the arrangement are evaluated to determine if they are distinct. In areas such as application management, business process outsourcing and other cloud-based services arrangements, the company determines whether the services performed during the initial phases of the arrangement, such as setup activities, are distinct. In most cases, the arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The company applies a measure of progress (typically time-based) to any fixed consideration and allocates variable consideration to the distinct periods of service based on usage. As a result, revenue is generally recognized over the period the services are provided on a usage basis. This results in revenue recognition that corresponds with the value to the client of the services transferred to date relative to the remaining services promised. Revenue related to maintenance and technology support and extended warranty is recognized on a straight-line basis over the period of performance because the company is standing ready to provide services. In design and build contracts, revenue is recognized based on progress toward completion of the performance obligation using a cost-to-cost measure of progress. Revenue is recognized based on the labor costs incurred to date as a percentage of the total estimated labor costs to fulfill the contract. Due to the nature of the work performed in these arrangements, the estimation of cost at completion is complex, subject to many variables and requires significant judgment. Key factors reviewed by the company to estimate costs to complete each contract are future labor and product costs and expected productivity efficiencies. Changes in original estimates are reflected in revenue on a cumulative catch-up basis in the period in which the circumstances that gave rise to the revision become known by the company. Refer to note D, “Revenue Recognition,” for the amount of revenue recognized in the reporting period on a cumulative catch-up basis (i.e., from performance obligations satisfied, or partially satisfied, in previous periods). The company performs ongoing profitability analyses of its design and build services contracts accounted for using a cost-to-cost measure of progress in order to determine whether the latest estimates of revenues, costs and profits require updating. If at any time these estimates indicate that the contract will be unprofitable, the entire estimated loss for the remainder of the contract is recorded immediately. For other types of services contracts, any losses are recorded as incurred. In some services contracts, the company bills the client prior to recognizing revenue from performing the services. Deferred income of $3,460 million and $3,604 million at December 31, 2021 and 2020, respectively, is included in the Consolidated Balance Sheet. In other services contracts, the company performs the services prior to billing the client. When the company performs services prior to billing the client in design and build contracts, the right to consideration is typically subject to milestone completion or client acceptance and the unbilled accounts receivable is classified as a contract asset. At December 31, 2021 and 2020, contract assets for services contracts of $430 million and $376 million, respectively, are included in prepaid expenses and other current assets in the Consolidated Balance Sheet. The remaining amount of unbilled accounts receivable of $723 million and $650 million at December 31, 2021 and 2020, respectively, is included in notes and accounts receivable–trade in the Consolidated Balance Sheet. Billings usually occur in the month after the company performs the services or in accordance with specific contractual provisions. Hardware The company’s hardware offerings include the sale or lease of Hybrid Infrastructure solutions including Z systems as well as Distributed Infrastructure solutions such as Power and storage solutions. The capabilities of these products can also be delivered through as-a-Service or cloud delivery models, such as Infrastructure-as-a-Service and Storage-as-a-Service. The company also offers installation services for its more complex hardware products. Hardware offerings are often sold with distinct maintenance services, described in the Services section above. Revenue from hardware sales is recognized when control has transferred to the customer which typically occurs when the hardware has been shipped to the client, risk of loss has transferred to the client and the company has a present right to payment for the hardware. In limited circumstances when a hardware sale includes client acceptance provisions, revenue is recognized either when client acceptance has been obtained, client acceptance provisions have lapsed, or the company has objective evidence that the criteria specified in the client acceptance provisions have been satisfied. Revenue from hardware sales-type leases is recognized at the beginning of the lease term. Revenue from rentals and operating leases is recognized on a straight-line basis over the term of the rental or lease. Revenue from as-a-Service arrangements is recognized either on a straight-line basis or on a usage basis as described in the Services section above. Installation services are accounted for as distinct performance obligations with revenue recognized as the services are performed. Shipping and handling activities that occur after the client has obtained control of a product are accounted for as an activity to fulfill the promise to transfer the product rather than as an additional promised service and, therefore, no revenue is deferred and recognized over the shipping period. Software The company’s software offerings include hybrid platform software solutions, which contain many of the company’s strategic areas including Red Hat, automation, data and AI, and security; transaction processing, which primarily supports mission-critical systems for clients; and, distributed infrastructure software, which provides operating systems for IBM Z and Power Systems hardware. These offerings include proprietary software and open source software, and many can be delivered entirely or partially through as-a-Service or cloud delivery models, while others are delivered as on-premise software licenses. Revenue from proprietary perpetual (one-time charge) license software is recognized at a point in time at the inception of the arrangement when control transfers to the client, if the software license is distinct from the post-contract support (PCS) offered by the company. Revenue from proprietary term license software is recognized at a point in time for the committed term of the contract, unless consideration depends on client usage, in which case revenue is recognized when the usage occurs. Proprietary term licenses often have a one-month contract term due to client termination rights, in which case, revenue would be recognized in that month for both the license and PCS. Clients may contract to convert their existing IBM term license software into perpetual license software plus PCS. When proprietary term license software is converted to perpetual license software, the consideration becomes fixed with no cancellability and, therefore, revenue for the perpetual license is recognized upon conversion, consistent with the accounting for other perpetual licenses, as described above. PCS revenue is recognized as described below. The company also has open source software offerings. Since open source software is offered under an open source licensing model and therefore, the license is available for free, the standalone selling price is zero. As such, when the license is sold with PCS or other products and services, no consideration is allocated to the license when it is a distinct performance obligation and therefore no revenue is recognized when control of the license transfers to the client. Revenue is recognized over the PCS period. In certain cases, open source software is bundled with proprietary software and, if the open source software is not considered distinct, the software bundle (e.g., Cloud Pak) is accounted for under a proprietary software model. Cloud Paks can be sold either as perpetual or committed-term software licenses, both of which are described above. Revenue from PCS is recognized over the contract term on a straight-line basis because the company is providing a service of standing ready to provide support, when-and-if needed, and is providing unspecified software upgrades on a when-and-if available basis over the contract term. Revenue from software hosting or Software-as-a-Service arrangements is recognized either on a straight-line basis or on a usage basis as described in the Services section above. In software hosting arrangements, the rights provided to the client (e.g., ownership of a license, contract termination provisions and the feasibility of the client to operate the software) are considered in determining whether the arrangement includes a license. In arrangements that include a software license, the associated revenue is recognized in accordance with the software license recognition policy above rather than over time as a service. Financing Financing income attributable to sales-type leases, direct financing leases and loans is recognized on the accrual basis using the effective interest method. Operating lease income is recognized on a straight-line basis over the term of the lease. Standalone Selling Price The company allocates the transaction price to each performance obligation on a relative standalone selling price basis. The standalone selling price (SSP) is the price at which the company would sell a promised product or service separately to a client. In most cases, the company is able to establish SSP based on the observable prices of products or services sold separately in comparable circumstances to similar clients. The company typically establishes SSP ranges for its products and services which are reassessed on a periodic basis or when facts and circumstances change. In certain instances, the company may not be able to establish a SSP range based on observable prices and the company estimates SSP. The company estimates SSP by considering multiple factors including, but not limited to, overall market conditions, including geographic or regional specific factors, competitive positioning, competitor actions, internal costs, profit objectives and pricing practices. Additionally, in certain circumstances, the company may estimate SSP for a product or service by applying the residual approach. Estimating SSP is a formal process that includes review and approval by the company’s management. |
Costs, Warranties, Shipping and Handling | Services Costs Recurring operating costs for services contracts are recognized as incurred. For fixed-price design and build contracts, the costs of external hardware and software accounted for under the cost-to-cost measure of progress are deferred and recognized based on the labor costs incurred to date (i.e., the measure of progress), as a percentage of the total estimated labor costs to fulfill the contract as control transfers over time for these performance obligations. Certain eligible, nonrecurring costs (i.e., setup costs) incurred in the initial phases of business process outsourcing contracts and other cloud-based services contracts, including Software-as-a-Service arrangements, are capitalized when the costs relate directly to the contract, the costs generate or enhance resources of the company that will be used in satisfying the performance obligation in the future, and the costs are expected to be recovered. These costs consist of transition and setup costs related to the provisioning, configuring, implementation and training and other deferred fulfillment costs, including, for example, prepaid assets used in services contracts (i.e., prepaid software or prepaid maintenance). Capitalized costs are amortized on a straight-line basis over the expected period of benefit, which includes anticipated contract renewals or extensions, consistent with the transfer to the client of the services to which the asset relates. Additionally, fixed assets associated with these contracts are capitalized and depreciated on a straight-line basis over the expected useful life of the asset. If an asset is contract specific, then the depreciation period is the shorter of the useful life of the asset or the contract term. Amounts paid to clients in excess of the fair value of acquired assets used in business process outsourcing arrangements are deferred and amortized on a straight-line basis as a reduction of revenue over the expected period of benefit. The company performs periodic reviews to assess the recoverability of deferred contract transition and setup costs. If the carrying amount is deemed not recoverable, an impairment loss is recognized. Refer to note D, “Revenue Recognition,” for the amount of deferred costs to fulfill a contract at December 31, 2021 and 2020. In situations in which a business process outsourcing or other cloud-based services contract is terminated, the terms of the contract may require the client to reimburse the company for the recovery of unbilled accounts receivable, unamortized deferred contract costs and additional costs incurred by the company to transition the services. Software Costs Costs that are related to the conceptual formulation and design of licensed software programs are expensed as incurred to research, development and engineering expense; costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. Capitalized amounts are amortized on a straight-line basis over periods ranging up to three years and are recorded in software cost within cost of sales. The company performs periodic reviews to ensure that unamortized program costs remain recoverable from future revenue. Costs to support or service licensed programs are charged to software cost within cost of sales as incurred. The company capitalizes certain costs that are incurred to purchase or develop internal-use software. Internal-use software programs also include software used by the company to deliver Software-as-a-Service when the client does not receive a license to the software and the company has no substantive plans to market the software externally. Capitalized costs are amortized on a straight-line basis over periods ranging up to three years and are recorded in selling, general and administrative expense or cost of sales, depending on whether the software is used by the company in revenue generating transactions. Additionally, the company may capitalize certain types of implementation costs and amortize them over the term of the arrangement when the company is a customer in a cloud-computing arrangement. Incremental Costs of Obtaining a Contract Incremental costs of obtaining a contract (e.g., sales commissions) are capitalized and amortized on a straight-line basis over the expected customer relationship period if the company expects to recover those costs. The expected customer relationship period is determined based on the average customer relationship period, including expected renewals, for each offering type and ranges from three Product Warranties The company offers warranties for its hardware products that generally range up to three years, with the majority being either one Revenue from extended warranty contracts is initially recorded as deferred income and subsequently recognized on a straight-line basis over the delivery period because the company is providing a service of standing ready to provide services over such term. Refer to note S, “Commitments & Contingencies,” for additional information. Shipping and Handling Costs related to shipping and handling are recognized as incurred and included in cost in the Consolidated Income Statement. |
Selling, General and Administrative | Selling, General and Administrative Selling, general and administrative (SG&A) expense is charged to income as incurred, except for certain sales commissions, which are capitalized and amortized. For further information regarding capitalizing sales commissions, see “Incremental Costs of Obtaining a Contract” above. Expenses of promoting and selling products and services are classified as selling expense and, in addition to sales commissions, include such items as compensation, advertising and travel. General and administrative expense includes such items as compensation, legal costs, office supplies, non-income taxes, insurance and office rental. In addition, general and administrative expense includes other operating items such as an allowance for credit losses, workforce rebalancing charges for contractually obligated payments to employees terminated in the ongoing course of business, acquisition costs related to business combinations, amortization of certain intangible assets and environmental remediation costs. |
Advertising and Promotional Expense | Advertising and Promotional Expense The company expenses advertising and promotional costs as incurred. Cooperative advertising reimbursements from vendors are recorded net of advertising and promotional expense in the period in which the related advertising and promotional expense is incurred. Advertising and promotional expense, which includes media, agency and promotional expense, was $1,413 million, $1,509 million and $1,591 million in 2021, 2020 and 2019, respectively, and is recorded in SG&A expense in the Consolidated Income Statement. |
Research, Development and Engineering | Research, Development and Engineering Research, development and engineering (RD&E) costs are expensed as incurred. Software costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. |
Intellectual Property and Custom Development Income | Intellectual Property and Custom Development Income The company licenses and sells the rights to certain of its intellectual property (IP) including internally developed patents, trade secrets and technological know-how. Certain IP transactions to third parties are licensing/royalty-based and others are transaction-based sales/other transfers. Income from licensing arrangements is recognized at the inception of the license term if the nature of the company’s promise is to provide a right to use the company’s intellectual property as it exists at that point in time (i.e., the license is functional intellectual property) and control has transferred to the client. Income is recognized over time if the nature of the company’s promise is to provide a right to access the company’s intellectual property throughout the license period (i.e., the license is symbolic intellectual property), such as a trademark license. Income from royalty-based fee arrangements is recognized at the later of when the subsequent sale or usage occurs or the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). The company also enters into cross-licensing arrangements of patents, and income from these arrangements is recognized when control transfers to the customer. In addition, the company earns income from certain custom development projects with strategic technology partners and specific clients. The company records the income from these projects over time as the company satisfies the performance obligation if the fee is nonrefundable and is not dependent upon the ultimate success of the project. |
Other (Income) and Expense | Other (Income) and Expense Other (income) and expense includes interest income (other than from Financing external transactions), gains and losses on certain derivative instruments, gains and losses from securities and other investments including the changes in fair value associated with the company’s retained interest in Kyndryl common stock, gains and losses from certain real estate transactions, foreign currency transaction gains and losses, gains and losses from the sale of financial assets, gains and losses from the sale of businesses, other than reported as discontinued operations, and amounts related to accretion of asset retirement obligations. Other (income) and expense also includes certain components of retirement-related costs, including interest costs, expected return on plan assets, amortization of prior service costs/(credits), curtailments and settlements and other net periodic pension/post-retirement benefit costs. |
Business Combinations and Intangible Assets Including Goodwill | Business Combinations and Intangible Assets Including Goodwill The company accounts for business combinations using the acquisition method and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree are generally recorded at their acquisition date fair values. Contract assets and contract liabilities are measured in accordance with the guidance on revenue recognition. Goodwill represents the excess of the purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. The primary drivers that generate goodwill are the value of synergies between the acquired entities and the company and the acquired assembled workforce, neither of which qualifies as a separately identifiable intangible asset. Goodwill recorded in an acquisition is assigned to applicable reporting units based on expected revenues or expected cash flows. Identifiable intangible assets with finite lives are amortized over their useful lives. Amortization of completed technology is recorded in cost, and amortization of all other intangible assets is recorded in SG&A expense. Acquisition-related costs, including advisory, legal, accounting, valuation and pre-close and other costs, are typically expensed in the periods in which the costs are incurred and are recorded in SG&A expense. The results of operations of acquired businesses are included in the Consolidated Financial Statements from the acquisition date. |
Impairment | Impairment Long-lived assets, other than goodwill, are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The impairment test is typically based on undiscounted cash flows and, if impaired, the asset is written down to fair value based on either discounted cash flows or appraised values. Goodwill is tested for impairment at least annually, in the fourth quarter and whenever changes in circumstances indicate an impairment may exist. The goodwill impairment test is performed at the reporting unit level, which is generally at the level of or one level below an operating segment. |
Depreciation and Amortization | Depreciation and Amortization Property, plant and equipment are carried at cost and depreciated over their estimated useful lives using the straight-line method. The estimated useful lives of certain depreciable assets are as follows: buildings, 30 to 50 years; building equipment, 10 to 20 years; land improvements, 20 years; production, engineering, office and other equipment, 2 to 20 years; and information technology equipment, 1.5 to 5 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease term, rarely exceeding 25 years. As noted within the “Software Costs” section of this note, capitalized software costs are amortized on a straight-line basis over periods ranging up to 3 years. Other intangible assets are amortized over periods between 1 and 20 years. |
Environmental | Environmental The cost of internal environmental protection programs that are preventative in nature are expensed as incurred. When a cleanup program becomes likely, and it is probable that the company will incur cleanup costs and those costs can be reasonably estimated, the company accrues remediation costs for known environmental liabilities. |
Asset Retirement Obligations | Asset Retirement Obligations Asset retirement obligations (ARO) are legal obligations associated with the retirement of long-lived assets and the liability is initially recorded at fair value. The related asset retirement costs are capitalized by increasing the carrying amount of the related assets by the same amount as the liability. Asset retirement costs are subsequently depreciated over the useful lives of the related assets. Subsequent to initial recognition, the company records period-to-period changes in the ARO liability resulting from the passage of time in interest expense and revisions to either the timing or the amount of the original expected cash flows to the related assets. |
Defined Benefit Pension and Nonpension Postretirement Benefit Plans, Defined Contribution Plans | Defined Benefit Pension and Nonpension Postretirement Benefit Plans The funded status of the company’s defined benefit pension plans and nonpension postretirement benefit plans (retirement-related benefit plans) is recognized in the Consolidated Balance Sheet. The funded status is measured as the difference between the fair value of plan assets and the benefit obligation at December 31, the measurement date. For defined benefit pension plans, the benefit obligation is the projected benefit obligation (PBO), which represents the actuarial present value of benefits expected to be paid upon retirement based on employee services already rendered and estimated future compensation levels. For the nonpension postretirement benefit plans, the benefit obligation is the accumulated postretirement benefit obligation (APBO), which represents the actuarial present value of postretirement benefits attributed to employee services already rendered. The fair value of plan assets represents the current market value of assets held in an irrevocable trust fund, held for the sole benefit of participants, which are invested by the trust fund. Overfunded plans, with the fair value of plan assets exceeding the benefit obligation, are aggregated and recorded as a prepaid pension asset equal to this excess. Underfunded plans, with the benefit obligation exceeding the fair value of plan assets, are aggregated and recorded as a retirement and nonpension postretirement benefit obligation equal to this excess. The current portion of the retirement and nonpension post-retirement benefit obligations represents the actuarial present value of benefits payable in the next 12 months exceeding the fair value of plan assets, measured on a plan-by-plan basis. This obligation is recorded in compensation and benefits in the Consolidated Balance Sheet. Net periodic pension and nonpension postretirement benefit cost/(income) is recorded in the Consolidated Income Statement and includes service cost, interest cost, expected return on plan assets, amortization of prior service costs/(credits) and (gains)/losses previously recognized as a component of other comprehensive income/(loss) (OCI) and amortization of the net transition asset remaining in accumulated other comprehensive income/(loss) (AOCI). The service cost component of net benefit cost is recorded in Cost, SG&A and RD&E in the Consolidated Income Statement (unless eligible for capitalization) based on the employees’ respective functions. The other components of net benefit cost are presented separately from service cost within other (income) and expense in the Consolidated Income Statement. (Gains)/losses and prior service costs/(credits) are recognized as a component of OCI in the Consolidated Statement of Comprehensive Income as they arise. Those (gains)/losses and prior service costs/(credits) are subsequently recognized as a component of net periodic cost/(income) pursuant to the recognition and amortization provisions of applicable accounting guidance. (Gains)/losses arise as a result of differences between actual experience and assumptions or as a result of changes in actuarial assumptions. Prior service costs/(credits) represent the cost of benefit changes attributable to prior service granted in plan amendments. The measurement of benefit obligations and net periodic cost/(income) is based on estimates and assumptions approved by the company’s management. These valuations reflect the terms of the plans and use participant-specific information such as compensation, age and years of service, as well as certain assumptions, including estimates of discount rates, expected return on plan assets, rate of compensation increases, interest crediting rates and mortality rates. Defined Contribution Plans The company’s contribution for defined contribution plans is recorded when the employee renders service to the company. The charge is recorded in Cost, SG&A and RD&E in the Consolidated Income Statement based on the employees’ respective functions. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation represents the cost related to stock-based awards granted to employees. The company measures stock-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost on a straight-line basis (net of estimated forfeitures) over the employee requisite service period. The company grants its employees Restricted Stock Units (RSUs), including Retention Restricted Stock Units (RRSUs); Performance Share Units (PSUs); and stock options. RSUs are stock awards granted to employees that entitle the holder to shares of common stock as the award vests, typically over a one The company records deferred tax assets for awards that result in deductions on the company’s income tax returns, based on the amount of compensation cost recognized and the relevant statutory tax rates. The differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the income tax return are recorded as a benefit or expense to the provision for income taxes in the Consolidated Income Statement. |
Income Taxes | Income Taxes Income tax expense is based on reported income before income taxes. Deferred income taxes reflect the tax effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. These deferred taxes are measured by applying currently enacted tax laws. The company includes Global Intangible Low-Taxed Income (GILTI) in measuring deferred taxes. Valuation allowances are recognized to reduce deferred tax assets to the amount that will more likely than not be realized. In assessing the need for a valuation allowance, management considers all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies/actions. When the company changes its determination as to the amount of deferred tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to income tax expense in the period in which such determination is made. The company recognizes additional tax liabilities when the company believes that certain positions may not be fully sustained upon review by tax authorities. Benefits from tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. The noncurrent portion of tax liabilities is included in other liabilities in the Consolidated Balance Sheet. To the extent that new information becomes available which causes the company to change its judgment regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. |
Translation of Non-U.S. Currency Amounts | Translation of Non-U.S. Currency Amounts Assets and liabilities of non-U.S. subsidiaries that have a local functional currency are translated to U.S. dollars at year-end exchange rates. Translation adjustments are recorded in OCI. Income and expense items are translated at weighted-average rates of exchange prevailing during the year. Inventory, property, plant and equipment—net and other non-monetary assets and liabilities of non-U.S. subsidiaries and branches that operate in U.S. dollars are translated at the approximate exchange rates prevailing when the company acquired the assets or liabilities. All other assets and liabilities denominated in a currency other than U.S. dollars are translated at year-end exchange rates with the transaction gain or loss recognized in other (income) and expense. Income and expense items are translated at the weighted-average rates of exchange prevailing during the year. These translation gains and losses are included in net income for the period in which exchange rates change. |
Derivative Financial Instruments | Derivative Financial Instruments The company uses derivative financial instruments primarily to manage foreign currency and interest rate risk, and to a lesser extent, equity and credit risk. The company does not use derivative financial instruments for trading or speculative purposes. Derivatives that qualify for hedge accounting can be designated as either cash flow hedges, net investment hedges, or fair value hedges. The company may enter into derivative contracts that economically hedge certain of its risks, even when hedge accounting does not apply, or the company elects not to apply hedge accounting. Derivatives are recognized in the Consolidated Balance Sheet at fair value on a gross basis as either assets or liabilities and classified as current or noncurrent based upon whether the maturity of the instrument is less than or greater than 12 months. Changes in the fair value of derivatives designated as a cash flow hedge are recorded, net of applicable taxes, in OCI and subsequently reclassified into the same income statement line as the hedged exposure when the underlying hedged item is recognized in earnings. Effectiveness for net investment hedging derivatives is measured on a spot-to-spot basis. Changes in the fair value of highly effective net investment hedging derivatives and other non-derivative financial instruments designated as net investment hedges are recorded as foreign currency translation adjustments in AOCI. Changes in the fair value of the portion of a net investment hedging derivative excluded from the assessment of effectiveness are recorded in interest expense and cost of financing. Changes in the fair value of interest rate derivatives designated as a fair value hedge and the offsetting changes in the fair value of the underlying hedged exposure are recorded in interest expense and cost of financing. Changes in the fair value of derivatives not designated as hedges are reported in earnings primarily in other (income) and expense. See note U, “Derivative Financial Instruments,” for further information. The cash flows associated with derivatives designated as fair value and cash flow hedges are reported in cash flows from operating activities in the Consolidated Statement of Cash Flows. Cash flows from derivatives designated as net investment hedges and derivatives not designated as hedges are reported in cash flows from investing activities in the Consolidated Statement of Cash Flows. Cash flows from derivatives designated as hedges of foreign currency denominated debt directly associated with the settlement of the principal are reported in payments to settle debt in cash flows from financing activities in the Consolidated Statement of Cash Flows. |
Financial Instruments and Fair Value Measurement | Financial Instruments In determining the fair value of its financial instruments, the company uses a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. See note J, “Financial Assets & Liabilities,” for further information. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized. Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The company classifies certain assets and liabilities based on the following fair value hierarchy: • Level 1–Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date; • Level 2–Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and • Level 3–Unobservable inputs for the asset or liability. When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items as Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation. The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument. In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calculated using the methodologies described below for several parameters that market participants would consider in determining fair value: • Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument. • Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market. The company holds investments primarily in time deposits, certificates of deposit, and U.S. government debt that are designated as available-for-sale. The primary objective of the company’s cash and debt investment portfolio is to maintain principal by investing in very liquid and highly rated investment grade securities. Available-for-sale securities are measured for impairment on a recurring basis by comparing the security’s fair value with its amortized cost basis. Effective January 1, 2020 with the adoption of the new standard on credit losses, if the fair value of the security falls below its amortized cost basis, the change in fair value is recognized in the period the impairment is identified when the loss is due to credit factors. The change in fair value due to non-credit factors is recorded in other comprehensive income when the company does not intend to sell and has the ability to hold the investment. The company’s standard practice is to hold all of its debt security investments classified as available-for-sale until maturity. There were no impairments for credit losses and no material non-credit impairments recognized for the years ended December 31, 2021 and 2020. Prior to the adoption of the new standard, available-for-sale securities were measured for impairment using an other-than-temporary impairment model. No impairment was recorded for the year ended December 31, 2019. Certain nonfinancial assets such as property, plant and equipment, land, goodwill and intangible assets are subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for nonfinancial assets depend on the type of asset. There were no material impairments of nonfinancial assets for the years ended December 31, 2021, 2020 and 2019. |
Cash Equivalents | Cash Equivalents All highly liquid investments with maturities of three months or less at the date of purchase are considered to be cash equivalents. |
Marketable Securities | Marketable Securities The company measures equity investments at fair value with changes recognized in net income. Debt securities included in current assets represent securities that are expected to be realized in cash within one year of the balance sheet date. Long-term debt securities and alliance equity securities are included in investments and sundry assets. Debt securities are considered available-for-sale and are reported at fair value with unrealized gains and losses, net of applicable taxes, in OCI. The realized gains and losses on available-for-sale debt securities are included in other (income) and expense in the Consolidated Income Statement. Realized gains and losses are calculated based on the specific identification method. |
Inventory | Inventory Raw materials, work in process and finished goods are stated at the lower of average cost or net realizable value. |
Notes and Accounts Receivable-Trade and Contract Assets | Notes and Accounts Receivable—Trade and Contract Assets The company classifies the right to consideration in exchange for products or services transferred to a client as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional as compared to a contract asset which is a right to consideration that is conditional upon factors other than the passage of time. The majority of the company’s contract assets represent unbilled amounts related to design and build services contracts when the cost-to-cost method of revenue recognition is utilized, revenue recognized exceeds the amount billed to the client, and the right to consideration is subject to milestone completion or client acceptance. Contract assets are generally classified as current and are recorded on a net basis with deferred income (i.e., contract liabilities) at the contract level. |
Financing Receivables | Financing Receivables Financing receivables primarily consist of client loan and installment payment receivables (loans) and investment in sales-type and direct financing leases (collectively referred to as client financing receivables) and commercial financing receivables. Leases are accounted for in accordance with lease accounting standards. Loans, which are generally unsecured, are primarily for software and services. Commercial financing receivables are primarily for working capital financing to distributors and resellers of IBM products and services. Financing receivables are classified as either held for sale or held for investment, depending on the company’s intent and ability to hold the underlying contract for the foreseeable future or until maturity or payoff. Loans and commercial financing receivables are recorded at amortized cost, which approximates fair value. |
Transfers of Financial Assets | Transfers of Financial Assets The company enters into arrangements to sell certain financial assets (primarily notes and accounts receivable–trade and financing receivables) to third-party financial institutions. For a transfer of financial assets to be considered a sale, the asset must be legally isolated from the company and the purchaser must have control of the asset. Determining whether all the requirements have been met includes an evaluation of legal considerations, the extent of the company’s continuing involvement with the assets transferred and any other relevant consideration. When the true sale criteria are met, the company derecognizes the carrying value of the financial asset transferred and recognizes a net gain or loss on the sale. The proceeds from these arrangements are reflected as cash provided by operating activities in the Consolidated Statement of Cash Flows. If the true sale criteria are not met, the transfer is considered a secured borrowing and the financial asset remains on the Consolidated Balance Sheet with proceeds from the sale recognized as debt and recorded as cash flows from financing activities in the Consolidated Statement of Cash Flows. Arrangements to sell notes and accounts receivable–trade are used in the normal course of business as part of the company’s cash and liquidity management. Facilities primarily in the U.S., Canada and several countries in Europe enable the company to sell certain notes and accounts receivable–trade, without recourse, to third parties in order to manage credit, collection, concentration and currency risk. The gross amounts sold (the gross proceeds) under these arrangements were $1.8 billion, $2.2 billion and $1.4 billion for the years ended December 31, 2021, 2020 and 2019, respectively. Within the notes and accounts receivables–trade sold and derecognized from the Consolidated Balance Sheet, $0.7 billion, $0.4 billion, and $0.4 billion remained uncollected from customers at December 31, 2021, 2020 and 2019, respectively. The fees and the net gains and losses associated with the transfer of receivables were not material for any of the periods presented. Refer to note L, “Financing Receivables,” for more information on transfers of financing receivables. |
Allowance for Credit Losses - Financing Receivables | Allowance for Credit Losses Effective January 1, 2020, the company adopted the new accounting standard related to current expected credit losses. The standard applies to financial assets measured at amortized cost, including loans, net investments in leases, trade accounts receivable and certain off-balance sheet commitments. As of the effective date, the company estimates its allowance for current expected credit losses based on an expected loss model, compared to prior periods which were estimated using an incurred loss model. The impact related to adopting the new standard was not material. Certain changes resulting from the new standard impacted the company’s description of its significant accounting policies compared to 2019. For further information regarding the adoption of the new standard, see note B, “Accounting Changes.” Receivables are recorded concurrent with billing and shipment of a product and/or delivery of a service to customers. An allowance for uncollectible trade receivables and contract assets, if needed, is estimated based on specific customer situations, current and future expected economic conditions, past experiences of losses, as well as an assessment of potential recoverability of the balance due. The company estimates its allowances for expected credit losses for financing receivables by considering past events, including any historical default, historical concessions and resulting troubled debt restructurings, current economic conditions, any non-freestanding mitigating credit enhancements, and certain forward-looking information, including reasonable and supportable forecasts. As of January 1, 2020, the methodologies that the company uses to calculate its financing receivables reserves, which are applied consistently to its different portfolios, are as follows: Individually Evaluated– Collectively Evaluated– For client financing receivables, the company uses a credit loss model to calculate allowances based on its internal loss experience and current conditions and forecasts, by class of financing receivable. The company records an unallocated reserve that is calculated by applying a reserve rate to its portfolio, excluding accounts that have been individually evaluated and specifically reserved. This reserve rate is based upon credit rating, probability of default, term and loss history. The allowance is adjusted quarterly for expected recoveries of amounts that were previously written off or are expected to be written off. Recoveries cannot exceed the aggregated amount of the previous write-off or expected write-off. The company considers forward-looking macroeconomic variables such as gross domestic product, unemployment rates, equity prices and corporate profits when quantifying the impact of economic forecasts on its client financing receivables allowance for expected credit losses. Macroeconomic variables may vary by class of financing receivables based on historical experiences, portfolio composition and current environment. The company also considers the impact of current conditions and economic forecasts relating to specific industries, geographical areas, and client credit ratings, in addition to performing a qualitative review of credit risk factors across the portfolio. Under this approach, forecasts of these variables over two years are considered reasonable and supportable. Beyond two years, the company reverts to long-term average loss experience. Forward-looking estimates require the use of judgment, particularly in times of economic uncertainty. The portfolio of commercial financing receivables is short term in nature and any allowance for these assets is estimated based on a combination of write-off history and current economic conditions, excluding any individually evaluated accounts. Other Credit-Related Policies Past Due– Non-Accrual– may be removed from non-accrual status, if appropriate, based upon changes in client circumstances, such as a sustained history of payments. Write-Off– |
Leases | 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 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 the use of that asset. |
Accounting for Leases as a Lessee | Accounting for Leases as a Lessee 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 Balance Sheet. The lease liabilities are measured at the lease commencement date and determined using the present value of the 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. The company’s variable lease payments generally relate to payments tied to various indexes, non-lease components and payments above a contractual minimum fixed amount. Operating leases are included in operating right-of-use assets–net, current operating lease liabilities and operating lease liabilities in the Consolidated Balance Sheet. Finance leases are included in property, plant and equipment, short-term debt and long-term debt in the Consolidated Balance Sheet. The lease term includes options to extend or terminate the lease when it is reasonably certain that the company will exercise that option. The company made a policy election to not recognize leases with a lease term of 12 months or less in the Consolidated Balance Sheet. 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. The company also has equipment leases, such as IT equipment and vehicles, which have lease terms that range from two |
Accounting for Leases as a Lessor | 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. IBM equipment generally consists of IBM Z, Power and Storage products. 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, in an instance when the client requests to terminate the lease prior to the end of the lease term, the client would typically 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 at the then-current fair market value or at a pre-stated purchase price or renew the lease based on mutually agreed upon terms. 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 For 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 and the estimated residual value of the equipment less unearned income and allowance for credit losses. 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. Over the term of the lease, the company recognizes finance income 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 net 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. The company has insight into product plans and cycles for 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, or selling leased equipment to existing clients. The company manages residual value risk through insight into its own product cycles. 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 income. Operating Leases Equipment provided to clients under an operating lease is carried at cost within property, plant and equipment in the Consolidated Balance Sheet and depreciated over the lease term using the straight-line method, generally ranging from one At commencement of an operating lease, IDCs are deferred. As lease payments are made, the company records sales revenue over the lease term. IDCs are amortized 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. |
Common Stock | Common Stock Common stock refers to the $.20 par value per share capital stock as designated in the company’s Certificate of Incorporation. Treasury stock is accounted for using the cost method. When treasury stock is reissued, the value is computed and recorded using a weighted-average basis. |
Earnings Per Share of Common Stock | Earnings Per Share of Common Stock Earnings per share (EPS) is computed using the two-class method, which determines EPS for each class of common stock and participating securities according to dividends and dividend equivalents and their respective participation rights in undistributed earnings. Basic EPS of common stock is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS of common stock is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock awards, convertible notes and stock options. |
Accounting Changes | New Standards to be Implemented Disclosures about Government Assistance Standard/Description– Effective Date and Adoption Considerations– Effect on Financial Statements or Other Significant Matters– Lessors–Certain Leases with Variable Lease Payments Standard/Description– Effective Date and Adoption Considerations– Effect on Financial Statements or Other Significant Matters– Standards Implemented Revenue Contracts with Customers Acquired in a Business Combination Standard/Description– Effective Date and Adoption Considerations– Effect on Financial Statements or Other Significant Matters– Simplifying the Accounting for Income Taxes Standard/Description– Effective Date and Adoption Considerations – Effect on Financial Statements or Other Significant Matters– Reference Rate Reform Standard/Description– Effective Date and Adoption Considerations– Effect on Financial Statements or Other Significant Matters – Simplifying the Test for Goodwill Impairment Standard/Description– Effective Date and Adoption Considerations– Effect on Financial Statements or Other Significant Matters – Financial Instruments–Credit Losses Standard/Description– Effective Date and Adoption Considerations– Effect on Financial Statements or Other Significant Matters– For all other standards that the company adopted in the periods presented, there was no material impact in the consolidated financial results. |
Separation of Kyndryl | The accounting requirements for reporting the separation of Kyndryl as a discontinued operation were met when the separation was completed. Accordingly, the historical results of Kyndryl have been presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. Prior to the separation, Kyndryl was predominantly reported within the company’s Global Technology Services segment. For additional information relating to the company’s segments, refer to note E, “Segments.” The company’s presentation of discontinued operations excludes general corporate overhead costs which were historically allocated to Kyndryl, consistent with the company’s management system, that do not meet the requirements to be presented in discontinued operations. Such allocations include labor and non-labor expenses related to IBM’s corporate support functions (e.g., finance, accounting, tax, treasury, IT, HR, legal, among others) that historically provided support to Kyndryl and transferred to Kyndryl at separation. In addition, discontinued operations excludes the historical intercompany purchases and sales between IBM and Kyndryl that were eliminated in consolidation. |
Remaining Performance Obligations | Remaining Performance Obligations The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not include contracts that have an original duration of one year or less. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency. |
Segments | In the fourth quarter of 2021, immediately prior to the separation of Kyndryl, the company made a number of changes to its organizational structure and management system to align the company’s operating model to its platform-centric approach to hybrid cloud and AI. With these changes, the company revised its reportable segments, but did not impact its Consolidated Financial Statements. |
Segment Revenue and Pre-tax Income | 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 segments are determined based on several factors, including client base, homogeneity of products, technology, delivery channels and similar economic characteristics. With this organizational and management system change, the segments no longer include internal revenue. Certain transactions between the segments are recorded to other income and expense and are reflected in segment pre-tax income. After the Kyndryl separation, these transactions predominately represent loans between Financing and Infrastructure segments to facilitate the acquisition of equipment and software used in IBM IaaS services arrangements. The prior period revenue and pre-tax income presented in the tables below are reported on a comparable basis. The company utilizes globally integrated support organizations to realize economies of scale and efficient use of resources. As a result, a considerable amount of expense is shared by all of the segments. This shared expense includes sales coverage, certain marketing functions and support functions such as Accounting, Treasury, Procurement, Legal, Human Resources and Billing and Collections. Where practical, shared expenses are allocated based on measurable drivers of expense, e.g., headcount. When a clear and measurable driver cannot be identified, shared expenses are allocated on a financial basis that is consistent with the company’s management system, e.g., advertising expense is allocated based on the gross profits of the segments. A portion of the shared expenses, which are recorded in net income, are not allocated to the segments. These expenses are associated with the elimination of internal transactions and other miscellaneous items. The following tables reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company and have been recast for the prior-year periods due to the company’s segment changes in the fourth quarter of 2021. Performance measurement is based on pre-tax income from continuing operations, consistent with the company’s management and measurement system. These results are used, by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments. |
Segment Assets and Other Items | To ensure the efficient use of the company’s space and equipment, several segments may share leased or owned plant, property and equipment assets. Where assets are shared, landlord ownership of the assets is assigned to one segment and is not allocated to each user segment. This is consistent with the company’s management system and is reflected accordingly in the table below. In those cases, there will not be a precise correlation between segment pre-tax income and segment assets. Depreciation expense and capital expenditures that are reported by each segment also are consistent with the landlord ownership basis of asset assignment. Financing amounts for interest income reflect the income associated with Financing's external client transactions, as well as the income from investment in cash and marketable securities. Financing amounts for interest expense reflect the expense associated with the arm's length terms of the intercompany loans supporting Financing's external client transactions. Intercompany financing activities are recorded to other income and expense and are reflected in segment pre-tax income. |
Financial Assets and Liabilities Not Measured At Fair Value | 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 December 31, 2021 and 2020, 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 $44,917 million and $54,217 million, and the estimated fair value was $49,465 million and $61,460 million at December 31, 2021 and 2020, 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. |
Cash Payments Lease Costs | Cash payments related to variable lease costs and short-term leases are not included in the measurement of operating and finance lease liabilities |
Goodwill | The company performed its annual goodwill impairment test for all reporting units during the fourth quarter of 2021. Following the changes to the organizational structure, goodwill was reassigned to the reporting units using a relative fair value allocation approach. As a result, the company performed the quantitative goodwill impairment test for all affected reporting units. |
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. The following is a description of arrangements in which the company is the guarantor. |
Contingencies | The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any recorded liabilities, including any changes to such liabilities for the years ended December 31, 2021, 2020 and 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. |
Derivative Financial Instruments | The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations. |
Offsetting Derivatives | In the Consolidated Balance Sheet, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments.The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in restricted cash in the Consolidated Balance Sheet |
Derivatives, Methods of Accounting, Hedge Effectiveness | (3) The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing in net income each period. |
Separation of Kyndryl (Tables)
Separation of Kyndryl (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Separation of Kyndryl | |
Schedule of discontinued operations | ($ in millions) For the year ended December 31: 2021 * È 2020 * 2019 * Revenue $ 14,994 $ 18,441 $ 19,433 Cost of sales 11,270 13,651 14,478 Selling, general and administrative expense 1,865 1,638 1,726 Workforce rebalancing charges 35 887 158 RD&E and Other (income) and expense 80 124 116 Income from discontinued operations before income taxes $ 1,744 $ 2,142 $ 2,954 Provision for income taxes 714 ** 484 670 Income from discontinued operations, net of tax È È $ 1,030 $ 1,658 $ 2,285 * Excludes intercompany transactions between IBM and Kyndryl and general corporate overhead costs transferred to Kyndryl as discussed above. ** Includes tax charges related to the Kyndryl separation. È Represents 10 months of Kyndryl operations in 2021, versus a full year of Kyndryl operations in 2020 and 2019. È È Includes $(1) million, $89 million and $(4) million in 2021, 2020 and 2019, respectively, related to discontinued operations of Microelectronics, divested in 2015. ($ in millions) At December 31: 2020 Assets Current assets Notes and accounts receivable (net of allowances of $94) $ 1,361 Deferred costs 1,089 Prepaid expenses and other current assets 168 Total current assets of discontinued operations 2,618 Plant, rental machines and other property, net 3,835 Operating right-of-use assets, net 1,120 Deferred costs 1,300 Deferred taxes 837 Goodwill* 5,851 Other assets 203 Total non-current assets of discontinued operations 13,147 Total assets of discontinued operations $ 15,764 Liabilities Current liabilities Accounts payable $ 875 Compensation and benefits 384 Workforce reductions 449 Deferred income 854 Operating lease liabilities 322 Other accrued expenses and liabilities 936 Total current liabilities of discontinued operations 3,820 Long-term debt 138 Retirement and nonpension postretirement benefit obligations 1,063 Deferred income 543 Operating lease liabilities 854 Other liabilities 718 Total non-current liabilities of discontinued operations 3,317 Total liabilities of discontinued operations $ 7,136 * Goodwill allocated to discontinued operations represents the amount of goodwill attributable to Kyndryl which was determined on a relative fair value basis. ($ in millions) For the year ended December 31: 2021 * 2020 2019 Net cash provided by/(used in) operating activities $ 1,612 $ 4,403 $ 4,535 Net cash provided by/(used in) investing activities (380) (935) (1,113) * |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue Recognition | |
Schedule of disaggregation of revenue | Revenue by Major Products/Service Offerings ($ in millions) For the year ended December 31: 2021 2020 * 2019 * Hybrid Platform & Solutions $ 17,751 $ 16,321 $ 14,472 Transaction Processing 6,390 6,606 7,936 Total Software $ 24,141 $ 22,927 $ 22,408 Business Transformation $ 8,284 $ 7,193 $ 7,569 Technology Consulting 3,466 3,133 2,821 Application Operations 6,095 5,931 6,549 Total Consulting $ 17,844 $ 16,257 $ 16,939 Hybrid Infrastructure $ 8,167 $ 8,415 $ 9,176 Infrastructure Support 6,021 6,118 6,599 Total Infrastructure $ 14,188 $ 14,533 $ 15,774 Financing** $ 774 $ 975 $ 1,215 Other $ 404 $ 488 $ 1,378 Total Revenue $ 57,350 $ 55,179 $ 57,714 * Recast to reflect segment changes. ** Contains lease and loan/working capital financing arrangements which are not subject to the guidance on revenue from contracts with customers. |
Schedule of hybrid cloud revenue by segment | ($ in millions) For the year ended December 31: 2021 2020 2019 Software $ 8,713 $ 6,907 $ 4,099 Consulting 7,852 5,861 5,274 Infrastructure 3,645 4,039 4,183 Other—divested businesses — 32 279 Total $ 20,210 $ 16,838 $ 13,834 |
Schedule of disaggregation of revenue by geography | ($ in millions) For the year ended December 31: 2021 2020 2019 Americas $ 28,299 $ 27,119 $ 28,704 Europe/Middle East/Africa 17,447 16,767 17,282 Asia Pacific 11,604 11,293 11,728 Total $ 57,350 $ 55,179 $ 57,714 |
Schedule of reconciliation of contract balances | ($ in millions) At December 31: 2021 2020 Notes and accounts receivable—trade (net of allowances of $218 in 2021 and $260 in 2020) $ 6,754 $ 5,790 Contract assets* 471 425 Deferred income (current) 12,518 11,980 Deferred income (noncurrent) 3,577 3,758 * Included within prepaid expenses and other current assets in the Consolidated Balance Sheet. |
Schedule of notes and accounts receivable - trade allowance for credit losses | ($ in millions) January 1, 2021 Additions/(Releases) Write-offs Other * December 31, 2021 $ 260 $ (15) $ (28) $ 1 $ 218 January 1, 2020 Additions/(Releases) Write-offs Other * December 31, 2020 $ 235 $ 63 $ (39) $ 1 $ 260 * Primarily represents translation adjustments. |
Schedule of deferred contract costs | ($ in millions) At December 31: 2021 2020 Capitalized costs to obtain a contract $ 476 $ 572 Deferred costs to fulfill a contract Deferred setup costs 546 591 Other deferred fulfillment costs 1,000 1,004 Total deferred costs* $ 2,022 $ 2,168 * Of the total deferred costs, $1,097 million was current and $924 million was noncurrent at December 31, 2021 and $1,018 million was current and $1,150 million was noncurrent at December 31, 2020. |
Segments (Tables)
Segments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segments | |
Revenue and Pre-tax Income by Segment | ($ in millions) Total For the year ended December 31: Software Consulting Infrastructure Financing Segments 2021 Revenue $ 24,141 $ 17,844 $ 14,188 $ 774 $ 56,946 Pre-tax income from continuing operations 4,722 1,449 2,025 441 8,637 Revenue year-to-year change 5.3 % 9.8 % (2.4) % (20.6) % 4.1 % Pre-tax income year-to-year change 41.3 % 40.1 % 22.4 % (1.8) % 33.3 % Pre-tax income margin 19.6 % 8.1 % 14.3 % 57.0 % 15.2 % 2020* Revenue $ 22,927 $ 16,257 $ 14,533 $ 975 $ 54,691 Pre-tax income from continuing operations** 3,341 1,034 1,654 449 6,479 Revenue year-to-year change 2.3 % (4.0) % (7.9) % (19.8) % (2.9) % Pre-tax income year-to-year change (33.5) % (23.0) % (33.3) % (31.2) % (31.8) % Pre-tax income margin 14.6 % 6.4 % 11.4 % 46.1 % 11.8 % 2019* Revenue $ 22,408 $ 16,939 $ 15,774 $ 1,215 $ 56,336 Pre-tax income from continuing operations 5,025 1,344 2,481 652 9,502 * Recast to conform to 2021 presentation. ** Includes the impact of a $1.5 billion pre-tax charge for structural actions in the fourth quarter of 2020. The impact by segment was as follows: Software ($0.7 billion), Consulting ($0.4 billion), Infrastructure ($0.4 billion). The impact to Financing was immaterial. |
Reconciliation of segment revenue and pre-tax income to IBM as reported | Reconciliations of IBM as Reported ($ in millions) For the year ended December 31: 2021 2020 * 2019 * Revenue Total reportable segments $ 56,946 $ 54,691 $ 56,336 Other—divested businesses 70 101 1,010 Other revenue 335 387 368 Total revenue $ 57,350 $ 55,179 $ 57,714 0 0 ($ in millions) For the year ended December 31: 2021 2020 * 2019 * Pre-tax income from continuing operations Total reportable segments $ 8,637 $ 6,479 ** $ 9,502 Amortization of acquired intangible assets (1,838) (1,832) (1,271) Acquisition-related charges (43) (13) (423) Non-operating retirement-related (costs)/income (1,282) (1,073) (576) Kyndryl-related impacts 118 — — Elimination of internal transactions (7) (28) (21) Other—divested businesses 25 12 580 Unallocated corporate amounts and other (774) (973) (586) Total pre-tax income from continuing operations $ 4,837 $ 2,572 ** $ 7,206 * Recast to conform to 2021 presentation. Includes the impact of a $1.5 billion pre-tax charge for structural actions in the fourth quarter of 2020. |
Assets and Other Items by segment | ($ in millions) Total For the year ended December 31: Software Consulting Infrastructure Financing Segments 2021 Assets $ 59,336 $ 11,914 $ 11,766 $ 16,880 $ 99,896 Depreciation/amortization of intangibles** 1,204 250 1,399 49 2,902 Capital expenditures/investments in intangibles 565 55 792 33 1,444 Interest income — — — 628 628 Interest expense — — — 129 129 2020* Assets $ 58,558 $ 10,548 $ 12,378 $ 24,974 $ 106,458 Depreciation/amortization of intangibles** 1,237 207 1,419 120 2,983 Capital expenditures/investments in intangibles 548 26 1,093 41 1,709 Interest income — — — 834 834 Interest expense — — — 307 307 2019* Assets $ 58,230 $ 10,421 $ 12,002 $ 29,460 $ 110,113 Depreciation/amortization of intangibles** 676 179 1,348 186 2,389 Capital expenditures/investments in intangibles 517 45 612 57 1,230 Interest income — — — 1,133 1,133 Interest expense — — — 512 512 * Recast to conform to 2021 presentation. ** Segment pre-tax income from continuing operations does not include the amortization of acquired intangible assets. |
Reconciliation of assets to IBM as reported | ($ in millions) At December 31: 2021 2020 * 2019 * Assets Total reportable segments $ 99,896 $ 106,458 $ 110,113 Elimination of internal transactions (1,608) (4,686) (4,317) Other—divested businesses 193 254 1,942 Unallocated amounts Cash and marketable securities 6,222 12,463 7,271 Notes and accounts receivable 1,622 1,655 1,601 Deferred tax assets 7,158 8,175 4,917 Plant, other property and equipment 2,196 2,449 2,488 Operating right-of-use assets 1,945 2,368 2,531 Pension assets 9,848 7,557 6,819 Other 4,530 3,514 3,184 Total assets of discontinued operations** — 15,764 15,638 Total IBM consolidated assets $ 132,001 $ 155,971 $ 152,186 * Recast to conform to 2021 presentation. ** Refer to note C, “Separation of Kyndryl,” for additional information. |
Geographic Information | Revenue È ($ in millions) For the year ended December 31: 2021 2020 * 2019 * United States $ 22,893 $ 22,258 $ 23,389 Japan 5,648 5,680 5,755 Other countries 28,810 27,241 28,570 Total revenue $ 57,350 $ 55,179 $ 57,714 È Revenues are attributed to countries based on the location of the client. * Recast to conform to 2021 presentation. Plant and Other Property–Net ($ in millions) At December 31: 2021 2020 * 2019 * United States $ 3,375 $ 3,452 $ 3,513 Other countries 2,293 2,656 2,273 Total $ 5,668 $ 6,108 $ 5,785 * Recast to conform to 2021 presentation. Operating Right-of-Use Assets–Net ($ in millions) At December 31: 2021 2020 * 2019 * United States $ 1,148 $ 1,165 $ 1,305 Japan 398 532 599 Other countries 1,676 1,870 1,947 Total $ 3,222 $ 3,566 $ 3,850 * Recast to conform to 2021 presentation. |
Revenue by Classes of Similar Products or Services | ($ in millions) For the year ended December 31: 2021 2020 * 2019 * Software Software $ 20,098 $ 19,046 $ 18,574 Services 3,934 3,770 3,670 Systems 109 110 165 Consulting Services $ 17,563 $ 15,986 $ 16,663 Software 173 183 160 Systems 108 89 116 Infrastructure Maintenance $ 4,743 $ 4,804 $ 5,171 Servers 3,363 3,549 3,829 Services 2,616 2,656 2,927 Storage 1,908 1,813 1,936 Software 1,426 1,563 1,725 Used Equipment Sales** 131 149 186 Financing Financing $ 628 $ 834 $ 1,120 Used Equipment Sales 145 140 95 * Recast to conform to 2021 presentation. ** Represents Global Asset Recovery Service transferred from Financing segment. |
Acquisitions & Divestitures (Ta
Acquisitions & Divestitures (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Acquisitions & Divestitures | |
Business acquisition, goodwill segment allocation | ($ in billions) Goodwill Segment Allocated * Software $ 18.4 Consulting 1.1 Infrastructure 0.8 Total $ 20.3 ** * Approximately seven percent of the goodwill was determined to be deductible for tax purposes. ** Goodwill of approximately $2.7 billion related to the Red Hat acquisition was derecognized at the time of the Kyndryl separation. Refer to note A, “Significant Accounting Policies,” and note C, “Separation of Kyndryl,” for additional details. |
Business acquisition, pro forma information | ($ in millions) For the year ended December 31: 2019 Revenue $ 60,195 * Net income $ 7,438 * * Adjusted to reflect the Kyndryl separation. Refer to note A, “Significant Accounting Policies,” and note C, “Separation of Kyndryl,” for additional information. |
2021 Acquisitions | |
Acquisitions & Divestitures | |
Business acquisition, purchase price allocation | ($ in millions) Amortization Other Life (in Years) Turbonomic Acquisitions Current assets $ 126 $ 108 Property, plant and equipment/noncurrent assets — 12 Intangible assets Goodwill N/A 1,439 1,110 Client relationships 4 — 10 290 200 Completed technology 4 — 7 117 196 Trademarks 1 — 6 18 30 Total assets acquired $ 1,990 $ 1,656 Current liabilities 49 59 Noncurrent liabilities 113 84 Total liabilities assumed $ 161 $ 143 Total purchase price $ 1,829 $ 1,513 N/A–Not applicable |
2020 Acquisitions | |
Acquisitions & Divestitures | |
Business acquisition, purchase price allocation | ($ in millions) Amortization Allocated Life (in Years) Amount Current assets $ 35 Property, plant and equipment/noncurrent assets 7 Intangible assets Goodwill N/A 575 Client relationships 5—7 84 Completed technology 2—7 73 Trademarks 1—7 11 Total assets acquired $ 784 Current liabilities 19 Noncurrent liabilities 41 Total liabilities assumed $ 61 Total purchase price $ 723 N/A—Not applicable |
Red Hat, Inc. | |
Acquisitions & Divestitures | |
Business acquisition, purchase price allocation | ($ in millions) Amortization Allocated Life (in Years) Amount Current assets* $ 3,186 Property, plant and equipment/noncurrent assets 948 Intangible assets Goodwill N/A 22,985 Client relationships 10 7,215 Completed technology 9 4,571 Trademarks 20 1,686 Total assets acquired $ 40,592 Current liabilities** 1,395 Noncurrent liabilities 4,117 Total liabilities assumed $ 5,512 Total purchase price $ 35,080 * Includes $2.2 billion of cash and cash equivalents. ** Includes $485 million of short-term debt related to the convertible notes acquired from Red Hat that were recognized at their fair value on the acquisition date, which was fully settled as of October 1, 2019. N/A—Not applicable |
Taxes (Tables)
Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Taxes | |
Income before income taxes | ($ in millions) For the year ended December 31: 2021 2020 2019 Income/(loss) from continuing operations before income taxes U.S. operations $ (2,654) $ (2,349) $ (874) Non-U.S. operations 7,491 4,921 8,080 Total income from continuing operations before income taxes $ 4,837 $ 2,572 $ 7,206 |
Components of the provision for income taxes by geographic operations and taxing jurisdiction | ($ in millions) For the year ended December 31: 2021 2020 2019 U.S. operations $ (969) $ 1,913 $ (419) Non-U.S. operations 1,093 (3,273) 479 Total continuing operations provision for/(benefit from) income taxes $ 124 $ (1,360) $ 60 ($ in millions) For the year ended December 31: 2021 2020 2019 U.S. federal Current $ 374 $ 312 $ 327 Deferred (1,358) 1,102 (873) $ (984) $ 1,414 $ (546) U.S. state and local Current $ 161 $ 345 $ (55) Deferred (370) (358) (85) $ (209) $ (13) $ (140) Non-U.S. Current $ 1,342 $ 1,208 $ 1,376 Deferred (25) (3,969) (630) $ 1,317 $ (2,761) $ 746 Total continuing operations provision for/(benefit from) income taxes $ 124 $ (1,360) $ 60 Discontinued operations provision for/(benefit from) income taxes 714 484 670 Provision for social security, real estate, personal property and other taxes 3,227 3,199 3,304 Total taxes included in net income $ 4,065 $ 2,322 $ 4,034 |
Effective income tax rate reconciliation | For the year ended December 31: 2021 2020 2019 Statutory rate 21 % 21 % 21 % Enactment of U.S. tax reform — — 2 Tax differential on foreign income (10) (31) (14) Intra-entity IP sale — (37) — Domestic incentives (5) (9) (6) State and local (3) 0 (2) Other 0 3 0 Effective rate 3 % (53) % 1 % Percentages rounded for disclosure purposes. |
Components of deferred tax assets and liabilities | Deferred Tax Assets ($ in millions) At December 31: 2021 2020 Retirement benefits $ 3,142 $ 3,700 Leases 1,061 1,149 Share-based and other compensation 661 579 Domestic tax loss/credit carryforwards 1,619 1,746 Deferred income 630 661 Foreign tax loss/credit carryforwards 983 818 Bad debt, inventory and warranty reserves 390 324 Depreciation 249 139 Hedging losses 26 576 Restructuring charges 216 253 Accruals 305 483 Intangible assets 2,929 3,540 Capitalized research and development 2,161 1,387 Other 1,280 1,352 Gross deferred tax assets 15,652 16,707 Less: valuation allowance 883 850 Net deferred tax assets $ 14,769 $ 15,857 * Deferred Tax Liabilities ($ in millions) At December 31: 2021 2020 Goodwill and intangible assets $ 2,290 $ 2,635 GILTI deferred taxes 3,257 4,119 Leases and right-of-use assets 1,314 1,584 Depreciation 518 646 Retirement benefits 1,971 1,209 Software development costs 1,016 1,007 Deferred transition costs 42 200 Undistributed foreign earnings 131 276 Other 817 734 Gross deferred tax liabilities $ 11,356 $ 12,410 |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | ($ in millions) 2021 2020 2019 Balance at January 1 $ 8,568 $ 7,146 $ 6,759 Additions based on tax positions related to the current year 934 1,690 816 Additions for tax positions of prior years 247 159 779 Reductions for tax positions of prior years (including impacts due to a lapse of statute) (688) (408) (922) Settlements (352) (19) (286) Balance at December 31 $ 8,709 $ 8,568 $ 7,146 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share | |
Computation of basic and diluted earnings per share | ($ in millions except per share amounts) For the year ended December 31: 2021 2020 2019 Weighted-average number of shares on which earnings per share calculations are based Basic 895,990,771 890,348,679 887,235,105 Add—incremental shares under stock-based compensation plans 6,883,290 4,802,940 4,199,440 Add—incremental shares associated with contingently issuable shares 1,766,940 1,412,352 1,378,831 Assuming dilution 904,641,001 896,563,971 892,813,376 Income from continuing operations $ 4,712 $ 3,932 $ 7,146 Income/(loss) from discontinued operations, net of tax 1,030 1,658 2,285 Net income on which basic earnings per share is calculated $ 5,743 $ 5,590 $ 9,431 Income from continuing operations $ 4,712 $ 3,932 $ 7,146 Net income applicable to contingently issuable shares — (2) 0 Income from continuing operations on which diluted earnings per share is calculated $ 4,712 $ 3,930 $ 7,146 Income/(loss) from discontinued operations, net of tax, on which basic and diluted earnings per share is calculated 1,030 1,658 2,285 Net income on which diluted earnings per share is calculated $ 5,743 $ 5,588 $ 9,431 Earnings/(loss) per share of common stock Assuming dilution Continuing operations $ 5.21 $ 4.38 $ 8.00 Discontinued operations 1.14 1.85 2.56 Total $ 6.35 $ 6.23 $ 10.56 Basic Continuing operations $ 5.26 $ 4.42 $ 8.05 Discontinued operations 1.15 1.86 2.58 Total $ 6.41 $ 6.28 $ 10.63 |
Financial Assets & Liabilities
Financial Assets & Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Financial Assets & Liabilities | |
Financial assets and financial liabilities measured at fair value on a recurring basis | ($ in millions) Fair Value 2021 2020 At December 31: Hierarchy Level Assets (7) Liabilities (8) Assets (7) Liabilities (8) Cash equivalents (1) Time deposits and certificates of deposit (2) 2 $ 1,903 N/A $ 7,658 N/A Money market funds 1 263 N/A 148 N/A U.S. government securities (2) 2 599 N/A 500 N/A Total cash equivalents $ 2,766 N/A $ 8,306 N/A Equity investments (3) 1 0 N/A 2 N/A Kyndryl common stock 1 807 N/A — N/A Debt securities–current (2)(4) 2 600 N/A 600 N/A Debt securities–noncurrent (2)(5) 1,2,3 37 N/A 7 N/A Derivatives designated as hedging instruments Interest rate contracts 2 12 — 100 — Foreign exchange contracts 2 359 117 111 580 Derivatives not designated as hedging instruments Foreign exchange contracts 2 21 42 13 47 Equity contracts (6) 1,2 6 4 12 — Total $ 4,608 $ 162 $ 9,151 $ 627 (1) (2) (3) (4) (5) (6) (7) (8) N/A–Not applicable |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Inventory | |
Inventory | ($ in millions) At December 31: 2021 2020 Finished goods $ 208 $ 163 Work in process and raw materials 1,442 1,649 Total $ 1,649 $ 1,812 |
Financing Receivables (Tables)
Financing Receivables (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Financing Receivables | |
Summary of the components of financing receivables | ($ in millions) Client Financing Receivables Commercial Financing Receivables Client Loan and Investment in Installment Payment Sales-Type and Receivables/ Direct Financing Held for Held for At December 31, 2021: (Loans) Leases Investment Sale * Total Financing receivables, gross $ 9,303 $ 3,336 $ 450 $ 793 $ 13,881 Unearned income (353) (223) — — (576) Residual value** — 335 — — 335 Amortized cost $ 8,949 $ 3,448 $ 450 $ 793 $ 13,640 Allowance for credit losses (131) (64) (6) — (201) Total financing receivables, net $ 8,818 $ 3,384 $ 444 $ 793 $ 13,439 Current portion $ 5,371 $ 1,406 $ 444 $ 793 $ 8,014 Noncurrent portion $ 3,447 $ 1,978 $ — $ — $ 5,425 ($ in millions) Client Financing Receivables Commercial Financing Receivables È Client Loan and Investment in Installment Payment Sales-Type and Receivables/ Direct Financing Held for Held for At December 31, 2020: (Loans) Leases Investment Sale * Total Financing receivables, gross $ 12,159 $ 4,001 $ 2,036 $ 383 $ 18,580 Unearned income (488) (335) 0 — (823) Residual value** — 485 — — 485 Amortized cost $ 11,671 $ 4,151 $ 2,036 $ 383 $ 18,242 Allowance for credit losses (173) (82) (8) — (263) Total financing receivables, net $ 11,498 $ 4,069 $ 2,028 $ 383 $ 17,979 Current portion $ 6,955 $ 1,525 $ 2,028 $ 383 $ 10,892 Noncurrent portion $ 4,542 $ 2,544 $ — $ — $ 7,086 * The carrying value of the receivables classified as held for sale approximates fair value. ** Includes guaranteed and unguaranteed residual value. È Recast to conform to 2021 presentation. |
Schedule of transfer of client and commercial financing assets | ($ in millions) 2021 2020 Client financing receivables for the year ended December 31 Lease receivables $ 819 $ 1,152 Loan receivables 2,224 1,410 Total client financing receivables transferred* $ 3,043 $ 2,562 Commercial financing receivables Receivables transferred for the year ended December 31 $ 7,359 $ 515 Receivables transferred and uncollected as of December 31** 1,653 510 * More than half of the client financing receivables sold were classified as current assets at the time of sale. ** Of the total amount of commercial financing receivables sold and derecognized from the Consolidated Balance Sheet, the amounts presented remained uncollected from business partners as of December 31, 2021 and 2020. |
Schedule of financing receivables and allowance for credit losses by class | ($ in millions) At December 31, 2021: Americas EMEA Asia Pacific Total Amortized cost $ 6,573 $ 3,793 $ 2,031 $ 12,397 Allowance for credit losses Beginning balance at January 1, 2021 $ 141 $ 77 $ 37 $ 255 Write-offs (8) (2) (7) (17) Recoveries 0 0 1 1 Additions/(releases) (19) (11) (7) (38) Other* (3) (3) 0 (7) Ending balance at December 31, 2021 $ 111 $ 61 $ 23 $ 195 * Primarily represents translation adjustments. ($ in millions) At December 31, 2020: Americas EMEA Asia Pacific Total Amortized cost $ 7,758 $ 5,023 $ 3,042 $ 15,822 Allowance for credit losses Beginning balance at January 1, 2020 142 69 41 252 Write-offs (28) (3) (3) (34) Recoveries 0 0 2 3 Additions/(releases) 33 5 (4) 34 Other* (6) 6 1 1 Ending balance at December 31, 2020 $ 141 $ 77 $ 37 $ 255 * Primarily represents translation adjustments. |
Schedule of past due financing receivables | ($ in millions) Amortized Billed Amortized Total Amortized Cost Invoices Cost Amortized Cost > 90 Days and > 90 Days and Not At December 31, 2021: Cost > 90 Days (1) Accruing (1) Accruing Accruing (2) Americas $ 6,573 $ 188 $ 100 $ 6 $ 90 EMEA 3,793 99 7 2 95 Asia Pacific 2,031 25 5 2 20 Total client financing receivables $ 12,397 $ 312 $ 112 $ 10 $ 205 ($ in millions) Amortized Billed Amortized Total Amortized Cost Invoices Cost Amortized Cost > 90 Days and > 90 Days and Not At December 31, 2020: Cost > 90 Days (1) Accruing (1) Accruing Accruing (2) Americas $ 7,758 $ 295 $ 200 $ 12 $ 96 EMEA 5,023 119 28 5 95 Asia Pacific 3,042 42 12 4 32 Total client financing receivables $ 15,822 $ 456 $ 241 $ 20 $ 223 (1) At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days. (2) Of the amortized cost not accruing, there was a related allowance of $ 153 million and $ 178 million at December 31, 2021 and 2020, respectively. Financing income recognized on these receivables was immaterial for the years ended December 31, 2021 and 2020, respectively. |
Schedule of amortized cost by credit quality indicator | ($ in millions) Americas EMEA Asia Pacific At December 31, 2021: Aaa - Baa3 Ba1 - D Aaa - Baa3 Ba1 - D Aaa - Baa3 Ba1 - D Vintage year 2021 $ 2,556 $ 1,147 $ 1,181 $ 778 $ 565 $ 226 2020 1,013 392 506 342 381 86 2019 544 236 287 291 297 51 2018 338 117 189 85 211 64 2017 108 50 15 52 74 17 2016 and prior 20 53 21 46 38 20 Total $ 4,579 $ 1,994 $ 2,198 $ 1,595 $ 1,567 $ 464 ($ in millions) Americas EMEA Asia Pacific At December 31, 2020: Aaa - Baa3 Ba1 - D Aaa - Baa3 Ba1 - D Aaa - Baa3 Ba1 - D Vintage year 2020 $ 2,818 $ 1,449 $ 1,513 $ 1,427 $ 958 $ 351 2019 988 623 668 519 564 123 2018 829 360 329 245 419 167 2017 285 154 70 128 205 52 2016 90 52 33 46 114 33 2015 and prior 28 81 22 22 38 18 Total $ 5,038 $ 2,720 $ 2,635 $ 2,387 $ 2,298 $ 743 |
Property, Plant & Equipment (Ta
Property, Plant & Equipment (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant & Equipment | |
Schedule of property, plant & equipment | ($ in millions) At December 31: 2021 2020 Land and land improvements $ 224 $ 234 Buildings and building and leasehold improvements 6,049 6,407 Information technology equipment 10,515 9,840 Production, engineering, office and other equipment 3,222 3,354 Plant and other property—gross 20,010 19,836 Less: Accumulated depreciation 14,343 13,728 Plant and other property—net 5,668 6,108 Rental machines 74 265 Less: Accumulated depreciation 48 168 Rental machines—net 27 97 Total—net $ 5,694 $ 6,205 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases | |
Schedule of various components of lease costs | ($ in millions) For the year ended December 31: 2021 2020 2019 Finance lease cost $ 52 $ 35 $ 14 Operating lease cost 1,126 1,181 1,257 Short-term lease cost 21 28 24 Variable lease cost 336 343 364 Sublease income (46) (28) (22) Total lease cost $ 1,489 $ 1,558 $ 1,637 |
Schedule of supplemental information relating to the cash flows arising from lease transactions | ($ in millions) For the year ended December 31: 2021 2020 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash outflows from finance leases $ 8 $ 8 $ 7 Financing cash outflows from finance leases 42 25 4 Operating cash outflows from operating leases 1,135 1,212 1,154 ROU assets obtained in exchange for new finance lease liabilities 46 50 68 * ROU assets obtained in exchange for new operating lease liabilities 779 785 5,102 * * 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 for the year ended December 31, 2019 was $1,383 million for operating leases and immaterial for finance leases. |
Schedule of weighted-average lease terms and discount rates | At December 31: 2021 2020 Finance leases Weighted-average remaining lease term 4.1 yrs. 4.9 yrs. Weighted-average discount rate 0.88 % 1.08 % Operating leases Weighted-average remaining lease term 4.5 yrs. 4.7 yrs. Weighted-average discount rate 3.01 % 3.25 % |
Schedule of expected undiscounted cash out flows for operating and finance leases | ($ in millions) Imputed 2022 2023 2024 2025 2026 Thereafter Interest * Total ** Finance leases $ 43 $ 30 $ 18 $ 9 $ 8 $ 28 $ (36) $ 99 Operating leases 1,047 845 685 424 313 356 (234) 3,435 * Imputed interest represents the difference between undiscounted cash flows and discounted cash flows. ** The company entered into lease agreements for certain facilities and equipment with payments totaling approximately $202 million that have not yet commenced as of December 31, 2021, and therefore are not included in this table. |
Schedule of finance lease right of use assets and liability | ($ in millions) At December 31: 2021 2020 ROU Assets—Property, plant and equipment $ 86 $ 84 Lease Liabilities Short-term debt 36 30 Long-term debt 63 60 |
Schedule of amounts included in the Consolidated Income Statement related to lessor activity | ($ in millions) For the year ended December 31: 2021 2020 2019 Lease income—sales-type and direct financing leases Sales-type lease selling price $ 1,355 $ 1,321 $ 1,360 Less: Carrying value of underlying assets* (300) (410) (476) Gross profit 1,055 911 884 Interest income on lease receivables 179 249 303 Total sales-type and direct financing lease income 1,234 1,160 1,187 Lease income—operating leases 169 255 322 Variable lease income 120 115 56 Total lease income $ 1,523 $ 1,530 $ 1,565 * Excludes unguaranteed residual value. |
Schedule of maturity analysis of the lease payments due to IBM on sales-type and direct financing leases | ($ in millions) Total 2022 $ 1,528 2023 1,014 2024 555 2025 209 2026 27 Thereafter 1 Total undiscounted cash flows $ 3,336 Present value of lease payments (recognized as financing receivables) 3,113 * Difference between undiscounted cash flows and discounted cash flows $ 223 * The present value of the lease payments will not equal the financing receivables balances in the Consolidated Balance Sheet due to certain items including IDCs, allowance for credit losses and residual values, which are included in the financing receivable 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 | ($ in millions) Total 2022 $ 13 2023 4 2024 0 2025 0 2026 — Thereafter — Total undiscounted cash flows $ 17 |
Intangible Assets Including G_2
Intangible Assets Including Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Intangible Assets Including Goodwill | |
Intangible asset balances by major asset class | ($ in millions) Gross Carrying Accumulated Net Carrying At December 31, 2021: Amount Amortization Amount * Intangible asset class Capitalized software $ 1,696 $ (751) $ 945 Client relationships 9,021 (2,889) 6,132 Completed technology 6,074 (2,259) 3,815 Patents/trademarks 2,196 (586) 1,610 Other** 44 (35) 9 Total $ 19,031 $ (6,520) $ 12,511 * Includes a decrease in net intangible asset balance of $221 million due to foreign currency translation. ** Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. ($ in millions) Gross Carrying Accumulated Net Carrying At December 31, 2020: Amount Amortization Amount * Intangible asset class Capitalized software $ 1,777 $ (814) $ 963 Client relationships 8,708 (1,976) 6,732 Completed technology 5,937 (1,655) 4,283 Patents/trademarks 2,244 (499) 1,744 Other** 56 (39) 16 Total $ 18,722 $ (4,983) $ 13,739 * Includes an increase in net intangible asset balance of $279 million due to foreign currency translation. ** Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems. |
Intangible assets, future amortization expense | Capitalized Acquired ($ in millions) Software Intangibles Total 2022 $ 512 $ 1,818 $ 2,329 2023 313 1,513 1,826 2024 120 1,467 1,587 2025 0 1,450 1,450 2026 0 1,433 1,433 Thereafter — 3,886 3,886 |
Changes in goodwill balances by reportable segment | ($ in millions) Foreign Currency Purchase Translation Balance at Goodwill Price and Other Balance at Segment* January 1, 2021 Additions Adjustments Divestitures Adjustments ** December 31, 2021 Software $ 43,149 $ 1,836 $ 23 $ (13) $ (545) $ 44,450 Consulting 6,145 713 (21) — (40) 6,797 Infrastructure 4,436 — 0 — (39) 4,396 Other—divested businesses 36 — — (37) 1 — Total $ 53,765 $ 2,549 $ 2 $ (50) $ (623) $ 55,643 ($ in millions) Foreign Currency Purchase Translation Balance at Goodwill Price and Other Balance at Segment* January 1, 2020 Additions Adjustments Divestitures Adjustments ** December 31, 2020 Software $ 42,275 $ 362 $ (139) $ — $ 651 $ 43,149 Consulting 5,775 205 — — 165 6,145 Infrastructure 4,386 8 — — 42 4,436 Other—divested businesses 35 — — — 1 36 Total $ 52,471 $ 575 $ (139) $ — $ 859 $ 53,765 * Recast to reflect segment changes. ** Primarily driven by foreign currency translation. |
Investments & Sundry Assets (Ta
Investments & Sundry Assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Investments & Sundry Assets | |
Investments & Sundry Assets | ($ in millions) At December 31: 2021 2020 Derivatives—noncurrent $ 40 $ 151 Alliance investments Equity method 159 170 Non-equity method 47 46 Long-term deposits 205 231 Other receivables 181 423 Employee benefit-related 210 237 Prepaid income taxes 743 777 Other assets 237 153 Total $ 1,823 $ 2,187 |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Borrowings | |
Short-Term Debt | ($ in millions) At December 31: 2021 2020 Short-term loans $ 22 $ 130 Long-term debt—current maturities 6,764 6,986 Total $ 6,787 $ 7,116 |
Long-Term Debt | ($ in millions) At December 31: Maturities 2021 2020 U.S. dollar debt (weighted-average interest rate at December 31, 2021):* 1.3% 2021 $ — $ 5,499 2.6% 2022 5,673 6,233 3.4% 2023 1,573 2,395 3.3% 2024 5,016 5,029 6.9% 2025 608 631 3.3% 2026 4,356 4,370 3.0% 2027 2,221 2,219 6.5% 2028 313 313 3.5% 2029 3,250 3,250 2.0% 2030 1,350 1,350 5.9% 2032 600 600 8.0% 2038 83 83 4.5% 2039 2,745 2,745 2.9% 2040 650 650 4.0% 2042 1,107 1,107 7.0% 2045 27 27 4.7% 2046 650 650 4.3% 2049 3,000 3,000 3.0% 2050 750 750 7.1% 2096 316 316 $ 34,290 $ 41,218 Other currencies (weighted-average interest rate at December 31, 2021, in parentheses):* Euro (1.1%) 2023-2040 $ 15,903 $ 18,355 Pound sterling (2.6%) 2022 406 411 Japanese yen (0.3%) 2022-2026 1,263 1,409 Other (11.3%) 2022-2025 378 324 $ 52,240 $ 61,718 Finance lease obligations (1.8%) 2022-2030 99 91 $ 52,339 $ 61,808 Less: net unamortized discount 839 875 Less: net unamortized debt issuance costs 130 156 Add: fair value adjustment** 311 426 $ 51,681 $ 61,203 Less: current maturities 6,764 6,986 Total $ 44,917 $ 54,217 * Includes notes, debentures, bank loans and secured borrowings. ** The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Balance Sheet as an amount equal to the sum of the debt’s carrying value and a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates. |
Post-Swap Borrowing (Long-Term Debt, Including Current Portion) | ($ in millions) 2021 2020 Weighted-Average Weighted-Average For the year ended December 31: Amount Interest Rate Amount Interest Rate Fixed-rate debt $ 49,976 2.8 % $ 53,237 2.7 % Floating-rate debt* 1,705 2.6 % 7,966 1.1 % Total $ 51,681 $ 61,203 * Includes $425 million and $2,975 million in 2021 and 2020, respectively, of notional interest-rate swaps that effectively convert fixed-rate long-term debt into floating-rate debt. Refer to note U, “Derivative Financial Instruments,” for additional information. |
Pre-swap annual contractual obligations of long-term debt outstanding | ($ in millions) Total 2022 $ 6,765 2023 4,848 2024 6,391 2025 4,015 2026 4,719 Thereafter 25,601 Total $ 52,339 |
Interest on Debt | ($ in millions) For the year ended December 31: 2021 2020 2019 Cost of financing $ 392 $ 451 $ 608 Interest expense 1,155 1,288 1,344 Interest capitalized 3 5 4 Total interest paid and accrued $ 1,550 $ 1,743 $ 1,956 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other Liabilities | |
Other Liabilities | ($ in millions) At December 31: 2021 2020 Income tax reserves $ 6,179 $ 5,274 Excess 401(k) Plus Plan 1,686 1,635 Disability benefits 359 385 Derivative liabilities 103 40 Workforce reductions 752 886 Deferred taxes 3,956 4,958 Other taxes payable 72 253 Environmental accruals 224 246 Warranty accruals 29 33 Asset retirement obligations 92 84 Acquisition related 218 60 Divestiture related 47 63 Other 278 263 Total $ 13,996 $ 14,180 |
Commitments & Contingencies (Ta
Commitments & Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments & Contingencies | |
Changes in warranty liabilities | Standard Warranty Liability ($ in millions) 2021 2020 Balance at January 1 $ 83 $ 113 Current period accruals 82 83 Accrual adjustments to reflect experience (1) (16) Charges incurred (86) (96) Balance at December 31 $ 77 $ 83 Extended Warranty Liability (Deferred Income) ($ in millions) 2021 2020 Balance at January 1 $ 425 $ 477 Revenue deferred for new extended warranty contracts 133 166 Amortization of deferred revenue (198) (224) Other* (10) 6 Balance at December 31 $ 350 $ 425 Current portion $ 163 $ 204 Noncurrent portion $ 186 $ 221 * Other consists primarily of foreign currency translation adjustments. |
Equity Activity (Tables)
Equity Activity (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Equity Activity | |
Reclassifications and taxes related to items of other comprehensive income | ($ in millions) Before Tax Tax (Expense)/ Net of Tax For the year ended December 31, 2021: Amount Benefit Amount Other comprehensive income/(loss) Foreign currency translation adjustments $ 987 $ (414) $ 573 Net changes related to available-for-sale securities Unrealized gains/(losses) arising during the period $ 0 $ 0 $ 0 Reclassification of (gains)/losses to other (income) and expense — — — Total net changes related to available-for-sale securities $ 0 $ 0 $ 0 Unrealized gains/(losses) on cash flow hedges Unrealized gains/(losses) arising during the period $ 344 $ (89) $ 256 Reclassification of (gains)/losses to: Cost of services (43) 11 (32) Cost of sales 16 (3) 13 Cost of financing 22 (6) 17 SG&A expense 24 (6) 19 Other (income) and expense 157 (40) 118 Interest expense 65 (16) 49 Total unrealized gains/(losses) on cash flow hedges $ 587 $ (149) $ 438 Retirement-related benefit plans (1) Prior service costs/(credits) $ (51) $ (1) $ (52) Net (losses)/gains arising during the period 2,433 (601) 1,832 Curtailments and settlements 94 (11) 83 Amortization of prior service (credits)/costs 9 0 9 Amortization of net (gains)/losses 2,484 (528) 1,956 Total retirement-related benefit plans $ 4,969 $ (1,140) $ 3,828 Other comprehensive income/(loss) $ 6,542 $ (1,703) $ 4,839 (1) ($ in millions) Before Tax Tax (Expense)/ Net of Tax For the year ended December 31, 2020: Amount Benefit Amount Other comprehensive income/(loss) Foreign currency translation adjustments $ (1,500) $ 535 $ (965) Net changes related to available-for-sale securities Unrealized gains/(losses) arising during the period $ (1) $ 0 $ 0 Reclassification of (gains)/losses to other (income) and expense — — — Total net changes related to available-for-sale securities $ (1) $ 0 $ 0 Unrealized gains/(losses) on cash flow hedges Unrealized gains/(losses) arising during the period $ (349) $ 89 $ (261) Reclassification of (gains)/losses to: Cost of services (23) 6 (18) Cost of sales (2) 1 (2) Cost of financing 27 (7) 20 SG&A expense 0 0 0 Other (income) and expense (101) 25 (75) Interest expense 78 (20) 58 Total unrealized gains/(losses) on cash flow hedges $ (370) $ 94 $ (277) Retirement-related benefit plans (1) Prior service costs/(credits) $ (37) $ 7 $ (29) Net (losses)/gains arising during the period (1,678) 295 (1,383) Curtailments and settlements 52 (14) 38 Amortization of prior service (credits)/costs 13 (1) 12 Amortization of net (gains)/losses 2,314 (451) 1,863 Total retirement-related benefit plans $ 664 $ (163) $ 501 Other comprehensive income/(loss) $ (1,206) $ 466 $ (740) (1) ($ in millions) Before Tax Tax (Expense)/ Net of Tax For the year ended December 31, 2019: Amount Benefit Amount Other comprehensive income/(loss) Foreign currency translation adjustments $ (39) $ 29 $ (10) Net changes related to available-for-sale securities Unrealized gains/(losses) arising during the period $ 1 $ 0 $ 1 Reclassification of (gains)/losses to other (income) and expense — — — Total net changes related to available-for-sale securities $ 1 $ 0 $ 1 Unrealized gains/(losses) on cash flow hedges Unrealized gains/(losses) arising during the period $ (689) $ 167 $ (522) Reclassification of (gains)/losses to: Cost of services (68) 17 (50) Cost of sales (51) 15 (37) Cost of financing 89 (22) 67 SG&A expense (53) 14 (39) Other (income) and expense (39) 10 (29) Interest expense 197 (50) 148 Total unrealized gains/(losses) on cash flow hedges $ (614) $ 151 $ (463) Retirement-related benefit plans (1) Prior service costs/(credits) $ (73) $ 10 $ (63) Net (losses)/gains arising during the period (120) 52 (68) Curtailments and settlements 41 (12) 29 Amortization of prior service (credits)/costs (9) 5 (4) Amortization of net (gains)/losses 1,843 (371) 1,471 Total retirement-related benefit plans $ 1,681 $ (316) $ 1,365 Other comprehensive income/(loss) $ 1,029 $ (136) $ 893 (1) |
Accumulated other comprehensive income/(loss) (net of tax) | ($ in millions) Net Change Net Unrealized Net Unrealized Foreign Retirement- Gains/(Losses) Accumulated Gains/(Losses) Currency Related on Available- Other on Cash Flow Translation Benefit For-Sale Comprehensive Hedges Adjustments * Plans Securities Income/(Loss) December 31, 2018 $ 284 $ (3,690) $ (26,083) $ 0 $ (29,490) Other comprehensive income before reclassifications (522) (10) (131) 1 (663) Amount reclassified from accumulated other comprehensive income 59 — 1,496 — 1,556 Total change for the period (463) (10) 1,365 1 893 December 31, 2019 (179) (3,700) (24,718) 0 (28,597) Other comprehensive income before reclassifications (261) (965) (1,412) 0 (2,638) Amount reclassified from accumulated other comprehensive income (16) — 1,914 — 1,898 Total change for the period (277) (965) 501 0 (740) December 31, 2020 (456) (4,665) (24,216) 0 (29,337) Other comprehensive income before reclassifications 256 573 1,780 0 2,608 Amount reclassified from accumulated other comprehensive income 183 — 2,049 — 2,231 Separation of Kyndryl** — 730 534 — 1,264 Total change for the period 438 1,303 4,362 0 6,103 December 31, 2021 $ (18) $ (3,362) $ (19,854) $ (1) $ (23,234) * Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax. ** Refer to note C, “Separation of Kyndryl,” for additional information. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Derivative Financial Instruments | |
Amounts related to cumulative basis adjustments for fair value hedges | ($ in millions) At December 31: 2021 2020 Short-term debt Carrying amount of the hedged item $ (227) $ (1,302) Cumulative hedging adjustments included in the carrying amount—assets/(liabilities) (2) (2) Long-term debt Carrying amount of the hedged item (508) (2,097) Cumulative hedging adjustments included in the carrying amount—assets/(liabilities)* (309) (424) * Includes ($302) million and ($353) million of hedging adjustments on discontinued hedging relationships at December 31, 2021 and 2020, respectively. |
Effect of derivative instruments in the consolidated income statement | ($ in millions) Gains/(Losses) of Total Total Hedge Activity For the year ended December 31: 2021 2020 2019 2021 2020 2019 Cost of services $ 19,147 $ 17,689 $ 19,009 $ 43 $ 23 $ 68 Cost of sales 6,184 6,048 * 6,467 * (16) 2 51 Cost of financing 534 577 * 704 * 1 12 (42) SG&A expense 18,745 20,561 18,724 176 141 267 Other (income) and expense 873 802 (1,012) (205) 101 (15) Interest expense 1,155 1,288 1,344 3 35 (93) * Reclassifed to conform to 2021 presentation. ($ in millions) Gain/(Loss) Recognized in Consolidated Income Statement Consolidated Recognized on Attributable to Risk Income Statement Derivatives Being Hedged (2) For the year ended December 31: Line Item 2021 2020 2019 2021 2020 2019 Derivative instruments in fair value hedges (1) Interest rate contracts Cost of financing $ (1) $ 20 $ 44 $ 18 $ 4 $ (32) Interest expense (2) 58 98 53 11 (71) Derivative instruments not designated as hedging instruments Foreign exchange contracts Other (income) (48) 1 (53) N/A N/A N/A Equity contracts SG&A expense 201 142 214 N/A N/A N/A Total $ 150 $ 220 $ 302 $ 71 $ 14 $ (103) ($ in millions) Gain/(Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income Consolidated Reclassified Amounts Excluded from For the year ended Recognized in OCI Income Statement from AOCI Effectiveness Testing (3) December 31: 2021 2020 2019 Line Item 2021 2020 2019 2021 2020 2019 Derivative instruments in cash flow hedges Interest rate contracts $ — $ — $ (168) Cost of financing $ (4) $ (5) $ (3) $ — $ — $ — Interest expense (13) (13) (8) — — — Foreign exchange contracts 344 (349) (521) Cost of services 43 23 68 — — — Cost of sales (16) 2 51 — — — Cost of financing (18) (23) (86) — — — SG&A expense (24) 0 53 — — — Other (income) (157) 101 39 — — — Interest expense (52) (65) (190) — — — Instruments in net investment hedges (4) Foreign exchange contracts 1,644 (2,127) (95) Cost of financing — — — 6 16 35 Interest expense — — — 17 45 77 Total $ 1,989 $ (2,477) $ (784) $ (243) $ 21 $ (75) $ 23 $ 60 $ 112 (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 with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries. N/A–Not applicable |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stock-Based Compensation | |
Stock-based compensation cost included in income from continuing operations | ($ in millions) For the year ended December 31: 2021 2020 2019 Cost $ 145 $ 126 $ 85 SG&A expense 555 550 419 RD&E expense 218 197 125 Pre-tax stock-based compensation cost 919 873 628 Income tax benefits (223) (198) (143) Net stock-based compensation cost $ 695 $ 675 $ 484 |
Summary of Restricted Stock Units activity | RSUs PSUs Weighted-Average Weighted-Average Grant Price Number of Units Grant Price Number of Units Balance at January 1, 2019 $ 130 9,802,704 $ 136 2,419,695 Awards granted 119 5,650,861 117 1,395,534 Awards released 136 (3,145,016) 140 (846,672) Awards canceled/forfeited/performance adjusted 128 (981,921) 131 (112,107) * Balance at December 31, 2019 $ 123 11,326,628 $ 126 2,856,450 ** Awards granted 115 10,651,955 117 1,582,666 Awards released 126 (3,781,240) 137 (630,974) Awards canceled/forfeited/performance adjusted 121 (1,300,639) 125 (256,642) * Balance at December 31, 2020 $ 117 16,896,704 $ 120 3,551,500 ** Awards granted 125 9,566,307 129 1,561,120 Awards released 120 (4,582,159) 129 (581,397) Awards canceled/forfeited/performance adjusted 119 (2,072,800) 124 (453,178) * Kyndryl separation - adjustment — 660,089 — 120,428 Kyndryl separation - cancellation 119 (1,429,661) 119 (469,616) Balance at December 31, 2021 $ 116 19,038,480 $ 118 3,728,857 ** * Includes adjustments of (223,397), (70,089) and (8,544) PSUs for 2021, 2020 and 2019, respectively, because final performance metrics were above or below specified targets. ** Represents the number of shares expected to be issued based on achievement of grant date performance targets. The actual number of shares issued will depend on final performance against specified targets over the vesting period. |
Summary of Performance Share Units activity | RSUs PSUs Weighted-Average Weighted-Average Grant Price Number of Units Grant Price Number of Units Balance at January 1, 2019 $ 130 9,802,704 $ 136 2,419,695 Awards granted 119 5,650,861 117 1,395,534 Awards released 136 (3,145,016) 140 (846,672) Awards canceled/forfeited/performance adjusted 128 (981,921) 131 (112,107) * Balance at December 31, 2019 $ 123 11,326,628 $ 126 2,856,450 ** Awards granted 115 10,651,955 117 1,582,666 Awards released 126 (3,781,240) 137 (630,974) Awards canceled/forfeited/performance adjusted 121 (1,300,639) 125 (256,642) * Balance at December 31, 2020 $ 117 16,896,704 $ 120 3,551,500 ** Awards granted 125 9,566,307 129 1,561,120 Awards released 120 (4,582,159) 129 (581,397) Awards canceled/forfeited/performance adjusted 119 (2,072,800) 124 (453,178) * Kyndryl separation - adjustment — 660,089 — 120,428 Kyndryl separation - cancellation 119 (1,429,661) 119 (469,616) Balance at December 31, 2021 $ 116 19,038,480 $ 118 3,728,857 ** * Includes adjustments of (223,397), (70,089) and (8,544) PSUs for 2021, 2020 and 2019, respectively, because final performance metrics were above or below specified targets. ** Represents the number of shares expected to be issued based on achievement of grant date performance targets. The actual number of shares issued will depend on final performance against specified targets over the vesting period. |
Summary of total fair value of RSUs and PSUs granted and vested | ($ in millions) For the year ended December 31: 2021 2020 2019 RSUs Granted $ 1,195 $ 1,220 $ 674 Vested 549 478 428 PSUs Granted $ 201 $ 186 $ 164 Vested 75 86 118 |
Retirement-Related Benefits (Ta
Retirement-Related Benefits (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Retirement-Related Benefits | |
Pre-tax cost for all retirement-related plans | ($ in millions) U.S. Plans Non-U.S. Plans Total For the year ended December 31: 2021 2020 2019 2021 2020 2019 2021 2020 2019 Defined benefit pension plans $ 303 $ 167 $ (153) $ 1,119 $ 1,057 $ 842 $ 1,422 $ 1,224 $ 689 Retention Plan 16 11 11 — — — 16 11 11 Total defined benefit pension plans (income)/cost $ 319 $ 178 $ (142) $ 1,119 $ 1,057 $ 842 $ 1,438 $ 1,235 $ 700 IBM 401(k) Plus Plan and non-U.S. plans $ 561 $ 585 $ 588 $ 409 $ 403 $ 389 $ 971 $ 988 $ 976 Excess 401(k) 21 27 26 — — — 21 27 26 Total defined contribution plans cost $ 582 $ 612 $ 613 $ 409 $ 403 $ 389 $ 992 $ 1,015 $ 1,002 Nonpension postretirement benefit plans cost $ 127 $ 145 $ 154 $ 44 $ 57 $ 64 $ 172 $ 202 $ 218 Total retirement-related benefits net periodic cost $ 1,029 $ 934 $ 624 $ 1,573 $ 1,517 $ 1,295 $ 2,601 $ 2,451 $ 1,920 |
Summary of the total PBO for defined benefit plans, APBO for nonpension postretirement benefit plans, fair value of plan assets and associated funded status | ($ in millions) Benefit Obligations Fair Value of Plan Assets Funded Status * At December 31: 2021 2020 2021 2020 2021 2020 U.S. Plans Overfunded plans Qualified PPP $ 46,458 $ 50,375 $ 51,852 $ 54,386 $ 5,395 $ 4,011 Underfunded plans Excess PPP $ 1,441 $ 1,556 $ — $ — $ (1,441) $ (1,556) Retention Plan 283 306 — — (283) (306) Nonpension postretirement benefit plan 3,404 3,791 8 15 (3,395) (3,776) Total underfunded U.S. plans $ 5,128 $ 5,652 $ 8 $ 15 $ (5,119) $ (5,638) Non-U.S. Plans Overfunded plans Qualified defined benefit pension plans** $ 21,617 $ 20,504 $ 26,071 $ 24,051 $ 4,454 $ 3,546 Nonpension postretirement benefit plans — 9 — 9 — 0 Total overfunded non-U.S. plans $ 21,617 $ 20,513 $ 26,071 $ 24,060 $ 4,454 $ 3,546 Underfunded plans Qualified defined benefit pension plans** $ 17,360 $ 23,207 $ 13,908 $ 18,257 $ (3,452) $ (4,950) Nonqualified defined benefit pension plans 6,120 6,736 — — (6,120) (6,736) Nonpension postretirement benefit plans 638 747 31 31 (607) (716) Total underfunded non-U.S. plans $ 24,118 $ 30,690 $ 13,939 $ 18,288 $ (10,179) $ (12,402) Total overfunded plans $ 68,075 $ 70,888 $ 77,924 $ 78,445 $ 9,850 $ 7,557 Total underfunded plans $ 29,246 $ 36,342 $ 13,947 $ 18,302 $ (15,300) $ (18,040) * Funded status is recognized in the Consolidated Balance Statement as follows: Asset amounts as prepaid pension assets; (Liability) amounts as compensation and benefits (current liability) and retirement and nonpension postretirement benefit obligations (noncurrent liability). ** Non-U.S. qualified plans represent plans funded outside of the U.S. Non-U.S. nonqualified plans are unfunded. |
Components of net periodic (income)/cost of the company's retirement-related benefit plans | ($ in millions) Defined Benefit Pension Plans U.S. Plans Non-U.S. Plans For the year ended December 31: 2021 2020 2019 2021 2020 2019 Service cost $ — $ — $ — $ 300 $ 328 $ 304 Interest cost (1) 1,109 1,501 1,882 424 541 814 Expected return on plan assets (1) (1,802) (2,169) (2,599) (1,115) (1,229) (1,530) Amortization of transition assets (1) — — — — — 0 Amortization of prior service costs/(credits) (1) 16 16 16 (12) (9) (25) Recognized actuarial losses (1) 996 829 559 1,392 1,336 1,190 Curtailments and settlements (1) — — — 94 49 38 Multi-employer plans — — — 17 23 23 Other costs/(credits) — — — 18 18 28 Total net periodic (income)/cost $ 319 $ 178 $ (142) $ 1,119 $ 1,057 $ 842 ($ in millions) Nonpension Postretirement Benefit Plans U.S. Plan Non-U.S. Plans For the year ended December 31: 2021 2020 2019 2021 2020 2019 Service cost $ 7 $ 9 $ 10 $ 4 $ 4 $ 4 Interest cost (1) 65 103 145 27 35 54 Expected return on plan assets (1) — — — (3) (4) (5) Amortization of transition assets (1) — — — — — — Amortization of prior service costs/(credits) (1) 4 4 (2) 0 0 0 Recognized actuarial losses (1) 52 29 1 15 21 10 Curtailments and settlements (1) — — — 0 0 0 Other costs/(credits) — — — 0 0 — Total net periodic cost $ 127 $ 145 $ 154 $ 44 $ 57 $ 64 (1) These components of net periodic pension costs are included in other (income) and expense in the Consolidated Income Statement. |
Changes in benefit obligations | ($ in millions) Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans 2021 2020 2021 2020 2021 2020 2021 2020 Change in benefit obligation Benefit obligation at January 1 $ 52,237 $ 50,232 $ 50,447 $ 45,947 $ 3,791 $ 3,857 $ 756 $ 830 Service cost — — 300 328 7 9 4 4 Interest cost 1,109 1,501 424 541 65 103 27 35 Plan participants' contributions — — 19 18 50 56 — — Acquisitions/divestitures, net — 1 (70) 63 — — 6 0 Actuarial losses/(gains) (1,582) 4,071 (876) 2,794 (141) 135 (78) (2) Benefits paid from trust (3,459) (3,445) (2,090) (1,908) (369) (369) (6) (4) Direct benefit payments (125) (123) (516) (391) (1) 0 (28) (24) Foreign exchange impact — — (2,548) 3,085 — — (42) (83) Amendments/curtailments/ settlements/other 1 0 7 (29) 3 — (1) (1) Benefit obligation at December 31 $ 48,182 $ 52,237 $ 45,097 $ 50,447 $ 3,404 $ 3,791 $ 638 $ 756 Change in plan assets Fair value of plan assets at January 1 $ 54,386 $ 51,784 $ 42,308 $ 38,891 $ 15 $ 3 $ 40 $ 52 Actual return on plan assets 924 6,046 1,686 2,559 — 0 (14) 2 Employer contributions — — 86 166 313 325 6 — Acquisitions/divestitures, net — 1 (87) 106 — — — — Plan participants' contributions — — 19 18 50 56 — — Benefits paid from trust (3,459) (3,445) (2,090) (1,908) (369) (369) (6) (4) Foreign exchange impact — — (1,939) 2,479 — — 6 (10) Amendments/curtailments/ settlements/other 1 — (4) (2) 0 0 0 0 Fair value of plan assets at December 31 $ 51,852 $ 54,386 $ 39,979 $ 42,308 $ 8 $ 15 $ 31 $ 40 Funded status at December 31 $ 3,671 $ 2,149 $ (5,118) $ (8,140) $ (3,395) $ (3,776) $ (607) $ (716) Accumulated benefit obligation* $ 48,182 $ 52,237 $ 44,628 $ 50,019 N/A N/A N/A N/A * Represents the benefit obligation assuming no future participant compensation increases. N/A–Not applicable |
Changes in plan assets | ($ in millions) Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans 2021 2020 2021 2020 2021 2020 2021 2020 Change in benefit obligation Benefit obligation at January 1 $ 52,237 $ 50,232 $ 50,447 $ 45,947 $ 3,791 $ 3,857 $ 756 $ 830 Service cost — — 300 328 7 9 4 4 Interest cost 1,109 1,501 424 541 65 103 27 35 Plan participants' contributions — — 19 18 50 56 — — Acquisitions/divestitures, net — 1 (70) 63 — — 6 0 Actuarial losses/(gains) (1,582) 4,071 (876) 2,794 (141) 135 (78) (2) Benefits paid from trust (3,459) (3,445) (2,090) (1,908) (369) (369) (6) (4) Direct benefit payments (125) (123) (516) (391) (1) 0 (28) (24) Foreign exchange impact — — (2,548) 3,085 — — (42) (83) Amendments/curtailments/ settlements/other 1 0 7 (29) 3 — (1) (1) Benefit obligation at December 31 $ 48,182 $ 52,237 $ 45,097 $ 50,447 $ 3,404 $ 3,791 $ 638 $ 756 Change in plan assets Fair value of plan assets at January 1 $ 54,386 $ 51,784 $ 42,308 $ 38,891 $ 15 $ 3 $ 40 $ 52 Actual return on plan assets 924 6,046 1,686 2,559 — 0 (14) 2 Employer contributions — — 86 166 313 325 6 — Acquisitions/divestitures, net — 1 (87) 106 — — — — Plan participants' contributions — — 19 18 50 56 — — Benefits paid from trust (3,459) (3,445) (2,090) (1,908) (369) (369) (6) (4) Foreign exchange impact — — (1,939) 2,479 — — 6 (10) Amendments/curtailments/ settlements/other 1 — (4) (2) 0 0 0 0 Fair value of plan assets at December 31 $ 51,852 $ 54,386 $ 39,979 $ 42,308 $ 8 $ 15 $ 31 $ 40 Funded status at December 31 $ 3,671 $ 2,149 $ (5,118) $ (8,140) $ (3,395) $ (3,776) $ (607) $ (716) Accumulated benefit obligation* $ 48,182 $ 52,237 $ 44,628 $ 50,019 N/A N/A N/A N/A * Represents the benefit obligation assuming no future participant compensation increases. N/A–Not applicable |
Accumulated benefit obligation | ($ in millions) Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans 2021 2020 2021 2020 2021 2020 2021 2020 Change in benefit obligation Benefit obligation at January 1 $ 52,237 $ 50,232 $ 50,447 $ 45,947 $ 3,791 $ 3,857 $ 756 $ 830 Service cost — — 300 328 7 9 4 4 Interest cost 1,109 1,501 424 541 65 103 27 35 Plan participants' contributions — — 19 18 50 56 — — Acquisitions/divestitures, net — 1 (70) 63 — — 6 0 Actuarial losses/(gains) (1,582) 4,071 (876) 2,794 (141) 135 (78) (2) Benefits paid from trust (3,459) (3,445) (2,090) (1,908) (369) (369) (6) (4) Direct benefit payments (125) (123) (516) (391) (1) 0 (28) (24) Foreign exchange impact — — (2,548) 3,085 — — (42) (83) Amendments/curtailments/ settlements/other 1 0 7 (29) 3 — (1) (1) Benefit obligation at December 31 $ 48,182 $ 52,237 $ 45,097 $ 50,447 $ 3,404 $ 3,791 $ 638 $ 756 Change in plan assets Fair value of plan assets at January 1 $ 54,386 $ 51,784 $ 42,308 $ 38,891 $ 15 $ 3 $ 40 $ 52 Actual return on plan assets 924 6,046 1,686 2,559 — 0 (14) 2 Employer contributions — — 86 166 313 325 6 — Acquisitions/divestitures, net — 1 (87) 106 — — — — Plan participants' contributions — — 19 18 50 56 — — Benefits paid from trust (3,459) (3,445) (2,090) (1,908) (369) (369) (6) (4) Foreign exchange impact — — (1,939) 2,479 — — 6 (10) Amendments/curtailments/ settlements/other 1 — (4) (2) 0 0 0 0 Fair value of plan assets at December 31 $ 51,852 $ 54,386 $ 39,979 $ 42,308 $ 8 $ 15 $ 31 $ 40 Funded status at December 31 $ 3,671 $ 2,149 $ (5,118) $ (8,140) $ (3,395) $ (3,776) $ (607) $ (716) Accumulated benefit obligation* $ 48,182 $ 52,237 $ 44,628 $ 50,019 N/A N/A N/A N/A * Represents the benefit obligation assuming no future participant compensation increases. N/A–Not applicable |
Net funded status | ($ in millions) Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans At December 31: 2021 2020 2021 2020 2021 2020 2021 2020 Prepaid pension assets $ 5,395 $ 4,011 $ 4,455 $ 3,546 $ 0 $ 0 $ 0 $ 0 Current liabilities—compensation and benefits (123) (122) (359) (342) (364) (346) (19) (46) Noncurrent liabilities—retirement and nonpension postretirement benefit obligations (1,601) (1,740) (9,215) (11,344) (3,031) (3,430) (588) (670) Funded status—net $ 3,671 $ 2,149 $ (5,118) $ (8,140) $ (3,395) $ (3,776) $ (607) $ (716) |
Pre-tax net loss and prior service costs/(credits) and transition (assets)/liabilities recognized in OCI and changes in pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in AOCI | ($ in millions) Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans 2021 2020 2021 2020 2021 2020 2021 2020 Net loss at January 1 $ 15,972 $ 16,608 $ 16,310 $ 16,361 $ 656 $ 551 $ 263 $ 284 Current period loss/(gain) (704) 194 (1,411) 1,334 (141) 135 (65) 0 Curtailments and settlements — — (94) (49) — — 0 0 Amortization of net loss included in net periodic (income)/cost (996) (829) (1,392) (1,336) (52) (29) (15) (21) Net loss at December 31 $ 14,273 $ 15,972 $ 13,412 $ 16,310 $ 464 $ 656 $ 183 $ 263 Prior service costs/(credits) at January 1 $ 24 $ 41 $ 325 $ 280 $ 30 $ 34 $ (4) $ (4) Current period prior service costs/(credits) — — 60 36 — — 0 — Curtailments, settlements and other — — — 0 — — — — Amortization of prior service (costs)/credits included in net periodic (income)/cost (16) (16) 12 9 (4) (4) 0 0 Prior service costs/(credits) at December 31 $ 8 $ 24 $ 397 $ 325 $ 26 $ 30 $ (4) $ (4) Transition (assets)/liabilities at January 1 $ — $ — $ 0 $ 0 $ — $ — $ 0 $ 0 Amortization of transition assets/(liabilities) included in net periodic (income)/cost — — — 0 — — 0 0 Transition (assets)/liabilities at December 31 $ — $ — $ 0 $ 0 $ — $ — $ 0 $ 0 Total loss recognized in accumulated other comprehensive income/(loss)* $ 14,281 $ 15,997 $ 13,809 $ 16,635 $ 490 $ 687 $ 179 $ 259 * Refer to note T, “Equity Activity,” for the total change in AOCI, and the Consolidated Statement of Comprehensive Income for the components of net periodic (income)/cost, including the related tax effects, recognized in OCI for the retirement-related benefit plans. |
Assumptions used to measure the net periodic (income)/cost and year-end benefit obligations | Defined Benefit Pension Plans U.S. Plans Non-U.S. Plans 2021 2020 2019 2021 2020 2019 Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 Discount rate 2.20 % 3.10 % 4.10 % 0.87 % 1.20 % 1.86 % Expected long-term returns on plan assets 3.75 % 4.50 % 5.25 % 2.85 % 3.36 % 4.38 % Rate of compensation increase N/A N/A N/A 2.59 % 2.32 % 2.20 % Interest crediting rate 1.10 % 2.70 % 3.60 % 0.26 % 0.28 % 0.30 % Weighted-average assumptions used to measure benefit obligations at December 31 Discount rate 2.60 % 2.20 % 3.10 % 1.26 % 0.87 % 1.20 % Rate of compensation increase N/A N/A N/A 3.02 % 2.59 % 2.32 % Interest crediting rate 1.10 % 1.10 % 2.70 % 0.26 % 0.26 % 0.28 % N/A–Not applicable Nonpension Postretirement Benefit Plans U.S. Plan Non-U.S. Plans 2021 2020 2019 2021 2020 2019 Weighted-average assumptions used to measure net periodic cost for the year ended December 31 Discount rate 1.80 % 2.80 % 3.90 % 4.55 % 5.08 % 4.88 % Expected long-term returns on plan assets N/A N/A N/A 6.62 % 7.73 % 7.70 % Interest crediting rate 1.10 % 2.70 % 3.60 % N/A N/A N/A Weighted-average assumptions used to measure benefit obligations at December 31 Discount rate 2.30 % 1.80 % 2.80 % 5.35 % 4.55 % 5.08 % Interest crediting rate 1.10 % 1.10 % 2.70 % N/A N/A N/A N/A–Not applicable |
Defined benefit pension plans' asset classes and their associated fair value | ($ in millions) U.S. Plan Non-U.S. Plans Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Equity Equity securities (1) $ 2,023 $ 0 $ — $ 2,023 $ 485 $ — $ — $ 485 Equity mutual funds (2) 133 — — 133 0 — — 0 Fixed income Government and related (3) — 21,751 — 21,751 — 9,900 — 9,900 Corporate bonds (4) — 16,246 598 16,844 — 3,842 — 3,842 Mortgage and asset-backed securities — 660 — 660 — 3 — 3 Fixed income mutual funds (5) 281 — — 281 — — — — Insurance contracts (6) — — — — — 5,662 — 5,662 Cash and short-term investments (7) 104 1,269 — 1,373 324 403 — 728 Real estate — — — — — — 174 174 Derivatives (8) 3 3 — 5 61 489 — 550 Other mutual funds (9) — — — — 30 — — 30 Subtotal 2,543 39,930 598 43,070 900 20,300 174 21,374 Investments measured at net asset value using the NAV practical expedient (10) — — — 9,078 — — — 18,652 Other (11) — — — (296) — — — (47) Fair value of plan assets $ 2,543 $ 39,930 $ 598 $ 51,852 $ 900 $ 20,300 $ 174 $ 39,979 (1) Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $2 million. Non-U.S. Plans include IBM common stock of $2 million. (2) Invests in predominantly equity securities. (3) Includes debt issued by national, state and local governments and agencies. (4) The U.S. Plans include IBM corporate bonds of $19 million. Non-U.S. Plans include IBM corporate bonds of $4 million. (5) Invests predominantly in fixed-income securities. (6) Primarily represents insurance policy contracts (Buy-In) in certain non-U.S. plans. (7) Includes cash, cash equivalents and short-term marketable securities. (8) Includes interest-rate derivatives, forwards, exchange-traded and other over-the-counter derivatives. (9) Invests in both equity and fixed-income securities. (10) (11) ($ in millions) U.S. Plan Non-U.S. Plans Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Equity Equity securities (1) $ 2,714 $ 0 $ — $ 2,714 $ 466 $ 0 $ — $ 466 Equity mutual funds (2) 105 — — 105 0 — — 0 Fixed income Government and related (3) — 21,375 — 21,375 — 9,599 2 9,601 Corporate bonds (4) — 18,217 542 18,759 — 3,690 — 3,690 Mortgage and asset-backed securities — 612 — 612 — 3 — 3 Fixed income mutual funds (5) 470 — — 470 — — — — Insurance contracts (6) — — — — — 6,378 — 6,378 Cash and short-term investments (7) 76 1,001 — 1,077 337 651 — 988 Real estate — — — — — — 298 298 Derivatives (8) (3) 18 — 15 66 510 — 575 Other mutual funds (9) — — — — 21 — — 21 Subtotal 3,363 41,222 542 45,128 891 20,832 300 22,023 Investments measured at net asset value using the NAV practical expedient (10) — — — 9,579 — — — 20,321 Other (11) — — — (321) — — — (37) Fair value of plan assets $ 3,363 $ 41,222 $ 542 $ 54,386 $ 891 $ 20,832 $ 300 $ 42,308 (1) Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $6 million. Non-U.S. Plans include IBM common stock of $1 million. (2) Invests in predominantly equity securities. (3) Includes debt issued by national, state and local governments and agencies. (4) Non-U.S. Plans include IBM corporate bonds of $5 million. (5) Invests in predominantly fixed-income securities. (6) Primarily represents insurance policy contracts (Buy-In) in certain non-U.S. plans. (7) Includes cash, cash equivalents and short-term marketable securities. (8) Includes interest-rate derivatives, forwards, exchange-traded and other over-the-counter derivatives. (9) Invests in both equity and fixed-income securities. (10) (11) |
Reconciliation of the beginning and ending balances of Level 3 assets | ($ in millions) Total * Balance at January 1, 2021 $ 542 Return on assets held at end of year (15) Return on assets sold during the year 1 Purchases, sales and settlements, net 63 Transfers, net 6 Balance at December 31, 2021 $ 598 * Corporate bonds. ($ in millions) Total * Balance at January 1, 2020 $ 518 Return on assets held at end of year 29 Return on assets sold during the year 0 Purchases, sales and settlements, net (5) Transfers, net 0 Balance at December 31, 2020 $ 542 * Corporate bonds. The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2021 and 2020 for the non-U.S. Plans. ($ in millions) Government Private and Related Real Estate Total Balance at January 1, 2021 $ 2 $ 298 $ 300 Return on assets held at end of year 0 (43) (43) Return on assets sold during the year 0 58 58 Purchases, sales and settlements, net (2) (138) (140) Transfers, net — — — Foreign exchange impact 0 (1) (1) Balance at December 31, 2021 $ — $ 174 $ 174 ($ in millions) Government Private and Related Real Estate Total Balance at January 1, 2020 $ 2 $ 328 $ 330 Return on assets held at end of year 0 (29) (29) Return on assets sold during the year — 2 2 Purchases, sales and settlements, net — (14) (14) Transfers, net — 4 4 Foreign exchange impact 0 7 7 Balance at December 31, 2020 $ 2 $ 298 $ 300 |
Schedule of contributions and direct benefit payments | ($ in millions) For the years ended December 31: 2021 2020 Non-U.S. DB plans $ 86 $ 166 Nonpension postretirement benefit plans 319 325 Multi-employer plans 17 23 DC plans 992 1,015 Direct benefit payments 671 538 Total $ 2,085 $ 2,066 |
Total expected benefit payments | ($ in millions) Qualified Nonqualified Qualified Nonqualified Total Expected U.S. Plan U.S. Plans Non-U.S. Plans Non-U.S. Plans Benefit Payments Payments Payments Payments Payments 2022 $ 3,488 $ 124 $ 1,968 $ 342 $ 5,922 2023 3,450 123 1,949 320 5,842 2024 3,419 121 1,959 328 5,827 2025 3,348 119 1,976 331 5,774 2026 3,244 116 1,972 337 5,670 2027-2031 14,524 532 9,438 1,624 26,117 ($ in millions) Qualified Nonqualified Total Expected U.S. Plan Non-U.S. Plans Non-U.S. Plans Benefit Payments Payments Payments Payments 2022 $ 377 $ 16 $ 25 $ 418 2023 380 17 25 422 2024 363 18 24 405 2025 339 19 24 382 2026 316 20 24 360 2027-2031 1,156 115 115 1,386 |
Defined benefit pension plans with accumulated benefit obligations (ABO) in excess of plan assets | ($ in millions) 2021 2020 Benefit Plan Benefit Plan At December 31: Obligation Assets Obligation Assets Plans with PBO in excess of plan assets $ 25,204 $ 13,908 $ 31,805 $ 18,257 Plans with ABO in excess of plan assets 24,853 13,908 31,465 18,257 Plans with plan assets in excess of PBO 68,075 77,924 70,879 78,436 |
Schedule of nonpension postretirement benefit plan with APBO in excess of plan assets | ($ in millions) 2021 2020 Benefit Plan Benefit Plan At December 31: Obligation Assets Obligation Assets Plans with APBO in excess of plan assets $ 4,042 $ 40 $ 4,537 $ 45 Plans with plan assets in excess of APBO — — 9 9 |
Significant Accounting Polici_3
Significant Accounting Policies - Basis of Presentation (Details) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2020USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Nov. 03, 2021 | Jul. 09, 2019 | |
Net benefit | $ 900 | |||||
Income tax expense benefit, change in foreign tax law. | $ (200) | |||||
Kyndryl Holdings, Inc | ||||||
Ownership interest by stockholders (in percent) | 19.90% | |||||
Total of Kyndryl stock distributed to IBM stockholders of record as of 10/25/2021 (as a percentage) | 80.10% | |||||
Ownership interest (as a percent) | 19.90% | |||||
Share conversion ratio | 0.2 | |||||
Other (income) and expense | ||||||
Noncontrolling interest amounts, net of tax | $ 19 | $ 13 | $ 16 | |||
Red Hat, Inc. | ||||||
Percentage of business acquired (as a percent) | 100.00% |
Significant Accounting Polici_4
Significant Accounting Policies - Billing and Financing Components (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue | |
Payment due period from receipt of invoice, per standard billing terms | 30 days |
Practical expedient, financing components | true |
Significant Accounting Polici_5
Significant Accounting Policies - Revenue Recognition for Major Categories of Revenue (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Amount of revenue deferred and recognized over the shipping period | $ 0 | |
Services. | ||
Disaggregation of Revenue [Line Items] | ||
Deferred income | 3,460 | $ 3,604 |
Contract assets | 430 | 376 |
Unbilled services accounts receivable included in notes and accounts receivable - trade | $ 723 | $ 650 |
Services. | Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Contract term, high end of range | 10 years | |
Services. | Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Contract term, low end of range | 1 year | |
Open Source Software | ||
Disaggregation of Revenue [Line Items] | ||
Standalone selling price | $ 0 | |
Allocation of consideration to open source software license | 0 | |
Revenue recognized when control is transferred to client | $ 0 |
Significant Accounting Polici_6
Significant Accounting Policies - Software Costs (Details) - Capitalized software - Maximum | 12 Months Ended |
Dec. 31, 2021 | |
Intangible assets | |
Amortization period | 3 years |
Cost of sales | |
Intangible assets | |
Amortization period | 3 years |
SG&A expense or Cost of sales | |
Intangible assets | |
Amortization period | 3 years |
Significant Accounting Polici_7
Significant Accounting Policies - Incremental Costs of Obtaining a Contract (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Incremental Costs of Obtaining a Contract | |
Practical expedient, incremental costs of obtaining a contract | true |
Minimum | |
Incremental Costs of Obtaining a Contract | |
Capitalized costs to obtain contract, expected customer relationship period as amortization period | 3 years |
Maximum | |
Incremental Costs of Obtaining a Contract | |
Capitalized costs to obtain contract, expected customer relationship period as amortization period | 6 years |
Significant Accounting Polici_8
Significant Accounting Policies - Product Warranties (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Minimum | |
Product Warranties | |
Product warranty term | 1 year |
Maximum | |
Product Warranties | |
Product warranty term | 3 years |
Significant Accounting Polici_9
Significant Accounting Policies - Advertising and Promotional Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Significant Accounting Policies | |||
Advertising and promotional expense | $ 1,413 | $ 1,509 | $ 1,591 |
Significant Accounting Polic_10
Significant Accounting Policies - Depreciation (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Buildings | Minimum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 30 years |
Buildings | Maximum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 50 years |
Building equipment | Minimum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 10 years |
Building equipment | Maximum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 20 years |
Land improvements | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 20 years |
Production, engineering, office and other equipment | Minimum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 2 years |
Production, engineering, office and other equipment | Maximum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 20 years |
Information technology equipment | Minimum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 1 year 6 months |
Information technology equipment | Maximum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 5 years |
Leasehold improvements | Maximum | |
Depreciation and amortization | |
Estimated useful lives of certain depreciable assets | 25 years |
Significant Accounting Polic_11
Significant Accounting Policies - Amortization (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Capitalized software | Maximum | |
Intangible assets | |
Amortization period | 3 years |
Other** | Minimum | |
Intangible assets | |
Amortization period | 1 year |
Other** | Maximum | |
Intangible assets | |
Amortization period | 20 years |
Significant Accounting Polic_12
Significant Accounting Policies - Stock-Based Compensation (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Performance Share Units | |
Stock-Based Compensation | |
Vesting period | 3 years |
Minimum | Restricted Stock Units | |
Stock-Based Compensation | |
Vesting period | 1 year |
Maximum | Restricted Stock Units | |
Stock-Based Compensation | |
Vesting period | 5 years |
Significant Accounting Polic_13
Significant Accounting Policies - Fair Value Measurement (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Significant Accounting Policies | |||
Impairment for credit losses | $ 0 | $ 0 | |
Available-for-sale securities impairment | $ 0 |
Significant Accounting Polic_14
Significant Accounting Policies - Transfers of Financial Assets (Details) - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Significant Accounting Policies | |||
Gross proceeds from transfers of notes and accounts receivable trade | $ 1.8 | $ 2.2 | $ 1.4 |
Accounts receivable sold and derecognized that remain uncollected from customers | $ 0.7 | $ 0.4 | $ 0.4 |
Significant Accounting Polic_15
Significant Accounting Policies - Financing Receivables (Details) | 12 Months Ended |
Dec. 31, 2021segmentitem | |
Financing receivables | |
Number of portfolio segments | segment | 2 |
Number of classes of financing receivable | item | 3 |
Client Financing Receivables | |
Financing receivables | |
Period after which financing receivables become past due | 90 days |
Maximum | |
Financing receivables | |
Reasonable and supportable economic forecast duration | 2 years |
Significant Accounting Polic_16
Significant Accounting Policies - Leases (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Existence of Option to Extend [true false] | true |
Lessee, Operating Lease, Existence of Option to Terminate [true false] | true |
Lease, Practical Expedient, Lessor Single Lease Component [true false] | true |
Real estate | Weighted-Average | |
Lessee, Lease, Description [Line Items] | |
Lease terms (in years) | 5 years |
Equipment leases | Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease terms (in years) | 2 years |
Equipment leases | Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease terms (in years) | 5 years |
Rental machines | Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 1 year |
Rental machines | Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 4 years |
Significant Accounting Polic_17
Significant Accounting Policies - Common Stock (Details) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Significant Accounting Policies | ||
Common stock, Par value (in dollars per share) | $ 0.20 | $ 0.20 |
Accounting Changes - Credit Los
Accounting Changes - Credit Losses (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Accounting Changes | ||
Net deferred taxes | $ (7,370) | $ (8,404) |
Retained earnings | $ 154,209 | 162,717 |
Cumulative Effect, Period of Adoption, Adjustment | ||
Accounting Changes | ||
Retained earnings | (66) | |
Accounting Standards Update 2016-13 | Cumulative Effect, Period of Adoption, Adjustment | ||
Accounting Changes | ||
Allowance for credit losses | 81 | |
Net deferred taxes | (14) | |
Retained earnings | $ (66) |
Separation of Kyndryl (Details)
Separation of Kyndryl (Details) $ in Millions | Nov. 03, 2021USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Discontinued Operations | |||||
Net cash flow from dividend distribution | $ 879 | ||||
Kyndryl Holdings, Inc | |||||
Discontinued Operations | |||||
Kyndryl stock distributed to IBM stockholders | 80.10% | ||||
Share conversion ratio | 0.2 | ||||
Period in which shares are intended to be disposed of after separation | 12 months | ||||
Aggregate amount of debt issued | $ 2,900 | $ 2,900 | |||
Net cash flow from dividend distribution | $ 879 | ||||
Upgraded hardware period | 2 years | ||||
Kyndryl Holdings, Inc | Maximum | |||||
Discontinued Operations | |||||
Transition services period | 2 years | ||||
Kyndryl Holdings, Inc | Accrued expenses and other liabilities | |||||
Discontinued Operations | |||||
Estimated obligation | 265 | $ 265 | |||
Kyndryl Holdings, Inc | Senior unsecured fixed rate notes | |||||
Discontinued Operations | |||||
Aggregate amount of debt issued | 2,400 | 2,400 | |||
Kyndryl Holdings, Inc | Variable-rate term loan | |||||
Discontinued Operations | |||||
Aggregate amount of debt issued | $ 500 | 500 | |||
Term of debt instrument | 3 years | ||||
Kyndryl Holdings, Inc | |||||
Discontinued Operations | |||||
Kyndryl stock distributed to IBM stockholders | 80.10% | ||||
Ownership interest by stockholders (in percent) | 19.90% | ||||
Share conversion ratio | 0.2 | ||||
Managed infrastructure services unit | Disposed by separation | |||||
Discontinued Operations | |||||
Separation costs | $ 1,042 | $ 21 | $ 0 |
Separation of Kyndryl - Major c
Separation of Kyndryl - Major categories of income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Discontinued Operations | |||
Provision for income taxes | $ 714 | $ 484 | $ 670 |
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent, Total | 1,030 | 1,658 | 2,285 |
Managed infrastructure services unit | Disposed by separation | |||
Discontinued Operations | |||
Revenue | 14,994 | 18,441 | 19,433 |
Cost of sales | 11,270 | 13,651 | 14,478 |
Selling, general and administrative | 1,865 | 1,638 | 1,726 |
Restructuring charges | 35 | 887 | 158 |
RD&E and Other (income) and expense | 80 | 124 | 116 |
Income from discontinued operations before income taxes | 1,744 | 2,142 | 2,954 |
Provision for income taxes | 714 | 484 | 670 |
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent, Total | 1,030 | 1,658 | 2,285 |
Microelectronics Business | |||
Discontinued Operations | |||
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent, Total | $ (1) | $ 89 | $ (4) |
Separation of Kyndryl - Major_2
Separation of Kyndryl - Major classes of assets and liabilities (Details) $ in Millions | Dec. 31, 2020USD ($) |
Current assets | |
Total current assets of discontinued operations | $ 2,618 |
Total non-current assets of discontinued operations | 13,147 |
Current liabilities | |
Total current liabilities of discontinued operations | 3,820 |
Total non-current liabilities of discontinued operations | 3,317 |
Managed infrastructure services unit | Disposed by separation | |
Current assets | |
Notes and accounts receivable (net of allowances of $94) | 1,361 |
Deferred costs | 1,089 |
Prepaid expenses and other current assets | 168 |
Total current assets of discontinued operations | 2,618 |
Plant, rental machines and other property, net | 3,835 |
Operating right-of-use assets, net | 1,120 |
Deferred costs | 1,300 |
Deferred taxes | 837 |
Goodwill | 5,851 |
Other assets | 203 |
Total non-current assets of discontinued operations | 13,147 |
Total assets of discontinued operations | 15,764 |
Current liabilities | |
Accounts payable | 875 |
Compensation and benefits | 384 |
Restructuring liabilities | 449 |
Deferred income | 854 |
Operating lease liabilities | 322 |
Other accrued expenses and liabilities | 936 |
Total current liabilities of discontinued operations | 3,820 |
Long-term debt | 138 |
Retirement and nonpension postretirement benefit obligations | 1,063 |
Deferred income | 543 |
Operating lease liabilities | 854 |
Other liabilities | 718 |
Total non-current liabilities of discontinued operations | 3,317 |
Total liabilities of discontinued operations | 7,136 |
Allowance for credit loss on notes and accounts receivable | $ 94 |
Separation of Kyndryl - Net Imp
Separation of Kyndryl - Net Impact to stockholders equity (Details) - USD ($) $ in Millions | Nov. 03, 2021 | Dec. 31, 2021 |
Divestitures | ||
Shares retained (as percent) | 19.90% | |
Kyndryl Holdings, Inc | ||
Divestitures | ||
Ownership interest by stockholders (in percent) | 19.90% | |
Shares retained, net book value | $ 681 | |
Managed infrastructure services unit | Disposed by separation | ||
Divestitures | ||
Increase in stockholders equity | $ (7,203) | |
Managed infrastructure services unit | Disposed by separation | Retained Earnings | ||
Divestitures | ||
Increase in stockholders equity | (8,404) | |
Managed infrastructure services unit | Disposed by separation | Accumulated Other Comprehensive Income/(Loss) | ||
Divestitures | ||
Increase in stockholders equity | 1,264 | |
Managed infrastructure services unit | Disposed by separation | Non-Controlling Interests | ||
Divestitures | ||
Increase in stockholders equity | $ (62) |
Separation of Kyndryl - Cash fl
Separation of Kyndryl - Cash flows (Details) - Managed infrastructure services unit - Disposed by separation - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Divestitures | |||
Net cash provided by operating activities - discontinued operations | $ 1,612 | $ 4,403 | $ 4,535 |
Net cash provided by/(used in) investing activities - discontinued operations | $ (380) | $ (935) | $ (1,113) |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue by Major Products and Service Offerings (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue by Major Products/Service Offerings | |||
Total Revenue | $ 57,350 | $ 55,179 | $ 57,714 |
Business Segments | |||
Revenue by Major Products/Service Offerings | |||
Total Revenue | 56,946 | 54,691 | 56,336 |
Other | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 404 | 488 | 1,378 |
Software | Business Segments | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 24,141 | 22,927 | 22,408 |
Total Revenue | 24,141 | 22,927 | 22,408 |
Consulting | Business Segments | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 17,844 | 16,257 | 16,939 |
Total Revenue | 17,844 | 16,257 | 16,939 |
Infrastructure | Business Segments | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 14,188 | 14,533 | 15,774 |
Total Revenue | 14,188 | 14,533 | 15,774 |
Financing | Business Segments | |||
Revenue by Major Products/Service Offerings | |||
Financial Services Revenue | 774 | 975 | 1,215 |
Total Revenue | 774 | 975 | 1,215 |
Hybrid Platform & Solutions | Software | Business Segments | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 17,751 | 16,321 | 14,472 |
Transaction Processing | Software | Business Segments | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 6,390 | 6,606 | 7,936 |
Business Transformation | Consulting | Business Segments | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 8,284 | 7,193 | 7,569 |
Technology Consulting | Consulting | Business Segments | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 3,466 | 3,133 | 2,821 |
Application Operations | Consulting | Business Segments | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 6,095 | 5,931 | 6,549 |
Hybrid Infrastructure | Infrastructure | Business Segments | |||
Revenue by Major Products/Service Offerings | |||
Revenue | 8,167 | 8,415 | 9,176 |
Infrastructure Support | Infrastructure | Business Segments | |||
Revenue by Major Products/Service Offerings | |||
Revenue | $ 6,021 | $ 6,118 | $ 6,599 |
Revenue Recognition - Hybrid Cl
Revenue Recognition - Hybrid Cloud Revenue by Segment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue by Major Products/Service Offerings | |||
Hybrid cloud revenue | $ 20,210 | $ 16,838 | $ 13,834 |
Software | |||
Revenue by Major Products/Service Offerings | |||
Hybrid cloud revenue | 8,713 | 6,907 | 4,099 |
Consulting | |||
Revenue by Major Products/Service Offerings | |||
Hybrid cloud revenue | 7,852 | 5,861 | 5,274 |
Infrastructure | |||
Revenue by Major Products/Service Offerings | |||
Hybrid cloud revenue | $ 3,645 | 4,039 | 4,183 |
Other - divested businesses | |||
Revenue by Major Products/Service Offerings | |||
Hybrid cloud revenue | $ 32 | $ 279 |
Revenue Recognition - Disaggr_2
Revenue Recognition - Disaggregation of Revenue by Geography (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue by Geography | |||
Revenues | $ 57,350 | $ 55,179 | $ 57,714 |
Americas | |||
Revenue by Geography | |||
Revenues | 28,299 | 27,119 | 28,704 |
EMEA | |||
Revenue by Geography | |||
Revenues | 17,447 | 16,767 | 17,282 |
Asia Pacific | |||
Revenue by Geography | |||
Revenues | $ 11,604 | $ 11,293 | $ 11,728 |
Revenue Recognition - Remaining
Revenue Recognition - Remaining Performance Obligations (Details) $ in Billions | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Revenue Recognition | |
Practical expedient, remaining performance obligations | true |
Remaining performance obligations related to customer contracts that are unsatisfied or partially unsatisfied | $ 62 |
Revenue Recognition - Remaini_2
Revenue Recognition - Remaining Performance Obligations, Expected Timing of Satisfaction (Details) | Dec. 31, 2021 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Remaining Performance Obligations | |
Percentage of remaining performance obligation expected to be recognized | 68.00% |
Duration of expected recognition period for remaining performance obligation | 2 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Remaining Performance Obligations | |
Percentage of remaining performance obligation expected to be recognized | 28.00% |
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Remaining Performance Obligations | |
Duration of expected recognition period for remaining performance obligation | 3 years |
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Remaining Performance Obligations | |
Duration of expected recognition period for remaining performance obligation | 5 years |
Revenue Recognition - Performan
Revenue Recognition - Performance Obligations Satisfied or Partially Satisfied in Prior Periods (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Revenue Recognition | |
Impact to revenue from performance obligations satisfied (or partially satisfied) in previous periods | $ (61) |
Revenue Recognition - Reconcili
Revenue Recognition - Reconciliation of Contract Balances (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of Contract Balances | ||
Notes and accounts receivable - trade (net of allowances of $218 in 2021 and $260 in 2020) | $ 6,754 | $ 5,790 |
Notes and accounts receivable - trade, allowances | 218 | 260 |
Contract assets | 471 | 425 |
Deferred income (current) | 12,518 | 11,980 |
Deferred income (noncurrent) | 3,577 | $ 3,758 |
Revenue recognized that was included in deferred income at the beginning of the period | $ 10,200 |
Revenue Recognition - Trade All
Revenue Recognition - Trade Allowance for Credit Losses (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Roll forward of notes and accounts receivable - trade allowance for credit losses | ||
Allowance for Credit Loss, Beginning Balance | $ 260 | $ 235 |
Additions / (Releases) | (15) | 63 |
Write-offs | (28) | (39) |
Other | 1 | 1 |
Allowance for Credit Loss, Ending Balance | $ 218 | $ 260 |
Revenue Recognition - Deferred
Revenue Recognition - Deferred Contract Costs (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred Contract Costs | ||
Deferred contract costs | $ 2,022 | $ 2,168 |
Deferred contract costs, current | 1,097 | 1,018 |
Deferred contract costs, noncurrent | 924 | 1,150 |
Amortization of deferred contract costs | 1,872 | |
Costs to obtain a contract | ||
Deferred Contract Costs | ||
Deferred contract costs | 476 | 572 |
Deferred setup costs | ||
Deferred Contract Costs | ||
Deferred contract costs | 546 | 591 |
Other deferred fulfillment costs | ||
Deferred Contract Costs | ||
Deferred contract costs | $ 1,000 | $ 1,004 |
Segments - Results of Continuin
Segments - Results of Continuing Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Information | ||||
Revenue | $ 57,350 | $ 55,179 | $ 57,714 | |
Pre-tax income from continuing operations | 4,837 | 2,572 | 7,206 | |
Charge for structural actions | $ 1,472 | |||
Software | ||||
Segment Information | ||||
Charge for structural actions | 700 | |||
Consulting | ||||
Segment Information | ||||
Charge for structural actions | 400 | |||
Infrastructure | ||||
Segment Information | ||||
Charge for structural actions | $ 400 | |||
Internal transactions | ||||
Segment Information | ||||
Pre-tax income from continuing operations | (7) | (28) | (21) | |
Business Segments | ||||
Segment Information | ||||
Revenue | 56,946 | 54,691 | 56,336 | |
Pre-tax income from continuing operations | $ 8,637 | $ 6,479 | 9,502 | |
Revenue year-to-year change (as a percent) | 4.10% | (2.90%) | ||
Pre-tax income year-to-year change (as a percent) | 33.30% | (31.80%) | ||
Pre-tax income margin (as a percent) | 15.20% | 11.80% | ||
Business Segments | Software | ||||
Segment Information | ||||
Revenue | $ 24,141 | $ 22,927 | 22,408 | |
Pre-tax income from continuing operations | $ 4,722 | $ 3,341 | 5,025 | |
Revenue year-to-year change (as a percent) | 5.30% | 2.30% | ||
Pre-tax income year-to-year change (as a percent) | 41.30% | (33.50%) | ||
Pre-tax income margin (as a percent) | 19.60% | 14.60% | ||
Business Segments | Consulting | ||||
Segment Information | ||||
Revenue | $ 17,844 | $ 16,257 | 16,939 | |
Pre-tax income from continuing operations | $ 1,449 | $ 1,034 | 1,344 | |
Revenue year-to-year change (as a percent) | 9.80% | (4.00%) | ||
Pre-tax income year-to-year change (as a percent) | 40.10% | (23.00%) | ||
Pre-tax income margin (as a percent) | 8.10% | 6.40% | ||
Business Segments | Infrastructure | ||||
Segment Information | ||||
Revenue | $ 14,188 | $ 14,533 | 15,774 | |
Pre-tax income from continuing operations | $ 2,025 | $ 1,654 | 2,481 | |
Revenue year-to-year change (as a percent) | (2.40%) | (7.90%) | ||
Pre-tax income year-to-year change (as a percent) | 22.40% | (33.30%) | ||
Pre-tax income margin (as a percent) | 14.30% | 11.40% | ||
Business Segments | Financing | ||||
Segment Information | ||||
Revenue | $ 774 | $ 975 | 1,215 | |
Pre-tax income from continuing operations | $ 441 | $ 449 | $ 652 | |
Revenue year-to-year change (as a percent) | (20.60%) | (19.80%) | ||
Pre-tax income year-to-year change (as a percent) | (1.80%) | (31.20%) | ||
Pre-tax income margin (as a percent) | 57.00% | 46.10% |
Segments - Revenue Reconciliati
Segments - Revenue Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue | |||
Revenue | $ 57,350 | $ 55,179 | $ 57,714 |
Business Segments | |||
Revenue | |||
Revenue | 56,946 | 54,691 | 56,336 |
Other | |||
Revenue | |||
Other - divested businesses | 70 | 101 | 1,010 |
Other revenue | $ 335 | $ 387 | $ 368 |
Segments - Pre-Tax Income Recon
Segments - Pre-Tax Income Reconciliation (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Pre-tax income from continuing operations | ||||
Amortization of acquired intangible assets | $ (1,838) | $ (1,832) | $ (1,271) | |
Acquisition-related (charges)/income | (43) | (13) | (423) | |
Non-operating retirement-related (costs)/income | (1,282) | (1,073) | (576) | |
Separation-related charges | 118 | |||
Other - divested businesses | 25 | 12 | 580 | |
Income from continuing operations before income taxes | 4,837 | 2,572 | 7,206 | |
Charge for structural actions | $ 1,472 | |||
Business Segments | ||||
Pre-tax income from continuing operations | ||||
Income from continuing operations before income taxes | 8,637 | 6,479 | 9,502 | |
Internal transactions | ||||
Pre-tax income from continuing operations | ||||
Income from continuing operations before income taxes | (7) | (28) | (21) | |
Unallocated corporate amounts | ||||
Pre-tax income from continuing operations | ||||
Income from continuing operations before income taxes | $ (774) | $ (973) | $ (586) |
Segments - Assets and Other Ite
Segments - Assets and Other Items (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Segment Information | |||
Number of business segments to which assets are assigned when ownership is shared between several segments | segment | 1 | ||
Assets | $ 132,001 | $ 155,971 | $ 152,186 |
Interest expense | 1,155 | 1,288 | 1,344 |
Business Segments | |||
Segment Information | |||
Assets | 99,896 | 106,458 | 110,113 |
Depreciation/amortization of intangibles | 2,902 | 2,983 | 2,389 |
Capital expenditures/investments in intangibles | 1,444 | 1,709 | 1,230 |
Interest income | 628 | 834 | 1,133 |
Interest expense | 129 | 307 | 512 |
Business Segments | Software | |||
Segment Information | |||
Assets | 59,336 | 58,558 | 58,230 |
Depreciation/amortization of intangibles | 1,204 | 1,237 | 676 |
Capital expenditures/investments in intangibles | 565 | 548 | 517 |
Business Segments | Consulting | |||
Segment Information | |||
Assets | 11,914 | 10,548 | 10,421 |
Depreciation/amortization of intangibles | 250 | 207 | 179 |
Capital expenditures/investments in intangibles | 55 | 26 | 45 |
Business Segments | Infrastructure | |||
Segment Information | |||
Assets | 11,766 | 12,378 | 12,002 |
Depreciation/amortization of intangibles | 1,399 | 1,419 | 1,348 |
Capital expenditures/investments in intangibles | 792 | 1,093 | 612 |
Business Segments | Financing | |||
Segment Information | |||
Assets | 16,880 | 24,974 | 29,460 |
Depreciation/amortization of intangibles | 49 | 120 | 186 |
Capital expenditures/investments in intangibles | 33 | 41 | 57 |
Interest income | 628 | 834 | 1,133 |
Interest expense | $ 129 | $ 307 | $ 512 |
Segments - Asset Reconciliation
Segments - Asset Reconciliation (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Assets | |||
Assets | $ 132,001 | $ 155,971 | $ 152,186 |
Deferred tax assets | 7,370 | 8,404 | |
Plant, other property and equipment | 5,668 | 6,108 | 5,785 |
Operating right-of-use assets | 3,222 | 3,566 | 3,850 |
Pension assets | 9,850 | 7,557 | |
Discontinued Operations | 2,618 | ||
Business Segments | |||
Assets | |||
Assets | 99,896 | 106,458 | 110,113 |
Internal transactions | |||
Assets | |||
Assets | (1,608) | (4,686) | (4,317) |
Other | |||
Assets | |||
Assets | 193 | 254 | 1,942 |
Unallocated amounts | |||
Assets | |||
Cash and marketable securities | 6,222 | 12,463 | 7,271 |
Notes and accounts receivable | 1,622 | 1,655 | 1,601 |
Deferred tax assets | 7,158 | 8,175 | 4,917 |
Plant, other property and equipment | 2,196 | 2,449 | 2,488 |
Operating right-of-use assets | 1,945 | 2,368 | 2,531 |
Pension assets | 9,848 | 7,557 | 6,819 |
Other | $ 4,530 | 3,514 | 3,184 |
Discontinued Operations | $ 15,764 | $ 15,638 |
Segments - Geographic Informati
Segments - Geographic Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Information | |||
Revenue | $ 57,350 | $ 55,179 | $ 57,714 |
Plant and Other Property - Net | 5,668 | 6,108 | 5,785 |
Operating right-of-use assets | $ 3,222 | $ 3,566 | $ 3,850 |
Revenue | Major Client | |||
Segment Information | |||
Number of clients representing 10% or more of the company's total revenue | 0 | 0 | 0 |
U.S. | Revenue | Geographic Information | |||
Segment Information | |||
Revenue | $ 22,893 | $ 22,258 | $ 23,389 |
U.S. | Revenue | Geographic Information | Minimum | |||
Segment Information | |||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% |
U.S. | Plant and Other Property - Net | Geographic Information | |||
Segment Information | |||
Plant and Other Property - Net | $ 3,375 | $ 3,452 | $ 3,513 |
U.S. | Plant and Other Property - Net | Geographic Information | Minimum | |||
Segment Information | |||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% |
U.S. | Operating Right-Of-Use Assets - Net | Geographic Information | |||
Segment Information | |||
Operating right-of-use assets | $ 1,148 | $ 1,165 | $ 1,305 |
U.S. | Operating Right-Of-Use Assets - Net | Geographic Information | Minimum | |||
Segment Information | |||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% |
Japan | Revenue | Geographic Information | |||
Segment Information | |||
Revenue | $ 5,648 | $ 5,680 | $ 5,755 |
Japan | Revenue | Geographic Information | Minimum | |||
Segment Information | |||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% |
Japan | Operating Right-Of-Use Assets - Net | Geographic Information | |||
Segment Information | |||
Operating right-of-use assets | $ 398 | $ 532 | $ 599 |
Japan | Operating Right-Of-Use Assets - Net | Geographic Information | Minimum | |||
Segment Information | |||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% |
Non-United States | Plant and Other Property - Net | Geographic Information | |||
Segment Information | |||
Plant and Other Property - Net | $ 2,293 | $ 2,656 | $ 2,273 |
Non-United States | Plant and Other Property - Net | Geographic Information | Minimum | |||
Segment Information | |||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% |
Other Countries | Revenue | Geographic Information | |||
Segment Information | |||
Revenue | $ 28,810 | $ 27,241 | $ 28,570 |
Other Countries | Revenue | Geographic Information | Minimum | |||
Segment Information | |||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% |
Other Countries | Operating Right-Of-Use Assets - Net | Geographic Information | |||
Segment Information | |||
Operating right-of-use assets | $ 1,676 | $ 1,870 | $ 1,947 |
Other Countries | Operating Right-Of-Use Assets - Net | Geographic Information | Minimum | |||
Segment Information | |||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% |
Segments - Revenue by Product o
Segments - Revenue by Product or Service (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue by Classes of Similar Products or Services | |||
Revenue | $ 57,350 | $ 55,179 | $ 57,714 |
Software | Software. | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 20,098 | 19,046 | 18,574 |
Software | Services | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 3,934 | 3,770 | 3,670 |
Software | Systems | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 109 | 110 | 165 |
Consulting | Software. | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 173 | 183 | 160 |
Consulting | Services | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 17,563 | 15,986 | 16,663 |
Consulting | Systems | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 108 | 89 | 116 |
Infrastructure | Maintenance | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 4,743 | 4,804 | 5,171 |
Infrastructure | Servers | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 3,363 | 3,549 | 3,829 |
Infrastructure | Storage | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 1,908 | 1,813 | 1,936 |
Infrastructure | Software. | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 1,426 | 1,563 | 1,725 |
Infrastructure | Services | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 2,616 | 2,656 | 2,927 |
Infrastructure | Used equipment sales | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 131 | 149 | 186 |
Financing | -Financing | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | 628 | 834 | 1,120 |
Financing | Used equipment sales | |||
Revenue by Classes of Similar Products or Services | |||
Revenue | $ 145 | $ 140 | $ 95 |
Acquisitions & Divestitures - (
Acquisitions & Divestitures - (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021USD ($)item | Dec. 31, 2020USD ($) | Dec. 31, 2019 | |
Acquisitions | |||
Restricted Cash | $ 307 | $ 463 | |
Acquisitions 2021, 2020, and 2019 | |||
Acquisitions | |||
Percentage of business acquired (as a percent) | 100.00% | 100.00% | 100.00% |
2021 Acquisitions | |||
Acquisitions | |||
Number of acquisitions | item | 15 | ||
Aggregate acquisitions cost | $ 3,342 |
Acquisitions & Divestitures - P
Acquisitions & Divestitures - Purchase Price Allocation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Acquisitions | |||
Goodwill | $ 55,643 | $ 53,765 | $ 52,471 |
2021 Acquisitions | Client relationships | Minimum | |||
Acquisitions | |||
Weighted average useful life | 4 years | ||
2021 Acquisitions | Client relationships | Maximum | |||
Acquisitions | |||
Weighted average useful life | 10 years | ||
2021 Acquisitions | Completed technology | Minimum | |||
Acquisitions | |||
Weighted average useful life | 4 years | ||
2021 Acquisitions | Completed technology | Maximum | |||
Acquisitions | |||
Weighted average useful life | 7 years | ||
2021 Acquisitions | Trademarks | Minimum | |||
Acquisitions | |||
Weighted average useful life | 1 year | ||
2021 Acquisitions | Trademarks | Maximum | |||
Acquisitions | |||
Weighted average useful life | 6 years | ||
Turbonomic | |||
Acquisitions | |||
Current assets | $ 126 | ||
Goodwill | 1,439 | ||
Total assets acquired | 1,990 | ||
Current liabilities | 49 | ||
Noncurrent liabilities | 113 | ||
Total liabilities assumed | 161 | ||
Total purchase price | $ 1,829 | ||
Weighted average useful life | 8 years 10 months 24 days | ||
Estimated percent of goodwill deductible for tax purposes | 0.00% | ||
Turbonomic | Client relationships | |||
Acquisitions | |||
Intangible assets | $ 290 | ||
Turbonomic | Completed technology | |||
Acquisitions | |||
Intangible assets | 117 | ||
Turbonomic | Trademarks | |||
Acquisitions | |||
Intangible assets | 18 | ||
Other Acquisitions 2021 | |||
Acquisitions | |||
Current assets | 108 | ||
Property, plant, and equipment/noncurrent assets | 12 | ||
Goodwill | 1,110 | ||
Total assets acquired | 1,656 | ||
Current liabilities | 59 | ||
Noncurrent liabilities | 84 | ||
Total liabilities assumed | 143 | ||
Total purchase price | $ 1,513 | ||
Weighted average useful life | 6 years 7 months 6 days | ||
Estimated percent of goodwill deductible for tax purposes | 7.00% | ||
Other Acquisitions 2021 | Client relationships | |||
Acquisitions | |||
Intangible assets | $ 200 | ||
Other Acquisitions 2021 | Completed technology | |||
Acquisitions | |||
Intangible assets | 196 | ||
Other Acquisitions 2021 | Trademarks | |||
Acquisitions | |||
Intangible assets | 30 | ||
Software | Turbonomic | |||
Acquisitions | |||
Goodwill | 1,372 | ||
Software | Other Acquisitions 2021 | |||
Acquisitions | |||
Goodwill | 464 | ||
Consulting | Turbonomic | |||
Acquisitions | |||
Goodwill | 67 | ||
Consulting | Other Acquisitions 2021 | |||
Acquisitions | |||
Goodwill | $ 646 |
Acquisitions & Divestitures - 2
Acquisitions & Divestitures - 2020 Acquisitions (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2020USD ($)item | Dec. 31, 2021USD ($) | |
Acquisitions | ||
Restricted Cash | $ 463 | $ 307 |
2020 Acquisitions | ||
Acquisitions | ||
Number of acquisitions | item | 7 | |
Aggregate acquisitions cost | $ 723 | |
Restricted Cash | $ 323 |
Acquisitions & Divestitures -_2
Acquisitions & Divestitures - 2020 Purchase Price Allocation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2019 | |
Acquisitions | |||
Goodwill | $ 53,765 | $ 55,643 | $ 52,471 |
2020 Acquisitions | |||
Acquisitions | |||
Current assets | 35 | ||
Property, plant, and equipment/noncurrent assets | 7 | ||
Goodwill | 575 | ||
Total assets acquired | 784 | ||
Current liabilities | 19 | ||
Noncurrent liabilities | 41 | ||
Total liabilities assumed | 61 | ||
Total purchase price | $ 723 | ||
Weighted average useful life | 6 years 9 months 18 days | ||
2020 Acquisitions | Client relationships | |||
Acquisitions | |||
Intangible assets | $ 84 | ||
2020 Acquisitions | Client relationships | Minimum | |||
Acquisitions | |||
Weighted average useful life | 5 years | ||
2020 Acquisitions | Client relationships | Maximum | |||
Acquisitions | |||
Weighted average useful life | 7 years | ||
2020 Acquisitions | Completed technology | |||
Acquisitions | |||
Intangible assets | $ 73 | ||
2020 Acquisitions | Completed technology | Minimum | |||
Acquisitions | |||
Weighted average useful life | 2 years | ||
2020 Acquisitions | Completed technology | Maximum | |||
Acquisitions | |||
Weighted average useful life | 7 years | ||
2020 Acquisitions | Trademarks | |||
Acquisitions | |||
Intangible assets | $ 11 | ||
2020 Acquisitions | Trademarks | Minimum | |||
Acquisitions | |||
Weighted average useful life | 1 year | ||
2020 Acquisitions | Trademarks | Maximum | |||
Acquisitions | |||
Weighted average useful life | 7 years | ||
Software | 2020 Acquisitions | |||
Acquisitions | |||
Goodwill | $ 362 | ||
Consulting | 2020 Acquisitions | |||
Acquisitions | |||
Goodwill | 205 | ||
Infrastructure | 2020 Acquisitions | |||
Acquisitions | |||
Goodwill | $ 8 |
Acquisitions & Divestitures -_3
Acquisitions & Divestitures - 2019 Acquisitions (Details) $ / shares in Units, $ in Billions | Jul. 09, 2019USD ($)$ / shares | Dec. 31, 2019USD ($)item |
2019 Acquisitions | ||
Acquisitions | ||
Aggregate acquisitions cost | $ 35 | |
Red Hat, Inc. | ||
Acquisitions | ||
Aggregate acquisitions cost | $ 35 | |
Percentage of business acquired (as a percent) | 100.00% | |
Cash paid to acquiree shareholders (in dollars per share) | $ / shares | $ 190 | |
Equity value | $ 34 | |
Software | Red Hat, Inc. | ||
Acquisitions | ||
Number of acquisitions | item | 1 |
Acquisitions & Divestitures -_4
Acquisitions & Divestitures - Purchase Price Allocation 2019 (Details) - USD ($) $ in Millions | Jul. 09, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Acquisitions | ||||
Goodwill | $ 55,643 | $ 53,765 | $ 52,471 | |
Red Hat, Inc. | ||||
Acquisitions | ||||
Current assets | $ 3,186 | |||
Property, plant, and equipment/noncurrent assets | 948 | |||
Goodwill | 22,985 | $ 20,300 | ||
Total assets acquired | 40,592 | |||
Current liabilities | 1,395 | |||
Noncurrent liabilities | 4,117 | |||
Total liabilities assumed | 5,512 | |||
Total purchase price | $ 35,080 | |||
Weighted average useful life | 10 years 10 months 24 days | |||
Cash and cash equivalents | $ 2,200 | |||
Short-term debt | 485 | |||
Red Hat, Inc. | Client relationships | ||||
Acquisitions | ||||
Intangible assets | $ 7,215 | |||
Weighted average useful life | 10 years | |||
Red Hat, Inc. | Completed technology | ||||
Acquisitions | ||||
Intangible assets | $ 4,571 | |||
Weighted average useful life | 9 years | |||
Red Hat, Inc. | Trademarks | ||||
Acquisitions | ||||
Intangible assets | $ 1,686 | |||
Weighted average useful life | 20 years |
Acquisitions & Divestitures - G
Acquisitions & Divestitures - Goodwill and Restricted Cash (Details) - USD ($) $ in Millions | Jul. 09, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Acquisitions | ||||
Goodwill | $ 55,643 | $ 53,765 | $ 52,471 | |
Red Hat, Inc. | ||||
Acquisitions | ||||
Weighted average useful life | 10 years 10 months 24 days | |||
Goodwill | $ 22,985 | $ 20,300 | ||
Estimated percent of goodwill deductible for tax purposes | 7.00% | |||
Red Hat, Inc. | Kyndryl Holdings, Inc | ||||
Acquisitions | ||||
Amount of goodwill derecognized | $ 2,700 | |||
Software | Red Hat, Inc. | ||||
Acquisitions | ||||
Goodwill | 18,400 | |||
Consulting | Red Hat, Inc. | ||||
Acquisitions | ||||
Goodwill | 1,100 | |||
Infrastructure | Red Hat, Inc. | ||||
Acquisitions | ||||
Goodwill | $ 800 |
Acquisitions & Divestitures -_5
Acquisitions & Divestitures - Pro forma information (Details) - Red Hat, Inc. $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Acquisitions | |
Revenue | $ 60,195 |
Net income | $ 7,438 |
Acquisitions & Divestitures - D
Acquisitions & Divestitures - Divestitures (Details) $ in Millions | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2021USD ($)entity | Dec. 31, 2020USD ($)entity | Dec. 31, 2019USD ($)entity |
Divestitures | |||||
Number of divestitures | entity | 0 | ||||
Select Standalone Software Products | |||||
Divestitures | |||||
Consideration | $ 1,775 | ||||
Contingent consideration included in total | 150 | ||||
Cash consideration received | 812 | $ 812 | |||
Contingent consideration received | $ 140 | ||||
Cash payments by IBM for deferred revenue earned and received post divestiture | 38 | $ 288 | $ 174 | ||
Pre-tax gain on sale of business | $ 43 | 626 | |||
Select Marketing Platform and Commerce Offerings | |||||
Divestitures | |||||
Pre-tax gain on sale of business | $ 79 | ||||
Select Marketing Platform and Commerce Offerings | U.S. | |||||
Divestitures | |||||
Contingent consideration received | 240 | ||||
Remaining consideration to be received | $ 150 | ||||
Period after closing for receipt of remaining consideration | 36 months | ||||
Sales Performance Management Offerings | |||||
Divestitures | |||||
Cash consideration received | 230 | ||||
Pre-tax gain on sale of business | $ 136 | ||||
Other divestitures | |||||
Divestitures | |||||
Number of divestitures | entity | 1 | ||||
Software | |||||
Divestitures | |||||
Number of divestitures | entity | 2 | ||||
Financing, Consulting and Other | |||||
Divestitures | |||||
Number of divestitures | entity | 3 |
Research, Development & Engin_2
Research, Development & Engineering (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Research, Development & Engineering | |||
RD&E expense | $ 6,488 | $ 6,262 | $ 5,910 |
Scientific research, application of scientific advances, services and application | 6,216 | 5,968 | 5,578 |
Software-related expenses | 3,922 | 3,682 | 3,497 |
Product-related engineering expenses | $ 272 | $ 295 | $ 334 |
Taxes - Income before Income Ta
Taxes - Income before Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Taxes | |||
U.S. operations | $ (2,654) | $ (2,349) | $ (874) |
Non-U.S. operations | 7,491 | 4,921 | 8,080 |
Income from continuing operations before income taxes | $ 4,837 | $ 2,572 | $ 7,206 |
Taxes - Provision by Geographic
Taxes - Provision by Geographic Operations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Taxes | |||
Total continuing operations provision for/(benefit from) income taxes | $ 124 | $ (1,360) | $ 60 |
U.S. | |||
Taxes | |||
Total continuing operations provision for/(benefit from) income taxes | (969) | 1,913 | (419) |
Non-United States | |||
Taxes | |||
Total continuing operations provision for/(benefit from) income taxes | $ 1,093 | $ (3,273) | $ 479 |
Taxes - Provision by Taxing Jur
Taxes - Provision by Taxing Jurisdiction (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
U.S. federal | |||
Current | $ 374 | $ 312 | $ 327 |
Deferred | (1,358) | 1,102 | (873) |
Total | (984) | 1,414 | (546) |
U.S. state and local | |||
Current | 161 | 345 | (55) |
Deferred | (370) | (358) | (85) |
Total | (209) | (13) | (140) |
Non-U.S. | |||
Current | 1,342 | 1,208 | 1,376 |
Deferred | (25) | (3,969) | (630) |
Total | 1,317 | (2,761) | 746 |
Total continuing operations provision for/(benefit from) income taxes | 124 | (1,360) | 60 |
Discontinued operations provision for/(benefit from) income taxes | 714 | 484 | 670 |
Provision for social security, real estate, personal property and other taxes | 3,227 | 3,199 | 3,304 |
Total taxes included in net income | $ 4,065 | $ 2,322 | $ 4,034 |
Taxes - Tax Rate Reconciliation
Taxes - Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of the statutory U.S. federal tax rate to the company's effective tax rate from continuing operations | |||
Statutory rate | 21.00% | 21.00% | 21.00% |
Enactment of U.S. tax reform | 2.00% | ||
Tax differential on foreign income | (10.00%) | (31.00%) | (14.00%) |
Intra-entity IP sale | (37.00%) | ||
Domestic incentives | (5.00%) | (9.00%) | (6.00%) |
State and local | (3.00%) | 0.00% | (2.00%) |
Other | 0.00% | 3.00% | 0.00% |
Effective rate | 2.60% | (52.90%) | 1.00% |
Taxes - Tax Rate Reconciliati_2
Taxes - Tax Rate Reconciliation Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Effective income tax rate reconciliation, additional disclosures | ||||
U.S. corporate tax rate | 21.00% | 21.00% | 21.00% | |
Effective tax rate (as a percent) | 2.60% | (52.90%) | 1.00% | |
Intangible assets | $ 3,400 | $ 2,929 | $ 3,540 | |
Increase (decrease) in tax provision from intra-entity sale of intellectual property and impact of U.S. tax reform | $ (900) | |||
Tax benefit due to change in foreign tax law | $ 200 |
Taxes - Deferred Taxes (Details
Taxes - Deferred Taxes (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Deferred Tax Assets | ||||
Retirement benefits | $ 3,142 | $ 3,700 | ||
Leases | 1,061 | 1,149 | ||
Share-based and other compensation | 661 | 579 | ||
Domestic tax loss/credit carryforwards | 1,619 | 1,746 | ||
Deferred income | 630 | 661 | ||
Foreign tax loss/credit carryforwards | 983 | 818 | ||
Bad debt, inventory and warranty reserves | 390 | 324 | ||
Depreciation | 249 | 139 | ||
Hedging losses | 26 | 576 | ||
Restructuring charges | 216 | 253 | ||
Accruals | 305 | 483 | ||
Intangible assets | 2,929 | 3,540 | $ 3,400 | |
Capitalized research and development | 2,161 | 1,387 | ||
Other | 1,280 | 1,352 | ||
Gross deferred tax assets | 15,652 | 16,707 | ||
Less: valuation allowance | 883 | 850 | $ 608 | |
Net deferred tax assets | 14,769 | 15,857 | ||
Deferred Tax Liabilities | ||||
Goodwill and intangible assets | 2,290 | 2,635 | ||
GILTI deferred taxes | 3,257 | 4,119 | ||
Leases and right of use assets | 1,314 | 1,584 | ||
Depreciation | 518 | 646 | ||
Retirement benefits | 1,971 | 1,209 | ||
Software development costs | 1,016 | 1,007 | ||
Deferred transition costs | 42 | 200 | ||
Undistributed foreign earnings | 131 | 276 | ||
Other | 817 | 734 | ||
Gross deferred tax liabilities | $ 11,356 | $ 12,410 |
Taxes - Carryforwards (Details)
Taxes - Carryforwards (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Loss and tax credit carryforwards | |
Tax effect of foreign and domestic loss carryforwards | $ 773 |
Foreign and domestic tax credit carryforwards | $ 1,829 |
Minimum | |
Loss and tax credit carryforwards | |
Period for which substantially all loss and tax credit carryforwards are available | 2 years |
Period for which the majority of loss and tax credit carryforwards are available | 10 years |
Taxes - Unrecognized Tax Benefi
Taxes - Unrecognized Tax Benefits Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Taxes | |||
Increase (decrease) in amount of unrecognized tax benefits | $ 141 | ||
Reconciliation of the beginning and ending amount of unrecognized tax benefits | |||
Balance at January 1 | 8,568 | $ 7,146 | $ 6,759 |
Additions based on tax positions related to the current year | 934 | 1,690 | 816 |
Additions for tax positions of prior years | 247 | 159 | 779 |
Reductions for tax positions of prior years (including impacts due to a lapse of statute) | (688) | (408) | (922) |
Settlements | (352) | (19) | (286) |
Balance at December 31 | $ 8,709 | $ 8,568 | $ 7,146 |
Taxes - Unrecognized Tax Bene_2
Taxes - Unrecognized Tax Benefits Additional Disclosures (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Taxes | ||||
Unrecognized tax benefits | $ 8,709 | $ 8,568 | $ 7,146 | $ 6,759 |
Offsetting tax benefits associated with timing adjustments, U.S. tax credits, potential transfer pricing adjustments, and state income taxes | 546 | |||
Net unrecognized tax benefit amount that, if recognized, would favorably affect the company's effective tax rate | 8,163 | 7,994 | 6,562 | |
Interest expense and penalties, net (benefit)/charge recognized | 125 | 117 | $ (13) | |
Interest and penalties accrued | 935 | $ 843 | ||
Reasonably possible reduction in unrecognized tax benefits within the next 12 months | $ 166 |
Taxes - Income Tax Assessments
Taxes - Income Tax Assessments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2021 | |
Income tax examination | ||
Possible additional taxable income based on IRS assessment | $ 4,500 | |
India Tax Authorities | ||
Income tax examination | ||
Prepaid income taxes | $ 727 |
Taxes - Undistributed Foreign E
Taxes - Undistributed Foreign Earnings (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Taxes | ||
Deferred tax liability for undistributed foreign earnings not indefinitely reinvested | $ 131 | $ 276 |
Earnings Per Share - Computatio
Earnings Per Share - Computation (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Weighted-average number of shares on which earnings per share calculations are based | |||
Weighted-average shares outstanding during period (in shares) | 895,990,771 | 890,348,679 | 887,235,105 |
Add - Incremental shares under stock-based compensation plans (in shares) | 6,883,290 | 4,802,940 | 4,199,440 |
Add - Incremental shares associated with contingently issuable shares (in shares) | 1,766,940 | 1,412,352 | 1,378,831 |
Assuming dilution (in shares) | 904,641,001 | 896,563,971 | 892,813,376 |
Net income on which basic earnings per share is calculated | |||
Income from continuing operations | $ 4,712 | $ 3,932 | $ 7,146 |
Income/(loss) from discontinued operations, net of tax | 1,030 | 1,658 | 2,285 |
Net income on which basic earnings per share is calculated | 5,743 | 5,590 | 9,431 |
Net income on which diluted earnings per share is calculated | |||
Income from continuing operations | 4,712 | 3,932 | 7,146 |
Net income applicable to contingently issuable shares | (2) | 0 | |
Income from continuing operations on which diluted earnings per share is calculated | 4,712 | 3,930 | 7,146 |
Income/(loss) from discontinued operations, net of tax, on which basic and diluted earnings per share is calculated | 1,030 | 1,658 | 2,285 |
Net income on which diluted earnings per share is calculated | $ 5,743 | $ 5,588 | $ 9,431 |
Assuming dilution | |||
Continuing operations (in dollars per share) | $ 5.21 | $ 4.38 | $ 8 |
Discontinued operations (in dollars per share) | 1.14 | 1.85 | 2.56 |
Total (in dollars per share) (Note I) | 6.35 | 6.23 | 10.56 |
Basic | |||
Continuing operations (in dollars per share) | 5.26 | 4.42 | 8.05 |
Discontinued operations (in dollars per share) | 1.15 | 1.86 | 2.58 |
Total (in dollars per share) (Note I) | $ 6.41 | $ 6.28 | $ 10.63 |
Earnings Per Share - Antidiluti
Earnings Per Share - Antidilutive Stock Options (Details) - shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Stock Options | |||
Antidilutive stock options | |||
Outstanding stock options not included in the computation of diluted earnings per share (in shares) | 980,505 | 1,417,665 | 855,679 |
Financial Assets & Liabilitie_2
Financial Assets & Liabilities - Fair Value Measurements (Details) - USD ($) $ in Millions | Nov. 03, 2021 | Dec. 31, 2021 | Dec. 31, 2020 |
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Debt securities - current | $ 600 | $ 600 | |
Shares retained (as percent) | 19.90% | ||
Kyndryl stock, unrealized gain | 126 | ||
Common Stock | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Equity investments | 807 | ||
Kyndryl Holdings, Inc | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Period in which shares are intended to be disposed of after separation | 12 months | ||
Recurring | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 2,766 | 8,306 | |
Total assets | 4,608 | 9,151 | |
Total liabilities | 162 | 627 | |
Recurring | Prepaid expenses and other current assets | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative assets | 358 | 85 | |
Recurring | Investments and sundry assets | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative assets | 40 | 151 | |
Recurring | Other accrued expenses and liabilities | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative liabilities | 60 | 587 | |
Recurring | Other liabilities | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivative liabilities | 103 | 40 | |
Recurring | Level 1 | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Equity investments | 0 | 2 | |
Recurring | Level 1 | Money market funds | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 263 | 148 | |
Recurring | Level 2 | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Debt securities - current | 600 | 600 | |
Recurring | Level 2 | Interest rate contracts | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivatives designated as hedging - Assets | 12 | 100 | |
Recurring | Level 2 | Foreign exchange contracts | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivatives designated as hedging - Assets | 359 | 111 | |
Derivatives designated as hedging - Liabilities | 117 | 580 | |
Derivatives not designated as hedging - Assets | 21 | 13 | |
Derivatives not designated as hedging - Liabilities | 42 | 47 | |
Recurring | Level 2 | Time deposits and certificates of deposit | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 1,903 | 7,658 | |
Recurring | Level 2 | U.S. government securities | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Cash equivalents | 599 | 500 | |
Recurring | Level 1 And 2 | Equity contracts | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Derivatives not designated as hedging - Assets | 6 | 12 | |
Derivatives not designated as hedging - Liabilities | 4 | ||
Recurring | Level 1, 2 and 3 | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Debt securities - noncurrent | 37 | $ 7 | |
Recurring | Common Stock | Level 1 | |||
Financial assets and financial liabilities measured at fair value on a recurring basis: | |||
Equity investments | $ 807 |
Financial Assets & Liabilitie_3
Financial Assets & Liabilities - Not Measured at Fair Value (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Long-Term Debt | ||
Long-term debt | $ 44,917 | $ 54,217 |
Fair value of long-term debt | $ 49,465 | $ 61,460 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Inventory | ||
Finished goods | $ 208 | $ 163 |
Work in process and raw materials | 1,442 | 1,649 |
Total inventory | $ 1,649 | $ 1,812 |
Financing Receivables - Payment
Financing Receivables - Payment Terms (Details) | 12 Months Ended |
Dec. 31, 2021 | |
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 | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 24, 2020 | Dec. 31, 2019 | |
Components of the company's financing receivables | ||||
Financing receivables, gross | $ 13,881 | $ 18,580 | ||
Unearned income | (576) | (823) | ||
Residual value | 335 | 485 | ||
Amortized Cost | 13,640 | 18,242 | ||
Allowance for credit losses | (201) | (263) | ||
Total financing receivables, net | 13,439 | 17,979 | ||
Financing receivables pledged as collateral for nonrecourse borrowings | 408 | 482 | ||
Current Assets | ||||
Components of the company's financing receivables | ||||
Total financing receivables, net | 8,014 | 10,892 | ||
Noncurrent Assets | ||||
Components of the company's financing receivables | ||||
Total financing receivables, net | 5,425 | 7,086 | ||
Loan receivables | ||||
Components of the company's financing receivables | ||||
Financing receivables, gross | 9,303 | 12,159 | ||
Unearned income | (353) | (488) | ||
Amortized Cost | 8,949 | 11,671 | ||
Allowance for credit losses | (131) | (173) | ||
Total financing receivables, net | 8,818 | 11,498 | ||
Financing receivables transferred | 2,224 | 1,410 | ||
Loan receivables | Current Assets | ||||
Components of the company's financing receivables | ||||
Total financing receivables, net | 5,371 | 6,955 | ||
Loan receivables | Noncurrent Assets | ||||
Components of the company's financing receivables | ||||
Total financing receivables, net | 3,447 | 4,542 | ||
Lease receivables | ||||
Components of the company's financing receivables | ||||
Financing receivables, gross | 3,336 | 4,001 | ||
Unearned income | (223) | (335) | ||
Residual value | 335 | 485 | ||
Amortized Cost | 3,448 | 4,151 | ||
Allowance for credit losses | (64) | (82) | ||
Total financing receivables, net | 3,384 | 4,069 | ||
Financing receivables transferred | 819 | 1,152 | ||
Lease receivables | Current Assets | ||||
Components of the company's financing receivables | ||||
Total financing receivables, net | 1,406 | 1,525 | ||
Lease receivables | Noncurrent Assets | ||||
Components of the company's financing receivables | ||||
Total financing receivables, net | 1,978 | 2,544 | ||
Commercial financing receivables | ||||
Components of the company's financing receivables | ||||
Financing receivables transferred | 7,359 | 515 | ||
Commercial financing receivables, Held for investment | ||||
Components of the company's financing receivables | ||||
Financing receivables, gross | 450 | 2,036 | ||
Unearned income | 0 | |||
Amortized Cost | 450 | 2,036 | ||
Allowance for credit losses | (6) | (8) | ||
Total financing receivables, net | 444 | 2,028 | ||
Commercial financing receivables, Held for investment | Current Assets | ||||
Components of the company's financing receivables | ||||
Total financing receivables, net | 444 | 2,028 | ||
Commercial financing receivables, Held for sale | ||||
Components of the company's financing receivables | ||||
Financing receivables, gross | 793 | 383 | ||
Amortized Cost | 793 | 383 | ||
Total financing receivables, net | 793 | 383 | ||
Commercial financing receivables, Held for sale | Current Assets | ||||
Components of the company's financing receivables | ||||
Total financing receivables, net | 793 | 383 | ||
Client Financing Receivables | ||||
Components of the company's financing receivables | ||||
Amortized Cost | 12,397 | 15,822 | ||
Allowance for credit losses | (195) | (255) | $ (252) | |
Financing receivables transferred | $ 3,043 | $ 2,562 | ||
Third Party Investor | Maximum | Commercial financing receivables | ||||
Components of the company's financing receivables | ||||
Financing receivables to be sold | $ 3 |
Financing Receivables - Transfe
Financing Receivables - Transfer of Commercial Financing Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Lease receivables | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Financing receivables transferred | $ 819 | $ 1,152 |
Loan receivables | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Financing receivables transferred | 2,224 | 1,410 |
Client Financing Receivables | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Financing receivables transferred | 3,043 | 2,562 |
Commercial financing receivables | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Financing receivables transferred | 7,359 | 515 |
Financing receivables transferred and uncollected | $ 1,653 | $ 510 |
Financing Receivables - By Port
Financing Receivables - By Portfolio Segment (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2021USD ($)segmentitem | Dec. 31, 2020USD ($) | |
Financing receivables | ||
Number of portfolio segments | segment | 2 | |
Number of classes of financing receivable | item | 3 | |
Amortized Cost | $ 13,640 | $ 18,242 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 263 | |
Allowance for credit losses, ending balance | 201 | 263 |
Client Financing Receivables | ||
Financing receivables | ||
Amortized Cost | 12,397 | 15,822 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 255 | 252 |
Write-offs | (17) | (34) |
Recoveries | 1 | 3 |
Additions/(releases) | (38) | 34 |
Other | (7) | 1 |
Allowance for credit losses, ending balance | 195 | 255 |
Client Financing Receivables | Americas | ||
Financing receivables | ||
Amortized Cost | 6,573 | 7,758 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 141 | 142 |
Write-offs | (8) | (28) |
Recoveries | 0 | 0 |
Additions/(releases) | (19) | 33 |
Other | (3) | (6) |
Allowance for credit losses, ending balance | 111 | 141 |
Client Financing Receivables | EMEA | ||
Financing receivables | ||
Amortized Cost | 3,793 | 5,023 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 77 | 69 |
Write-offs | (2) | (3) |
Recoveries | 0 | 0 |
Additions/(releases) | (11) | 5 |
Other | (3) | 6 |
Allowance for credit losses, ending balance | 61 | 77 |
Client Financing Receivables | Asia Pacific | ||
Financing receivables | ||
Amortized Cost | 2,031 | 3,042 |
Allowance for credit losses: | ||
Allowance for credit losses, beginning balance | 37 | 41 |
Write-offs | (7) | (3) |
Recoveries | 1 | 2 |
Additions/(releases) | (7) | (4) |
Other | 0 | 1 |
Allowance for credit losses, ending balance | $ 23 | $ 37 |
Financing Receivables - Past Du
Financing Receivables - Past Due (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Past Due Financing Receivable | ||
Amortized Cost | $ 13,640 | $ 18,242 |
Client Financing Receivables | ||
Past Due Financing Receivable | ||
Amortized Cost | 12,397 | 15,822 |
Amortized Cost Not Accruing | 205 | 223 |
Impaired financing receivables, related allowance | 153 | 178 |
Client Financing Receivables | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Amortized Cost | 312 | 456 |
Amortized Cost > 90 Days and Accruing | 112 | 241 |
Billed Invoices > 90 Days and Accruing | 10 | 20 |
Client Financing Receivables | Americas | ||
Past Due Financing Receivable | ||
Amortized Cost | 6,573 | 7,758 |
Amortized Cost Not Accruing | 90 | 96 |
Client Financing Receivables | Americas | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Amortized Cost | 188 | 295 |
Amortized Cost > 90 Days and Accruing | 100 | 200 |
Billed Invoices > 90 Days and Accruing | 6 | 12 |
Client Financing Receivables | EMEA | ||
Past Due Financing Receivable | ||
Amortized Cost | 3,793 | 5,023 |
Amortized Cost Not Accruing | 95 | 95 |
Client Financing Receivables | EMEA | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Amortized Cost | 99 | 119 |
Amortized Cost > 90 Days and Accruing | 7 | 28 |
Billed Invoices > 90 Days and Accruing | 2 | 5 |
Client Financing Receivables | Asia Pacific | ||
Past Due Financing Receivable | ||
Amortized Cost | 2,031 | 3,042 |
Amortized Cost Not Accruing | 20 | 32 |
Client Financing Receivables | Asia Pacific | Total Past Due > 90 days | ||
Past Due Financing Receivable | ||
Amortized Cost | 25 | 42 |
Amortized Cost > 90 Days and Accruing | 5 | 12 |
Billed Invoices > 90 Days and Accruing | $ 2 | $ 4 |
Financing Receivables - Credit
Financing Receivables - Credit Quality Year of Origination (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Amortized cost for each class of receivables, by credit quality indicator | ||
Total Amortized Cost | $ 13,640 | $ 18,242 |
Americas | Aaa - Baa3 | ||
Amortized cost for each class of receivables, by credit quality indicator | ||
Originated in Current Fiscal Year | 2,556 | 2,818 |
Originated in Fiscal Year before Latest Fiscal Year | 1,013 | 988 |
Originated Two Years before Latest Fiscal Year | 544 | 829 |
Originated Three Years before Latest Fiscal Year | 338 | 285 |
Originated Four Years before Latest Fiscal Year | 108 | 90 |
Originated Five or More Years before Latest Fiscal Year | 20 | 28 |
Total Amortized Cost | 4,579 | 5,038 |
Americas | Ba1 - D | ||
Amortized cost for each class of receivables, by credit quality indicator | ||
Originated in Current Fiscal Year | 1,147 | 1,449 |
Originated in Fiscal Year before Latest Fiscal Year | 392 | 623 |
Originated Two Years before Latest Fiscal Year | 236 | 360 |
Originated Three Years before Latest Fiscal Year | 117 | 154 |
Originated Four Years before Latest Fiscal Year | 50 | 52 |
Originated Five or More Years before Latest Fiscal Year | 53 | 81 |
Total Amortized Cost | 1,994 | 2,720 |
EMEA | Aaa - Baa3 | ||
Amortized cost for each class of receivables, by credit quality indicator | ||
Originated in Current Fiscal Year | 1,181 | 1,513 |
Originated in Fiscal Year before Latest Fiscal Year | 506 | 668 |
Originated Two Years before Latest Fiscal Year | 287 | 329 |
Originated Three Years before Latest Fiscal Year | 189 | 70 |
Originated Four Years before Latest Fiscal Year | 15 | 33 |
Originated Five or More Years before Latest Fiscal Year | 21 | 22 |
Total Amortized Cost | 2,198 | 2,635 |
EMEA | Ba1 - D | ||
Amortized cost for each class of receivables, by credit quality indicator | ||
Originated in Current Fiscal Year | 778 | 1,427 |
Originated in Fiscal Year before Latest Fiscal Year | 342 | 519 |
Originated Two Years before Latest Fiscal Year | 291 | 245 |
Originated Three Years before Latest Fiscal Year | 85 | 128 |
Originated Four Years before Latest Fiscal Year | 52 | 46 |
Originated Five or More Years before Latest Fiscal Year | 46 | 22 |
Total Amortized Cost | 1,595 | 2,387 |
Asia Pacific | Aaa - Baa3 | ||
Amortized cost for each class of receivables, by credit quality indicator | ||
Originated in Current Fiscal Year | 565 | 958 |
Originated in Fiscal Year before Latest Fiscal Year | 381 | 564 |
Originated Two Years before Latest Fiscal Year | 297 | 419 |
Originated Three Years before Latest Fiscal Year | 211 | 205 |
Originated Four Years before Latest Fiscal Year | 74 | 114 |
Originated Five or More Years before Latest Fiscal Year | 38 | 38 |
Total Amortized Cost | 1,567 | 2,298 |
Asia Pacific | Ba1 - D | ||
Amortized cost for each class of receivables, by credit quality indicator | ||
Originated in Current Fiscal Year | 226 | 351 |
Originated in Fiscal Year before Latest Fiscal Year | 86 | 123 |
Originated Two Years before Latest Fiscal Year | 51 | 167 |
Originated Three Years before Latest Fiscal Year | 64 | 52 |
Originated Four Years before Latest Fiscal Year | 17 | 33 |
Originated Five or More Years before Latest Fiscal Year | 20 | 18 |
Total Amortized Cost | $ 464 | $ 743 |
Property, Plant & Equipment (De
Property, Plant & Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant, and equipment, excluding underlying asset - gross | $ 20,010 | $ 19,836 | |
Less: Accumulated depreciation, excluding underlying asset | 14,343 | 13,728 | |
Property, plant, and equipment, excluding underlying asset | 5,668 | 6,108 | $ 5,785 |
Rental machines | 74 | 265 | |
Less: Accumulated depreciation - rental machines | 48 | 168 | |
Rental machines - net | 27 | 97 | |
Property, plant and equipment - net (Note M) | 5,694 | 6,205 | |
Land and land improvements | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant, and equipment, excluding underlying asset - gross | 224 | 234 | |
Buildings and building and leasehold improvements | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant, and equipment, excluding underlying asset - gross | 6,049 | 6,407 | |
Information technology equipment | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant, and equipment, excluding underlying asset - gross | 10,515 | 9,840 | |
Production, engineering, office and other equipment | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant, and equipment, excluding underlying asset - gross | $ 3,222 | $ 3,354 |
Leases - Components of Lease Co
Leases - Components of Lease Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Components of lease cost | |||
Finance lease cost | $ 52 | $ 35 | $ 14 |
Operating lease cost | 1,126 | 1,181 | 1,257 |
Short-term lease cost | 21 | 28 | 24 |
Variable lease cost | 336 | 343 | 364 |
Sublease income | (46) | (28) | (22) |
Total lease cost | 1,489 | 1,558 | 1,637 |
Gains on sale and leaseback transactions, net | $ 7 | $ 0 | $ 36 |
Leases - Cash Flow From Lease T
Leases - Cash Flow From Lease Transactions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash outflows from finance leases | $ 8 | $ 8 | $ 7 |
Financing cash outflows from finance leases | 42 | 25 | 4 |
Operating cash outflows from operating leases | 1,135 | 1,212 | 1,154 |
ROU assets obtained in exchange for new finance lease liabilities | 46 | 50 | 68 |
ROU assets obtained in exchange for new operating lease liabilities | $ 779 | $ 785 | 5,102 |
ROU assets obtained in exchange for new operating lease liabilities - post adoption | $ 1,383 |
Leases - Weighted-average Lease
Leases - Weighted-average Lease Terms and Discount Rates (Details) | Dec. 31, 2021 | Dec. 31, 2020 |
Leases | ||
Weighted-average remaining lease term - finance leases | 4 years 1 month 6 days | 4 years 10 months 24 days |
Weighted-average discount rate - finance leases | 0.88% | 1.08% |
Weighted-average remaining lease term - operating leases | 4 years 6 months | 4 years 8 months 12 days |
Weighted-average discount rate - operating leases | 3.01% | 3.25% |
Leases - Maturity Analysis of U
Leases - Maturity Analysis of Undiscounted Cash Out Flows (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Finance leases | ||
2022 | $ 43 | |
2023 | 30 | |
2024 | 18 | |
2025 | 9 | |
2026 | 8 | |
Thereafter | 28 | |
Imputed Interest | (36) | |
Finance lease obligations | 99 | $ 91 |
Operating leases | ||
2022 | 1,047 | |
2023 | 845 | |
2024 | 685 | |
2025 | 424 | |
2026 | 313 | |
Thereafter | 356 | |
Imputed Interest | (234) | |
Operating lease liabilities | 3,435 | |
Amount of leases not yet commenced | $ 202 |
Leases - ROU Assets and Lease L
Leases - ROU Assets and Lease Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Lessee, Lease, Description [Line Items] | ||
Lease liabilities - short-term debt | $ 36 | $ 30 |
Finance Lease, Liability, Current, Statement of Financial Position | Short-term debt (Note J&Q) | Short-term debt (Note J&Q) |
Lease liabilities - long-term debt | $ 63 | $ 60 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position | Long-term debt (Note J&Q) | Long-term debt (Note J&Q) |
Property, plant and equipment | ||
Lessee, Lease, Description [Line Items] | ||
ROU assets | $ 86 | $ 84 |
Leases - Lease Amounts Included
Leases - Lease Amounts Included in Consolidated Income Statement (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Lease income - sales-type and direct financing leases | |||
Sales-type lease selling price | $ 1,355 | $ 1,321 | $ 1,360 |
Less: Carrying value of underlying assets | (300) | (410) | (476) |
Gross profit | 1,055 | 911 | 884 |
Interest income on lease receivables | 179 | 249 | 303 |
Total sales-type and direct financing lease income | 1,234 | 1,160 | 1,187 |
Lease income - operating leases | 169 | 255 | 322 |
Variable lease income | 120 | 115 | 56 |
Total lease income | $ 1,523 | $ 1,530 | $ 1,565 |
Leases - Maturity Analysis of L
Leases - Maturity Analysis of Lease Payments Due on Sales-type and Direct Financing Leases (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Leases | ||
Unguaranteed residual value of sales-type and direct financing leases | $ 335 | $ 469 |
Maturity analysis of the lease payments due on sales-type and direct financing leases | ||
2022 | 1,528 | |
2023 | 1,014 | |
2024 | 555 | |
2025 | 209 | |
2026 | 27 | |
Thereafter | 1 | |
Total undiscounted cash flows | 3,336 | |
Present value of lease payments (recognized as financing receivables) | 3,113 | |
Difference between undiscounted cash flows and discounted cash flows | $ 223 |
Leases - Maturity Analysis of_2
Leases - Maturity Analysis of Undiscounted Lease Payments on Operating Leases (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Operating leases | ||
Unguaranteed residual value for operating leases | $ 13 | $ 48 |
Maturity analysis of the undiscounted lease payments | ||
2022 | 13 | |
2023 | 4 | |
2024 | 0 | |
2025 | 0 | |
Total undiscounted cash flows | $ 17 |
Intangible Assets Including G_3
Intangible Assets Including Goodwill - Intangible Assets by Class (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Intangible asset balances by major asset class | ||
Gross Carrying Amount | $ 19,031 | $ 18,722 |
Accumulated Amortization | (6,520) | (4,983) |
Net Carrying Amount | 12,511 | 13,739 |
Amount of foreign currency translation increase (decrease) | (221) | 279 |
Capitalized software | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 1,696 | 1,777 |
Accumulated Amortization | (751) | (814) |
Net Carrying Amount | 945 | 963 |
Client relationships | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 9,021 | 8,708 |
Accumulated Amortization | (2,889) | (1,976) |
Net Carrying Amount | 6,132 | 6,732 |
Completed technology | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 6,074 | 5,937 |
Accumulated Amortization | (2,259) | (1,655) |
Net Carrying Amount | 3,815 | 4,283 |
Patents/trademarks | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 2,196 | 2,244 |
Accumulated Amortization | (586) | (499) |
Net Carrying Amount | 1,610 | 1,744 |
Other** | ||
Intangible asset balances by major asset class | ||
Gross Carrying Amount | 44 | 56 |
Accumulated Amortization | (35) | (39) |
Net Carrying Amount | $ 9 | $ 16 |
Intangible Assets Including G_4
Intangible Assets Including Goodwill - Intangible Assets Activity (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Intangible assets | ||
Intangible assets, increase (decrease) | $ (1,228) | |
Impairment of intangible assets | 0 | $ 0 |
Intangible asset amortization expense | 2,506 | 2,441 |
Retirement of fully amortized intangible assets | $ 904 | $ 1,461 |
Intangible Assets Including G_5
Intangible Assets Including Goodwill - Future Amortization (Details) $ in Millions | Dec. 31, 2021USD ($) |
Future amortization expense, by year | |
2022 | $ 2,329 |
2023 | 1,826 |
2024 | 1,587 |
2025 | 1,450 |
2026 | 1,433 |
Thereafter | 3,886 |
Capitalized software | |
Future amortization expense, by year | |
2022 | 512 |
2023 | 313 |
2024 | 120 |
2025 | 0 |
2026 | 0 |
Acquired intangibles | |
Future amortization expense, by year | |
2022 | 1,818 |
2023 | 1,513 |
2024 | 1,467 |
2025 | 1,450 |
2026 | 1,433 |
Thereafter | $ 3,886 |
Intangible Assets Including G_6
Intangible Assets Including Goodwill - Goodwill by Segment (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Changes in Goodwill Balances | ||
Beginning Balance | $ 53,765 | $ 52,471 |
Goodwill Additions | 2,549 | 575 |
Purchase Price Adjustments | 2 | (139) |
Divestitures | (50) | |
Foreign Currency Translation and Other Adjustments | (623) | 859 |
Ending Balance | 55,643 | 53,765 |
Goodwill impairment losses | 0 | 0 |
Goodwill accumulated impairment losses | 0 | 0 |
Other - divested businesses | Divested businesses | ||
Changes in Goodwill Balances | ||
Beginning Balance | 36 | 35 |
Divestitures | (37) | |
Foreign Currency Translation and Other Adjustments | 1 | 1 |
Ending Balance | 36 | |
Business Segments | Software | ||
Changes in Goodwill Balances | ||
Beginning Balance | 43,149 | 42,275 |
Goodwill Additions | 1,836 | 362 |
Purchase Price Adjustments | 23 | (139) |
Divestitures | (13) | |
Foreign Currency Translation and Other Adjustments | (545) | 651 |
Ending Balance | 44,450 | 43,149 |
Business Segments | Consulting | ||
Changes in Goodwill Balances | ||
Beginning Balance | 6,145 | 5,775 |
Goodwill Additions | 713 | 205 |
Purchase Price Adjustments | (21) | |
Foreign Currency Translation and Other Adjustments | (40) | 165 |
Ending Balance | 6,797 | 6,145 |
Business Segments | Infrastructure | ||
Changes in Goodwill Balances | ||
Beginning Balance | 4,436 | 4,386 |
Goodwill Additions | 8 | |
Purchase Price Adjustments | 0 | |
Foreign Currency Translation and Other Adjustments | (39) | 42 |
Ending Balance | $ 4,396 | $ 4,436 |
Investments & Sundry Assets (De
Investments & Sundry Assets (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Investments & Sundry Assets | ||
Derivatives - noncurrent | $ 40 | $ 151 |
Alliance investments - equity method | 159 | 170 |
Alliance investments - non-equity method | 47 | 46 |
Long-term deposits | 205 | 231 |
Other receivables | 181 | 423 |
Employee benefit-related | 210 | 237 |
Prepaid income taxes | 743 | 777 |
Other assets | 237 | 153 |
Total | $ 1,823 | $ 2,187 |
Borrowings - Short-Term Debt (D
Borrowings - Short-Term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Short-term debt disclosures | ||
Short-term loans | $ 22 | $ 130 |
Long-term debt - current maturities | 6,764 | 6,986 |
Short-term Debt, Total | $ 6,787 | $ 7,116 |
Short-term loans | ||
Short-term debt disclosures | ||
Weighted-average interest rates for short-term debt (as a percent) | 6.70% | 5.70% |
Borrowings - Long-Term Debt, Co
Borrowings - Long-Term Debt, Components (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Borrowings | ||
Long-term debt excluding finance lease obligations | $ 52,240 | $ 61,718 |
Finance lease obligations | 99 | 91 |
Long-term debt, gross | 52,339 | 61,808 |
Less: net unamortized discount | 839 | 875 |
Less: net unamortized debt issuance costs | 130 | 156 |
Add: fair value adjustment | 311 | 426 |
Total | 51,681 | 61,203 |
Less: current maturities | 6,764 | 6,986 |
Total long-term debt (excluding current portion) | $ 44,917 | 54,217 |
Finance lease obligations, interest rate (as a percent) | 1.80% | |
U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 34,290 | 41,218 |
Euro | ||
Borrowings | ||
Long-term debt excluding finance lease obligations | $ 15,903 | 18,355 |
Debt instrument, weighted-average interest rate (as a percent) | 1.10% | |
Pound sterling | ||
Borrowings | ||
Long-term debt excluding finance lease obligations | $ 406 | 411 |
Debt instrument, weighted-average interest rate (as a percent) | 2.60% | |
Japanese yen | ||
Borrowings | ||
Long-term debt excluding finance lease obligations | $ 1,263 | 1,409 |
Debt instrument, weighted-average interest rate (as a percent) | 0.30% | |
Other currencies | ||
Borrowings | ||
Long-term debt excluding finance lease obligations | $ 378 | 324 |
Debt instrument, weighted-average interest rate (as a percent) | 11.30% | |
Maturing 2021 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | 5,499 | |
Debt instrument, weighted-average interest rate (as a percent) | 1.30% | |
Maturing 2022 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 5,673 | 6,233 |
Debt instrument, weighted-average interest rate (as a percent) | 2.60% | |
Maturing 2023 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 1,573 | 2,395 |
Debt instrument, weighted-average interest rate (as a percent) | 3.40% | |
Maturing 2024 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 5,016 | 5,029 |
Debt instrument, weighted-average interest rate (as a percent) | 3.30% | |
Maturing 2025 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 608 | 631 |
Debt instrument, weighted-average interest rate (as a percent) | 6.90% | |
Maturing 2026 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 4,356 | 4,370 |
Debt instrument, weighted-average interest rate (as a percent) | 3.30% | |
Maturing 2027 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 2,221 | 2,219 |
Debt instrument, weighted-average interest rate (as a percent) | 3.00% | |
Maturing 2028 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 313 | 313 |
Debt instrument, weighted-average interest rate (as a percent) | 6.50% | |
Maturing 2029 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 3,250 | 3,250 |
Debt instrument, weighted-average interest rate (as a percent) | 3.50% | |
Maturing 2030 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 1,350 | 1,350 |
Debt instrument, weighted-average interest rate (as a percent) | 2.00% | |
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 | $ 2,745 | 2,745 |
Debt instrument, weighted-average interest rate (as a percent) | 4.50% | |
Maturing 2040 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 650 | 650 |
Debt instrument, weighted-average interest rate (as a percent) | 2.90% | |
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 2049 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 3,000 | 3,000 |
Debt instrument, weighted-average interest rate (as a percent) | 4.30% | |
Maturing 2050 | U.S. dollars | ||
Borrowings | ||
Long-term debt, gross | $ 750 | 750 |
Debt instrument, weighted-average interest rate (as a percent) | 3.00% | |
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 | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Borrowings | |
Limit based on net tangible assets | 10.00% |
Credit Facilities | |
Borrowings | |
Minimum net interest expense ratio | 2.20 |
Default provision on credit facility | $ 500 |
Borrowings - Long-Term Debt, De
Borrowings - Long-Term Debt, Debt Issued (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Euro fixed-rate notes | ||
Notes Issued | ||
Aggregate amount of debt issued | $ 4,100 | |
Fixed rate debt due in 2021 | ||
Notes Issued | ||
Outstanding debt redeemed | $ 2,900 | |
Aggregate principal redeemed (as a percent) | 100.00% | |
Loss upon redemption on notes | $ (49) | |
IBM Credit LLC | Fixed rate debt due in 2021 to 2023 | ||
Notes Issued | ||
Outstanding debt redeemed | $ 1,750 | |
Aggregate principal redeemed (as a percent) | 100.00% | |
Loss upon redemption on notes | $ (22) |
Borrowings - Post-Swap Borrowin
Borrowings - Post-Swap Borrowing (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Borrowings | ||
Fixed-rate debt, Amount | $ 49,976 | $ 53,237 |
Floating-rate debt, Amount | 1,705 | 7,966 |
Total | $ 51,681 | $ 61,203 |
Fixed-rate debt, Weighted-average Interest Rate (as a percent) | 2.80% | 2.70% |
Floating-rate debt, Weighted-average Interest Rate (as a percent) | 2.60% | 1.10% |
Interest rate swaps | ||
Borrowings | ||
Notional amount | $ 425 | $ 2,975 |
Borrowings - Pre-Swap Obligatio
Borrowings - Pre-Swap Obligations (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Pre-swap annual contractual obligations of long-term debt outstanding | ||
2022 | $ 6,765 | |
2023 | 4,848 | |
2024 | 6,391 | |
2025 | 4,015 | |
2026 | 4,719 | |
Thereafter | 25,601 | |
Total | $ 52,339 | $ 61,808 |
Borrowings - Interest on Debt (
Borrowings - Interest on Debt (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Interest on Debt | |||
Interest capitalized | $ 3 | $ 5 | $ 4 |
Total interest paid and accrued | 1,550 | 1,743 | 1,956 |
Cost of financing | |||
Interest on Debt | |||
Interest paid | 392 | 451 | 608 |
Interest expense | |||
Interest on Debt | |||
Interest paid | $ 1,155 | $ 1,288 | $ 1,344 |
Borrowings - Lines of Credit (D
Borrowings - Lines of Credit (Details) - USD ($) $ in Millions | Jun. 22, 2021 | Jun. 21, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Five-Year Credit Agreement | |||||
Lines of Credit | |||||
Amount of credit facility | $ 7,500 | ||||
Credit facility term | 5 years | ||||
Three-Year Credit Agreement | |||||
Lines of Credit | |||||
Amount of credit facility | $ 2,500 | ||||
Credit facility term | 3 years | ||||
Terminated Credit Agreement 364 Days 2020 | |||||
Lines of Credit | |||||
Credit facility term | 364 days | ||||
Amount of terminated credit facility | $ 2,500 | ||||
Prior Three Year Credit Agreement | |||||
Lines of Credit | |||||
Amount of credit facility | $ 2,500 | ||||
Credit facility term | 3 years | ||||
Prior Five Year Credit Agreement | |||||
Lines of Credit | |||||
Amount of credit facility | $ 10,250 | ||||
Credit facility term | 5 years | ||||
Credit Facilities | |||||
Lines of Credit | |||||
Amount of credit facility | $ 10,000 | ||||
Expenses related to credit facility | 12 | $ 12 | $ 9 | ||
Borrowings outstanding | $ 0 |
Other Liabilities - Components
Other Liabilities - Components (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Other Liabilities | ||
Income tax reserves | $ 6,179 | $ 5,274 |
Excess 401(k) Plus Plan | 1,686 | 1,635 |
Disability benefits | 359 | 385 |
Derivative liabilities | 103 | 40 |
Workforce reductions | 752 | 886 |
Deferred taxes | 3,956 | 4,958 |
Other taxes payable | 72 | 253 |
Environmental accruals | 224 | 246 |
Warranty accruals | 29 | 33 |
Asset retirement obligations | 92 | 84 |
Acquisition related | 218 | 60 |
Divestiture related | 47 | 63 |
Other | 278 | 263 |
Total | $ 13,996 | $ 14,180 |
Other Liabilities - Workforce R
Other Liabilities - Workforce Reduction and Environmental Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2021 | |
Other Liabilities | ||
Total amounts accrued for workforce reductions | $ 2,631 | $ 1,359 |
Charge for structural actions | 1,472 | |
Total amounts accrued for non-ARO environmental liabilities | 266 | 248 |
Total amounts accrued for ARO liabilities | $ 122 | $ 119 |
Commitments & Contingencies - E
Commitments & Contingencies - Extensions of Credit (Details) - USD ($) $ in Billions | Dec. 31, 2021 | Dec. 31, 2020 |
Extended lines of credit | ||
Commitments, guarantees: | ||
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients | $ 1.7 | $ 2.1 |
Financing for client purchase agreements | ||
Commitments, guarantees: | ||
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients | $ 3.2 | $ 3.4 |
Commitments & Contingencies - S
Commitments & Contingencies - Standard Warranty Liability (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Movement in standard warranty liability | ||
Beginning Balance | $ 83 | $ 113 |
Current period accruals | 82 | 83 |
Accrual adjustments to reflect experience | (1) | (16) |
Charges incurred | (86) | (96) |
Ending Balance | $ 77 | $ 83 |
Commitments & Contingencies -_2
Commitments & Contingencies - Extended Warranty Liability (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Movement in deferred income | ||
Amortization of deferred revenue | $ (10,200) | |
Current portion | 12,518 | $ 11,980 |
Noncurrent portion | 3,577 | 3,758 |
Extended Warranty | ||
Movement in deferred income | ||
Beginning Balance | 425 | 477 |
Revenue deferred for new extended warranty contracts | 133 | 166 |
Amortization of deferred revenue | (198) | (224) |
Other | (10) | 6 |
Ending Balance | 350 | 425 |
Current portion | 163 | 204 |
Noncurrent portion | $ 186 | $ 221 |
Commitments & Contingencies - C
Commitments & Contingencies - Contingencies (Details) $ in Millions | Jun. 08, 2021USD ($) | Feb. 28, 2021USD ($) | Dec. 31, 2021USD ($)country |
Brazil Tax Matters | |||
Loss Contingencies | |||
Damages sought, value | $ 400 | ||
CISGIL v. IBM UK | |||
Loss Contingencies | |||
Amount of award against IBM | $ 20 | ||
Minimum | |||
Loss Contingencies | |||
Clients' presence in number of countries | country | 175 | ||
Minimum | IBM v. GF | |||
Loss Contingencies | |||
Damages sought, value | $ 1,500 |
Equity Activity - Stock Repurch
Equity Activity - Stock Repurchases and Other Transactions (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Equity Activity | |||
Common stock, Shares authorized (in shares) | 4,687,500,000 | 4,687,500,000 | |
Common stock, Par value (in dollars per share) | $ 0.20 | $ 0.20 | |
Common stock, outstanding (in shares) | 898,068,600 | ||
Preferred stock, shares authorized (in shares) | 150,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | ||
Common stock repurchased (in shares) | 9,979,516 | ||
Common stock repurchased, value | $ 1,331 | ||
Common stock repurchase authorization available, value | $ 2,008 | ||
Common stock issued under employee plans (in shares) | 5,608,845 | 4,972,028 | 4,569,917 |
Issue of treasury shares as a result of RSU releases and stock option exercises (in shares) | 2,093,243 | 2,934,907 | 2,041,347 |
Common stock remitted by employees in order to satisfy tax withholding requirements (in shares) | 2,286,912 | 2,363,966 | 2,000,704 |
Value of common shares remitted by employees in order to satisfy tax withholding requirements | $ 319 | $ 302 | $ 272 |
Series A Preferred Stock | |||
Equity Activity | |||
Preferred stock, shares authorized (in shares) | 75,000,000 | ||
Preferred stock, shares issued (in shares) | 57,916,244 | ||
Preferred stock, shares outstanding (in shares) | 0 |
Equity Activity - Reclassificat
Equity Activity - Reclassifications and Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | $ 25,865 | $ 24,314 | $ 26,181 |
SG&A expense | 18,745 | 20,561 | 18,724 |
Other (income) and expense | 873 | 802 | (1,012) |
Interest expense | 1,155 | 1,288 | 1,344 |
Provision for/(benefit from) income taxes (Note H) | 124 | (1,360) | 60 |
Net (income) loss | (5,743) | (5,590) | (9,431) |
Other comprehensive income/(loss) | (740) | 893 | |
Other comprehensive income/(loss) (Note T) | 4,839 | ||
Services. | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | 19,147 | 17,689 | 19,009 |
Sales | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | 6,184 | 6,048 | 6,467 |
Financing. | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | 534 | 577 | 704 |
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 | 2,608 | (2,638) | (663) |
Reclassification/amortization, Net of Tax Amount | 2,231 | 1,898 | 1,556 |
Other comprehensive income/(loss), Before Tax Amount | 6,542 | (1,206) | 1,029 |
Other comprehensive income/(loss), Tax (Expense)/Benefit | (1,703) | 466 | (136) |
Other comprehensive income/(loss) | 6,103 | (740) | 893 |
Other comprehensive income/(loss) (Note T) | 4,839 | ||
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 | 573 | (965) | (10) |
Other comprehensive income/(loss), Before Tax Amount | 987 | (1,500) | (39) |
Other comprehensive income/(loss), Tax (Expense)/Benefit | (414) | 535 | 29 |
Other comprehensive income/(loss) | 1,303 | (965) | (10) |
Other comprehensive income/(loss) (Note T) | 573 | ||
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 | 0 | (1) | 1 |
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | 0 | 0 | 0 |
Unrealized gains/(losses) arising during the period, Net of Tax Amount | 0 | 0 | 1 |
Other comprehensive income/(loss), Before Tax Amount | 0 | (1) | 1 |
Other comprehensive income/(loss), Tax (Expense)/Benefit | 0 | 0 | 0 |
Other comprehensive income/(loss) | 0 | 0 | 1 |
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 | 344 | (349) | (689) |
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | (89) | 89 | 167 |
Unrealized gains/(losses) arising during the period, Net of Tax Amount | 256 | (261) | (522) |
Reclassification/amortization, Net of Tax Amount | 183 | (16) | 59 |
Other comprehensive income/(loss), Before Tax Amount | 587 | (370) | (614) |
Other comprehensive income/(loss), Tax (Expense)/Benefit | (149) | 94 | 151 |
Other comprehensive income/(loss) | 438 | (277) | (463) |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
SG&A expense | 24 | 0 | (53) |
Other (income) and expense | 157 | (101) | (39) |
Interest expense | 65 | 78 | 197 |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Services. | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | (43) | (23) | (68) |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Sales | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | 16 | (2) | (51) |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | Reclassifications | Financing. | |||
Reclassifications and Taxes Related to Items of Other Comprehensive Income | |||
Cost | 22 | 27 | 89 |
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 (Note H) | 11 | 6 | 17 |
Net (income) loss | (32) | (18) | (50) |
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 (Note H) | (3) | 1 | 15 |
Net (income) loss | 13 | (2) | (37) |
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 (Note H) | (6) | (7) | (22) |
Net (income) loss | 17 | 20 | 67 |
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 (Note H) | (6) | 0 | 14 |
Net (income) loss | 19 | 0 | (39) |
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 (Note H) | (40) | 25 | 10 |
Net (income) loss | 118 | (75) | (29) |
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 (Note H) | (16) | (20) | (50) |
Net (income) loss | 49 | 58 | 148 |
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 | 1,780 | (1,412) | (131) |
Reclassification/amortization, Net of Tax Amount | 2,049 | 1,914 | 1,496 |
Other comprehensive income/(loss), Before Tax Amount | 4,969 | 664 | 1,681 |
Other comprehensive income/(loss), Tax (Expense)/Benefit | (1,140) | (163) | (316) |
Other comprehensive income/(loss) | 4,362 | 501 | 1,365 |
Other comprehensive income/(loss) (Note T) | 3,828 | ||
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 | (51) | (37) | (73) |
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | (1) | 7 | 10 |
Unrealized gains/(losses) arising during the period, Net of Tax Amount | (52) | (29) | (63) |
Reclassification/amortization, Before Tax Amount | 9 | 13 | (9) |
Reclassification/amortization, Tax (Expense)/Benefit | 0 | (1) | 5 |
Reclassification/amortization, Net of Tax Amount | 9 | 12 | (4) |
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 | 2,433 | (1,678) | (120) |
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | (601) | 295 | 52 |
Unrealized gains/(losses) arising during the period, Net of Tax Amount | 1,832 | (1,383) | (68) |
Reclassification/amortization, Before Tax Amount | 2,484 | 2,314 | 1,843 |
Reclassification/amortization, Tax (Expense)/Benefit | (528) | (451) | (371) |
Reclassification/amortization, Net of Tax Amount | 1,956 | 1,863 | 1,471 |
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 | 94 | 52 | 41 |
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit | (11) | (14) | (12) |
Unrealized gains/(losses) arising during the period, Net of Tax Amount | $ 83 | $ 38 | $ 29 |
Equity Activity - AOCI Rollforw
Equity Activity - AOCI Rollforward (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Balance at the Beginning of the Period | $ 20,727 | $ 20,985 | $ 16,929 |
Separation of Kyndryl | (7,203) | ||
Other comprehensive income/(loss) | (740) | 893 | |
Balance at the End of the Period | 18,996 | 20,727 | 20,985 |
Accumulated Other Comprehensive Income/(Loss) | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Balance at the Beginning of the Period | (29,337) | (28,597) | (29,490) |
Other comprehensive income before reclassifications | 2,608 | (2,638) | (663) |
Amount reclassified from accumulated other comprehensive income | 2,231 | 1,898 | 1,556 |
Separation of Kyndryl | 1,264 | ||
Other comprehensive income/(loss) | 6,103 | (740) | 893 |
Balance at the End of the Period | (23,234) | (29,337) | (28,597) |
Net Unrealized Gains/(Losses) on Cash Flow Hedges | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Balance at the Beginning of the Period | (456) | (179) | 284 |
Other comprehensive income before reclassifications | 256 | (261) | (522) |
Amount reclassified from accumulated other comprehensive income | 183 | (16) | 59 |
Other comprehensive income/(loss) | 438 | (277) | (463) |
Balance at the End of the Period | (18) | (456) | (179) |
Foreign Currency Translation Adjustments | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Balance at the Beginning of the Period | (4,665) | (3,700) | (3,690) |
Other comprehensive income before reclassifications | 573 | (965) | (10) |
Separation of Kyndryl | 730 | ||
Other comprehensive income/(loss) | 1,303 | (965) | (10) |
Balance at the End of the Period | (3,362) | (4,665) | (3,700) |
Net Change Retirement-Related Benefit Plans | |||
Accumulated Other Comprehensive Income (Loss) (net of tax) | |||
Balance at the Beginning of the Period | (24,216) | (24,718) | (26,083) |
Other comprehensive income before reclassifications | 1,780 | (1,412) | (131) |
Amount reclassified from accumulated other comprehensive income | 2,049 | 1,914 | 1,496 |
Separation of Kyndryl | 534 | ||
Other comprehensive income/(loss) | 4,362 | 501 | 1,365 |
Balance at the End of the Period | (19,854) | (24,216) | (24,718) |
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 | 0 | 0 |
Other comprehensive income before reclassifications | 0 | 0 | 1 |
Other comprehensive income/(loss) | 0 | 0 | 1 |
Balance at the End of the Period | $ (1) | $ 0 | $ 0 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Offsetting (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Derivative Financial Instruments | ||
Potential reduction in net position of total derivative assets | $ 60 | $ 213 |
Potential reduction in net position of total derivative liabilities | 60 | 213 |
Cash collateral rehypothecated | 2 | 0 |
Other receivables | ||
Derivative Financial Instruments | ||
Right to reclaim cash collateral | 2 | 0 |
Accounts payable | ||
Derivative Financial Instruments | ||
Obligation to return cash collateral | $ 38 | $ 0 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Hedging Programs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | |
Instruments in net investment hedges | |||
Derivative Financial Instruments | |||
Notional amount | $ 6,800 | $ 7,200 | |
Average remaining maturity | 1 month 6 days | 3 months 18 days | |
Interest rate swaps | |||
Derivative Financial Instruments | |||
Notional amount | $ 425 | $ 2,975 | |
Amount of terminated derivative | $ 1,300 | ||
Interest rate swaps | Derivative instruments in fair value hedges | |||
Derivative Financial Instruments | |||
Notional amount | $ 400 | $ 3,000 | |
Average remaining maturity | 1 year 2 months 12 days | 1 year 2 months 12 days | |
Foreign exchange contracts | Not designated as hedging instruments - economic hedges | |||
Derivative Financial Instruments | |||
Notional amount | $ 6,800 | $ 6,800 | |
Foreign exchange contracts | Not designated as hedging instruments - economic hedges | Maximum | |||
Derivative Financial Instruments | |||
Term of contract | 1 year | ||
Foreign exchange contracts | Instruments in net investment hedges | |||
Derivative Financial Instruments | |||
Notional amount | $ 14,100 | 16,400 | |
Foreign exchange forward contracts | Derivative instruments in cash flow hedges | |||
Derivative Financial Instruments | |||
Maximum length of time hedged | 3 years | ||
Notional amount | $ 7,200 | $ 8,000 | |
Average remaining maturity | 7 months 6 days | 8 months 12 days | |
Net gains (losses) before taxes in accumulated other comprehensive income/(loss), cash flow hedges | $ 315 | $ (192) | |
Gains (losses) expected to be reclassified to net income within the next 12 months | $ 236 | ||
Cross-currency swaps | Derivative instruments in cash flow hedges | |||
Derivative Financial Instruments | |||
Maximum length of time hedged | 6 years | ||
Notional amount | $ 2,000 | 1,500 | |
Net gains (losses) before taxes in accumulated other comprehensive income/(loss), cash flow hedges | (174) | $ (236) | |
Gains (losses) expected to be reclassified to net income within the next 12 months | $ (15) | ||
Forward-starting interest rate swaps | Derivative instruments in cash flow hedges | |||
Derivative Financial Instruments | |||
Number of derivative instruments outstanding | 0 | 0 | |
Net gains (losses) before taxes in accumulated other comprehensive income/(loss), cash flow hedges | $ (157) | $ (174) | |
Gains (losses) expected to be reclassified to net income within the next 12 months | (18) | ||
Equity contracts hedging employee compensation obligations | Not designated as hedging instruments - economic hedges | |||
Derivative Financial Instruments | |||
Notional amount | $ 1,400 | $ 1,300 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Cumulative Basis Adjustments for Fair Value Hedges (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Short-term debt | ||
Amounts recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges | ||
Carrying amount of the hedged item | $ (227) | $ (1,302) |
Cumulative hedging adjustments included in the carrying amount-assets/(liabilities) | (2) | (2) |
Long-term debt | ||
Amounts recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges | ||
Carrying amount of the hedged item | (508) | (2,097) |
Cumulative hedging adjustments included in the carrying amount-assets/(liabilities) | (309) | (424) |
Hedging adjustments on discontinued hedging relationships | $ (302) | $ (353) |
Derivative Financial Instrume_6
Derivative Financial Instruments - Effect of Hedge Activity on Income and Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Derivative Instruments, Gain (Loss) | |||
Cost | $ 25,865 | $ 24,314 | $ 26,181 |
SG&A expense | 18,745 | 20,561 | 18,724 |
Other (income) and expense | 873 | 802 | (1,012) |
Interest expense | 1,155 | 1,288 | 1,344 |
Cost of services | |||
Derivative Instruments, Gain (Loss) | |||
Gains/(losses) of total hedge activity | 43 | 23 | 68 |
Cost of sales | |||
Derivative Instruments, Gain (Loss) | |||
Gains/(losses) of total hedge activity | (16) | 2 | 51 |
Cost of financing | |||
Derivative Instruments, Gain (Loss) | |||
Gains/(losses) of total hedge activity | 1 | 12 | (42) |
SG&A expense | |||
Derivative Instruments, Gain (Loss) | |||
Gains/(losses) of total hedge activity | 176 | 141 | 267 |
Other (income) and expense | |||
Derivative Instruments, Gain (Loss) | |||
Gains/(losses) of total hedge activity | (205) | 101 | (15) |
Interest expense | |||
Derivative Instruments, Gain (Loss) | |||
Gains/(losses) of total hedge activity | 3 | 35 | (93) |
Services. | |||
Derivative Instruments, Gain (Loss) | |||
Cost | 19,147 | 17,689 | 19,009 |
Sales | |||
Derivative Instruments, Gain (Loss) | |||
Cost | 6,184 | 6,048 | 6,467 |
Financing. | |||
Derivative Instruments, Gain (Loss) | |||
Cost | $ 534 | $ 577 | $ 704 |
Derivative Financial Instrume_7
Derivative Financial Instruments - Gains and Losses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Derivative Instruments, Gain (Loss) | |||
Gain (loss) recognized in earnings on derivatives | $ 150 | $ 220 | $ 302 |
Gain (loss) recognized in earnings attributable to risk being hedged | 71 | 14 | (103) |
Cash flow hedges and net investment hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI | 1,989 | (2,477) | (784) |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (243) | 21 | (75) |
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing | 23 | 60 | 112 |
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 | (168) | ||
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 | 344 | (349) | (521) |
Foreign exchange contracts | Instruments in net investment hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI | 1,644 | (2,127) | (95) |
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 | 43 | 23 | 68 |
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 | (16) | 2 | 51 |
Cost of financing | Interest rate contracts | Derivative instruments in fair value hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (loss) recognized in earnings on derivatives | (1) | 20 | 44 |
Gain (loss) recognized in earnings attributable to risk being hedged | 18 | 4 | (32) |
Cost of financing | Interest rate contracts | Derivative instruments in cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (4) | (5) | (3) |
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 | (18) | (23) | (86) |
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 | 6 | 16 | 35 |
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 | (24) | 0 | 53 |
SG&A expense | Equity contracts | Not designated as hedging instruments - economic hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (loss) recognized in earnings on derivatives | 201 | 142 | 214 |
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 | (157) | 101 | 39 |
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 | (48) | 1 | (53) |
Interest expense | Interest rate contracts | Derivative instruments in fair value hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (loss) recognized in earnings on derivatives | (2) | 58 | 98 |
Gain (loss) recognized in earnings attributable to risk being hedged | 53 | 11 | (71) |
Interest expense | Interest rate contracts | Derivative instruments in cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI | (13) | (13) | (8) |
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 | (52) | (65) | (190) |
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 | $ 17 | $ 45 | $ 77 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Stock-based compensation cost, allocation of recognized costs | |||
Pre-tax stock-based compensation cost | $ 919 | $ 873 | $ 628 |
Income tax benefits | (223) | (198) | (143) |
Net stock-based compensation cost | 695 | 675 | 484 |
Unrecognized compensation cost related to non-vested awards | $ 1,400 | ||
Unrecognized compensation cost related to non-vested awards, weighted average period of recognition | 2 years 4 months 24 days | ||
Cost | |||
Stock-based compensation cost, allocation of recognized costs | |||
Pre-tax stock-based compensation cost | $ 145 | 126 | 85 |
SG&A expense | |||
Stock-based compensation cost, allocation of recognized costs | |||
Pre-tax stock-based compensation cost | 555 | 550 | 419 |
Research, development and engineering | |||
Stock-based compensation cost, allocation of recognized costs | |||
Pre-tax stock-based compensation cost | $ 218 | $ 197 | $ 125 |
Stock-Based Compensation - Ince
Stock-Based Compensation - Incentive Awards (Details) shares in Millions | 12 Months Ended |
Dec. 31, 2021shares | |
Kyndryl Holdings, Inc | |
Stock-Based Compensation | |
Stock adjustment ratio | 1.03 |
Adjusted stock options issued | 0.8 |
Long-term performance plans | |
Stock-Based Compensation | |
Shares authorized under existing stock based compensation plans (in shares) | 293 |
Additional shares considered authorized under previous stock based compensation plans (in shares) | 66 |
Unused shares available to be granted (in shares) | 96 |
Stock-Based Compensation - RSU
Stock-Based Compensation - RSU and PSU Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Restricted Stock Units | |||
Weighted Average Grant Price | |||
Beginning balance (in dollars per share) | $ 117 | $ 123 | $ 130 |
Granted (in dollars per share) | 125 | 115 | 119 |
Released (in dollars per share) | 120 | 126 | 136 |
Canceled/forfeited/performance adjusted (in dollars per share) | 119 | 121 | 128 |
Ending balance (in dollars per share) | $ 116 | $ 117 | $ 123 |
Number of Units | |||
Beginning balance (in shares) | 16,896,704 | 11,326,628 | 9,802,704 |
Granted (in shares) | 9,566,307 | 10,651,955 | 5,650,861 |
Released (in shares) | (4,582,159) | (3,781,240) | (3,145,016) |
Canceled/forfeited/performance adjusted (in shares) | (2,072,800) | (1,300,639) | (981,921) |
Ending balance (in shares) | 19,038,480 | 16,896,704 | 11,326,628 |
Restricted Stock Units | Kyndryl Holdings, Inc | |||
Weighted Average Grant Price | |||
Kyndryl separation - cancellation (in dollars per share) | $ 119 | ||
Number of Units | |||
Kyndryl separation - adjustment (in shares) | 660,089 | ||
Kyndryl separation - cancellation (in shares) | 1,429,661 | ||
Performance Share Units | |||
Weighted Average Grant Price | |||
Beginning balance (in dollars per share) | $ 120 | $ 126 | $ 136 |
Granted (in dollars per share) | 129 | 117 | 117 |
Released (in dollars per share) | 129 | 137 | 140 |
Canceled/forfeited/performance adjusted (in dollars per share) | 124 | 125 | 131 |
Ending balance (in dollars per share) | $ 118 | $ 120 | $ 126 |
Number of Units | |||
Beginning balance (in shares) | 3,551,500 | 2,856,450 | 2,419,695 |
Granted (in shares) | 1,561,120 | 1,582,666 | 1,395,534 |
Performance adjustments (in shares) | (223,397) | (70,089) | (8,544) |
Released (in shares) | (581,397) | (630,974) | (846,672) |
Canceled/forfeited/performance adjusted (in shares) | (453,178) | (256,642) | (112,107) |
Ending balance (in shares) | 3,728,857 | 3,551,500 | 2,856,450 |
Performance Share Units | Kyndryl Holdings, Inc | |||
Weighted Average Grant Price | |||
Kyndryl separation - cancellation (in dollars per share) | $ 119 | ||
Number of Units | |||
Kyndryl separation - adjustment (in shares) | 120,428 | ||
Kyndryl separation - cancellation (in shares) | 469,616 |
Stock-Based Compensation - RSUs
Stock-Based Compensation - RSUs and PSUs, Other Disclosures (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
RSUs and PSUs | |||
Stock-Based Compensation | |||
Tax benefits realized in connection with vesting and release of awards | $ 175 | $ 139 | $ 131 |
Restricted Stock Units | |||
Stock-Based Compensation | |||
Fair value of stock units granted | 1,195 | 1,220 | 674 |
Fair value of stock units vested | 549 | 478 | 428 |
Performance Share Units | |||
Stock-Based Compensation | |||
Fair value of stock units granted | 201 | 186 | 164 |
Fair value of stock units vested | $ 75 | $ 86 | $ 118 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) $ / shares in Units, $ in Millions | 12 Months Ended | 60 Months Ended | ||
Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2016itemshares | Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2020shares | |
Stock options | ||||
Treasury stock, Shares (in shares) | shares | 1,350,509,249 | 1,350,509,249 | 1,350,315,580 | |
Stock Options | ||||
Number of Shares under Option | ||||
Options granted (in shares) | shares | 0 | |||
Stock Options | Granted in 2016 | ||||
Stock options | ||||
Occurrences of stock award options granted | item | 1 | |||
Number of Shares under Option | ||||
Options granted (in shares) | shares | 1,500,000 | |||
Exercise Price Range $125-$149 | Stock Options | ||||
Stock options | ||||
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 125 | |||
Exercise price, upper range limit (in dollars per share) | $ / shares | 149 | |||
Options outstanding, weighted average exercise price (in dollars per share) | $ / shares | $ 135 | $ 135 | ||
Options outstanding, total intrinsic value | $ | $ 4.5 | $ 4.5 | ||
Options outstanding, weighted average remaining contractual life | 4 years 1 month 6 days |
Stock-Based Compensation - Acqu
Stock-Based Compensation - Acquisitions (Details) $ / shares in Units, shares in Millions, $ in Millions | Jul. 09, 2019USD ($)shares | Dec. 31, 2021$ / sharesshares |
Red Hat, Inc. | Stock Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock awards issued in connection with the acquisition (in shares) | 6.4 | |
Stock awards issued in connection with the acquisition | $ | $ 845 | |
Share conversion ratio | 1.35 | |
Stock awards outstanding (in shares) | 0.7 | |
Stock awards weighted-average grant price (in dollars per share) | $ / shares | $ 127 | |
Various other acquisition transactions | Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Additional stock options outstanding in connection with acquisitions (in shares) | 0.6 | |
Additional options outstanding, weighted-average exercise price (in dollars per share) | $ / shares | $ 26 |
Stock-Based Compensation - ESPP
Stock-Based Compensation - ESPP (Details) - Employee Stock Purchase Plan - USD ($) | Apr. 01, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Stock-Based Compensation | ||||
Discount on purchase of common stock (as a percent) | 5.00% | |||
Maximum percentage of payroll deductions on eligible compensation | 10.00% | |||
Maximum stock purchases by employees, value | $ 25,000 | |||
Maximum stock purchases by employees (in shares) | 1,000 | |||
Shares purchased by employees under the ESPP (in shares) | 1,000,000 | 1,000,000 | 1,000,000 | |
Shares available for purchase (in shares) | 16,800,000 | |||
Expected | ||||
Stock-Based Compensation | ||||
Discount on purchase of common stock (as a percent) | 15.00% |
Retirement-Related Benefits - D
Retirement-Related Benefits - Defined Benefit Plans (Details) | 12 Months Ended |
Dec. 31, 2021 | |
U.S. | Pension Plans | Personal Pension Plan (PPP) | |
Defined Benefit Plans | |
Period used in final pay formula that determines benefits | 5 years |
Retirement-Related Benefits -_2
Retirement-Related Benefits - Defined Contribution Plans (Details) | 12 Months Ended |
Dec. 31, 2021 | |
IBM 401(k) Plus Plan | |
Defined Contribution Plans | |
Employer's automatic contribution as a percentage of eligible compensation, lowest level defined | 1.00% |
Employer's automatic contribution as a percentage of eligible compensation, second level defined | 2.00% |
Employer's automatic contribution as a percentage of eligible compensation, highest level defined | 4.00% |
Service period after which employees receive automatic and matching contributions | 1 year |
Nonqualified Plans | IBM Excess 401(k) Plus Plan | |
Defined Contribution Plans | |
Service period after which employees receive automatic and matching contributions | 1 year |
Pension Plans | Qualified Plans | IBM 401(k) Plus Plan | |
Defined Contribution Plans | |
Maximum percentage, dollar-for-dollar match by entity to employee contribution of eligible compensation for employees | 5.00% |
Maximum percentage, dollar-for-dollar match by entity to employee contribution of eligible compensation for employees | 6.00% |
Retirement-Related Benefits - A
Retirement-Related Benefits - All Retirement Plans Cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | $ 992 | $ 1,015 | $ 1,002 |
Total | 2,601 | 2,451 | 1,920 |
Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 1,438 | 1,235 | 700 |
Nonpension Postretirement Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 172 | 202 | 218 |
U.S. | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | 582 | 612 | 613 |
Total | 1,029 | 934 | 624 |
U.S. | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 319 | 178 | (142) |
U.S. | Nonpension Postretirement Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 127 | 145 | 154 |
Non-U.S. | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | 409 | 403 | 389 |
Total | 1,573 | 1,517 | 1,295 |
Non-U.S. | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 1,119 | 1,057 | 842 |
Non-U.S. | Nonpension Postretirement Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 44 | 57 | 64 |
Personal Pension Plan (PPP) | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 1,422 | 1,224 | 689 |
Personal Pension Plan (PPP) | U.S. | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 303 | 167 | (153) |
Personal Pension Plan (PPP) | Non-U.S. | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 1,119 | 1,057 | 842 |
Retention Plan | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 16 | 11 | 11 |
Retention Plan | U.S. | Pension Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Total defined benefit plans (income)/cost | 16 | 11 | 11 |
IBM 401(k) Plus Plan and Non-U.S. Defined Contribution Plans | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | 971 | 988 | 976 |
IBM 401(k) Plus Plan and Non-U.S. Defined Contribution Plans | U.S. | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | 561 | 585 | 588 |
IBM 401(k) Plus Plan and Non-U.S. Defined Contribution Plans | Non-U.S. | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | 409 | 403 | 389 |
IBM Excess 401(k) Plus Plan | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | 21 | 27 | 26 |
IBM Excess 401(k) Plus Plan | U.S. | |||
RETIREMENT-RELATED BENEFITS | |||
Defined contribution plans cost | $ 21 | $ 27 | $ 26 |
Retirement-Related Benefits - P
Retirement-Related Benefits - PBO, APBO, FV of Plan Assets, Funded Status (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Overfunded plans | |||
Funded status of plan | |||
Benefit Obligations | $ 68,075 | $ 70,888 | |
Fair Value of Plan Assets | 77,924 | 78,445 | |
Funded Status | 9,850 | 7,557 | |
Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 29,246 | 36,342 | |
Fair Value of Plan Assets | 13,947 | 18,302 | |
Funded Status | $ (15,300) | (18,040) | |
Pension Plans | |||
Funded status of plan | |||
Percentage of plan funded | 98.00% | ||
Pension Plans | Qualified Plans | |||
Funded status of plan | |||
Percentage of plan funded | 107.00% | ||
U.S. | Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | $ 5,128 | 5,652 | |
Fair Value of Plan Assets | 8 | 15 | |
Funded Status | (5,119) | (5,638) | |
U.S. | Underfunded plans | Personal Pension Plan (PPP) | |||
Funded status of plan | |||
Benefit Obligations | 1,441 | 1,556 | |
Funded Status | (1,441) | (1,556) | |
U.S. | Underfunded plans | Retention Plan | |||
Funded status of plan | |||
Benefit Obligations | 283 | 306 | |
Funded Status | (283) | (306) | |
U.S. | Pension Plans | |||
Funded status of plan | |||
Benefit Obligations | 48,182 | 52,237 | $ 50,232 |
Fair Value of Plan Assets | 51,852 | 54,386 | 51,784 |
Funded Status | $ 3,671 | 2,149 | |
U.S. | Pension Plans | Qualified Plans | Personal Pension Plan (PPP) | |||
Funded status of plan | |||
Percentage of plan funded | 112.00% | ||
U.S. | Pension Plans | Qualified Plans | Overfunded plans | Personal Pension Plan (PPP) | |||
Funded status of plan | |||
Benefit Obligations | $ 46,458 | 50,375 | |
Fair Value of Plan Assets | 51,852 | 54,386 | |
Funded Status | 5,395 | 4,011 | |
U.S. | Nonpension Postretirement Plans | |||
Funded status of plan | |||
Benefit Obligations | 3,404 | 3,791 | 3,857 |
Fair Value of Plan Assets | 8 | 15 | 3 |
Funded Status | (3,395) | (3,776) | |
U.S. | Nonpension Postretirement Plans | Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 3,404 | 3,791 | |
Fair Value of Plan Assets | 8 | 15 | |
Funded Status | (3,395) | (3,776) | |
Non-U.S. | Overfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 21,617 | 20,513 | |
Fair Value of Plan Assets | 26,071 | 24,060 | |
Funded Status | 4,454 | 3,546 | |
Non-U.S. | Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 24,118 | 30,690 | |
Fair Value of Plan Assets | 13,939 | 18,288 | |
Funded Status | (10,179) | (12,402) | |
Non-U.S. | Pension Plans | |||
Funded status of plan | |||
Benefit Obligations | 45,097 | 50,447 | 45,947 |
Fair Value of Plan Assets | 39,979 | 42,308 | 38,891 |
Funded Status | (5,118) | (8,140) | |
Non-U.S. | Pension Plans | Qualified Plans | Overfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 21,617 | 20,504 | |
Fair Value of Plan Assets | 26,071 | 24,051 | |
Funded Status | 4,454 | 3,546 | |
Non-U.S. | Pension Plans | Qualified Plans | Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 17,360 | 23,207 | |
Fair Value of Plan Assets | 13,908 | 18,257 | |
Funded Status | (3,452) | (4,950) | |
Non-U.S. | Pension Plans | Nonqualified Plans | Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 6,120 | 6,736 | |
Funded Status | (6,120) | (6,736) | |
Non-U.S. | Nonpension Postretirement Plans | |||
Funded status of plan | |||
Benefit Obligations | 638 | 756 | 830 |
Fair Value of Plan Assets | 31 | 40 | $ 52 |
Funded Status | (607) | (716) | |
Non-U.S. | Nonpension Postretirement Plans | Overfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 9 | ||
Fair Value of Plan Assets | 9 | ||
Funded Status | 0 | ||
Non-U.S. | Nonpension Postretirement Plans | Underfunded plans | |||
Funded status of plan | |||
Benefit Obligations | 638 | 747 | |
Fair Value of Plan Assets | 31 | 31 | |
Funded Status | $ (607) | $ (716) |
Retirement-Related Benefits - N
Retirement-Related Benefits - Net Periodic Cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Pension Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Total net periodic pension / nonpension (income)/cost of defined benefit plans | $ 1,438 | $ 1,235 | $ 700 |
Nonpension Postretirement Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Total net periodic pension / nonpension (income)/cost of defined benefit plans | 172 | 202 | 218 |
U.S. | Pension Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Interest cost | $ 1,109 | $ 1,501 | $ 1,882 |
Interest cost - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Expected return on plan assets | $ (1,802) | $ (2,169) | $ (2,599) |
Expected return on plan assets - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Amortization of transition assets - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Amortization of prior service costs/(credits) | $ 16 | $ 16 | $ 16 |
Amortization of prior service costs/(credits) - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Recognized actuarial losses | $ 996 | $ 829 | $ 559 |
Recognized actuarial losses - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Curtailments and settlements - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Total net periodic pension / nonpension (income)/cost of defined benefit plans | $ 319 | $ 178 | $ (142) |
U.S. | Nonpension Postretirement Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Service cost | 7 | 9 | 10 |
Interest cost | $ 65 | $ 103 | $ 145 |
Interest cost - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Expected return on plan assets - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Amortization of transition assets - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Amortization of prior service costs/(credits) | $ 4 | $ 4 | $ (2) |
Amortization of prior service costs/(credits) - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Recognized actuarial losses | $ 52 | $ 29 | $ 1 |
Recognized actuarial losses - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Curtailments and settlements - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Total net periodic pension / nonpension (income)/cost of defined benefit plans | $ 127 | $ 145 | $ 154 |
Non-U.S. | Pension Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Service cost | 300 | 328 | 304 |
Interest cost | $ 424 | $ 541 | $ 814 |
Interest cost - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Expected return on plan assets | $ (1,115) | $ (1,229) | $ (1,530) |
Expected return on plan assets - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Amortization of transition assets | $ 0 | ||
Amortization of transition assets - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Amortization of prior service costs/(credits) | $ (12) | $ (9) | $ (25) |
Amortization of prior service costs/(credits) - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Recognized actuarial losses | $ 1,392 | $ 1,336 | $ 1,190 |
Recognized actuarial losses - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Curtailments and settlements | $ 94 | $ 49 | $ 38 |
Curtailments and settlements - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Multi-employer plans | $ 17 | $ 23 | $ 23 |
Other costs/(credits) | 18 | 18 | 28 |
Total net periodic pension / nonpension (income)/cost of defined benefit plans | 1,119 | 1,057 | 842 |
Non-U.S. | Nonpension Postretirement Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Service cost | 4 | 4 | 4 |
Interest cost | $ 27 | $ 35 | $ 54 |
Interest cost - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Expected return on plan assets | $ (3) | $ (4) | $ (5) |
Expected return on plan assets - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Amortization of transition assets - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Amortization of prior service costs/(credits) | $ 0 | $ 0 | $ 0 |
Amortization of prior service costs/(credits) - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Recognized actuarial losses | $ 15 | $ 21 | $ 10 |
Recognized actuarial losses - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Curtailments and settlements | $ 0 | $ 0 | $ 0 |
Curtailments and settlements - income statement location | Other (income) and expense | Other (income) and expense | Other (income) and expense |
Other costs/(credits) | $ 0 | $ 0 | |
Total net periodic pension / nonpension (income)/cost of defined benefit plans | 44 | 57 | $ 64 |
Personal Pension Plan (PPP) | Pension Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Total net periodic pension / nonpension (income)/cost of defined benefit plans | 1,422 | 1,224 | 689 |
Personal Pension Plan (PPP) | U.S. | Pension Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Total net periodic pension / nonpension (income)/cost of defined benefit plans | 303 | 167 | (153) |
Personal Pension Plan (PPP) | Non-U.S. | Pension Plans | |||
Components of net periodic (income)/cost of the retirement-related benefit plans | |||
Total net periodic pension / nonpension (income)/cost of defined benefit plans | $ 1,119 | $ 1,057 | $ 842 |
Retirement-Related Benefits - C
Retirement-Related Benefits - Changes in Benefit Obligation and Plan Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Pension Plans | U.S. | |||
Changes in benefit obligation | |||
Benefit obligation, balance at beginning of period | $ 52,237 | $ 50,232 | |
Interest cost | 1,109 | 1,501 | $ 1,882 |
Acquisitions/divestitures, net | 1 | ||
Actuarial losses/(gains) | (1,582) | 4,071 | |
Benefits paid from trust | (3,459) | (3,445) | |
Direct benefit payments | (125) | (123) | |
Amendments/curtailments/settlements/other | 1 | 0 | |
Benefit obligation, balance at end of period | 48,182 | 52,237 | 50,232 |
Change in plan assets | |||
Fair value of plan assets, balance at beginning of period | 54,386 | 51,784 | |
Actual return on plan assets | 924 | 6,046 | |
Acquisitions/divestitures, net | 1 | ||
Benefits paid from trust | (3,459) | (3,445) | |
Amendments/curtailments/settlements/other | 1 | ||
Fair value of plan assets, balance at end of period | 51,852 | 54,386 | 51,784 |
Funded status | 3,671 | 2,149 | |
Accumulated benefit obligation | 48,182 | 52,237 | |
Pension Plans | Non-U.S. | |||
Changes in benefit obligation | |||
Benefit obligation, balance at beginning of period | 50,447 | 45,947 | |
Service cost | 300 | 328 | 304 |
Interest cost | 424 | 541 | 814 |
Plan participants' contributions | 19 | 18 | |
Acquisitions/divestitures, net | (70) | 63 | |
Actuarial losses/(gains) | (876) | 2,794 | |
Benefits paid from trust | (2,090) | (1,908) | |
Direct benefit payments | (516) | (391) | |
Foreign exchange impact | (2,548) | 3,085 | |
Amendments/curtailments/settlements/other | 7 | (29) | |
Benefit obligation, balance at end of period | 45,097 | 50,447 | 45,947 |
Change in plan assets | |||
Fair value of plan assets, balance at beginning of period | 42,308 | 38,891 | |
Actual return on plan assets | 1,686 | 2,559 | |
Employer contributions | 86 | 166 | |
Acquisitions/divestitures, net | (87) | 106 | |
Plan participant's contributions | 19 | 18 | |
Benefits paid from trust | (2,090) | (1,908) | |
Foreign exchange impact | (1,939) | 2,479 | |
Amendments/curtailments/settlements/other | (4) | (2) | |
Fair value of plan assets, balance at end of period | 39,979 | 42,308 | 38,891 |
Funded status | (5,118) | (8,140) | |
Accumulated benefit obligation | 44,628 | 50,019 | |
Nonpension Postretirement Plans | U.S. | |||
Changes in benefit obligation | |||
Benefit obligation, balance at beginning of period | 3,791 | 3,857 | |
Service cost | 7 | 9 | 10 |
Interest cost | 65 | 103 | 145 |
Plan participants' contributions | 50 | 56 | |
Actuarial losses/(gains) | (141) | 135 | |
Benefits paid from trust | (369) | (369) | |
Direct benefit payments | (1) | 0 | |
Amendments/curtailments/settlements/other | 3 | ||
Benefit obligation, balance at end of period | 3,404 | 3,791 | 3,857 |
Change in plan assets | |||
Fair value of plan assets, balance at beginning of period | 15 | 3 | |
Actual return on plan assets | 0 | ||
Employer contributions | 313 | 325 | |
Plan participant's contributions | 50 | 56 | |
Benefits paid from trust | (369) | (369) | |
Amendments/curtailments/settlements/other | 0 | 0 | |
Fair value of plan assets, balance at end of period | 8 | 15 | 3 |
Funded status | (3,395) | (3,776) | |
Nonpension Postretirement Plans | Non-U.S. | |||
Changes in benefit obligation | |||
Benefit obligation, balance at beginning of period | 756 | 830 | |
Service cost | 4 | 4 | 4 |
Interest cost | 27 | 35 | 54 |
Acquisitions/divestitures, net | 6 | 0 | |
Actuarial losses/(gains) | (78) | (2) | |
Benefits paid from trust | (6) | (4) | |
Direct benefit payments | (28) | (24) | |
Foreign exchange impact | (42) | (83) | |
Amendments/curtailments/settlements/other | (1) | (1) | |
Benefit obligation, balance at end of period | 638 | 756 | 830 |
Change in plan assets | |||
Fair value of plan assets, balance at beginning of period | 40 | 52 | |
Actual return on plan assets | (14) | 2 | |
Employer contributions | 6 | ||
Benefits paid from trust | (6) | (4) | |
Foreign exchange impact | 6 | (10) | |
Amendments/curtailments/settlements/other | 0 | 0 | |
Fair value of plan assets, balance at end of period | 31 | 40 | $ 52 |
Funded status | $ (607) | $ (716) |
Retirement-Related Benefits -_3
Retirement-Related Benefits - Net Funded Status (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Net funded status recognized in the Consolidated Balance Sheet | ||
Prepaid pension assets | $ 9,850 | $ 7,557 |
Current liabilities - compensation and benefits | (3,204) | (3,056) |
Noncurrent liabilities - retirement and nonpension postretirement benefit obligations | (14,435) | (17,184) |
Pension Plans | U.S. | ||
Net funded status recognized in the Consolidated Balance Sheet | ||
Prepaid pension assets | 5,395 | 4,011 |
Current liabilities - compensation and benefits | (123) | (122) |
Noncurrent liabilities - retirement and nonpension postretirement benefit obligations | (1,601) | (1,740) |
Funded Status-net | 3,671 | 2,149 |
Pension Plans | Non-U.S. | ||
Net funded status recognized in the Consolidated Balance Sheet | ||
Prepaid pension assets | 4,455 | 3,546 |
Current liabilities - compensation and benefits | (359) | (342) |
Noncurrent liabilities - retirement and nonpension postretirement benefit obligations | (9,215) | (11,344) |
Funded Status-net | (5,118) | (8,140) |
Nonpension Postretirement Plans | U.S. | ||
Net funded status recognized in the Consolidated Balance Sheet | ||
Prepaid pension assets | 0 | 0 |
Current liabilities - compensation and benefits | (364) | (346) |
Noncurrent liabilities - retirement and nonpension postretirement benefit obligations | (3,031) | (3,430) |
Funded Status-net | (3,395) | (3,776) |
Nonpension Postretirement Plans | Non-U.S. | ||
Net funded status recognized in the Consolidated Balance Sheet | ||
Prepaid pension assets | 0 | 0 |
Current liabilities - compensation and benefits | (19) | (46) |
Noncurrent liabilities - retirement and nonpension postretirement benefit obligations | (588) | (670) |
Funded Status-net | $ (607) | $ (716) |
Retirement-Related Benefits - O
Retirement-Related Benefits - OCI and AOCI (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Changes in AOCI for retirement-related benefits | |||
Current period loss/(gain) | $ (2,433) | $ 1,678 | $ 120 |
Curtailments and settlements | (94) | (52) | (41) |
Amortization of net loss included in net periodic (income)/cost | (2,484) | (2,314) | (1,843) |
Current period prior service costs/(credits) | 51 | 37 | 73 |
Amortization of prior service (costs)/credits included in net periodic (income)/cost | (9) | (13) | 9 |
Pension Plans | U.S. | |||
Changes in AOCI for retirement-related benefits | |||
Net loss at beginning of period | 15,972 | 16,608 | |
Current period loss/(gain) | (704) | 194 | |
Amortization of net loss included in net periodic (income)/cost | (996) | (829) | |
Net loss at end of period | 14,273 | 15,972 | 16,608 |
Prior service costs/(credits) at beginning of period | 24 | 41 | |
Amortization of prior service (costs)/credits included in net periodic (income)/cost | (16) | (16) | |
Prior service costs/(credits) at end of period | 8 | 24 | 41 |
Total loss recognized in accumulated other comprehensive income/(loss) | 14,281 | 15,997 | |
Pension Plans | Non-U.S. | |||
Changes in AOCI for retirement-related benefits | |||
Net loss at beginning of period | 16,310 | 16,361 | |
Current period loss/(gain) | (1,411) | 1,334 | |
Curtailments and settlements | (94) | (49) | |
Amortization of net loss included in net periodic (income)/cost | (1,392) | (1,336) | |
Net loss at end of period | 13,412 | 16,310 | 16,361 |
Prior service costs/(credits) at beginning of period | 325 | 280 | |
Current period prior service costs/(credits) | 60 | 36 | |
Curtailments, settlements and other | 0 | ||
Amortization of prior service (costs)/credits included in net periodic (income)/cost | 12 | 9 | |
Prior service costs/(credits) at end of period | 397 | 325 | 280 |
Transition (assets)/liabilities at beginning of period | 0 | 0 | |
Amortization of transition assets/(liabilities) included in net periodic (income)/cost | 0 | ||
Transition (assets)/liabilities at end of period | 0 | 0 | 0 |
Total loss recognized in accumulated other comprehensive income/(loss) | 13,809 | 16,635 | |
Nonpension Postretirement Plans | U.S. | |||
Changes in AOCI for retirement-related benefits | |||
Net loss at beginning of period | 656 | 551 | |
Current period loss/(gain) | (141) | 135 | |
Amortization of net loss included in net periodic (income)/cost | (52) | (29) | |
Net loss at end of period | 464 | 656 | 551 |
Prior service costs/(credits) at beginning of period | 30 | 34 | |
Amortization of prior service (costs)/credits included in net periodic (income)/cost | (4) | (4) | |
Prior service costs/(credits) at end of period | 26 | 30 | 34 |
Total loss recognized in accumulated other comprehensive income/(loss) | 490 | 687 | |
Nonpension Postretirement Plans | Non-U.S. | |||
Changes in AOCI for retirement-related benefits | |||
Net loss at beginning of period | 263 | 284 | |
Current period loss/(gain) | (65) | 0 | |
Curtailments and settlements | 0 | 0 | |
Amortization of net loss included in net periodic (income)/cost | (15) | (21) | |
Net loss at end of period | 183 | 263 | 284 |
Prior service costs/(credits) at beginning of period | (4) | (4) | |
Current period prior service costs/(credits) | 0 | ||
Amortization of prior service (costs)/credits included in net periodic (income)/cost | 0 | 0 | |
Prior service costs/(credits) at end of period | (4) | (4) | (4) |
Transition (assets)/liabilities at beginning of period | 0 | 0 | |
Amortization of transition assets/(liabilities) included in net periodic (income)/cost | 0 | 0 | |
Transition (assets)/liabilities at end of period | 0 | 0 | $ 0 |
Total loss recognized in accumulated other comprehensive income/(loss) | $ 179 | $ 259 |
Retirement-Related Benefits -_4
Retirement-Related Benefits - Assumptions (Details) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Pension Plans | ||||
Expected Long-Term Returns on Plan Assets | ||||
Period over which changes in fair value of plan assets recognized | 5 years | |||
Pension Plans | U.S. | ||||
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ||||
Discount rate | 2.20% | 3.10% | 4.10% | |
Expected long-term returns on plan assets | 3.75% | 4.50% | 5.25% | |
Interest crediting rate | 1.10% | 2.70% | 3.60% | |
Weighted-average assumptions used to measure benefit obligations at December 31 | ||||
Discount rate | 2.60% | 2.20% | 3.10% | |
Interest crediting rate | 1.10% | 1.10% | 2.70% | |
Pension Plans | U.S. | Expected | ||||
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ||||
Expected long-term returns on plan assets | 4.00% | |||
Pension Plans | U.S. | Personal Pension Plan (PPP) | ||||
Interest Crediting Rate | ||||
Maturity period of the average interest from August to October | 1 year | |||
Percentage interest rate added to average interest from August to October of the one-year U.S. Treasury Constant Maturity yield for computation of interest crediting rate (as a percent) | 1.00% | |||
Pension Plans | Non-U.S. | ||||
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ||||
Discount rate | 0.87% | 1.20% | 1.86% | |
Expected long-term returns on plan assets | 2.85% | 3.36% | 4.38% | |
Rate of compensation increase | 2.59% | 2.32% | 2.20% | |
Interest crediting rate | 0.26% | 0.28% | 0.30% | |
Weighted-average assumptions used to measure benefit obligations at December 31 | ||||
Discount rate | 1.26% | 0.87% | 1.20% | |
Rate of compensation increase | 3.02% | 2.59% | 2.32% | |
Interest crediting rate | 0.26% | 0.26% | 0.28% | |
Pension Plans | Non-U.S. | Expected | ||||
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ||||
Expected long-term returns on plan assets | 2.97% | |||
Nonpension Postretirement Plans | U.S. | ||||
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ||||
Discount rate | 1.80% | 2.80% | 3.90% | |
Interest crediting rate | 1.10% | 2.70% | 3.60% | |
Weighted-average assumptions used to measure benefit obligations at December 31 | ||||
Discount rate | 2.30% | 1.80% | 2.80% | |
Interest crediting rate | 1.10% | 1.10% | 2.70% | |
Nonpension Postretirement Plans | Non-U.S. | ||||
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | ||||
Discount rate | 4.55% | 5.08% | 4.88% | |
Expected long-term returns on plan assets | 6.62% | 7.73% | 7.70% | |
Weighted-average assumptions used to measure benefit obligations at December 31 | ||||
Discount rate | 5.35% | 4.55% | 5.08% | |
Retiree Health Benefits | ||||
Healthcare Cost Trend Rate | ||||
Health care cost trend rate assumed for next fiscal year | 6.00% | |||
Ultimate healthcare cost trend rate | 5.00% | |||
Period for ultimate trend rate | 6 years |
Retirement-Related Benefits - I
Retirement-Related Benefits - Investment Strategy (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
U.S. | Personal Pension Plan (PPP) | Qualified Plans | Equity securities | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 10.00% | ||
U.S. | Personal Pension Plan (PPP) | Qualified Plans | Fixed-income securities | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 82.00% | ||
U.S. | Personal Pension Plan (PPP) | Qualified Plans | Real Estate. | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 3.00% | ||
U.S. | Personal Pension Plan (PPP) | Qualified Plans | Other investments | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 4.00% | ||
U.S. | Personal Pension Plan (PPP) | Qualified Plans | Private equities and private real estate investments | |||
Investment Policies And Strategies | |||
Fair Value of plan assets | $ 4,049 | ||
Commitments for future investments in private markets | $ 1,066 | ||
Non-U.S. | Maximum | |||
Investment Policies And Strategies | |||
Percentage of board members, elected by employees and retirees for managing investments (as a percent) | 50.00% | ||
Non-U.S. | Equity securities | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 16.00% | ||
Non-U.S. | Fixed-income securities | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 71.00% | ||
Non-U.S. | Real Estate. | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 3.00% | ||
Non-U.S. | Other investments | |||
Investment Policies And Strategies | |||
Target allocation (as a percent) | 10.00% | ||
Pension Plans | U.S. | |||
Investment Policies And Strategies | |||
Fair Value of plan assets | $ 51,852 | $ 54,386 | $ 51,784 |
Pension Plans | Non-U.S. | |||
Investment Policies And Strategies | |||
Fair Value of plan assets | $ 39,979 | $ 42,308 | $ 38,891 |
Retirement-Related Benefits -_5
Retirement-Related Benefits - Plan Assets (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
U.S. | Qualified Plans | Personal Pension Plan (PPP) | Level 3 | Corporate bonds | |||
Retirement-Related Benefits | |||
Fair value of plan assets | $ 598 | $ 542 | $ 518 |
Non-U.S. | Level 3 | |||
Retirement-Related Benefits | |||
Fair value of plan assets | 174 | 300 | 330 |
Non-U.S. | Level 3 | Government and related | |||
Retirement-Related Benefits | |||
Fair value of plan assets | 2 | 2 | |
Non-U.S. | Level 3 | Real Estate. | |||
Retirement-Related Benefits | |||
Fair value of plan assets | 174 | 298 | 328 |
Pension Plans | U.S. | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 43,070 | 45,128 | |
Investments measured at net asset value using the NAV expedient | 9,078 | 9,579 | |
Other | (296) | (321) | |
Fair value of plan assets | 51,852 | 54,386 | 51,784 |
Pension Plans | U.S. | Equity Securities | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 2,023 | 2,714 | |
Pension Plans | U.S. | Equity mutual funds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 133 | 105 | |
Pension Plans | U.S. | Government and related | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 21,751 | 21,375 | |
Pension Plans | U.S. | Corporate bonds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 16,844 | 18,759 | |
Value of IBM securities included in plan assets | 19 | ||
Pension Plans | U.S. | Mortgage and asset-backed securities | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 660 | 612 | |
Pension Plans | U.S. | Fixed income mutual funds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 281 | 470 | |
Pension Plans | U.S. | Cash and short-term investments | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 1,373 | 1,077 | |
Pension Plans | U.S. | Derivatives | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 5 | 15 | |
Pension Plans | U.S. | Level 1 | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 2,543 | 3,363 | |
Fair value of plan assets | 2,543 | 3,363 | |
Pension Plans | U.S. | Level 1 | Equity Securities | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 2,023 | 2,714 | |
Pension Plans | U.S. | Level 1 | Equity mutual funds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 133 | 105 | |
Pension Plans | U.S. | Level 1 | Fixed income mutual funds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 281 | 470 | |
Pension Plans | U.S. | Level 1 | Cash and short-term investments | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 104 | 76 | |
Pension Plans | U.S. | Level 1 | Derivatives | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 3 | (3) | |
Pension Plans | U.S. | Level 2 | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 39,930 | 41,222 | |
Fair value of plan assets | 39,930 | 41,222 | |
Pension Plans | U.S. | Level 2 | Equity Securities | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 0 | 0 | |
Pension Plans | U.S. | Level 2 | Government and related | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 21,751 | 21,375 | |
Pension Plans | U.S. | Level 2 | Corporate bonds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 16,246 | 18,217 | |
Pension Plans | U.S. | Level 2 | Mortgage and asset-backed securities | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 660 | 612 | |
Pension Plans | U.S. | Level 2 | Cash and short-term investments | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 1,269 | 1,001 | |
Pension Plans | U.S. | Level 2 | Derivatives | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 3 | 18 | |
Pension Plans | U.S. | Level 3 | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 598 | 542 | |
Fair value of plan assets | 598 | 542 | |
Pension Plans | U.S. | Level 3 | Corporate bonds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 598 | 542 | |
Pension Plans | U.S. | Qualified Plans | Personal Pension Plan (PPP) | Equity Securities | |||
Retirement-Related Benefits | |||
Value of IBM securities included in plan assets | 2 | 6 | |
Pension Plans | Non-U.S. | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 21,374 | 22,023 | |
Investments measured at net asset value using the NAV expedient | 18,652 | 20,321 | |
Other | (47) | (37) | |
Fair value of plan assets | 39,979 | 42,308 | 38,891 |
Pension Plans | Non-U.S. | Equity Securities | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 485 | 466 | |
Value of IBM securities included in plan assets | 2 | 1 | |
Pension Plans | Non-U.S. | Equity mutual funds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 0 | 0 | |
Pension Plans | Non-U.S. | Government and related | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 9,900 | 9,601 | |
Pension Plans | Non-U.S. | Corporate bonds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 3,842 | 3,690 | |
Value of IBM securities included in plan assets | 4 | 5 | |
Pension Plans | Non-U.S. | Mortgage and asset-backed securities | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 3 | 3 | |
Pension Plans | Non-U.S. | Insurance contracts | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 5,662 | 6,378 | |
Pension Plans | Non-U.S. | Cash and short-term investments | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 728 | 988 | |
Pension Plans | Non-U.S. | Real Estate. | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 174 | 298 | |
Pension Plans | Non-U.S. | Derivatives | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 550 | 575 | |
Pension Plans | Non-U.S. | Other mutual funds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 30 | 21 | |
Pension Plans | Non-U.S. | Level 1 | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 900 | 891 | |
Fair value of plan assets | 900 | 891 | |
Pension Plans | Non-U.S. | Level 1 | Equity Securities | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 485 | 466 | |
Pension Plans | Non-U.S. | Level 1 | Equity mutual funds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 0 | 0 | |
Pension Plans | Non-U.S. | Level 1 | Cash and short-term investments | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 324 | 337 | |
Pension Plans | Non-U.S. | Level 1 | Derivatives | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 61 | 66 | |
Pension Plans | Non-U.S. | Level 1 | Other mutual funds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 30 | 21 | |
Pension Plans | Non-U.S. | Level 2 | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 20,300 | 20,832 | |
Fair value of plan assets | 20,300 | 20,832 | |
Pension Plans | Non-U.S. | Level 2 | Equity Securities | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 0 | ||
Pension Plans | Non-U.S. | Level 2 | Government and related | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 9,900 | 9,599 | |
Pension Plans | Non-U.S. | Level 2 | Corporate bonds | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 3,842 | 3,690 | |
Pension Plans | Non-U.S. | Level 2 | Mortgage and asset-backed securities | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 3 | 3 | |
Pension Plans | Non-U.S. | Level 2 | Insurance contracts | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 5,662 | 6,378 | |
Pension Plans | Non-U.S. | Level 2 | Cash and short-term investments | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 403 | 651 | |
Pension Plans | Non-U.S. | Level 2 | Derivatives | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 489 | 510 | |
Pension Plans | Non-U.S. | Level 3 | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 174 | 300 | |
Fair value of plan assets | 174 | 300 | |
Pension Plans | Non-U.S. | Level 3 | Government and related | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 2 | ||
Pension Plans | Non-U.S. | Level 3 | Real Estate. | |||
Retirement-Related Benefits | |||
Fair value of plan assets, gross | 174 | 298 | |
Nonpension Postretirement Plans | U.S. | |||
Retirement-Related Benefits | |||
Fair value of plan assets | 8 | 15 | 3 |
Nonpension Postretirement Plans | U.S. | Level 1 | |||
Retirement-Related Benefits | |||
Fair value of plan assets | 8 | 15 | |
Nonpension Postretirement Plans | Non-U.S. | |||
Retirement-Related Benefits | |||
Fair value of plan assets | 31 | 40 | $ 52 |
Nonpension Postretirement Plans | Non-U.S. | Level 2 | |||
Retirement-Related Benefits | |||
Fair value of plan assets | $ 31 | $ 40 |
Retirement-Related Benefits - L
Retirement-Related Benefits - Level 3 Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
U.S. | Pension Plans | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | $ 54,386 | $ 51,784 |
Fair value of plan assets, balance at end of period | 51,852 | 54,386 |
Non-U.S. | Pension Plans | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 42,308 | 38,891 |
Foreign exchange impact | (1,939) | 2,479 |
Fair value of plan assets, balance at end of period | 39,979 | 42,308 |
Level 3 | U.S. | Pension Plans | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 542 | |
Fair value of plan assets, balance at end of period | 598 | 542 |
Level 3 | U.S. | Personal Pension Plan (PPP) | Qualified Plans | Corporate bonds | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 542 | 518 |
Return on assets held at end of year | (15) | 29 |
Return on assets sold during the year | 1 | 0 |
Purchases, sales and settlements, net | 63 | (5) |
Transfers, net | 6 | 0 |
Fair value of plan assets, balance at end of period | 598 | 542 |
Level 3 | Non-U.S. | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 300 | 330 |
Return on assets held at end of year | (43) | (29) |
Return on assets sold during the year | 58 | 2 |
Purchases, sales and settlements, net | (140) | (14) |
Transfers, net | 4 | |
Foreign exchange impact | (1) | 7 |
Fair value of plan assets, balance at end of period | 174 | 300 |
Level 3 | Non-U.S. | Government and related | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 2 | 2 |
Return on assets held at end of year | 0 | 0 |
Return on assets sold during the year | 0 | |
Purchases, sales and settlements, net | (2) | |
Foreign exchange impact | 0 | 0 |
Fair value of plan assets, balance at end of period | 2 | |
Level 3 | Non-U.S. | Real Estate. | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 298 | 328 |
Return on assets held at end of year | (43) | (29) |
Return on assets sold during the year | 58 | 2 |
Purchases, sales and settlements, net | (138) | (14) |
Transfers, net | 4 | |
Foreign exchange impact | (1) | 7 |
Fair value of plan assets, balance at end of period | 174 | 298 |
Level 3 | Non-U.S. | Pension Plans | ||
Change in plan assets | ||
Fair value of plan assets, balance at beginning of period | 300 | |
Fair value of plan assets, balance at end of period | $ 174 | $ 300 |
Retirement-Related Benefits -_6
Retirement-Related Benefits - Contributions and Direct Benefit Payments (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Total | $ 2,085 | $ 2,066 |
Contributions by employer - Noncash | 424 | 288 |
Non-U.S. DB plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total | 86 | 166 |
Multi-employer plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total | 17 | 23 |
DC plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total | 992 | 1,015 |
Direct Benefit Payments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total | 671 | 538 |
Nonpension Postretirement Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total | 319 | 325 |
Nonpension Postretirement Plans | Non-U.S. DB plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Contributions by employer - Noncash | $ 416 | $ 452 |
Retirement-Related Benefits -_7
Retirement-Related Benefits - Contributions (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Retirement-Related Benefits | ||
Contributions by employer - Noncash | $ 424 | $ 288 |
Nonpension Postretirement Plans | Non-U.S. DB plans | ||
Retirement-Related Benefits | ||
Contributions by employer - Noncash | 416 | $ 452 |
Non-U.S. | Pension Plans, Including Multi-employer Plans | ||
Retirement-Related Benefits | ||
Estimated cash contributions to the defined benefit plans in next fiscal year | $ 200 |
Retirement-Related Benefits - E
Retirement-Related Benefits - Expected Benefit Payments (Details) $ in Millions | Dec. 31, 2021USD ($) |
Pension Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2022 | $ 5,922 |
Expected benefit payments, 2023 | 5,842 |
Expected benefit payments, 2024 | 5,827 |
Expected benefit payments, 2025 | 5,774 |
Expected benefit payments, 2026 | 5,670 |
Expected benefit payments, 2027-2031 | 26,117 |
Nonpension Postretirement Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2022 | 418 |
Expected benefit payments, 2023 | 422 |
Expected benefit payments, 2024 | 405 |
Expected benefit payments, 2025 | 382 |
Expected benefit payments, 2026 | 360 |
Expected benefit payments, 2027-2031 | 1,386 |
U.S. | Pension Plans | Qualified Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2022 | 3,488 |
Expected benefit payments, 2023 | 3,450 |
Expected benefit payments, 2024 | 3,419 |
Expected benefit payments, 2025 | 3,348 |
Expected benefit payments, 2026 | 3,244 |
Expected benefit payments, 2027-2031 | 14,524 |
U.S. | Pension Plans | Nonqualified Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2022 | 124 |
Expected benefit payments, 2023 | 123 |
Expected benefit payments, 2024 | 121 |
Expected benefit payments, 2025 | 119 |
Expected benefit payments, 2026 | 116 |
Expected benefit payments, 2027-2031 | 532 |
U.S. | Nonpension Postretirement Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2022 | 377 |
Expected benefit payments, 2023 | 380 |
Expected benefit payments, 2024 | 363 |
Expected benefit payments, 2025 | 339 |
Expected benefit payments, 2026 | 316 |
Expected benefit payments, 2027-2031 | 1,156 |
Non-U.S. | Pension Plans | Qualified Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2022 | 1,968 |
Expected benefit payments, 2023 | 1,949 |
Expected benefit payments, 2024 | 1,959 |
Expected benefit payments, 2025 | 1,976 |
Expected benefit payments, 2026 | 1,972 |
Expected benefit payments, 2027-2031 | 9,438 |
Non-U.S. | Pension Plans | Nonqualified Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2022 | 342 |
Expected benefit payments, 2023 | 320 |
Expected benefit payments, 2024 | 328 |
Expected benefit payments, 2025 | 331 |
Expected benefit payments, 2026 | 337 |
Expected benefit payments, 2027-2031 | 1,624 |
Non-U.S. | Nonpension Postretirement Plans | Qualified Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2022 | 16 |
Expected benefit payments, 2023 | 17 |
Expected benefit payments, 2024 | 18 |
Expected benefit payments, 2025 | 19 |
Expected benefit payments, 2026 | 20 |
Expected benefit payments, 2027-2031 | 115 |
Non-U.S. | Nonpension Postretirement Plans | Nonqualified Plans | |
Expected Benefit Payments | |
Expected benefit payments, 2022 | 25 |
Expected benefit payments, 2023 | 25 |
Expected benefit payments, 2024 | 24 |
Expected benefit payments, 2025 | 24 |
Expected benefit payments, 2026 | 24 |
Expected benefit payments, 2027-2031 | $ 115 |
Retirement-Related Benefits -_8
Retirement-Related Benefits - ABO and APBO in Excess of Plan Assets (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Pension Plans | ||
Defined Benefit Plan, Pension and Non-Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets | ||
Plans with PBO in excess of plan assets, Benefit Obligation | $ 25,204 | $ 31,805 |
Plans with PBO in excess of plan assets, Plan Assets | 13,908 | 18,257 |
Plans with ABO in excess of plan assets, Benefit Obligation | 24,853 | 31,465 |
Plans with ABO in excess of plan assets, Plan Assets | 13,908 | 18,257 |
Plans with assets in excess of PBO, Benefit Obligation | 68,075 | 70,879 |
Plans with assets in excess of PBO, Plan Assets | 77,924 | 78,436 |
Nonpension Postretirement Plans | ||
Defined Benefit Plan, Pension and Non-Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets | ||
Plans with APBO in excess of plan assets, Benefit Obligation | 4,042 | 4,537 |
Plans with APBO in excess of plan assets, Plan Assets | $ 40 | 45 |
Plans with plan assets in excess of APBO, Benefit Obligation | 9 | |
Plans with plan assets in excess of APBO, Plan Assets | $ 9 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 09, 2022 | Feb. 01, 2022 | Dec. 31, 2021 | Mar. 31, 2020 |
Kyndryl Holdings, Inc | ||||
Subsequent Events | ||||
Aggregate amount of debt issued | $ 2,900 | |||
Variable-rate term loan | Kyndryl Holdings, Inc | ||||
Subsequent Events | ||||
Aggregate amount of debt issued | $ 500 | |||
Term of debt instrument | 3 years | |||
Euro fixed-rate notes | ||||
Subsequent Events | ||||
Aggregate amount of debt issued | $ 4,100 | |||
Subsequent event | ||||
Subsequent Events | ||||
Dividend declared, date | Feb. 1, 2022 | |||
Dividend declared (in dollars per share) | $ 1.64 | |||
Dividend payable, date | Mar. 10, 2022 | |||
Shareholders of record, date | Feb. 11, 2022 | |||
Subsequent event | U.S dollar. fixed rate notes | ||||
Subsequent Events | ||||
Aggregate amount of debt issued | $ 1,800 | |||
Subsequent event | U.S dollar. fixed rate notes | Minimum | ||||
Subsequent Events | ||||
Term of debt instrument | 5 years | |||
Coupon rate (as a percent) | 2.20% | |||
Subsequent event | U.S dollar. fixed rate notes | Maximum | ||||
Subsequent Events | ||||
Term of debt instrument | 30 years | |||
Coupon rate (as a percent) | 3.43% | |||
Subsequent event | Euro fixed-rate notes | ||||
Subsequent Events | ||||
Aggregate amount of debt issued | $ 2,300 | |||
Subsequent event | Euro fixed-rate notes | Minimum | ||||
Subsequent Events | ||||
Term of debt instrument | 8 years | |||
Coupon rate (as a percent) | 0.875% | |||
Subsequent event | Euro fixed-rate notes | Maximum | ||||
Subsequent Events | ||||
Term of debt instrument | 12 years | |||
Coupon rate (as a percent) | 1.25% |
SCHEDULE II VALUATION AND QUA_2
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Allowance for Credit Losses - Current | |||
Movement in Valuation and Qualifying Accounts and Reserves | |||
Balance at Beginning of Period | $ 503 | $ 437 | $ 477 |
Additions / (Deductions), charged to expense and cost accounts | (35) | 91 | 47 |
Write-offs | (46) | (78) | (96) |
Other | (4) | 19 | 8 |
Balance at End of Period | 418 | 503 | 437 |
Allowance for Credit Losses - Noncurrent | |||
Movement in Valuation and Qualifying Accounts and Reserves | |||
Balance at Beginning of Period | 47 | 33 | 48 |
Additions / (Deductions), charged to expense and cost accounts | (21) | 4 | (10) |
Write-offs | 0 | 0 | (4) |
Other | (2) | (13) | (1) |
Balance at End of Period | 25 | 47 | 33 |
Allowance For Inventory Losses | |||
Movement in Valuation and Qualifying Accounts and Reserves | |||
Balance at Beginning of Period | 514 | 490 | 530 |
Additions / (Deductions), charged to expense and cost accounts | 240 | 135 | 115 |
Write-offs | (118) | (125) | (166) |
Other | (3) | 15 | 11 |
Balance at End of Period | 633 | 514 | 490 |
Revenue Based Provisions | |||
Movement in Valuation and Qualifying Accounts and Reserves | |||
Balance at Beginning of Period | 372 | 383 | 384 |
Additions / (Deductions), charged to revenue accounts | 627 | 689 | 735 |
Write-offs | (574) | (712) | (731) |
Other | 10 | 13 | (5) |
Balance at End of Period | $ 435 | 372 | 383 |
Cumulative Effect, Period of Adoption, Adjusted Balance | Allowance for Credit Losses - Current | |||
Movement in Valuation and Qualifying Accounts and Reserves | |||
Balance at Beginning of Period | 471 | ||
Balance at End of Period | 471 | ||
Cumulative Effect, Period of Adoption, Adjusted Balance | Allowance for Credit Losses - Noncurrent | |||
Movement in Valuation and Qualifying Accounts and Reserves | |||
Balance at Beginning of Period | $ 56 | ||
Balance at End of Period | $ 56 |
Accounting Changes - Leases (De
Accounting Changes - Leases (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Leases | |||
Operating right-of-use assets | $ 3,222 | $ 3,566 | $ 3,850 |
Operating lease liabilities | 3,435 | ||
Finance lease obligations | $ 99 | $ 91 |
Accounting Changes - Revenue Re
Accounting Changes - Revenue Recognition (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Accounting Changes | ||
Deferred costs | $ 2,022 | $ 2,168 |
Deferred tax assets | 7,370 | 8,404 |
Liability for taxes | 2,289 | 3,198 |
Retained earnings | $ 154,209 | 162,717 |
Cumulative Effect, Period of Adoption, Adjustment | ||
Accounting Changes | ||
Retained earnings | $ (66) |