IBM 1997 Annual Report Download - page 78

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76
notes to consolidated financial statements
International Business Machines Corporation
and Subsidiary Companies
Z Geographic Areas
The United States and Canada are managed as a single
enterprise. However, in compliance with SFAS 14,
“Financial Reporting for Segments of a Business
Enterprise,” the United States is reported as a separate
geographic area. Canadian operations are included in the
“Americas” area.
Non-U.S. subsidiaries operating in local currency
environments account for approximately 81 percent
of the company’s non-U.S. revenue. The remaining
19 percent is from subsidiaries and branches operating
in U.S. dollars or in highly inflationary environments.
In the Europe/Middle East/Africa area, European oper-
ations accounted for approximately 95 percent of revenue
in 1997, 1996 and 1995.
Interarea transfers consist principally of completed
machines, subassemblies and parts, and software.
Machines and subassemblies and parts are generally
transferred at an intracompany selling price. Software
transfers represent license fees paid by non-U.S.
subsidiaries. The intracompany selling price that relates
to fixed asset transfers is capitalized and depre-
ciated by the importing area.