IBM 2002 Annual Report Download - page 106

Notes to Consolidated Financial Statements
104 international business machines corporation and Subsidiary Companies
ICC shelf will be terminated shortly after the effective date of
the new IBM shelf.
On February 21, 2003, the company purchased the out-
standing stock of Rational Software Corp. (Rational) for
approximately $2.1 billion in cash. Rational provides open,
industry standard tools, best practices and services for devel-
oping business applications and building software products
and systems. The Rational acquisition provides the company
with the ability to offer a complete software development
environment for customers. The company intends to merge
Rational’s business operations and employees into the IBM
Software Group as a new division and brand. The results of
operations of Rational will be included in the company’s
Consolidated Financial Statements as of February 21, 2003.
The company has not completed the allocation of the pur-
chase price related to the Rational acquisition as it is in the
process of identifying and determining the fair value of all
assets acquired and liabilities assumed.
consolidated
(dollars in millions) 2002 2001*2000*
Technology Group:
OEM $«««3,612 $«««4,805 $«««4,900
Technology services 323 344 284
Systems Group:
Servers $«10,047 $«10,947 $«11,497
Storage 2,581 2,755 2,539
Networking products 18 41 158
Global Services:
Services $«31,290 $«29,953 $«28,036
Maintenance 5,070 5,003 5,116
Enterprise Investments:
Software $««««««916 $««««««913 $«««1,077
Hardware 95 181 238
Others 11 24 54
*Reclassified to conform with 2002 presentation.
Major Customers
No single customer represents 10 percent or more of the company’s total revenue.
Geographic Information
revenue*long-lived assets**
(dollars in millions) 2002 2001 2000 2002 2001+2000+
United States $«32,759 $«34,233 $«35,713 $«27,889 $«22,800 $«21,449
Japan 10,939 11,512 12,122 2,814 4,034 4,319
Other countries 37,488 37,322 37,254 13,027 11,560 12,092
Total $«81,186 $«83,067 $«85,089 $«43,730 $«38,394 $«37,860
*Revenues are attributed to countries based on location of customer and are for continuing operations.
** Includes all non-current assets except non-current financial instruments and deferred tax assets.
+Reclassified to conform with 2002 presentation.
ySubsequent Events
On January 21, 2003, the company filed with the Securities
and Exchange Commission a shelf registration to periodically
sell up to $20 billion in debt securities, preferred and capital
stock, depositary shares and warrants. The company may sell
securities in one or more separate offerings with the size,
price and terms to be determined at the time of sale. The net
proceeds from the sale of the securities will be used for gen-
eral corporate purposes, which may include debt repayment,
investments in or extensions of credit to its subsidiaries,
redemption of any preferred stock the company may issue, or
financing of possible acquisitions or business expansion. The
net proceeds may be invested temporarily or applied to repay
short-term debt until they are used for their stated purpose.
Consistent with the company’s strategy to concentrate
borrowing at the IBM level, this shelf registration eliminates
the need for a shelf registration associated with its U.S.
financing subsidiary, IBM Credit Corporation (ICC). The
Revenue by Classes of Similar Products or Services
For the Personal Systems Group, Software and Global
Financing segments, the segment data on page 101 represents
the revenue contributions from the products that are con-
tained in the segments and that are basically similar in nature.
The following table provides external revenue for similar
classes of products within the Technology Group, Systems
Group, Global Services and Enterprise Investments segments.
The Technology Group segment’s OEM hardware comprises
revenue primarily from the sale of semiconductors and display
devices. Technology services comprise the Technology
Group’s existing circuit design business for its OEM customers
and the new component design services, strategic outsourcing
of customer’s design team work, and technology and manufac-
turing consulting services associated with the new Engineering
and Technology Services Division. The Systems Group seg-
ment’s storage comprises revenue from the Enterprise Storage
Server, other disk storage products and tape subsystems.
Enterprise Investments software revenue is primarily from
product life-cycle management products. The following table
on the right is presented on a continuing operations basis.