IBM 2004 Annual Report Download - page 91

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
89
International Business Machines Corporation and Subsidiary Companies
ibm annual report 2004
Reconciliations to IBM as Reported
(Dollars in millions)
FOR THE YEAR ENDED DECEMBER 31: 2004 2003 2002
Revenue:
Total reportable segments $«103,259 $«95,485 $«86,775
Other revenue and adjustments 489 437 283
Elimination of internal revenue (7,455) (6,791) (5,872)
Total IBM consolidated $«««96,293 $«89,131 $«81,186
(Dollars in millions)
FOR THE YEAR ENDED DECEMBER 31: 2004 2003 2002
Pre-Tax Income:
Total reportable segments $«12,932 $«10,947 $«8,470
Elimination of internal transactions (152) (89) (198)
Unallocated corporate amounts (752) 16 (748)
Total IBM consolidated $«12,028 $«10,874 $«7,524
immaterial items
Investment in Equity Alliances and Equity Alliances Gains/(Losses)
The investments in equity alliances and the resulting gains and (losses) from these invest-
ments that are attributable to the segments do not have a material effect on the financial
position or the financial results of the segments.
segment assets and other items
The Global Services assets are primarily accounts receivable, goodwill, maintenance
inventory, and plant, property and equipment including those associated with the seg-
ment’s outsourcing business. The Software segment assets are mainly goodwill, plant,
property and equipment, and investment in capitalized software. The assets of the
Hardware segments are primarily inventory and plant, property and equipment. The assets
of the Global Financing segment are primarily financing receivables and fixed assets under
operating leases.
To accomplish the efficient use of the company’s space and equipment, it usually is
necessary for several segments to share 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 schedule on page 90. In those cases, there will not be
a precise correlation between segment pre-tax income and segment assets.
Similarly, the depreciation amounts reported by each segment are based on the
assigned landlord ownership and may not be consistent with the amounts that are
included in the segments’ pre-tax income. The amounts that are included in pre-tax
income reflect occupancy charges from the landlord segment and are not specifically
identified by the management reporting system. Capital expenditures that are reported by
each segment also are in line with the landlord ownership basis of asset assignment.
The Global Financing segment amounts on page 90 for Interest income and Cost of
Global Financing interest expense reflect the interest income and interest expense associ-
ated with the Global Financing business, including the intercompany financing activities
discussed on page 35 as well as the income from the investment in cash and marketable
securities. The explanation of the difference between Cost of Global Financing and Interest
expense for segment presentation versus presentation in the Consolidated Statement of
Earnings is included on page 38 of the Management Discussion.