IBM 2009 Annual Report Download - page 126

Notes to Consolidated Financial Statements
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES
Reconciliations of IBM as Reported
($ in millions)
For the year ended December 31: 2009 2008 2007
Revenue:
Total reportable segments $102,524 $110,951 $105,670
Other revenue and adjustments 869 803 842
Elimination of internal revenue (7,635) (8,125) (7,726)
Total IBM consolidated revenue $ 95,758 $103,630 $ 98,786
($ in millions)
For the year ended December 31: 2009 2008 2007
Pre-Tax Income:
Total reportable segments $19,335 $17,531 $15,163
Elimination of internal transactions (744) (433) (194)
Unallocated corporate amounts* (453) (382) (480)
Total IBM consolidated pre-tax
income from continuing
operations $18,138 $16,715 $14,489
* Includes a provision related to a joint venture investment (2009 only); gains
related to the divestiture of the printing business (2007 – 2009), interest expense
associated with debt related to the 2007 accelerated share repurchase (2007 –
2009); and gains related to the sale of Lenovo stock (2008 and 2007).
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 seg-
ments did not have a material effect on the financial position or
the financial results of the segments.
Segment Assets and Other Items
Global Technology Services assets are primarily accounts receiv-
able, plant, property and equipment including those associated
with the segment’s outsourcing business, goodwill, acquired
intangible assets, deferred services arrangement transition costs
and maintenance parts inventory. Global Business Services
assets are primarily goodwill and accounts receivable. Software
segment assets are mainly goodwill, acquired intangible assets
and accounts receivable. Systems and Technology assets are
primarily plant, property and equipment, manufacturing inven-
tory and accounts receivable. The assets of the Global Financing
segment are primarily financing receivables and fixed assets
under operating leases.
To ensure 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 following table. In those cases, there will not be a precise cor-
relation between segment pre-tax income and segment assets.
Similarly, the depreciation amounts reported by each seg-
ment 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 consistent with the landlord ownership
basis of asset assignment.
The Global Financing segment amounts for interest income
and interest expense reflect the interest income and interest
expense associated with the Global Financing business, includ-
ing the intercompany financing activities discussed on page 24,
as well as the income from investment in cash and marketable
securities. The explanation of the difference between cost of
financing and interest expense for segment presentation ver-
sus presentation in the Consolidated Statement of Earnings is
included on page 60 of the Management Discussion.
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