IBM 2014 Annual Report Download - page 61

60 Management Discussion
International Business Machines Corporation and Subsidiary Companies
Total geographic revenue of $97,800 million decreased 4.4per-
cent (2percent adjusted for currency) in 2013. Revenue in the
major markets decreased 4.2percent (2percent adjusted for
currency). Revenue from the growth markets, which represented
approximately 23percent of the total geographic revenue for the
year, decreased 4.9percent on a year-to-year basis (2percent
adjusted for currency). Performance at constant currency in the
growth markets was mixed, with year-to-year growth in the first half
offset by declines in the second half. The company had strength
in Latin America and the Middle East and Africa region. How-
ever, declines in some of the larger growth markets, for example
China and Australia, impacted the overall performance in the
growth markets. Within the BRIC countries of Brazil, Russia, India
and China, combined revenue declined 8.2percent (6percent
adjusted for currency).
Americas revenue decreased 2.9percent (2percent adjusted
for currency) year to year. The major market countries were down
3.9percent (4percent adjusted for currency), partially offset by an
increase in the Latin America growth markets of 4.4percent (9per-
cent adjusted for currency). Within the major market countries,
the U.S. was down 3.4percent and Canada was down 6.3per-
cent (3percent adjusted for currency). Within the growth market
countries, Brazil increased 3.3percent (10percent adjusted for
currency) and Mexico increased 7.8percent (8percent adjusted
for currency).
Europe/Middle East/Africa revenue decreased 0.5percent
(2percent adjusted for currency) compared to 2012. The major
market countries were down 0.5percent (3percent adjusted for
currency), while the growth market countries were down 0.6percent
(up 1percent adjusted for currency). In the major market countries,
the UK decreased 1.4percent (flat adjusted for currency), Germany
decreased 0.1percent (3percent adjusted for currency), France
decreased 1.8percent (5percent adjusted for currency), and Italy
decreased 2.1percent (5percent adjusted for currency). Within
the EMEA growth markets, the Middle East and Africa region
increased 5.0percent (11percent adjusted for currency), but this
growth was offset primarily by a decrease in Russia of 22.7percent
(22percent adjusted for currency).
Asia Pacific revenue decreased 11.6percent (3percent
adjusted for currency) year to year. Japan revenue decreased
15.2percent as reported, but increased 4percent overall and
grew in every quarter on a constant currency basis. This growth
reflected the benefits of shifting investment and redirection of the
company’s go-to-market focus to improve performance in Japan.
The Asia Pacific growth markets decreased 9.1percent (7percent
adjusted for currency), with China down 12.2percent (14percent
adjusted for currency) and Australia down 15.9percent (10per-
cent adjusted for currency). During 2013, performance in China
was impacted by the process surrounding the implementation of
a broad governmental economic reform plan.
Total Expense and Other (Income)
($ in millions)
For the year ended December 31: 2013 2012
Yr.-to-Yr.
Percent/
Margin
Change
Total consolidated expense
and other (income) $28,440 $27,821 2.2%
Non-operating adjustments
Amortization of acquired
intangible assets (370) (328) 12.9
Acquisition-related charges (40) (35) 14.9
Non-operating retirement-related
(costs)/income (433) (274)58.3
Operating (non-GAAP)
expense and other (income) $27,597 $27,184 1.5%
Total consolidated
expense-to-revenue ratio 28.9% 27.0%1.9 pts.
Operating (non-GAAP)
expense-to-revenue ratio 28.1%26.4%1.7 pts.
Selling, General and Administrative
($ in millions)
For the year ended December 31: 2013 2012
Yr.-to-Yr.
Percent
Change
Selling, general and
administrative expense
Selling, general and
administrative—other $19,178 $19,532 (1.8)%
Advertising and promotional
expense 1,294 1,339 (3.4)
Workforce rebalancing charges 1,031 784 31.6
Retirement-related costs 986 932 5.8
Amortization of acquired
intangible assets 370 328 12.9
Stock-based compensation 435 498 (12.6)
Bad debt expense 156 50 209.8
Total consolidated selling, general
and administrative expense $23,451 $23,463 (0.1)%
Non-operating adjustments
Amortization of acquired
intangible assets (370)(328)12.9
Acquisition-related charges (25)(22)13.3
Non-operating retirement-related
(costs)/income (376)(294)28.1
Operating (non-GAAP)
selling, general and
administrative expense $22,680 $22,820 (0.6)%