IBM 2015 Annual Report Download - page 20

18 Management Discussion
International Business Machines Corporation and Subsidiary Companies
OVERVIEW
The financial section of the International Business Machines Cor-
por ation (IBM or the company) 2015 Annual Report includes the
Management Discussion, the Consolidated Financial State ments
and the Notes to Consolidated Financial State ments. This Over-
view is designed to provide the reader with some perspective
regarding the information contained in the financial section.
Organization of Information
• The Management Discussion is designed to provide readers
with an overview of the business and a narrative on the
company’s financial results and certain factors that may affect
its future prospects from the perspective of the company’s
management. The “Management Discussion Snap shot,”
beginning on page19, presents an overview of the key per-
formance drivers in 2015.
• Beginning with the “Year in Review” on page29, the
Manage ment Discussion contains the results of operations
for each reportable segment of the business and a discus-
sion of the company’s financial position and cash flows.
Other key sections within the Management Discussion
include: “Looking Forward” on page60, and “Liquidity and
Capital Resources” on page61.
• Global Financing is a reportable segment that is measured
as a stand-alone entity. A separate “Global Financing” section
is included in the Management Discussion beginning on
page69.
• The Consolidated Financial Statements are presented on
pages76 through 81. These statements provide an overview
of the company’s income and cash flow performance and
its financial position.
• The Notes follow the Consolidated Financial Statements.
Among other items, the Notes contain the company’s
accounting policies (pages82 to 92), acquisitions and
divestitures (pages93 to 99), detailed information
on specific items within the financial statements, certain
contingencies and commitments (pages118 to 120) and
retirement-related plans information (pages127 to 141).
• The Consolidated Financial Statements and the Notes have
been prepared in accordance with accounting principles
generally accepted in the United States (GAAP).
• In October 2014, the company announced a definitive agree-
ment to divest its Microelectronics business. The assets and
liabilities of the Microelectronics business were reported as
held for sale at December31, 2014. The operating results of
the Microelectronics business are reported as discontinued
operations. The transaction closed on July1, 2015. In addition,
in 2015, the company renamed its Systems & Technology
segment to Systems Hardware and its Systemz brand to
zSystems. Also, in 2015, the company’s business process
outsourcing business, Global Process Services, which was
previously managed within Global Technology Services,
was integrated into Global Business Services, creating an
end-to-end business transformation capability for clients and
to better leverage the company’s industry knowledge. Prior
periods have been reclassified to conform to this presenta-
tion in the Management Discussion, the Consolidated
Financial Statements and the Notes, where applicable, to
allow for a meaningful comparison of continuing operations.
• The references to “adjusted for currency” or “at constant
currency” in the Management Discussion do not include
operational impacts that could result from fluctuations in
foreign currency rates. Certain financial results are adjusted
based on a simple mathematical model that translates current
period results in local currency using the comparable prior
year period’s currency conversion rate. This approach is used
for countries where the functional currency is the local country
currency. This information is provided so that certain financial
results can be viewed without the impact of fluctuations in
foreign currency rates, thereby facilitating period- to-period
comparisons of business performance. See “Currency Rate
Fluctuations” on page67 for additional information.
• Within the financial statements and tables in this Annual
Report, certain columns and rows may not add due to
the use of rounded numbers for disclosure purposes.
Percentages reported are calculated from the underlying
whole-dollar numbers.
Operating (non-GAAP) Earnings
In an effort to provide better transparency into the operational
results of the business, the company separates business results
into operating and non-operating categories. Operating earnings
from continuing operations is a non-GAAP measure that excludes
the effects of certain acquisition-related charges, retirement-re-
lated costs, discontinued operations and their related tax impacts.
For acquisitions, operating earnings exclude the amortization of
purchased intangible assets and acquisition-related charges
such as in-process research and development, transaction costs,
applicable restructuring and related expenses and tax charges
related to acquisition integration. For retirement-related costs, the