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56 Management Discussion
International Business Machines Corporation and Subsidiary Companies
The company announced the divestiture of its Microelectronics
business with future chip supply coming from an at-scale provider,
and has committed $3billion of investment over five years in the
next era of chip technology as it strengthens its semiconductor
research and development and systems innovation. The company
also divested the Systemx business, and announced the z13, the
new generation of the mainframe. With its portfolio repositioned
and the introduction of the new mainframe, this business segment
should now see profit leverage going forward.
Global Financing
See pages 69 through 73 for an analysis of Global Financing’s
segment results.
Geographic Revenue
In addition to the revenue presentation by reportable segment, the
company also measures revenue performance on a geographic
basis. The following geographic, regional and country-specific
revenue performance excludes OEM revenue.
($ inmillions)
For the year ended December 31: 2014 2013
Yr.-to-Yr.
Percent
Change
Yr.-to-Yr.
Percent Change
Adjusted for
Currency*
Total revenue $92,793 $98,367 (5.7)% (1.5)%
Geographies $92,326 $97,800 (5.6)% (1.5)%
Americas 41,410 43,249 (4.3) (0.8)
Europe/Middle East/Africa 30,700 31,628 (2.9) (0.6)
Asia Pacifi c 20,216 22,923 (11.8) (4.1)
Major markets (4.3)% (1.0)%
Growth markets (9.9)% (3.2)%
BRIC countries (10.7)% (4.5)%
* Adjusted for divestitures and currency.
Total geographic revenue of $92,326 million decreased 5.6per-
cent as reported and 1percent adjusted for divestitures (2points)
and currency (2points) in 2014 compared to 2013. In total, major
market countries decreased 4.3percent as reported and 1percent
adjusted for divestitures (2points) and currency (1point). Growth
market countries decreased 9.9percent as reported and 3per-
cent adjusted for divestitures (3points) and currency (4points)
compared to 2013. The year-to-year decline in growth markets rev-
enue adjusted for currency and the divestitures reflected growth in
the Latin American and Europe growth markets, more than offset
by decreased revenue in the Asia Pacific growth markets.
Americas revenue of $41,410 million decreased 4.3percent as
reported and 1percent adjusted for divestitures (2points) and cur-
rency (1point) compared to 2013. On an adjusted basis, there was
increased revenue in the growth markets offset by year-to-year
declines in the major market countries. Within the North Ameri-
can major markets, the U.S. declined 4.0percent as reported and
2percent adjusted for divestitures (2points). Canada was down
9.8percent as reported and 2percent adjusted for divestitures
(1point) and currency (7points).
EMEA revenue of $30,700 million decreased 2.9percent as
reported and 1percent adjusted for divestitures (3points) and
offset by currency (1point). On an adjusted basis, growth in Ger-
many, Italy and Spain was more than offset by declines in the UK
and France, compared to 2013.
Asia Pacific revenue of $20,216 million decreased 11.8percent
as reported and 4percent adjusted for the divested businesses
(3points) and currency (5points). Japan was down 7.6percent as
reported, but increased 3percent adjusted for currency (8points)
and divestitures (3points). On this basis, Japan reflected year-to-
year growth in every quarter of 2014. However, this growth was
more than offset by declines in the Asia Pacific growth markets.
Total Expense and Other (Income)
($ inmillions)
For the year ended December 31: 2014 2013
Yr.-to-Yr.
Percent/
Margin
Change
Total consolidated expense
and other (income) $26,421 $28,440 (7.1)%
Non-operating adjustments
Amortization of acquired
intangible assets (374) (370) 1.2
Acquisition-related charges (12) (40) (70.0)
Non-operating retirement-related
(costs)/income (180) (433) (58.4)
Operating (non-GAAP)
expense and other (income) $25,855 $27,597 (6.3)%
Total co nso lid ated
expense-to-revenue ratio 28.5% 28.9% (0.4) pts.
Operating (non-GAAP)
expense-to-revenue ratio 27.9% 28.1% (0.2) pts.