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目錄
美國
證券交易委員會
華盛頓特區20549
表格 10-Q
季度報告 根據第13或15(d)條的報告
修改契約重製證明文件證券 1934年的交易所法案
截至本季度末 2024年9月30日
1-2360
（委託文件編號）
國際商業機器公司
(根據其章程規定的註冊人準確名稱)
紐約
(設立狀態)
13-0871985
（納稅人識別號）
One New Orchard Road
阿蒙克, 紐約
，（主要行政辦公地址）
10504
(郵政編碼)
914-499-1900
（報告人電話號碼）
在法案第12(b)條的規定下注冊的證券：
每一類的名稱交易標的
在其上註冊的交易所的名稱
普通股，每股面值爲0.20美元這項協議是在日本新能源和工業技術開發組織（NEDO）下進行的「2納米一代半導體的Chiplet和Package Design和製造技術開發」項目框架內的國際合作的一部分，並建立在與IBM關於2納米節點技術的聯合開發已有協議的基礎上，IBM和Rapidus的工程師將在IBM的北美設施內進行半導體封裝的研發和製造，以供給高性能計算機系統使用。請使用moomoo賬號登錄查看New York Stock Exchange
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到期日爲2029年的1.500%票據IBM 29請使用moomoo賬號登錄查看New York Stock Exchange
到期日爲2030年的0.875％票據IBM 30A請使用moomoo賬號登錄查看New York Stock Exchange
到期日爲2031年的1.750％票據IBM 31請使用moomoo賬號登錄查看New York Stock Exchange
到期日爲2031年的3.625％票據IBM 31B請使用moomoo賬號登錄查看New York Stock Exchange
到期日爲2032年的0.650％票據IBM 32A請使用moomoo賬號登錄查看New York Stock Exchange
到期日爲2034年的1.250％票據IBM 34請使用moomoo賬號登錄查看New York Stock Exchange
到期日爲2035年的3.750％票據IBM 35請使用moomoo賬號登錄查看New York Stock Exchange
到期日爲2038年的4.875％票據IBM 38請使用moomoo賬號登錄查看New York Stock Exchange
到期日爲2040年的1.200％票據IBM 40請使用moomoo賬號登錄查看New York Stock Exchange
2043年到期的4.000%債券IBm 43請使用moomoo賬號登錄查看New York Stock Exchange
2025年到期的7.00%債券IBM 25請使用moomoo賬號登錄查看New York Stock Exchange
2027年到期的6.22%債券IBM 27請使用moomoo賬號登錄查看New York Stock Exchange
2028年到期的6.50%債券IBM 28請使用moomoo賬號登錄查看New York Stock Exchange
2032年到期的5.875%債券IBM 32D請使用moomoo賬號登錄查看New York Stock Exchange
2045年到期的7.00%債券IBM 45請使用moomoo賬號登錄查看New York Stock Exchange
2096年到期的7.125%債券IBM 96請使用moomoo賬號登錄查看New York Stock Exchange
請以複選標記表示：註冊人（1）是否在過去12個月內（或註冊人需要提交此類報告的較短期間，但必須提交此類報告的情況下）已提交證券交易法案1934年第13或15（d）條要求提出的所有報告，以及（2）在過去90天內是否受到過這些報告要求的約束。 是根據交易所法規12b-2中「大型加速文件報告人」，「加速文件報告人」，「小型報告公司」和「新興增長公司」的定義，請勾選發行人是否爲大型加速文件報告人。
請在以下勾選方框表示註冊人是否已在Regulation S-T Rule 405規定的前12個月(或在註冊人需要提交此類文件的較短期間內)提交了每個互動數據文件。是根據交易所法規12b-2中「大型加速文件報告人」，「加速文件報告人」，「小型報告公司」和「新興增長公司」的定義，請勾選發行人是否爲大型加速文件報告人。
請勾選標記以說明註冊人是大型快速申報人、加速申報人、非加速申報人、較小的報告公司還是新興成長型公司。請查看《交易所法》第120億.2條中「大型快速申報人」、「加速申報人」、「較小的報告公司」和「新興成長型公司」的定義。
大型加速報告人
☒
加速報告人☐
非加速報告人
☐
小型報告公司☐
新興成長公司 ☐
如果是新興成長型公司，在選中複選標記的同時，如果公司已選擇不使用根據證券交易法第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期來符合新的或修訂後的財務會計準則，則表明該公司已選擇不使用根據證券交易法第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期來符合新的或修訂後的財務會計準則。☐
用複選標記表明註冊人是否爲空殼公司（定義見《交易法》第12b-2條）。是的 ☐ 沒有 ☒
截至2024年5月17日，申報人共有 924,645,152 2024年9月30日，普通股的流通股數。

目錄
指數

2
目錄
第I部分-財務信息
項目1. 綜合財務報表:
國際商業機器公司
及其子公司
合併利潤表
(未經審計)
截至9月30日的三個月截至9月30日的九個月
（除每股數據外，單位爲百萬美元） 2024202320242023
營業收入：    
服務$7,453 $7,541 $22,329 $22,618 
銷售7,334 7,025 22,329 21,296 
融資情況180 186 542 566 
總收入14,968 14,752 45,199 44,479 
成本：    
服務5,048 5,217 15,414 15,821 
銷售1,404 1,419 4,393 4,329 
融資情況95 94 281 297 
總成本6,548 6,729 20,087 20,446 
毛利潤8,420 8,023 25,112 24,033 
費用和其他收入：    
銷售、一般及行政費用4,911 4,458 14,823 14,212 
研究、開發和工程1,876 1,685 5,512 5,027 
知識產權和定製開發收入(238)(190)(696)(618)
其他（收入）和支出2,244 (215)1,694 (721)
利息支出429 412 1,288 1,202 
總支出和其他(收入)9,222 6,150 22,621 19,102 
繼續經營活動淨利潤/(虧損)稅前
(802)1,873 2,491 4,931 
所得稅借項（或貸項）(485)159 (597)702 
持續經營活動的收入/(虧損)
$(317)$1,714 $3,088 $4,229 
已中止運營的業務淨損益稅後(13)(10)21 (15)
淨利潤 (1)
$(330)$1,704 $3,109 $4,214 
普通股每股收益/（虧損）： (1)
    
假定已行權：    
持續經營業務$(0.34)$1.86 $3.30 $4.59 
已停業的業務(0.01)(0.01)0.02 (0.02)
總費用$(0.36)$1.84 $3.32 $4.58 
基本的：    
持續經營業務$(0.34)$1.88 $3.36 $4.65 
已停業的業務(0.01)(0.01)0.02 (0.02)
總費用$(0.36)$1.87 $3.38 $4.63 
普通股加權平均流通股數：（百萬）    
假設稀釋923.6 923.7 935.4 920.3 
基本923.6 912.8 920.3 910.1 
(1)2024年包括一次性、非現金的養老金結算費用的影響。有關更多信息，請參閱第18條「養老相關福利」註釋。
（由於四捨五入，金額可能不匹配。）
(附註是基本報表的一部分。)
3
目錄
國際商業機器公司
及其子公司
綜合利潤表
(未經審計)
截至9月30日的三個月 截至9月30日的九個月
(金額單位：百萬美元) 2024 2023 2024 2023
淨利潤/(淨虧損)$(330)$1,704 $3,109 $4,214 
其他全面收益/(損失)，稅前：    
外幣翻譯調整(330)151 (273)180 
可供出售證券方面的淨變動：    
期間內產生的未實現收益/(損失)0 0 1 (1)
將(收益)/損失重新分類至淨利潤— — — — 
可供出售證券相關的淨變動合計0 0 1 (1)
現金流量套期交易的未實現收益/(損失):    
在期間發生的未實現收益/(損失)(215)131 64 279 
將(收益)/損失重新分類至淨利潤(234)202 (206)51 
現金流量套期交易的總未實現收益/(損失)(449)333 (142)330 
養老相關的福利計劃:    
往期服務成本/(貸項)— — — — 
期間發生的淨損失/收益100 102 101 104 
削減和解決2,727 2 2,731 7 
往期服務成本攤銷/（貸項）
(2)(2)(5)(6)
淨損失/收益攤銷246 128 765 389 
養老相關福利計劃總額3,072 230 3,592 494 
所得稅前其他綜合收益/(虧損)2,293 714 3,178 1,003 
與其他綜合收益相關項目的所得稅支出/收益(392)(313)(835)(361)
其他綜合收益/(虧損)，稅後淨額1,900 402 2,343 642 
總綜合收益$1,570 $2,105 $5,452 $4,857 
（由於四捨五入，金額可能不匹配。）
(附註是基本報表的一部分。)
4
目錄
國際商業機器公司
和子公司
合併資產負債表
(未經審計)
資產
(金額單位：百萬美元)2024年9月30日2023年12月31日
資產：  
流動資產：  
現金及現金等價物$13,197 $13,068 
受限現金17 21 
有價證券505 373 
Notes and accounts receivable — trade (net of allowances of $132的。192在2023年）
5,390 7,214 
Short-term financing receivables:
Held for investment (net of allowances of $115的。129在2023年）
5,256 6,102 
持有待售投資509 692 
其他應收賬款（扣除$應收款項準備）35的。109 在2023年)
928 640 
庫存，按平均成本或淨可變現價值較低者計量：
成品169 78 
2023年3月31日結束的三個月內，我們在「石油田服務和設備」（"OFSE"）板塊主要錄得了$百萬的存貨減值。有關詳細信息，請參見「注17. 重組、減值及其他」。1,199 1,083 
19,7821,367 1,161 
延緩成本966 998 
預付費用和其他流動資產2,408 2,639 
總流動資產30,543 32,908 
資產：固定資產17,994 18,122 
減：累計折舊12,380 12,621 
不動產、廠房和設備 - 淨額5,614 5,501 
經營租賃資產-淨額3,355 3,220 
長期融資應收款項（扣減$17的。27在2023年）
4,931 5,766 
預付養老金資產7,975 7,506 
延緩成本788 842 
遞延所得稅6,943 6,656 
商譽61,092 60,178 
無形資產淨額11,090 11,036 
投資和其他資產2,009 1,626 
總資產$134,339 $135,241 
（由於四捨五入，金額可能不匹配。）
（附註是財務報表的一部分 ）
5
目錄
國際商業機器公司
及其子公司
合併資產負債表–（續）
(未經審計)
負債和股東權益
（除每股數據外，單位爲百萬美元）2024年9月30日2023年12月31日
負債：
流動負債:  
稅收$1,584 $2,270 
短期債務3,599 6,426 
應付賬款3,274 4,132 
薪酬和福利3,250 3,501 
遞延收益12,882 13,451 
經營租賃負債790 820 
其他應計費用和負債3,474 3,521 
流動負債合計28,853 34,122 
長期債務52,980 50,121 
養老和非養老後離職福利義務10,366 10,808 
遞延收益3,666 3,533 
經營租賃負債2,757 2,568 
其他負債11,186 11,475 
負債合計109,809 112,628 
股東權益：  
IBM股東權益：  
普通股，每股面值 $，授權股數：百萬股；發行股數：分別爲2024年6月30日和2023年12月31日：百萬股；流通股數：分別爲2024年6月30日和2023年12月31日：百萬股0.20 每股，以及其他股本資本
61,013 59,643 
已授權股數： 4,687,500,000
  
股份發行：2024 - 2,277,669,454
  
2023 - 2,266,911,160
  
保留盈餘149,789 151,276 
庫藏股-成本價(169,935)(169,624)
股份：2024 - 1,353,024,302
  
2023 - 1,351,897,514
  
累計其他綜合收益/（虧損）(16,418)(18,761)
總IBM股東權益24,448 22,533 
非控制權益82 80 
股東權益總計24,530 22,613 
負債和所有者權益總額$134,339 $135,241 
（由於四捨五入，金額可能不匹配。）
(附註是基本報表的一部分。)
6
目錄
國際商業機器公司
及其子公司
現金流量表合併報表
(未經審計)
截至9月30日的九個月
(金額單位：百萬美元) 2024 2023
經營活動現金流量：  
淨收入$3,109 $4,214 
調整淨收益以使其與經營活動提供的現金流量相一致：  
養老金結算費用
2,725 — 
折舊(1)
1,644 1,568 
資本化軟件和收購無形資產的攤銷1,910 1,676 
以股票爲基礎的報酬計劃966 843 
清售資產、資產出售和其他淨利潤/(損失) (2)
(632)(100)
經營性資產和負債變動，扣除收購/清售 (2) (3)
(607)1,267 
經營活動產生的現金流量淨額9,115 9,468 
投資活動現金流量：  
購買固定資產、廠房及設備支付的現金
(745)(945)
處置固定資產、廠房和設備/其他的收益
536 137 
軟件投資(496)(417)
收購企業，扣除現金淨額(2,748)(4,945)
出售業務資產，扣除現金轉移淨額705 (4)
購買可變現證券及其他投資(6,501)(10,374)
處置可交易證券和其他投資所得款項5,691 6,642 
投資活動提供的淨現金流量/（使用的現金流量）(3,558)(9,906)
籌集資金的現金流量：  
新增債務所得款項5,705 9,586 
支付清償債務(6,491)(4,973)
90天內的短期借款／償還 — 淨額9 6 
普通股票回購以支付稅款(539)(338)
融資 — 其他513 86 
支付現金分紅派息(4,601)(4,522)
融資活動產生的現金流量淨額(5,403)(154)
匯率變動對現金、現金等價物及受限制資金的影響(29)(120)
經營性現金流淨額125 (713)
現金、現金等價物和受限現金截至1月1日13,089 7,988 
截至9月30日的現金、現金等價物和受限現金$13,214 $7,275 
(1) 其中包括2024年和2023年的經營租賃權利使用資產攤銷費用爲$0.7 十億。
(2) 之前的期間已重新分類，以符合2024年的呈現方式。
(3) 請參考附註1「報告基礎」獲取更多信息。
（由於四捨五入，金額可能不匹配。）
（附註是財務報表的一部分 ）
7
目錄
國際商業機器公司
及其子公司
股本變動表（續）
（未經審計）
（除每股數據外，單位爲百萬美元）普通股
股份和
額外的
實收資本
資本		 留存收益
收益		 國庫
股票		 累積的
其他
綜合
收益/（損失）		 IBM總計
股東權益
股權		 非公司治理股份
控制
利益		 總費用
股權
股本 - 2024年7月1日$60,501 $151,659 $(169,815)$(18,319)$24,026 $77 $24,103 
淨利潤/(損失)加其他全面收益/(損失):        
淨利潤/(淨虧損) (330)  (330) (330)
其他綜合收益/(虧損)   1,900 1,900  1,900 
總綜合收益    $1,570  $1,570 
普通股股息支付 - common stock ($1.67每股)
 (1,542)  (1,542) (1,542)
員工計劃下發行的普通股 (3,948,208股）
512    512  512 
購買 (1,000,001 股份）和銷售（548,750 股份）的庫存股票根據僱員計劃——淨
 3 (120) (118) (118)
非控股權益變動     5 5 
淨資產–2024年9月30日$61,013 $149,789 $(169,935)$(16,418)$24,448 $82 $24,530 
(以百萬美元計，每股金額除外)Common
股票及其
額外的
實收資本
資本		保留收益
累積盈餘		金庫
股票		累計
其他
綜合
收益/（虧損）		IBM總額
股东权益
股權		Non-
控制
權益投資		總計
股權
股本 - 2023年7月1日$58,963 $149,318 $(169,581)$(16,499)$22,201 $70 $22,271 
凈利潤加其他綜合損益：
       
凈利潤 1,704   1,704  1,704 
其他綜合收益/(虧損)   402 402  402 
累計綜合收益
    $2,105  $2,105 
普通股份現金分紅派息 ($)1.66 每股)
 (1,515)  (1,515) (1,515)
員工計劃發行普通股份 (2,501,236 股）
350    350 350
購買 (688,254 股份）及出售（299,359 股份）的庫藏股票根據員工計劃—分紅派息
 (1)(60) (60) (60)
非控制權益變動     5 5 
權益－2023年9月30日$59,313 $149,506 $(169,640)$(16,098)$23,081 $75 $23,156 
（由於四捨五入，金額可能不匹配。）
(附註是基本報表的一部分。)

8
目錄
國際商業機器公司
及其子公司
所有者權益變動表 - (續)
(未經審計)
（除每股數據外，單位爲百萬美元）普通股
股份和
額外的
實收資本
資本		留存收益
收益		國庫
股票		累積的
其他
綜合
收益/（損失）		IBM總計
股東權益
股權		非公司治理股份
控制
利益		總費用
股權
股本 - 2024年1月1日$59,643 $151,276 $(169,624)$(18,761)$22,533 $80 $22,613 
淨利潤加其他全面收益/(損失):        
淨收入 3,109   3,109  3,109 
其他綜合收益/(虧損)   2,343 2,343  2,343 
總綜合收益
    $5,452  $5,452 
普通股分紅支付（$5.00每股)
 (4,601)  (4,601) (4,601)
員工計劃下發行的普通股（10,758,294股）
1,370    1,370  1,370 
購買（2,944,556 股份)和銷售(1,817,768 股份)用於員工股票計劃—淨
 5 (311) (306) (306)
非控股權益變動     2 2 
所有者權益-2024年9月30日$61,013 $149,789 $(169,935)$(16,418)$24,448 $82 $24,530 
（除每股數據外，單位爲百萬美元）普通股
股份和
額外的
實收資本
資本		留存收益
收益		國庫
股票		累積的
其他
綜合
收益/（損失）		Total IBM
股東權益
股權		非公司治理股份
控制
利益		總費用
股權
2023年1月1日的股本$58,343 $149,825 $(169,484)$(16,740)$21,944 $77 $22,021 
淨利潤加其他綜合收益/(損失):        
淨收入 4,214   4,214  4,214 
其他綜合收益/(虧損)   642 642  642 
總綜合收益
    $4,857  $4,857 
普通股現金股息支付 ($4.97每股)
 (4,522)  (4,522) (4,522)
員工股份計劃下發行的普通股 (8,081,507股）
970    970  970 
購買 (2,498,567 份額)及銷售(分紅派息1,443,664 份額)的資金股票計劃下資本-淨
 (11)(156) (167) (167)
非控股權益變動     (2)(2)
股本-2023年9月30日$59,313 $149,506 $(169,640)$(16,098)$23,081 $75 $23,156 
（由於四捨五入，金額可能不匹配。）
(附註是基本報表的一部分。)

目錄
合併財務報表註釋
1
1. 演示方式的基礎：
國際商用機器公司（IBM或公司）的附帶的合併基本報表和附註是根據美國通用會計準則（GAAP）編制的。這些財務報表和附註未經審計。根據公司管理層的意見，這些報表包括所有僅屬正常循環性質的調整，以便對公司業務運營、財務狀況和現金流進行公正陳述。
根據GAAP編制基本報表要求管理層對影響合併財務報表和附屬披露中報告的資產、負債、營業收入、成本、費用和其他全面收益/(損失)金額的估計和假設進行評估。這些估計基於管理層對當前事件、歷史經驗、公司未來可能採取的行動以及被認爲在當時情況下合理的各種其他假設的最佳了解。因此，實際結果可能與這些估計不同。
2024年9月，IBM合格個人養老金計劃（合格PPP）從美國保誠保險公司（「保險公司」）購買了一份非參與型單一保費團體年金合同，並不可撤銷地轉讓給了該保險公司約美元6 合格PPP的固定福利養老金債務和相關計劃資產的數十億美元，從而使公司的養老金債務和資產減少了相同金額。團體年金合同是使用合格PPP的資產購買的，不需要公司提供額外的資金捐助。由於這筆交易，該公司確認了一次性、非現金的稅前養老金結算費用爲美元2.7 十億（美元）2.0 2024年第三季度扣除稅款10億美元），主要與加速確認合格PPP的累計精算虧損有關。這美元0.7 與和解費用相關的10億美元稅收優惠反映在截至2024年9月30日的九個月合併現金流量表中，調整運營資產和負債變動中的淨收入/（虧損）與經營活動的淨現金，扣除收購/剝離。有關其他信息，請參閱附註18 「與退休有關的福利」。
截至2024年9月30日，三個季度和九個月結束時，公司報告稱所得稅受益爲$485萬美元和597 分別爲百萬美元。2024年9月30日結束的三個月和九個月的稅收受益，是由於將部分符合PPP合格定義的養老金義務和相關計劃資產轉移給了保險公司，如上所述。2024年9月30日結束的九個月的稅收受益，也受益於第一季度解決了某些稅務審計事項。截至2023年9月30日，三個季度和九個月結束時，公司報告稱所得稅準備金爲$159萬美元和702 百萬美元，分別。
非控股權益金額作爲減少在合併利潤表中的其它收入和費用，對所呈現的期間的合併結果並不是很重要。
公司與第三方金融機構有供應商融資計劃，公司同意在參與供應商原始發票到期日支付金融機構規定的金額，其平均期限爲⋯天 90至120 保持公司標準付款條件一致。金融機構可以根據供應商的獨立決定提供較早支付，但金額會有折扣。公司不會在安排中提供已擔保的法律資產或其他擔保形式。公司不是其供應商和金融機構之間安排的一方。這些義務在合併資產負債表中被確認爲應付賬款。這些計劃下尚未履行的義務在2024年9月30日和2023年12月31日分別爲$99萬美元和101百萬美元。
中期結果並不一定代表全年財務結果。此10-Q表格中包含的信息應與公司的2023年年度報告一起閱讀。
在呈現的基本報表和表格中，由於使用四捨五入的目的，某些列和行可能不會加總。提供的百分比是根據基礎整數金額計算的。某些往期金額已重新分類以符合當前期間呈現的變化。在適用的地方進行了標註。
10
目錄
綜合財務報表附註 — （續）

2. 會計變更:
新標準將被實施
所得稅披露
準則/描述–發行日期：2023年12月。該指引要求將稅率調解的披露細分爲八大類別，對超過特定門檻的項目還需要進一步細分。此外，該指引要求披露按聯邦、州和國外司法管轄區細分支付的所得稅。
生效日期和採納考慮事項。—該指導意見自2025年1月1日起生效，允許提前採納。公司預計在生效日期採納該指導意見。
財務報表或其他重要事項的影響。由於該指南僅涉及披露的變更，它將影響公司年度基本報表中的「稅收」註釋，但不會影響合併財務業績。
分部報告披露
準則/描述–發行日期：2023年11月。根據此指引，要求披露定期提供給公司首席運營決策者幷包含在每個報告的各個板塊利潤或損失中的重要板塊費用。公司還必須披露「其他板塊項目」，即每個報告的各板塊利潤或損失中，板塊營業收入減去重要費用之間的差異，以及其構成的描述。此指引還要求所有板塊的年度披露以臨時基礎提供。
生效日期和採納考慮事項。該準則適用於2024年起的年度期間以及2025年1月1日起的中間期間，並要求在所有以前期間上以追溯方式應用。允許提前採納。公司將於生效日期採納該指導。
財務報表或其他重要事項的影響。由於該指引僅對披露內容進行了更改，因此將會影響公司季度和年度基本報表中的「業務分部」附註，但不會影響合併財務報表的結果。
實施標準
供應商融資計劃義務披露
標準/說明–發佈日期：2022年9月。本指南要求實體就與採購商品或服務有關的供應商融資計劃提供某些中期和年度披露。
生效日期和採納考慮-指南自2023年1月1日起生效，要求進行某些年度披露始於2024年，並允許提前採納。公司在生效日期之日採納了該指南。
財務報表或其他重要事項的影響 -由於該指引僅涉及披露的變更，並未對合並財務結果產生影響。有關額外披露信息，請參閱附註1「報告編制基礎」章節。


11
目錄
綜合財務報表附註 — （續）
3. 營業收入確認：
訂閱和支持收入包括以下內容（以百萬美元爲單位）：
以下表格提供了主要產品/服務提供方面的營業收入細節和按地理位置劃分的營業收入。
主要產品/服務項目的營業收入
截至9月30日的三個月截至9月30日的九個月
(金額單位：百萬美元)2024
2023 (1)
2024
2023 (1)
混合平台及解決方案$4,600 $4,187 $13,272 $12,388 
交易處理1,925 1,759 5,889 5,444 
軟件總額$6,524 $5,947 $19,162 $17,832 
業務轉型2,327 2,291 7,004 6,869 
應用程序運營1,921 1,944 5,761 5,924 
科技諮詢905 943 2,752 2,808 
總體諮詢$5,152 $5,178 $15,517 $15,601 
混合製造行業1,765 1,943 5,928 5,912 
製造行業壓力位1,277 1,329 3,835 4,076 
總體制造行業$3,042 $3,272 $9,764 $9,988 
融資(2)
181 186 543 566 
其他68 170 214 491 
總收入$14,968 $14,752 $45,199 $44,479 
(1)根據2024年1月份的業務板塊變化進行重新調整。有關更多信息，請參閱附註4「業務板塊」。
(2)包含租賃和貸款融資安排，不適用於與客戶簽訂合同的營業收入指南。
地理區域營收
 截至9月30日的三個月 截至9月30日的九個月
（百萬美元）2024202320242023
美洲$7,453 $7,686 $22,727 $22,810 
歐洲/中東/非洲4,584 4,223 13,619 13,156 
亞太地區2,932 2,843 8,853 8,513 
總計$14,968 $14,752 $45,199 $44,479 
剩餘績效承諾
剩餘履約責任（RPO）披露提供了截至報告期末尚未確認交易價格的總金額，並解釋公司預計何時將這些金額確認爲營業收入。它旨在表明尚未執行的合同下的整體工作聲明，並不包括客戶未承諾的合同，如某些作爲服務、政府、期限軟件許可和服務產品。當客戶能夠無需支付實質性罰款而隨時方便終止時，客戶並不被視爲承諾。披露包括變量考慮的估計，除非變量考慮是承諾以交換知識產權許可的基於銷售或使用的專利費。此外，作爲一種便利措施，公司不包括原始持續時間爲另外一個以下。RPO估計可能會發生變化，受到多種因素的影響，包括終止、合同範圍的變更、定期重新確認、未實現的營業收入調整以及貨幣調整。 一年 或更少。RPO估計可能會發生變化，受到多種因素的影響，包括終止、合同範圍的變更、定期重新確認、未實現的營業收入調整以及貨幣調整。

12
目錄
綜合財務報表附註 — （續）
2024年9月30日，分配給與客戶合同相關的RPO且尚未滿足或部分未滿足的交易價格總額約爲$57 十億。預計該金額的大約 70 百分比將在隨後的營業中確認 發生約爲 27 百分之二十在隨後的營業中 三至月內。2023年和2022年的三個和九個月期權授予均以授予日公司普通股的公允價值相等的行權價格授予，並且是非法定股票期權。 並且之後的餘額。
在以往期間已實現的績效義務
截至2024年9月30日的三個和九個月，對於在之前期間履行或部分履行的績效承諾，已確認的營業收入是不重要的。
合同餘額調節
以下表格提供了有關票據和應收賬款-交易、合同資產和遞延收入餘額的信息。
(金額單位：百萬美元)2024年9月30日2023年12月31日
票據和應收賬款 — 貿易（減除$津貼後淨額 132的。192在2023年）
$5,390 $7,214 
合同資產 (1)
$572 $505 
遞延收入（流動）$12,882 $13,451 
遞延收入（非流動）$3,666 $3,533 
(1)包含在資產負債表中的預付費用和其他流動資產中。
在2024年9月30日結束的九個月中確認的營業收入金額，包括在2023年12月31日的遞延收入餘額內，爲$9.5 億美元，主要與軟件和服務相關。
以下表格提供了截至2024年9月30日和2023年12月31日的九個月的應收帳款-交易應收賬款的預期信用損失回撥情況。
(金額單位：百萬美元)    
2024年1月1日，到期日期。增補/(發佈)
覈銷 (1)
外匯及其他貨幣2024年9月30日
$192$4$(71)$7$132
2023年1月1日增加 / (發佈)
覈銷 (1)
外匯及其他貨幣2023年12月31日
$233$32$(79)$6$192
(1)此期間大部分覈銷涉及之應收款項爲先前已備抵。
預計信貸損失合同資產準備金在任何期間都不是重要的。
13
目錄
綜合財務報表附註 — （續）

4. 片段：檢測類型（血統和親屬關係測試，營養基因組學測試，預測測試，攜帶者測試，其他測試類型）；技術（單核苷酸多態性（SNP）芯片，靶向分析，整個基因組測序（WGS））；分銷渠道（在線，非處方藥）
在2024年第一季度，該公司對其組織結構和管理系統進行了調整，以更好地與市場結構保持一致，增加透明度和改善與同行的段可比性。 這些變化並未影響公司的合併財務報表，但影響了其可報告部門。 由於移除了特定部門利潤的某些元件，如下所述，該公司還將其部門績效指標的標題從持續經營的稅前收入更新爲部門利潤。
以下表格顯示了段更新：
報告段變更
導致的部門影響
氣象公司資產剝離 (1)
-
軟件部門
+
其他-出售的業務
安防-半導體服務重組
-
軟件部門
+諮詢部門
從部門盈利中移除基於股票的補償和淨利息分配
-
軟件部門, 諮詢部門, 製造行業部門, 融資部門 (2)
+其他
(1) 天氣公司資產出售已於2024年1月31日關閉。
(2) 融資業務利息的披露未發生變化。
以下表格反映了公司各部門持續運營的結果，這與公司內部採用的管理和計量系統一致，並已重新調整爲以前年度的結果，以反映上述公司部門變更。這些結果被首席運營決策者使用，既用於評估各部門的表現，也用於分配資源。
14
目錄
綜合財務報表附註 — （續）

板塊信息
(金額單位：百萬美元)軟件諮詢製造行業融資情況總費用
業務板塊
截至2024年9月30日的三個月：     
營業收入$6,524 $5,152 $3,042 $181 $14,900 
業務板塊利潤
$1,969 $559 $422 $86 $3,037 
營業收入同比變化9.7 %(0.5)%(7.0)%(2.5)%2.2 %
部門利潤同比變化14.4 %(1.2)%(13.8)%(5.9)%5.8 %
分部利潤率30.2 %10.9 %13.9 %47.5 %20.4 %
截至2023年9月30日三個月： (1)
     
營業收入$5,947 $5,178 $3,272 $186 $14,582 
業務板塊利潤
$1,722 $566 $490 $91 $2,869 
分部利潤率29.0 %10.9 %15.0 %49.2 %19.7 %
(1) 重新調整以反映2024年1月的部分變更。
按IBM報告的調解：
(金額單位：百萬美元)  
截至9月30日結束的三個月：2024
2023 (1)
營業收入：  
總報告段落$14,900 $14,582 
其他‒已剝離的業務
0 103 
其他收入68 66 
持續經營的總營業收入$14,968 $14,752 
持續經營前稅收收入/(虧損):
  
報告分部總利潤
$3,037 $2,869 
取得的無形資產攤銷(482)(414)
與收購相關的費用/(收入)(10)(25)
非經營性養老相關費用/(收入) (2)
(2,797)12 
以股票爲基礎的報酬計劃(330)(286)
不包括融資部門的淨利息 (265)(262)
員工再平衡費用
(306)(34)
其他‒已剝離的企業
(4)28 
未分配的公司款項和其他 (3)
355 (15)
持續經營的稅前收益/(虧損)總額
$(802)$1,873 
(1)重新調整以反映2024年1月段變化。
(2)2024年包括一次性、非現金的養老金解決費用影響$2.7 十八號註釋中有關"養老相關福利"的更多信息。
(3)2024年包括從出售某些QRadar saas-雲計算資產中獲得的收益。請參閱附註5「收購和剝離」以獲取更多信息。

15
目錄
綜合財務報表附註 — （續）
板塊信息
（以百萬美元計）軟件諮詢基礎架構融資總計
細分市場
在截至2024年9月30日的九個月中：     
收入$19,162 $15,517 $9,764 $543 $44,985 
分部利潤$5,582 $1,447 $1,387 $254 $8,670 
收入逐年變化7.5 %(0.5)%(2.3)%(4.1)%2.3 %
分部利潤同比變化15.1 %(1.9)%(9.3)%(0.5)%6.9 %
分部利潤率29.1 %9.3 %14.2 %46.9 %19.3 %
在截至 2023 年 9 月 30 日的九個月中： (1)
     
收入$17,832 $15,601 $9,988 $566 $43,988 
分部利潤$4,850 $1,476 $1,529 $256 $8,110 
分部利潤率27.2 %9.5 %15.3 %45.2 %18.4 %
(1) Recast to reflect January 2024 segment changes.
Reconciliations to IBM as Reported:
(Dollars in millions)  
For the nine months ended September 30:2024
2023 (1)
Revenue:  
Total reportable segments$44,985 $43,988 
Other‒divested businesses
35 298 
Other revenue178 193 
Total revenue from continuing operations$45,199 $44,479 
Pre-tax income from continuing operations:  
Total reportable segment profit$8,670 $8,110 
Amortization of acquired intangible assets(1,348)(1,194)
Acquisition-related (charges)/income (2)
(106)(35)
Non-operating retirement-related (costs)/income (3)
(2,991)16 
Stock-based compensation(966)(843)
Net interest excluding the Finance segment(706)(704)
Workforce rebalancing changes(698)(410)
Other‒divested businesses (4)
231 63 
Unallocated corporate amounts and other (5)
404 (72)
Total pre-tax income from continuing operations$2,491 $4,931 
(1)Recast to reflect January 2024 segment changes.
(2)2024 includes the impact of foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, "Derivative Financial Instruments," for additional information.
(3)2024 includes the impact of a one-time, non-cash pension settlement charge of $2.7 billion. Refer to note 18, "Retirement-Related Benefits," for additional information.
(4)2024 includes a gain from the divestiture of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.
(5)2024 includes a gain from the sale of certain QRadar SaaS assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.
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Notes to Consolidated Financial Statements — (continued)

5. Acquisitions & Divestitures:
Acquisitions
Purchase price consideration for all acquisitions was paid primarily in cash. All acquisitions, unless otherwise stated, were for 100 percent of the acquired business and are reported in the Consolidated Statement of Cash Flows, net of acquired cash and cash equivalents.
During the nine months ended September 30, 2024, the company completed five acquisitions within the Software segment and three acquisitions within the Consulting segment at an aggregate cost of $2,798 million. These acquisitions are expected to enhance the company’s portfolio of products and services capabilities and further advance IBM’s hybrid cloud and AI strategy.
At September 30, 2024, the remaining cash to be remitted by the company related to 2024 acquisitions was not material.
The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocation as of September 30, 2024.
(Dollars in millions)Amortization
Life (in years)
StreamSets and webMethods
Other
Acquisitions
Current assets$364 $57 
Property, plant and equipment/noncurrent assets12 9 
Intangible assets:
 GoodwillN/A1,072 390 
 Client relationships
1-7
680 82 
 Completed technology
5-7
550 63 
 Trademarks
2-7
45 4 
Total assets acquired$2,723 $605 
Current liabilities209 39 
Noncurrent liabilities251 31 
Total liabilities assumed$461 $70 
Total purchase price$2,262 $535 
N/A – not applicable
The goodwill generated is primarily attributable to the assembled workforce of the acquired businesses and the increased synergies expected to be achieved from the integration of the acquired businesses into the company’s various integrated solutions and services, neither of which qualifies as an amortizable intangible asset.
The valuation of the assets acquired and liabilities assumed is subject to revision. If additional information becomes available, the company may further revise the purchase price allocation as soon as practical, but no later than one year from the acquisition date.
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Notes to Consolidated Financial Statements — (continued)
StreamSets and webMethods — On July 1, 2024, the company completed the acquisition of StreamSets and webMethods from Software AG for approximately $2.3 billion (€2.13 billion) in cash. StreamSets will add new data ingestion capabilities to IBM's data platform and webMethods will bring integration platform-as-a-service (iPaaS) capabilities to IBM's automation solutions. Goodwill of $1,072 million was assigned to the Software segment. It is expected that 56 percent of the goodwill will be deductible for tax purposes. The overall weighted-average useful life of the identified amortizable intangible assets acquired was 7.0 years. The acquisition will be integrated into the Software segment. Prior to the acquisition, the company entered into foreign currency derivative contracts which expired by June 28, 2024. Refer to note 16, “Derivative Financial Instruments,” for financial impacts and additional information.
Other Acquisitions — Goodwill of $216 million, $166 million and $8 million was assigned to the Consulting, Software and Infrastructure segments, respectively. It is expected that 12 percent of the goodwill will be deductible for tax purposes. The overall weighted-average useful life of the identified amortizable intangible assets acquired was 6.5 years.
The identified intangible assets will be amortized on a straight-line basis over their useful lives, which approximates the pattern that the assets’ economic benefits are expected to be consumed over time.
Transactions Closed in Fourth-Quarter 2024 — On October 10, 2024, the company completed an acquisition within the Software segment which is not expected to have a material impact on the company's Consolidated Financial Statements.
Transactions Announced — On April 24, 2024, the company announced its intent to acquire all of the outstanding shares of HashiCorp, Inc. (HashiCorp). IBM’s and HashiCorp’s combined portfolios will help clients manage growing application and infrastructure complexity and create a comprehensive end-to-end hybrid cloud platform designed for the AI era. Under the terms of the definitive agreement, HashiCorp's shareholders on record immediately prior to the effective time on the closing date will receive $35 per share in cash, representing a total enterprise value of approximately $6.4 billion. On July 15, 2024, HashiCorp stockholders voted to approve the merger with IBM. The transaction is expected to close by the end of 2024, subject to regulatory approvals and other customary closing conditions. Upon closing, HashiCorp will be integrated into the Software segment.
On September 9, 2024, the company announced its intent to acquire a global Oracle services provider. The acquisition is expected to close in the fourth quarter of 2024, subject to regulatory approvals and other customary closing conditions. Upon closing, the acquisition will be included in "Other Acquisitions" in the purchase price allocation table and will be integrated into the Consulting segment.
Divestitures
The Weather Company Assets — On January 31, 2024, the company completed the sale of The Weather Company assets to Zephyr Buyer, L.P., a wholly-owned subsidiary of Francisco Partners (collectively, Francisco). Under the agreement, Francisco acquired The Weather Company assets from IBM for $1,100 million inclusive of $250 million of contingent consideration, of which $200 million is contingent on Francisco’s attainment of certain investment return metrics. The assets include The Weather Company's digital consumer-facing offerings, The Weather Channel mobile and cloud-based digital properties including Weather.com, Weather Underground and Storm Radar, as well as its enterprise offerings for broadcast, media, aviation, advertising technology and data solutions for other emerging industries.
Upon closing, the company received cash proceeds of $750 million and provided seller financing to Francisco in the form of a $100 million loan with a term of 7 years. The cash proceeds from the sale were primarily included in cash from investing activities within the Consolidated Statement of Cash Flows. The seller financing is a non-cash investing activity. For the nine months ended September 30, 2024, the company recognized a pre-tax gain on sale of $241 million in other (income) and expense in the Consolidated Income Statement. As discussed in note 4, “Segments,” in the first quarter of 2024, The Weather Company assets previously reported in the Software segment were moved and recast to the Other–divested businesses category.
Sale of Assets
On August 31, 2024, the company completed the sale of certain QRadar SaaS (software-as-a-service) assets including QRadar intellectual property, customer relationships and customer contracts to Palo Alto Networks (Palo Alto). Upon closing, the company received cash proceeds of $500 million from Palo Alto. Proceeds of $437 million from the sale were
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Notes to Consolidated Financial Statements — (continued)
included in proceeds from disposition of property, plant and equipment/other within cash from investing activities and the remaining $63 million related to transition and migration services described below were included within cash from operating activities in the Consolidated Statement of Cash Flows. The company recognized a pre-tax gain on sale of $351 million at closing in other (income) and expense in the Consolidated Income Statement.
In connection with the sale of the QRadar SaaS assets, IBM and Palo Alto will facilitate the migration of QRadar SaaS and IBM's QRadar on-premise (on-prem) clients who choose to migrate to Palo Alto's Cortex XSIAM, their security operations (SOC) platform. As part of the agreement, IBM will receive incremental future cash payments from Palo Alto for QRadar on-prem clients who choose to migrate to the Cortex XSIAM platform. Until this migration is completed, or contracts expire, the contractual relationship with certain QRadar SaaS and IBM's QRadar on-prem clients remains with IBM. IBM also provides Palo Alto with transition services including support, operations and other services for QRadar SaaS customer contracts. The client migrations to Cortex XSIAM platform and transition services did not have a material impact on IBM's Consolidated Financial Statements during the third quarter of 2024.
6. Other (Income) and Expense:
Components of other (income) and expense are as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2024202320242023
Other (income) and expense:
(Gains)/losses on foreign currency transactions (1)
$470 $(260)$126 $(338)
(Gains)/losses on derivative instruments (1)
(428)316 (1)315 
Interest income(170)(156)(597)(527)
Net (gains)/losses from securities and investment assets(4)(5)(14)3 
Retirement-related costs/(income) (2)
2,797 (12)2,991 (16)
Other (3)
(422)(97)(810)(158)
Total other (income) and expense$2,244 $(215)$1,694 $(721)
(1)The company uses financial hedging instruments to limit specific currency risks related to foreign currency-based transactions. The hedging program does not hedge 100 percent of currency exposures and defers, versus eliminates, the impact of currency. Refer to note 16, "Derivative Financial Instruments," for additional information on foreign exchange risk.
(2)2024 amounts include the impact of a one-time, non-cash, pre-tax pension settlement charge of $2.7 billion. Refer to note 18, "Retirement-Related Benefits," for additional information.
(3)2024 amounts include a pre-tax gain of $351 million from the sale of certain QRadar SaaS assets. The nine months ended September 30, 2024 also includes a pre-tax gain of $241 million from the divestiture of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.
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Notes to Consolidated Financial Statements — (continued)
7. Earnings Per Share of Common Stock:
The following tables provide the computation of basic and diluted earnings per share of common stock for the three and nine months ended September 30, 2024 and 2023.
（除每股數據外，單位爲百萬美元）
截至9月30日結束的三個月：20242023
基本每股盈利的計算基數：  
加權平均流通股份數：923,577,526912,790,387
加 — 股權激勵計劃下的增量股份：—8,531,982
加 — 與待發行股份相關的增量股份：—2,350,932
稀釋每股盈利的計算基數：923,577,526923,673,300
持續經營活動的收入/(虧損)$(317)$1,714 
(損失) 來自已終止的經營活動，稅後(13)(10)
基本每股收益計算基準的淨利潤/(損失)$(330)$1,704 
持續經營活動的收入/(虧損)$(317)$1,714 
適用於有潛在發行股份的淨利潤— — 
稀釋每股收益計算基準的持續經營所得/(虧損)$(317)$1,714 
停止運作的(虧損)，稅後，計算稀釋每股收益的基準(13)(10)
稀釋每股收益計算基準的淨利潤/(損失)$(330)$1,704 
普通股每股收益：  
假設稀釋  
持續經營$(0.34)$1.86 
已停止的營運(0.01)(0.01)
總計$(0.36)$1.84 
基本
持續經營$(0.34)$1.88 
已停止的營運(0.01)(0.01)
總計$(0.36)$1.87 
購買期權的期權數 9,189 股數和 536,391 截至2024年和2023年9月30日，共有未發行的分享，但由於在各自期間的期權行使價格高於普通分享的平均市場價格，因此未計入稀釋每股收益的計算，因而其影響將是反稀釋的。
由於截至2024年9月30日的三個月內出現淨虧損，爲避免對每股股票基本按期權補償計劃列入的普通股的潛在攤薄股份和有條件發行的股份的計算產生的影響，這些股份被排除在攤薄每股盈利/(虧損)的計算之外。 12,348,507 和 2,520,759分別排除了每股收益/(虧損)的攤薄計算，因爲這些股份的影響將會對每股收益/(虧損)產生抗攤薄效應。

20
目錄
綜合財務報表附註 — （續）
(Dollars in millions except per share amounts)
For the nine months ended September 30:20242023
Number of shares on which basic earnings per share is calculated:  
Weighted-average shares outstanding during period920,347,948910,057,739
Add — Incremental shares under stock-based compensation plans12,829,5728,241,752
Add — Incremental shares associated with contingently issuable shares2,247,7122,024,201
Number of shares on which diluted earnings per share is calculated935,425,233920,323,692
Income from continuing operations
$3,088 $4,229 
Income/(loss) from discontinued operations, net of tax21 (15)
Net income on which basic earnings per share is calculated
$3,109 $4,214 
Income from continuing operations
$3,088 $4,229 
Net income applicable to contingently issuable shares— — 
Income from continuing operations on which diluted earnings per share is calculated
$3,088 $4,229 
Income/(loss) from discontinued operations, net of tax, on which diluted earnings per share is calculated21 (15)
Net income on which diluted earnings per share is calculated
$3,109 $4,214 
Earnings/(loss) per share of common stock:  
Assuming dilution  
Continuing operations$3.30 $4.59 
Discontinued operations0.02 (0.02)
Total$3.32 $4.58 
Basic
Continuing operations$3.36 $4.65 
Discontinued operations0.02 (0.02)
Total$3.38 $4.63 
Stock options to purchase 1,018,714 shares and 2,346,268 shares (average of first, second and third quarter share amounts) were outstanding as of September 30, 2024 and 2023, respectively, but were not included in the computation of diluted earnings per share because the exercise price of the options during the respective period was greater than the average market price of the common shares, and therefore, the effect would have been antidilutive.
8. Financial Assets & Liabilities:
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The company classifies certain assets and liabilities based on the following fair value hierarchy:
•Level 1–Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date;
•Level 2–Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
•Level 3–Unobservable inputs for the asset or liability.
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Notes to Consolidated Financial Statements — (continued)
When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items as Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation.
The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument.
In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calculated using the methodologies described below for several parameters that market participants would consider in determining fair value:
•Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument.
•Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market.
The company holds investments primarily in time deposits, certificates of deposit, and U.S. government debt that are designated as available-for-sale. The primary objective of the company’s cash and debt investment portfolio is to protect principal by investing in very liquid investment securities with highly rated counterparties.
The company’s standard practice is to hold all of its debt security investments classified as available-for-sale until maturity. No impairments for credit losses and no material non-credit impairments were recorded for the three and nine months ended September 30, 2024 and 2023, respectively.
Certain non-financial assets such as property, plant and equipment (PP&E), operating right-of-use assets, goodwill and intangible assets are also subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for non-financial assets depend on the type of asset. There were no material impairments of non-financial assets for the three and nine months ended September 30, 2024 and 2023, respectively.
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Notes to Consolidated Financial Statements — (continued)
The following table presents the company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at September 30, 2024 and December 31, 2023.
Fair Value
Hierarchy
Level		At September 30, 2024At December 31, 2023
(Dollars in millions)
Assets (6)
Liabilities (7)
Assets (6)
Liabilities (7)
Cash equivalents: (1)
Time deposits and certificates of deposit (2)
2$6,331 N/A$7,206 N/A
Money market funds1432 N/A 494 N/A
Total cash equivalents$6,763 N/A$7,699 N/A
Equity investments1— N/A25 N/A
Debt securities-current (2)(3)
2505 N/A373 N/A
Debt securities-noncurrent (2)(4)
2,3107 N/A8 N/A
Derivatives designated as hedging instruments:
Interest rate contracts211 218 2 299 
Foreign exchange contracts260 276 131 275 
Derivatives not designated as hedging instruments:
Foreign exchange contracts (5)
217 6 115 19 
Equity contracts237 0 93 — 
Total$7,499 $500 $8,446 $593 
(1)Included within cash and cash equivalents in the Consolidated Balance Sheet.
(2)Available-for-sale debt securities with carrying values that approximate fair value.
(3)Term deposits and U.S. treasury bills that are reported within marketable securities in the Consolidated Balance Sheet.
(4)September 30, 2024 amount includes a $100 million seller financing loan in connection with the divestiture of The Weather Company assets reported within investments and sundry assets in the Consolidated Balance Sheet. Refer to note 5, "Acquisitions & Divestitures," for additional information.
(5)December 31, 2023 asset amount includes $62 million in foreign exchange call option contracts in connection with the acquisition of StreamSets and webMethods from Software AG. There were no associated derivatives outstanding at September 30, 2024. Refer to note 16, "Derivative Financial Instruments," for additional information.
(6)The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Balance Sheet at September 30, 2024 were $84 million and $41 million, respectively, and at December 31, 2023 were $304 million and $37 million, respectively.
(7)The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Balance Sheet at September 30, 2024 were $248 million and $252 million, respectively, and at December 31, 2023 were $294 million and $299 million, respectively.
N/A – not applicable
Financial Assets and Liabilities Not Measured at Fair Value
Short-Term Receivables and Payables
Short-term receivables (excluding the current portion of long-term receivables) and other investments are financial assets with carrying values that approximate fair value. Accounts payable, other accrued expenses and short-term debt (excluding the current portion of long-term debt) are financial liabilities with carrying values that approximate fair value. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy, except for short-term debt which would be classified as Level 2.
Loans and Long-Term Receivables
Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At September 30, 2024 and December 31, 2023, the difference between the carrying amount and estimated fair value for loans and long-term receivables was immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy.
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Notes to Consolidated Financial Statements — (continued)
Long-Term Debt
Fair value of publicly traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt (including long-term finance lease liabilities) for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. The carrying amount of long-term debt was $52,980 million and $50,121 million, and the estimated fair value was $51,718 million and $48,284 million at September 30, 2024 and December 31, 2023, respectively. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy.
9. Financing Receivables:
Financing receivables primarily consist of client loan and installment payment receivables (loans), investment in sales-type and direct financing leases (collectively referred to as client financing receivables) and commercial financing receivables. Loans are provided primarily to clients to finance the purchase of IBM hardware, software and services. Payment terms on these financing arrangements are for terms generally up to seven years. Investment in sales-type and direct financing leases relate principally to the company’s Infrastructure products and are for terms generally up to five years. Commercial financing receivables, which consist of both held-for-investment and held-for-sale receivables, relate primarily to working capital financing for business partners and distributors of IBM products and services. Payment terms for working capital financing generally range from 30 to 60 days.
A summary of the components of the company’s financing receivables is presented as follows:
Client Financing Receivables
Client Loan and Installment Payment ReceivablesInvestment in Sales-Type and Direct Financing
Commercial Financing Receivables
(Dollars in millions)Held forHeld for
At September 30, 2024(Loans)LeasesInvestment
Sale (1)
Total
Financing receivables, gross$6,286 $3,750 $675 $509 $11,220 
Unearned income(480)(370)— — (850)
Unguaranteed residual value— 457 — — 457 
Amortized cost$5,806 $3,837 $675 $509 $10,827 
Allowance for credit losses(75)(51)(5)— (131)
Total financing receivables, net$5,731 $3,786 $670 $509 $10,696 
Current portion$3,017 $1,570 $670 $509 $5,765 
Noncurrent portion$2,714 $2,216 $— $— $4,931 
Client Financing Receivables
Client Loan and Installment Payment ReceivablesInvestment in Sales-Type and Direct Financing
Commercial Financing Receivables
(Dollars in millions)Held forHeld for
At December 31, 2023(Loans)LeasesInvestment
Sale (1)
Total
Financing receivables, gross$7,060 $4,261 $1,160 $692 $13,173 
Unearned income(486)(429)— — (915)
Unguaranteed residual value— 458 — — 458 
Amortized cost$6,574 $4,290 $1,160 $692 $12,716 
Allowance for credit losses(87)(63)(6)— (156)
Total financing receivables, net$6,486 $4,227 $1,155 $692 $12,560 
Current portion$3,427 $1,520 $1,155 $692 $6,793 
Noncurrent portion$3,059 $2,707 $— $— $5,766 
(1)The carrying value of the receivables classified as held for sale approximates fair value.

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Notes to Consolidated Financial Statements — (continued)
The company has a long-standing practice of taking mitigation actions, in certain circumstances, to transfer credit risk to third parties. These actions may include credit insurance, financial guarantees, nonrecourse secured borrowings, transfers of receivables recorded as true sales in accordance with accounting guidance or sales of equipment under operating lease. Sale of receivables arrangements are also utilized in the normal course of business as part of the company’s cash and liquidity management.
Financing receivables pledged as collateral for secured borrowings were $289 million and $232 million at September 30, 2024 and December 31, 2023, respectively. These borrowings are included in note 12, “Borrowings.”
Transfer of Financial Assets
The company has an existing agreement with a third-party investor to sell IBM short-term commercial financing receivables on a revolving basis. This agreement previously allowed for sales up to $3.0 billion. In December 2023, the company amended and renewed its agreement for a one-year term, which reduced the limit to $1.3 billion in January 2024. In addition, the company enters into agreements with third-party financial institutions to sell certain of its client financing receivables, including both loan and lease receivables, for cash proceeds. There were no material client financing receivables transferred for the nine months ended September 30, 2024 and 2023.
The following table presents the total amount of commercial financing receivables transferred.
(Dollars in millions)
For the nine months ended September 30:20242023
Commercial financing receivables:
Receivables transferred during the period$5,590 $6,453 
Receivables uncollected at end of period (1)
$691 $836 
(1)Of the total amount of commercial financing receivables sold and derecognized from the Consolidated Balance Sheet, the amounts presented remained uncollected from business partners as of September 30, 2024 and 2023.
The transfer of these receivables qualified as true sales and therefore reduced financing receivables. The cash proceeds from the sales are included in cash flows from operating activities. For the nine months ended September 30, 2024 and 2023, the net loss, including fees, associated with the transfer of commercial financing receivables was $49 million and $69 million, respectively, and is included in other (income) and expense in the Consolidated Income Statement.
Financing Receivables by Portfolio Segment
The following tables present the amortized cost basis for client financing receivables at September 30, 2024 and December 31, 2023, further segmented by three classes: Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific. The commercial financing receivables portfolio segment is excluded from the tables in the sections below as the receivables are short term in nature and the current estimated risk of loss and resulting impact to the company’s financial results are not material.
(Dollars in millions)    
At September 30, 2024:AmericasEMEAAsia PacificTotal
Amortized cost$5,731 $2,531 $1,381 $9,643 
Allowance for credit losses:    
Beginning balance at January 1, 2024$92 $48 $11 $150 
Write-offs$(1)$(1)$0 $(2)
Recoveries0 0 0 1 
Additions/(releases)(8)(6)(2)(16)
Other (1)
(7)0 0 (7)
Ending balance at September 30, 2024$75 $41 $10 $126 
(1)Primarily represents translation adjustments.
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Notes to Consolidated Financial Statements — (continued)
(Dollars in millions)    
At December 31, 2023:AmericasEMEAAsia PacificTotal
Amortized cost$6,488 $3,007 $1,368 $10,863 
Allowance for credit losses:   
Beginning balance at January 1, 2023$88 $60 $20 $168 
Write-offs$(9)$(1)$(8)$(18)
Recoveries0 2 3 5 
Additions/(releases)5 (14)(4)(12)
Other (1)
7 1 (1)8 
Ending balance at December 31, 2023$92 $48 $11 $150 
(1)Primarily represents translation adjustments.
When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For the company’s policy on determining allowances for credit losses, refer to note A, “Significant Accounting Policies,” in the company’s 2023 Annual Report.
Past Due Financing Receivables
The company summarizes information about the amortized cost basis for client financing receivables, including amortized cost aged over 90 days and still accruing, billed invoices aged over 90 days and still accruing, and amortized cost not accruing.
(Dollars in millions)Total
Amortized
Cost
Amortized
Cost
> 90 Days (1)
Amortized
Cost
> 90 Days and
Accruing (1)
Billed
Invoices
> 90 Days and
Accruing
Amortized
Cost
Not
Accruing (2)
At September 30, 2024:
Americas$5,731 $80 $17 $1 $66 
EMEA2,531 32 3 3 30 
Asia Pacific1,381 8 1 0 7 
Total client financing receivables$9,643 $120 $20 $4 $103 
(Dollars in millions)Total
Amortized
Cost
Amortized
Cost
> 90 Days (1)
Amortized
Cost
> 90 Days and
Accruing (1)
Billed
Invoices
> 90 Days and
Accruing
Amortized
Cost
Not
Accruing (2)
At December 31, 2023:
Americas$6,488 $111 $40 $6 $71 
EMEA3,007 31 1 1 31 
Asia Pacific1,368 9 1 0 8 
Total client financing receivables$10,863 $151 $43 $7 $110 
(1)At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days.
(2)Of the amortized cost not accruing, there was a related allowance of $99 million and $106 million at September 30, 2024 and December 31, 2023, respectively. Financing income recognized on these receivables was immaterial for the three and nine months ended September 30, 2024 and 2023, respectively.
Credit Quality Indicators
The company’s credit quality indicators, which are based on rating agency data, publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Moody’s Investors Service credit ratings as shown below. The company uses information provided by Moody’s, where available, as one of many inputs in its determination of customer credit ratings. The credit quality of the customer is evaluated based on these indicators and is assigned the same risk rating whether the receivable is a lease or a loan.
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Notes to Consolidated Financial Statements — (continued)
The following tables present the amortized cost basis for client financing receivables by credit quality indicator at September 30, 2024 and December 31, 2023, respectively. Receivables with a credit quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators reflect mitigating credit enhancement actions taken by customers which reduce the risk to IBM. Gross write-offs by vintage year at September 30, 2024 and December 31, 2023 were not material.
(Dollars in millions)AmericasEMEAAsia Pacific
At September 30, 2024:Aaa – Baa3
Ba1 – C
Aaa – Baa3
Ba1 – C
Aaa – Baa3
Ba1 – C
Vintage year:      
2024$1,377 $481 $448 $264 $423 $97 
20231,589 467 419 314 321 29 
20221,106 141 479 245 287 30 
2021335 35 158 45 64 25 
202057 26 42 27 48 13 
2019 and prior67 50 46 45 32 12 
Total$4,531 $1,201 $1,591 $940 $1,175 $206 
(Dollars in millions)AmericasEMEAAsia Pacific
At December 31, 2023:Aaa – Baa3
Ba1 – C
Aaa – Baa3
Ba1 – C
Aaa – Baa3
Ba1 – C
Vintage year:      
2023$2,292 $1,028 $750 $520 $501 $70 
20221,645 268 687 374 386 42 
2021655 85 284 83 110 40 
2020205 79 106 60 97 22 
2019104 23 58 38 40 8 
2018 and prior55 50 16 30 39 12 
Total$4,955 $1,533 $1,901 $1,106 $1,174 $195 
Modifications
The company did not have any significant modifications due to clients experiencing financial difficulty during the nine months ended September 30, 2024 or for the year ended December 31, 2023.
10. Leases:
Accounting for Leases as a Lessor
The following table presents amounts included in the Consolidated Income Statement related to lessor activity.
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2024202320242023
Lease income — sales-type and direct financing leases:
    
Sales-type lease selling price$48 $190 $528 $528 
Less: Carrying value of underlying assets (1)
(12)(42)(106)(133)
Gross profit$37 $148 $423 $395 
Interest income on lease receivables67 58 206 176 
Total sales-type and direct financing lease income$104 $206 $628 $571 
Lease income — operating leases
13 20 47 71 
Variable lease income16 12 54 47 
Total lease income$133 $238 $729 $689 
(1)Excludes unguaranteed residual value.
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Notes to Consolidated Financial Statements — (continued)
11. Intangible Assets Including Goodwill:
Intangible Assets
The following tables present the company's intangible asset balances by major asset class.
At September 30, 2024
(Dollars in millions)Gross Carrying
Amount		Accumulated
Amortization
Net Carrying
Amount (1)
Intangible asset class:
Capitalized software$1,450 $(634)$816 
Client relationships9,793 (4,218)5,574 
Completed technology6,258 (3,019)3,239 
Patents/trademarks1,869 (514)1,355 
Other (2)
136 (30)106 
Total$19,506 $(8,416)$11,090 
At December 31, 2023
(Dollars in millions)Gross Carrying
Amount		Accumulated
Amortization
Net Carrying
Amount (1)
Intangible asset class:
Capitalized software$1,636 $(762)$874 
Client relationships9,053 (3,500)5,553 
Completed technology5,713 (2,510)3,203 
Patents/trademarks1,821 (436)1,385 
Other (2)
41 (20)22 
Total$18,265 $(7,229)$11,036 
(1)Amounts as of September 30, 2024 and December 31, 2023 include an increase in net intangible asset balances of $6 million and $50 million, respectively, due to foreign currency translation.
(2)Other intangibles are primarily acquired proprietary and non-proprietary technology licenses, data, business processes, methodologies and systems.
The net carrying amount of intangible assets increased $53 million during the first nine months of 2024, primarily due to additions of acquired intangibles of $1,424 million, driven by the acquisition of StreamSets and webMethods in the current quarter, and additions of capitalized software, partially offset by intangible asset amortization. The aggregate intangible asset amortization expense was $705 million and $1,910 million for the three and nine months ended September 30, 2024, respectively, compared to $572 million and $1,676 million for the three and nine months ended September 30, 2023, respectively. During the nine months ended September 30, 2024, the company retired $681 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount.
The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet was estimated to be the following at September 30, 2024:
(Dollars in millions)Capitalized
Software		Acquired
Intangibles		Total
Remainder of 2024$155 $488 $643 
2025383 1,923 2,306 
2026217 1,899 2,116 
202760 1,879 1,939 
20280 1,576 1,576 
Thereafter0 2,510 2,510 
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Notes to Consolidated Financial Statements — (continued)
Goodwill
The changes in the goodwill balances by segment for the nine months ended September 30, 2024 and for the year ended December 31, 2023 were as follows:
(Dollars in millions)BalanceGoodwill
Additions
Purchase
Price
Adjustments (1)
Foreign
Currency
Translation
and Other
Adjustments (2)
Balance
Segment1/1/2024Divestitures9/30/2024
Software$46,447 $1,237 $(44)$— $(59)$47,581 
Consulting8,883 215 (3)(1)27 9,122 
Infrastructure4,384 8 (1)— (2)4,390 
Other (3)
464 — — (464)— — 
Total$60,178 $1,460 $(48)$(465)$(33)$61,092 

(Dollars in millions)BalanceGoodwill
Additions
Purchase
Price
Adjustments (1)
Foreign
Currency
Translation
and Other
Adjustments (2)
Balance
Segment
1/1/2023Divestitures12/31/2023
Software (4)
$42,712 $3,538 $(17)$— $214 $46,447 
Consulting (4)
8,409 403 2 — 69 8,883 
Infrastructure4,363 12 — — 8 4,384 
Other (4)
464 — — — — 464 
Total$55,949 $3,953 $(15)$— $291 $60,178 
(1)Includes measurement period adjustments related to business combinations that closed in the current and prior year.
(2)Primarily driven by foreign currency translation.
(3)In the first quarter of 2024, the company derecognized goodwill related to the divestiture of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.
(4)Recast to reflect January 2024 segment changes. Refer to note 4, "Segments," for additional information.
There were no goodwill impairment losses recorded during the nine months ended September 30, 2024 or the year ended December 31, 2023 and the company has no accumulated impairment losses. Purchase price adjustments recorded during the nine months ended September 30, 2024 and the year ended December 31, 2023 were related to acquisitions that were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. Net purchase price adjustments recorded in the nine months ended September 30, 2024 and the year ended December 31, 2023 were not material.
12. Borrowings:
Short-Term Debt
The company's total short-term debt at September 30, 2024 and December 31, 2023 was $3,599 million and $6,426 million, respectively, and primarily consisted of current maturities of long-term debt detailed in "Long-Term Debt" below.
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Notes to Consolidated Financial Statements — (continued)
Long-Term Debt
Pre-Swap Borrowing
 BalanceBalance
(Dollars in millions)Maturities9/30/202412/31/2023
U.S. dollar debt (weighted-average interest rate at September 30, 2024): (1)
   
3.5%2024$1 $5,003 
5.1%20251,602 1,601 
3.7%20265,800 5,201 
3.3%20274,119 3,619 
5.0%20281,313 1,313 
3.6%20293,750 3,250 
2.0%20301,350 1,350 
4.8%2031500 — 
4.4%20321,850 1,850 
4.8%2033750 750 
4.9%20341,000 — 
8.0%203883 83 
4.5%20392,745 2,745 
2.9%2040650 650 
4.0%20421,107 1,107 
5.3%20441,000 — 
7.0%204527 27 
4.7%2046650 650 
4.3%20493,000 3,000 
3.0%2050750 750 
4.2%20521,400 1,400 
5.1%2053650 650 
5.3%20541,400 — 
7.1%2096316 316 
$35,815 $35,317 
Euro debt (weighted-average interest rate at September 30, 2024): (1)
1.1%2024$— $829 
1.6%20253,348 3,315 
2.3%20272,232 2,210 
0.7%20282,009 1,989 
1.5%20291,116 1,105 
0.9%20301,116 1,105 
2.7%20312,790 2,762 
0.7%20321,786 1,768 
1.3%20341,116 1,105 
3.8%20351,116 1,105 
1.2%2040949 939 
4.0%20431,116 1,105 
$18,693 $19,335 
Other currencies (weighted-average interest rate at September 30, 2024 in parentheses): (1)
  
Pound sterling (4.9%)
2038$1,006 $955 
Japanese yen (0.7%)
2026–2028887 1,251 
Other (13.8%)
2024–2027285 241 
$56,686 $57,099 
Finance lease obligations (4.9%)
2024–2034878 499 
$57,565 $57,598 
Less: net unamortized discount 837 838 
Less: net unamortized debt issuance costs 176 154 
Add: fair value adjustment (2)
 19 (60)
$56,570 $56,546 
Less: current maturities 3,590 6,425 
Total $52,980 $50,121 
(1)Includes notes, debentures, bank loans and secured borrowings.
(2)The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Balance Sheet as an amount equal to the sum of the debt’s carrying value and a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates.
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Notes to Consolidated Financial Statements — (continued)
The company’s indenture governing its debt securities and its various credit facilities each contain significant covenants which obligate the company to promptly pay principal and interest, limit the aggregate amount of secured indebtedness and sale and leaseback transactions to 10 percent of the company’s consolidated net tangible assets, and restrict the company’s ability to merge or consolidate unless certain conditions are met. The credit facilities also include a covenant on the company’s consolidated net interest expense ratio, which cannot be less than 2.20 to 1.0, as well as a cross default provision with respect to other defaulted indebtedness of at least $500 million.
The company is in compliance with its debt covenants and provides periodic certifications to its lenders. The failure to comply with its debt covenants could constitute an event of default with respect to the debt to which such provisions apply. If certain events of default were to occur, the principal and interest on the debt to which such event of default applied would become immediately due and payable.
On February 5, 2024, IBM International Capital Pte. Ltd (IIC), a wholly owned finance subsidiary of the company, issued $5.5 billion of U.S. dollar fixed rate notes (IIC Notes) in tranches with maturities ranging from 2 to 30 years and coupons ranging from 4.6 to 5.3 percent. These notes are fully and unconditionally guaranteed by the company.

IIC is a 100 percent owned finance subsidiary of IBM, as described by the SEC in Rule 13-01(a)(4)(vi) of Regulation S-X, the primary purpose of which is to borrow money to be made available for the benefit of IBM and its affiliates. The IIC Notes are fully and unconditionally guaranteed by IBM, and no other subsidiary of IBM guarantees the IIC Notes.

Pre-swap annual contractual obligations of long-term debt outstanding at September 30, 2024, were as follows:
(Dollars in millions)Total
Remainder of 2024$93 
20255,296 
20266,321 
20276,501 
20284,043 
Thereafter35,311 
Total$57,565 
Interest on Debt
(Dollars in millions)  
For the nine months ended September 30:20242023
Cost of financing$254 $255 
Interest expense1,288 1,202 
Interest capitalized10 7 
Total interest paid and accrued$1,552 $1,464 
Lines of Credit
The company has a $2.5 billion Three-Year Credit Agreement and a $7.5 billion Five-Year Credit Agreement (the Credit Agreements) with maturity dates of June 20, 2027 and June 22, 2029, respectively. The Credit Agreements permit the company and its subsidiary borrowers to borrow up to $10 billion on a revolving basis. At September 30, 2024, there were no borrowings by the company, or its subsidiaries, under these credit facilities.
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Notes to Consolidated Financial Statements — (continued)

13. Commitments:
The company’s extended lines of credit to third-party entities include unused amounts of $1.8 billion and $1.4 billion at September 30, 2024 and December 31, 2023, respectively. A portion of these amounts was available to the company’s business partners to support their working capital needs. In addition, the company has committed to provide future financing to its clients in connection with client purchase agreements for $1.8 billion and $1.9 billion at September 30, 2024 and December 31, 2023, respectively. The company collectively evaluates the allowance for these arrangements using a provision methodology consistent with the portfolio of the commitments. Refer to note A, “Significant Accounting Policies,” in the company’s 2023 Annual Report for additional information. The allowance for these commitments is recorded in other liabilities in the Consolidated Balance Sheet and was not material at September 30, 2024.
The company has applied the guidance requiring a guarantor to disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s performance is remote. The following is a description of arrangements in which the company is the guarantor.
The company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party with respect to certain matters. Typically, these obligations arise in the context of contracts entered into by the company, under which the company customarily agrees to hold the party harmless against losses arising from a breach of representations and covenants related to such matters as title to the assets sold, certain intellectual property rights, specified environmental matters, third-party performance of nonfinancial contractual obligations and certain income taxes. In each of these circumstances, payment by the company is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, the procedures of which typically allow the company to challenge the other party’s claims. While indemnification provisions typically do not include a contractual maximum on the company’s payment, the company’s obligations under these agreements may be limited in terms of time and/or nature of claim, and in some instances, the company may have recourse against third parties for certain payments made by the company.
It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the company under these agreements have not had a material effect on the company’s business, financial condition or results of operations.
In addition, the company guarantees certain loans and financial commitments. The maximum potential future payment under these financial guarantees and the fair value of these guarantees recognized in the Consolidated Balance Sheet at September 30, 2024 and December 31, 2023 was not material.
Changes in the company’s warranty liability for standard warranties, which are included in other accrued expenses and liabilities and other liabilities in the Consolidated Balance Sheet, and for extended warranty contracts, which are included in deferred income in the Consolidated Balance Sheet, are presented in the following tables.
Standard Warranty Liability
(Dollars in millions)20242023
Balance at January 1$65 $79 
Current-period accruals53 53 
Accrual adjustments to reflect actual experience7 (14)
Charges incurred(61)(64)
Balance at September 30$64 $54 
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Notes to Consolidated Financial Statements — (continued)
Extended Warranty Liability
(Dollars in millions)20242023
Balance at January 1$184 $272 
Revenue deferred for new extended warranty contracts20 55 
Amortization of deferred revenue(88)(122)
Other (1)
(3)(4)
Balance at September 30$112 $201 
Current portion$72 $119 
Noncurrent portion$40 $82 
(1)Other primarily consists of foreign currency translation adjustments.
The decrease in extended warranty liability is primarily due to the company’s shift to alternative maintenance and support offerings without a warranty element.
14. Contingencies:
As a company with a substantial employee population and with clients in more than 175 countries, IBM is involved, either as plaintiff or defendant, in a variety of ongoing claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business. The company is a leader in the information technology industry and, as such, has been and will continue to be subject to claims challenging its IP rights and associated products and offerings, including claims of copyright and patent infringement and violations of trade secrets and other IP rights. In addition, the company enforces its own IP against infringement, through license negotiations, lawsuits or otherwise. Further, given the rapidly evolving external landscape of cybersecurity, AI, privacy and data protection laws, regulations and threat actors, the company and its clients have been and will continue to be subject to actions or proceedings in various jurisdictions. Also, as is typical for companies of IBM’s scope and scale, the company is party to actions and proceedings in various jurisdictions involving a wide range of labor and employment issues (including matters related to contested employment decisions, country-specific labor and employment laws, and the company’s pension, retirement and other benefit plans), as well as actions with respect to contracts, product liability, cybersecurity, data privacy, securities, foreign operations, competition law and environmental matters. These actions may be commenced by a number of different parties, including competitors, clients, current or former employees, government and regulatory agencies, stockholders and representatives of the locations in which the company does business. Some of the actions to which the company is party may involve particularly complex technical issues, and some actions may raise novel questions under the laws of the various jurisdictions in which these matters arise.
The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any recorded liabilities, including any changes to such liabilities for the quarter ended September 30, 2024 were not material to the Consolidated Financial Statements.
In accordance with the relevant accounting guidance, the company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer and employee relations considerations.
With respect to certain of the claims, suits, investigations and proceedings discussed herein, the company believes at this time that the likelihood of any material loss is remote, given, for example, the procedural status, court rulings, and/or the strength of the company’s defenses in those matters. With respect to the remaining claims, suits, investigations and proceedings discussed in this note, except as specifically discussed herein, the company is unable to provide estimates of reasonably possible losses or range of losses, including losses in excess of amounts accrued, if any, for the following reasons. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of these matters. It is the company’s experience that damage amounts claimed in litigation against it are unreliable and unrelated to possible outcomes, and as such are not meaningful indicators of the company’s potential liability. Further, the company is unable to provide such an estimate due to a number of other factors with respect to these claims, suits,
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Notes to Consolidated Financial Statements — (continued)
investigations and proceedings, including considerations of the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters.
The company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate), to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter.
Whether any losses, damages or remedies finally determined in any claim, suit, investigation or proceeding could reasonably have a material effect on the company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including: the timing and amount of such losses or damages; the structure and type of any such remedies; the significance of the impact any such losses, damages or remedies may have in the Consolidated Financial Statements; and the unique facts and circumstances of the particular matter that may give rise to additional factors. While the company will continue to defend itself vigorously, it is possible that the company’s business, financial condition, results of operations or cash flows could be affected in any particular period by the resolution of one or more of these matters.
The following is a summary of the more significant legal matters involving the company.
On June 8, 2021, IBM sued GlobalFoundries U.S. Inc. (GF) in New York State Supreme Court for claims including fraud and breach of contract relating to a long-term strategic relationship between IBM and GF for researching, developing, and manufacturing advanced semiconductor chips for IBM. GF walked away from its obligations and IBM is now suing to recover amounts paid to GF, and other compensatory and punitive damages, totaling more than $1.5 billion. On September 14, 2021, the court ruled on GF’s motion to dismiss. On April 7, 2022, the Appellate Division unanimously reversed the lower court’s dismissal of IBM’s fraud claim. IBM’s claims for breaches of contract, promissory estoppel, and fraud are proceeding.
On June 2, 2022, a putative class action lawsuit was filed in the United States District Court for the Southern District of New York alleging that the IBM Pension Plan miscalculated certain joint and survivor annuity pension benefits by using outdated actuarial tables in violation of the Employee Retirement Income Security Act of 1974. IBM, the Plan Administrator Committee, and the IBM Pension Plan are named as defendants. On April 4, 2024, the court dismissed the lawsuit with prejudice. On May 6, 2024, the plaintiffs appealed.
As disclosed in the Kyndryl Form 10 and subsequent Kyndryl public filings, in 2017 BMC Software, Inc. (BMC) filed suit against IBM in the United States District Court for the Southern District of Texas in a dispute involving IBM’s former managed infrastructure services business. On May 30, 2022, the trial court awarded BMC $718 million in direct damages and $718 million in punitive damages, plus interest and fees. On April 30, 2024, the United States Court of Appeals for the Fifth Circuit reversed and rendered the district court’s judgment in IBM’s favor. IBM does not believe it has any material exposure relating to this litigation. No material liability or related indemnification asset has been recorded by IBM.
The company is party to, or otherwise involved in, proceedings brought by U.S. federal or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), known as “Superfund,” or laws similar to CERCLA. Such statutes require potentially responsible parties to participate in remediation activities regardless of fault or ownership of sites. The company is also conducting environmental investigations, assessments or remediations at or in the vicinity of several current or former operating sites globally pursuant to permits, administrative orders or agreements with country, state or local environmental agencies, and is involved in lawsuits and claims concerning certain current or former operating sites.
The company is also subject to ongoing tax examinations and governmental assessments in various jurisdictions. Along with many other U.S. companies doing business in Brazil, the company is involved in various challenges with Brazilian tax authorities regarding non-income tax assessments and non-income tax litigation matters. The total potential amount related to all these matters for all applicable years is approximately $300 million. The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability.
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Notes to Consolidated Financial Statements — (continued)
15. Equity Activity:
Reclassifications and Taxes Related to Items of Other Comprehensive Income
(Dollars in millions)Before Tax
Amount		Tax (Expense)/
Benefit		Net of Tax
Amount
For the three months ended September 30, 2024:
Other comprehensive income/(loss):   
Foreign currency translation adjustments$(330)$270 $(60)
Net changes related to available-for-sale securities:  
Unrealized gains/(losses) arising during the period$0 $0 $0 
Reclassification of (gains)/losses to other (income) and expense— — — 
Total net changes related to available-for-sale securities$0 $0 $0 
Unrealized gains/(losses) on cash flow hedges:  
Unrealized gains/(losses) arising during the period$(215)$57 $(158)
Reclassification of (gains)/losses to:
   
Cost of services(5)1 (4)
Cost of sales(3)1 (2)
Cost of financing2 0 1 
SG&A expense0 0 0 
Other (income) and expense(234)59 (175)
Interest expense8 (2)6 
Total unrealized gains/(losses) on cash flow hedges$(449)$116 $(333)
Retirement-related benefit plans: (1)
   
Prior service costs/(credits)$— $— $— 
Net (losses)/gains arising during the period100 (25)75 
Curtailments and settlements2,727 (686)2,041 
Amortization of prior service costs/(credits)(2)0 (1)
Amortization of net (gains)/losses246 (68)178 
Total retirement-related benefit plans$3,072 $(779)$2,293 
Other comprehensive income/(loss)$2,293 $(392)$1,900 
(1)These accumulated other comprehensive income (AOCI) components are included in the computation of net periodic pension cost and include the impact of a one-time, non-cash pension settlement charge of $2.7 billion ($2.0 billion net of tax) in the third quarter of 2024. Refer to note 18, “Retirement-Related Benefits,” for additional information.

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Notes to Consolidated Financial Statements — (continued)
Reclassifications and Taxes Related to Items of Other Comprehensive Income
(Dollars in millions)Before Tax
Amount		Tax (Expense)/
Benefit		Net of Tax
Amount
For the three months ended September 30, 2023:
Other comprehensive income/(loss):   
Foreign currency translation adjustments$151 $(164)$(13)
Net changes related to available-for-sale securities:   
Unrealized gains/(losses) arising during the period$0 $0 $0 
Reclassification of (gains)/losses to other (income) and expense— — — 
Total net changes related to available-for-sale securities$0 $0 $0 
Unrealized gains/(losses) on cash flow hedges:   
Unrealized gains/(losses) arising during the period$131 $(35)$95 
Reclassification of (gains)/losses to:   
Cost of services2 0 1 
Cost of sales5 (1)4 
Cost of financing3 (1)2 
SG&A expense4 (1)3 
Other (income) and expense175 (44)131 
Interest expense14 (4)11 
Total unrealized gains/(losses) on cash flow hedges$333 $(85)$248 
Retirement-related benefit plans: (1)
   
Prior service costs/(credits)$— $— $— 
Net (losses)/gains arising during the period102 (26)77 
Curtailments and settlements2 (1)1 
Amortization of prior service costs/(credits)(2)1 (2)
Amortization of net (gains)/losses128 (37)91 
Total retirement-related benefit plans$230 $(63)$167 
Other comprehensive income/(loss)$714 $(313)$402 
(1)These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

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Notes to Consolidated Financial Statements — (continued)
(Dollars in millions)Before Tax
Amount		Tax (Expense)/
Benefit		Net of Tax
Amount
For the nine months ended September 30, 2024:
Other comprehensive income/(loss):   
Foreign currency translation adjustments$(273)$49 $(224)
Net changes related to available-for-sale securities:   
Unrealized gains/(losses) arising during the period$1 $0 $1 
Reclassification of (gains)/losses to other (income) and expense— — — 
Total net changes related to available-for-sale securities$1 $0 $1 
Unrealized gains/(losses) on cash flow hedges:   
Unrealized gains/(losses) arising during the period$64 $(18)$46 
Reclassification of (gains)/losses to:
   
Cost of services(19)5 (14)
Cost of sales(30)10 (20)
Cost of financing5 (1)4 
SG&A expense(10)3 (7)
Other (income) and expense(176)44 (132)
Interest expense24 (6)18 
Total unrealized gains/(losses) on cash flow hedges$(142)$37 $(105)
Retirement-related benefit plans: (1)
   
Prior service costs/(credits)$— $— $— 
Net (losses)/gains arising during the period101 (23)78 
Curtailments and settlements2,731 (687)2,044 
Amortization of prior service costs/(credits)(5)1 (4)
Amortization of net (gains)/losses765 (212)554 
Total retirement-related benefit plans$3,592 $(921)$2,672 
Other comprehensive income/(loss)$3,178 $(835)$2,343 
(1)These AOCI components are included in the computation of net periodic pension cost and include the impact of a one-time, non-cash pension settlement charge of $2.7 billion ($2.0 billion net of tax) in the third quarter of 2024. Refer to note 18, “Retirement-Related Benefits,” for additional information.

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Notes to Consolidated Financial Statements — (continued)
Reclassifications and Taxes Related to Items of Other Comprehensive Income
(Dollars in millions)Before Tax
Amount		Tax (Expense)/
Benefit		Net of Tax
Amount
For the nine months ended September 30, 2023:
Other comprehensive income/(loss):   
Foreign currency translation adjustments$180 $(142)$39 
Net changes related to available-for-sale securities:   
Unrealized gains/(losses) arising during the period$(1)$0 $(1)
Reclassification of (gains)/losses to other (income) and expense— — — 
Total net changes related to available-for-sale securities$(1)$0 $(1)
Unrealized gains/(losses) on cash flow hedges:   
Unrealized gains/(losses) arising during the period$279 $(77)$203 
Reclassification of (gains)/losses to:   
Cost of services6 (1)5 
Cost of sales(12)4 (8)
Cost of financing12 (3)9 
SG&A expense(7)2 (4)
Other (income) and expense(6)1 (4)
Interest expense57 (14)43 
Total unrealized gains/(losses) on cash flow hedges$330 $(87)$243 
Retirement-related benefit plans: (1)
   
Prior service costs/(credits)$— $1 $1 
Net (losses)/gains arising during the period104 (19)85 
Curtailments and settlements7 (2)5 
Amortization of prior service costs/(credits)(6)2 (5)
Amortization of net (gains)/losses389 (113)276 
Total retirement-related benefit plans$494 $(132)$361 
Other comprehensive income/(loss)$1,003 $(361)$642 
(1)These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.
Accumulated Other Comprehensive Income/(Loss) (net of tax)
(Dollars in millions)Net Unrealized
Gains/(Losses)
on Cash Flow
Hedges
Foreign
Currency
Translation
Adjustments (1)
Net Change
Retirement-
Related
Benefit
Plans		Net Unrealized
Gains/(Losses)
on Available-
For-Sale
Securities		Accumulated
Other
Comprehensive
Income/ (Loss)
January 1, 2024$(106)$(3,488)$(15,165)$(1)$(18,761)
Other comprehensive income before reclassifications46 (224)78 1 (100)
Amount reclassified from accumulated other comprehensive income (2)
(151)— 2,594 — 2,443 
Total change for the period$(105)$(224)$2,672 $1 $2,343 
September 30, 2024$(211)$(3,713)$(12,493)$(1)$(16,418)
(1)Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.
(2)Net change in retirement-related benefit plans includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $2.7 billion ($2.0 billion net of tax) in the third quarter of 2024. Refer to note 18, "Retirement-Related Benefits," for additional information.
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Notes to Consolidated Financial Statements — (continued)
(Dollars in millions)Net Unrealized
Gains/(Losses)
on Cash Flow
Hedges
Foreign
Currency
Translation
Adjustments (1)
Net Change
Retirement-
Related
Benefit
Plans		Net Unrealized
Gains/(Losses)
on Available-
For-Sale
Securities		Accumulated
Other
Comprehensive
Income/ (Loss)
January 1, 2023$(135)$(3,591)$(13,013)$(1)$(16,740)
Other comprehensive income before reclassifications203 39 86 (1)326 
Amount reclassified from accumulated other comprehensive income40 — 276 — 316 
Total change for the period$243 $39 $361 $(1)$642 
September 30, 2023$109 $(3,552)$(12,652)$(2)$(16,098)
(1)Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.
16. Derivative Financial Instruments:
The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations.
In the Consolidated Balance Sheet, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments. At September 30, 2024 and December 31, 2023, the amount recognized in other accounts receivables for the right to reclaim cash collateral was $5 million and $11 million, respectively. At September 30, 2024, there was no amount recognized in accounts payable for the obligation to return cash collateral. At December 31, 2023, the amount recognized in accounts payable for such obligation was $7 million. The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in restricted cash in the Consolidated Balance Sheet. There was no cash collateral rehypothecated at September 30, 2024. At December 31, 2023, the amount rehypothecated was $7 million. Additionally, if derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated Balance Sheet at September 30, 2024 and December 31, 2023, the total derivative asset and liability positions each would have been reduced by $94 million and $235 million, respectively.
As discussed in note 5, “Acquisitions & Divestitures,” the company completed the acquisition of StreamSets and webMethods from Software AG on July 1, 2024. In December 2023, in connection with the announcement of the acquisition, the company entered into foreign exchange call option contracts (the call options) with a total notional amount of $2.3 billion (€2.13 billion) and a total premium paid of $49 million. The call options were accounted for as non-hedge derivatives and expired on June 18, 2024 with no economic value. From June 18, 2024 to June 28, 2024, the company replaced the majority of the options with foreign currency forward contracts with notional values of $1.8 billion to cover the economic exposure. For the nine months ended September 30, 2024, the company recorded a realized loss of $68 million in other (income) and expense in the Consolidated Income Statement. At December 31, 2023, the fair value of the call options was $62 million, and was included in prepaid expenses and other current assets in the Consolidated Balance Sheet. There were no associated derivatives outstanding at September 30, 2024.
In its hedging programs, the company may use forward contracts, futures contracts, interest-rate swaps, cross-currency swaps, equity swaps, and options depending upon the underlying exposure. The company is not a party to leveraged derivative instruments.
A brief description of the major hedging programs, categorized by underlying risk, follows.
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Notes to Consolidated Financial Statements — (continued)
Interest Rate Risk
Fixed and Variable Rate Borrowings
The company issues debt in the global capital markets to fund its operations and financing business. Access to cost-effective financing can result in interest rate mismatches with the underlying assets. To manage these mismatches and to reduce overall interest cost, the company may use interest-rate swaps to convert specific fixed-rate debt issuances into variable-rate debt (i.e., fair value hedges) and to convert specific variable-rate debt issuances into fixed-rate debt (i.e., cash flow hedges). At both September 30, 2024 and December 31, 2023, the total notional amount of the company’s interest-rate swaps was $6.7 billion. The weighted-average remaining maturity of these instruments at September 30, 2024 and December 31, 2023 was approximately 4.7 years and 5.5 years, respectively. These interest-rate contracts were accounted for as fair value hedges. The company did not have any cash flow hedges relating to this program outstanding at September 30, 2024 and December 31, 2023.
Forecasted Debt Issuance
The company is exposed to interest rate volatility on future debt issuances. To manage this risk, the company may use instruments such as forward starting interest-rate swaps to lock in the rate on the interest payments related to the forecasted debt issuances. There were no instruments outstanding at September 30, 2024 and December 31, 2023.
In connection with cash flow hedges of forecasted interest payments related to the company's borrowings, the company recorded net losses (before taxes) of $110 million and $121 million at September 30, 2024 and December 31, 2023, respectively, in AOCI. The company estimates that $14 million of the deferred net losses (before taxes) on derivatives in AOCI at September 30, 2024 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying interest payments.
Foreign Exchange Risk
Long-Term Investments in Foreign Subsidiaries (Net Investment)
A large portion of the company’s foreign currency denominated debt portfolio is designated as a hedge of net investment in major foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates in the subsidiaries' functional currency with respect to the U.S. dollar. At September 30, 2024 and December 31, 2023, the carrying value of debt designated as hedging instruments was $15.1 billion and $15.9 billion, respectively. The company also uses foreign currency derivatives, such as forward contracts and long-term cross currency swaps, for this risk management purpose. In the third quarter of 2024, the company entered into long-term cross currency swaps designated as hedge of net investment instruments with a $2.2 billion notional value that the company also relates to its U.S. dollar denominated debt. The interim net interest cash settlements of these swaps will be included as cash flows from operating activities in the Consolidated Statement of Cash Flows. There were no net interest settlements during the three months ended September 30, 2024. At September 30, 2024 and December 31, 2023, the total notional amount of derivative instruments designated as net investment hedges was $6.9 billion and $4.9 billion, respectively. At September 30, 2024 and December 31, 2023, the weighted-average remaining maturity of these instruments was approximately 0.8 years and 0.1 years, respectively.
In conjunction with the company entering into long-term cross currency swaps as described above, the company records unrealized gains and losses on the excluded component of net investment hedging derivatives in other comprehensive income (loss) and recognizes the excluded component on a straight-line basis over the life of the hedge in interest expense and cost of financing in the Consolidated Income Statement.
Anticipated Royalties and Cost Transactions
The company’s operations generate significant nonfunctional currency, third-party vendor payments and intercompany payments for royalties and goods and services among the company’s non-U.S. subsidiaries and with the company. In anticipation of these foreign currency cash flows and in view of the volatility of the currency markets, the company selectively employs foreign exchange forward contracts to manage its currency risk. These forward contracts are accounted for as cash flow hedges. At September 30, 2024, the maximum remaining length of time over which the company hedged its exposure is approximately two years. At September 30, 2024 and December 31, 2023, the total notional amount of
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Notes to Consolidated Financial Statements — (continued)
forward contracts designated as cash flow hedges of forecasted royalty and cost transactions was $9.8 billion and $9.2 billion, respectively. At September 30, 2024 and December 31, 2023, the weighted-average remaining maturity of these instruments was approximately 0.5 years and 0.6 years, respectively.
At September 30, 2024 and December 31, 2023, in connection with cash flow hedges of anticipated royalties and cost transactions, the company recorded net losses (before taxes) of $105 million and net gains (before taxes) of $40 million, respectively, in AOCI. The company estimates that $160 million of deferred net losses (before taxes) on derivatives in AOCI at September 30, 2024 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions.
Foreign Currency Denominated Borrowings
The company is exposed to exchange rate volatility on foreign currency denominated debt. To manage this risk, the company may employ forward contracts or cross-currency swaps to convert the principal, or principal and interest payments of foreign currency denominated debt, to debt denominated in the functional currency of the borrowing entity. These derivatives are accounted for as cash flow hedges. At September 30, 2024, the maximum length of time remaining over which the company hedged its exposure was approximately six years. At September 30, 2024 and December 31, 2023, the total notional amount of derivative instruments designated as cash flow hedges of foreign-currency denominated debt was $5.0 billion and $5.2 billion respectively.
At September 30, 2024 and December 31, 2023, in connection with previously terminated cross-currency swaps, the company recorded net losses (before taxes) of $51 million and $68 million, respectively, in AOCI, of which $16 million of deferred net losses (before taxes) is estimated to be reclassified to net income within the next 12 months.
At September 30, 2024 and December 31, 2023, in connection with forward contracts, the company has recorded net losses (before taxes) of $4 million and net gains (before taxes) of $23 million, respectively, in AOCI. Approximately $63 million of losses (before taxes) related to the initial forward points excluded from the assessment of hedge effectiveness is expected to be amortized to other (income) and expense within the next 12 months.
Subsidiary Cash and Foreign Currency Asset/Liability Management
The company uses its Global Treasury Centers to manage the cash of its subsidiaries. These centers principally use currency swaps to convert cash flows in a cost-effective manner. In addition, the company uses forward contracts to economically hedge, on a net basis, the foreign currency exposure of a portion of the company’s nonfunctional currency assets and liabilities. The terms of these forward and swap contracts are generally less than one year. The changes in the fair values of these contracts and of the underlying hedged exposures are generally offsetting and are recorded in other (income) and expense in the Consolidated Income Statement. At September 30, 2024 and December 31, 2023, the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $5.7 billion and $6.7 billion, respectively.
Equity Risk Management
The company is exposed to market price changes in certain broad market indices and in the company’s own stock primarily related to certain obligations to employees. Changes in the overall value of these employee compensation obligations are recorded in SG&A expense in the Consolidated Income Statement. Although not designated as accounting hedges, the company utilizes derivatives, including equity swaps and futures, to economically hedge the exposures related to its employee compensation obligations. The derivatives are linked to the total return on certain broad market indices or the total return on the company’s common stock, and are recorded at fair value with gains or losses also reported in SG&A expense in the Consolidated Income Statement. At September 30, 2024 and December 31, 2023, the total notional amount of derivative instruments in economic hedges of these compensation obligations was $1.4 billion and $1.2 billion, respectively.
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Notes to Consolidated Financial Statements — (continued)
Cumulative Basis Adjustments for Fair Value Hedges
At September 30, 2024 and December 31, 2023, the following amounts were recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:
(Dollars in millions)September 30,
2024		December 31,
2023
Short-term debt:  
Carrying amount of the hedged item$— $(1)
Cumulative hedging adjustments included in the carrying amount — assets/(liabilities) $— $(1)
Long-term debt:  
Carrying amount of the hedged item$(6,704)$(6,629)
Cumulative hedging adjustments included in the carrying amount — assets/(liabilities) (1)
$(19)$61 
(1)Includes ($166) million and ($200) million of hedging adjustments on discontinued hedging relationships at September 30, 2024 and December 31, 2023, respectively.
The Effect of Derivative Instruments in the Consolidated Income Statement
The total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value hedges, cash flow hedges, net investment hedges and derivatives not designated as hedging instruments are recorded and the total effect of hedge activity on these income and expense line items are as follows:
(Dollars in millions)TotalGains/(Losses) of
Total Hedge Activity
For the three months ended September 30:2024202320242023
Cost of services$5,048 $5,217 $5 $(2)
Cost of sales$1,404 $1,419 $3 $(5)
Cost of financing$95 $94 $(2)$(3)
SG&A expense$4,911 $4,458 $83 $(58)
Other (income) and expense$2,244 $(215)$428 $(316)
Interest expense$429 $412 $(11)$(15)
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Notes to Consolidated Financial Statements — (continued)
Gain (Loss) Recognized in Consolidated Income Statement
(Dollars in millions)Consolidated
Income Statement
Line Item		Recognized on
Derivatives
Attributable to Risk
Being Hedged (2)
For the three months ended September 30:2024202320242023
Derivative instruments in fair value hedges: (1)
     
Interest rate contractsCost of financing$31 $(33)$(37)$28 
Interest expense155 (166)(185)139 
Derivative instruments not designated as hedging instruments: 
Foreign exchange contractsOther (income) and expense194 (141) N/A  N/A
Equity contractsSG&A expense83 (54) N/A  N/A
Total $463 $(394)$(222)$167 
Gain (Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income
Recognized in OCIConsolidated
Income Statement
Line Item		Reclassified
from AOCI
Amounts Excluded from
Effectiveness Testing (3)
(Dollars in millions)
For the three months ended September 30:202420232024202320242023
Derivative instruments in cash flow hedges:       
Interest rate contracts$— $— Cost of financing$(1)$(1)$— $— 
Interest expense(3)(4)— — 
Foreign exchange contractsCost of services5 (2)— — 
Amount included in the assessment of effectiveness(153)101 Cost of sales3 (5)— — 
Amount excluded from the assessment of effectiveness(62)29 Cost of financing(1)(2)— — 
SG&A expense0 (4)— — 
Other (income) and expense255 (164)(20)(11)
Interest expense(5)(11)— — 
Instruments in net investment hedges: (4)
       
Foreign exchange contractsCost of financing— — 5 5 
Amount included in the assessment of effectiveness
(1,086)652 Interest expense— — 26 26 
Amount excluded from the assessment of effectiveness10 — 
Total$(1,290)$782  $254 $(192)$11 $21 
(1)The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.
(2)The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.
(3)Amounts excluded from effectiveness testing for both net investment hedges and cash flow hedges of foreign currency debt are amortized to net income on a straight-line basis over the life of the relevant hedging instrument.
(4)Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.
N/A - not applicable


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Notes to Consolidated Financial Statements — (continued)
(Dollars in millions)TotalGains/(Losses) of
Total Hedge Activity
For the nine months ended September 30:2024202320242023
Cost of services$15,414 $15,821 $19 $(6)
Cost of sales$4,393 $4,329 $30 $12 
Cost of financing$281 $297 $(9)$(10)
SG&A expense$14,823 $14,212 $168 $44 
Other (income) and expense$1,694 $(721)$1 $(315)
Interest expense$1,288 $1,202 $(45)$(46)
Gain (Loss) Recognized in Consolidated Income Statement
(Dollars in millions)Consolidated
Income Statement
Line Item		Recognized on
Derivatives
Attributable to Risk
Being Hedged (2)
For the nine months ended September 30:2024202320242023
Derivative instruments in fair value hedges: (1)
     
Interest rate contractsCost of financing$(5)$(55)$(13)$42 
Interest expense(24)(261)(66)196 
Derivative instruments not designated as hedging instruments:     
Foreign exchange contractsOther (income) and expense(174)(321) N/A  N/A
Equity contractsSG&A expense158 37  N/A  N/A
Total $(46)$(600)$(79)$238 
Gain (Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income
Recognized in OCIConsolidated
Income Statement
Line Item		Reclassified
from AOCI
Amounts Excluded from
Effectiveness Testing (3)
(Dollars in millions)
For the nine months ended September 30:202420232024202320242023
Derivative instruments in cash flow hedges:       
Interest rate contracts$— $— Cost of financing$(2)$(2)$— $— 
Interest expense(10)(11)— — 
Foreign exchange contractsCost of services19 (6)— — 
Amount included in the assessment of effectiveness147 250 Cost of sales30 12 — — 
Amount excluded from the assessment of effectiveness(84)29 Cost of financing(3)(10)— — 
SG&A expense10 7 — — 
Other (income) and expense233 16 (57)(11)
Interest expense(15)(46)— — 
Instruments in net investment hedges: (4)
       
Foreign exchange contractsCost of financing— — 14 16 
Amount included in the assessment of effectiveness(205)564 Interest expense— — 69 75 
Amount excluded from the assessment of effectiveness10 — 
Total$(131)$843  $263 $(40)$26 $81 
(1)The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.
(2)The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.
(3)Amounts excluded from effectiveness testing for both net investment hedges and cash flow hedges of foreign currency debt are amortized to net income on a straight line basis over the life of the relevant hedging instrument.
(4)Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.
N/A - not applicable
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Notes to Consolidated Financial Statements — (continued)
For the three and nine months ended September 30, 2024 and 2023, there were no material gains or losses excluded from the assessment of hedge effectiveness (for fair value or cash flow hedges), or associated with an underlying exposure that did not or was not expected to occur (for cash flow hedges); nor are there any anticipated in the normal course of business.
17. Stock-Based Compensation:
Stock-based compensation cost for stock awards and stock options is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. The following table presents total stock-based compensation cost included in income from continuing operations.
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2024202320242023
Cost$56 $48 $165 $141 
Selling, general and administrative167 148 511 465 
Research, development and engineering107 91 290 237 
Pre-tax stock-based compensation cost$330 $286 $966 $843 
Income tax benefits(131)(74)(353)(216)
Total net stock-based compensation cost$199 $213 $613 $627 
Pre-tax stock-based compensation cost for the three months ended September 30, 2024 increased $44 million compared to the corresponding period in the prior year due to increases in restricted stock units ($31 million), stock options ($6 million), performance share units ($4 million) and Employees Stock Purchase Plan (ESPP) ($3 million). The increases are primarily driven by stock-based compensation awards granted by the company as part of its annual cycles for executives and other employees.
Pre-tax stock-based compensation cost for the nine months ended September 30, 2024 increased $123 million compared to the corresponding period in the prior year due to increases in restricted stock units ($73 million), performance share units ($25 million), stock options ($19 million) and ESPP ($7 million). The increases are primarily driven by stock-based compensation awards granted by the company as part of its annual cycles for executives and other employees.
Total unrecognized compensation cost related to non-vested awards at September 30, 2024 was $1.8 billion and is expected to be recognized over a weighted-average period of approximately 2.6 years.
18. Retirement-Related Benefits:
The company offers defined benefit (DB) pension plans, defined contribution plans, as well as nonpension postretirement plans primarily consisting of retiree medical benefits.
IBM U.S. Retirement Plan Changes
Effective January 1, 2024, IBM changed how it provides certain retirement-related benefits in the U.S. IBM is providing a new benefit to most U.S. employees under its existing Qualified PPP called the Retirement Benefit Account (RBA). This is in place of any IBM contributions to the U.S. employees' 401(k) Plus accounts. IBM U.S. regular full-time and part-time employees with at least one year of service will participate in the RBA. Each eligible employee's RBA is credited monthly with an amount equal to five percent of their eligible pay with no employee contribution required. Under the RBA, eligible employees earn six percent interest through 2026 and starting in 2027, will earn interest equal to the 10-year U.S. Treasury Yield, subject to a three percent minimum per year through 2033. Eligible employees also received a salary increase effective January 1, 2024 for the difference between the IBM 401(k) Plus contribution percent they were previously entitled to receive and the five percent RBA pay credit. Since the RBA is a component of the Qualified PPP, it is funded by the trust for the Qualified PPP along with all other benefits in the Qualified PPP.
As a result of this change, inactive pension plan participants no longer represent substantially all of the participants in the Qualified PPP. As required by U.S. GAAP, this changed the amortization period of unrecognized actuarial losses from the average remaining life expectancy of inactive plan participants to the average remaining service period of active plan
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Notes to Consolidated Financial Statements — (continued)
participants in 2024. Recognized actuarial losses for the U.S. Plans increased by approximately $100 million and $300 million for the three and nine months ended September 30, 2024, respectively, as compared to the prior-year periods, primarily driven by the change in amortization period. There was no impact to funded status, retiree benefit payments or funding requirements of the Qualified PPP due to the change in amortization period.
Over the past several years, the company has taken actions to reduce the risk profile of its worldwide retirement-related plans, while at the same time increasing the funded status of the plans. As described in note 1, "Basis of Presentation," in September 2024, the Qualified PPP irrevocably transferred to the Insurer approximately $6 billion of the Qualified PPP's defined benefit pension obligations and related plan assets, thereby reducing the company's pension obligations and assets by the same amount. This transaction further de-risks the company's retirement-related plans by eliminating the potential for the company to make future cash contributions to fund this portion of pension obligations being transferred to the Insurer. After the transaction, the Qualified PPP remained in an overfunded position as of September 30, 2024.
Upon issuance of the group annuity contract, the Qualified PPP's benefit obligations and administration for approximately 32,000 of the company's Plan participants and beneficiaries (the "Transferred Participants") were transferred to the Insurer. Under the group annuity contract, the Insurer has made an irrevocable commitment, and will be solely responsible, to pay the pension benefits of each Transferred Participant that are due on or after January 1, 2025. The transaction resulted in no changes to the amount of benefits payable to the Transferred Participants. The company recognized a one-time, non-cash, pre-tax pension settlement charge of $2.7 billion ($2.0 billion net of tax) in the third quarter of 2024 primarily related to the accelerated recognition of actuarial losses included within AOCI in the Consolidated Statement of Equity. As a result of this transaction, the company was required to remeasure the benefit obligations and plan assets of the Qualified PPP. The remeasurement reflects the use of the current discount rate and actual return on plan assets as of August 31, 2024, applying the practical expedient to remeasure plan assets and obligations as of the nearest calendar month-end date.
46
Table of Contents
Notes to Consolidated Financial Statements — (continued)
The following table presents the changes in benefit obligations and plan assets of the company's retirement-related benefit plans affected by the interim remeasurements described above for the nine months ended September 30, 2024.
Qualified PPP
(Dollars in millions)U.S. Plan
Change in benefit obligation:
Benefit obligation at January 1, 2024
$19,854 
Service cost295 
Interest cost686 
Plan participants' contributions— 
Actuarial losses/(gains) (1)
46 
Benefits paid from trust(1,073)
Direct benefit payments— 
Amendments/curtailments/settlements/other (2)
(6,229)
Benefit obligation at September 30, 2024
$13,578 
Change in plan assets:
Fair value of plan assets at January 1, 2024
$24,437 
Actual return of plan assets (1)
1,140 
Employer contributions— 
Plan participants' contributions— 
Benefits paid from trust(1,073)
Direct benefit payments— 
Amendments/curtailments/settlements/other (2)
(6,229)
Fair value of plan assets at September 30, 2024
$18,275 
Funded status at September 30, 2024
$4,697 
Accumulated benefit obligation (3)
$13,578 
(1)Reflects a 5.00 percent discount rate at both December 31, 2023 and at the remeasurement date.
(2)Primarily represents the transfer of pension obligations and related plan assets to the Insurer pursuant to a group annuity contract and lump sum payments to Transferred Participants.
(3)Represents the benefit obligation assuming no future participant compensation increases.
IBM Non-U.S. Retirement Plan Change
In the fourth quarter of 2024, IBM Canada Ltd. (“IBMC”) purchased two separate nonparticipating single premium group annuity contracts from RBC Life Insurance Company and Brookfield Annuity Company (collectively the "Insurers") that will transfer to the Insurers approximately $1.2 billion of the IBMC IBM Retirement Plan’s (the “Plan”) defined benefit pension obligations for approximately 6,000 Plan participants and beneficiaries. The purchase of the group annuity contracts was completed October 29, 2024 and was funded directly by assets of the Plan and required no cash contribution from IBM. As a result of the transaction, the company expects to recognize a one-time, non-cash, pre-tax, pension settlement charge of approximately $0.4 billion in the fourth quarter of 2024. The actual charge will depend on finalization of the actuarial and other assumptions.

47
Table of Contents
Notes to Consolidated Financial Statements — (continued)
The following tables provide the pre-tax cost for all retirement-related plans.
Yr.-to-Yr.
(Dollars in millions)Percent
For the three months ended September 30:20242023Change
Retirement-related plans — cost:   
Defined benefit pension and defined contribution plans — cost (1)
$3,024 $250 nm 
Nonpension postretirement plans — cost30 33 (9.4)%
Total$3,053 $283 nm 
Yr.-to-Yr.
(Dollars in millions)Percent
For the nine months ended September 30:20242023Change
Retirement-related plans — cost:   
Defined benefit pension and defined contribution plans — cost (1)
$3,667 $791 nm 
Nonpension postretirement plans — cost90 98 (7.8)%
Total$3,757 $888 nm 
(1)2024 includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $2.7 billion related to the Qualified PPP, as described above.
nm - not meaningful

Cost/(Income) of Retirement Plans

The following tables provide the components of the cost/(income) for the company’s retirement-related benefit plans.
(金額單位：百萬美元)美國計劃非美國計劃
截至9月30日結束的三個月：2024 202320242023
服務費用 (1)
$98 $— $43 $44 
利息成本 (2)
228 272 271 293 
計劃資產預期回報(2)
(313)(382)(395)(363)
往前期服務成本攤銷/(貸款) (2)
— — 6 5 
確認的精算損失 (2)
113 27 131 99 
縮短和解算 (2) (3)
2,725 — 2 2 
多僱主計劃— — 3 4 
其他成本/貸項 (2)
— — 0 3 
定義利益計劃總淨週期性養老金(收入)/成本 $2,851 $(82)$62 $88 
定義貢獻計劃成本 15 150 95 95 
在綜合利潤表中確認的總體定義利益養老金和定義貢獻計劃成本 $2,866 $68 $158 $182 
(1)2024年美國計劃服務費用的增加是由於上述2024年1月1日生效的符合PPP計劃變更。
(2)淨週期性養老金成本的這些組成部分包含在合併利潤表的其他收益和費用中。
(3)2024年的美國計劃反映了一次性、非現金、稅前的養老金結算費用，與上述合格PPP相關。
48
目錄
綜合財務報表附註 — （續）
(金額單位：百萬美元)美國計劃非美國計劃
截至9月30日止九個月：2024 202320242023
服務費用 (1)
$295 $— $128 $133 
利息成本 (2)
735 817 803 873 
計劃資產預期回報(2)
(994)(1,146)(1,168)(1,081)
先前的服務成本攤銷/(貸項) (2)
— 0 17 15 
已確認的精算損失 (2)
370 82 389 302 
縮減和協議 (2) (3)
2,725 — 7 7 
多僱主計劃— — 10 10 
其他費用/(貸項) (2)
— — 20 21 
定義利益計劃的總淨期間性養老金(收入)/費用$3,131 $(247)$206 $281 
定義供款計劃成本42 473 288 283 
在合併利潤表中確認的總的定義利益養老金和定義供款計劃成本$3,173 $226 $494 $565 
(1)2024年美國計劃服務費用的增加是由於上述2024年1月1日生效的符合PPP計劃變更。
(2)這些養老金淨週期費用的元件包括在合併利潤表的其他收入和費用中。
(3)2024年的美國計劃反映了一次性、非現金、稅前的養老金結算費用，與上述合格PPP相關。
非養老戶後離退休計劃成本
以下表格提供了公司非養老金後離退休計劃成本的元件。
(金額單位：百萬美元)美國計劃非美國計劃
截至9月30日止三個月：2024202320242023
服務成本$1 $1 $1 $1 
利息成本 (1)
27 29 10 10 
計劃資產預期回報(1)
— — 0 (1)
往前期服務成本攤銷/(記入)貸項 (1)
(7)(7)0 0 
承認的精算損失 (1)
— — 0 0 
縮減和解決 (1)
— — — — 
共同財務報表中確認的總非退休後離職計劃成本 $20 $23 $10 $10 

(金額單位：百萬美元)美國計劃非美國計劃
截至9月30日結束的九個月：2024202320242023
服務成本$2 $3 $2 $2 
利息成本 (1)
80 88 31 29 
計劃資產預期回報(1)
— — (1)(2)
往期服務成本的攤銷/(賒欠) (1)
(22)(22)0 0 
確認的精算虧損 (1)
— — (1)(1)
減少和解決 (1)
— — — — 
在合併利潤表中確認的非退休後福利計劃總成本$59 $69 $30 $28 
(1)淨週期性養老金成本的這些元件包括在合併利潤表中的其他收益和費用中。
49
目錄
綜合財務報表附註 — （續）
計劃貢獻
公司預計2024年計劃捐款金額與2023年年度報告中披露的金額不會有重大變化。 下表包括以下計劃的捐款：
(金額單位：百萬美元)計劃捐款
截至9月30日的九個月：20242023
美國非養老後離退退休福利計劃
$155 $188 
非美國Db和多僱主計劃 (1)
53 45 
總計劃捐款$208 $233 
(1)報告金額已扣除退款。
上表中美國的非養老後離職福利計劃捐款是通過美國國債進行資助的。此外，在2024年和2023年截至9月30日的九個月內，公司分別向活躍的醫療信託基金捐款$600萬美元和537 美國國債資助。 使用美國國債進行的捐款被視爲非現金交易。
19. 後續事件:
2024年10月30日，公司宣佈董事會批准每股的季度股息爲$1.67 。該股息將於2024年12月10日支付給截至2024年11月12日持股的股東。

50
目錄
事項二
管理層討論與分析
經營業績和財務狀況結果
2024年9月30日結束的三個月和九個月
快照
信息組織：
2024年第一季度，我們對組織結構和管理系統進行了調整，以更好地使我們的投資組合與市場保持一致，增加透明度並提高與同行的業務部門可比性。這些變化對我們的綜合財務報表沒有影響，但對我們可報告的板塊有影響。所有時段都按可比基礎報告這些板塊。此外，由於移除了某些板塊盈利構成部分，我們還將績效指標的標題從持續經營前稅收利潤更新爲板塊利潤。參閱附註4「板塊」以獲取有關我們可報告的板塊的額外信息。
2024年9月，IBm合格個人養老金計劃（合格PPP）從美國保誠保險公司（保險公司）購買了一份非參與型單一保費團體年金合同，並將合格PPP的約60億美元的確定責任養老金義務和相關計劃資產無法撤銷地轉移給了保險公司，從而減少了我們的養老金義務和資產相同的金額。該團體年金合同是使用合格PPP的資產購買的，公司不需要進行額外的資金捐款。由於這筆交易，我們在2024年第三季度確認了一次性的、非營運的、非現金的、稅前養老金結算費用27億美元（稅後20億美元），主要與加速確認合格PPP累積精算損失有關。由於該費用是非營運和非現金的，它並沒有影響我們的營運（非GAAP）收益或現金流量結果。有關更多信息，請參閱附註18「與養老金相關的福利」。
在所呈現的表格中，由於使用舍入數以披露爲目的，某些列和行的總和可能不符合。所呈現的百分比是根據基礎整元金額計算的。某些往年金額已重新分類以符合當前期間的展示方式。適用情況下已做註釋。
貨幣:
管理層討論中提到的「按貨幣調整」或「按恒定貨幣」並不包括操作影響可能導致的外幣匯率波動。當我們提到恒定貨幣的增長率或調整此類增長率以考慮貨幣因素時，是爲了讓某些財務結果在沒有外幣匯率波動影響的情況下進行查看，從而促進對其業務績效的季度比較。根據貨幣調整的財務結果是通過使用可比年度期間的匯率將當前期活動以本地貨幣進行折算得出的。這種方法適用於本幣爲當地貨幣的國家。一般來說，當美元對其他貨幣的升值或貶值時，按恒定貨幣匯率或貨幣調整的增長率會高於或低於根據實際匯率報告的增長率。有關更多信息，請參閱「貨幣匯率波動」。
經營（非通用會計準則）盈利：
爲了更好地透明化業務的運營結果，此外，管理層將業務結果分爲經營和非經營類別。經營收益來自持續經營業務的非GAAP度量指標，不包括特定收購相關費用、無形資產攤銷、因權益法投資基礎差異產生的費用、與養老相關的成本及其相關稅收影響。由於美國減稅與就業法案（美國稅改）的頒佈具有獨特且非經常性的特點，管理層將2017年第四季度記錄的一次性暫定費用及對該費用的調整歸類爲非經營性質。調整主要包括調整、會計選擇以及影響已記錄一次性費用的監管、法律或審計調整的變化。對於收購而言，經營（非GAAP）收益不包括購買的無形資產攤銷以及相關收購費用，如正在進行的研究與開發、交易費用、相應留任、重組以及相關開支、與收購整合有關的稅收費用以及與前期結算相關的費用，如融資成本。這些費用被排除在外，因爲它們的數額和時間上可能與各期不一致，並且受到我們收購的規模、類型和頻率顯著影響。鑑於其獨特且暫時性質，管理團隊還將標記至市場價的影響歸類爲非經營性支出。
51
目錄
管理層討論 -（續）
在從SoftwareAG收購StreamSets和webMethods之前進入的外匯衍生合同是爲了經濟上對沖與此收購的購買價格相關的外幣波動風險。這些衍生合同在2024年6月28日到期。這一影響記錄在合併利潤表的其他（收入）和費用中，並反映了這些衍生合同公平價值變化造成的實現損失。對於已收購公司的所有其他支出，均包括在持續經營的收入和運營（非GAAP）收入中。對於與退休相關的費用，管理層將某些項目劃分爲運營性質，將其他項目劃分爲非運營性質，符合GAAP。我們將確定福利計劃和非養老福利計劃服務成本、多僱主計劃成本以及定義的貢獻計劃成本納入經營收入。非運營性質的與退休相關的費用包括確定福利計劃和非養老福利計劃的以前服務成本攤銷、利息費用、計劃資產預期回報、攤銷的精算增益/損失、任何計劃的收縮/結清對業績的影響，包括2024年第三季度將籌資保護計劃（PPP）一部分的定義福利養老金義務及相關計劃資產轉移給保險公司導致的一次性、非現金、稅前結算費27億美元（經過稅後折算後淨額20億美元）；養老金破產成本和其他成本。非運營性質的與退休相關的費用主要與養老金計劃資產和負債變化有關，這些變化與財務市場表現相關，我們認爲這些成本屬於業務的運營績效範疇之外。
總體而言，管理層認爲，如上所述補充性地爲投資者提供營運盈利的視角，將增加業務運營結果和養老金計劃績效的透明度和清晰度；提升管理層決策和其對運營績效影響的可見性；使得與同行公司更好地進行比較；並允許我們提供對未來業務的長期戰略視角。此外，這些非GAAP措施提供了一種與投資者和分析師常常關注的領域保持一致的觀點。我們的報告分部財務結果反映了來自持續運營的稅前營運盈利，與我們的管理和計量系統一致。

財務業績摘要-截至9月30日的三個月
(金額和股數以百萬計，除每股金額外)同比
百分比/
利潤率
變更
截至9月30日結束的三個月：20242023
營業收入(1)
$14,968 $14,752 1.5 %   
毛利潤率56.3 %54.4 %1.9 點
總支出和其他(收入)$9,222 $6,150 50.0 %   
持續經營活動稅前營業利潤/(虧損) $(802)$1,873 無量綱
持續經營活動所得稅負債/(受益)$(485)$159 無量綱
持續經營活動利潤/(虧損) $(317)$1,714 無量綱
持續經營業務利潤（虧損）率 (2.1)%11.6 %(13.7)點
來自終止經營的收入稅後$(13)$(10)29.4 %   
淨利潤 (2)
$(330)$1,704 無量綱
每股持續經營業務收益（虧損）- 假定稀釋情況 (2)
$(0.34)$1.86 無量綱
每股攤薄合併收益/(虧損) (2)
$(0.36)$1.84 無量綱
每股攤薄加權平均股量 - 假設發行923.6 923.7 0.0 %   
(1)按貨幣調整，年度營業收入增長1.6%。
(2)包括一次性的、非現金的、稅前養老金解決費用27億美元（稅後20億美元），導致每股攤薄收益/(虧損)和持續經營業務的合併攤薄收益/(虧損)分別受到2.18美元的影響。有關更多信息，請參閱附註18，「養老相關福利」
不重要

52
目錄
管理層討論 -（續）
以下表格列出了公司2024年第三季度和2023年的營運（非通用會計準則）收益。
（除每股數據外，單位爲百萬美元）年度對比。
百分比
變更
截至9月30日結束的三個月：20242023
淨利潤/虧損如所報告 (1)
$(330)$1,704 無量綱
來自終止經營的收入稅後(13)(10)29.4 %
持續經營業務的收入/損失 (1)
$(317)$1,714 無量綱
非經營調整（稅後淨額）：   
與收購相關的費用$373 $340 9.9 %
非經營性養老相關成本/收益 (1)
2,097 1 無量綱
美國稅改影響2 (24)無量綱
營運（非通用會計準則）收益 (2)
$2,155 $2,031 6.1 %
每股攤薄營運（非通用會計準則）收益 (2)
$2.30 $2.20 4.5 %
(1)包括一次性非現金養老金結算費用20億美元稅後。
(2)請參考第一頁進行淨利潤與FFO普通股股東可用收益的調解。 85 有關將淨利潤調節至營業收入的詳細對賬，請參考。
不重要
宏觀經濟環境:
我們的業務組合使我們能夠在複雜的宏觀經濟時期抓住市場機遇。我們在地理、行業、客戶和業務組合方面的多樣化，以及我們的經常性營業收入基礎爲營業收入、利潤和現金生成提供了一定的穩定性。客戶和合作夥伴繼續利用技術讓業務擴展規模，提高效率，促進增長並獲得競爭優勢。由地緣政治問題、即將舉行的選舉以及利率期貨和通脹形勢變化等臨時因素導致的經濟不確定性，正在促使客戶控制他們的自由支出，這已經對我們諮詢業務的某些領域產生影響。諮詢市場依然充滿活力，客戶和合作夥伴正爲人工智能做準備，市場前景十分廣闊。
2024年前九個月，全球貨幣的波動繼續影響了我們報告的年度營業收入和利潤。我們執行對沖計劃，延遲了貨幣的影響，但並未消除。這些對沖計劃帶來的收益/損失主要體現在其他收入和支出中。更多信息請參閱「貨幣匯率波動」。
財務業績摘要 — 截至9月30日止三個月：
2024年第三季度，我們報告營業收入爲150億美元，持續經營活動淨損失爲3億美元，其中包括一次性、非現金、稅前養老金結算費用影響爲27億美元（稅後20億美元）。養老金結算費用是將合格PPP的一部分定額養老金義務和相關計劃資產轉移給保險公司的結果，這是我們爲進一步減少全球與退休相關計劃的風險配置而採取的行動。我們截至2024年9月30日三個月的經營（非GAAP）收益爲22億美元。持續經營活動稀釋每股虧損爲0.34美元，其中包括養老金結算費用影響2.18美元，經營（非GAAP）基礎上的稀釋每股盈利爲2.30美元。我們從經營活動中產生了29億美元的現金和21億美元的自由現金流，並提供了15億美元的股東回報分紅派息。我們第三季度的表現反映了軟件營收增長加速、毛利率擴大和強勁的現金生成，顯示出我們混合雲和人工智能策略的持續成功，以及我們多元化業務模式的實力。我們繼續專注於業務的基本面，結合我們的現金生成能力，使我們能夠繼續在全組合中投資創新和專業知識，同時繼續通過分紅向股東回報價值。

總營業收入按報告增長了1.5%，按貨幣調整後增長了2%，與去年同期相比，由軟件業務帶動。軟件業務的營收增長率按報告爲9.7%，按貨幣調整後爲9.6%，主要受到混合平台與解決方案和事務處理的推動，反映出我們圍繞混合雲、自動化、數據和事務處理的軟件組合調整。混合平台與解決方案的營收按報告增長了9.8%，按貨幣調整後增長了9.7%，主要受到紅帽、自動化和數據與人工智能的增長所帶動。事務處理按報告增長了9.4%，調整後的貨幣增長率也是9.4%，反映出容量增長、穩定續約等因素。
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管理層討論 -（續）
匯率，以及客戶繼續對我們人工智能解決方案的興趣。諮詢收入按報告減少了0.5％，但在貨幣調整後保持不變，因爲它繼續受到動態市場環境的影響，客戶根據宏觀經濟不確定性重新調整支出重點。製造行業收入按報告降低了7.0％，按貨幣調整後降低了6.7％，反映了產品週期動態。
從地理角度來看，美洲的營業收入按報告增長了3.0％（按貨幣調整後爲2.4％）。歐洲、中東、非洲的營業收入按報告增長了8.5％（按貨幣調整後爲6.8％）。亞太地區的營業收入按報告增長了3.1％（按貨幣調整後爲4.5％）。
毛利率爲56.3%，同比增長1.9個百分點，受營業收入增長、組合結構優化和持續提高生產力措施推動繼續擴大。營運（非普通會計準則）毛利率爲57.5%，較去年同期增加2.1個百分點，原因是同樣的動態。
2024年第三季度，總支出和其他收入增長了50.0%，主要是由以上提到的27億美元的養老金結算費用推動的，更高的勞動力再平衡費用和更高的支出反映出我們持續投資於創新組合以推動我們的策略。部分抵銷了某些 QRadar saas-雲計算 資產的出售所帶來的收益以及我們爲轉變業務所採取的行動帶來的生產力和效益。總運營（非GAAP）支出和其他收入同比增長了4.1%，主要是由以上所述因素推動的，不包括養老金結算費用。
2024年第三季度持續經營的稅前虧損爲8億美元，而去年同期爲稅前收入19億美元，稅前利潤率同比下降18.1個百分點至(5.4)％。2024年第三季度持續經營的所得稅收益爲5億美元，而去年同期爲所得稅準備金20億美元。持續經營的淨虧損爲3億美元，而去年同期爲淨利潤17億美元，持續經營的淨利潤/（虧損）利潤率同比下降13.7個百分點。這種年度表現主要是由傳輸資產負債利潤合格PPP相關計劃資產的一部分給保險人，導致2024年第三季度350億美元的養老金結算費用（扣除稅款後淨額20億美元）造成的。
持續經營(非GAAP)的稅前收入爲25億美元，較2023年第三季度增長8.2％，持續經營(非GAAP)的稅前毛利率增加1.0個百分點，主要受到我們營業收入增長和毛利率表現的推動，以及生產力和改善運營措施的好處，部分抵消了我們持續投資推動創新。第三季度2024年和2023年的持續經營(非GAAP)所得稅準備均爲3億美元。持續經營(非GAAP)的淨利潤爲22億美元，增長了6.1％，持續經營(非GAAP)的淨利潤率達到14.4％，同比增加0.6個百分點。
2024年第三季度持續經營中每股攤薄虧損爲0.34美元，包括2.18美元的養老金結算費用影響，相比於去年同期每股攤薄收益1.86美元。非通用會計準則下的每股攤薄收益2.30美元，較2023年第三季度增長4.5%。非通用會計準則下的每股收益是使用93840萬股計算的，其中包括基於股份補償計劃和有條件可發行股份的1490萬股攤薄潛在股份。由於2024年9月30日結束的三個月中出現的通用會計準則淨虧損，這些潛在攤薄股份被排除在通用會計準則每股虧損計算之外，因爲這種影響將具有抵消效應。有關更多信息，請參閱「普通股每股收益」第7項註釋。
2024年第三季度經營活動提供的現金爲29億美元，比2023年第三季度減少2億美元，自由現金流爲21億美元，與去年同期相比增加了4億美元。投資活動產生的淨現金流量爲16億美元，減少了40億美元，而融資活動產生的淨現金流量爲28億美元，減少了40億美元，均與2023年第三季度相比。
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目錄
管理層討論 -（續）
財務結果摘要 — 截至9月30日的九個月：
(以百萬美元和百萬股爲單位，除每股金額外)年度對比。
百分比/
利潤率
變更
截至9月30日止九個月：20242023
營業收入(1)
$45,199 $44,479 1.6 %
毛利潤率55.6 %54.0 %1.5 點
總支出和其他(收入)$22,621 $19,102 18.4 %
持續經營活動稅前收入 $2,491 $4,931 (49.5)%   
持續經營活動所得稅負擔/(受益)$(597)$702 nm
持續經營淨利潤$3,088 $4,229 (27.0)%   
持續經營活動利潤率 6.8 %9.5 %(2.7)點
已中止運營的業務淨損益稅後$21 $(15)其他
淨利潤(2)
$3,109 $4,214 (26.2)%   
每股收益（按攤薄計算）從持續經營中 (2)
$3.30 $4.59 (28.1)%   
合併每股收益（按攤薄計算） (2)
$3.32 $4.58 (27.5)%   
平均稀釋後股份數（按攤薄計算）935.4 920.3 1.6 %
2024年9月30日2023年12月31日
資產$134,339$135,241(0.7)%   
負債$109,809$112,628(2.5)%   
股權$24,530$22,6138.5 %   
(1)按貨幣調整後，年同比營業收入增長2.7%。
(2)包括一次性、非現金、稅前養老金解決費用27億美元（稅後20億美元），導致每股攤薄收益/（虧損）和綜合攤薄收益/（虧損）分別減少2.18美元。有關詳細信息，請參閱附註18「養老相關福利」。
不重要
以下表格提供了公司2024年和2023年前9個月的營運（非常規會計準則）收益。
（除每股數據外，單位爲百萬美元）年度對比。
百分比
變更
截至9月30日止九個月：20242023
Net income as reported (1)
$3,109 $4,214 (26.2)%   
已中止運營的業務淨損益稅後21 (15)nm 
持續經營淨利潤(1)
$3,088 $4,229 (27.0)%   
非經營調整（稅後淨額）：   
與收購相關的費用$1,081 $953 13.4 %
非經營性養老相關成本/收益 (1)
2,259 11 nm
美國稅改影響(434)91 nm
營運（非通用會計準則）收益 (2)
$5,994 $5,283 13.4 %
每股攤薄營運（非通用會計準則）收益 (2)
$6.41 $5.74 11.7 %
(1)包括一次性非現金養老金結算費用20億美元稅後。
(2)請參考第一頁進行淨利潤與FFO普通股股東可用收益的調解。 86 更詳細地協調淨利潤與營業收入。
不重要
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Management Discussion – (continued)
Financial Performance Summary —Nine Months Ended September 30:
In the first nine months of 2024, we reported $45.2 billion in revenue, net income from continuing operations of $3.1 billion, including the impact of a one-time, non cash, pre-tax pension settlement charge of $2.7 billion ($2.0 billion net of tax), and operating (non-GAAP) earnings of $6.0 billion. Diluted earnings per share from continuing operations was $3.30 as reported, including an impact of $2.18 from the pension settlement charge, and diluted earnings per share was $6.41 on an operating (non-GAAP) basis. We generated $9.1 billion in cash from operations and $6.6 billion in free cash flow, and delivered shareholder returns of $4.6 billion in dividends. Our year-to-date performance reflects our deep focus on the business fundamentals with continued revenue growth, gross profit margin expansion and strong cash generation, and a balance sheet with financial flexibility to support our business.
Total revenue grew 1.6 percent as reported and 3 percent adjusted for currency compared to the prior-year period. Software delivered revenue growth of 7.5 percent as reported and 8.0 percent adjusted for currency, with solid growth in Hybrid Platform & Solutions and Transaction Processing. Consulting revenue decreased 0.5 percent as reported but grew 1.1 percent adjusted for currency, led by strength in our Business Transformation offerings with revenue growth year to year driven by transformation projects for data, finance and supply chain. Infrastructure revenue decreased 2.3 percent as reported and 1.2 percent adjusted for currency, driven by declines in Infrastructure Support, partially offset by growth in Hybrid Infrastructure.
From a geographic perspective, Americas revenue decreased 0.4 percent year to year as reported (flat adjusted for currency). EMEA increased 3.5 percent (2.6 percent adjusted for currency). Asia Pacific increased 4.0 percent (9.8 percent adjusted for currency).
Gross margin of 55.6 percent increased 1.5 points year to year with gross profit margin expansion across all reportable segments driven by our improving portfolio mix and productivity actions. Operating (non-GAAP) gross margin of 56.7 percent increased 1.7 points compared to the prior-year period due to the same dynamics.
Total expense and other (income) increased increased 18.4 percent in the first nine months of 2024 versus the prior-year period primarily driven by the pension settlement charge of $2.7 billion described above, higher workforce rebalancing charges and higher spending reflecting our continued investment in portfolio innovation to drive our strategy. This was partially offset by a gain from the sale of certain QRadar SaaS assets, the gain on the divestiture of The Weather Company assets in the first quarter and the benefits from productivity and the actions taken to transform our operations. Total operating (non-GAAP) expense and other (income) increased 2.0 percent year to year, driven primarily by the factors described above, excluding the pension settlement charge.
Pre-tax income from continuing operations of $2.5 billion decreased 49.5 percent and pre-tax margin was 5.5 percent, a decrease of 5.6 points as compared to the first nine months of 2023. Performance in the first nine months of 2024 reflects the impact from the pension settlement charge described above partially offset by our gross margin expansion and the benefits from productivity and the actions taken to transform our operations which enabled investments to drive innovation. The continuing operations benefit from income taxes for the first nine months of 2024 was $0.6 billion, compared to a provision for income taxes of $0.7 billion for the first nine months of 2023. The current-year tax benefit was primarily driven by the resolution of certain tax audit matters in the first quarter and the pension settlement charge in the third quarter. Net income from continuing operations of $3.1 billion decreased 27.0 percent and the net income from continuing operations margin was 6.8 percent, down 2.7 points year to year.
Operating (non-GAAP) pre-tax income from continuing operations of $6.9 billion increased 12.9 percent compared to the prior-year period and the operating (non-GAAP) pre-tax margin from continuing operations increased 1.5 points to 15.3 percent. The operating (non-GAAP) provision for income taxes was $0.9 billion in both the first nine months of 2024 and the first nine months of 2023. Operating (non-GAAP) income from continuing operations of $6.0 billion increased 13.4 percent and the operating (non-GAAP) income margin from continuing operations of 13.3 percent increased 1.4 points year to year.
Diluted earnings per share from continuing operations was $3.30 for the nine months ended 2024 and included an impact of $2.18 from the pension settlement charge and decreased 28.1 percent compared to the prior-year period. Operating (non-GAAP) diluted earnings per share of $6.41 increased 11.7 percent compared to the prior-year period.
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Management Discussion – (continued)
At September 30, 2024, the balance sheet remained strong with financial flexibility to support and invest in the business. Cash and cash equivalents, restricted cash and marketable securities at September 30, 2024 of $13.7 billion increased $0.3 billion from December 31, 2023 and debt of $56.6 billion at September 30, 2024 was flat from prior-year end.
Total assets decreased $0.9 billion ($0.7 billion adjusted for currency) from December 31, 2023 primarily driven by a decrease in receivables, partially offset by an increase in goodwill and intangible assets mainly related to the StreamSets and webMethods acquisition. Total liabilities decreased $2.8 billion ($2.9 billion adjusted for currency) from December 31, 2023 primarily driven by decreases in tax liabilities and accounts payable. Total equity of $24.5 billion increased $1.9 billion from December 31, 2023 primarily driven by the year-to-date net income, including the impact of the pension settlement charge, a decrease in accumulated other comprehensive loss mainly driven by retirement-related benefit plans due to the pension settlement charge of $2.0 billion net of tax, and common stock issuances; partially offset by dividends paid.
Cash provided by operating activities was $9.1 billion in the first nine months of 2024, a decrease of $0.4 billion compared to the first nine months of 2023 and free cash flow was $6.6 billion, an increase of $1.5 billion versus the prior-year period. Refer to page 81 for additional information on free cash flow. Net cash used in investing activities of $3.6 billion decreased $6.3 billion compared to the prior-year period. Financing activities were a net use of cash of $5.4 billion in the first nine months of 2024 compared to $0.2 billion in the prior-year period.


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Management Discussion – (continued)
Third Quarter in Review
Results of Continuing Operations
Segment Details
As discussed in the "Organization of Information" section, we made changes to our organizational structure and management system in the first quarter of 2024. With these changes, we revised our reportable segments and updated the title of our segment performance metric from pre-tax income from continuing operations to segment profit.
The following tables present each reportable segment’s revenue and gross margin results, followed by an analysis of the third quarter and first nine months of 2024 versus the third quarter and first nine months of 2023 reportable segments results. Prior-year results have been recast to reflect the January 2024 segment changes as described in note 4, "Segments."
(Dollars in millions)Yr.-to-Yr.
Percent/Margin
Change		Yr.-to-Yr.
Percent
Change
Adjusted For
Currency
For the three months ended September 30:2024
2023 (1)
Revenue:    
Software$6,524 $5,947 9.7 %   9.6 %
Gross margin83.2 %82.3 %0.9 pts. 
Consulting5,152 5,178 (0.5)%   (0.2)%
Gross margin28.4 %27.6 %0.9 pts. 
Infrastructure3,042 3,272 (7.0)%   (6.7)%
Gross margin55.0 %53.7 %1.2 pts. 
Financing181 186 (2.5)%   (1.3)%
Gross margin47.2 %49.7 %(2.5)pts. 
Other68 170 (60.0)%   (60.2)%
Gross margin(342.6)%(88.3)%(254.4)pts. 
Total revenue$14,968 $14,752 1.5 %   1.6 %
Total gross profit$8,420 $8,023 5.0 %    
Total gross margin56.3 %54.4 %1.9 pts.  
Non-operating adjustments: 
Amortization of acquired intangible assets192 162 18.6 %    
Operating (non-GAAP) gross profit$8,612 $8,185 5.2 %    
Operating (non-GAAP) gross margin 57.5 %55.5 %2.1 pts.  
(1)Recast to reflect January 2024 segment changes.

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Management Discussion – (continued)
(Dollars in millions)Yr.-to-Yr.
Percent/Margin
Change		Yr.-to-Yr.
Percent
Change
Adjusted For
Currency
For the nine months ended September 30:2024
2023 (1)
Revenue:    
Software$19,162 $17,832 7.5 %8.0 %
Gross margin83.1 %82.3 %0.8 pts. 
Consulting15,517 15,601 (0.5)%   1.1 %
Gross margin26.7 %26.3 %0.4 pts. 
Infrastructure9,764 9,988 (2.3)%   (1.2)%
Gross margin55.3 %54.0 %1.3 pts. 
Financing543 566 (4.1)%   (3.1)%
Gross margin48.2 %47.5 %0.7 pts. 
Other214 491 (56.4)%   (56.5)%
Gross margin(286.7)%(83.8)%(202.9)pts. 
Total revenue$45,199 $44,479 1.6 %2.7 %
Total gross profit$25,112 $24,033 4.5 % 
Total gross margin55.6 %54.0 %1.5 pts.  
Non-operating adjustments:    
Amortization of acquired intangible assets533 460 15.9 %    
Operating (non-GAAP) gross profit$25,645 $24,492 4.7 %    
Operating (non-GAAP) gross margin 56.7 %55.1 %1.7 pts.  
(1)Recast to reflect January 2024 segment changes.
Software
(Dollars in millions)Yr.-to-Yr.
Percent
Change		Yr.-to-Yr.
Percent
Change
Adjusted For
Currency
For the three months ended September 30:2024
2023 (1)
Software revenue:$6,524 $5,947 9.7 %9.6 %
Hybrid Platform & Solutions$4,600 $4,187 9.8 %9.7 %
Red Hat13.7 13.8 
Automation13.2 12.9 
Data & AI5.3 5.1 
Security(1.2)(1.0)
Transaction Processing1,925 1,759 9.4 9.4 
(1)Recast to reflect January 2024 segment changes.
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Management Discussion – (continued)
(Dollars in millions)Yr.-to-Yr.
Percent
Change		Yr.-to-Yr.
Percent
Change
Adjusted For
Currency
For the nine months ended September 30:2024
2023 (1)
Software revenue:$19,162 $17,832 7.5 %8.0 %
Hybrid Platform & Solutions$13,272 $12,388 7.1 %7.6 %
Red Hat9.8 10.4 
Automation13.7 14.1 
Data & AI0.8 1.1 
Security(0.5)(0.1)
Transaction Processing5,889 5,444 8.2 8.9 
(1)Recast to reflect January 2024 segment changes.
Software revenue of $6,524 million increased 9.7 percent as reported (9.6 percent adjusted for currency) in the third quarter of 2024 compared to the prior-year period, reflecting accelerated revenue growth in total Software and in Hybrid Platform & Solutions as compared to the quarterly year-to-year growth rates in the first-half 2024. This performance reflects the repositioning of Software around our key growth platforms, including Hybrid Cloud, Automation, Data and Transaction Processing, where we deliver a differentiated value proposition to our clients to help address their most pressing needs. We delivered strong growth in our recurring revenue base and have momentum from innovation across our Software portfolio. Red Hat revenue growth accelerated in the third quarter and contributed approximately 3.5 points of growth to total Software. The combination of innovation and recurring revenue also contributed approximately 3.5 points to total Software revenue growth. In addition, our focused acquisition strategy contributed approximately 3 points to our total Software revenue growth.
Hybrid Platform & Solutions revenue of $4,600 million increased 9.8 percent as reported (9.7 percent adjusted for currency) in the third quarter of 2024 compared to the prior-year period, driven primarily by strong growth in Red Hat, Automation and Data & AI. Red Hat revenue increased 13.7 percent as reported (13.8 percent adjusted for currency) in the third quarter of 2024. We gained market share across each of our key solutions, as OpenShift and Ansible each continued to grow year-to-year revenue greater than 20 percent in the third quarter, and RHEL had double-digit, year-to-year growth in the quarter. This revenue growth within Red Hat reflects the demand for our hybrid cloud solutions as clients continue to prioritize application modernization on OpenShift containers and Ansible automation to optimize their IT spend and reduce operational complexity. We had strong acceleration in Red Hat's subscription business this quarter compared to the second-quarter 2024 and the consumption-based services business returned to growth in the third quarter compared to the prior-year period. Automation revenue increased 13.2 percent as reported (12.9 percent adjusted for currency) in the third quarter of 2024 compared to the prior-year period driven by our Software-as-a-Service subscription offerings such as AI Ops and Management, which includes the revenue contribution from Apptio. The Apptio acquisition closed in August last year and continues to build strong synergies with our automation capabilities and broader software portfolio, driving continued growth in signings and annual recurring revenue. Data & AI revenue increased 5.3 percent as reported (5.1 percent adjusted for currency) driven by continued growth in watsonx including our AI Assistant for Customer Care.
Across Hybrid Platform & Solutions, our annual recurring revenue (ARR) was $14.9 billion. ARR is a key performance metric management uses to assess the health and growth trajectory of our Hybrid Platform & Solutions business within the Software segment. The metric was updated in the first quarter of 2024 to reflect the organizational changes described in note 4, “Segments,” and to simplify the calculation. ARR is calculated by using the current quarter’s recurring revenue and then multiplying that value by four. This value includes the following consumption models: (1) software subscription agreements, including committed term licenses, (2) as-a-service arrangements such as SaaS and PaaS, and (3) maintenance and support contracts. ARR should be viewed independently of revenue as this performance metric and its inputs may not represent revenue that will be recognized in future periods.
Transaction Processing revenue of $1,925 million increased 9.4 percent as reported and adjusted for currency in the third quarter of 2024 compared to the prior-year period, reflecting the growing client demand for workload capacity, solid renewal rates, and continued customer interest in our new generative AI product, watsonx Code Assistant for Z.
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Management Discussion – (continued)
For the first nine months of 2024, Software revenue of $19,162 million increased 7.5 percent as reported (8.0 percent adjusted for currency) compared to the same period in 2023, driven by solid growth in Hybrid Platform & Solutions, led by Automation and Red Hat, and Transaction Processing. This performance reflects the continued demand for the high-value capabilities within our Hybrid Platform & Solutions offerings and the value of our mission-critical software portfolio within Transaction Processing which supports growing workloads on our hardware platforms. This revenue performance also reflects the investments we have been making in Software, both organically and in acquisitions.
(Dollars in millions)Yr.-to-Yr.
Percent/
Margin
Change
For the three months ended September 30:2024
2023 (1)
Software:   
Gross profit$5,431 $4,896 10.9 %    
Gross profit margin83.2 %82.3 %0.9 pts.  
Segment profit$1,969 $1,722 14.4 %    
Segment profit margin 30.2 %29.0 %1.2 pts.  
(Dollars in millions)Yr.-to-Yr.
Percent/
Margin
Change
For the nine months ended September 30:2024
2023 (1)
Software:   
Gross profit$15,925 $14,681 8.5 %    
Gross profit margin83.1 %82.3 %0.8 pts. 
Segment profit$5,582 $4,850 15.1 %    
Segment profit margin29.1 %27.2 %1.9 pts. 
(1)Recast to reflect January 2024 segment changes.
Software gross profit margin increased 0.9 points to 83.2 percent in the third quarter of 2024 compared to the prior-year period. Segment profit of $1,969 million increased 14.4 percent and segment profit margin of 30.2 percent increased 1.2 points compared to the prior-year period. The segment profit growth reflects our operating leverage driven by our revenue performance and portfolio mix and the benefits of our continued productivity actions, partially offset by key investments in software innovation.
For the first nine months of 2024, gross profit margin increased 0.8 points to 83.1 percent, compared to the first nine months of 2023. Segment profit of $5,582 million increased 15.1 percent and segment profit margin of 29.1 percent increased 1.9 points compared to the prior-year period. The segment profit growth for the first nine months of 2024 was driven by the same factors described for the third quarter.

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Management Discussion – (continued)
Consulting
(Dollars in millions)  Yr.-to-Yr.
Percent
Change		Yr.-to-Yr.
Percent
Change
Adjusted For
Currency
For the three months ended September 30:2024
2023 (1)
Consulting revenue:$5,152 $5,178 (0.5)%(0.2)%
Business Transformation$2,327 $2,291 1.6 %1.7 %
Technology Consulting905 943 (4.0)(3.6)
Application Operations1,921 1,944 (1.2)(0.8)
(Dollars in millions)  Yr.-to-Yr.
Percent
Change		Yr.-to-Yr.
Percent
Change
Adjusted For
Currency
For the nine months ended September 30:2024
2023 (1)
Consulting revenue:$15,517 $15,601 (0.5)%1.1 %
Business Transformation$7,004 $6,869 2.0 %3.5 %
Technology Consulting2,752 2,808 (2.0)0.0 
Application Operations5,761 5,924 (2.8)(1.1)
(1)Recast to reflect January 2024 segment changes.

Consulting revenue of $5,152 million decreased 0.5 percent as reported (0.2 percent adjusted for currency) in the third quarter of 2024 compared to the prior-year period, reflecting a challenging macroeconomic environment which is impacting client buying behavior. At the same time, clients are reprioritizing their IT budgets to prepare for generative AI. We continued to build a solid generative AI business as we partner with our clients to design and scale AI solutions and develop new ways of working. This early momentum in engaging with clients as they architect their AI strategies is establishing IBM Consulting as a strategic partner of choice. In the third quarter, our Red Hat consulting practice, which helps clients optimize how they build, deploy, and manage applications for a hybrid cloud environment continued to grow revenue at a double-digit rate on a year-to-year basis in the third quarter, with the highest level of single-quarter signings since the acquisition of Red Hat. In addition, Consulting revenue generated through our strategic partnerships continued to contribute strong revenue growth.
In the third quarter of 2024, Business Transformation revenue of $2,327 million increased 1.6 percent as reported (1.7 percent adjusted for currency) compared to the prior-year period driven by strength in transformation projects for data, finance and supply chain.
Technology Consulting revenue of $905 million decreased 4.0 percent as reported (3.6 percent adjusted for currency) in the third quarter of 2024 compared to the prior-year period, driven by a decline in our application development offerings, partially offset by solid growth in our cloud-based application services across modernization development and management services.
Application Operations revenue of $1,921 million decreased 1.2 percent as reported (0.8 percent adjusted for currency) compared to the prior-year period, reflecting a reprioritization of spending by clients for on-premise customized services.
For the first nine months of 2024, Consulting revenue of $15,517 million decreased 0.5 percent as reported, but grew 1.1 percent adjusted for currency, led by strength in our Business Transformation offerings with revenue growth year to year driven by transformation projects for data, finance and supply chain. We had double-digit revenue growth in both our Red Hat and strategic partner driven practices in the first nine months of 2024 compared to the prior-year period. Throughout 2024, the uncertainty of the macroeconomic environment has delayed client spending on smaller, discretionary projects, however, we had solid demand for larger digital transformation projects.
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Management Discussion – (continued)
(Dollars in millions)Yr.-to-Yr.
Percent/
Margin
Change
For the three months ended September 30:2024
2023 (1)
Consulting:   
Gross profit$1,464 $1,427 2.6 %    
Gross profit margin28.4 %27.6 %0.9 pts.  
Segment profit$559 $566 (1.2)%    
Segment profit margin10.9 %10.9 %(0.1)pts.  
(Dollars in millions)  Yr.-to-Yr.
Percent/
Margin
Change
For the nine months ended September 30:2024
2023 (1)
Consulting:   
Gross profit$4,141 $4,105 0.9 %    
Gross profit margin26.7 %26.3 %0.4 pts.  
Segment profit$1,447 $1,476 (1.9)%    
Segment profit margin9.3 %9.5 %(0.1)pts.  
(1)Recast to reflect January 2024 segment changes.

In the third quarter of 2024, Consulting gross profit margin of 28.4 percent increased 0.9 points on a year-to-year basis. Segment profit of $559 million decreased 1.2 percent and segment profit margin of 10.9 percent decreased 0.1 points year to year. The gross profit margin expansion reflects the savings from productivity actions we have taken. Our segment profit margin improved 2.0 points compared to the second-quarter 2024 reflecting the benefits from our productivity actions, but was essentially flat year to year.
For the first nine months of 2024, Consulting gross profit margin of 26.7 percent increased 0.4 points compared to the prior-year period. Segment profit of $1,447 million decreased 1.9 percent and segment profit margin of 9.3 percent decreased 0.1 points in the first nine months of 2024 compared to the prior-year period. The nine-month margin performance was driven primarily by the same factors as described above for the third quarter.
Consulting Signings and Book-to-Bill
(Dollars in millions)Yr.-to-Yr.
Percent
Change		Yr.-to-Yr.
Percent
Change
Adjusted For
Currency
For the three months ended September 30:2024
2023 (1)
Total Consulting signings$5,448 $5,964 (8.7)%(9.3)%
(Dollars in millions)Yr.-to-Yr.
Percent
Change		Yr.-to-Yr.
Percent
Change
Adjusted For
Currency
For the nine months ended September 30:2024
2023 (1)
Total Consulting signings$16,637 $17,293 (3.8)%(2.7)%
(1)Recast to reflect January 2024 segment changes.
In the third quarter of 2024, Consulting signings decreased 8.7 percent as reported and 9.3 percent adjusted for currency. Clients are reprioritizing their IT budgets to prepare for investments in generative AI, while the challenging macroeconomic environment is impacting client spending, particularly on more discretionary projects. We continued to have solid demand for large digital transformations that contributed to the $5.4 billion in signings in the quarter. Our book-to-bill ratio for the trailing twelve-months was 1.14. Book-to-bill represents the ratio of IBM Consulting signings to its revenue over the same period. The metric is a useful indicator of the demand of our business over time.
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Management Discussion – (continued)
Signings are management’s initial estimate of the value of a client’s commitment under a services contract within IBM Consulting. There are no third-party standards or requirements governing the calculation of signings. The calculation used by management involves estimates and judgments to gauge the extent of a client’s commitment, including the type and duration of the agreement, and the presence of termination charges or wind-down costs.
Contract extensions and increases in scope are treated as signings only to the extent of the incremental new value. Total signings can vary over time due to a variety of factors including, but not limited to, the timing of signing a small number of larger contracts. Signings associated with an acquisition will be recognized on a prospective basis.
Management believes the estimated values of signings disclosed provide an indication of our forward-looking revenue. Signings are used to monitor the performance of the business and viewed as useful information for management and shareholders. The conversion of signings into revenue may vary based on the types of services and solutions, contract duration, customer decisions, and other factors, which may include, but are not limited to, the macroeconomic environment.
Infrastructure
(Dollars in millions)Yr.-to-Yr.
Percent
Change		Yr.-to-Yr.
Percent
Change
Adjusted For
Currency
For the three months ended September 30:20242023
Infrastructure revenue:$3,042 $3,272 (7.0)%(6.7)%
Hybrid Infrastructure$1,765 $1,943 (9.1)%(9.2)%
IBM Z(18.7)(18.6)
Distributed Infrastructure(2.8)(3.0)
Infrastructure Support1,277 1,329 (3.9)(3.1)
(Dollars in millions)Yr.-to-Yr.
Percent
Change		Yr.-to-Yr.
Percent
Change
Adjusted For
Currency
For the nine months ended September 30:20242023
Infrastructure revenue:$9,764 $9,988 (2.3)%(1.2)%
Hybrid Infrastructure$5,928 $5,912 0.3 %1.1 %
IBM Z(2.7)(1.8)
Distributed Infrastructure2.2 3.0 
Infrastructure Support3,835 4,076 (5.9)(4.5)

Infrastructure revenue of $3,042 million decreased 7.0 percent as reported and 6.7 percent adjusted for currency in the third quarter of 2024 compared to the prior-year period, reflecting the impact of product cycle dynamics in both Hybrid Infrastructure and Infrastructure Support.
Hybrid Infrastructure revenue of $1,765 million decreased 9.1 percent as reported and 9.2 percent adjusted for currency in the third quarter of 2024 compared to the prior-year period. Within Hybrid Infrastructure, IBM Z decreased 18.7 percent as reported (18.6 percent adjusted for currency) reflecting the z16 program cycle dynamics. Ten quarters into the program, z16 continued to exceed the total revenue generated by each prior cycle and resulted in a greater than 30 percent increase in program-to-date installed MIPs. Our clients continue to face increased demands for workloads given rapid business expansion, complex regulatory environments, and increased cybersecurity threats and attacks. IBM Z remains uniquely positioned to address these demands with the technologies that our latest program offers, which includes embedded AI at scale, quantum-safe security, and cloud-native development for hybrid cloud. Distributed Infrastructure revenue decreased 2.8 percent as reported and 3.0 percent adjusted for currency, driven primarily by declines in Cloud platform revenue, as well as a decrease in Power systems revenue reflecting product cycle dynamics, partially offset by solid growth in our Storage business as we continued to take market share in storage technology.
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Management Discussion – (continued)
Infrastructure Support revenue of $1,277 million decreased 3.9 percent as reported (3.1 percent adjusted for currency) in the third quarter of 2024 compared to the prior-year period, driven by product cycle dynamics and volume decline in support of non-IBM equipment.
For the first nine months of 2024, Infrastructure revenue of $9,764 million decreased 2.3 percent as reported (1.2 percent adjusted for currency) compared to the prior-year period, driven by declines in Infrastructure Support partially offset by growth in Hybrid Infrastructure. Within Hybrid Infrastructure, Distributed Infrastructure revenue increased in the first nine months of 2024 driven primarily by growth in Storage and Power systems, partially offset by a revenue decline in IBM Z reflecting the program cycle. Infrastructure Support revenue declined in the first nine months of 2024 driven by volume declines in support of non-IBM equipment and IBM product cycle dynamics.
(Dollars in millions)Yr.-to-Yr.
Percent/
Margin
Change
For the three months ended September 30:2024
2023 (1)
Infrastructure:   
Gross profit$1,672 $1,758 (4.9)%    
Gross profit margin55.0 %53.7 %1.2 pts.  
Segment profit$422 $490 (13.8)%    
Segment profit margin13.9 %15.0 %(1.1)pts.  
(Dollars in millions)Yr.-to-Yr.
Percent/
Margin
Change
For the nine months ended September 30:2024
2023 (1)
Infrastructure:   
Gross profit$5,398 $5,389 0.2 %
Gross profit margin55.3 %54.0 %1.3 pts.  
Segment profit$1,387 $1,529 (9.3)%    
Segment profit margin14.2 %15.3 %(1.1)pts.  
(1)Recast to reflect January 2024 segment changes.

Infrastructure gross profit margin of 55.0 percent increased 1.2 points in the third quarter of 2024 compared to the prior-year period, with margin expansion in Infrastructure Support and Hybrid Infrastructure. The increase in margin within Infrastructure Support was driven by product mix. The increase in margin within Hybrid Infrastructure was driven primarily by margin expansion in both IBM Z and Distributed Infrastructure, partially offset by portfolio mix. In the third quarter of 2024, Infrastructure segment profit of $422 million decreased 13.8 percent and segment profit margin of 13.9 percent decreased 1.1 points compared to the prior-year period. The year-to-year decrease in segment profit and margin reflects the revenue decline due to product cycle dynamics in IBM Z and Distributed Infrastructure and continued investments in innovation for our next generation of products. This performance was partially offset by higher IP and custom development income year to year and savings from productivity actions.
For the first nine months of 2024, gross profit margin of 55.3 percent increased 1.3 points compared to the prior-year period, driven by margin expansion in Hybrid Infrastructure and Infrastructure Support. Within Hybrid Infrastructure, we had margin improvement across our hardware platforms. The gross profit margin improvement in Infrastructure Support reflects the benefits from productivity and cost management. Infrastructure segment profit of $1,387 million decreased 9.3 percent and segment profit margin of 14.2 percent decreased 1.1 points in the first nine months of 2024 compared to the prior-year period. This performance reflects the same factors described for the third quarter, and also included approximately a half of a point of impact from currency.
Financing
Refer to pages 82 through 84 for a discussion of Financing’s segment results.
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Management Discussion – (continued)
Geographic Revenue
In addition to the revenue presentation by reportable segment, we also measure revenue performance on a geographic basis.
(Dollars in millions)Yr.-to-Yr.
Percent
Change 		Yr.-to-Yr.
Percent
Change
Adjusted For
Currency
For the three months ended September 30:20242023
Total Revenue$14,968 $14,752 1.5 %1.6 %
Americas$7,453 $7,686 (3.0)%(2.4)%
Europe/Middle East/Africa (EMEA)4,584 4,223 8.5 6.8 
Asia Pacific2,932 2,843 3.1 4.5 
(Dollars in millions)Yr.-to-Yr.
Percent
Change 		Yr.-to-Yr.
Percent
Change
Adjusted For
Currency
For the nine months ended September 30:20242023
Total Revenue$45,199 $44,479 1.6 %2.7 %
Americas$22,727 $22,810 (0.4)%0.0 %
Europe/Middle East/Africa (EMEA)13,619 13,156 3.5 2.6 
Asia Pacific8,853 8,513 4.0 9.8 
Geographic revenue performance for the three months ended September 30, 2024:
Americas revenue of $7,453 million decreased 3.0 percent as reported and 2.4 percent adjusted for currency in the third quarter of 2024 compared to the prior-year period. The U.S. decreased 3.5 percent. Canada decreased 7.5 percent as reported and 6.1 percent adjusted for currency. Latin America increased 8.3 percent as reported and 13.5 percent adjusted for currency, with Brazil increasing 11.5 percent as reported and 18.9 percent adjusted for currency.
In EMEA, total revenue of $4,584 million increased 8.5 percent as reported and 6.8 percent adjusted for currency. Germany, France and the UK increased 19.6 percent, 5.2 percent and 4.7 percent, respectively, as reported, and 18.1 percent, 4.1 percent and 1.9 percent, respectively, adjusted for currency. Italy decreased 1.6 percent as reported and 2.8 percent adjusted for currency.
Asia Pacific revenue of $2,932 million increased 3.1 percent as reported and 4.5 percent adjusted for currency. Japan increased 11.4 percent as reported and 14.7 percent adjusted for currency. India was flat as reported and increased 1.2 percent adjusted for currency. Australia and China decreased 16.8 percent and 9.6 percent, respectively, as reported, and 18.9 percent and 10.5 percent, respectively, adjusted for currency.
Geographic revenue performance for the nine months ended September 30, 2024:
Americas revenue of $22,727 million decreased 0.4 percent as reported, but was flat adjusted for currency. The U.S. increased 0.8 percent compared to the prior-year period. Canada decreased 6.7 percent as reported and 5.8 percent adjusted for currency. Latin America decreased 1.7 percent as reported, but grew 0.8 percent adjusted for currency, with a decline in Brazil of 2.1 percent as reported, but growth of 0.6 percent adjusted for currency.
In EMEA, total revenue of $13,619 million increased 3.5 percent as reported and 2.6 percent adjusted for currency. Germany, the UK and Italy increased 9.1 percent, 2.8 percent and 1.7 percent, respectively, as reported, and 8.6 percent, 0.3 percent and 1.3 percent, respectively, adjusted for currency. France decreased 0.9 percent as reported and 1.2 percent adjusted for currency.
Asia Pacific revenue of $8,853 million increased 4.0 percent as reported and 9.8 percent adjusted for currency. Japan increased 8.5 percent as reported and 18.9 percent adjusted for currency. India increased 5.6 percent as reported and 6.9 percent adjusted for currency. China and Australia decreased 6.5 percent and 4.5 percent, respectively, as reported, and 5.0 percent and 3.8 percent, respectively, adjusted for currency.
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Management Discussion – (continued)
Expense
Total Expense and Other (Income)
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the three months ended September 30:20242023
Total expense and other (income)$9,222 $6,150 50.0 %
Non-operating adjustments:   
Amortization of acquired intangible assets$(290)$(252)15.0 %
Acquisition-related charges(10)(25)(0.6)
Non-operating retirement-related (costs)/income (1)
(2,797)12 nm
Operating (non-GAAP) expense and other (income)$6,125 $5,885 4.1 %
Total expense-to-revenue ratio61.6 %41.7 %19.9 pts. 
Operating (non-GAAP) expense-to-revenue ratio40.9 %39.9 %1.0 pts. 
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the nine months ended September 30:20242023
Total expense and other (income)$22,621 $19,102 18.4 %
Non-operating adjustments:   
Amortization of acquired intangible assets$(815)$(735)11.0 %
Acquisition-related charges(106)(35)2.1 
Non-operating retirement-related (costs)/income (1)
(2,991)16 nm
Operating (non-GAAP) expense and other (income)$18,709 $18,348 2.0 %
Total expense-to-revenue ratio50.0 %42.9 %7.1 pts. 
Operating (non-GAAP) expense-to-revenue ratio41.4 %41.3 %0.1 pts. 
(1)Includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $2.7 billion. Refer to note 18, "Retirement-Related Benefits," for additional information.
nm - not meaningful
For additional information regarding total expense and other (income) for both expense presentations, refer to the following analyses by category.
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Management Discussion – (continued)
Selling, General and Administrative Expense
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the three months ended September 30:20242023
Selling, general and administrative expense:   
Selling, general and administrative — other$3,865 $3,730 3.6 %
Advertising and promotional expense279 303 (7.8)
Workforce rebalancing charges306 34 nm
Amortization of acquired intangible assets290 252 15.0 
Stock-based compensation167 148 13.2 
Provision for/(benefit from) expected credit loss expense4 (9)nm
Total selling, general and administrative expense$4,911 $4,458 10.2 %
Non-operating adjustments:   
Amortization of acquired intangible assets$(290)$(252)15.0 %
Acquisition-related charges(10)(25)(58.5)
Operating (non-GAAP) selling, general and administrative expense$4,611 $4,181 10.3 %
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the nine months ended September 30:20242023
Selling, general and administrative expense:   
Selling, general and administrative — other$11,901 $11,607 2.5 %
Advertising and promotional expense912 989 (7.9)
Workforce rebalancing charges701 410 71.3 
Amortization of acquired intangible assets815 734 11.1 
Stock-based compensation511 465 9.8 
Provision for/(benefit from) expected credit loss expense(17)7 nm
Total selling, general and administrative expense$14,823 $14,212 4.3 %
Non-operating adjustments:   
Amortization of acquired intangible assets$(815)$(734)11.1 %
Acquisition-related charges(39)(34)14.4 
Operating (non-GAAP) selling, general and administrative expense$13,969 $13,444 3.9 %
nm - not meaningful
Total selling, general and administrative (SG&A) expense increased 10.2 percent in the third quarter of 2024 versus the prior-year period driven primarily by the following factors:
•Higher workforce rebalancing charges (6 points) to address stranded costs and accelerate our productivity initiatives; and
•Higher spending, including expenses of acquired businesses, as a result of our continued investment to drive our hybrid cloud and AI strategy; partially offset by benefits from productivity and the actions taken to transform our operations (4 points).
Operating (non-GAAP) SG&A expense increased 10.3 percent year to year primarily driven by the same factors above.

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Management Discussion – (continued)
Total SG&A expense increased 4.3 percent in the first nine months of 2024 versus the prior-year period driven primarily by the following factors:

•Higher spending, including expenses from acquired businesses, as a result of our continued investment to drive our hybrid cloud and AI strategy; partially offset by benefits from productivity and the actions taken to transform our operations (3 points); and
•Higher workforce rebalancing charges (2 points) to address stranded costs and accelerate our productivity initiatives; partially offset by
•The effects of currency (1 point).
Operating (non-GAAP) SG&A expense increased 3.9 percent year to year primarily driven by the same factors above.
Expected credit loss expense was a benefit of $17 million in the first nine months of 2024 compared to a provision of $7 million in the prior-year period. The year-to-year change was primarily driven by lower reserve requirements in the current year. Refer to "Receivables and Allowances" section on page 75 for additional information.
Research, Development and Engineering
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the three months ended September 30:20242023
Research, development and engineering expense$1,876 $1,685 11.3 %
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the nine months ended September 30:20242023
Research, development and engineering expense$5,512 $5,027 9.7 %
Research, development and engineering (RD&E) expense increased 11.3 percent and 9.7 percent year to year in the third quarter and first nine months of 2024, respectively. The year-to-year increase in RD&E expense was primarily driven by investments to drive innovation in AI, hybrid cloud and quantum, as well as in Infrastructure ahead of our next IBM Z cycle in 2025.

Intellectual Property and Custom Development Income
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the three months ended September 30:20242023
Intellectual property and custom development income:   
Intellectual property income (1) (2)
$62 $76 (17.9)%
Custom development income176 114 53.9 
Total$238 $190 25.3 %
(1)Includes licensing, royalty-based fees and sales.
(2)Prior period has been reclassified to conform to the change in 2024 presentation.

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Management Discussion – (continued)
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the nine months ended September 30:20242023
Intellectual property and custom development income:   
Intellectual property income (1) (2)
$211 $269 (21.5)%
Custom development income484 349 38.8 
Total$696 $618 12.6 %
(1)Includes licensing, royalty-based fees and sales.
(2)Prior period has been reclassified to conform to the change in 2024 presentation.

Total intellectual property and custom development income increased 25.3 percent year to year in the third quarter, and increased 12.6 percent in the first nine months of 2024 compared to the prior-year period. The increase in the third quarter and first nine months of 2024 was primarily driven by joint development and licensing agreements with a Japanese consortium to leverage our intellectual property and expertise on advanced semiconductors.
The timing and amount of licensing and sales of IP may vary significantly from period to period depending upon the timing of licensing agreements, economic conditions, industry consolidation and the timing of new patents and know-how development.

Other (Income) and Expense
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the three months ended September 30:20242023
Other (income) and expense:   
(Gains)/losses on foreign currency transactions$470 $(260)nm
(Gains)/losses on derivative instruments (428)316 nm
Interest income(170)(156)8.6 %
Net (gains)/losses from securities and investment assets(4)(5)(33.9)
Retirement-related costs/(income)
2,797 (12)nm
Other (1)
(422)(97)nm
Total other (income) and expense$2,244 $(215)nm
Non-operating adjustments:   
Non-operating retirement-related (costs)/income
(2,797)12 nm
Operating (non-GAAP) other (income) and expense$(553)$(203)172.3 %
(1)2024 amount includes a pre-tax gain of $351 million from the sale of certain QRadar SaaS assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.
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(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the nine months ended September 30:20242023
Other (income) and expense:   
(Gains)/losses on foreign currency transactions$126 $(338)nm
(Gains)/losses on derivative instruments (1)
(1)315 nm
Interest income(597)(527)13.2 %
Net (gains)/losses from securities and investment assets(14)3 nm
Retirement-related costs/(income)
2,991 (16)nm
Other (2)
(810)(158)nm
Total other (income) and expense$1,694 $(721)nm
Non-operating adjustments:   
Amortization of acquired intangible assets$— $(1)(100.0)% 
Acquisition-related charges (1)
(68)(1)nm
Non-operating retirement-related (costs)/income
(2,991)16 nm
Operating (non-GAAP) other (income) and expense$(1,364)$(707)93.1 %
(1)2024 includes the realized loss of $68 million recognized on foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, “Derivative Financial Instruments,” for additional information.
(2)2024 amount includes a pre-tax gain of $351 million from the sale of certain QRadar SaaS assets and a pre-tax gain of $241 million from the divestiture of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.
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Total other (income) and expense was $2,244 million of expense in the third quarter of 2024 compared to income of $215 million in the prior-year period. The year-to-year change was primarily driven by:
•Non-operating retirement-related cost of $2,797 million in the current-year period versus $12 million of income in the prior-year period primarily driven by the impact of a one-time, non-cash pension settlement charge of $2,725 million in the third quarter of 2024 and an increase in recognized actuarial losses due to the change in amortization period effective January 1, 2024 as described in note 18, "Retirement-Related Benefits,"; partially offset by
•A gain of $351 million from the sale of certain QRadar SaaS assets in the third-quarter 2024. Refer to note 5, "Acquisitions & Divestitures," for additional information.
Operating (non-GAAP) other (income) and expense was income of $553 million in the third quarter of 2024 and increased $350 million compared to the prior-year period. The year-to-year change was primarily driven by the gain recognized from the sale of certain QRadar SaaS assets in the current year.
Total other (income) and expense was $1,694 million of expense in the first nine months of 2024 compared to income of $721 million in the prior-year period. The year-to-year change was primarily driven by:
•Non-operating retirement-related cost of $2,991 million compared to $16 million of income in the prior-year period primarily driven by the factors described in the third quarter above; and
•Net exchange losses (including derivative instruments) of $124 million in the current-year period versus net exchange gains of $23 million in the prior-year period; partially offset by
•A gain of $351 million from the sale of certain QRadar SaaS assets in the third-quarter 2024. Refer to note 5, "Acquisitions & Divestitures," for additional information; and
•Higher gains on divestitures ($203 million) primarily driven by the divestiture of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information; and
•Higher gains on sales of intangibles ($81 million) included in “Other”; and
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•Higher interest income ($70 million) primarily driven by a higher average cash balance in the current year.
Operating (non-GAAP) other (income) and expense was income of $1,364 million in the first nine months of 2024 and increased $658 million compared to the prior-year period. The year-to-year change was primarily driven by the gain recognized from the sale of certain QRadar SaaS assets in the third-quarter 2024, higher gains on divestitures and sales of intangibles and higher interest income.
Interest Expense
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the three months ended September 30:20242023
Interest expense$429 $412 4.2 %
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the nine months ended September 30:20242023
Interest expense$1,288 $1202 7.2 %
Interest expense increased $17 million and $86 million year to year in the third quarter and first nine months of 2024, respectively. Interest expense is presented in cost of financing in the Consolidated Income Statement if the related external borrowings are to support the Financing external business. Overall interest expense (excluding capitalized interest) for the third quarter and first nine months of 2024 was $516 million and $1,542 million, respectively, an increase of $22 million and $85 million, respectively, compared to the prior-year periods. The year-to-year dynamics for both the third quarter and first nine months of 2024 were primarily driven by higher average interest rates and a higher average debt balance in the current year.
Retirement-Related Plans
The following tables provide the total pre-tax cost for all retirement-related plans. The operating cost amounts are included in the Consolidated Income Statement within the caption (e.g., Cost, SG&A, RD&E) relating to the job function of the plan participants. The non-operating cost amounts are included in other (income) and expense.
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the three months ended September 30:20242023
Retirement-related plans — cost:   
Service cost$143 $46 209.2 %
Multi-employer plans3 4 (19.0)
Cost of defined contribution plans111 245 (54.7)
Total operating costs$257 $295 (13.0)%
Interest cost$535 $604 (11.5)%
Expected return on plan assets(708)(745)(5.0)
Recognized actuarial losses244 126 93.2 
Amortization of prior service costs/(credits)(2)(2)(18.4)
Curtailments/settlements (1)
2,727 2 nm 
Other costs0 3 (89.9)
Total non-operating costs/(income) (1)
$2,797 $(12)nm 
Total retirement-related plans — cost (1)
$3,053 $283 nm 
(1)2024 includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $2.7 billion. Refer to note 18, "Retirement-Related Benefits," for additional information.
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(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the nine months ended September 30:2024 2023
Retirement-related plans — cost:    
Service cost$426 $138 209.2 %
Multi-employer plans10 10 (6.5)
Cost of defined contribution plans330 756 (56.3)
Total operating costs$767 $905 (15.3)%
Interest cost$1,648 $1,807 (8.8)%
Expected return on plan assets(2,163)(2,229)(3.0)
Recognized actuarial losses759 384 97.7 
Amortization of prior service costs/(credits)(5)(6)(17.8)
Curtailments/settlements (1)
2,731 7 nm 
Other costs20 22 (4.9)
Total non-operating costs/(income) (1)
$2,991 $(16)nm 
Total retirement-related plans — cost (1)
$3,757 $888 nm 
(1)2024 includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $2.7 billion. Refer to note 18, "Retirement-Related Benefits," for additional information.
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Total pre-tax retirement-related plan cost increased by $2,771 million compared to the third quarter of 2023, primarily driven by an increase in curtailments/settlements driven by the impact of a one-time, non-cash pension settlement charge ($2,725 million), an increase in recognized actuarial losses ($118 million) and higher service cost ($97 million), partially offset by lower cost of defined contribution plans ($134 million) and lower interest costs ($69 million). Total cost for the first nine months of 2024 increased by $2,869 million compared to the first nine months of 2023, primarily driven by the impact of a one-time, non-cash pension settlement charge ($2,725 million), increase in recognized actuarial losses ($375 million) and higher service cost ($289 million), partially offset by lower cost of defined contribution plans ($426 million) and lower interest costs ($159 million).
As described in the “Operating (non-GAAP) Earnings” section, management characterizes certain retirement-related costs as operating and others as non-operating. Utilizing this characterization, operating retirement-related costs in the third quarter of 2024 were $257 million, a decrease of $38 million compared to the third quarter of 2023. The decrease was primarily driven by lower cost of defined contribution plans ($134 million), partially offset by higher service cost ($97 million) due to the U.S. retirement plan changes effective January 1, 2024. For the first nine months of 2024, operating retirement-related costs were $767 million, a decrease of $138 million compared to the prior-year period, primarily driven by lower cost of defined contribution plans ($426 million), partially offset by higher service cost ($289 million) due to U.S. retirement plan changes effective January 1, 2024. Including the related employee salary increase effective January 1, 2024, the net impact to our operating costs from the U.S. retirement plan changes was immaterial for the three and nine months ended September 30, 2024. Refer to note 18, "Retirement-Related Benefits," for additional information. Non-operating costs/(income) was $2,797 million of cost in the third quarter of 2024 compared to $12 million of income in the prior-year period and for the first nine months of 2024 non-operating costs/(income) was $2,991 million of cost compared to $16 million of income in the prior-year period. The year-to-year changes were primarily driven by an increase in curtailments/settlements including the impact of a one-time, non-cash pension settlement charge resulting from the transfer to the Insurer of a portion of the Qualified PPP in the current quarter and an increase in recognized actuarial losses due to the change in amortization period of the Qualified PPP effective January 1, 2024 as described in note 18, "Retirement-Related Benefits," partially offset by lower interest costs.
Taxes
The continuing operations benefit from income taxes in the third quarter of 2024 was $485 million, compared to a provision for income taxes of $159 million in the third quarter of 2023. The current-year tax benefit was primarily driven by the transfer to the Insurer of a portion of the Qualified PPP’s defined benefit pension obligations and related plan assets.
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The operating (non-GAAP) provision for income taxes in the third quarter of 2024 was $332 million, compared to $268 million in the third quarter of 2023.
The continuing operations benefit from income taxes in the first nine months of 2024 was $597 million, compared to a provision for income taxes of $702 million in the first nine months of 2023. The current-year tax benefit was primarily driven by the resolution of certain tax audit matters in the first quarter and the transfer to the Insurer of a portion of the Qualified PPP’s defined benefit pension obligations and related plan assets in the third quarter. The operating (non-GAAP) provision for income taxes in the first nine months of 2024 was $942 million, compared to $861 million in the first nine months of 2023.
IBM’s tax provision and effective tax rate are impacted by recurring factors including the geographical mix of income before taxes, incentives, specific transactions, changes in unrecognized tax benefits and discrete tax events, such as the settlement of income tax audits and changes in or new interpretations of tax laws. The GAAP tax provision and effective tax rate could also be affected by adjustments to the previously recorded charges for U.S. tax reform attributable to any changes in law, new regulations and guidance, and audit adjustments, among others.
During the fourth quarter of 2020, the U.S. Internal Revenue Service (IRS) concluded its examination of the company’s U.S. income tax returns for 2013 and 2014 and issued a final Revenue Agent’s Report (RAR) proposing adjustments related to certain cross-border transactions that occurred in 2013. The company filed its IRS Appeals protest in the first quarter of 2021, and in October of 2023, the IRS issued a revised RAR. These adjustments, if sustained, would increase the company’s income subject to tax by approximately $4.2 billion, with tax calculated at the relevant federal income tax rate. The company continues to strongly disagree with the IRS position and will pursue resolution at IRS Appeals and then court, if necessary. In the first quarter of 2024, the IRS concluded its examination of the company's U.S. income tax returns for 2015 and 2016 and issued a final RAR proposing adjustments related to certain cross-border transactions that occurred in 2015. The proposed adjustments, if sustained, would increase the company’s income subject to tax by approximately $1.2 billion, with tax calculated at the relevant federal income tax rate. The company strongly disagrees with the IRS position and filed its IRS Appeals protest in the second quarter of 2024. In the fourth quarter of 2021, the IRS commenced its audit of the company’s U.S. tax returns for 2017 and 2018. The company anticipates that this audit will be completed in 2024. With respect to major U.S. state and foreign taxing jurisdictions, the company is generally no longer subject to tax examinations for years prior to 2016. The company is no longer subject to income tax examination of its U.S. federal tax return for years prior to 2013. The open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as it relates to the amount and/or timing of income, deductions, and tax credits. Although the outcome of tax audits is always uncertain, the company believes that adequate amounts of tax, interest and penalties have been provided for any adjustments that are expected to result for these years.
The company is involved in a number of income tax-related matters in India challenging tax assessments issued by the India Tax Authorities. As of September 30, 2024, the company had recorded $589 million as prepaid income taxes in India. A significant portion of this balance represents cash tax deposits paid over time to protect the company’s right to appeal various income tax assessments made by the India Tax Authorities. Although the outcome of tax audits is always uncertain, the company believes that adequate amounts of tax, interest and penalties have been provided for any adjustments that are expected to result for these years.
The amount of unrecognized tax benefits at September 30, 2024 is $8,615 million which can be reduced by $613 million associated with timing adjustments, potential transfer pricing adjustments, and state income taxes. The net amount of $8,002 million, if recognized, would favorably affect the company’s effective tax rate.
Financial Position
Dynamics
Our balance sheet at September 30, 2024 continues to provide us with financial flexibility to support and invest in the business.
Cash and cash equivalents, restricted cash and marketable securities at September 30, 2024 were $13,719 million, an increase of $257 million compared to December 31, 2023. Total debt of $56,579 million at September 30, 2024 was flat compared to December 31, 2023. We continue to manage our debt levels while being acquisitive and without sacrificing investments in our business.
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In the first nine months of 2024, we generated $9,115 million in cash from operating activities, a decrease of $353 million compared to the first nine months of 2023 due to a decrease in cash provided by financing receivables; partially offset by performance-related improvements within net income. Our free cash flow for the nine months ended September 30, 2024 was $6,586 million, an increase of $1,463 million versus the prior year. Refer to pages 80 through 81 for additional information on free cash flow. Our cash generation enables us to continue investing in innovation and expertise across the portfolio, while returning value to shareholders through dividends. We invested $2,748 million in acquisitions and we returned $4,601 million to shareholders through dividends in the first nine months of 2024.

Our pension plans were well funded at the end of 2023, with worldwide qualified plans funded at 111 percent. Overall pension funded status as of the end of September 2024 was fairly consistent with year-end 2023, as the transfer to the Insurer of approximately $6 billion of the Qualified PPP’s defined benefit pension obligations and related plan assets, reduced the company’s pension obligations and assets by the same amount. After the settlement and remeasurement, the Qualified PPP remained in an overfunded position at September 30, 2024. Refer to note 18, "Retirement-Related Benefits," for additional information.
IBM Working Capital
(Dollars in millions)At September 30, 2024At December 31, 2023
Current assets$30,543 $32,908 
Current liabilities28,853 34,122 
Working capital$1,690 $(1,214)
Current ratio1.06:10.96:1
Working capital increased $2,904 million from the year-end 2023 position. Current assets decreased $2,365 million ($2,257 million adjusted for currency) primarily in receivables mainly from collections of seasonally higher year-end balances. Current liabilities decreased $5,269 million ($5,228 million adjusted for currency) due to declines in short-term debt mainly due to maturities, accounts payable, and taxes payable.
Receivables and Allowances
Roll Forward of Total IBM Receivables Allowance for Credit Losses
(Dollars in millions)
January 1, 2024
Additions / (Releases) (1)
Write-offs (2)(3)
Foreign currency and other (3)
September 30, 2024
$457$(14)$(137)$(8)$298
(1)Additions/(Releases) for allowance for credit losses are recorded in expense.
(2)Refer to note A, “Significant Accounting Policies,” in our 2023 Annual Report for additional information regarding allowance for credit loss write-offs.
(3)Includes activity related to discontinued operations.
Excluding receivables classified as held for sale, the total IBM receivables provision coverage was 1.7 percent at September 30, 2024, a decrease of 50 basis points compared to December 31, 2023. The decrease in coverage is due to declines in reserves primarily driven by write-offs; partially offset by the overall decrease in total receivables. The majority of the write-offs during the year were related to receivables which had been previously reserved and were considered uncollectible as the related customer is no longer in operation, and/or there was no reasonable expectation of repossession or additional collections primarily due to their aging. In addition, it includes about $60 million of previously reserved receivables from discontinued operations that were written off in the current year. Refer to Financing's "Financial Position" on page 83 for additional details regarding the Financing segment receivables and allowances.
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Noncurrent Assets and Liabilities
(Dollars in millions)At September 30, 2024At December 31, 2023
Noncurrent assets$103,796 $102,333 
Long-term debt$52,980 $50,121 
Noncurrent liabilities (excluding debt)$27,976 $28,385 
The increase in noncurrent assets of $1,463 million ($1,516 million adjusted for currency) was primarily due to an increase in goodwill and intangible assets from the StreamSets and webMethods acquisition; partially offset by a decrease in long-term financing receivables as a result of declines from seasonally higher year-end balances.
Long-term debt increased $2,859 million ($2,738 million adjusted for currency) primarily driven by our first-quarter 2023 debt issuances; partially offset by reclassifications to short-term debt to reflect upcoming maturities.
Noncurrent liabilities (excluding debt) decreased $409 million ($419 million adjusted for currency) primarily driven by a decrease in retirement and nonpension postretirement benefit obligations.
Debt
Our funding requirements are continually monitored as we execute our strategies to manage the overall asset and liability profile. Additionally, we maintain sufficient flexibility to access global funding sources as needed.
(Dollars in millions)At September 30, 2024At December 31, 2023
Total debt$56,579 $56,547 
Financing segment debt (1)
$10,355 $11,879 
Non-Financing debt$46,224 $44,668 
(1)Refer to Financing’s “Financial Position” on page 83 for additional details.
Total debt of $56,579 million increased $32 million (decreased $74 million adjusted for currency) from December 31, 2023, primarily driven by maturities of $6,491 million; partially offset by proceeds from issuances of $5,705 million and currency impacts.
Non-Financing debt of $46,224 million increased $1,557 million ($1,395 million adjusted for currency) from December 31, 2023, primarily due to the first-quarter debt issuances; partially offset by maturities.

Financing segment debt of $10,355 million decreased $1,525 million ($1,469 million adjusted for currency) from December 31, 2023, primarily due to lower funding requirements associated with financing receivables.
Financing provides financing solutions predominantly for IBM’s external client assets, and the debt used to fund Financing assets is primarily comprised of intercompany loans. Total debt changes generally correspond with the level of client and commercial financing receivables, the level of cash and cash equivalents, the change in intercompany and external payables and the change in intercompany investment from IBM. The terms of the intercompany loans are set by the company to substantially match the term, currency and interest rate variability underlying the financing receivable. The Financing debt-to-equity ratio remained at 9.0 to 1 at September 30, 2024.
Interest expense relating to debt supporting Financing’s external client and internal business is included in the “Financing Results of Operations” and in note 4, “Segments.” In the Consolidated Income Statement, the external debt-related interest expense supporting Financing’s internal financing to the company is classified as interest expense.
Equity
Total equity increased $1,917 million from December 31, 2023, primarily driven by an increase from net income of $3,109 million which includes the impact of a one-time, non-cash pension settlement charge of $2,039 million net of tax, a
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decrease in accumulated other comprehensive loss of $2,343 million driven by retirement-related benefit plans primarily due to the pension settlement charge, and common stock issuances of $1,370 million; partially offset by dividends paid of $4,601 million.
Cash Flow
Our cash flows from operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows on page 7, are summarized in the table below. These amounts also include the cash flows associated with the Financing business.
(Dollars in millions)
For the nine months ended September 30:20242023
Net cash provided by/(used in):  
Operating activities$9,115 $9,468 
Investing activities(3,558)(9,906)
Financing activities(5,403)(154)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(29)(120)
Net change in cash, cash equivalents and restricted cash$125 $(713)
Net cash provided by operating activities decreased $353 million as compared to the first nine months of 2023. This was due to a decrease in cash provided by financing receivables; partially offset by performance-related improvements within net income. Changes in operating assets and liabilities, net of acquisitions/divestitures in the Consolidated Statement of Cash Flows also includes the tax effect related to the pension settlement charge in the third quarter of 2024, which represents a non-cash adjustment to reconcile net income/(loss) to cash from operating activities.
Net cash used in investing activities decreased $6,348 million primarily driven by lower net purchases of marketable securities and other investments, a decrease in cash used in acquisitions mainly driven by the Apptio acquisition in the previous year, partially offset by the StreamSets and webMethods acquisition in the current quarter, an increase in cash provided by divestitures from the sale of The Weather Company assets in the first quarter of 2024 and an increase in cash from disposition of property, plant and equipment/other mainly driven by proceeds from the sale of certain QRadar SaaS assets in the current quarter.
Net cash used in Financing activities increased by $5,249 million primarily driven by a higher level of net debt issuances in the prior-year period.
Looking Forward
Technology has proven to be a fundamental source of competitive advantage. Continued demand for technology will serve as a major driving force behind global economic and business growth as businesses look to scale, offer better services, drive efficiencies and seize new market opportunities. AI-driven productivity, in particular, continues to be a top priority for businesses for both cost reductions and new revenue opportunities.
Enterprise AI continues to gain traction. The AI portfolio we have built is designed to give clients a comprehensive set of tools and we believe we are well positioned to help clients scale AI. We have infused AI across the business, from the tools clients use to manage and optimize their hybrid cloud environments, to the tools to deploy AI within their enterprise, to Infrastructure and Consulting, there is AI innovation within all of our segments. For example, in Software, our broad suite of automation products such as Apptio and watsonx Orchestrate are leveraging AI. Red Hat is bringing AI to the platform with innovation such as OpenShift AI and RHEL AI. In Transaction Processing we are experiencing continued customer interest in our new generative AI product, watsonx Code Assistant for Z. In Infrastructure, IBM Z is equipped with real time AI inferencing capabilities. We continue to see Infrastructure play a larger role as clients bring AI to their data. In Consulting, our experts are helping clients design and execute AI strategies and are also leveraging AI technologies in the delivery of those services.
We are committed to an open innovation ecosystem around AI, to help our clients maximize flexibility and leverage skills, and IBM with Red Hat can be a key driver of open-source AI. Earlier this year, we open-sourced IBM’s Granite family of large language models and we see parallels to how Linux became dominant in the enterprise server space as a
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result of the speed and innovation offered by open source. Red Hat and IBM also launched InstructLab to evolve and improve AI models. Our partner ecosystem remains essential to both AI and hybrid cloud growth and we continue to progress strategic partnerships with industry leaders. In August, we completed the previously announced sale of certain IBM QRadar SaaS assets, which is part of a partnership to deliver AI-powered security solutions using watsonx with Palo Alto. The sale of these assets resulted in a benefit to cash from operating activities, cash from investing activities and to free cash flow in the third quarter. However, for full-year 2024 we expect only a nominal benefit to cash flows due to payments for structural actions we have taken and foregone profit from the QRadar business.
We continue to invest in emerging technologies, bringing new innovations to market. In early October 2024, we opened Europe’s first IBM Quantum Data Center. This is the second IBM quantum data center deployed globally which will greatly advance our goal of expanding access to the world’s most performant quantum computers. As we remain focused on portfolio optimization, we closed the divestiture of The Weather Company assets in January. To complement our portfolio, we completed eight acquisitions in the first nine months of 2024, including the acquisition of the StreamSets and webMethods assets from Software AG in July. This acquisition brings together leading capabilities in integration, API management and data ingestion.
On April 24, 2024, we announced our intent to acquire all of the outstanding shares of HashiCorp. The combination of IBM’s and HashiCorp’s combined portfolios will help clients manage growing application and infrastructure complexity and create a comprehensive end-to-end hybrid cloud platform designed for the AI era. Under the terms of the definitive agreement, HashiCorp shareholders on record immediately prior to the effective time on the closing date will receive $35 per share in cash, representing a total enterprise value of approximately $6.4 billion. On July 15, 2024, HashiCorp stockholders voted to approve the merger with IBM. The transaction is expected to close by the end of 2024, subject to regulatory approvals and other customary closing conditions. Upon closing, HashiCorp will be integrated into the Software segment.
In the first nine months of 2024, we continued to invest organically and inorganically, bring new products and innovation to market, expand our ecosystem and drive productivity across our business. Our performance over the first nine months of 2024 is a proof point of this progress. We have made solid progress in transitioning our portfolio to a higher growth, more focused business that has delivered sustained revenue growth and strong cash generation – a business well positioned for the future.
Retirement-Related Plans
In the fourth quarter of 2024, IBM Canada Ltd. (“IBMC”) purchased two separate nonparticipating single premium group annuity contracts from RBC Life Insurance Company ("RBC Insurance") and Brookfield Annuity Company ("Brookfield") (collectively the "Insurers") that will transfer to the Insurers approximately $1.2 billion of the IBMC IBM Retirement Plan’s (the “Plan”) defined benefit pension obligations for approximately 6,000 Plan participants and beneficiaries whose last province of employment was in British Columbia, Ontario or Quebec and who were receiving a payment under the Plan on July 1, 2024 (the “Transferred Participants”). The purchase of the group annuity contracts was completed October 29, 2024 and was funded directly by assets of the Plan and required no cash contribution from IBM.
Under the group annuity contracts, each insurer has made an irrevocable commitment, and will be solely responsible to pay the pension benefits of each Transferred Participant that are due on and after May 1, 2025 as follows: RBC Insurance will be responsible for 25 percent of the pension benefit and Brookfield will be responsible for 75 percent of the pension benefit. RBC Insurance will be the lead administrator. The transaction will result in no changes to the amount of benefits payable to the Transferred Participants.
As a result of the transaction, the company expects to recognize a one-time, non-cash, pre-tax, non-operating pension settlement charge of approximately $0.4 billion in the fourth quarter of 2024. The actual charge will depend on finalization of the actuarial and other assumptions. This charge will not impact the company’s fourth-quarter or full-year 2024 operating (non-GAAP) profit or free cash flow.
Our pension plans are well funded. Contributions for all retirement-related plans are expected to be approximately $1.4 billion in 2024, of which $0.1 billion generally relates to legally required contributions to non-U.S. defined benefit and multi-employer plans. The expected decrease of $0.4 billion in total contributions for 2024 is primarily driven by ongoing dynamics of our retirement-related plans, including the change in U.S. retirement-related benefits effective January 1, 2024 described in note 18, "Retirement-Related Benefits." We expect 2024 pre-tax retirement-related plan cost to be
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approximately $4.6 billion, an increase of approximately $3.4 billion compared to 2023, primarily driven by an increase in curtailments/settlements including the impact of a one-time, non-cash pension settlement charge in the third quarter of 2024 and the expected settlement charge associated with the transfer of a portion of IBM Canada's defined benefit pension obligations as described above, which was completed on October 29, 2024. Within total retirement-related plan cost, operating retirement-related plan cost is expected to be approximately $1.0 billion, a decrease of approximately $0.2 billion compared to 2023. Non-operating retirement-related plan cost is expected to be approximately $3.6 billion, an increase of approximately $3.6 billion compared to 2023, due to the pension charges described above and an increase in recognized actuarial losses, partially offset by lower interest costs.
Currency Rate Fluctuations
Changes in the relative values of non-U.S. currencies to the USD affect our financial results and financial position. At September 30, 2024, currency changes resulted in assets and liabilities denominated in most local currencies being translated into fewer dollars than at year-end 2023. We use financial hedging instruments to limit specific currency risks related to foreign currency-based transactions.
Movements in currency, and the fact that we do not hedge 100 percent of our currency exposures, will result in a currency impact to our revenues, profit and cash flows throughout 2024. We execute a hedging program which defers, versus eliminates, the volatility of currency impacts on our financial results. During periods of sustained movements in currency, the marketplace and competition adjust to the changing rates over time.
We translate revenue, cost and expense in our non-U.S. operations at current exchange rates in the reported period. References to “adjusted for currency” or “constant currency” reflect adjustments based upon a simple mathematical formula. However, this constant currency methodology that we utilize to disclose this information does not incorporate any operational actions that management could take to mitigate fluctuating currency rates.
Based on the currency rate movements in the third quarter of 2024, revenue from continuing operations increased 1.5 percent as reported and 2 percent at constant currency compared to the prior year. In the first nine months of 2024, revenue from continuing operations increased 1.6 percent as reported and 3 percent at constant currency, compared to the same period in 2023. In the third quarter of 2024, the impact from currency translation and hedging to year-to-year pre-tax income growth and operating (non-GAAP) pre-tax income growth was immaterial. In the first nine months of 2024, currency translation and hedging negatively impacted year-to-year pre-tax income growth and operating (non-GAAP) pre-tax income growth by approximately $200 million. From a segment perspective, in the third quarter of 2024, the impact from currency translation and hedging to our segments profit margin year-to-year growth was immaterial. In the first nine months of 2024, currency translation and hedging impacted our Infrastructure segment profit margin year-to-year growth by about half a point. We view these amounts as a theoretical maximum impact to our as-reported financial results. Hedging and certain underlying foreign currency transaction gains and losses are allocated to our segment results. Considering the operational responses mentioned above, movements of exchange rates, and the nature and timing of hedging instruments, it is difficult to predict future currency impacts on any particular period.
For non-U.S. subsidiaries and branches that operate in U.S. dollars or whose economic environment is highly inflationary, translation adjustments are reflected in results of operations. Generally, we manage currency risk in these entities by linking prices and contracts to U.S. dollars.

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Management Discussion – (continued)
Liquidity and Capital Resources
In our 2023 Annual Report, on pages 30 to 32, there is a discussion of our liquidity including two tables that present three years of data. The table presented on page 30 includes net cash from operating activities, cash and cash equivalents, restricted cash and short-term marketable securities, and the size of our global credit facilities for each of the past three years. For the nine months ended, or at, as applicable, September 30, 2024, those amounts are $9.1 billion of net cash from operating activities, $13.7 billion of cash and cash equivalents, restricted cash and short-term marketable securities and $10.0 billion in global credit facilities, respectively. While we have no current plans to draw on these credit facilities, they are available as back-up liquidity.
The major rating agencies' ratings on our debt securities at September 30, 2024 appear in the following table and remain unchanged from June 30, 2024.
IBM Ratings:Standard
and Poor's		Moody’s
Investors
Service		Fitch
Ratings
Senior long-term debtA-A3A-
Commercial paperA-2Prime-2F1
We have financial flexibility, supported by our strong liquidity position and cash flows, to operate at a single A credit rating. At September 30, 2024, our debt level was flat from December 31, 2023 driven by maturities; partially offset by proceeds from issuances and currency impacts.
We do not have “ratings trigger” provisions in our debt covenants or documentation, which would allow the holders to declare an event of default and seek to accelerate payments thereunder in the event of a change in credit rating. Our debt covenants are well within the required levels. Our contractual agreements governing derivative instruments contain standard market clauses which can trigger the termination of the agreement if our credit rating were to fall below investment grade. At September 30, 2024, the fair value of those instruments that were in a liability position was $500 million, before any applicable netting, and this position is subject to fluctuations in fair value period to period based on the level of our outstanding instruments and market conditions. We have no other contractual arrangements that, in the event of a change in credit rating, would result in a material adverse effect on our financial position or liquidity.
We prepare our Consolidated Statement of Cash Flows in accordance with applicable accounting standards for cash flow presentation on page 7 of this Form 10-Q and highlight causes and events underlying sources and uses of cash in that format on page 77. For the purpose of running its business, IBM manages, monitors and analyzes cash flows in a different manner.
Management uses free cash flow as a measure to evaluate its operating results, plan shareholder return levels, strategic investments and assess its ability and need to incur and service debt. The entire free cash flow amount is not necessarily available for discretionary expenditures. We define free cash flow as net cash from operating activities less the change in Financing receivables and net capital expenditures, including the investment in software and other asset sales (e.g., certain QRadar SaaS assets). A key objective of the Financing business is to generate strong returns on equity, and our Financing receivables are the basis for that growth. Accordingly, management considers Financing receivables as a profit-generating investment, not as working capital that should be minimized for efficiency. Therefore, management includes presentations of both free cash flow and net cash from operating activities that exclude the effect of Financing receivables.
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Management Discussion – (continued)
The following is management’s view of cash flows for the first nine months of 2024 and 2023 prepared in a manner consistent with the description above.
(Dollars in millions)
For the nine months ended September 30:20242023
Net cash from operating activities per GAAP$9,115 $9,468 
Less: change in Financing receivables1,824 3,119 
Net cash from operating activities, excluding Financing receivables$7,292 $6,349 
Capital expenditures, net (705)(1,226)
Free cash flow $6,586 $5,123 
Acquisitions(2,748)(4,945)
Divestitures705 (4)
Dividends(4,601)(4,522)
Non-Financing debt693 7,572 
Other (includes Financing net receivables and Financing debt)(379)(1,068)
Change in cash, cash equivalents, restricted cash and short-term marketable securities$257 $2,156 
In the first nine months of 2024, we generated $6.6 billion in free cash flow, an increase of $1.5 billion versus the prior-year period. The increase was primarily driven by performance-related improvements within net income and lower net capital expenditures driven by the cash proceeds from the sale of certain QRadar SaaS assets in the current quarter. Proceeds of $0.4 billion from the sale were included within capital expenditures, net and the remaining $0.1 billion were included within net cash from operating activities in the table above. Refer to note 5, “Acquisitions & Divestitures,” for additional information.

Events that could temporarily change the historical cash flow dynamics discussed previously and in our 2023 Annual Report include significant changes in operating results, material changes in geographic sources of cash, unexpected adverse impacts from litigation, future pension funding requirements, periods of severe downturn in the capital markets or the timing of tax payments. Whether any litigation has such an adverse impact will depend on a number of variables, which are more completely described in note 14, “Contingencies,” in this Form 10-Q. With respect to pension funding, we expect to make legally mandated pension plan contributions to certain non-U.S. defined benefit plans of approximately $100 million in 2024. Contributions related to all retirement-related plans are expected to be approximately $1.4 billion in 2024. Refer to "Retirement-Related Plans" for additional information. Financial market performance could increase the legally mandated minimum contributions in certain non-U.S. countries that require more frequent remeasurement of the funded status. We are not quantifying any further impact from pension funding because it is not possible to predict future movements in the capital markets or changes in pension plan funding regulations. In 2024, we are not legally required to make any contributions to the U.S. defined benefit pension plans.
Our cash flows are sufficient to fund our current operations and obligations, including investing and financing activities such as dividends and debt service. When additional requirements arise, we have several liquidity options available. These options may include the ability to borrow additional funds at reasonable interest rates and utilizing our committed global credit facilities. Our overall shareholder payout remains at a comfortable level and we remain fully committed to our long-standing dividend policy.
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Management Discussion – (continued)
Financing
Financing is a reportable segment that facilitates IBM clients’ acquisition of hardware, software and services by providing financing solutions, while generating solid returns on equity.
Results of Operations
(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the three months ended September 30:20242023
Revenue$181 $186 (2.5)%
Segment profit (1)
$86 $91 (5.9)%

(Dollars in millions)Yr.-to-Yr.
Percent
Change
For the nine months ended September 30:20242023
Revenue$543 $566 (4.1)%
Segment profit (1)
$254 $256 (0.5)%
(1)Prior-year amounts recast to reflect January 2024 segment changes.
For the three months ended September 30, 2024, financing revenue decreased 2.5 percent as reported (1.3 percent adjusted for currency) compared to the prior-year period. For the nine months ended September 30, 2024, financing revenue decreased 4.1 percent as reported (3.1 percent adjusted for currency) compared to the prior-year period. These declines were primarily driven by a reduction in used equipment sales.
Financing segment profit decreased 5.9 percent to $86 million and 0.5 percent to $254 million in the third quarter and first nine months of 2024, respectively, compared to the prior-year period. The decreases in segment profit for both periods were primarily due to a reduction in used equipment sales. Financing segment profit margin decreased 1.7 points to 47.5 percent and increased 1.7 points to 46.9 percent in the third quarter and first nine months of 2024, respectively, compared to the prior-year period.

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Management Discussion – (continued)
Financial Position
(Dollars in millions)At September 30, 2024At December 31, 2023
Cash and cash equivalents$403 $555 
Client financing receivables:
Net investment in sales-type and direct financing leases (1)
3,792 4,237 
Client loans5,731 6,486 
Total client financing receivables$9,523 $10,723 
Commercial financing receivables:  
Held for investment670 1,155 
Held for sale509 692 
Other receivables15 26 
Total external receivables (2)
$10,716 $12,596 
Intercompany assets (3)
740 963 
Other assets211 294 
Total assets$12,070 $14,409 
Debt (4)
$10,355 $11,879 
Other liabilities (5) (6)
565 1,205 
Total liabilities (5)
$10,920 $13,085 
Total equity (5)
$1,151 $1,324 
Total liabilities and equity$12,070 $14,409 
(1)Includes deferred initial direct costs which are expensed in IBM’s consolidated financial results.
(2)The change in total external receivables of $1.9 billion and the $1.8 billion change in Financing segment’s receivables disclosed in the free cash flow presentation on page 81 is primarily attributable to currency impacts.
(3)Total amount is eliminated for purposes of IBM’s consolidated financial results and therefore does not appear in the Consolidated Balance Sheet.
(4)Financing segment debt is primarily comprised of intercompany loans.
(5)Prior-year amounts recast to reflect January 2024 segment change. Other liabilities have been reclassified to conform to the change in 2024 presentation.
(6)Includes intercompany payables of $0.4 billion at December 31, 2023. There were no intercompany payables outstanding at September 30, 2024. These intercompany payables were eliminated for purposes of IBM’s consolidated financial results.


Financing Segment Receivables and Allowances
The following table presents external Financing segment receivables excluding receivables classified as held for sale, and immaterial miscellaneous receivables.
(Dollars in millions)At September 30, 2024At December 31, 2023
Amortized cost (1)
$10,324 $12,034 
Specific allowance for credit losses104 111 
Unallocated allowance for credit losses27 45 
Total allowance for credit losses131 156 
Net financing receivables$10,193 $11,878 
Allowance for credit losses coverage1.3 %1.3 %
(1)Includes deferred initial direct costs which are expensed in IBM’s consolidated financial results.

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Management Discussion – (continued)
The percentage of Financing segment receivables reserved was 1.3 percent at both September 30, 2024 and December 31, 2023.
We continue to apply our rigorous credit policies. Approximately 75 percent of the total external portfolio was with investment grade clients, an increase of 3 points as compared to December 31, 2023. This investment grade percentage is based on the credit ratings of the companies in the portfolio and reflects certain mitigation actions taken to reduce the risk to IBM.

For additional information relating to the company's credit quality and mitigation actions, including sales of receivables, refer to note 9, “Financing Receivables.”
Return on Equity Calculation
For Three Months Ended September 30,For Nine Months Ended September 30,
(Dollars in millions)2024
2023 (1)
2024
2023 (1)
Numerator:  
Financing after-tax segment profit (2)
$70 $79 $207 $214 
Annualized after-tax segment profit (A)
$280 $315 $276 $285 
Denominator:    
Average Financing equity (B) (3)
$1,191 $1,137 $1,202 $1,219 
Financing return on equity (A)/(B)
23.5 %27.7 %23.0 %23.4 %
(1)Prior-year amounts recast to reflect January 2024 segment changes.
(2)Calculated based upon an estimated tax rate, which is a function of IBM’s provision for income taxes determined on a consolidated basis.
(3)Average of the ending equity for Financing for the last two quarters and four quarters, for the three months ended September 30 and for the nine months ended September 30, respectively.
Return on equity was 23.5 percent compared to 27.7 percent for the three months ended September 30, 2024, and 2023, respectively. The decrease was driven by a decrease in net income. Return on equity was 23.0 percent compared to 23.4 percent for the nine months ended September 30, 2024, and 2023, respectively. The decrease was primarily driven by a decrease in net income partially offset by a lower average equity balance.
Residual Value
The following table presents the recorded amount of unguaranteed residual value for sales-type and direct financing leases at September 30, 2024 and December 31, 2023. In addition, the table presents the run out of when the unguaranteed residual value assigned to equipment on leases at September 30, 2024 is expected to be returned to the company. The unguaranteed residual value for operating leases at September 30, 2024 and December 31, 2023 was not material. For additional information related to the company's residual value, refer to note A, "Significant Accounting Policies," in the company's 2023 Annual Report.

Unguaranteed Residual Value
At December 31, 2023At September 30,
2024		Estimated Run Out of September 30, 2024 Balance
(Dollars in millions)2024202520262027 and Beyond
Sales-type and direct financing leases$458 $457 $13 $133 $119 $191 


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Management Discussion – (continued)
GAAP Reconciliation
The tables below provide a reconciliation of our income statement results as reported under GAAP to our operating earnings presentation which is a non-GAAP measure. Management’s calculation of operating (non-GAAP) earnings, as presented, may differ from similarly titled measures reported by other companies. Refer to the “Operating (non-GAAP) Earnings” section for management’s rationale for presenting operating earnings information.
(Dollars in millions except per share amounts)GAAPAcquisition-
Related
Adjustments
Retirement-
Related
Adjustments (1)
U.S. Tax Reform
Impacts 		Operating
(non-GAAP)
For the three months ended September 30, 2024:
Gross profit$8,420 $192 $— $— $8,612 
Gross profit margin56.3 %1.3 pts. — pts. — pts. 57.5 %
SG&A$4,911 $(300)$— $— $4,611 
Other (income) and expense $2,244 $— $(2,797)$— $(553)
Total expense and other (income)
$9,222 $(300)$(2,797)$— $6,125 
Pre-tax income/(loss) from continuing operations$(802)$492 $2,797 $— $2,487 
Pre-tax margin from continuing operations(5.4)%3.3 pts. 18.7 pts. — pts. 16.6 %
Provision for/(benefit from) income taxes (2)
$(485)$119 $700 $(2)$332 
Effective tax rate60.4 %(7.2)pts. (39.8)pts. (0.1)pts. 13.4 %
Income/(loss) from continuing operations$(317)$373 $2,097 $2 $2,155 
Income/(loss) margin from continuing operations (2.1)%2.5 pts. 14.0 pts. 0.0 pts. 14.4 %
Diluted earnings/(loss) per share from continuing operations (3)
$(0.34)$0.40 $2.27 $0.00 $2.30 


(Dollars in millions except per share amounts)GAAPAcquisition-
Related
Adjustments		Retirement-
Related
Adjustments		U.S. Tax Reform
Impacts		Operating
(non-GAAP)
For the three months ended September 30, 2023:
Gross profit$8,023 $162 $— $— $8,185 
Gross profit margin54.4 %1.1 pts. — pts. — pts. 55.5 %
SG&A$4,458 $(277)$— $— $4,181 
Other (income) and expense$(215)$— $12 $— $(203)
Total expense and other (income)$6,150 $(277)$12 $— $5,885 
Pre-tax income from continuing operations$1,873 $438 $(12)$— $2,299 
Pre-tax margin from continuing operations12.7 %3.0 pts. (0.1)pts. — pts. 15.6 %
Provision for income taxes (2)
$159 $99 $(14)$24 $268 
Effective tax rate8.5 %2.7 pts. (0.5)pts. 1.0 pts. 11.7 %
Income from continuing operations$1,714 $340 $1 $(24)$2,031 
Income margin from continuing operations11.6 %2.3 pts. 0.0 pts. (0.2)pts. 13.8 %
Diluted earnings per share from continuing operations$1.86 $0.37 $0.00 $(0.03)$2.20 
(1)2024 includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $2.7 billion ($2.0 billion net of tax). Refer to note 18, "Retirement-Related Benefits," for additional information.
(2)The tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the GAAP pre-tax income which employs an annual effective tax rate method to the results.
(3)Operating (non-GAAP) earnings per share was calculated using 938.4 million shares, which includes 14.9 million dilutive potential shares under our stock-based compensation plans and contingently issuable shares. Due to the GAAP net loss for the three months ended September 30, 2024, these dilutive potential shares were excluded from the GAAP loss per share calculation as the effect would have been antidilutive. The difference in share count resulted in an additional (0.04) reconciling item.



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Management Discussion – (continued)
(Dollars in millions except per share amounts)GAAPAcquisition-
Related
Adjustments
Retirement-
Related
Adjustments (1)
U.S. Tax Reform
Impacts (2)
Operating
(non-GAAP)
For the nine months ended September 30, 2024:
Gross profit$25,112 $533 $— $— $25,645 
Gross profit margin55.6 %1.2 pts. — pts. — pts. 56.7 %
SG&A$14,823 $(854)$— $— $13,969 
Other (income) and expense (3)
$1,694 $(68)$(2,991)$— $(1,364)
Total expense and other (income)
$22,621 $(922)$(2,991)$— $18,709 
Pre-tax income from continuing operations$2,491 $1,454 $2,991 $— $6,936 
Pre-tax margin from continuing operations5.5 %3.2 pts. 6.6 pts. — pts. 15.3 %
Provision for/(benefit from) income taxes (4)
$(597)$374 $731 $434 $942 
Effective tax rate(24.0)%10.4 pts. 20.9 pts. 6.3 pts. 13.6 %
Income from continuing operations$3,088 $1,081 $2,259 $(434)$5,994 
Income margin from continuing operations6.8 %2.4 pts. 5.0 pts. (1.0)pts. 13.3 %
Diluted earnings per share from continuing operations $3.30 $1.16 $2.42 $(0.46)$6.41 

(Dollars in millions except per share amounts)GAAPAcquisition-
Related
Adjustments		Retirement-
Related
Adjustments		U.S. Tax Reform
Impacts		Operating
(non-GAAP)
For the nine months ended September 30, 2023:   
Gross profit$24,033 $460 $— $— $24,492 
Gross profit margin54.0 %1.0 pts.— pts. — pts. 55.1 %
SG&A$14,212 $(768)$— $— $13,444 
Other (income) and expense$(721)$(2)$16 $— $(707)
Total expense and other (income)$19,102 $(770)$16 $— $18,348 
Pre-tax income from continuing operations$4,931 $1,229 $(16)$— $6,144 
Pre-tax margin from continuing operations11.1 %2.8 pts. 0.0 pts. — pts. 13.8 %
Provision for income taxes (4)
$702 $277 $(27)$(91)$861 
Effective tax rate14.2 %1.7 pts. (0.4)pts. (1.5)pts. 14.0 %
Income from continuing operations
$4,229 $953 $11 $91 $5,283 
Income margin from continuing operations
9.5 %2.1 pts. 0.0 pts. 0.2 pts. 11.9 %
Diluted earnings per share from continuing operations$4.59 $1.04 $0.01 $0.10 $5.74 
(1)2024 includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $2.7 billion ($2.0 billion net of tax). Refer to note 18, "Retirement-Related Benefits," for additional information.
(2)2024 includes a benefit from income taxes due to the resolution of certain tax audit matters in the first quarter.
(3)Acquisition-Related Adjustments in 2024 includes a realized loss of $68 million on foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, “Derivative Financial Instruments,” for additional information.
(4)The tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the GAAP pre-tax income which employs an annual effective tax rate method to the results.
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Management Discussion – (continued)
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company’s current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company’s innovation initiatives; damage to the company’s reputation; risks from investing in growth opportunities; failure of the company’s intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the company’s ability to successfully manage acquisitions, alliances and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities and higher debt levels; fluctuations in financial results; impact of local legal, economic, political, health and other conditions; the company’s failure to meet growth and productivity objectives; ineffective internal controls; the company’s use of accounting estimates; impairment of the company’s goodwill or amortizable intangible assets; the company’s ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; reliance on third party distribution channels and ecosystems; cybersecurity and data privacy considerations; adverse effects related to climate change and environmental matters; tax matters; legal proceedings and investigatory risks; the company’s pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; potential failure of the separation of Kyndryl Holdings, Inc. to qualify for tax-free treatment; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company’s Form 10-Qs, Form 10-K and in the company’s other filings with the U.S. Securities and Exchange Commission or in materials incorporated therein by reference. Any forward-looking statement in this Form 10-Q speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.
Item 4. Controls and Procedures
The company’s management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the company’s disclosure controls and procedures were effective as of the end of the period covered by this report. There has been no change in the company’s internal control over financial reporting that occurred during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.
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Part II — Other Information
Item 1. Legal Proceedings
Refer to note 14, “Contingencies,” in this Form 10-Q.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities
The following table provides information relating to the company’s repurchase of common stock for the third quarter of 2024.
PeriodTotal Number
of Shares
Purchased		Average
Price Paid
per Share
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Program
Approximate
Dollar Value
of Shares that
May Yet Be
Purchased Under
The Program (1)
July 1, 2024 - July 31, 2024—$— —$2,007,611,768 
August 1, 2024 - August 31, 2024—$— —$2,007,611,768 
September 1, 2024 - September 30, 2024—$— —$2,007,611,768 
Total—$— — 
(1)On October 30, 2018, the Board of Directors authorized $4.0 billion in funds for use in the company’s common stock repurchase program. The company stated that it would repurchase shares on the open market or in private transactions depending on market conditions. The common stock repurchase program does not have an expiration date. This table does not include shares tendered to satisfy the exercise price in connection with cashless exercises of employee stock options or shares tendered to satisfy tax withholding obligations in connection with employee equity awards. The company suspended its share repurchase program at the time of the Red Hat closing in 2019.
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Item 6. Exhibits
Exhibit Number
10.1
22
31.1
31.2
32.1
32.2
101.INSXBRL Instance Document – the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
International Business Machines Corporation
(Registrant)
Date: October 30, 2024
By:/s/ Nicolás A. Fehring
Nicolás A. Fehring
Vice President and Controller
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