PROF WASHINGTON WATSON 6/1/2020

Zichun Gao

Professor Karen

Acct 1A

04/07/2020

Annual Report

International Business Machines Corporation（IBM） Annual report

6.International Business Machines Corporation

7.Stock on Feb 18 2020 :$ 151.10

Dividend: Yes, 2019:$ 5.7

8. Revenue Recognition：

● Revenue Recognized for Performance Obligations Satisfied (or Partially

Satisfied) in Prior Periods：For the year ended December 31, 2019, revenue

was reduced by $50 million for performance obligations satisfied (or partially

satisfied) in previous periods mainly due to changes in estimates on contracts

with cost-to-cost measures of progress. Refer to note A, “Significant

Accounting Policies,” for additional information on these contracts and

estimates of costs to complete.

● Inventory：Financing receivables primarily consist of client loan and

installment payment receivables (loans), investment in sales-type and direct

financing leases, and commercial financing receivables. Client loan and

installment payment receivables (loans) are provided primarily to clients to

finance the purchase of hardware, software and services. Payment terms on

these financing arrangements are generally for terms up to seven years.

Client loans and installment payment financing contracts are priced

independently at competitive market rates. Investment in sales-type and direct

financing leases relates principally to the company’s Systems products and

are for terms ranging generally from two to six years. Commercial financing

receivables relate primarily to inventory and accounts receivable financing for

dealers and remarketers of IBM and OEM products. Payment terms for

inventory and accounts receivable financing generally range from 30 to 90

days.

Beginning in the second quarter of 2019 and continuing throughout the year,

the company wound down the portion of its commercial financing operations

which provides short-term working capital solutions for OEM information

technology suppliers, distributors and resellers, which has resulted in a

significant reduction of commercial financing receivables. This wind down is

consistent with IBM’s capital allocation strategy and high-value focus. IBM

Global Financing will continue to provide differentiated end-to-end financing

solutions, including commercial financing in support of IBM partner

relationships.

● Property, plant and equipment and intangible assets and key money: Certain

nonfinancial assets such as property, plant and equipment, land, goodwill and

intangible assets are also subject to nonrecurring fair value measurements if

they are deemed to be impaired. The impairment models used for

nonfinancial assets depend on the type of asset. There were no material

impairments of nonfinancial assets for the years ended December 31, 2019,

2018 and 2017.The net carrying amount of intangible assets increased

$12,147 million during the year ended December 31, 2019, primarily due to

the acquisition of Red Hat and additions resulting from capitalized software,

partially offset by intangible asset amortization. Intangible assets of $13,472

million gener

9.

○ Revenue​ 2019: $77,147 2018:$79,591 %= -3.1

○ Expense 2019: $20,604＋5,989－(648)－(968)＋1,344=$26,322

Expense 2018:$19,366＋5,379－(1,026)＋1,152＋723＝$25,594

%=2.8

○ Income from operation 2019:$ 9,435* 2018: ​$ 8,723*​ %= 8.2

○ Net income 2019: $9,431 2018:$8,728 %= 8.1

10.Large use of investing activities: 2019 Capital Expenditure$6,720

Large use of financing activities:2019 Proceed from other credit facility borrowing

$31,825

11.​IBM's Cloud Selected by Movius to Provide Improved Services

IBM recently announced that it uses its public cloud to allow customers to communicate.

Also use MultiLine application, which can enable IBM to more effectively protect

customer privacy and increase IBM's revenue.By observing the social situation, IBM

quickly carried out digital transformation, seized the market opportunities, and obtained

the results of revenue growth. The implementation of this transformation has not only

increased customer demand, but also responded to the transformation of the

technological era, and can also be stable in the future for a long time. In addition, IBM

also increased the company's revenue by 19% compared with previous years through

the acquisition of Red Hat and Cloud Paks.