# Segment Information

IBM operates primarily in the single industry segment encompassing information-handling systems, equipment and services. This segment represents more than 90% of consolidated gross income, operating profit and identifiable assets. The schedule on the next page shows gross income by industry segments and by classes of similar products or services within the information-handling segment.

Financial information by geographic area for the years 1985, 1984 and 1983 is summarized below to provide a better understanding of IBM's operations. Material interdependencies and overlaps exist among IBM's operating units and, therefore, the information may not be indicative of the financial results of, or investments in, the reported areas were they independent organizations.

## Geographic Areas (Dollars in millions)

| Geographic Area | 1985 | 1984 | 1983 |
| --- | --- | --- | --- |
| United States |  |  |  |
| Gross income – Customers | $28,511 | $27,371 | $23,127 |
| Interarea transfers | 3,487 | 3,074 | 2,275 |
| Total |  |  |  |
| Net earnings |  |  |  |
| Assets at December 31 |  |  |  |
| Europe/Middle East/Africa |  |  |  |
| Gross income – Customers | $14,065 | $11,996 | $11,324 |
| Interarea transfers | 520 | 363 | 235 |
| Total |  |  |  |
| Net earnings |  |  |  |
| Assets at December 31 |  |  |  |
| Americas/Far East |  |  |  |
| Gross income – Customers | $7,480 | $6,570 | $5,729 |
| Interarea transfers | 1,173 | 1,124 | 728 |
| Total |  |  |  |
| Net earnings |  |  |  |
| Assets at December 31 |  |  |  |
| Eliminations |  |  |  |
| Gross income | $(5,180) | $(4,561) | $(3,238) |
| Net earnings | 21 | 9 | 47 |
| Assets | $(985) | $(1,050) | $(961) |
| Consolidated |  |  |  |
| Gross income | $50,056 | $45,937 | $40,180 |
| Net earnings | $6,555 | $6,582 | $5,485 |
| Assets at December 31 |  |  |  |
| $52,634 | $42,808 | $37,461 |

## Notes:

Non-U.S. subsidiaries which operate in a local currency environment account for approximately 85% of the company's non-U.S. gross income. The remaining 15% is from subsidiaries and branches, predominantly in the Americas/Far East area, which operate in U.S. dollars or whose economic environment is highly inflationary.

In the Europe/Middle East/Africa area, European operations accounted for approximately 95% of gross income in 1985, 1984 and 1983.

Interarea transfers, consisting principally of completed machines, subassemblies and parts, are generally priced at cost plus an appropriate service charge, applied consistently throughout the world. The cost and service charges that relate to asset transfers are capitalized and depreciated or amortized by the importing area. Interarea accounts receivable, the unamortized portion of service charges, and the net change during the year in unamortized service charges have been eliminated in consolidation.