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IBM REPORTS 2013 FOURTH-QUARTER AND FULL-YEAR RESULTS
Fourth-Quarter 2013:
o Diluted EPS:
- GAAP: $5.73, up 12 percent;
- Operating (non-GAAP): $6.13, up 14 percent;
o Net income:
- GAAP: $6.2 billion, up 6 percent;
- Operating (non-GAAP): $6.6 billion, up 8 percent;
o Pre-tax income:
- GAAP: $7.0 billion, down 11 percent;
- Operating (non-GAAP): $7.4 billion, down 8 percent;
o Gross profit margin:
- GAAP: 51.7 percent, down 0.1 points;
- Operating (non-GAAP): 52.6 percent, up 0.3 points;
o Revenue of $27.7 billion, down 5 percent, down 3 percent adjusting for currency;
– Software, Services and Global Financing each grew, adjusting for currency:
-- Software up 3 percent, up 4 percent adjusting for currency;
-- Services down 2 percent, up 1 percent adjusting for currency;
-- Global Financing revenue flat, up 3 percent adjusting for currency;
- Systems and Technology revenue declined 26 percent, down 25 percent adjusting
for currency;
o Services backlog of $143 billion, up 2 percent, up 5 percent adjusting for
currency;
o Free cash flow of $8.4 billion.
Full-Year 2013:
o Diluted EPS:
- GAAP: $14.94, up 4 percent;
- Operating (non-GAAP): $16.28, up 7 percent;
- Operating (non-GAAP)excluding second-quarter workforce rebalancing
charges, $16.99;
o Net income:
- GAAP: $16.5 billion, down 1 percent;
- Operating (non-GAAP): $18.0 billion, up 2 percent;
o Pre-tax income:
- Software, Services and Global Financing each increased segment profit:
-- Software: $11.1 billion, up approximately $300 million;
-- Services: $10.2 billion, up more than $250 million;
-- Global Financing: $2.2 billion, up more than $100 million;
- Systems and Technology segment profit declined $1.7 billion, to a loss of more
than $500 million;
o Revenue of $99.8 billion, down 5 percent, down 2 percent adjusting for currency;
o Business Analytics revenue of $15.7 billion, up 9 percent;
o Smarter Planet revenue up approximately 20 percent;
o Cloud revenue of $4.4 billion, up 69 percent:
– Fourth-quarter annual revenue run rate of more than $2 billion delivered as a
service;
o Free cash flow of $15.0 billion.
Full-Year 2014 Expectation:
o GAAP EPS of at least $17.00. Operating (non-GAAP) EPS of at least $18.00 compared
with $16.28 for 2013, an increase of more than 10 percent.
ARMONK, N.Y., January 21, 2014 . . . IBM (NYSE: IBM) today announced fourthquarter 2013 diluted earnings of $5.73 per share, compared with diluted earnings of
$5.13 per share in the fourth quarter of 2012, an increase of 12 percent. Operating
(non-GAAP) diluted earnings were $6.13 per share, compared with operating diluted
earnings of $5.39 per share in the fourth quarter of 2012, an increase of 14 percent.
Fourth-quarter net income, which includes benefits from tax audit settlements,
was $6.2 billion compared with $5.8 billion in the fourth quarter of 2012, an increase
of 6 percent. Operating (non-GAAP) net income was $6.6 billion compared with $6.1
billion in the fourth quarter of 2012, an increase of 8 percent.
Total revenues for the fourth quarter of 2013 of $27.7 billion decreased 5
percent (down 3 percent adjusting for currency) from the fourth quarter of 2012.
"We continued to drive strong results across much of our portfolio and again grew
earnings per share in 2013. While we made solid progress in businesses that are
powering our future, in view of the company’s overall full year results, my senior
team and I have recommended that we forgo our personal annual incentive payments for
2013,” said Ginni Rometty, IBM chairman, president and chief executive officer.
”As we enter 2014, we will continue to transform our business and invest
aggressively in the areas that will drive growth and higher value. We remain on track
toward our 2015 roadmap for operating EPS of at least $20, a step in our long-term
strategy of industry leadership and continuous transformation.””
Fourth-Quarter GAAP - Operating (non-GAAP) Reconciliation
Fourth-quarter operating (non-GAAP) diluted earnings exclude $0.40 per share of
net charges: $0.25 per share for the amortization of purchased intangible assets and
other acquisition-related charges, and $0.15 per share for retirement-related items
driven by changes to plan assets and liabilities primarily related to market
performance.
Full-Year 2014 Expectation
IBM said that it expects to deliver full-year 2014 GAAP earnings per share of at
least $17.00; and operating (non-GAAP) earnings per share of at least $18.00. The
2014 operating (non-GAAP) earnings exclude $1.00 per share of charges for amortization
of purchased intangible assets, other acquisition-related charges, and retirementrelated items driven by changes to plan assets and liabilities primarily related to
market performance.
Software
Revenues from the Software segment were $8.1 billion, an increase of 3 percent
(up 4 percent, adjusting for currency) from the fourth quarter of 2012. Software
pre-tax income of $4.2 billion increased 6 percent year over year.
Revenues from IBM’s key middleware products, which include WebSphere,
Information Management, Tivoli, Social Workforce Solutions and Rational products, were
$5.8 billion, an increase of 5 percent (up 6 percent, adjusting for currency) versus
the fourth quarter of 2012. Operating systems revenues of $687 million were down 3
percent (down 2 percent, adjusting for currency) compared with the prior-year quarter.
Revenues from the WebSphere family of software products increased 14 percent year
over year. Information Management software revenues increased 5 percent. Revenues
from Tivoli software increased 1 percent. Revenues from Social Workforce Solutions
increased 2 percent, and Rational software was flat.
Services
Global Technology Services segment revenues decreased 4 percent (down 1 percent
adjusting for currency) to $9.9 billion, from the fourth quarter of 2012. Global
Business Services segment revenues were up 1 percent (up 4 percent, adjusting for
currency) to $4.7 billion.
Pre-tax income from Global Technology Services decreased 2 percent; pre-tax
margin increased to 19.5 percent. Global Business Services pre-tax income increased
12 percent; pre-tax margin increased to 19.1 percent.
The estimated services backlog at December 31 was $143 billion, up 2 percent
(up 5 percent, adjusting for currency).
Financing
Global Financing segment revenues were flat (up 3 percent, adjusting for
currency) in the fourth quarter at $534 million. Pre-tax income for the segment
increased 14 percent to $589 million.
Hardware
Revenues from the Systems and Technology segment totaled $4.3 billion for the
quarter, down 26 percent from the fourth quarter of 2012. Systems and Technology
pre-tax income was $0.2 billion, a decrease of $768 million.
Total systems revenues decreased 25 percent. Revenues from System z mainframe
server products decreased 37 percent compared with the year-ago period. Total
delivery of System z computing power, as measured in MIPS (millions of instructions
per second), decreased 26 percent versus the prior year. Revenues from Power Systems
decreased 31 percent compared with the 2012 period. Revenues from System x decreased
16 percent. Revenues from System Storage decreased 13 percent. Revenues from
Microelectronics OEM decreased 33 percent.
Geographic Regions
The Americas’ fourth-quarter revenues were $12.2 billion, down 3 percent (down 2
percent, adjusting for currency) from the 2012 period. Revenues from Europe/Middle
East/Africa were $9.2 billion, up 1 percent (down 2 percent, adjusting for currency).
Asia-Pacific revenues decreased 16 percent (down 6 percent, adjusting for currency) to
$5.9 billion. OEM revenues were $452 million, down 33 percent compared with the 2012
fourth quarter.
Growth Markets
Revenues from the company’s growth markets decreased 9 percent (down 6 percent,
adjusting for currency). Revenues in the BRIC countries — Brazil, Russia, India and
China — decreased 14 percent (down 11 percent, adjusting for currency).
Gross Profit
The company’s total gross profit margin was 51.7 percent in the 2013 fourth
quarter compared with 51.8 percent in the 2012 fourth-quarter period. Total operating
(non-GAAP) gross profit margin was 52.6 percent in the 2013 fourth quarter compared
with 52.3 percent in the 2012 fourth-quarter period, driven by an increase in Services
and a mix to Software.
Expense
Total expense and other income was flat at $7.4 billion compared with the prioryear period. S,G&A expense of $6.0 billion increased 1 percent year over year
compared with prior-year expense. R,D&E expense of $1.6 billion decreased 1 percent
compared with the year-ago period. Intellectual property and custom development
income decreased to $201 million compared with $227 million a year ago. Other
(income) and expense was income of $113 million compared with prior-year income of $47
million. Interest expense increased to $113 million compared with $109 million in the
prior year.
Total operating (non-GAAP) expense and other income decreased 1 percent to $7.1
billion compared with the prior-year period. Operating (non-GAAP) S,G&A expense of
$5.8 billion was flat compared with prior-year expense. Operating (non-GAAP) R,D&E
expense of $1.6 billion decreased 2 percent compared with the year-ago period.
***
Pre-tax income decreased 11 percent to $7.0 billion; total operating (non-GAAP)
pre-tax income decreased 8 percent to $7.4 billion. Pre-tax margin was 25.1 percent,
down 1.6 points; total operating (non-GAAP) pre-tax margin was 26.8 percent, down
0.8 points.
IBM’s tax rate was 11.2 percent, down 14.3 points year over year; total operating
(non-GAAP) tax rate was 11.0 percent, down 13.5 points compared to the year-ago
period, due to discrete period tax items, including benefits from tax audit
settlements.
Net income margin increased 2.4 points to 22.3 percent; total operating
(non-GAAP) net income margin was 23.9 percent, an increase of 3.0 points.
The weighted-average number of diluted common shares outstanding in the
fourth-quarter 2013 was 1.08 billion compared with 1.14 billion shares in the same
period of 2012.
In the quarter, IBM generated free cash flow of $8.4 billion excluding Global
Financing receivables, down $1.1 billion year over year.
Full-Year 2013 Results
Net income for the year ended December 31, 2013 was $16.5 billion compared with
$16.6 billion in the prior year, a decrease of 1 percent. Operating (non-GAAP) net
income was $18.0 billion compared with $17.6 billion in 2012, an increase of 2
percent.
Diluted earnings were $14.94 per share compared with $14.37 per diluted share in
2012, an increase of 4 percent. Operating (non-GAAP) diluted earnings were $16.28 per
share, compared with operating diluted earnings of $15.25 per share in 2012, an
increase of 7 percent. Operating (non-GAAP) diluted earnings per share, excluding
second-quarter workforce rebalancing charges, were $16.99.
Revenues for 2013 totaled $99.8 billion, a decrease of 5 percent (down 2 percent
adjusting for currency), compared with $104.5 billion in 2012.
GAAP - Operating (non-GAAP) Reconciliation
Operating (non-GAAP) diluted earnings for the year exclude $1.34 per share of net
charges: $0.68 per share for the amortization of purchased intangible assets and other
acquisition-related charges, and $0.66 per share for retirement-related items driven
by changes to plan assets and liabilities primarily related to market performance.
Geographic Regions
From a geographic perspective, the Americas’ full-year revenues were $43.2
billion, a decrease of 3 percent (down 2 percent adjusting for currency) from the 2012
period. Revenues from Europe/Middle East/Africa were $31.6 billion, flat year to year
(down 2 percent, adjusting for currency). Asia-Pacific revenues decreased 12 percent
to $22.9 billion (down 3 percent adjusting for currency). OEM revenues were $2.0
billion, down 13 percent compared with 2012 (down 12 percent adjusting for currency).
Growth Markets
Revenues from the company’s growth markets decreased 5 percent (down 2 percent,
adjusting for currency), and represents 23 percent of IBM’s total geographic revenue.
Revenues in the BRIC countries — Brazil, Russia, India and China — decreased 8 percent
(down 6 percent, adjusting for currency).
Segments
Software segment revenues in 2013 totaled $25.9 billion, an increase of 2 percent
(up 3 percent, adjusting for currency). Total Global Services revenues decreased
3 percent (flat adjusting for currency). Revenues from the Global Technology Services
segment totaled $38.6 billion, a decrease of 4 percent (down 1 percent, adjusting for
currency) compared with 2012. Revenues from the Global Business Services segment were
$18.4 billion, down 1 percent (up 3 percent, adjusting for currency). Global
Financing segment revenues totaled $2.0 billion, flat year to year (up 3 percent,
adjusting for currency). Systems and Technology segment revenues were $14.4 billion,
a decrease of 19 percent (down 18 percent, adjusting for currency).
***
The company’s total gross profit margin was 48.6 percent in 2013 compared with
48.1 percent in 2012. Overall gross profit margins improved year over year for the
10th consecutive year. Total operating (non-GAAP) gross profit margin was 49.7
percent in the 2013 period compared with 48.7 percent in the 2012 period, with an
increase in Services and a mix to Software.
The weighted-average number of diluted common shares outstanding in 2013 was
1.10 billion compared with 1.16 billion shares in 2012. As of December 31, 2013,
there were 1.05 billion basic common shares outstanding.
Debt, including Global Financing, totaled $39.7 billion, compared with $33.3
billion at year-end 2012. From a management segment view, Global Financing debt
totaled $27.5 billion versus $24.5 billion at year-end 2012, resulting in a debt-toequity ratio of 7.2 to 1. Non-global financing debt totaled $12.2 billion, an
increase of $3.4 billion since year-end 2012, resulting in a debt-to-capitalization
ratio of 39.0 percent, up from 36.1 percent.
IBM ended 2013 with $11.1 billion of cash on hand and generated free cash flow of
$15.0 billion excluding Global Financing receivables, down approximately $3.2 billion
year over year. The company returned $17.9 billion to shareholders through $4.1
billion in dividends and $13.9 billion of gross share repurchases. The company’s
balance sheet remains strong and is well positioned to support the business over the
long term.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein,
statements contained in this release 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 the
following: a downturn in economic environment and corporate IT spending budgets; the
company’s failure to meet growth and productivity objectives; a failure of the
company’s innovation initiatives; 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; cybersecurity
and data privacy considerations; fluctuations in financial results and purchases,
impact of local legal, economic, political and health conditions; adverse effects from
environmental matters, tax matters and the company’s pension plans; ineffective
internal controls; the company’s use of accounting estimates; the company’s ability to
attract and retain key personnel and its reliance on critical skills; impacts of
relationships with critical suppliers and business with government clients; currency
fluctuations and customer financing risks; impact of changes in market liquidity
conditions and customer credit risk on receivables; reliance on third party
distribution channels; the company’s ability to successfully manage acquisitions and
alliances; 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 (SEC) or in materials
incorporated therein by reference. Any forward-looking statement in this release
speaks only as of the date on which it is made. The company assumes no obligation to
update or revise any forward-looking statements.
Presentation of Information in this Press Release
In an effort to provide investors with additional information regarding the
company’s results as determined by generally accepted accounting principles (GAAP),
the company has also disclosed in this press release the following non-GAAP
information which management believes provides useful information to investors:
IBM results and expectations –
• presenting operating (non-GAAP) earnings per share amounts and related income
statement items;
• presenting non-global financing debt-to-capitalization ratio;
• adjusting for free cash flow;
• adjusting for currency (i.e., at constant currency);
• adjusting for workforce rebalancing.
The rationale for management’s use of non-GAAP measures is included as part of
the supplementary materials presented within the fourth-quarter earnings materials.
These materials are available on the IBM investor relations Web site at
www.ibm.com/investor and are being included in Attachment II (“Non-GAAP Supplementary
Materials”) to the Form 8-K that includes this press release and is being submitted
today to the SEC.
Conference Call and Webcast
IBM’s regular quarterly earnings conference call is scheduled to begin at
4:30 p.m. EST, today. The Webcast may be accessed via a link at
http://www.ibm.com/investor/events/4q13.phtml. Presentation charts will be available
shortly before the Webcast.
Financial Results Below (certain amounts may not add due to use of rounded numbers;
percentages presented are calculated from the underlying whole-dollar amounts).
INTERNATIONAL BUSINESS MACHINES CORPORATION
COMPARATIVE FINANCIAL RESULTS
(Dollars in millions except per share amounts)
Three Months Ended
December 31,
Percent
2013
2012
Change
------- ------- -------
Twelve Months Ended
December 31,
Percent
2013
2012
Change
------- ------- -------
REVENUE
Global Technology Services
Gross profit margin
$9,917
38.8%
$10,284
37.6%
-3.6%
$38,551
38.1%
$40,236
36.6%
-4.2%
Global Business Services
Gross profit margin
4,747
30.7%
4,720
29.9%
0.6%
18,396
30.9%
18,566
30.0%
-0.9%
Software
Gross profit margin
8,140
90.5%
7,915
90.6%
2.8%
25,932
88.8%
25,448
88.7%
1.9%
System and Technology
Gross profit margin
4,261
38.6%
5,763
44.1%
-26.1%
14,371
35.6%
17,667
39.1%
-18.7%
Global Financing
Gross profit margin
534
43.3%
535
43.8%
-0.1%
2,022
45.6%
2,013
46.5%
0.4%
Other
Gross profit margin
100
-234.8%
87
-73.2%
15.2%
478
-195.6%
577
-71.6%
-17.1%
TOTAL REVENUE
27,699
29,304
-5.5%
99,751
104,507
-4.6%
GROSS PROFIT
Gross profit margin
14,315
51.7%
15,167
51.8%
-5.6%
48,505
48.6%
50,298
48.1%
-3.6%
S,G&A
Expense to revenue
5,989
21.6%
5,921
20.2%
1.2%
23,502
23.6%
23,553
22.5%
-0.2%
R,D&E
Expense to revenue
1,566
5.7%
1,580
5.4%
-0.9%
6,226
6.2%
6,302
6.0%
-1.2%
Intellectual property
and custom development
income
(201)
(227)
-11.5%
(822)
(1,074)
-23.5%
Other (income) and expense
(113)
(47)
142.5%
(327)
(843)
-61.2%
113
109
3.6%
402
459
-12.5%
TOTAL EXPENSE AND
OTHER INCOME
Expense to revenue
7,353
26.5%
7,336
25.0%
0.2%
28,981
29.1%
28,396
27.2%
2.1%
INCOME BEFORE
INCOME TAXES
Pre-tax margin
6,962
25.1%
7,831
26.7%
-11.1%
19,524
19.6%
21,902
21.0%
-10.9%
Provision for income taxes
Effective tax rate
777
11.2%
1,998
25.5%
-61.1%
3,041
15.6%
5,298
24.2%
-42.6%
$6,185
======
22.3%
$5,833
======
19.9%
6.0%
$16,483
=======
16.5%
$16,604
=======
15.9%
-0.7%
EXPENSE AND OTHER INCOME
Interest expense
NET INCOME
Net income margin
EARNINGS PER SHARE
OF COMMON STOCK:
ASSUMING DILUTION
BASIC
WEIGHTED-AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING (M's):
ASSUMING DILUTION
BASIC
$5.73
$5.77
$5.13
$5.19
1,080.0
1,072.5
1,136.4
1,124.7
11.7%
11.2%
$14.94
$15.06
$14.37
$14.53
1,103.0
1,094.5
1,155.4
1,142.5
4.0%
3.6%
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Dollars in Millions)
At
December 31,
2013
------------
At
December 31,
2012
------------
$10,716
350
$10,412
717
10,465
10,667
19,787
18,038
1,584
1,873
444
1,866
-------2,310
1,651
4,488
-------51,350
475
1,812
-------2,287
1,415
4,024
-------49,433
40,475
26,654
-------13,821
40,501
26,505
-------13,996
12,755
5,551
3,051
31,184
3,871
4,639
-------$126,223
========
12,812
945
3,973
29,247
3,787
5,021
-------$119,213
========
$4,633
6,862
7,461
3,893
12,557
4,748
-------40,154
$4,948
9,181
7,952
4,745
11,952
4,847
-------43,625
ASSETS:
Current Assets:
Cash and cash equivalents
Marketable securities
Notes and accounts receivable - trade
(net of allowances of $291 in 2013 and $255 in 2012)
Short-term financing receivables
(net of allowances of $308 in 2013 and $288 in 2012)
Other accounts receivable
(net of allowances of $36 in 2013 and $17 in 2012)
Inventories, at lower of average cost or market:
Finished goods
Work in process and raw materials
Total inventories
Deferred taxes
Prepaid expenses and other current assets
Total Current Assets
Property, plant and equipment
Less: Accumulated depreciation
Property, plant and equipment - net
Long-term financing receivables
(net of allowances of $80 in 2013 and $66 in 2012)
Prepaid pension assets
Deferred taxes
Goodwill
Intangible assets - net
Investments and sundry assets
Total Assets
LIABILITIES:
Current Liabilities:
Taxes
Short-term debt
Accounts payable
Compensation and benefits
Deferred income
Other accrued expenses and liabilities
Total Current Liabilities
Long-term debt
Retirement and nonpension postretirement
benefit obligations
Deferred income
Other liabilities
Total Liabilities
32,856
24,088
16,242
4,108
9,934
-------103,294
20,418
4,491
7,607
-------100,229
51,594
130,042
(137,242)
(21,602)
-------22,792
50,110
117,641
(123,131)
(25,759)
-------18,860
137
-------22,929
-------$126,223
========
124
-------18,984
-------$119,213
========
EQUITY:
IBM Stockholders' Equity:
Common stock
Retained earnings
Treasury stock -- at cost
Accumulated other comprehensive income/(loss)
Total IBM stockholders' equity
Noncontrolling interests
Total Equity
Total Liabilities and Equity
INTERNATIONAL BUSINESS MACHINES CORPORATION
CASH FLOW ANALYSIS
Three Months Ended Twelve Months Ended
December 31,
December 31,
2013
2012
2013
2012
-----------------------
(Dollars in Millions)
Net Cash from Operating Activities per GAAP:
$6,528
$6,346
$17,485
$19,586
(4,151)
-------
(1,304)
-------
(2,906)
-------
10,497
18,789
22,492
(1,059)
(981)
(3,768)
(4,307)
8,401
9,515
15,021
18,185
(495)
50
(1,025)
(5,797)
1,637
(1,455)
13
(957)
(3,006)
(1,571)
(3,056)
297
(4,058)
(13,859)
3,193
(3,722)
599
(3,773)
(11,995)
713
(1,937)
(3,664)
2,400
(802)
$834
========
($1,125)
=======
($63)
=======
($794)
=======
Less: the change in Global Financing (GF)
Receivables
(2,932)
------Net Cash from Operating Activities
(Excluding GF Receivables)
9,460
Capital Expenditures, Net
Free Cash Flow
(Excluding GF Receivables)
Acquisitions
Divestitures
Dividends
Share Repurchase
Non-GF Debt
Other (includes GF Receivables, and
GF Debt)
Change in Cash, Cash Equivalents and
Short-term Marketable Securities
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
FOURTH-QUARTER 2013
----------------------------------------------Pre-tax
--------- Revenue --------Income/ Pre-tax
External Internal
Total
(Loss)
Margin
-------- -------- --------------- -------
(Dollars in Millions)
SEGMENTS
Global Technology Services
Y-T-Y change
$9,917
-3.6%
$262
-11.9%
$10,179
-3.8%
$1,989
-1.9%
19.5%
Global Business Services
Y-T-Y change
4,747
0.6%
169
-7.0%
4,915
0.3%
940
11.7%
19.1%
Software
Y-T-Y change
8,140
2.8%
878
7.7%
9,018
3.3%
4,239
5.5%
47.0%
4,261
-26.1%
170
-8.4%
4,431
-25.5%
206
-78.8%
4.7%
534
-0.1%
654
15.1%
1,188
7.7%
589
13.8%
49.6%
$27,599
-5.5%
$2,133
4.2%
$29,732
-4.9%
$7,964
-4.9%
26.8%
100
(2,133)
(2,033)
(1,002)
$27,699
-5.5%
$0
$27,699
-5.5%
$6,962
-11.1%
Systems and Technology
Y-T-Y change
Global Financing
Y-T-Y change
TOTAL REPORTABLE SEGMENTS
Y-T-Y change
Eliminations / Other
TOTAL IBM CONSOLIDATED
Y-T-Y change
25.1%
FOURTH-QUARTER 2012
----------------------------------------------Pre-tax
--------- Revenue --------Income/ Pre-tax
External Internal
Total
(Loss)
Margin
-------- -------- --------------- -------
(Dollars in Millions)
SEGMENTS
Global Technology Services
$10,284
$297
$10,581
$2,027
19.2%
Global Business Services
4,720
181
4,901
841
17.2%
Software
7,915
815
8,730
4,017
46.0%
Systems and Technology
5,763
186
5,949
974
16.4%
535
568
1,103
518
46.9%
$29,217
$2,048
$31,265
$8,377
26.8%
87
(2,048)
(1,961)
(546)
$29,304
$0
$29,304
$7,831
Global Financing
TOTAL REPORTABLE SEGMENTS
Eliminations / Other
TOTAL IBM CONSOLIDATED
26.7%
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Dollars in Millions)
TWELVE-MONTHS 2013
----------------------------------------------Pre-tax
--------- Revenue --------Income/ Pre-tax
External Internal
Total
(Loss)
Margin
-------- -------- --------------- -------
SEGMENTS
Global Technology Services
Y-T-Y change
$38,551
-4.2%
$1,063
-8.8%
$39,615
-4.3%
$6,983
0.3%
17.6%
Global Business Services
Y-T-Y change
18,396
-0.9%
714
-0.8%
19,109
-0.9%
3,214
7.7%
16.8%
Software
Y-T-Y change
25,932
1.9%
3,191
-2.5%
29,123
1.4%
11,106
2.7%
38.1%
Systems and Technology
Y-T-Y change
14,371
-18.7%
593
-12.4%
14,964
-18.4%
(507)
-141.3%
-3.4%
2,022
0.4%
2,282
10.8%
4,304
5.7%
2,171
6.8%
50.4%
$99,273
-4.5%
$7,843
-0.7%
$107,115
-4.2%
$22,967
-4.4%
21.4%
478
(7,843)
(7,365)
(3,443)
$99,751
-4.6%
$0
$99,751
-4.6%
$19,524
-10.9%
Global Financing
Y-T-Y change
TOTAL REPORTABLE SEGMENTS
Y-T-Y change
Eliminations / Other
TOTAL IBM CONSOLIDATED
Y-T-Y change
(Dollars in Millions)
19.6%
TWELVE-MONTHS 2012
----------------------------------------------Pre-tax
--------- Revenue --------Income/ Pre-tax
External Internal
Total
(Loss)
Margin
-------- -------- --------------- -------
SEGMENTS
Global Technology Services
$40,236
$1,166
$41,402
$6,961
16.8%
Global Business Services
18,566
719
19,286
2,983
15.5%
Software
25,448
3,274
28,722
10,810
37.6%
Systems and Technology
17,667
676
18,343
1,227
6.7%
2,013
2,060
4,073
2,034
49.9%
$103,930
$7,896
$111,826
$24,015
21.5%
577
(7,896)
(7,319)
(2,113)
$104,507
$0
$104,507
$21,902
Global Financing
TOTAL REPORTABLE SEGMENTS
Eliminations / Other
TOTAL IBM CONSOLIDATED
21.0%
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING RESULTS RECONCILIATION
(Dollars in millions except per share amounts)
Gross Profit
FOURTH-QUARTER 2013
----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments** (Non-GAAP)
-------- ------------ --------------------$14,315
$105
$154
$14,574
Gross Profit Margin
51.7%
0.4Pts
0.6Pts
52.6%
S,G&A
5,989
(101)
(90)
5,798
R,D&E
1,566
0
(14)
1,552
Other (Income) & Expense
(113)
(8)
0
(121)
Total Expense & Other (Income)
7,353
(109)
(104)
7,140
Pre-Tax Income
6,962
213
258
7,434
Pre-Tax Income Margin
25.1%
0.8Pts
0.9Pts
26.8%
777
(55)
94
817
Effective Tax Rate
11.2%
-1.1Pts
0.9Pts
11.0%
Net Income
6,185
268
164
6,617
Net Income Margin
22.3%
1.0Pts
0.6Pts
23.9%
Diluted Earnings Per Share
$5.73
$0.25
$0.15
$6.13
Provision for Income Taxes***
FOURTH-QUARTER 2012
----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments** (Non-GAAP)
-------- ------------ --------------------$15,167
$100
$60
$15,327
Gross Profit
Gross Profit Margin
51.8%
0.3Pts
0.2Pts
52.3%
S,G&A
5,921
(91)
(29)
5,801
R,D&E
1,580
0
6
1,586
(47)
(7)
0
(54)
Total Expense & Other (Income)
7,336
(98)
(23)
7,215
Pre-Tax Income
7,831
198
83
8,112
Pre-Tax Income Margin
26.7%
0.7Pts
0.3Pts
27.7%
Provision for Income Taxes***
1,998
(45)
30
1,983
Effective Tax Rate
25.5%
-1.2Pts
0.1Pts
24.4%
Net Income
5,833
243
53
6,129
Net Income Margin
19.9%
0.8Pts
0.2Pts
20.9%
Diluted Earnings Per Share
$5.13
$0.21
$0.05
$5.39
Other (Income) & Expense
* Includes amortization of acquired intangible assets and other acquisition-related
charges.
** Includes retirement-related items driven by changes to plan assets and liabilities
primarily related to market performance.
*** Tax impact on operating (non-GAAP) pre-tax income 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.
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING RESULTS RECONCILIATION
(Dollars in millions except per share amounts)
Gross Profit
Gross Profit Margin
TWELVE-MONTHS 2013
----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments** (Non-GAAP)
-------- ------------ --------------------$48,505
$394
$629
$49,527
48.6%
0.4Pts
0.6Pts
49.7%
S,G&A
23,502
(394)
(376)
22,731
R,D&E
6,226
0
(57)
6,170
Other (Income) & Expense
(327)
(16)
0
(343)
Total Expense & Other (Income)
28,981
(410)
(433)
28,137
Pre-Tax Income
19,524
804
1,062
21,390
Pre-Tax Income Margin
19.6%
0.8Pts
1.1Pts
21.4%
Provision for Income Taxes***
3,041
57
333
3,431
Effective Tax Rate
15.6%
-0.3Pts
0.8Pts
16.0%
16,483
747
729
17,959
16.5%
0.7Pts
0.7Pts
18.0%
$14.94
$0.68
$0.66
$16.28
Net Income
Net Income Margin
Diluted Earnings Per Share
Gross Profit
Gross Profit Margin
TWELVE-MONTHS 2012
----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments** (Non-GAAP)
-------- ------------ --------------------$50,298
$376
$264
$50,938
48.1%
0.4Pts
0.3Pts
48.7%
S,G&A
23,553
(349)
(294)
22,910
R,D&E
6,302
0
20
6,322
Other (Income) & Expense
(843)
(13)
0
(857)
Total Expense & Other (Income)
28,396
(363)
(274)
27,760
Pre-Tax Income
21,902
739
538
23,179
Pre-Tax Income Margin
21.0%
0.7Pts
0.5Pts
22.2%
Provision for Income Taxes***
5,298
98
156
5,552
Effective Tax Rate
24.2%
-0.4Pts
0.1Pts
24.0%
16,604
641
381
17,627
15.9%
0.6Pts
0.4Pts
16.9%
$14.37
$0.55
$0.33
$15.25
Net Income
Net Income Margin
Diluted Earnings Per Share
* Includes amortization of acquired intangible assets and other acquisition-related
charges.
** Includes retirement-related items driven by changes to plan assets and
liabilities primarily related to market performance.
*** Tax impact on operating (non-GAAP) pre-tax income 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.
Contact:
IBM
Mike Fay, 914-525-8476
[email protected]
John Bukovinsky, 732-618-3531
[email protected]
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