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IBM REPORTS 2012 SECOND-QUARTER RESULTS
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Diluted EPS:
- GAAP: $3.34, up 11 percent;
- Operating (non-GAAP): $3.51, up 14 percent;
Net income:
- GAAP: $3.9 billion, up 6 percent;
- Operating (non-GAAP): $4.1 billion, up 8 percent;
Gross profit margin:
- GAAP: 47.6 percent, up 1.2 points;
- Operating (non-GAAP): 48.2 percent, up 1.5 points;
Revenue: $25.8 billion, down 3 percent, up 1 percent adjusting for currency;
Free cash flow of $3.7 billion, up 9 percent;
Software revenue, flat, up 4 percent adjusting for currency;
Services revenue down 3 percent, up 1 percent adjusting for currency:
- Services pre-tax income up 18 percent;
Services backlog of $136 billion, down 6 percent, flat adjusting for
currency;
Systems and Technology revenue down 9 percent, down 7 percent adjusting for
currency;
Growth markets revenue up 2 percent, up 8 percent adjusting for currency;
Business analytics revenue up 13 percent in the first half;
Smarter Planet revenue up more than 20 percent in the first half;
Cloud revenue doubled first-half 2011 revenue;
Full-year 2012 operating (non-GAAP) EPS expectations raised to at least
$15.10 from at least $15.00.
ARMONK, N.Y., July 18, 2012 . . . IBM (NYSE: IBM) today announced second-quarter
2012 diluted earnings of $3.34 per share, compared with diluted earnings of $3.00 per
share in the second quarter of 2011, an increase of 11 percent. Operating (non-GAAP)
diluted earnings were $3.51 per share, compared with operating diluted earnings of
$3.09 per share in the second quarter of 2011, an increase of 14 percent.
Second-quarter net income was $3.9 billion compared with $3.7 billion in the
second quarter of 2011, an increase of 6 percent. Operating (non-GAAP) net income
was $4.1 billion compared with $3.8 billion in the second quarter of 2011, an
increase of 8 percent.
Total revenues for the second quarter of 2012 of $25.8 billion were down 3
percent (up 1 percent, adjusting for currency) from the second quarter of 2011.
Currency negatively impacted revenue growth by approximately $1 billion.
“In the second quarter, we delivered strong profit, earnings per share and free
cash flow growth. This performance reflects continued strength in our growth
initiatives and investments in higher value opportunities,” said Ginni Rometty, IBM
president and chief executive officer. “These are fundamental elements of our
long-term business model.
“Looking ahead, we are well positioned to deliver greater value to a wider range
of clients and to our shareholders. Given our performance in the first half and our
outlook for the second half, we are raising our full-year operating earnings per
share expectations to at least $15.10.”
Second-Quarter GAAP – Operating (non-GAAP) Reconciliation
Second-quarter operating (non-GAAP) diluted earnings exclude $0.17 per share of
charges: $0.11 per share for the amortization of purchased intangible assets and
other acquisition-related charges, and $0.06 per share for retirement-related charges
driven by changes to plan assets and liabilities primarily related to market
performance.
Full-Year 2012 Expectations
IBM raised its expectations for full-year 2012 GAAP diluted earnings per share
to at least $14.40 from at least $14.27 and operating (non-GAAP) diluted earnings per
share to at least $15.10 from at least $15.00. The 2012 operating (non-GAAP)
earnings expectations exclude $0.70 per share of charges for amortization of
purchased intangible assets, other acquisition-related charges, and retirementrelated charges driven by changes to plan assets and liabilities primarily related to
market performance.
Geographic Regions
The Americas’ second-quarter revenues were $11.1 billion, a decrease of 1
percent (up 1 percent, adjusting for currency) from the 2011 period. Revenues from
Europe/Middle East/Africa were $7.9 billion, down 9 percent (flat, adjusting for
currency). Asia-Pacific revenues increased 2 percent (up 4 percent, adjusting for
currency) to $6.3 billion. OEM revenues were $512 million, down 24 percent compared
with the 2011 second quarter.
Growth Markets
Revenues from the company’s growth markets increased 2 percent (up 8 percent,
adjusting for currency) and more than 30 countries had double-digit revenue growth,
adjusting for currency. Revenues in the BRIC countries — Brazil, Russia, India and
China — increased 5 percent (up 12 percent, adjusting for currency).
Services
Global Technology Services segment revenues decreased 2 percent (up 2 percent,
adjusting for currency) to $10.0 billion. Global Business Services segment revenues
were down 4 percent (down 1 percent, adjusting for currency) to $4.7 billion.
Pre-tax income from Global Technology Services increased 24 percent and pre-tax
margin increased to 17.1 percent. Global Business Services pre-tax income increased
7 percent and pre-tax margin increased to 16.6 percent.
The estimated services backlog at June 30 was $136 billion, down 6 percent year
over year at actual rates (flat, adjusting for currency).
Software
Revenues from the Software segment were $6.2 billion, flat (up 4 percent,
adjusting for currency) compared with the second quarter of 2011. Software pre-tax
income increased 8 percent and pre-tax margin increased to 35.9 percent.
Revenues from IBM’s key middleware products, which include WebSphere,
Information Management, Tivoli, Lotus and Rational products, were $3.9 billion, flat
(up 4 percent, adjusting for currency) versus the second quarter of 2011. Operating
systems revenues of $628 million were flat (up 3 percent, adjusting for currency)
compared with the prior-year quarter.
Revenues from the WebSphere family of software products increased 3 percent year
over year. Information Management software revenues decreased 1 percent. Revenues
from Tivoli software increased 2 percent. Revenues from Lotus software decreased
8 percent, and Rational software decreased 7 percent.
Hardware
Revenues from the Systems and Technology segment totaled $4.3 billion for the
quarter, down 9 percent (down 7 percent, adjusting for currency) from the second
quarter of 2011. Systems and Technology pre-tax income decreased $159 million.
Total systems revenues decreased 7 percent (down 5 percent, adjusting for
currency). Revenues from Power Systems were down 7 percent compared with the 2011
period. Revenues from System x were down 8 percent. Revenues from System z
mainframe server products decreased 11 percent compared with the year-ago period.
Total delivery of System z computing power, as measured in MIPS (millions of
instructions per second), decreased 8 percent. Revenues from System Storage
decreased 4 percent, and revenues from Retail Store Solutions decreased 4 percent
year over year. Revenues from Microelectronics OEM decreased 22 percent.
Financing
Global Financing segment revenues were flat (up 4 percent, adjusting for
currency) in the second quarter at $517 million. Pre-tax income for the segment
increased 6 percent to $528 million.
***
The company’s total gross profit margin was 47.6 percent in the 2012 second
quarter compared with 46.4 percent in the 2011 second-quarter period. Total
operating (non-GAAP) gross profit margin was 48.2 percent in the 2012 second quarter
compared with 46.8 percent in the 2011 second-quarter period, with increases in
Global Technology Services and Global Business Services.
Total expense and other income decreased 5 percent to $7.1 billion compared with
the prior-year period. S,G&A expense of $5.8 billion decreased 3 percent year over
year. R,D&E expense of $1.6 billion increased 1 percent compared with the year-ago
period. Intellectual property and custom development income decreased to $289
million compared with $295 million a year ago. Other (income) and expense was income
of $132 million compared with prior-year expense of $97 million. Interest expense
increased to $117 million compared with $97 million in the prior year.
Total operating (non-GAAP) expense and other income decreased 6 percent to
$7.0 billion compared with the prior-year period. Operating (non-GAAP) S,G&A expense
of $5.7 billion decreased 4 percent compared with prior-year expense. Operating
(non-GAAP) R,D&E expense of $1.6 billion was flat compared with the year-ago period.
Pre-tax income increased 6 percent to $5.2 billion and pre-tax margin of
20.0 percent, up 1.7 points compared with the prior-year period. Operating (non-GAAP
) pre-tax income increased 8 percent to $5.4 billion and pre-tax margin was 21.1
percent, up 2.2 points.
IBM’s tax rate was 24.8 percent, down 0.2 points year over year; operating (nonGAAP) tax rate was 25.0 percent, flat compared to the year-ago period.
Net income margin increased 1.3 points to 15.1 percent. Total operating (nonGAAP) net income margin increased 1.6 points to 15.8 percent.
The weighted-average number of diluted common shares outstanding in the secondquarter 2012 was 1.16 billion compared with 1.22 billion shares in the same period of
2011. As of June 30, 2012, there were 1.14 billion basic common shares outstanding.
Debt, including Global Financing, totaled $32.4 billion, compared with $31.3
billion at year-end 2011. From a management segment view, Global Financing debt
totaled $22.6 billion versus $23.3 billion at year-end 2011, resulting in a debt-toequity ratio of 7.0 to 1. Non-global financing debt totaled $9.8 billion, an
increase of $1.8 billion since year-end 2011, resulting in a debt-to-capitalization
ratio of 36.1 percent from 32.0 percent.
IBM ended the second-quarter 2012 with $11.2 billion of cash on hand and
generated free cash flow of $3.7 billion, excluding Global Financing receivables, up
approximately $0.3 billion year over year. The company returned $4.0 billion to
shareholders through $1.0 billion in dividends and $3.0 billion of share repurchases.
Year-To-Date 2012 Results
Net income for the six months ended June 30, 2012 was $6.9 billion compared with
$6.5 billion in the year-ago period, an increase of 6 percent. Diluted earnings per
share were $5.95 compared with $5.30 per diluted share for the 2011 period, an
increase of 12 percent. Revenues for the six-month period totaled $50.5 billion, a
decrease of 2 percent (up 1 percent, adjusting for currency) compared with $51.3
billion for the six months of 2011.
Operating (non-GAAP) net income for the six months ended June 30, 2012 was $7.3
billion compared with $6.8 billion in the year-ago period, an increase of 9 percent.
Operating (non-GAAP) diluted earnings per share were $6.29 compared with $5.50 per
diluted share for the 2011 period, an increase of 14 percent.
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-Q, 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 -o presenting operating (non-GAAP) earnings per share amounts and related income
statement items;
o presenting non-global financing debt-to-capitalization ratio;
o adjusting for free cash flow;
o adjusting for currency (i.e., at constant currency).
The rationale for management’s use of non-GAAP measures is included as part of
the supplemental materials presented within the second-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 Supplemental
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. EDT, today. The Webcast may be viewed at www.ibm.com/investor/2q12.
Presentation charts will be available on the Web site 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
(Unaudited; Dollars in millions except per share amounts)
Three Months Ended
June 30,
Percent
Six Months Ended
June 30,
Percent
2012
-------
2011
-------
Change
2012
------- -------
2011
-------
Change
-------
Global Technology
Services
Gross profit margin
$9,995
36.3%
$10,241
34.0%
-2.4% $20,031
35.8%
$20,104
33.9%
-0.4%
Global Business
Services
Gross profit margin
4,667
30.7%
4,866
28.9%
-4.1%
9,304
29.4%
9,575
28.2%
-2.8%
Software
Gross profit margin
6,171
88.4%
6,169
88.4%
0.0%
11,770
87.7%
11,478
87.8%
2.5%
Systems and
Technology
Gross profit margin
4,259
38.3%
4,681
40.6%
-9.0%
8,008
36.4%
8,700
39.3%
-7.9%
Global Financing
Gross profit margin
517
46.0%
519
48.7%
-0.4%
1,006
48.3%
1,035
51.1%
-2.8%
Other
Gross profit margin
175
-60.0%
191
-57.7%
-8.4%
336
-67.1%
381
-75.5%
-11.7%
TOTAL REVENUE
25,783
26,666
-3.3%
50,456
51,273
-1.6%
GROSS PROFIT
Gross margin
12,281
47.6%
12,385
46.4%
-0.8%
23,400
46.4%
23,243
45.3%
0.7%
REVENUE
EXPENSE AND OTHER INCOME
S,G&A
Expense to revenue
5,837
22.6%
6,030
22.6%
-3.2%
11,723
23.2%
11,856
23.1%
-1.1%
R,D&E
Expense to revenue
1,587
6.2%
1,569
5.9%
1.1%
3,188
6.3%
3,156
6.2%
1.0%
(295)
-1.8%
(545)
(557)
-2.2%
97
97
NM
20.4%
(190)
226
(105)
190
80.9%
19.1%
Intellectual property
and custom development
income
(289)
Other (income)
and expense
(132)
Interest expense
117
TOTAL EXPENSE AND
OTHER INCOME
Expense to revenue
7,120
27.6%
7,500
28.1%
-5.1%
14,403
28.5%
14,541
28.4%
-0.9%
INCOME BEFORE
INCOME TAXES
Pre-tax margin
5,161
20.0%
4,885
18.3%
5.7%
8,997
17.8%
8,702
17.0%
3.4%
1,280
1,221
4.8%
2,049
2,175
-5.8%
24.8%
25.0%
22.8%
25.0%
$3,881
$3,664
$6,948
$6,526
Provision for
income taxes
Effective tax
rate
NET INCOME
5.9%
6.5%
Net income margin
======
15.1%
======
13.7%
EARNINGS PER SHARE
OF COMMON STOCK:
ASSUMING DILUTION
BASIC
$3.34
$3.38
$3.00
$3.04
WEIGHTED-AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING (M's):
ASSUMING DILUTION
1,161.9
BASIC
1,149.0
1,221.4
1,204.8
======
13.8%
======
12.7%
$5.95
$6.02
$5.30
$5.38
1,168.1
1,154.1
1,230.7
1,213.5
11.3%
11.2%
12.3%
11.9%
NM -- Not Meaningful
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited)
(Dollars in Millions)
At
June 30,
2012
------------
At
December 31,
2011
-------------
$10,864
323
$11,922
--
10,172
11,179
14,982
16,901
1,703
1,481
752
2,006
--------2,758
1,478
5,113
--------47,392
589
2,007
--------2,595
1,601
5,249
--------50,928
40,158
26,293
--------13,865
40,124
26,241
--------13,883
10,795
2,862
2,795
27,735
3,657
4,730
--------$113,832
10,776
2,843
3,503
26,213
3,392
4,895
--------$116,433
ASSETS
Current Assets:
Cash and cash equivalents
Marketable securities
Notes and accounts receivable - trade
(net of allowances of $264 in 2012 and $256 in 2011)
Short-term financing receivables
(net of allowances of $271 in 2012 and $311 in 2011)
Other accounts receivable
(net of allowances of $11 in 2012 and $11 in 2011)
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 $55 in 2012 and $38 in 2011)
Prepaid pension assets
Deferred taxes
Goodwill
Intangible assets - net
Investments and sundry assets
Total Assets
LIABILITIES AND EQUITY
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
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
=========
=========
$2,183
7,669
7,482
4,656
12,311
4,602
--------38,903
$3,313
8,463
8,517
5,099
12,197
4,535
--------42,123
24,766
22,857
16,544
3,889
9,166
--------93,269
18,374
3,847
8,996
--------96,197
49,157
109,928
(117,116)
(21,498)
--------20,472
48,129
104,857
(110,963)
(21,885)
--------20,138
92
--------20,563
--------$113,832
=========
97
--------20,236
--------$116,433
=========
INTERNATIONAL BUSINESS MACHINES CORPORATION
CASH FLOW ANALYSIS
(Unaudited)
Three Months Ended
June 30,
2012
2011
------------Net Cash from Operating Activities per GAAP:
$4,435
$4,279
(Dollars in Millions)
Less: the change in Global Financing (GF)
Receivables
Net Cash from Operating Activities
(Excluding GF Receivables)
Capital Expenditures, Net
Free Cash Flow
(Excluding GF Receivables)
Six Months Ended
June 30,
2012
2011
------------$8,726
$8,071
(507)
------
(33)
------
918
------
1,903
------
4,942
4,313
7,809
6,168
(1,278)
(952)
(2,279)
(2,010)
3,664
3,361
5,529
4,159
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
(606)
13
(978)
(2,988)
933
(107)
4
(905)
(3,976)
(20)
(1,925)
13
(1,848)
(6,002)
1,590
(159)
4
(1,700)
(8,021)
1,007
(1,187)
162
1,907
4,822
($1,148)
========
($1,481)
========
($736)
======
$113
======
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
(Dollars in Millions)
SECOND-QUARTER 2012
------------------------------------------------Pre-tax
--------- Revenue --------Income/
Pre-tax
External Internal
Total
(Loss)
Margin
-------- -------- --------- ---------------
SEGMENTS
Global Technology Services
Y-T-Y change
$9,995
-2.4%
$291
-9.1%
$10,286
-2.6%
$1,757
23.7%
17.1%
Global Business Services
Y-T-Y change
4,667
-4.1%
180
-12.2%
4,847
-4.4%
803
7.0%
16.6%
Software
Y-T-Y change
6,171
0.0%
776
-2.0%
6,946
-0.2%
2,493
7.9%
35.9%
Systems and Technology
Y-T-Y change
4,259
-9.0%
159
-27.3%
4,418
-9.8%
234
-40.4%
5.3%
Global Financing
Y-T-Y change
517
-0.4%
515
-5.7%
1,032
-3.2%
528
6.4%
51.1%
$25,608
-3.3%
$1,921
-7.7%
$27,529
-3.6%
$5,814
8.3%
21.1%
175
(1,921)
(1,746)
(653)
$25,783
-3.3%
$(0)
$25,783
-3.3%
$5,161
5.7%
TOTAL REPORTABLE SEGMENTS
Y-T-Y change
Eliminations / Other
TOTAL IBM CONSOLIDATED
Y-T-Y change
20.0%
(Dollars in Millions)
SECOND-QUARTER 2011
------------------------------------------------Pre-tax
--------- Revenue --------Income/
Pre-tax
External Internal
Total
(Loss)
Margin
-------- -------- --------- ---------------
SEGMENTS
Global Technology Services
$10,241
$320
$10,561
$1,420
13.4%
Global Business Services
4,866
205
5,071
750
14.8%
Software
6,169
792
6,961
2,310
33.2%
Systems and Technology
4,681
218
4,899
393
8.0%
519
547
1,066
496
46.5%
$26,476
$2,082
$28,558
$5,370
18.8%
191
(2,082)
(1,891)
(485)
$26,666
$(0)
$26,666
$4,885
Global Financing
TOTAL REPORTABLE SEGMENTS
Eliminations / Other
TOTAL IBM CONSOLIDATED
18.3%
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
(Dollars in Millions)
SIX-MONTHS 2012
------------------------------------------------Pre-tax
--------- Revenue --------Income/
Pre-tax
External Internal
Total
(Loss)
Margin
-------- -------- --------- ---------------
SEGMENTS
Global Technology Services
Y-T-Y change
$20,031
-0.4%
$584
-6.9%
$20,615
-0.6%
$3,237
21.8%
15.7%
9,304
-2.8%
363
-10.5%
9,667
-3.1%
1,404
1.0%
14.5%
11,770
2.5%
1,615
-0.4%
13,386
2.2%
4,438
9.7%
33.2%
Systems and Technology
Y-T-Y change
8,008
-7.9%
309
-33.1%
8,317
-9.2%
130
-75.3%
1.6%
Global Financing
Y-T-Y change
1,006
-2.8%
1,000
-4.2%
2,006
-3.5%
1,040
2.4%
51.8%
$50,120
-1.5%
$3,872
-6.9%
$53,991
-1.9%
$10,248
6.4%
19.0%
336
(3,872)
(3,535)
(1,252)
$50,456
-1.6%
$(0)
$50,456
-1.6%
$8,997
3.4%
Global Business Services
Y-T-Y change
Software
Y-T-Y change
TOTAL REPORTABLE SEGMENTS
Y-T-Y change
Eliminations / Other
TOTAL IBM CONSOLIDATED
Y-T-Y change
(Dollars in Millions)
SEGMENTS
17.8%
SIX-MONTHS 2011
------------------------------------------------Pre-tax
--------- Revenue --------Income/
Pre-tax
External Internal
Total
(Loss)
Margin
-------- -------- --------- ---------------
Global Technology Services
$20,104
$627
$20,732
$2,658
12.8%
9,575
405
9,980
1,390
13.9%
11,478
1,621
13,099
4,045
30.9%
Systems and Technology
8,700
462
9,162
525
5.7%
Global Financing
1,035
1,044
2,079
1,015
48.8%
$50,892
$4,160
$55,052
$9,634
17.5%
381
(4,160)
(3,779)
(932)
$51,273
$(0)
$51,273
$8,702
Global Business Services
Software
TOTAL REPORTABLE SEGMENTS
Eliminations / Other
TOTAL IBM CONSOLIDATED
17.0%
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING RESULTS RECONCILIATION
(Unaudited; Dollars in millions except per share amounts)
Gross Profit
SECOND-QUARTER 2012
-----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments** (Non-GAAP)
-------- ------------ --------------------$12,281
$93
$66
$12,440
Gross Profit Margin
47.6%
0.4Pts
0.3Pts
48.2%
S,G&A
5,837
(87)
(33)
5,717
R,D&E
1,587
0
5
1,592
Other (Income) & Expense
(132)
(1)
0
(133)
Total Expense & Other (Income)
7,120
(88)
(28)
7,004
Pre-Tax Income
5,161
181
94
5,436
Pre-Tax Income Margin
20.0%
0.7Pts
0.4Pts
21.1%
Provision for Income Taxes***
1,280
49
30
1,359
Effective Tax Rate
24.8%
0.1Pts
0.1Pts
25.0%
Net Income
3,881
132
64
4,077
Net Income Margin
15.1%
0.5Pts
0.2Pts
15.8%
Diluted Earnings Per Share
$3.34
$0.11
$0.06
$3.51
SECOND-QUARTER 2011
-----------------------------------------------Acquisition- Retirement-
Related
Related
Operating
GAAP
Adjustments* Adjustments** (Non-GAAP)
-------- ------------ --------------------$12,385
$87
$6
$12,477
Gross Profit
Gross Profit Margin
46.4%
0.3Pts
0.0pts
46.8%
S,G&A
6,030
(76)
(5)
5,950
R,D&E
1,569
0
24
1,593
97
(1)
0
96
Total Expense & Other (Income)
7,500
(77)
18
7,441
Pre-Tax Income
4,885
163
(12)
5,036
Pre-Tax Income Margin
18.3%
0.6Pts
-0.0Pts
18.9%
Provision for Income Taxes***
1,221
38
0
1,259
Effective Tax Rate
25.0%
-0.1Pts
0.1Pts
25.0%
Net Income
3,664
126
(13)
3,777
Net Income Margin
13.7%
0.5Pts
-0.0Pts
14.2%
Diluted Earnings Per Share
$3.00
$0.10
($0.01)
$3.09
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
(Unaudited; Dollars in millions except per share amounts)
Gross Profit
Gross Profit Margin
SIX-MONTHS 2012
-----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments** (Non-GAAP)
-------- ------------ ------------ ----------$23,400
$181
$137
$23,718
46.4%
0.4Pts
0.3Pts
47.0%
S,G&A
11,723
(171)
(69)
11,483
R,D&E
3,188
0
10
3,197
Other (Income) & Expense
(190)
(2)
0
(192)
Total Expense & Other (Income)
14,403
(172)
(60)
14,171
Pre-Tax Income
8,997
354
197
9,547
Pre-Tax Income Margin
17.8%
0.7Pts
0.4Pts
18.9%
Provision for Income Taxes***
2,049
96
60
2,205
Effective Tax Rate
22.8%
0.2Pts
0.2Pts
23.1%
Net Income
6,948
258
137
7,342
Net Income Margin
13.8%
0.5Pts
0.3Pts
14.6%
Diluted Earnings Per Share
$5.95
$0.22
$0.12
$6.29
Gross Profit
Gross Profit Margin
SIX-MONTHS 2011
-----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments** (Non-GAAP)
-------- ------------ --------------------$23,243
$172
$19
$23,434
45.3%
0.3Pts
0.0Pts
45.7%
S,G&A
11,856
(152)
(15)
11,689
R,D&E
3,156
0
43
3,199
Other (Income) & Expense
(105)
(5)
0
(110)
14,541
(157)
28
14,412
Pre-Tax Income
8,702
329
(8)
9,022
Pre-Tax Income Margin
17.0%
0.6Pts
-0.0Pts
17.6%
Provision for Income Taxes***
2,175
86
(5)
2,256
Effective Tax Rate
25.0%
0.0Pts
0.0Pts
25.0%
Net Income
6,526
243
(3)
6,767
Net Income Margin
12.7%
0.5Pts
-0.0Pts
13.2%
Diluted Earnings Per Share
$5.30
$0.20
($0.00)
$5.50
Total Expense & Other (Income)
* 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, 914/499-6107
[email protected]
John Bukovinsky, 732/618-3531
[email protected]