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IBM REPORTS 2011 FOURTH-QUARTER AND FULL-YEAR RESULTS
Fourth-Quarter 2011:
o
Diluted EPS:
- GAAP: $4.62, up 11 percent;
- Operating (non-GAAP): $4.71, up 11 percent;
o
Net income:
- GAAP: $5.5 billion, up 4 percent;
- Operating (non-GAAP): $5.6 billion, up 5 percent;
o
Gross profit margin:
- GAAP: 49.9 percent, up 0.9 points;
- Operating (non-GAAP): 50.2 percent, up 1.1 points;
o
Revenue of $29.5 billion, up 2 percent as reported, 1 percent adjusting for
currency;
o
Software revenue up 9 percent;
o
Global Technology Services revenue up 3 percent;
o
Global Business Services revenue up 3 percent, 2 percent adjusting for currency;
o
Services backlog of $141 billion, up $4 billion as reported, up $5 billion
adjusting for currency, quarter to quarter;
o
Systems and Technology revenue down 8 percent.
Full-Year 2011:
o
Diluted EPS, up double-digits for 9th consecutive year;
- GAAP: $13.06, up 13 percent;
- Operating (non-GAAP): $13.44, up 15 percent;
o
Net income:
- GAAP: $15.9 billion, up 7 percent;
- Operating (non-GAAP): $16.3 billion, up 9 percent;
o
Revenue of $106.9 billion, up 7 percent, up 3 percent adjusting for currency;
o
Free cash flow of $16.6 billion, up $300 million;
o
Growth markets revenue up 16 percent, up 11 percent adjusting for currency;
o
Business analytics revenue up 16 percent;
o
Smarter Planet revenue up 47 percent;
o
Cloud revenue more than tripled 2010 revenue.
Full-Year 2012 Expectation:
o
GAAP EPS of at least $14.16 and operating (non-GAAP) EPS of at least $14.85.
ARMONK, N.Y., January 19, 2012 . . . IBM (NYSE: IBM) today announced
fourth-quarter 2011 diluted earnings of $4.62 per share, compared with diluted
earnings of $4.18 per share in the fourth quarter of 2010, an increase of 11 percent.
Operating (non-GAAP) diluted earnings were $4.71 per share, compared with operating
diluted earnings of $4.25 per share in the fourth quarter of 2010, an increase of
11 percent.
Fourth-quarter net income was $5.5 billion compared with $5.3 billion in the
fourth quarter of 2010, an increase of 4 percent. Operating (non-GAAP) net income was
$5.6 billion compared with $5.4 billion in the fourth quarter of 2010, an increase of
5 percent.
Total revenues for the fourth quarter of 2011 of $29.5 billion increased
2 percent (1 percent, adjusting for currency) from the fourth quarter of 2010. While
currency provided a benefit to revenue growth of approximately 25 basis points in the
quarter, currency movements since the company announced its third-quarter earnings in
October impacted fourth-quarter revenue by approximately one point of growth, or
$300 million.
"We had a strong fourth-quarter performance, capping a year of record earnings
per share, revenue, profit and free cash flow," said Ginni Rometty, IBM president and
chief executive officer. "We delivered outstanding results in all four of our
strategic initiatives for the quarter and the year, as we continued to realize the
benefit of our long-term investments in growth markets, business analytics, Smarter
Planet solutions and cloud. We are well on track toward our long-term roadmap for
operating earnings per share of at least $20 in 2015.””
Fourth-Quarter GAAP - Operating (non-GAAP) Reconciliation
Fourth-quarter operating (non-GAAP) diluted earnings exclude $0.09 per share of
net charges: $0.10 per share for the amortization of purchased intangible assets and
other acquisition-related charges, offset by ($0.01) per share for retirement-related
items driven by changes to plan assets and liabilities primarily related to market
performance.
Full-Year 2012 Expectation
IBM said that it expects to deliver full-year 2012 GAAP earnings per share of at
least $14.16; and operating (non-GAAP) earnings per share of at least $14.85. The
2012 operating (non-GAAP) earnings exclude $0.69 per share of charges for amortization
of purchased intangible assets, other acquisition-related charges, and
retirement-related items driven by changes to plan assets and liabilities primarily
related to market performance.
Geographic Regions
The Americas’ fourth-quarter revenues were $12.5 billion, an increase of
3 percent (3 percent, adjusting for currency) from the 2010 period. Revenues from
Europe/Middle East/Africa were $9.6 billion, up 1 percent (1 percent, adjusting for
currency). Asia-Pacific revenues increased 2 percent (down 1 percent, adjusting for
currency) to $6.7 billion. OEM revenues were $714 million, down 9 percent compared
with the 2010 fourth quarter.
Growth Markets
Revenues from the company’s growth markets increased 7 percent (8 percent,
adjusting for currency). Revenues in the BRIC countries — Brazil, Russia, India and
China — increased 10 percent (11 percent, adjusting for currency).
Services
Global Technology Services segment revenues increased 3 percent
(3 percent, adjusting for currency) to $10.5 billion. Global Business Services
segment revenues were up 3 percent (2 percent, adjusting for currency) at
$4.9 billion.
Pre-tax income from Global Technology Services increased 18 percent; pre-tax
margin increased to 18.0 percent. Global Business Services pre-tax income increased
14 percent; pre-tax margin increased to 16.6 percent.
The estimated services backlog at December 31 was $141 billion, up $4 billion as
reported ($5 billion, adjusting for currency), quarter to quarter, and down
$2 billion as reported (flat, adjusting for currency), year over year. Services
backlog at the end of a quarter measures the current value of work under contract
expected to be recognized as revenue in future quarters.
Software
Revenues from the Software segment were $7.6 billion, an increase of 9 percent
(9 percent, adjusting for currency). Software pre-tax income of $3.7 billion
increased 12 percent year over year.
Revenues from IBM’s key middleware products, which include WebSphere,
Information Management, Tivoli, Lotus and Rational products, were $5.2 billion, an
increase of 11 percent (11 percent, adjusting for currency) versus the fourth quarter
of 2010. Operating systems revenues of $710 million increased 3 percent (3 percent,
adjusting for currency) compared with the prior-year quarter.
Revenues from the WebSphere family of software products increased 21 percent
year over year. Information Management software revenues increased 9 percent.
Revenues from Tivoli software increased 14 percent. Revenues from Lotus software
decreased 2 percent, and Rational software increased 4 percent.
Hardware
Revenues from the Systems and Technology segment totaled $5.8 billion for the
quarter, down 8 percent (8 percent, adjusting for currency) from the fourth quarter of
2010. Systems and Technology pre-tax income was $790 million, a decrease of
33 percent.
Total systems revenues decreased 7 percent (7 percent, adjusting for currency).
Revenues from Power Systems increased 6 percent compared with the 2010 period.
Revenues from System z mainframe server products decreased 31 percent compared with
the year-ago period which was the first full quarter after a new product introduction.
Total delivery of System z computing power, as measured in MIPS (millions of
instructions per second), decreased 4 percent. Revenues from System x decreased
2 percent. Revenues from System Storage decreased 1 percent, and revenues from Retail
Store Solutions increased 9 percent year over year. Revenues from Microelectronics
OEM decreased 11 percent.
Financing
Global Financing segment revenues decreased 13 percent (13 percent, adjusting for
currency) in the fourth quarter to $548 million. Pre-tax income for the segment
decreased 9 percent to $514 million.
***
The company’s total gross profit margin was 49.9 percent in the 2011 fourth
quarter compared with 49.0 percent in the 2010 fourth-quarter period. Total operating
(non-GAAP) gross profit margin was 50.2 percent in the 2011 fourth quarter compared
with 49.1 percent in the 2010 fourth-quarter period, with increases in Services and
Software.
Total expense and other income increased 2 percent to $7.4 billion compared with
the prior-year period. S,G&A expense of $6.1 billion increased 2 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 $253 million compared with $318 million a year ago.
Other (income) and expense was income of $44 million compared with prior-year income
of $42 million. Interest expense increased to $113 million compared with
$102 million in the prior year.
Total operating (non-GAAP) expense and other income increased 2 percent to
$7.4 billion compared with the prior-year period. Operating (non-GAAP) S,G&A expense
of $6.0 billion increased 2 percent year over year 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 increased 5 percent to $7.3 billion; total operating (non-GAAP)
pre-tax income increased 6 percent to $7.4 billion. Pre-tax margin was 24.7 percent,
up 0.7 points; total operating (non-GAAP) pre-tax margin was 25.1 percent, up
0.9 points.
IBM’s tax rate was 24.5 percent, up 0.1 points year over year; total operating
(non-GAAP) tax rate was 24.4 percent, up 0.7 points.
Net income margin increased 0.5 points to 18.6 percent; total operating
(non-GAAP) net income margin was 19.0 percent, an increase of 0.5 points.
The weighted-average number of diluted common shares outstanding in the
fourth-quarter 2011 was 1.19 billion compared with 1.26 billion shares in the same
period of 2010.
In the quarter, IBM generated free cash flow of $9.0 billion excluding Global
Financing receivables, up approximately $300 million year over year.
Full-Year 2011 Results
Net income for the year ended December 31, 2011 was $15.9 billion compared with
$14.8 billion in the year-ago period, an increase of 7 percent. Operating (non-GAAP)
net income was $16.3 billion compared with $15.0 billion in 2010, an increase of
9 percent.
Diluted earnings were $13.06 per share compared with $11.52 per diluted share in
2010, an increase of 13 percent. Operating (non-GAAP) diluted earnings were $13.44
per share, compared with operating diluted earnings of $11.67 per share in 2010, an
increase of 15 percent. This was the company’s 9th consecutive year of double-digit
EPS growth.
Revenues for 2011 totaled $106.9 billion, an increase of 7 percent (3 percent,
adjusting for currency), compared with $99.9 billion in 2010.
GAAP - Operating (non-GAAP) Reconciliation
Operating (non-GAAP) diluted earnings for the year exclude $0.38 per share of net
charges: $0.41 per share for the amortization of purchased intangible assets and other
acquisition-related charges, offset by ($0.03) 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
$44.9 billion, an increase of 7 percent (6 percent, adjusting for currency) from the
2010 period. Revenues from Europe/Middle East/Africa were $34.0 billion, an increase
of 7 percent (2 percent, adjusting for currency). Asia-Pacific revenues increased
9 percent (2 percent, adjusting for currency) to $25.3 billion. OEM revenues were
$2.7 billion, down 2 percent (3 percent, adjusting for currency) compared with 2010.
Growth Markets
Revenues from the company’s growth markets increased 16 percent (11 percent,
adjusting for currency), and represents 22 percent of IBM’s total geographic revenue.
Revenues in the BRIC countries — Brazil, Russia, India and China — increased
19 percent (16 percent, adjusting for currency).
Segments
Total Global Services revenues increased 7 percent (2 percent, adjusting for
currency). Revenues from the Global Technology Services segment totaled
$40.9 billion, an increase of 7 percent (3 percent, adjusting for currency) compared
with 2010. Revenues from the Global Business Services segment were $19.3 billion, up
6 percent (1 percent, adjusting for currency). Software segment revenues in 2011
totaled $24.9 billion, an increase of 11 percent (8 percent, adjusting for currency).
Systems and Technology segment revenues were $19.0 billion, an increase of 6 percent
(3 percent, adjusting for currency). Global Financing segment revenues totaled
$2.1 billion, a decrease of 6 percent (9 percent, adjusting for currency).
***
The company’s total gross profit margin was 46.9 percent in 2011 compared with
46.1 percent in 2010. Overall gross profit margins improved year over year for the
8th consecutive year. Total operating (non-GAAP) gross profit margin was
47.2 percent in the 2011 period compared with 46.1 percent in the 2010 period, with
increases in Services, Software, and Systems and Technology.
The weighted-average number of diluted common shares outstanding in 2011 was
1.21 billion compared with 1.29 billion shares in 2010. As of December 31, 2011,
there were 1.16 billion basic common shares outstanding.
Debt, including Global Financing, totaled $31.3 billion, compared with
$28.6 billion at year-end 2010. From a management segment view, Global Financing debt
totaled $23.3 billion versus $22.8 billion at year-end 2010, resulting in a
debt-to-equity ratio of 7.2 to 1. Non-global financing debt totaled $8.0 billion, an
increase of $2.2 billion since year-end 2010, resulting in a debt-to-capitalization
ratio of 32.0 percent from 22.6 percent.
IBM ended 2011 with $11.9 billion of cash on hand and generated free cash flow of
$16.6 billion excluding Global Financing receivables, up approximately
$300 million year over year. The company returned $18.5 billion to shareholders
through $3.5 billion in dividends and $15.0 billion of share repurchases. The balance
sheet remains strong, and the company 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; breaches of
data security; 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 –
• 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).
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. Investors may participate by viewing the Webcast at
www.ibm.com/investor/4q11. 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
(Dollars in millions except per share amounts)
Three Months Ended
December 31,
Percent
2011
2010* Change
------- ------- -------
Twelve Months Ended
December 31,
Percent
2011
2010* Change
------- ------- -------
REVENUE
Global Technology
Services
Gross margin
$10,452 $10,165
36.6%
34.5%
2.8% $40,879 $38,201
35.0%
34.5%
7.0%
Global Business
Services
Gross margin
4,877
29.3%
4,758
28.0%
2.5%
19,284
28.8%
18,223
28.0%
5.8%
Software
Gross margin
7,648
89.8%
7,039
89.6%
8.7%
24,944
88.5%
22,485
87.9%
10.9%
Systems and
Technology
Gross margin
5,803
40.5%
6,277
43.6%
-7.6%
18,985
39.8%
17,973
38.1%
5.6%
548
49.7%
628
51.8%
-12.9%
2,102
49.8%
2,238
51.3%
-6.1%
159
-11.0%
151
10.3%
4.7%
722
-54.5%
750
-8.6%
-3.8%
Global Financing
Gross margin
Other
Gross margin
TOTAL REVENUE
29,486
29,019
1.6% 106,916
99,870
7.1%
GROSS PROFIT
Gross margin
14,722
49.9%
14,227
49.0%
3.5%
50,138
46.9%
46,014
46.1%
9.0%
EXPENSE AND OTHER INCOME
S,G&A
% of revenue
6,076
20.6%
5,951
20.5%
2.1%
23,594
22.1%
21,837
21.9%
8.0%
R,D&E
% of revenue
1,555
5.3%
1,578
5.4%
-1.5%
6,258
5.9%
6,026
6.0%
3.8%
(318)
-20.4%
(1,108)
(1,154)
-4.0%
(42)
102
4.9%
11.6%
(20)
411
(787)
368
-97.4%
11.6%
Intellectual property
and custom development
income
(253)
Other (income)
and expense
(44)
Interest expense
113
TOTAL EXPENSE AND
OTHER INCOME
% of revenue
7,448
25.3%
7,271
25.1%
2.4%
29,135
27.3%
26,291
26.3%
10.8%
INCOME BEFORE
INCOME TAXES
Pre-tax margin
7,274
24.7%
6,956
24.0%
4.6%
21,003
19.6%
19,723
19.7%
6.5%
1,784
1,698
5.1%
5,148
4,890
5.3%
Provision for
income taxes
Effective tax
rate
24.5%
24.4%
$5,490
======
18.6%
$5,257
======
18.1%
$4.62
$4.68
$4.18
$4.24
WEIGHTED-AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING (M's):
ASSUMING DILUTION 1,188.7
BASIC
1,172.2
1,258.4
1,240.1
NET INCOME
Net margin
EARNINGS PER SHARE
OF COMMON STOCK:
ASSUMING DILUTION
BASIC
*
24.5%
4.4% $15,855
=======
14.8%
10.5%
10.4%
24.8%
$14,833
=======
14.9%
6.9%
$13.06
$13.25
$11.52
$11.69
13.4%
13.3%
1,213.8
1,197.0
1,287.4
1,268.8
Segment gross profit margins in 2010 reclassified to conform with
2011 presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Dollars in Millions)
At
December 31,
2011
------------
At
December 31,
2010
------------
$11,922
--
$10,661
990
11,179
10,834
16,901
16,257
1,481
1,134
589
2,007
-----------2,595
1,601
5,249
-----------50,928
432
2,018
-----------2,450
1,564
4,226
------------48,116
ASSETS
Current Assets:
Cash and cash equivalents
Marketable securities
Notes and accounts receivable - trade
(net of allowances of $256 in 2011 and $324 in 2010)
Short-term financing receivables
(net of allowances of $311 in 2011 and $342 in 2010)
Other accounts receivable
(net of allowances of $11 in 2011 and $10 in 2010)
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 $38 in 2011 and $58 in 2010)
Prepaid pension assets
Deferred taxes
Goodwill
Intangible assets - net
Investments and sundry assets
Total Assets
40,124
26,241
-----------13,883
40,289
26,193
-----------14,096
10,776
2,843
3,503
26,213
3,392
4,895
-----------$116,433
============
10,548
3,068
3,220
25,136
3,488
5,778
-----------$113,452
============
$3,313
8,463
8,517
5,099
12,197
4,535
-----------42,123
$4,216
6,778
7,804
5,028
11,580
5,156
-----------40,562
22,857
21,846
18,374
3,847
8,996
-----------96,197
15,978
3,666
8,226
-----------90,279
48,129
104,857
(110,963)
(21,885)
-----------20,138
45,418
92,532
(96,161)
(18,743)
-----------23,046
97
-----------20,236
-----------$116,433
============
126
-----------23,172
-----------$113,452
============
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
Contingencies and commitments
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
(Dollars in Millions)
Three Months
Ended
December 31,
Twelve Months
Ended
December 31,
2011
------
2010
------
2011
-------
2010
-------
Net Cash from Operating Activities per GAAP: $7,097
$6,795
$19,846
$19,549
(2,991)
------
(817)
-------
(734)
-------
9,786
20,663
20,283
(1,059)
(1,103)
(4,059)
(3,984)
8,965
8,683
16,604
16,299
(1,588)
10
(880)
(3,581)
599
(2,928)
55
(808)
(3,601)
745
(1,811)
14
(3,473)
(15,046)
1,692
(5,922)
55
(3,177)
(15,375)
2,279
(2,906)
(1,582)
2,291
3,518
Less: the change in Global Financing (GF)
Receivables
(2,927)
-----Net Cash from Operating Activities
(Excluding GF Receivables)
10,024
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
$619
=======
$564
=======
$271
=======
($2,322)
=======
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Dollars in Millions)
FOURTH-QUARTER 2011
------------------------------------------------------- Revenue --------- Pre-tax
Pre-tax
External Internal
Total
Income
Margin
-------- -------- --------------------
SEGMENTS
Global Technology Services
Y-T-Y change
$10,452
2.8%
$299
0.2%
$10,751
2.7%
$1,930
18.0%
18.0%
Global Business Services
Y-T-Y change
4,877
2.5%
193
-3.4%
5,069
2.3%
841
14.4%
16.6%
Software
Y-T-Y change
7,648
8.7%
851
9.9%
8,499
8.8%
3,710
12.5%
43.7%
Systems and Technology
Y-T-Y change
5,803
-7.6%
186
-19.8%
5,989
-8.0%
790
-32.6%
13.2%
Global Financing
Y-T-Y change
548
-12.9%
569
-1.1%
1,116
-7.2%
514
-9.1%
46.1%
$29,328
1.6%
$2,098
0.9%
$31,425
1.5%
$7,786
5.1%
24.8%
(2,098)
(1,939)
(512)
TOTAL REPORTABLE SEGMENTS
Y-T-Y change
Eliminations / Other
159
TOTAL IBM CONSOLIDATED
Y-T-Y change
$29,486
1.6%
$0
$29,486
1.6%
$7,274
4.6%
24.7%
(Dollars in Millions)
FOURTH-QUARTER 2010
------------------------------------------------------- Revenue --------Pre-tax
Pre-tax
External Internal
Total
Income*
Margin*
-------- -------- --------------------
SEGMENTS
Global Technology Services
$10,165
$299
$10,464
$1,635
15.6%
Global Business Services
4,758
199
4,957
735
14.8%
Software
7,039
774
7,813
3,299
42.2%
Systems and Technology
6,277
232
6,509
1,173
18.0%
628
575
1,203
566
47.0%
$28,867
$2,079
$30,947
$7,408
23.9%
Global Financing
TOTAL REPORTABLE SEGMENTS
Eliminations / Other
151
TOTAL IBM CONSOLIDATED
$29,019
(2,079)
$0
(1,928)
$29,019
(452)
$6,956
24.0%
* Reclassified to conform with 2011 presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Dollars in Millions)
TWELVE-MONTHS 2011
------------------------------------------------------- Revenue --------Pre-tax
Pre-tax
External Internal
Total
Income
Margin
-------- -------- --------------------
SEGMENTS
Global Technology Services
Y-T-Y change
$40,879
7.0%
$1,242
-5.3%
$42,121
6.6%
$6,284
14.3%
14.9%
Global Business Services
Y-T-Y change
19,284
5.8%
797
-0.2%
20,081
5.6%
3,006
18.1%
15.0%
Software
Y-T-Y change
24,944
10.9%
3,276
11.0%
28,219
10.9%
9,970
5.3%
35.3%
Systems and Technology
Y-T-Y change
18,985
5.6%
838
4.3%
19,823
5.6%
1,633
12.2%
8.2%
2,102
-6.1%
2,092
13.6%
4,195
2.8%
2,011
2.8%
47.9%
$8,246 $114,440
7.0%
7.1%
$22,904
9.5%
20.0%
Global Financing
Y-T-Y change
TOTAL REPORTABLE SEGMENTS
Y-T-Y change
Eliminations / Other
$106,194
7.1%
722
(8,246)
(7,524)
(1,901)
TOTAL IBM CONSOLIDATED
Y-T-Y change
(Dollars in Millions)
$106,916
7.1%
$0
$106,916
7.1%
$21,003
6.5%
19.6%
TWELVE-MONTHS 2010
------------------------------------------------------- Revenue --------Pre-tax
Pre-tax
External Internal
Total
Income*
Margin*
-------- -------- -------- --------------
SEGMENTS
Global Technology Services
$38,201
$1,313
$39,514
$5,499
13.9%
Global Business Services
18,223
798
19,021
2,546
13.4%
Software
22,485
2,950
25,436
9,466
37.2%
Systems and Technology
17,973
804
18,777
1,456
7.8%
2,238
1,842
4,080
1,956
48.0%
$99,120
$7,707
$106,827
$20,923
19.6%
Global Financing
TOTAL REPORTABLE SEGMENTS
Eliminations / Other
TOTAL IBM CONSOLIDATED
750
(7,707)
$99,870
$0
(6,956)
$99,870
(1,200)
$19,723
19.7%
* Reclassified to conform with 2011 presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING RESULTS RECONCILIATION
(Dollars in millions except per share amounts)
Gross Profit
Gross Profit Margin
FOURTH-QUARTER 2011
----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments** (Non-GAAP)
-------- ------------ --------------------$14,722
$81
($10)
$14,793
49.9%
0.3Pts
-0.0Pts
50.2%
S,G&A
6,076
(82)
2
5,996
R,D&E
1,555
0
23
1,578
(2)
0
Other (Income) & Expense
(44)
(46)
Total Expense & Other (Income)
7,448
(85)
25
7,388
Pre-Tax Income
7,274
166
(35)
7,405
Pre-Tax Income Margin
Provision for Income Taxes***
24.7%
1,784
0.6Pts
47
-0.1Pts
(24)
25.1%
1,808
Effective Tax Rate
Net Income
24.5%
5,490
Net Income Margin
18.6%
Diluted Earnings Per Share
$4.62
0.1Pts
-0.2Pts
119
0.4Pts
$0.10
(12)
-0.0Pts
($0.01)
24.4%
5,597
19.0%
$4.71
FOURTH-QUARTER 2010
----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments** (Non-GAAP)
-------- ------------ --------------------$14,227
$82
($60)
$14,249
Gross Profit
Gross Profit Margin
49.0%
0.3Pts
-0.2Pts
49.1%
S,G&A
5,951
(95)
28
5,884
R,D&E
1,578
0
33
1,611
(2)
0
Other (Income) & Expense
(42)
(44)
Total Expense & Other (Income)
7,271
(98)
61
7,235
Pre-Tax Income
6,956
180
(121)
7,015
Pre-Tax Income Margin
Provision for Income Taxes***
Effective Tax Rate
Net Income
24.0%
1,698
24.4%
5,257
Net Income Margin
18.1%
Diluted Earnings Per Share
$4.18
0.6Pts
-0.4Pts
10
-0.5Pts
(47)
-0.3Pts
170
0.6Pts
$0.14
(74)
-0.3Pts
($0.06)
24.2%
1,661
23.7%
5,354
18.5%
$4.25
* 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)
TWELVE-MONTHS 2011
----------------------------------------------Acquisition- RetirementRelated
Related
Operating
Gross Profit
Gross Profit Margin
GAAP
Adjustments* Adjustments** (Non-GAAP)
-------- ------------ --------------------$50,138
$341
$2
$50,481
46.9%
S,G&A
23,594
R,D&E
6,258
Other (Income) & Expense
(20)
0.3Pts
(309)
0.0Pts
47.2%
(13)
23,272
0
88
6,345
(25)
0
(45)
Total Expense & Other (Income)
29,135
(334)
74
28,875
Pre-Tax Income
21,003
675
(72)
21,605
Pre-Tax Income Margin
Provision for Income Taxes***
Effective Tax Rate
Net Income
Net Income Margin
Diluted Earnings Per Share
Gross Profit
Gross Profit Margin
19.6%
5,148
24.5%
15,855
14.8%
$13.06
179
0.1Pts
495
0.5Pts
$0.41
-0.1Pts
(40)
-0.1Pts
(32)
-0.0Pts
($0.03)
20.2%
5,287
24.5%
16,318
15.3%
$13.44
TWELVE-MONTHS 2010
----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments** (Non-GAAP)
-------- ------------ --------------------$46,014
$260
($204)
$46,070
46.1%
S,G&A
21,837
R,D&E
6,026
Other (Income) & Expense
0.6Pts
(787)
0.3Pts
(294)
0
-0.2Pts
46.1%
84
21,628
126
6,152
(4)
0
(791)
Total Expense & Other (Income)
26,291
(298)
210
26,202
Pre-Tax Income
19,723
558
(414)
19,867
Pre-Tax Income Margin
Provision for Income Taxes***
Effective Tax Rate
Net Income
Net Income Margin
Diluted Earnings Per Share
19.7%
4,890
24.8%
14,833
14.9%
$11.52
0.6Pts
116
-0.1Pts
443
0.4Pts
$0.34
-0.4Pts
(162)
-0.3Pts
(253)
-0.3Pts
($0.20)
19.9%
4,844
24.4%
15,023
15.0%
$11.67
* 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]
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