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IBM REPORTS 2011 THIRD-QUARTER RESULTS
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Diluted EPS:
- GAAP: $3.19, up 13 percent;
- Operating (non-GAAP): $3.28, up 15 percent;
Revenue: $26.2 billion, up 8 percent, up 3 percent adjusting for currency;
Net income:
- GAAP: $3.8 billion, up 7 percent;
- Operating (non-GAAP): $4.0 billion, up 9 percent;
Pre-tax income:
- GAAP: $5.0 billion, up 7 percent;
- Operating (non-GAAP): $5.2 billion, up 10 percent;
Gross profit margin:
- GAAP: 46.5 percent, up 1.2 points;
- Operating (non-GAAP): 46.8 percent, up 1.5 points;
Software revenue up 13 percent, 8 percent adjusting for currency;
Services revenue up 8 percent, 2 percent adjusting for currency;
- Services backlog of $137 billion, up $2.4 billion;
Systems and Technology revenue up 4 percent, 1 percent adjusting for
currency:
- Power Systems up 15 percent;
Growth markets revenue up 19 percent, 13 percent adjusting for currency;
Business analytics revenue up 19 percent year to date;
Smarter Planet revenue up 50 percent year to date;
Cloud revenue year to date has doubled full-year 2010 revenue;
Full-year 2011 Operating (non-GAAP) EPS expectations raised to at least
$13.35 from at least $13.25.
ARMONK, N.Y., October 17, 2011 . . . IBM (NYSE: IBM) today announced thirdquarter 2011 diluted earnings of $3.19 per share, compared with diluted earnings of
$2.82 per share in the third quarter of 2010, an increase of 13 percent. Operating
(non-GAAP) diluted earnings were $3.28 per share, compared with operating diluted
earnings of $2.85 per share in the third quarter of 2010, an increase of
15 percent.
Third-quarter net income was $3.8 billion compared with $3.6 billion in the
third quarter of 2010, an increase of 7 percent. Operating (non-GAAP) net income was
$4.0 billion compared with $3.6 billion in the third quarter of 2010, an increase of
9 percent.
Total revenues for the third quarter of 2011 of $26.2 billion increased 8
percent (3 percent, adjusting for currency) from the third quarter of 2010.
"In the third quarter, we drove revenue growth, margin expansion and increased
earnings as a result of our innovation-based strategy and continued investment in
growth initiatives," said Samuel J. Palmisano, IBM chairman, president and chief
executive officer. “Growth markets delivered outstanding revenue performance across
software, hardware, and services and contributed to the company's expanded margins.
We also achieved strong results in Smarter Planet, business analytics and cloud.
"Based on this performance, we are raising our 2011 full-year operating earnings
per share expectations to at least $13.35."
Third-Quarter GAAP - Operating (non-GAAP) Reconciliation
Third-quarter operating (non-GAAP) diluted earnings exclude $0.09 per share of
net charges: $0.11 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 2011 Expectations
IBM raised its expectations for full-year 2011 GAAP diluted earnings per share
to at least $12.95 from at least $12.87; and operating (non-GAAP) diluted earnings
per share to at least $13.35 from at least $13.25. The 2011 operating (non-GAAP)
earnings exclude $0.40 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’ third-quarter revenues were $10.9 billion, an increase of 7
percent (6 percent, adjusting for currency) from the 2010 period. Revenues from
Europe/Middle East/Africa were $8.0 billion, up 9 percent (flat, adjusting for
currency). Asia-Pacific revenues increased 10 percent (1 percent, adjusting for
currency) to $6.5 billion. OEM revenues were $743 million, down 8 percent (8
percent, adjusting for currency) compared with the 2010 third quarter.
Growth Markets
Revenues from the company’s growth markets increased 19 percent (13 percent,
adjusting for currency). Revenues in the BRIC countries — Brazil, Russia, India and
China — increased 17 percent (13 percent, adjusting for currency). Growth markets
revenue represents 23 percent of IBM’s total geographic revenue for the third
quarter.
Services
Total Global Services revenues increased 8 percent (2 percent, adjusting for
currency). Global Technology Services segment revenues increased 9 percent (3
percent, adjusting for currency) to $10.3 billion. Global Business Services segment
revenues were up 6 percent (flat, adjusting for currency) at $4.8 billion.
Total Global Services pre-tax income increased to $2.5 billion, up 13 percent
year over year. Pre-tax income from both Global Technology Services and Global
Business Services also increased 13 percent.
The estimated services backlog at September 30 was $137 billion, up $2.4 billion
year over year at actual rates ($2.3 billion, adjusting for currency). 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 $5.8 billion, an increase of 13 percent
(8 percent, adjusting for currency). Software pre-tax income of $2.2 billion was up
12 percent year over year.
Revenues from IBM’s key middleware products, which include WebSphere,
Information Management, Tivoli, Lotus and Rational products, were $3.6 billion, an
increase of 17 percent (12 percent, adjusting for currency) versus the third quarter
of 2010. Operating systems revenues of $598 million increased 9 percent (4 percent,
adjusting for currency) compared with the prior-year quarter.
Revenues from the WebSphere family of software products increased 52 percent
year over year. Information Management software revenues increased 12 percent.
Revenues from Tivoli software increased 8 percent. Revenues from Lotus software
increased 6 percent, and Rational software increased 7 percent.
Hardware
Revenues from the Systems and Technology segment totaled $4.5 billion for the
quarter, up 4 percent (1 percent, adjusting for currency) from the third quarter of
2010. Systems and Technology pre-tax income was $318 million, an increase of 8
percent year over year.
Systems revenues increased 6 percent (2 percent, adjusting for currency).
Revenues from Power Systems increased 15 percent compared with the 2010 period.
Revenues from System x increased 1 percent. Revenues from System z mainframe server
products decreased 5 percent compared with the year-ago period. Total delivery of
System z computing power, as measured in MIPS (millions of instructions per second),
decreased 11 percent. Revenues from System Storage increased 8 percent, and revenues
from Retail Store Solutions increased 14 percent year over year. Revenues from
Microelectronics OEM decreased 6 percent.
Financing
Global Financing segment revenues decreased 2 percent (6 percent, adjusting for
currency) in the third quarter to $520 million. Pre-tax income for the segment
decreased 4 percent to $481 million.
***
The company’s total gross profit margin was 46.5 percent in the 2011 third
quarter compared with 45.3 percent in the 2010 third-quarter period. Total operating
(non-GAAP) gross profit margin was 46.8 percent in the 2011 third quarter compared
with 45.4 percent in the 2010 third-quarter period, with increases in Software,
Services and Systems and Technology.
Total expense and other income increased 13 percent to $7.1 billion compared
with the prior-year period. S,G&A expense of $5.7 billion increased 10 percent
compared with prior-year expense. R,D&E expense of $1.5 billion increased 6 percent
compared with the year-ago period. Intellectual property and custom development
income increased to $298 million compared with $278 million a year ago. Other
(income) and expense was expense of $128 million compared with prior-year income of
$106 million. Interest expense increased to $107 million compared with $95 million
in the prior year.
Total operating (non-GAAP) expense and other income increased 12 percent to $7.1
billion compared with the prior-year period. Operating (non-GAAP) S,G&A expense of
$5.6 billion increased 10 percent year over year compared with prior-year expense.
Operating (non-GAAP) R,D&E expense of $1.6 billion increased 5 percent compared with
the year-ago period.
Pre-tax income increased 7 percent to $5.0 billion, and pre-tax margin was 19.2
percent, down 0.1 points. Operating (non-GAAP) pre-tax income increased 10 percent
to $5.2 billion and pre-tax margin was 19.8 percent, up 0.4 points.
IBM’s tax rate was 23.6 percent, up 0.4 points year over year; operating (nonGAAP) tax rate was also 23.6 percent, up 0.6 points.
Net income margin decreased 0.1 points to 14.7 percent. Operating (non-GAAP)
net income margin increased 0.2 points to 15.1 percent.
The weighted-average number of diluted common shares outstanding in the thirdquarter 2011 was 1.20 billion compared with 1.27 billion shares in the same period of
2010. As of September 30, 2011, there were 1.18 billion basic common shares
outstanding.
Debt, including Global Financing, totaled $30.2 billion, compared with $28.6
billion at year-end 2010. From a management segment view, Global Financing debt
totaled $22.8 billion versus $22.8 billion at year-end 2010, resulting in a debt-toequity ratio of 7.1 to 1. Non-global financing debt totaled $7.4 billion, an
increase of $1.6 billion since year-end 2010, resulting in a debt-to-capitalization
ratio of 27.8 percent from 22.6 percent.
IBM ended the third-quarter 2011 with $11.3 billion of cash on hand and
generated free cash flow of $3.5 billion, up approximately $300 million year
over year. The company returned $4.3 billion to shareholders through $0.9 billion in
dividends and $3.4 billion of share repurchases. The balance sheet remains strong,
and the company is well positioned to support the business over the long term.
Year-To-Date 2011 Results
Net income for the nine months ended September 30, 2011 was $10.4 billion
compared with $9.6 billion in the year-ago period, an increase of 8 percent. Diluted
earnings per share were $8.48 compared with $7.38 per diluted share for the 2010
period, an increase of 15 percent. Revenues for the nine-month period totaled $77.4
billion, an increase of 9 percent (4 percent, adjusting for currency) compared with
$70.9 billion for the nine months of 2010.
Operating (non-GAAP) net income for the nine months ended September 30, 2011 was
$10.7 billion compared with $9.7 billion in the year-ago period, an increase of 11
percent. Operating (non-GAAP) diluted earnings per share were $8.77 compared with
$7.45 per diluted share for the 2010 period, an increase of 18 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; 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 —
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 supplementary materials presented within the third-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. EDT, today. Investors may participate by viewing the Webcast at
www.ibm.com/investor/3q11. 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
September 30,
Percent
2011
2010* Change
------- ------- -------
Nine Months Ended
September 30,
Percent
2011
2010*
Change
------- ------- -------
REVENUE
Global Technology
Services
Gross margin
$10,322
35.7%
$9,496
35.1%
Global Business
Services
Gross margin
4,832
29.4%
Software
Gross margin
Systems and
Technology
Gross margin
Global Financing
Gross margin
Other
Gross margin
8.7% $30,427 $28,036
34.5%
34.5%
8.5%
4,572
28.6%
5.7%
14,407
28.6%
13,465
28.0%
7.0%
5,817
88.1%
5,151
87.9%
12.9%
17,295
87.9%
15,447
87.2%
12.0%
4,482
39.8%
4,325
36.4%
3.6%
13,182
39.5%
11,696
35.2%
12.7%
520
47.4%
529
53.3%
-1.7%
1,555
49.9%
1,610
51.1%
-3.4%
182
-48.3%
199
-10.8%
-8.3%
563
-66.7%
599
-13.3%
-5.9%
TOTAL REVENUE
26,157
24,271
7.8%
77,430
70,852
9.3%
GROSS PROFIT
Gross margin
12,173
46.5%
11,001
45.3%
10.6%
35,416
45.7%
31,787
44.9%
11.4%
EXPENSE AND OTHER INCOME
S,G&A
% of revenue
5,662
21.6%
5,149
21.2%
10.0%
17,518
22.6%
15,886
22.4%
10.3%
R,D&E
% of revenue
1,546
5.9%
1,464
6.0%
5.6%
4,703
6.1%
4,448
6.3%
5.7%
(278)
7.2%
(855)
(836)
2.2%
(106)
95
nm
13.5%
23
298
(746)
267
nm
11.6%
Intellectual property
and custom development
income
(298)
Other (income)
and expense
128
Interest expense
107
TOTAL EXPENSE AND
OTHER INCOME
% of revenue
7,146
27.3%
6,324
26.1%
13.0%
21,687
28.0%
19,019
26.8%
14.0%
INCOME BEFORE
INCOME TAXES
Pre-tax margin
5,027
19.2%
4,677
19.3%
7.5%
13,729
17.7%
12,767
18.0%
7.5%
Provision for
income taxes
Effective tax
rate
1,188
1,088
9.2%
3,364
3,192
5.4%
23.6%
23.3%
24.5%
25.0%
$3,839
======
14.7%
$3,589
======
14.8%
7.0% $10,365
=======
13.4%
$9,576
======
13.5%
8.2%
$3.19
$3.23
$2.82
$2.86
$8.48
$8.60
$7.38
$7.49
14.9%
14.8%
WEIGHTED-AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING (M's):
ASSUMING DILUTION 1,204.9
BASIC
1,188.6
1,272.8
1,255.2
1,222.1
1,205.2
1,297.0
1,278.3
NET INCOME
Net margin
EARNINGS PER SHARE
OF COMMON STOCK:
ASSUMING DILUTION
BASIC
13.1%
12.9%
nm -- not meaningful
*
Segment gross profit margins in 2010 reclassified to conform with
2011 presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited)
(Dollars in Millions)
At
September 30,
2011
-------------
At
December 31,
2010
------------
ASSETS
Current Assets:
Cash and cash equivalents
$11,303
Marketable securities
-Notes and accounts receivable - trade
(net of allowances of $282 in 2011 and $324 in 2010)
9,719
Short-term financing receivables
(net of allowances of $266 in 2011 and $342 in 2010)
14,145
Other accounts receivable
(net of allowances of $11 in 2011 and $10 in 2010)
1,123
Inventories, at lower of average cost or market:
Finished goods
618
Work in process and raw materials
2,045
------------Total inventories
2,663
Deferred taxes
1,247
Prepaid expenses and other current assets
5,172
------------Total Current Assets
45,373
Plant, rental machines, and other property
Less: Accumulated depreciation
40,139
26,252
$10,661
990
10,834
16,257
1,134
432
2,018
------------2,450
1,564
4,226
------------48,116
40,289
26,193
------------13,887
------------14,096
9,830
5,131
2,570
24,913
3,033
5,422
------------$110,158
=============
10,548
3,068
3,220
25,136
3,488
5,778
------------$113,452
=============
$2,360
6,071
7,093
4,826
11,252
4,426
------------36,028
$4,216
6,778
7,804
5,028
11,580
5,156
------------40,562
24,089
21,846
15,375
3,634
8,654
------------87,781
15,978
3,666
8,226
------------90,279
47,558
100,266
(107,434)
(18,099)
------------22,291
45,418
92,532
(96,161)
(18,743)
------------23,046
87
------------22,378
------------$110,158
=============
126
------------23,172
------------$113,452
=============
Plant, rental machines, and other property - net
Long-term financing receivables
(net of allowances of $37 in 2011 and $58 in 2010)
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
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
(Unaudited)
Three Months Ended
September 30,
2011
2010
-----------
(Dollars in Millions)
Net Cash from Operating Activities per GAAP: $4,678
Nine Months Ended
September 30,
2011
2010
-------------
$4,551
$12,750
$12,754
374
------
2,110
-------
2,257
------
4,177
10,640
10,497
(1,007)
(3,000)
(2,881)
3,481
3,169
7,640
7,616
(64)
0
(893)
(3,444)
86
(1,984)
0
(818)
(3,653)
273
(223)
4
(2,593)
(11,465)
1,093
(2,993)
0
(2,369)
(11,774)
1,534
374
1,858
5,196
5,099
($461)
($1,154)
($348)
($2,887)
Less: the change in Global Financing (GF)
Receivables
207
-----Net Cash from Operating Activities
(Excluding GF Receivables)
4,471
Capital Expenditures, Net
(991)
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
(Unaudited)
THIRD-QUARTER 2011
----------------------------------------------(Dollars in Millions)
--------- Revenue --------External Internal
Total
-------- -------- --------
Pre-tax
Income
-------
Pre-tax
Margin
-------
$10,322
8.7%
$316
-12.6%
$10,638
7.9%
$1,695
12.5%
15.9%
Global Business Services
Y-T-Y change
4,832
5.7%
199
0.1%
5,031
5.5%
775
12.8%
15.4%
Software
Y-T-Y change
5,817
12.9%
804
10.4%
6,621
12.6%
2,214
12.0%
33.4%
Systems and Technology
Y-T-Y change
4,482
3.6%
190
-3.2%
4,672
3.3%
318
7.8%
6.8%
SEGMENTS
Global Technology Services
Y-T-Y change
Global Financing
Y-T-Y change
TOTAL REPORTABLE SEGMENTS
Y-T-Y change
Eliminations / Other
520
-1.7%
480
10.9%
999
4.0%
481
-4.0%
48.2%
$25,974
7.9%
$1,989
3.7%
$27,963
7.6%
$5,484
10.4%
19.6%
(1,989)
(1,806)
(457)
$26,157
7.8%
$5,027
7.5%
182
TOTAL IBM CONSOLIDATED
Y-T-Y change
$26,157
7.8%
$0
19.2%
(Dollars in Millions)
THIRD-QUARTER 2010
------------------------------------------------------- Revenue --------Pre-tax
Pre-tax
External Internal
Total
Income*
Margin*
-------- -------- --------------------
SEGMENTS
Global Technology Services
$9,496
$362
$9,857
$1,506
15.3%
Global Business Services
4,572
199
4,771
687
14.4%
Software
5,151
728
5,879
1,978
33.6%
Systems and Technology
4,325
196
4,521
295
6.5%
529
432
961
502
52.2%
$24,072
$1,917
$25,990
$4,968
19.1%
Global Financing
TOTAL REPORTABLE SEGMENTS
Eliminations / Other
TOTAL IBM CONSOLIDATED
199
$24,271
(1,917)
$0
(1,718)
$24,271
(291)
$4,677
19.3%
* Reclassified to conform with 2011 presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
(Dollars in Millions)
NINE-MONTHS 2011
------------------------------------------------------- Revenue --------Pre-tax
Pre-tax
External Internal
Total
Income
Margin
-------- -------- --------------------
SEGMENTS
Global Technology Services
Y-T-Y change
$30,427
8.5%
$943
-7.0%
$31,370
8.0%
$4,353
12.7%
13.9%
Global Business Services
Y-T-Y change
14,407
7.0%
604
0.9%
15,012
6.7%
2,166
19.6%
14.4%
Software
Y-T-Y change
17,295
12.0%
2,425
11.4%
19,720
11.9%
6,260
1.5%
31.7%
Systems and Technology
13,182
652
13,834
843
6.1%
Y-T-Y change
12.7%
14.1%
12.8%
197.9%
Global Financing
Y-T-Y change
1,555
-3.4%
1,524
20.3%
3,078
7.0%
1,497
7.6%
48.6%
$76,866
9.4%
$6,148
9.3%
$83,015
9.4%
$15,118
11.9%
18.2%
(6,148)
(5,585)
(1,389)
$77,430
9.3%
$13,729
7.5%
TOTAL REPORTABLE SEGMENTS
Y-T-Y change
Eliminations / Other
TOTAL IBM CONSOLIDATED
Y-T-Y change
(Dollars in Millions)
563
$77,430
9.3%
$0
17.7%
NINE-MONTHS 2010
------------------------------------------------------- Revenue --------Pre-tax
Pre-tax
External Internal
Total
Income*
Margin*
-------- -------- -------- --------------
SEGMENTS
Global Technology Services
$28,036
$1,014
$29,050
$3,863
13.3%
Global Business Services
13,465
599
14,064
1,811
12.9%
Software
15,447
2,176
17,623
6,167
35.0%
Systems and Technology
11,696
572
12,267
283
2.3%
1,610
1,267
2,877
1,391
48.3%
$70,253
$5,627
$75,880
$13,514
17.8%
Global Financing
TOTAL REPORTABLE SEGMENTS
Eliminations / Other
TOTAL IBM CONSOLIDATED
599
(5,627)
$70,852
$0
(5,028)
$70,852
(747)
$12,767
18.0%
* Reclassified to conform with 2011 presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING RESULTS RECONCILIATION
(Unaudited, Dollars in millions except per share amounts)
Gross Profit
Gross Profit Margin
THIRD-QUARTER 2011
----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments
(Non-GAAP)
-------- ------------ ------------- ----------$12,173
$87
($7)
$12,253
46.5%
0.3Pts
0.0Pts
46.8%
S,G&A
5,662
(75)
(0)
5,587
R,D&E
1,546
0
22
1,568
(18)
0
111
Other (Income) & Expense
128
Total Expense & Other (Income)
7,146
(92)
21
7,075
Pre-Tax Income
5,027
180
(29)
5,178
Pre-Tax Income Margin
Provision for Income Taxes**
Effective Tax Rate
19.2%
1,188
23.6%
Net Income
3,839
Net Income Margin
14.7%
Diluted Earnings Per Share
$3.19
0.7Pts
-0.1Pts
47
0.1Pts
(11)
-0.1Pts
133
0.5Pts
$0.11
(17)
-0.1Pts
($0.01)
19.8%
1,224
23.6%
3,954
15.1%
$3.28
THIRD-QUARTER 2010
----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments
(Non-GAAP)
-------- ------------ ------------- ----------Gross Profit
$11,001
Gross Profit Margin
45.3%
$65
0.3Pts
($53)
-0.2Pts
$11,013
45.4%
S,G&A
5,149
(76)
20
5,094
R,D&E
1,464
0
31
1,495
1
0
Other (Income) & Expense
(106)
(105)
Total Expense & Other (Income)
6,324
(75)
51
6,301
Pre-Tax Income
4,677
139
(104)
4,712
Pre-Tax Income Margin
Provision for Income Taxes**
Effective Tax Rate
19.3%
1,088
23.3%
Net Income
3,589
Net Income Margin
14.8%
Diluted Earnings Per Share
$2.82
0.6Pts
-0.4Pts
34
0.0Pts
(38)
-0.3Pts
105
0.4Pts
$0.08
(66)
-0.3Pts
($0.05)
19.4%
1,084
23.0%
3,628
14.9%
$2.85
* Includes amortization of acquired intangible assets and other acquisition-related
charges.
** 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
NINE-MONTHS 2011
----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments
(Non-GAAP)
-------- ------------ ------------- ----------$35,416
$259
$12
$35,687
45.7%
S,G&A
17,518
R,D&E
4,703
0.3Pts
46.1%
(16)
17,276
0
65
4,768
23
(23)
0
1
Total Expense & Other (Income)
21,687
(249)
49
21,487
Pre-Tax Income
13,729
508
(37)
14,200
Other (Income) & Expense
Pre-Tax Income Margin
Provision for Income Taxes**
Effective Tax Rate
Net Income
Net Income Margin
Diluted Earnings Per Share
17.7%
3,364
24.5%
10,365
13.4%
$8.48
(226)
0.0Pts
0.7Pts
132
0.1Pts
376
0.0Pts
(17)
-0.1Pts
(20)
0.5Pts
0.0Pts
$0.31
($0.02)
18.3%
3,479
24.5%
10,721
13.8%
$8.77
NINE-MONTHS 2010
----------------------------------------------Acquisition- RetirementRelated
Related
Operating
GAAP
Adjustments* Adjustments
(Non-GAAP)
-------- ------------ ------------- ----------Gross Profit
Gross Profit Margin
$31,787
44.9%
S,G&A
15,886
R,D&E
4,448
Other (Income) & Expense
(746)
$178
0.3Pts
(199)
($144)
-0.2Pts
$31,820
44.9%
56
15,744
0
93
4,541
(2)
0
(747)
Total Expense & Other (Income)
19,019
(200)
149
18,968
Pre-Tax Income
12,767
378
(293)
12,853
Pre-Tax Income Margin
18.0%
0.5Pts
-0.4Pts
18.1%
Provision for Income Taxes**
Effective Tax Rate
Net Income
3,192
25.0%
9,576
Net Income Margin
Diluted Earnings Per Share
13.5%
$7.38
106
0.1Pts
272
0.4Pts
$0.21
(114)
-0.3Pts
(179)
-0.3Pts
($0.14)
3,184
24.8%
9,669
13.6%
$7.45
* Includes amortization of acquired intangible assets and other acquisition-related
charges.
** 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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