2Q10 charts (pdf, 765 KB)

®
2Q 2010 Earnings Presentation
July 19, 2010
www.ibm.com/investor
Forward Looking Statements
Certain comments made in this presentation may be characterized as forward
looking under the Private Securities Litigation Reform Act of 1995. Forwardlooking statements are based on the company's current assumptions
regarding future business and financial performance. Those statements by
their nature address matters that are uncertain to different degrees. Those
statements involve a number of factors that could cause actual results to
differ materially. Additional information concerning these factors is contained
in the Company's filings with the SEC. Copies are available from the SEC,
from the IBM web site, or from IBM Investor Relations.
Any forward-looking statement made during this presentation speaks only as
of the date on which it is made. The company assumes no obligation to
update or revise any forward-looking statements.
These charts and the associated remarks and comments are integrally related,
and are intended to be presented and understood together.
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2
2Q 2010 Highlights
EPS
$2.61
+13% yr/yr
¾ Revenue growth rate improved in all brands and all geographies @CC
• Growth markets +9% yr/yr @CC, led by BRICs +16% yr/yr @CC
• Power midrange +11% yr/yr
• Business analytics +14% yr/yr
¾ Continued margin expansion
• Led by Software and Global Business Services
• Focus on productivity
¾ Cash flow generation supports ongoing investments and shareholder returns
• Announced >$3B of acquisitions in first half
• $8B share repurchase and almost $2B dividends in first half
Increasing EPS expectations to at least $11.25 in 2010
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3
Financial Summary
$ in Billions, except EPS
Revenue
2Q10
B/(W)
Yr/Yr
$23.7
2%
@CC
GP %
2%
45.6%
0.1 pts
Expense
$6.2
1%
Pre-Tax Income
$4.6
7%
PTI Margin
19.3%
1.0 pts
Tax Rate
26.0%
1.2 pts
Net Income
Shares (Diluted) (M)
EPS
$3.4
1,296.7
$2.61
9%
3%
13%
Improving revenue growth and margin expansion drive profit performance
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4
Revenue by Geography
$ in Billions
2Q10
Americas
$10.2
B/(W) Yr/Yr
Rptd
@CC
2Q10 Yr/Yr vs.
1Q10 Yr/Yr
@CC
3%
2%
+2 pts
Europe/ME/A
7.4
(6%)
(1%)
+1 pts
Asia Pacific
5.4
9%
3%
+2 pts
OEM
0.7
26%
26%
+8 pts
$23.7
2%
2%
+2 pts
Major Markets
(1%)
(1%)
+1 pts
Growth Markets
14%
9%
+1 pts
22%
16%
+3 pts
IBM
BRIC Countries
Canada/
LA
EMEA
U.S.
+1%
APac
Japan +7%
-1% @CC
@CC
OEM
+26%
Growth markets now as large as Euro-based business
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5
Revenue by Segment
B/(W) Yr/Yr
Rptd
@CC
2Q10 Yr/Yr vs.
1Q10 Yr/Yr
@CC
$9.2
1%
Flat
+<1 pts
Global Business Services
4.5
3%
3%
+8 pts
Software
5.3
6%*
6%*
+1 pts*
Systems & Technology
4.0
3%
4%
+2 pts
Global Financing
0.5
(4%)
(5%)
+7 pts
2%
2%
+2 pts
$ in Billions
2Q10
Global Technology Services
Total IBM
$23.7
Global
Business Systems
&
Services
Technology
Global
Technology
Services
* Revenue growth excluding PLM
Software
Global
Financing
Broad-based improvement in revenue growth rate
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6
Expense Summary
$ in Billions
2Q10
B/(W)
Yr/Yr
SG&A
$5.1
RD&E
B/(W) Yr/Yr Drivers
Currency
Acq.*
Ops
1%
(1 pts)
(2 pts)
4 pts
1.5
(3%)
(1 pts)
(1 pts)
(1 pts)
IP and Development Income
(0.3)
(2%)
Other (Income)/Expense
(0.1)
nm
0.1
11%
$6.2
1%
(2 pts)
(2 pts)
5 pts
Interest Expense
Total Expense & Other Income
* Includes acquisitions made in the last twelve months
8th consecutive quarter of operational expense improvement
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7
Margins by Segment
External
Gross Profit Margins
Total
Pre-Tax Margins
2Q10
B/(W)
Yr/Yr Pts
2Q10
B/(W)
Yr/Yr Pts
Global Technology Services
34.6%
(0.2 pts)
14.9%
Flat
Global Business Services
28.5%
1.3 pts
14.6%
1.3 pts
Software
87.1%
1.2 pts
33.3%
1.3 pts
Systems & Technology
36.1%
(1.0 pts)
Global Financing
50.1%
3.0 pts
47.4%
1.6 pts
Total IBM
45.6%
0.1 pts
19.3%
1.0 pts
5.3%
(2.9 pts)
Margin expansion led by Global Business Services and Software
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8
Services Segments
Global Technology Services (GTS)
$ in Billions
Global Business Services (GBS)
2Q10
B/(W) Yr/Yr
Rptd
@CC
$9.2
1%
Gross Margin (External)
34.6%
(0.2 pts)
PTI Margin
14.9%
Flat
Revenue (External)
Flat
Global Services Signings
$ in Billions
2Q10
Outsourcing
- GTS O/S, Appl. O/S (AMS)
Transactional
- ITS, Consulting, AMS SI
Total Signings
$6.5
5.8
$12.3
B/(W) Yr/Yr
Rptd
@CC
(19%)
(3%)
(12%)
$ in Billions
2Q10
B/(W) Yr/Yr
Rptd
@CC
$4.5
3%
Gross Margin (External)
28.5%
1.3 pts
PTI Margin
14.6%
1.3 pts
Revenue (External)
2Q10 Revenues
(% of Total Services)
(Growth @CC)
(19%)
(3%)
Flat
Yr/Yr
(12%)
GTS
Outsourcing
39%
3%
(2%) Yr/Yr
Integrated
Technology
Services
15% Maint.
13%
Global Business
Services
33%
3%
Yr/Yr
3%
Yr/Yr
Return to revenue growth with positive trends
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9
Software Segment
$ in Billions
Revenue (External) excl. PLM
2Q10
$5.3
B/(W) Yr/Yr
Rptd
@CC
6%
6%
Revenue (External) incl. PLM
$5.3
2%
Gross Margin (External)
87.1%
1.2 pts
PTI Margin
33.3%
1.3 pts
Yr/Yr
2Q10 Revenue
Rptd
@CC
17%
16%
7%
7%
Tivoli
18%
19%
Lotus
(6%)
(6%)
1%
2%
Key Branded Middleware
9%
10%
Total Middleware
6%
6%
Total Software excl. PLM
6%
6%
WebSphere Family
Information Management
Rational
2%
2Q10 Revenue
(% of Total Software)
Key
Branded
Middleware
62%
Other
Middleware
21%
Operating
Systems
Other 10%
7%
Continued share gains in Branded Middleware
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10
Systems & Technology Segment
$ in Billions
Revenue (External)
Gross Margin (External)
PTI Margin
2Q10 Revenue
2Q10
B/(W) Yr/Yr
Rptd
@CC
$4.0
3%
36.1%
(1.0 pts)
5.3%
(2.9 pts)
4%
Yr/Yr
System z
Power Systems
Midrange
System x
Storage
Disk
Retail Store Solutions
Total Systems
Microelectronics OEM
Total Systems & Technology
Rptd
(24%)
(10%)
11%
30%
5%
12%
31%
1%
23%
3%
@CC
(22%)
(10%)
12%
30%
6%
14%
33%
2%
23%
4%
2Q10 Revenue
(% of Total Sys & Tech)
Storage
20%
Servers
62%
RSS
Micr
o OE
13% M
New System z and Power7 high-end in 3Q
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11
Cash Flow Analysis
2Q10
B/(W)
Yr/Yr
YTD
1H10
B/(W)
Yr/Yr
$3.8
($1.0)
$8.2
($0.9)
(0.2)
(0.6)
1.9
(1.1)
4.0
(0.3)
6.3
0.2
(1.0)
(0.1)
(1.9)
(0.2)
3.0
(0.4)
4.4
0.0
Acquisitions
(0.2)
(0.1)
(1.0)
(0.9)
Divestitures
0.0
0.0
0.0
(0.4)
Dividends
(0.8)
(0.1)
(1.6)
(0.1)
Share Repurchases
(4.1)
(2.4)
(8.1)
(4.7)
0.9
1.2
1.3
3.4
(0.5)
(0.1)
3.2
1.3
($1.7)
($2.0)
$ in Billions
Net Cash from Operations
Less: Global Financing Receivables
Net Cash from Operations
(excluding GF Receivables)
Net Capital Expenditures
Free Cash Flow (excluding GF Receivables)
Non-GF Debt
Other (includes GF A/R & GF Debt)
Change in Cash & Marketable Securities
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($1.7)
($1.4)
12
Balance Sheet Summary
$ in Billions
Cash & Marketable Securities
June 09
Dec. 09
June 10
$12.5
$14.0
$12.2
Non-GF Assets*
60.2
61.7
61.6
Global Financing Assets
30.9
33.3
29.5
103.7
109.0
103.4
Other Liabilities
58.8
60.2
55.6
Non-GF Debt*
6.6
3.7
5.5
22.8
22.4
21.2
29.4
26.1
26.7
Total Liabilities
88.2
86.3
82.2
Equity
15.5
22.8
21.2
Total Assets
Global Financing Debt
Total Debt
Non-GF Debt / Capital
Global Financing Leverage
35%
16%
23%
6.9
7.1
7.1
* Includes eliminations of inter-company activity
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13
EPS Bridge – 2Q09 to 2Q10
$2.61
$0.08
$0.16
$2.32
$0.05
$0.01 Gross Margin
$0.11 Expense Productivity
$0.04 Tax Rate
2Q09 EPS
Revenue Growth
@ Actual
Operating
Leverage
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Share
Repurchases
2Q10 EPS
14
2Q 2010 Summary
At Least
$11.25
$10.01
$8.89
$7.15
$6.05
2Q EPS
2006
2007
2008
2009
2010
Dow indexed to IBM 2006 EPS, excludes Financials and GM for all periods. Data Source: Bloomberg
Note: 2006-2008 EPS reflects the adoption of amendments to ASC 260, “Earnings Per Share”
¾ Double-digit earnings growth off strong base
¾ Steady improvement in the business
¾ Investing for growth
¾ Superior shareholder returns
Increasing EPS expectations to at least $11.25 in 2010
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15
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16
Supplemental Materials
Some columns and rows in these materials, including the supplemental exhibits, may not add
due to rounding
¾ Currency – Year/Year Comparison
¾ Supplemental Segment Information – Global Services
¾ Services Transactional Signings Trends
¾ Supplemental Segment Information – Systems & Technology, Software
¾ Global Financing Portfolio
¾ Revenue by Key Industry Sales Unit
¾ Cash Flow (FAS 95)
¾ Supplemental Information – Operating Earnings
¾ Non-GAAP Supplementary Materials
• Constant Currency, Cash Flow
• Debt-to-Capital Ratio, PLM Sale
• Reconciliation of Total Revenue Growth Rates
• Reconciliation of Revenue Growth Rates - Segments, Geographies
• Reconciliation of Geography Revenue Growth
• Reconciliation of Services Segment Revenue Growth Rates
• Reconciliation of Debt-to-Capital Ratio
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17
Currency – Year/Year Comparison
Quarterly Averages per US $
Yr/Yr @ 7/16 Spot
1Q10
Yr/Yr
2Q10
Yr/Yr
7/16
Spot
Euro
0.72
6%
0.79
(7%)
0.77
(11%)
(14%)
(6%)
Pound
0.64
8%
0.67
(4%)
0.65
(7%)
(6%)
(2%)
91
3%
92
5%
87
7%
3%
5%
Yen
Revenue Impact - Pts
5 pts
0 pts
@ 7/2/10 Rates
$1.2
$0.1
- $B
3Q10
4Q10
FY10
~(1 pts)
(3-4 pts)
~0 pts
Vs. 4/19 View - Pts B/(W)
(2 pts)
(1 pts)
(1 pts)
(1 pts)
- $B B/(W)
($0.5)
($0-0.5)
($0-0.5)
~($1.0)
(1-2 pts)
(4 pts)
(2-3 pts)
(3 pts)
(3 pts)
($0.3)
($0.9)
~($0.5)
($0.5-1.0)
~($3.0)
Vs. 1/19 View - Pts B/(W)
- $B B/(W)
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18
Supplemental Segment Information – 2Q 2010
Revenue Growth
Global Services
Backlog
Yr/Yr
@CC
Global Services
2Q10
2%
Flat
Backlog
$129B
(2%)
(2%)
5%
3%
Quarter-to-Quarter
($4B)
Global Technology Services
1%
Flat
Year-to-Year
($3B)
Global Business Services
3%
3%
GTS Outsourcing
Integrated Tech Services
Maintenance
Change in Backlog due to Currency
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19
Services Transactional Signings Trends
Services Transactional Signings Yr/Yr Growth @CC
0%
-1%
-3%
-5%
-4%
-5%
-3%
-4%
-5%
-5%
-6%
-7%
-6%
-7%
-8%
-7%
-10%
-10%
-12%
-15%
-15%
-18%
-20%
1Q09
2Q09
GTS Transactional
3Q09
4Q09
GBS Transactional
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1Q10
2Q10
Services Transactional
20
Supplemental Segment Information – 2Q 2010
Revenue Growth
Revenue Growth
Systems & Technology
Yr/Yr
@CC
System z *
(24%)
(22%)
Power Systems
(10%)
(10%)
30%
30%
5%
6%
31%
33%
1%
2%
23%
23%
3%
4%
System x
Storage
Retail Store Solutions
Total Systems
Microelectronics OEM
Total Systems & Technology
* MIPS down 14% yr/yr
GP%
Yr/Yr
@CC
17%
16%
7%
7%
Tivoli
18%
19%
=
Lotus
(6%)
(6%)
=
Rational
1%
2%
9%
10%
Share
Software
WebSphere Family
Information Management
Key Branded Middleware
(3%)
(4%)
Total Middleware
6%
6%
Operating Systems
2%
2%
Other Middleware
Other Software/Services
(28%)
(28%)
Total Software excl. PLM
6%
6%
Total Software incl. PLM
2%
2%
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21
Global Financing Portfolio
2Q10 – $21.9B Net External Receivables
Investm ent Grade
64%
Non-Investm ent Grade
36%
45%
40%
35%
30%
25%
20%
40%
15%
10%
24%
17%
5%
11%
5%
Ba3-B1
B2-B3
3%
0%
Aaa-A3
Baa1-Baa3
Ba1-Ba2
Identified Loss Rate
Anticipated Loss Rate
Reserve Coverage
Client Days Delinquent Outstanding
Commercial A/R > 30 Days
Caa-D
2Q10
1.8%
0.3%
2.1%
1Q10
1.9%
0.4%
2.3%
2Q09
1.7%
0.6%
2.3%
3.7
$27M
3.3
$49M
3.4
$48M
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22
Revenue by Key Industry Sales Unit
$ in Billions
Financial Services
2Q10
$6.7
B/(W) Yr/Yr
Rptd
@CC
4%
3%
Public
3.9
(2%)
(2%)
Industrial
2.4
(3%)
(3%)
Distribution
2.4
5%
5%
Communications
2.3
(1%)
(2%)
General Business
4.7
5%
5%
All Sectors
$23.1
2%
1%
Total IBM
$23.7
2%
2%
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Public
Financial
Services
Industrial
Distribution
Comms
General
Business
23
$ in Billions
Cash Flow (FAS 95)
QTD
2Q10
QTD
2Q09
YTD
1H10
YTD
1H09
$3.4
$3.1
$6.0
$5.4
Depreciation / Amortization of Intangibles
1.2
1.2
2.4
2.5
Stock-based Compensation
0.2
0.1
0.3
0.3
Working Capital / Other
(0.7)
(0.2)
(2.4)
(2.0)
Global Financing A/R
(0.2)
0.4
1.9
3.0
3.8
4.7
8.2
9.1
(1.0)
(0.9)
(1.9)
(1.6)
0.0
0.0
0.0
0.4
Acquisitions, net of cash acquired
(0.2)
(0.1)
(1.0)
(0.1)
Marketable Securities / Other Investments, net
(0.8)
(0.9)
0.2
(0.5)
(1.9)
(1.8)
(2.6)
(1.9)
0.2
(1.6)
0.7
(4.0)
Dividends
(0.8)
(0.7)
(1.6)
(1.4)
Common Stock Repurchases
(4.1)
(1.7)
(8.1)
(3.4)
0.9
0.3
1.8
0.5
Net Cash used in Financing Activities
(3.7)
(3.7)
(7.1)
(8.3)
Effect of Exchange Rate changes on Cash
(0.2)
0.2
(0.3)
0.0
Net Income from Operations
Net Cash provided by Operating Activities
Capital Expenditures, net of payments & proceeds
Divestitures, net of cash transferred
Net Cash used in Investing Activities
Debt, net of payments & proceeds
Common Stock Transactions - Other
Net Change in Cash & Cash Equivalents
($2.1)
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($0.6)
($1.9)
($1.1)
24
Supplemental Information – Operating Earnings
The company is including a view of the impact of certain acquisitionrelated charges and certain retirement-related elements on IBM's
earnings results (Operating Earnings).
The company believes that providing investors with a view of operating
earnings will provide better transparency into the operational results of
the business; improve visibility to management decisions and their
impacts on operational performance; enable better comparison to peer
companies; and, allow the company to provide a long-term strategic
view of the business going forward.
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25
Supplemental Information – Operating Earnings - 2010
1Q10
2Q10
Pre-Tax Income
$3,515
$4,575
Net Income
$2,601
$3,386
EPS
$1.97
$2.61
$ in Millions, except EPS
As Reported
Adjustments
Pre-Tax Income Total
$41
Non-Operating Pension*
(76)
Acquisition-Related Charges**
116
Tax Impact***
($4)
Net Income
$37
EPS
$9
(113)
122
7
$17
$0.03
$0.01
Pre-Tax Income
$3,556
$4,584
Net Income
$2,638
$3,402
EPS
$2.00
$2.62
Operating (Non-GAAP)
* Includes Retirement Related Interest Cost, Expected ROA, Recognized actuarial losses or gains, amortization of transition assets, other settlements, curtailments, multi-employer
plans and insolvency insurance
** Includes Amortization of Purchased Intangibles, In Process R&D, Severance Cost for Acquired employees, vacant space for acquired companies, deal costs
*** The tax impact on the Operating (Non-GAAP) Pre Tax Income will be calculated under the same accounting principles applied to the As Reported Pre Tax Income under ACS
740, which employs an annual effective tax rate concept to the results.
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26
Supplemental Information – Operating Earnings - 2009
1Q09
2Q09
3Q09
4Q09
FY09
Pre-Tax Income
$3,122
$4,262
$4,373
$6,381
$18,138
Net Income
$2,295
$3,103
$3,214
$4,813
$13,425
EPS
$1.70
$2.32
$2.40
$3.59
$10.01
$ in Millions, except EPS
As Reported
Adjustments
Pre-Tax Income Total
$31
($23)
Non-Operating Pension*
(94)
(145)
Acquisition-Related Charges**
125
Tax Impact***
Net Income
EPS
$3
($22)
($12)
(121)
(149)
(509)
122
124
127
498
($2)
$14
$8
$19
$39
$29
($9)
($3)
$27
$10
$0.02
($0.01)
$0.01
$0.00
$0.02
Pre-Tax Income
$3,153
$4,239
$4,375
$6,359
$18,126
Net Income
$2,324
$3,094
$3,224
$4,810
$13,452
EPS
$1.72
$2.31
$2.41
$3.59
$10.03
Operating (Non-GAAP)
* Includes Retirement Related Interest Cost, Expected ROA, Recognized actuarial losses or gains, amortization of transition assets, other settlements, curtailments, multi-employer
plans and insolvency insurance
** Includes Amortization of Purchased Intangibles, In Process R&D, Severance Cost for Acquired employees, vacant space for acquired companies, deal costs
*** The tax impact on the Operating (Non-GAAP) Pre Tax Income will be calculated under the same accounting principles applied to the As Reported Pre Tax Income under ACS
740, which employs an annual effective tax rate concept to the results.
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27
Supplemental Information – Operating Earnings - 2008
1Q08
2Q08
3Q08
4Q08
FY08
Pre-Tax Income
$3,198
$3,814
$3,895
$5,808
$16,715
Net Income
$2,319
$2,765
$2,824
$4,427
$12,334
EPS
$1.64
$1.97
$2.04
$3.27
$8.89
$ in Millions, except EPS
As Reported
Adjustments
Pre-Tax Income Total
Non-Operating Pension*
Acquisition-Related Charges**
Tax Impact***
Net Income
EPS
($6)
$24
$2
($167)
($147)
(121)
(140)
(132)
(297)
(691)
115
165
134
130
544
$13
$27
($5)
$70
$105
$7
$52
($3)
($97)
($41)
$0.00
$0.04
$0.00
($0.07)
($0.03)
Pre-Tax Income
$3,191
$3,839
$3,897
$5,642
$16,569
Net Income
$2,325
$2,817
$2,821
$4,330
$12,293
EPS
$1.65
$2.01
$2.04
$3.20
$8.86
Operating (Non-GAAP)
* Includes Retirement Related Interest Cost, Expected ROA, Recognized actuarial losses or gains, amortization of transition assets, other settlements, curtailments, multi-employer
plans and insolvency insurance
** Includes Amortization of Purchased Intangibles, In Process R&D, Severance Cost for Acquired employees, vacant space for acquired companies, deal costs
*** The tax impact on the Operating (Non-GAAP) Pre Tax Income will be calculated under the same accounting principles applied to the As Reported Pre Tax Income under ACS
740, which employs an annual effective tax rate concept to the results.
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Non-GAAP Supplementary Materials
In an effort to provide investors with additional information regarding the company's
results as determined by generally accepted accounting principles (GAAP), the company
also discusses, in its earnings press release and/or earnings presentation materials, the
following Non-GAAP information which management believes provides useful information
to investors.
Constant Currency
Management refers to growth rates at constant currency or adjusting for currency so that
the business results can be viewed without the impact of fluctuations in foreign currency
exchange rates, thereby facilitating period-to-period comparisons of the company's
business performance. Constant currency revenue results are calculated by translating
current period revenue in local currency using the prior year's currency conversion rate.
This consistent approach is based on the pricing currency for each country which is
typically the functional currency. Generally, when the dollar either strengthens or
weakens against other currencies, the growth at constant currency rates or adjusting for
currency will be higher or lower than growth reported at actual exchange rates.
Cash Flow
Management includes presentations of both cash flow from operations and free cash flow
that exclude the effect of Global Financing Receivables. For a financing business,
increasing receivables is the basis for growth. Receivables are viewed as an investment
and an income-producing asset. Therefore, management presents financing receivables
as an investing activity. Management’s view is that this presentation gives the investor the
best perspective of cash available for new investment or for distribution to shareholders.
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Non-GAAP Supplementary Materials
Debt-to-Capital Ratio
Management presents its debt-to-capital ratio excluding the Global Financing business. A
financing business is managed on a leveraged basis. The company funds its Global
Financing segment using a debt-to-equity ratio target of approximately 7 to 1. Given this
significant leverage, the company presents a debt-to-capital ratio which excludes the
Global Financing segment debt and equity because the company believes this is more
representative of the company’s core business operations.
PLM Sale
Management presents certain financial results excluding the effects of the PLM sale. In
March 2010, the company completed the sale of its activities associated with the sales
and support of Dassault Systemes’ (Dassault) product lifecycle management (PLM)
software, including customer contracts and related assets to Dassault. Given this sale,
management believes that presenting financial information regarding revenue and
software segment revenue without this item is more representative of operational
performance and provides additional insight into, and clarifies the basis for, historical
and/or future performance, which may be more useful for investors.
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Non-GAAP Supplementary Materials
Reconciliation of Revenue Growth Rates
2Q10 Yr/Yr vs. 4Q09 Yr/Yr
Total Revenue
As Rptd
@CC
1 pts
7 pts
The above serves to reconcile the Non-GAAP financial information contained in the “2Q 2010 Financial Highlights”
discussion regarding revenue growth in the company’s earnings presentation. See Slide 29 of this presentation for
additional information on the use of these Non-GAAP financial measures.
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Non-GAAP Supplementary Materials
Reconciliation of Revenue Growth Rates
2Q10 Yr/Yr vs. 1Q10 Yr/Yr
As Rptd
@CC
Global Technology Services
(5 pts)
<1 pts
3 pts
8 pts
Software
(8 pts)
(3 pts)
Software, excluding PLM Sale
(4 pts)
1 pts
Systems & Technology
(1 pts)
2 pts
3 pts
7 pts
(3 pts)
2 pts
1 pts
2 pts
(11 pts)
1 pts
Asia
Flat
2 pts
OEM
8 pts
8 pts
Major Markets
(3 pts)
1 pts
Growth Markets
(6 pts)
1 pts
BRIC
(1 pts)
3 pts
Global Business Services
Global Financing
Total Revenue
Americas
EMEA
The above serves to reconcile the Non-GAAP financial information contained in the “2Q 2010 Financial Highlights,” “Revenue by Segment” and
“Revenue by Geography” discussion regarding segment revenue growth in the company’s earnings presentation. The above reconciles the sequential
change from 1Q10 to 2Q10. See Slide 29 and 30 of this presentation for additional information on the use of these Non-GAAP financial measures.
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Non-GAAP Supplementary Materials
Reconciliation of Geography Revenue Growth
2Q10 Yr/Yr
As Rptd
@CC
Asia Pacific, other than Japan
14%
7%
Japan
5%
(1%)
UK
6%
11%
The above serves to reconcile the Non-GAAP financial information contained in the “Revenue by Geography” discussion
regarding revenue growth in certain geographies/countries in the company’s earnings presentation. See Slide 29 of this
presentation for additional information on the use of these Non-GAAP financial measures.
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Non-GAAP Supplementary Materials
Reconciliation of Services Segment Revenue Growth
2Q10 Yr/Yr
As Rptd
@CC
Growth Markets – GTS Outsourcing
19%
8%
Growth Markets - ITS
13%
8%
North America – Consulting & AMS
10%
8%
The above serves to reconcile the Non-GAAP financial information contained in the “Services Segment” discussion regarding
revenue growth in certain segments in the company’s earnings presentation. See Slide 29 of this presentation for additional
information on the use of these Non-GAAP financial measures.
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Non-GAAP Supplementary Materials
Reconciliation of Debt-to-Capital Ratio
2Q10
FY09
2Q09
Non-Global Financing Debt / Capital
23%
16%
35%
IBM Consolidated Debt / Capital
56%
53%
65%
The above serves to reconcile the Non-GAAP financial information contained in the “Balance Sheet Summary”
discussion regarding the non-Global Financing debt to capital ratio in the company’s earnings presentation. See
Slide 30 of this presentation for additional information on the use of these Non-GAAP financial measures.
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