4Q12 charts (pdf, 48 KB)

®
4Q 2012 Earnings Presentation
January 22, 2013
www.ibm.com/investor
Forward Looking Statements and Non-GAAP Information
Certain comments made in this presentation may be characterized as forward looking under
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.
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.
In an effort to provide additional and useful information regarding the company’s financial
results and other financial information as determined by generally accepted accounting
principles (GAAP), the company also discusses, in its earnings press release and earnings
presentation materials, certain non-GAAP information including "operating earnings" and other
"operating" financial measures. The rationale for management’s use of this non-GAAP
information, the reconciliation of that information to GAAP, and other related information are
included in supplemental materials entitled “Non-GAAP Supplemental Materials” that are
posted on the Company’s investor relations web site at http://www.ibm.com/investor/4q12/
The Non-GAAP Supplemental Materials are also included as Attachment II to the Company’s
Form 8-K dated January 22, 2013.
www.ibm.com/investor
2
2012 Summary
Revenue
@CC excl. RSS divestiture
Operating Pre-Tax Income
Operating (Non-GAAP) EPS
Free Cash Flow
4Q12
$
Yr/Yr
$29.3B
(1%)
+1%
$8.1B +10%
$5.39
+14%
$9.5B +$0.6B
FY12
Yr/Yr
(2%)
Flat
$23.2B
+7%
$15.25 +13%
$18.2B +$1.6B
$
$104.5B
 4Q Segment highlights:
• Software growth across the portfolio
• Services revenue growth fairly consistent with 3Q, strength in growth initiatives
• Systems led by successful mainframe ramp
 Expanded operating gross, pre-tax and net margins for 4Q and full year
 10th consecutive year of double-digit EPS growth
Expect at least $16.70 of Operating EPS in 2013
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3
Key Financial Metrics
$ in Billions, except EPS
P&L Highlights
Revenue
4Q12
B/(W)
Yr/Yr
$29.3
(1%)
Flat
@CC
@CC excl. RSS
1%
PTI – Operating
$8.1
10%
EPS – Operating
$5.39
14%
P&L Ratios
(Operating)
4Q12
B/(W)
Yr/Yr
GP Margin
52.3%
2.1 pts
PTI Margin
27.7%
2.6 pts
Tax Rate
24.4%
Flat
NI Margin
20.9%
1.9 pts
4Q12
Last
12 Mos.
$9.5
$18.2
Share Repurchase (Gross)
3.0
12.0
Dividends
1.0
3.8
Cash Highlights
Free Cash Flow (excl GF Receivables)
Cash Balance @ Dec. 31
11.1
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4
Revenue by Geography
$ in Billions
Americas
4Q12
$12.5
B/(W) Yr/Yr
Rptd
@CC
Flat
1%
Europe/ME/A
9.1
(5%)
(3%)
Asia Pacific
7.0
4%
5%
Total Geographies
excl. Retail Store Solutions
IBM
excl. Retail Store Solutions
Major Markets
Growth Markets
BRIC Countries
$28.6
$29.3
(1%)
Flat
Flat
1%
(1%)
Flat
Flat
1%
(3%)
(2%)
7%
7%
11%
14%
Canada/
LA
EMEA
U.S.
-1%
Japan APac
+5%
@CC
OEM
-5%
Growth Markets outpace Major Markets by 9 points
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5
Revenue and Gross Profit Margin by Segment
Operating
Gross Profit Margin
Revenue
$ in Billions
4Q12
B/(W) Yr/Yr
Rptd
@CC
4Q12
B/(W)
Yr/Yr Pts
$10.3
(2%)
Flat
37.6%
1.1 pts
Global Business Services
4.7
(3%)
(2%)
29.9%
0.7 pts
Software
7.9
3%
4%
90.6%
0.8 pts
Systems & Technology
5.8
(1%)
(1%)
44.1%
3.6 pts
4%
4%
0.5
(2%)
(1%)
43.8%
(5.9 pts)
$29.3
(1%)
Flat
52.3%
2.1 pts
Flat
1%
Global Technology Services
excl. Retail Store Solutions
Global Financing
Total Revenue & Op. GP Margin
excl. Retail Store Solutions
Broad-based margin expansion
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6
Expense Summary
4Q12
B/(W)
Yr/Yr
SG&A – Operating
$5.8
RD&E – Operating
1.6
$ in Billions
Currency
Acq.*
Base
3%
1 pts
(2 pts)
4 pts
(1%)
0 pts
(3 pts)
2 pts
1 pts
(2 pts)
3 pts
IP and Development Income
(0.2)
(10%)
Other (Income)/Expense
(0.1)
17%
Interest Expense
Operating Expense & Other Income
0.1
$7.2
B/(W) Yr/Yr Drivers
4%
2%
* Includes acquisitions made in the last twelve months, net of non-operating acquisition-related charges
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7
Services Segments
Global Technology Services (GTS)
$ in Billions
4Q12
$10.3
37.6%
$2.0
19.2%
Revenue (External)
Gross Margin (External)
Pre-Tax Income
PTI Margin
4Q12 Revenue
Global Business Services (GBS)
B/(W) Yr/Yr
@CC
Rptd
(2%)
Flat
1.1 pts
5%
1.2 pts
$ in Billions
Revenue (External)
Gross Margin (External)
Pre-Tax Income
PTI Margin
Yr/Yr
GTS
GTS Outsourcing
Integrated Technology Services
Maintenance
Rptd
(3%)
2%
(2%)
@CC
(2%)
3%
Flat
(4%)
(3%)
(2%)
(2%)
Flat
1%
GBS
GBS Outsourcing
Consulting & Systems Integration
Services Backlog
4Q12
$140B
4Q12
$4.7
29.9%
$0.8
17.2%
B/(W) Yr/Yr
@CC
Rptd
(3%)
(2%)
0.7 pts
Flat
0.6 pts
4Q12 Revenue
(% of Total Services)
Maint.
12%
GTS
Outsourcing
40%
GBS
Outsourcing
7%
ITS
17%
GBS C&SI
24%
Continued margin expansion
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8
Full Year Services Backlog Run Out
+2 pts yr/yr
(1 pt) yr/yr
2012 Revenue
from Opening
Backlog
Projected
2013 Revenue
from Opening
Backlog
Gross profit dollar
contribution to
Services
2013 Revenue
from Backlog
+1% yr/yr*
2012
Outsourcing
Contract
Restructuring
Rest of
Portfolio
2013
* @ consistent foreign exchange rates yr/yr
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9
Software Segment
$ in Billions
4Q12
$7.9
90.6%
$4.0B
46.0%
Revenue (External)
Gross Margin (External)
Pre-Tax Income
PTI Margin
Yr/Yr
Rptd
@CC
4Q12 Revenue
11%
11%
Information Management
2%
3%
Tivoli
4%
5%
Lotus
9%
9%
12%
12%
Key Branded Middleware
5%
6%
Total Middleware
4%
5%
Total Software
3%
4%
WebSphere Family
Rational
B/(W) Yr/Yr
Rptd
@CC
3%
4%
0.8 pts
8%
2.4 pts
4Q12 Revenue
(% of Total Software)
Key
Branded
Middleware
69%
Other
Middleware
15%
Operating
Systems
Other 9%
7%
Performance led by Branded Middleware
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10
Systems & Technology Segment
B/(W) Yr/Yr
$ in Billions
Revenue (External) – including RSS
4Q12
Rptd
@CC
$5.8
(1%)
(1%)
4%
4%
excluding RSS
Gross Margin (External)
Pre-Tax Income
PTI Margin
4Q12 Revenue
System z
Power Systems
System x
Storage
Total Systems excl. RSS
Microelectronics OEM
Total Systems & Technology excl. RSS
44.1%
$1.0
16.4%
Yr/Yr
Rptd
56%
(19%)
(2%)
(5%)
4%
4%
4%
@CC
56%
(19%)
(3%)
(5%)
4%
4%
4%
3.6 pts
23%
3.2 pts
4Q12 Revenue
(% of Total Sys & Tech)
Servers
71%
Storage
19%
M i cr
o OE
1 0% M
System z strength; profit growth driven by new products
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11
Growth Initiatives
Smarter Planet
2012 Revenue up >25% yr/yr
Growth Markets
Business Analytics
2012 Revenue
up 7% yr/yr @CC
2012 Revenue
up 13% yr/yr
Cloud
2012 Revenue up 80% yr/yr
Continued strength in our key growth initiatives
supports shift to higher value
12
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12
Cash Flow Analysis
$ in Billions
Net Cash from Operations
Less: Global Financing Receivables
4Q12
B/(W)
Yr/Yr
FY12
B/(W)
Yr/Yr
$6.3
($0.8)
$19.6
($0.3)
(4.2)
(1.2)
(2.9)
(2.1)
10.5
0.5
22.5
(1.0)
0.1
(4.3)
9.5
0.6
18.2
Acquisitions
(1.5)
0.1
(3.7)
(1.9)
Divestitures
0.0
0.0
0.6
0.6
Dividends
(1.0)
(0.1)
(3.8)
(0.3)
Share Repurchases (Gross)
(3.0)
0.6
Non-GF Debt
(1.6)
(2.2)
0.7
(1.0)
Other (includes GF A/R & GF Debt)
(3.7)
(0.8)
(0.8)
(3.1)
($1.1)
($1.7)
($0.8)
($1.1)
Net Cash from Operations
(excluding GF Receivables)
Net Capital Expenditures
Free Cash Flow (excluding GF Receivables)
Change in Cash & Marketable Securities
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(12.0)
1.8
(0.2)
1.6
3.1
13
Balance Sheet Summary
Dec. 11
Dec. 12
$11.9
$11.1
Non-GF Assets*
69.4
70.6
Global Financing Assets
35.1
37.5
116.4
119.2
Other Liabilities
64.9
67.0
Non-GF Debt*
8.0
8.8
23.3
24.5
31.3
33.3
Total Liabilities
96.2
100.2
Equity
20.2
19.0
32%
36%
7.2
7.0
$ in Billions
Cash & Marketable Securities
Total Assets
Global Financing Debt
Total Debt
Non-GF Debt / Capital
Global Financing Leverage
* Includes eliminations of inter-company activity
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14
Operating EPS Bridge – 4Q11 to 4Q12
$0.24
$5.39
$0.47
$4.71
($0.03)
4Q11
Operating EPS
Revenue Growth
@ Actual
Margin
Expansion
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Share
Repurchases
4Q12
Operating EPS
15
Operating EPS Bridge – FY11 to FY12
$0.73
$15.25
$1.38
$13.44
($0.30)
FY11
Operating EPS
Revenue Growth
@ Actual
Margin
Expansion
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Share
Repurchases
FY12
Operating EPS
16
2015e
At least
$20
2013e
$16.70+
2012
$15.25
2011
$13.44
2010
$11.67
FY 2012 Summary
 Continued momentum in growth initiatives
• Growth markets +7% yr/yr @CC; 24% of IBM’s geographic revenue
• Business Analytics +13%, Cloud +80%, Smarter Planet +>25%
 Invested in innovation and continued portfolio transformation
• Introduced new mainframe, storage, Power7, Pure Systems
• #1 in US patents for 20th consecutive year
• Acquired 11 companies, @$4B spend
• Divested Retail Store Solutions business
 Leveraged growth in high value areas and productivity initiatives to
expand margin and grow profit
• Operating net margin +1.6 points yr/yr — above model level
• Operating EPS +13% yr/yr
 Strong balance sheet and cash generation
• Generated $18.2B free cash flow
• Returned value to shareholders: $12B share repurchase, $3.8B dividends
Operating EPS
Expect at least $16.70 of Operating EPS in 2013
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17
IBM Transformation Continues
At Least
$20
Operating PTI / EPS *
At Least
$16.70
Segment Operating PTI
Operating EPS
$15.25
'00
'01
'02
'03
'04
'05
'06
Hardware / Financing
'07
'08
'09
'10
Services
'11
'12
'13e
'14e
'15e
Software
* Non-GAAP: Excludes acquisition-related charges and non-operating retirement-related charges
2000 & 2001 segments not restated for stock based compensation; 2000-2010 Segment PTI is reclassified to conform with 2012 operating presentation
Sum of external segment pre-tax income not equal to IBM pre-tax income
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18
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19
Supplemental Materials
Supplemental Materials
Some columns and rows in these materials, including the supplemental exhibits, may not add due to rounding

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Currency – Year/Year Comparison
Supplemental Segment Information – Global Services
Supplemental Segment Information – Systems & Technology, Software
Global Financing Portfolio
Key Financial Metrics – FY 2012
Revenue by Geography – FY 2012
Revenue by Segment – FY 2012
Revenue by Key Industry Sales Unit – 4Q and FY 2012
Gross Margins by Segment – FY 2012
Expense Summary – FY 2012
Pre-Tax Income by Segment – FY 2012
Cash Flow (FAS 95)
Retirement-Related Charges
Retirement-Related Charges
Retirement-Related Charges
Non-GAAP Supplemental Materials
• Operating (Non-GAAP) Earnings Per Share and Related Income Statement Items, Constant Currency
• Cash Flow, Debt-to-Capital Ratio, Workforce Rebalancing, Retail Store Solutions (RSS) Divestiture
• Reconciliation of Operating Earnings Per Share
• GAAP to Operating (Non-GAAP) Bridge – 4Q 2012
• GAAP to Operating (Non-GAAP) Bridge – 4Q 2011
• GAAP to Operating (Non-GAAP) Bridge – FY 2012
• GAAP to Operating (Non-GAAP) Bridge – FY 2011
• GAAP to Operating (Non-GAAP) Bridge – 4Q 2012 and 4Q 2011
• GAAP to Operating (Non-GAAP) Bridge – FY 2012 and FY 2011
• Reconciliation of B/(W) Yr/Yr Expense Drivers – 4Q12
• Reconciliation of B/(W) Yr/Yr Expense Drivers – FY12
• Reconciliation of Free Cash Flow (excluding GF Receivables) – 12 months ended 2012, 2011, 2002
• Reconciliation of Free Cash Flow (excluding GF Receivables) – 3 months ended 2012, 2011
• Reconciliation of Debt-to-Capital Ratio
• Reconciliation of Operating EPS Bridge 4Q11 to 4Q12
• Reconciliation of Operating EPS Bridge FY11 to FY12
• Reconciliation of Revenue Growth
• Reconciliation of Consolidated EPS
• Reconciliation of Segment Pre-Tax Income and Margin Growth
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20
Supplemental Materials
Currency – Year/Year Comparison
Quarterly Averages per US $
Yr/Yr @ 1/18 Spot
2Q13 3Q13
4Q13
3Q12
Yr/Yr
4Q12
Yr/Yr
1/18
Spot
Euro
0.80
(13%)
0.77
(4%)
0.75
1%
3%
6%
2%
3%
Pound
0.63
(2%)
0.62
2%
0.63
1%
0%
0%
(1%)
0%
79
(1%)
81
(5%)
90
Yen
IBM Revenue
Impact
(4 pts)
Revenue As Reported
Currency Impact
Revenue @CC
(1 pts)
(US$B)
Yr/Yr
$29.3
(1%)
1Q13
(13%)
(12%) (14%)
~(1 pts) 0 pts
(11%)
FY13
(13%)
0 pts ~(0-1 pts) ~(0-1 pts)
(0.3) (1 pts)
Flat
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21
Supplemental Materials
Supplemental Segment Information – 4Q 2012
Global Services Revenue
Global Services Backlog / Signings
Revenue Growth
Yr/Yr
@CC
(3%)
(2%)
2%
3%
(2%)
Flat
(2%)
Flat
GBS Outsourcing
(4%)
(2%)
GBS C&SI
(3%)
(2%)
(3%)
(2%)
GTS Outsourcing
Integrated Tech Services
Maintenance
Total GTS
Total GBS
Total Outsourcing
(3%)
(2%)
Total Transactional
(1%)
Flat
Maintenance
(2%)
Flat
$ in Billions
Total Backlog
Backlog
4Q12
Yr/Yr
@CC
$140
Flat
1%
(3%)
(2%)
Change in Backlog due to Currency
Quarter-to-Quarter
($1)
Year-to-Year
($1)
Outsourcing Backlog
$89
Signings
Outsourcing
4Q12
Yr/Yr
@CC
$8.3
(28%)
(27%)
- GTS O/S, GBS O/S (AMS)
Transactional
9.5
9%
9%
- ITS, Consulting & AMS SI
(incl. US Federal)
Total Signings
$17.9
(12%)
(12%)
Note: Actual backlog calculated using December 31 currency spot rates
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22
Supplemental Materials
Supplemental Segment Information – 4Q 2012
Systems & Technology
Software
Revenue Growth
Revenue Growth
Yr/Yr
@CC
56%
56%
(19%)
(19%)
System x
(2%)
(3%)
Storage
(5%)
(5%)
Total Systems excl. RSS
4%
4%
Microelectronics OEM
4%
4%
Total Sys & Tech excl. RSS
4%
4%
System z
Power Systems
GP%
Yr/Yr
@CC
11%
11%
Information Management
2%
3%
Tivoli
4%
5%
Lotus
9%
9%
12%
12%
5%
6%
Share
WebSphere Family
=
=
=
Rational
Key Branded Middleware
Other Middleware
Total Middleware
(1%)
Flat
4%
5%
Flat
1%
Other Software/Services
1%
1%
Total Software
3%
4%
Operating Systems
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23
Supplemental Materials
Global Financing Portfolio
4Q12 – $30.3B Net External Receivables
40%
Investment Grade
60%
Non-Investment Grade
40%
38%
30%
20%
22%
20%
10%
12%
6%
2%
B2-B3
Caa-D
0%
Aaa-A3
Baa1-Baa3
Ba1-Ba2
4Q12
3Q12
4Q11
Identified Loss Rate
0.8%
0.9%
0.8%
Anticipated Loss Rate
0.4%
0.5%
0.5%
Reserve Coverage
1.2%
1.3%
1.3%
2.5
2.9
1.9
$22M
$36M
$37M
Client Days Delinquent Outstanding
Commercial A/R > 30 days
24
Ba3-B1
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24
Supplemental Materials
Key Financial Metrics – FY 2012
$ in Billions, except EPS
P&L Highlights
FY12
Revenue
$104.5
@CC
B/(W)
Yr/Yr
P&L Ratios
(Operating)
FY12
B/(W)
Yr/Yr
(2%)
GP Margin
48.7%
1.5 pts
Flat
PTI Margin
22.2%
2.0 pts
Tax Rate
24.0%
0.5 pts
NI Margin
16.9%
1.6 pts
PTI – Operating
$23.2
7%
EPS – Operating
$15.25
13%
Cash Highlights
FY12
Free Cash Flow (excl GF Receivables)
Share Repurchase (Gross)
Dividends
$18.2
12.0
3.8
Cash Balance @ Dec. 31
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11.1
25
Supplemental Materials
Revenue by Geography – FY 2012
$ in Billions
Americas
FY12
B/(W) Yr/Yr
Rptd
@CC
$44.6
(1%)
Flat
Europe/ME/A
31.8
(6%)
(1%)
Asia Pacific
25.9
3%
3%
Total Geographies
excl. Retail Store Solutions
IBM
excl. Retail Store Solutions
Major Markets
Growth Markets
BRIC Countries
$102.3
$104.5
(2%)
(1%)
Flat
1%
(2%)
(2%)
Flat
Flat
(4%)
(1%)
4%
7%
7%
12%
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Canada/
LA
EMEA
U.S.
-1%
Japan APac
-2%
@CC
OEM
-18%
26
Supplemental Materials
Revenue by Segment – FY 2012
FY12
B/(W) Yr/Yr
Rptd
@CC
Global Technology Services
$40.2
(2%)
1%
Global Business Services
18.6
(4%)
(2%)
Software
25.4
2%
4%
Systems & Technology
17.7
(7%)
(6%)
Global Financing
2.0
(4%)
(1%)
$104.5
(2%)
Flat
$ in Billions
Total IBM
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Global
Business Systems
&
Services
Technology
Global
Technology
Services
Software
Global
Financing
27
Supplemental Materials
Revenue by Key Industry Sales Unit – 4Q & FY 2012
$ in Billions
4Q12
B/(W) Yr/Yr
Rptd
@CC
FY12
B/(W) Yr/Yr
Rptd
@CC
(1%)
2%
Flat
2%
$9.0
4%
6%
$30.7
Public
4.2
1%
1%
15.3
Industrial
2.6
(3%)
(2%)
9.7
(2%)
Flat
Distribution
2.5
(9%)
(8%)
9.2
(7%)
(5%)
Communications
2.6
(7%)
(7%)
9.5
(6%)
(4%)
General Business
6.8
(1%)
(1%)
24.2
Flat
3%
$29.3
(1%)
Flat
(2%)
Flat
Financial Services
Total IBM
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$104.5
28
Supplemental Materials
Gross Margins by Segment – FY 2012
External
Gross Profit Margins
FY12
B/(W)
Yr/Yr Pts
Global Technology Services
36.6%
1.6 pts
Global Business Services
30.0%
1.2 pts
Software
88.7%
0.2 pts
Systems & Technology
39.1%
(0.7 pts)
Global Financing
46.5%
(3.3 pts)
Total IBM - Operating
48.7%
1.5 pts
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29
Supplemental Materials
Expense Summary – FY 2012
FY12
B/(W)
Yr/Yr
SG&A – Operating
$22.9
2%
3 pts
(2 pts)
1 pts
RD&E – Operating
6.3
Flat
2 pts
(3 pts)
2 pts
5 pts
(2 pts)
2 pts
$ in Billions
IP and Development Income
(1.1)
(3%)
Other (Income)/Expense
(0.9)
nm
0.5
(12%)
Interest Expense
Operating Expense & Other Income
$27.8
4%
B/(W) Yr/Yr Drivers
Currency
Acq.*
Base
* Includes acquisitions made in the last twelve months, net of non-operating acquisition-related charges
www.ibm.com/investor
30
Supplemental Materials
Pre-Tax Income by Segment – FY 2012
Segment PTI $
PTI $
B/(W)
Yr/Yr
B/(W) Yr/Yr
w/o Wkfrce
Rebal.*
$7.0
11%
PTI %
B/(W)
Yr/Yr
B/(W) Yr/Yr
w/o Wkfrce
Rebal.*
13%
16.8%
1.9 pts
2.2 pts
(1%)
3%
15.5%
0.5 pts
1.1 pts
8%
9%
37.6%
2.3 pts
2.6 pts
(1.5 pts)
(1.3 pts)
49.9%
2.0 pts
2.0 pts
22.2%
2.0 pts
$ in Billions
Global Technology Services
Global Business Services
Software
3.0
10.8
Systems & Technology
1.2
Global Financing
2.0
1%
$23.2
7%
Total Operating PTI
Segment PTI Margin
(25%)
(22%)
1%
6.7%
* 3Q12 Workforce Rebalancing charge of $407M, 3Q11 Workforce Rebalancing charge of $21M
www.ibm.com/investor
31
Supplemental Materials
Cash Flow (FAS 95)
$ in Billions
4Q12
4Q11
FY12
FY11
Net Income from Operations
$5.8
$5.5
$16.6
$15.9
Depreciation / Amortization of Intangibles
1.2
1.2
4.7
4.8
Stock-based Compensation
0.2
0.2
0.7
0.7
Working Capital / Other
3.3
3.1
0.5
(0.7)
(4.2)
(2.9)
(2.9)
(0.8)
6.3
7.1
19.6
19.8
(1.0)
(1.1)
(4.3)
(4.1)
0.0
0.0
0.6
0.0
Acquisitions, net of cash acquired
(1.5)
(1.6)
(3.7)
(1.8)
Marketable Securities / Other Investments, net
(1.7)
(0.9)
(1.6)
1.5
Net Cash used in Investing Activities
(4.1)
(3.5)
(9.0)
(4.4)
Debt, net of payments & proceeds
(0.2)
1.2
2.3
2.4
Dividends
(1.0)
(0.9)
(3.8)
(3.5)
Common Stock Repurchases (Gross)
(3.0)
(3.6)
(12.0)
(15.0)
Common Stock Transactions - Other
0.3
0.4
(3.8)
(2.8)
(12.0)
(13.7)
0.0
(0.2)
(0.1)
(0.5)
Global Financing A/R
Net Cash provided by Operating Activities
Capital Expenditures, net of payments & proceeds
Divestitures, net of cash transferred
Net Cash used in Financing Activities
Effect of Exchange Rate changes on Cash
Net Change in Cash & Cash Equivalents
($1.5)
www.ibm.com/investor
$0.6
1.5
($1.5)
2.5
$1.3
32
Supplemental Materials
Retirement-Related Charges
YE 2011
YE 2012
Funded Status*
US WW
98% 96%
98% 94%
Expected ROA
WW
7.3%
7.3%
Actual ROA
WW
6.1%
11.1%
Operating
Discount Rate
WW
4.2%
3.4%
Non-Operating
Pre-Tax Retirement-Related (Cost) / Income ($B)
$0.5
$0.4
$0.1
($0.5)
($1.1)
($1.9)
($1.8)
($1.9)
2009
2010
2011
($1.9) ($1.9)
2012
2013
($1.9)
($1.9)
2014
2015
2010
2011
2012
2013
2014
($1.1)
($1.2)
2013
2014
($0.1)
2015
Retirement-Related Cash Drivers ($B)
($1.9)
($1.8)
($1.9)
($1.9)
($1.9)
($1.9)
($1.9)
2009
2010
2011
2012
2013
2014
Actual
2015
* Tax-qualified plans
2009
($0.6)
($1.7)
($1.5) ($1.4)
($1.6)
2009
2010
2011
2012
Projection based on Dec ‘12 assumptions
www.ibm.com/investor
($1.4)
2015
33
Supplemental Materials
Retirement-Related Charges
YE 2011
YE 2012
Upside
Downside
Funded Status*
US WW
98% 96%
98% 94%
Expected ROA
WW
7.3%
7.3%
7.3%
7.3%
Actual ROA
WW
6.1%
11.1%
14.0%
0.0%
Operating
Discount Rate
WW
4.2%
3.4%
3.9%
2.9%
Non-Operating
Pre-Tax Retirement-Related (Cost) / Income ($B)
$0.5
$0.4
$0.1
($0.5)
($1.1)
($1.9)
($1.8)
($1.9)
($1.9) ($1.9)
2009
2010
2011
2012
($1.9)
($1.8)
($1.9)
2009
2010
2011
2012
Actual
* Tax-qualified plans
2013
($1.9)
($1.9)
2014
2015
2009
2010
2011
2012
($0.6)
2013
2014
($1.1)
($1.2)
~$1B
($0.1) Range
2015
Retirement-Related Cash Drivers ($B)
($1.9) ($1.9)
($1.9)
($1.9)
($1.7)
2013
2014
2015
2009
Projection based on Dec ‘12 assumptions
($1.5) ($1.4)
2010
www.ibm.com/investor
($1.6)
2011
2012
Upside Case
2013
($1.4)
2014
2015
Downside Case
34
Supplemental Materials
Retirement-Related Charges
Non-Operating Retirement-Related ($B)
Pre-tax (Cost) / Income
$0.5
$0.4
$0.1
($0.5)
($1.1)
B/(W) Y/Y
($0.1)
2009
2010
($0.3) ($0.6) ($0.6)
2011
2012
2013
($0.6)
($0.1)
$0.6
$0.5
2014
2015
Cash Drivers
($1.7)
B/(W) Y/Y
($1.5) ($1.4)
$0.2
2009
Actual
2010
$0.1
2011
($1.1)
($1.2)
($0.2)
$0.5
($0.0)
($0.3)
2012
2013
2014
2015
($1.6)
($1.4)
Projection based on Dec ‘12 assumptions
* Tax-qualified planswww.ibm.com/investor
35
Supplemental Materials
Non-GAAP Supplemental 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 earnings presentation
materials, the following Non-GAAP information which management believes provides useful information to investors.
Operating (Non-GAAP) Earnings Per Share and Related Income Statement Items
Management presents certain financial measures excluding the effects of certain acquisition-related charges, non-operating
retirement-related costs, and any related tax impacts. Management uses the term "operating" to describe this view of the
company's financial results and other financial information. For acquisitions, these measures exclude the amortization of
purchased intangible assets and acquisition-related charges such as in-process research and development, transaction
costs, applicable restructuring and related expenses, and tax charges related to acquisition integration. For retirementrelated costs, the company has characterized certain items as operating and others as non-operating. The company
includes service cost, amortization of prior service cost and the cost of defined contribution plans in its operating results.
Non-operating retirement-related costs include interest cost, expected return on plan assets, amortized actuarial
gains/losses, the impacts of any plan curtailments/settlements, multi-employer plan costs, pension insolvency costs, and
other costs. Non-operating costs primarily relate to changes in pension plan assets and liabilities which are tied to market
performance, and management considers these costs to be outside the operational performance of the business.
Management’s calculation of these operating measures, as presented, may differ from similarly titled measures reported by
other companies.
Overall, management believes that providing investors with an operating view as described above provides increased
transparency and clarity into both the operational results of the business and the performance of the company’s pension
plans, improves visibility to management decisions and their impacts on operational performance, enables better
comparison to peer companies, and allows the company to provide a long term strategic view of the business going
forward. For the 2015 earnings per share roadmap, the company is utilizing an operating view to establish its objectives
and track its progress. The company’s segment financial results and performance reflect operating earnings, consistent
with the company’s management and measurement system.
Constant Currency
Management refers to growth rates at constant currency or adjusting for currency so that certain financial 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. Financial results adjusted for currency are calculated by translating
current period activity in local currency using the comparable prior year period’s currency conversion rate. This approach is
used for countries where the functional currency is the local 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.
www.ibm.com/investor
36
Supplemental Materials
Non-GAAP Supplemental Materials
Cash Flow
Management uses a free cash flow measure to evaluate the company’s operating results, plan share repurchase levels,
evaluate strategic investments and assess the company’s ability and need to incur and service debt. The entire free cash
flow amount is not necessarily available for discretionary expenditures. The company defines free cash flow as net cash
from operating activities less the change in Global Financing receivables and net capital expenditures, including the
investment in software. A key objective of the Global Financing business is to generate strong returns on equity, and
increasing receivables is the basis for growth. Accordingly, management considers Global Financing receivables as a profitgenerating investment, not as working capital that should be minimized for efficiency. Therefore, management includes
presentations of both free cash flow and cash flow from operations that exclude the effect of Global Financing receivables.
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.
Workforce Rebalancing
Management presents certain financial results excluding the effects of charges in connection with workforce rebalancing
actions. Management believes that presenting financial information regarding pre-tax income, pre-tax income margin, and
SG&A expense 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 to investors.
Retail Store Solutions (RSS) Divestiture
On April 17, 2012, the company announced that it had signed a definitive agreement with Toshiba Tec for the sale of its
RSS business to Toshiba Tec. In the fourth quarter of 2012, the company completed the latest phase of the sale of its RSS
business. Management presents certain financial results excluding the effects of the RSS divestiture. Management believes
that presenting financial information regarding 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 to investors.
www.ibm.com/investor
37
Supplemental Materials
Non
-GAAP Supplemental Materials
Non-GAAP
Reconciliation of Operating Earnings Per Share
2013
Expectations
IBM GAAP EPS
$15.53+
IBM Operating EPS (Non-GAAP)
$16.70+
Adjustments
Acquisition-Related Charges *
$0.48
Amortization of Purchased Intangibles
$0.47
Other Acquisition-Related Charges
$0.01
Non-Operating Retirement-Related Items
$0.69
* Includes acquisitions through December 31, 2012
The above serves to reconcile the Non-GAAP financial information contained in “2012 Summary” and “FY 2012 Summary” discussions in the
company’s earnings presentation. See Slide 36 of this presentation for additional information on the use of these Non-GAAP financial measures.
www.ibm.com/investor
38
Supplemental Materials
Non-GAAP Supplemental Materials
GAAP to Operating (Non-GAAP) Bridge – 4Q 2012
$ in Millions, except EPS
GAAP
Acquisition-related
Adjustments*
Retirement-related
Adjustments**
Operating
(Non-GAAP)
$15,167
$100
$60
$15,327
SG&A
5,921
(91)
RD&E
1,580
Gross Profit
(29)
5,801
0
6
(47)
(7)
0
Total Operating Expense & Other Income
7,336
(98)
(23)
7,215
Pre-Tax Income
7,831
198
83
8,112
Tax ***
1,998
(45)
30
1,983
Net Income
5,833
243
53
6,129
Diluted Earnings Per Share
$5.13
$0.21
Other Income & Expense
$0.05
1,586
(54)
$5.39
* Includes amortization of purchased Intangibles, in process R&D, severance cost for acquired employees, vacant space for acquired companies, deal costs and
acquisition integration tax charges.
** Includes retirement related interest cost, expected return on plan assets, recognized actuarial losses or gains, amortization of transition assets, other settlements,
curtailments, multi-employer plans and insolvency insurance.
***The tax impact on the Operating (Non-GAAP) Pre-Tax Income is calculated under the same accounting principles applied to the As Reported Pre-Tax Income under
ASC 740, which employs an annual effective tax rate method to the results.
The above serves to reconcile the Non-GAAP financial information contained in the “2012 Summary,” “Key Financial Metrics” and “Expense Summary”
discussions in the company’s earnings presentation. See Slide 36 of this presentation for additional information on the use of these Non-GAAP
financial measures.
www.ibm.com/investor
39
Supplemental Materials
Non-GAAP Supplemental Materials
GAAP to Operating (Non-GAAP) Bridge – 4Q 2011
$ in Millions, except EPS
Gross Profit
GAAP
Acquisition-related
Adjustments*
Retirement-related
Adjustments**
Operating
(Non-GAAP)
$14,722
$81
($10)
$14,793
2
5,996
23
1,578
SG&A
6,076
RD&E
1,555
Other Income & Expense
(82)
0
(44)
(2)
0
(46)
Total Operating Expense & Other Income
7,448
(85)
25
7,388
Pre-Tax Income
7,274
166
(35)
7,405
Tax ***
1,784
47
(24)
1,808
Net Income
5,490
119
(12)
5,597
Diluted Earnings Per Share
$4.62
$0.10
($0.01)
$4.71
* Includes amortization of purchased Intangibles, in process R&D, severance cost for acquired employees, vacant space for acquired companies, deal costs
** Includes retirement related interest cost, expected return on plan assets, recognized actuarial losses or gains, amortization of transition assets, other settlements,
curtailments, multi-employer plans and insolvency insurance
***The tax impact on the Operating (Non-GAAP) Pre-Tax Income is calculated under the same accounting principles applied to the As Reported Pre-Tax Income under
ASC 740, which employs an annual effective tax rate method to the results.
The above serves to reconcile the Non-GAAP financial information contained in the “2012 Summary” and “Key Financial Metrics” discussions in the
company’s earnings presentation. See Slide 36 of this presentation for additional information on the use of these Non-GAAP financial measures.
www.ibm.com/investor
40
Supplemental Materials
Non-GAAP Supplemental Materials
GAAP to Operating (Non-GAAP) Bridge – FY 2012
$ in Millions, except EPS
Gross Profit
GAAP
Acquisition-related
Adjustments*
Retirement-related
Adjustments**
Operating
(Non-GAAP)
$50,298
$376
$264
$50,938
(349)
(294)
SG&A
23,553
RD&E
6,302
Other Income & Expense
(843)
(13)
Total Operating Expense & Other Income
28,396
(363)
(274)
27,760
Pre-Tax Income
21,902
739
538
23,179
5,298
98
156
5,552
Net Income
16,604
641
381
17,627
Diluted Earnings Per Share
$14.37
$0.55
$0.33
$15.25
Tax ***
0
20
22,910
6,322
0
(857)
* Includes amortization of purchased Intangibles, in process R&D, severance cost for acquired employees, vacant space for acquired companies, deal costs and
acquisition integration tax charges.
** Includes retirement related interest cost, expected return on plan assets, recognized actuarial losses or gains, amortization of transition assets, other settlements,
curtailments, multi-employer plans and insolvency insurance.
***The tax impact on the Operating (Non-GAAP) Pre-Tax Income is calculated under the same accounting principles applied to the As Reported Pre-Tax Income under
ASC 740, which employs an annual effective tax rate method to the results.
The above serves to reconcile the Non-GAAP financial information contained in the “2012 Summary” and “Key Financial Metrics – FY 2012”
discussions in the company’s earnings presentation. See Slide 36 of this presentation for additional information on the use of these Non-GAAP
financial measures.
www.ibm.com/investor
41
Supplemental Materials
Non-GAAP Supplemental Materials
GAAP to Operating (Non-GAAP) Bridge – FY 2011
$ in Millions, except EPS
Gross Profit
GAAP
Acquisition-related
Adjustments*
Retirement-related
Adjustments**
Operating
(Non-GAAP)
$50,138
$341
$2
$50,481
SG&A
23,594
RD&E
6,258
Other Income & Expense
(309)
0
(13)
88
23,272
6,345
(20)
(25)
0
Total Operating Expense & Other Income
29,135
(334)
74
28,875
Pre-Tax Income
21,003
675
(72)
21,605
5,148
179
(40)
5,287
Net Income
15,855
495
(32)
16,318
Diluted Earnings Per Share
$13.06
$0.41
Tax ***
($0.03)
(45)
$13.44
* Includes amortization of purchased Intangibles, in process R&D, severance cost for acquired employees, vacant space for acquired companies, deal costs
** Includes retirement related interest cost, expected return on plan assets, recognized actuarial losses or gains, amortization of transition assets, other settlements,
curtailments, multi-employer plans and insolvency insurance
***The tax impact on the Operating (Non-GAAP) Pre-Tax Income is calculated under the same accounting principles applied to the As Reported Pre-Tax Income under
ASC 740, which employs an annual effective tax rate method to the results.
The above serves to reconcile the Non-GAAP financial information contained in the “2012 Summary” and “Key Financial Metrics – FY 2012”
discussions in the company’s earnings presentation. See Slide 36 of this presentation for additional information on the use of these Non-GAAP
financial measures.
www.ibm.com/investor
42
Supplemental Materials
Non-GAAP Supplemental Materials
GAAP to Operating (Non-GAAP) Bridge – 4Q 2012 and 4Q 2011
4Q 2012
GAAP
Acquisitionrelated
Adjustments*
Retirementrelated
Adjustments **
Operating
(Non-GAAP)
Gross Profit Margin
51.8%
0.3 pts
0.2 pts
52.3%
PTI Margin
26.7%
0.7 pts
0.3 pts
27.7%
Tax Rate ***
25.5%
(1.2 pts)
0.1 pts
24.4%
Net Income Margin
19.9%
0.8 pts
0.2 pts
20.9%
Gross Profit Margin
49.9%
0.3 pts
(0.0 pts)
50.2%
PTI Margin
24.7%
0.6 pts
(0.1 pts)
25.1%
Tax Rate ***
24.5%
0.1 pts
(0.2 pts)
24.4%
Net Income Margin
18.6%
0.4 pts
(0.0 pts)
19.0%
4Q 2011
* Includes amortization of purchased Intangibles, in process R&D, severance cost for acquired employees, vacant space for acquired companies, deal costs and acquisition
integration tax charges
** Includes retirement related interest cost, expected return on plan assets, recognized actuarial losses or gains, amortization of transition assets, other settlements, curtailments,
multi-employer plans and insolvency insurance
***The tax impact on the Operating (Non-GAAP) Pre-Tax Income is calculated under the same accounting principles applied to the As Reported Pre-Tax Income under ASC 740,
which employs an annual effective tax rate method to the results.
The above serves to reconcile the Non-GAAP financial information contained in the”2012 Summary” and “Key Financial Metrics” discussions in the company’s
earnings presentation. See Slide 36 of this presentation for additional information on the use of these Non-GAAP financial measures.
www.ibm.com/investor
43
Supplemental Materials
Non-GAAP Supplemental Materials
GAAP to Operating (Non-GAAP) Bridge – FY 2012 and FY 2011
FY 2012
GAAP
Acquisitionrelated
Adjustments*
Retirementrelated
Adjustments **
Operating
(Non-GAAP)
Gross Profit Margin
48.1%
0.4 pts
0.3 pts
48.7%
PTI Margin
21.0%
0.7 pts
0.5 pts
22.2%
Tax Rate ***
24.2%
(0.4 pts)
0.1 pts
24.0%
Net Income Margin
15.9%
0.6 pts
0.4 pts
16.9%
Gross Profit Margin
46.9%
0.3 pts
0.0 pts
47.2%
PTI Margin
19.6%
0.6 pts
(0.1 pts)
20.2%
Tax Rate ***
24.5%
0.1 pts
(0.1 pts)
24.5%
Net Income Margin
14.8%
0.5 pts
(0.0 pts)
15.3%
FY 2011
* Includes amortization of purchased Intangibles, in process R&D, severance cost for acquired employees, vacant space for acquired companies, deal costs and acquisition
integration tax charges
** Includes retirement related interest cost, expected return on plan assets, recognized actuarial losses or gains, amortization of transition assets, other settlements, curtailments,
multi-employer plans and insolvency insurance
***The tax impact on the Operating (Non-GAAP) Pre-Tax Income is calculated under the same accounting principles applied to the As Reported Pre-Tax Income under ASC 740,
which employs an annual effective tax rate method to the results.
The above serves to reconcile the Non-GAAP financial information contained in the “2012 Summary” and “Key Financial Metrics” discussions in the company’s
earnings presentation. See Slide 36 of this presentation for additional information on the use of these Non-GAAP financial measures.
www.ibm.com/investor
44
Supplemental Materials
Non-GAAP Supplemental Materials
Reconciliation of B/(W) Yr/Yr Expense Drivers – 4Q12
GAAP
Non-GAAP
Adjustments
Operating
(Non-GAAP)
1 pts
0 pts
1 pts
(2 pts)
0 pts
(2 pts)
4 pts
0 pts
4 pts
0 pts
0 pts
0 pts
(3 pts)
0 pts
(3 pts)
1 pts
1 pts
2 pts
1 pts
0 pts
1 pts
(2 pts)
0 pts
(2 pts)
3 pts
1 pts
3 pts
SG&A
Currency
Acquisitions
Base
RD&E
Currency
Acquisitions
Base
Operating Expense & Other Income
Currency
Acquisitions
Base
The above serves to reconcile the Non-GAAP financial information contained in the “Expense Summary” discussion in the company’s earnings
presentation. See Slide 36 of this presentation for additional information on the use of these Non-GAAP financial measures.
www.ibm.com/investor
45
Supplemental Materials
Non-GAAP Supplemental Materials
Reconciliation of B/(W) Yr/Yr Expense Drivers – FY12
GAAP
Non-GAAP
Adjustments
Operating
(Non-GAAP)
3 pts
0 pts
3 pts
(2 pts)
0 pts
(2 pts)
0 pts
1 pts
1 pts
2 pts
0 pts
2 pts
(3 pts)
0 pts
(3 pts)
1 pts
1 pts
2 pts
5 pts
0 pts
5 pts
(3 pts)
0 pts
(2 pts)
0 pts
1 pts
2 pts
SG&A
Currency
Acquisitions
Base
RD&E
Currency
Acquisitions
Base
Operating Expense & Other Income
Currency
Acquisitions
Base
The above serves to reconcile the Non-GAAP financial information contained in the “Expense Summary – FY 2012” discussion in the company’s
earnings presentation. See Slide 36 of this presentation for additional information on the use of these Non-GAAP financial measures.
www.ibm.com/investor
46
Supplemental Materials
Non-GAAP Supplemental Materials
Reconciliation of Free Cash Flow (excluding GF Receivables)
$ 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)
12 months
ended
12/31/12
12 months
ended
12/31/11
12 months
ended
12/31/02
$19.6
$19.8
$13.8
(2.9)
(0.8)
(3.3)
22.5
20.7
10.5
(4.3)
(4.1)
(4.6)
$18.2
$16.6
$5.9
The above serves to reconcile the Non-GAAP financial information contained in the “2012 Financial Highlights,” and “Key Financial
Metrics” discussion in the company’s earnings presentation. See Slide 37 of this presentation for additional information on the use of
these Non-GAAP financial measures.
www.ibm.com/investor
47
Supplemental Materials
Non-GAAP Supplemental Materials
Reconciliation of Free Cash Flow (excluding GF Receivables)
$ 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)
3 months
ended
12/31/12
3 months
ended
12/31/11
$6.3
$7.1
(4.2)
(2.9)
10.5
10.0
(1.0)
(1.1)
$9.5
$9.0
The above serves to reconcile the Non-GAAP financial information contained in the “2012 Financial Highlights,” and “Key Financial
Metrics” discussion in the company’s earnings presentation. See Slide 37 of this presentation for additional information on the use of
these Non-GAAP financial measures.
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Supplemental Materials
Non-GAAP Supplemental Materials
Reconciliation of Debt-to-Capital Ratio
FY 12
FY 11
Non-Global Financing Debt / Capital
36%
32%
IBM Consolidated Debt / Capital
64%
61%
The above serves to reconcile the Non-GAAP financial information contained in the “Balance Sheet Summary” discussion in the
company’s earnings presentation. See Slide 37 of this presentation for additional information on the use of these Non-GAAP financial
measures.
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Supplemental Materials
Non-GAAP Supplemental Materials
Reconciliation of Operating EPS Bridge 4Q11 to 4Q12
GAAP
Acquisitionrelated
Adjustments*
Retirementrelated
Adjustments**
Operating
(Non-GAAP)
4Q11 EPS
$4.62
$0.10
($0.01)
$4.71
Revenue growth @ actual
(0.03)
0.00
0.00
(0.03)
Margin expansion
0.31
0.10
0.06
0.47
Share repurchases
0.23
0.01
0.00
0.24
$5.13
$0.21
$0.05
$5.39
4Q12 EPS
* Includes amortization of purchased intangibles, in process R&D, severance cost for acquired employees, vacant space for acquired companies, deal costs
and acquisition integration tax charges.
** Includes retirement related interest cost, expected return on plan assets, recognized actuarial losses or gains, amortization of transition assets, other
settlements, curtailments, multi-employer plans and insolvency insurance.
The above serves to reconcile the Non-GAAP financial information contained in the “Operating EPS Bridge – 4Q11 to 4Q12” discussion in the
company’s earnings presentation. See Slide 36 of this presentation for additional information on the use of these Non-GAAP financial measures.
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50
Supplemental Materials
Non-GAAP Supplemental Materials
Reconciliation of Operating EPS Bridge FY11 to FY12
FY11 EPS
Revenue growth @ actual
GAAP
Acquisitionrelated
Adjustments*
Retirementrelated
Adjustments**
Operating
(Non-GAAP)
$13.06
$0.41
($0.03)
$13.44
(0.29)
(0.01)
0.00
(0.30)
Margin expansion
0.91
0.13
0.34
1.38
Share repurchases
0.69
0.02
0.02
0.73
$14.37
$0.55
$0.33
$15.25
FY12 EPS
* Includes amortization of purchased intangibles, in process R&D, severance cost for acquired employees, vacant space for acquired companies, deal costs
and acquisition integration tax charges.
** Includes retirement related interest cost, expected return on plan assets, recognized actuarial losses or gains, amortization of transition assets, other
settlements, curtailments, multi-employer plans and insolvency insurance.
The above serves to reconcile the Non-GAAP financial information contained in the “Operating EPS Bridge – FY11 to FY12” discussion in the
company’s earnings presentation. See Slide 36 of this presentation for additional information on the use of these Non-GAAP financial measures.
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51
Supplemental Materials
Non-GAAP Supplemental Materials
Reconciliation of Revenue Growth
4Q12 Yr/Yr
Japan
OEM
Canada
Latin America
Growth Markets GTS Outsourcing
Tivoli Storage Software
Tivoli Security
@CC
5%
(5%)
(9%)
18%
8%
13%
16%
As Rptd
Flat
(5%)
(6%)
13%
6%
12%
16%
FY12 Yr/Yr
OEM
Japan
As Rptd
(18%)
(2%)
@CC
(18%)
(2%)
4Q12
Total IBM Revenue
excluding RSS divestiture
As Rptd
(1%)
Flat
@CC
Flat
1%
4Q11 Yr/Yr
As Rptd
@CC
12%
13%
FY11 Yr/Yr
@CC
(3%)
(7%)
As Rptd
(2%)
2%
As Rptd
(5%)
(5%)
3Q12
@CC
(2%)
(1%)
The above serves to reconcile the Non-GAAP financial information contained in the “Key Financial Metrics,” “Revenue by Geography,” “Services
Segments,” “Software Segment,” “Systems and Technology Segment,” “Growth Initiatives,” “Revenue by Geography – FY 2012,” “2012 Summary,” and
“Full Year 2012 Summary” discussions in the company’s earnings presentation. See Slides 36-37 of this presentation for additional information on the
use of these Non-GAAP financial measures.
www.ibm.com/investor
52
Supplemental Materials
Non-GAAP Supplemental Materials
Reconciliation of Consolidated EPS
EPS
(As Reported)
AcquisitionRelated
Non-Operating
RetirementRelated
Operating
EPS
2000
$3.88
$0.05
($0.62)
$3.32
2001
3.94
0.04
(0.72)
3.26
2002
2.43
0.07
(0.68)
1.81
2003
3.76
0.13
(0.48)
3.41
2004
4.39
0.13
(0.19)
4.33
2005
2006
4.91
6.05
0.14
0.14
0.13
0.12
5.18
6.31
2007
7.15
0.17
0.14
7.46
2008
8.89
0.29
(0.32)
8.86
2009
10.01
0.27
(0.25)
10.03
2010
11.52
0.34
(0.20)
11.67
2011
13.06
0.41
(0.03)
13.44
2012
$14.37
$0.55
$0.33
$15.25
The above serves to reconcile the Non-GAAP financial information contained in the “IBM Transformation Continues” discussion in the
company’s earnings presentation. See Slide 36 of this presentation for additional information on the use of these Non-GAAP financial
measures.
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53
Supplemental Materials
Non-GAAP Supplemental Materials
Reconciliation of Segment Pre-Tax Income and Margin Growth
FY12 Yr/Yr
As Rptd
3Q Workforce
Rebalancing
Normalized
7%
3 pts
10%
1.5 pts
0.4 pts
1.9 pts
Pre-Tax Income Growth
Total Global Services
Pre-Tax Margin Growth
Total Global Services
The above serves to reconcile the Non-GAAP financial information contained in the “Services Segments” discussion in the company’s
earnings presentation. See Slide 37 of this presentation for additional information on the use of these Non-GAAP financial measures.
www.ibm.com/investor
54
www.ibm.com/investor
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