IBM (NYSE:IBM)
Continued Strong Growth in Strategic
Imperatives Led by IBM Cloud
Highlights
- Diluted EPS from continuing
operations: GAAP of $4.73; Operating (non-GAAP) of $5.01
- Revenue from continuing operations
of $21.8 billion
- Strategic imperatives revenue for
full-year 2016 of $32.8 billion up 13 percent (up 14 percent
adjusting for currency) represents 41 percent of IBM
revenue
- Cloud revenue of $13.7 billion for
full-year 2016, up 35 percent-- Cloud as-a-service annual exit run
rate of $8.6 billion at year end, up 61 percent year to year (up 63
percent adjusting for currency)
- 2017 EPS Expectations: GAAP of at
least $11.95; Operating (non-GAAP) of at least $13.80
IBM (NYSE:IBM) today announced fourth-quarter and full-year 2016
earnings results.
"In 2016, our strategic imperatives grew to represent more than
40 percent of our total revenue and we have established ourselves
as the industry's leading cognitive solutions and cloud platform
company," said Ginni Rometty, IBM chairman, president and chief
executive officer. "IBM Watson is the world's leading AI platform
for business, and emerging solutions such as IBM Blockchain are
enabling new levels of trust in transactions of every kind. More
and more clients are choosing the IBM Cloud because of its
differentiated capabilities, which are helping to transform
industries, such as financial services, airlines and retail."
FOURTH QUARTER 2016 Gross Profit
Diluted EPS Net Income Margin
GAAP from Continuing Operations $4.73
$4.5B 50.0% Year/Year 3% 1%
-1.7Pts
Operating (Non-GAAP) $5.01
$4.8B 51.0% Year/Year 4% 1%
-1.8Pts
Strategic REVENUE Total
IBM Imperatives Cloud As
reported (US$) $21.8B $9.5B $4.2B
Year/Year -1% 11% 33% Year/Year adjusting for
currency -1% 12% 33%
"In 2016, we again made substantial capital investments,
increased our R&D spending and acquired 15 companies -- a total
of more than $15 billion across these elements. The acquisitions
further strengthened our capabilities in analytics, security,
cognitive and cloud, while expanding our level of industry
expertise with additions such as Truven Health Analytics and
Promontory Financial Group,” said Martin Schroeter, IBM senior vice
president and chief financial officer. "At the same time, we
returned almost $9 billion to shareholders through dividends and
gross share repurchases."
Strategic Imperatives
Fourth-quarter cloud revenues increased 33 percent. The annual
exit run rate for cloud as-a-service revenue increased to $8.6
billion from $5.3 billion at year-end 2015. Revenues from analytics
increased 9 percent. Revenues from mobile increased 16 percent (up
17 percent adjusting for currency) and revenues from security
increased 7 percent (up 8 percent adjusting for currency).
For the full year, revenues from strategic imperatives increased
13 percent (up 14 percent adjusting for currency). Cloud revenues
increased 35 percent to $13.7 billion. The annual exit run rate for
cloud as-a-service revenue increased 61 percent (up 63 percent
adjusting for currency) year to year. Revenues from analytics
increased 9 percent. Revenues from mobile increased 34 percent (up
35 percent adjusting for currency) and from security increased 13
percent (up 14 percent adjusting for currency).
Full-Year 2017 Expectations
The company expects operating (non-GAAP) diluted earnings per
share of at least $13.80 and GAAP diluted earnings per share of at
least $11.95. Operating (non-GAAP) diluted earnings per share
exclude $1.85 per share of charges for amortization of purchased
intangible assets, other acquisition-related charges and
retirement-related charges. IBM expects a free cash flow
realization rate in excess of 90 percent of GAAP net income.
Cash Flow and Balance Sheet
In the fourth quarter, the company generated net cash from
operating activities of $3.2 billion; or $5.6 billion excluding
Global Financing receivables. IBM’s free cash flow was $4.7
billion. IBM returned $1.3 billion in dividends and $0.9 billion of
gross share repurchases to shareholders. At the end of December
2016, IBM had $5.1 billion remaining in the current share
repurchase authorization.
The company generated full-year free cash flow of $11.6 billion,
excluding Global Financing receivables. The company returned $8.8
billion to shareholders through $5.3 billion in dividends and $3.5
billion of gross share repurchases.
IBM ended the fourth-quarter 2016 with $8.5 billion of cash on
hand. Debt, including Global Financing debt of $27.9 billion,
totaled $42.2 billion. Core (non-Global Financing) debt totaled
$14.3 billion. The balance sheet remains strong and is well
positioned to support the business over the long term.
Segment Results for Fourth Quarter
- Cognitive Solutions (includes solutions
software and transaction processing software) -- revenues of $5.3
billion, up 1.4 percent (up 2.2 percent adjusting for currency)
were driven by growth in cloud, analytics and security.
- Global Business Services (includes
consulting, global process services and application management) --
revenues of $4.1 billion, down 4.1 percent (down 3.6 percent
adjusting for currency).
- Technology Services & Cloud
Platforms (includes infrastructure services, technical support
services and integration software) -- revenues of $9.3 billion, up
1.7 percent (up 2.4 percent adjusting for currency). Growth was
driven by strong hybrid cloud services, analytics and security
performance.
- Systems (includes systems hardware and
operating systems software) -- revenues of $2.5 billion, down 12.5
percent (down 12.1 percent adjusting for currency). Gross profit
margins improved driven by z Systems performance.
- Global Financing (includes financing
and used equipment sales) -- revenues of $447 million, down 1.5
percent (down 2.1 percent adjusting for currency).
Full-Year 2016 Results
Diluted earnings per share from continuing operations were
$12.39, down 9 percent compared to the 2015 period. Net income from
continuing operations for the twelve months ended December 31, 2016
was $11.9 billion compared with $13.4 billion in the year-ago
period, a decrease of 11 percent.
Consolidated net income was $11.9 billion compared to $13.2
billion in the year-ago period. Consolidated diluted earnings per
share were $12.38 compared to $13.42, down 8 percent year to year.
Revenues from continuing operations for the twelve-month period
totaled $79.9 billion, a decrease of 2 percent year to year
compared with $81.7 billion for the twelve months of 2015.
Operating (non-GAAP) diluted earnings per share from continuing
operations were $13.59 compared with $14.92 per diluted share for
the 2015 period, a decrease of 9 percent. Operating (non-GAAP) net
income from continuing operations for the twelve months ended
December 31, 2016 was $13.0 billion compared with $14.7 billion in
the year-ago period, a decrease of 11 percent.
FULL YEAR 2016 Gross Profit
Diluted EPS Net Income Margin
GAAP from Continuing Operations $12.39
$11.9B 47.9% Year/Year -9% -11%
-1.9 Pts
Operating (Non-GAAP) $13.59
$13.0B 48.9% Year/Year -9% -11%
-1.9 Pts
Strategic REVENUE Total
IBM Imperatives Cloud As
reported (US$) $79.9B $32.8B $13.7B
Year/Year -2% 13% 35% Year/Year adjusting for
currency -2% 14% 35%
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 client spending budgets; the
company’s failure to meet growth and productivity objectives, a
failure of the company’s innovation initiatives; risks from
investing in growth opportunities; failure of the company’s
intellectual property portfolio to prevent competitive offerings
and the failure of the company to obtain necessary licenses;
cybersecurity and data privacy considerations; fluctuations in
financial results, 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;
product quality issues; impacts of 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 and
ecosystems; the company’s ability to successfully manage
acquisitions, alliances and dispositions; risks from legal
proceedings; risk factors related to IBM securities; and other
risks, uncertainties and factors discussed in the company’s Form
10-Qs, 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 --
- presenting operating (non-GAAP)
earnings per share amounts and related income statement items;
- adjusting for free cash flow;
- adjusting for currency (i.e., at
constant currency).
Free cash flow guidance is derived using an estimate of profit,
working capital and operational cash outflows. The company views
Global Financing receivables as a profit-generating investment,
which it seeks to maximize and therefore it is not considered when
formulating guidance for free cash flow. As a result, the company
does not estimate a GAAP Net Cash from Operations expectation
metric.
The rationale for management’s use of these non-GAAP measures is
included in Exhibit 99.2 in 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 5:00 p.m. EST, today. The Webcast may be accessed via
a link at http://www.ibm.com/investor/events/earnings/4q16.html.
Presentation charts will be available 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 Twelve Months Ended December 31,
December 31, 2016 2015* 2016
2015* REVENUE Cognitive Solutions $
5,297 $ 5,225 $ 18,187 $ 17,841 Global Business Services 4,121
4,297 16,700 17,166 Technology Services & Cloud Platforms 9,308
9,149 35,337 35,142 Systems 2,530 2,892 7,714 9,547 Global
Financing 447 454 1,692 1,840 Other 66
43 289 206
TOTAL
REVENUE 21,770 22,059 79,919 81,741
GROSS PROFIT
10,893 11,407 38,294 40,684
GROSS PROFIT MARGIN
Cognitive Solutions 82.7 % 85.7 % 81.9 % 85.1 % Global Business
Services 26.9 % 28.2 % 27.0 % 28.2 % Technology Services &
Cloud Platforms 42.9 % 44.3 % 41.9 % 42.7 % Systems 56.9 % 55.8 %
55.7 % 55.8 % Global Financing 36.2 % 39.9 % 38.7 % 45.6 %
TOTAL GROSS PROFIT MARGIN 50.0 % 51.7 % 47.9 % 49.8 %
EXPENSE AND OTHER INCOME S,G&A 4,976 5,157 21,069
20,430 R,D&E 1,431 1,362 5,751 5,247 Intellectual property and
custom development income (521 ) (193 ) (1,631 ) (682 ) Other
(income) and expense (136 ) (146 ) 145 (724 ) Interest expense 157
128 630 468
TOTAL
EXPENSE AND OTHER INCOME 5,907 6,308 25,964 24,740
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
4,986 5,098 12,330 15,945 Pre-tax margin 22.9 % 23.1 % 15.4 % 19.5
% Provision for / (Benefit) from income taxes 480 638 449
2,581 Effective tax rate 9.6 % 12.5 % 3.6 % 16.2 %
INCOME
FROM CONTINUING OPERATIONS $ 4,505 $ 4,460 $ 11,881 $ 13,364
DISCONTINUED OPERATIONS Income/(Loss) from
discontinued operations, net of taxes (4 ) 3
(9 ) (174 )
NET INCOME $
4,501 $ 4,463 $ 11,872 $ 13,190
EARNINGS PER SHARE OF COMMON STOCK: Assuming
Dilution Continuing Operations $ 4.73 $ 4.59 $ 12.39 $ 13.60
Discontinued Operations ($0.01 ) $ 0.00
($0.01 ) ($0.18 ) TOTAL $ 4.72 $ 4.59
$ 12.38 $ 13.42 Basic Continuing
Operations $ 4.75 $ 4.60 $ 12.44 $ 13.66 Discontinued Operations
($0.01 ) $ 0.00 ($0.01 )
($0.18 ) TOTAL $ 4.74 $ 4.60 $ 12.43
$ 13.48
WEIGHTED-AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING (M's): Assuming Dilution 952.7 972.8
958.7 982.7 Basic 948.6 969.4 955.4 978.7
* Recast to
conform with 2016 segment presentation. INTERNATIONAL
BUSINESS MACHINES CORPORATION CONDENSED CONSOLIDATED BALANCE
SHEET (Unaudited) At At
(Dollars in Millions) December 31, December
31, 2016 2015 ASSETS: Current
Assets: Cash and cash equivalents $ 7,826 $ 7,686 Marketable
securities 701 508 Notes and accounts receivable - trade, net 9,182
8,333 Short-term financing receivables, net 19,006 19,020 Other
accounts receivable, net 1,057 1,201 Inventory 1,553 1,551 Prepaid
expenses and other current assets 4,564 4,205
Total Current Assets 43,888 42,504
Property, plant and equipment, net 10,830 10,727 Long-term
financing receivables, net 9,021 10,013 Prepaid pension assets
3,034 1,734 Deferred taxes 5,224 4,822 Goodwill and intangibles,
net 40,887 35,508 Investments and sundry assets 4,585 5,187
Total Assets $ 117,470 $
110,495 LIABILITIES:
Current Liabilities: Taxes $ 3,235 $ 2,847 Short-term debt
7,513 6,461 Accounts payable 6,209 6,028 Deferred income 11,035
11,021 Other liabilities 8,283 7,913
Total Current
Liabilities 36,275 34,269 Long-term debt
34,655 33,428 Retirement related obligations 17,070 16,504 Deferred
income 3,600 3,771 Other liabilities 7,477 8,099
Total Liabilities 99,078 96,071
EQUITY: IBM Stockholders' Equity: Common stock
53,935 53,262 Retained earnings 152,759 146,124 Treasury stock --
at cost (159,050 ) (155,518 ) Accumulated other comprehensive
income/(loss) (29,398 ) (29,607 )
Total IBM
stockholders' equity 18,246 14,262
Noncontrolling interests 146 162
Total Equity
18,392 14,424 Total Liabilities and
Equity $ 117,470 $ 110,495
INTERNATIONAL BUSINESS MACHINES CORPORATION
CASH FLOW ANALYSIS (Unaudited)
Three Months Ended Twelve Months Ended
(Dollars in Millions) December 31, December
31, 2016 2015 2016 2015
Net Cash Provided by Operating Activities per GAAP: $
3,217 $ 5,278 $ 16,518 $
17,008 Less: change in Global Financing (GF)
Receivables (2,429 ) (1,810 ) 1,218 152 Capital Expenditures, Net
(925 ) (1,016 ) (3,726 ) (3,780 )
Free Cash Flow
4,721 6,072 11,574 13,075
Acquisitions (235 ) (2,529 ) (5,679 ) (3,349 ) Divestitures (490 )
87 (454 ) (401 ) Dividends (1,329 ) (1,261 ) (5,256 ) (4,897 )
Share Repurchase (871 ) (764 ) (3,502 ) (4,609 ) Non-GF Debt (2,048
) (898 ) 1,317 (128 ) Other (includes GF Receivables and GF Debt)
(1,189 ) (2,080 ) 2,333 28
Change in Cash, Cash
Equivalents and Short-term Marketable Securities
($1,441 ) ($1,373 )
$ 332 ($282 )
INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW
(Unaudited) Three Months
Ended Twelve Months Ended (Dollars in Millions)
December 31, December 31, 2016 2015
2016 2015 Net Income from Operations
$ 4,501 $ 4,463 $ 11,872
$ 13,190 Depreciation/Amortization of Intangibles
1,127 990 4,381 3,856 Stock-based Compensation 141 99 544 468
Working Capital / Other (124 ) 1,514 (1,497 ) (729 ) Global
Financing A/R (2,429 ) (1,810 ) 1,218 152 Loss on Microelectronics
Business Disposal 0 23 0 71
Net Cash Provided by Operating
Activities $ 3,217 $ 5,278 $
16,518 $ 17,008 Capital Expenditures, net of
payments & proceeds (925 ) (1,016 ) (3,726 ) (3,780 )
Divestitures, net of cash transferred (490 ) 87 (454 ) (401 )
Acquisitions, net of cash acquired (235 ) (2,529 ) (5,679 ) (3,349
) Marketable Securities / Other Investments, net (1,286 ) (1,987 )
(676 ) (629 )
Net Cash Used in Investing Activities
($2,936 ) ($5,445 ) ($10,536
) ($8,159 ) Debt, net of payments &
proceeds 875 626 2,763 19 Dividends (1,329 ) (1,261 ) (5,256 )
(4,897 ) Common Stock Repurchases (871 ) (764 ) (3,502 ) (4,609 )
Common Stock Transactions - Other 37 50 204 322
Net Cash Used in
Financing Activities ($1,287 ) ($1,348
) ($5,791 ) ($9,166 ) Effect of
Exchange Rate changes on Cash
(206 ) (279
) (51 ) (473 ) Net Change in
Cash & Cash Equivalents ($1,213 )
($1,794 ) $ 140 ($790 )
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA (Unaudited)
FOURTH - QUARTER 2016 Cognitive Solutions
& Industry Services Technology Global
Services & (Dollars in Millions) Cognitive
Business Cloud Global Solutions
Services Platforms Systems
Financing Revenue External $ 5,297 $ 4,121 $
9,308 $ 2,530 $ 447 Internal 701 100
214 156
462
Total Segment Revenue $ 5,999 $ 4,221 $
9,522 $ 2,686 $ 909
Pre-tax Income from Continuing
Operations 2,313 522 1,882 579 448
Pre-tax margin
38.6 % 12.4 % 19.8 % 21.6 % 49.3 %
Change YTY
Revenue - External 1.4 % (4.1 )%
1.7 % (12.5 )% (1.5 )%
Change YTY Revenue - External @constant currency 2.2
% (3.6 )% 2.4 % (12.1
)% (2.1 )% FOURTH - QUARTER
2015* Cognitive Solutions & Industry Services
Technology Global Services & (Dollars
in Millions) Cognitive Business Cloud
Global Solutions Services
Platforms Systems Financing
Revenue External $ 5,225 $ 4,297 $ 9,149 $ 2,892 $ 454
Internal 520 118
198 207 763
Total Segment Revenue $ 5,744 $ 4,415 $ 9,347 $ 3,099 $
1,216
Pre-tax Income from Continuing Operations 2,296
707 1,808 674 674
Pre-tax margin 40.0 % 16.0 % 19.3 %
21.7 % 55.4 %
* Recast to conform with 2016 segment
presentation. INTERNATIONAL BUSINESS MACHINES
CORPORATION SEGMENT DATA (Unaudited)
TWELVE - MONTHS 2016
Cognitive Solutions & Industry Services
Technology Global Services & (Dollars
in Millions) Cognitive Business Cloud
Global Solutions Services
Platforms Systems Financing
Revenue External $ 18,187 $ 16,700 $ 35,337 $ 7,714 $ 1,692
Internal 2,630 409
715 750 1,802
Total Segment Revenue $ 20,817 $ 17,109 $ 36,052 $ 8,464 $
3,494
Pre-tax Income from Continuing Operations 6,352
1,732 4,707 933 1,656
Pre-tax margin 30.5 % 10.1 %
13.1 % 11.0 % 47.4 %
Change YTY Revenue -
External 1.9 % (2.7 )% 0.6
% (19.2 )% (8.0 )% Change YTY
Revenue - External @constant currency 2.7 %
(2.5 )% 1.4 % (18.9 )%
(6.9 )% TWELVE - MONTHS 2015*
Cognitive Solutions & Industry Services
Technology Global Services & (Dollars
in Millions) Cognitive Business Cloud
Global Solutions Services
Platforms Systems Financing
Revenue External $ 17,841 $ 17,166 $ 35,142 $ 9,547 $ 1,840
Internal 2,215 499
698 778 2,637
Total Segment Revenue $ 20,055 $ 17,664 $ 35,840 $ 10,325 $
4,477
Pre-tax Income from Continuing Operations 7,245
2,602 5,669 1,722 2,364
Pre-tax margin 36.1 % 14.7 %
15.8 % 16.7 % 52.8 %
* Recast to conform with 2016
segment presentation. INTERNATIONAL BUSINESS MACHINES
CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS
RECONCILIATION (Unaudited; Dollars in millions except per
share amounts) FOURTH - QUARTER 2016
CONTINUING OPERATIONS Acquisition-
Retirement- Related Related
Operating GAAP Adjustments*
Adjustments** (Non-GAAP) Gross
Profit $ 10,893 $ 124 $ 78 $ 11,095
Gross Profit
Margin 50.0 % 0.6Pts 0.4Pts 51.0 %
S,G&A
4,976 (136 ) (69 ) 4,771
R,D&E 1,431 - - (6 )
1,425
Other (Income) & Expense (136 ) 0 - - (136
)
Total Expense & Other (Income) 5,907 (136 ) (76
) 5,696
Pre-tax Income from Continuing Operations
4,986 260 154 5,399
Pre-tax Income Margin from Continuing
Operations 22.9 % 1.2Pts 0.7Pts 24.8 %
Provision for
Income Taxes*** 480 66 77 623
Effective Tax Rate
9.6 % 0.8Pts 1.2Pts 11.5 %
Income from Continuing
Operations 4,505 193 77 4,776
Income Margin from
Continuing Operations 20.7 % 0.9Pts 0.4Pts 21.9 %
Diluted Earnings Per Share: Continuing Operations $ 4.73 $
0.20 $ 0.08 $ 5.01
FOURTH - QUARTER 2015
CONTINUING OPERATIONS Acquisition- Retirement-
Related Related Operating GAAP
Adjustments* Adjustments**
(Non-GAAP) Gross Profit $ 11,407 $ 105 $ 119 $
11,630
Gross Profit Margin 51.7 % 0.5Pts 0.5Pts 52.7
%
S,G&A 5,157 (95 ) (88 ) 4,975
R,D&E 1,362 - - (12 ) 1,350
Other (Income)
& Expense (146 ) 0 - - (146 )
Total Expense &
Other (Income) 6,308 (95 ) (100 ) 6,114
Pre-tax
Income from Continuing Operations 5,098 199 218 5,516
Pre-tax Income Margin from Continuing Operations 23.1 %
0.9Pts 1.0Pts 25.0 %
Provision for Income Taxes***
638 89 82 809
Effective Tax Rate 12.5 % 1.2Pts 1.0Pts
14.7 %
Income from Continuing Operations 4,460 110
137 4,707
Income Margin from Continuing Operations
20.2 % 0.5Pts 0.6Pts 21.3 %
Diluted Earnings Per Share:
Continuing Operations $ 4.59 $ 0.11 $ 0.14 $ 4.84
* Includes amortization of purchased
intangible assets, 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.
*** Tax impact on operating (non-GAAP)
pre-tax income from continuing operations 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.
INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO
OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited;
Dollars in millions except per share amounts) TWELVE
- MONTHS 2016 CONTINUING OPERATIONS
Acquisition- Retirement- Related
Related Operating GAAP
Adjustments* Adjustments**
(Non-GAAP) Gross Profit $ 38,294 $ 494 $ 316 $
39,104
Gross Profit Margin 47.9 % 0.6Pts 0.4Pts 48.9
%
S,G&A 21,069 (501 ) (253 ) 20,315
R,D&E 5,751 - - (29 ) 5,722
Other (Income)
& Expense 145 (7 ) - - 138
Total Expense &
Other (Income) 25,964 (508 ) (282 ) 25,174
Pre-tax
Income from Continuing Operations 12,330 1,003 598 13,931
Pre-tax Income Margin from Continuing Operations 15.4
% 1.3Pts 0.7Pts 17.4 %
Provision for / (Benefit) from
Income Taxes*** 449 268 183 900
Effective Tax
Rate 3.6 % 1.7Pts 1.2Pts 6.5 %
Income from Continuing
Operations 11,881 735 415 13,031
Income Margin from
Continuing Operations 14.9 % 0.9Pts 0.5Pts 16.3 %
Diluted Earnings Per Share: Continuing Operations $ 12.39 $
0.77 $ 0.43 $ 13.59
TWELVE - MONTHS 2015
CONTINUING OPERATIONS Acquisition- Retirement-
Related Related Operating GAAP
Adjustments* Adjustments**
(Non-GAAP) Gross Profit $ 40,684 $ 373 $ 469 $
41,526
Gross Profit Margin 49.8 % 0.5Pts 0.6Pts 50.8
%
S,G&A 20,430 (324 ) (533 ) 19,573
R,D&E 5,247 - - (48 ) 5,200
Other (Income)
& Expense (724 ) (5 ) - - (729 )
Total Expense
& Other (Income) 24,740 (330 ) (581 ) 23,830
Pre-Tax Income from Continuing Operations 15,945 703 1,050
17,697
Pre-tax Income Margin from Continuing
Operations 19.5 % 0.9Pts 1.3Pts 21.6 %
Provision for
Income Taxes*** 2,581 141 316 3,037
Effective Tax
Rate 16.2 % 0.2Pts 0.9Pts 17.2 %
Income from
Continuing Operations 13,364 562 734 14,659
Income
Margin from Continuing Operations 16.3 % 0.7Pts 0.9Pts 17.9 %
Diluted Earnings Per Share: Continuing Operations $
13.60 $ 0.57 $ 0.75 $ 14.92
* Includes amortization of purchased
intangible assets, 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.
*** Tax impact on operating (non-GAAP)
pre-tax income from continuing operations 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.
INTERNATIONAL BUSINESS MACHINES CORPORATION
RECONCILIATION OF OPERATING EARNINGS PER SHARE
(Unaudited) 2017
EPS
Guidance
Expectations IBM GAAP EPS at least $11.95 IBM
Operating EPS (non-GAAP) at least $13.80 Adjustments
Acquisition related charges * $0.75 Non-Operating
Retirement-Related Items $1.10 * Includes acquisitions
through December 31, 2016
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170119006193/en/
IBMIan Colley, 914-434-3043colley@us.ibm.comorJohn Bukovinsky,
732-618-3531jbuko@us.ibm.com
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