TIDMIBM
IBM (NYSE:IBM)
Highlights
-- Diluted EPS from continuing operations: GAAP of $2.92; Operating
(non-GAAP) of $3.30
-- Revenue of $19.2 billion
-- Strategic imperatives revenue of $34.9 billion over the trailing 12
months, up 10 percent; represents 45 percent of IBM
revenue--
Third-quarter revenue up 11 percent (up 10 percent adjusting
for
currency)
-- Cloud revenue of $15.8 billion over the trailing 12 months, up 25
percent year to year (up 26 percent adjusting for
currency)--
As-a-service annual exit run rate of $9.4 billion in the
quarter, up
25 percent year to year (up 24 percent adjusting for
currency)
-- Maintains full-year EPS and free cash flow expectations
IBM (NYSE:IBM) today announced third-quarter earnings
results.
"In the third quarter we achieved double-digit growth in our
strategic imperatives, extended our enterprise cloud leadership,
and expanded our cognitive solutions business," said Ginni Rometty,
IBM chairman, president and chief executive officer. "There was
enthusiastic adoption of IBM's new z Systems mainframe, which
delivers breakthrough security capabilities to our clients.
THIRD QUARTER 2017
Gross Profit
Diluted EPS Net Income Margin
GAAP from Continuing Operations $2.92 $2.7B 45.9%
Year/Year -2% -4% -0.9Pts
Operating (Non-GAAP) $3.30 $3.1B 47.6%
Year/Year 0% -2% -0.4Pts
As-a-service
Strategic annual exit
REVENUE Total IBM Imperatives Cloud run rate
As reported (US$) $19.2B $8.8B $4.1B $9.4B
Year/Year 0% 11% 20% 25%
Year/Year adjusting for currency -1% 10% 20% 24%
"During the first three quarters of the year, our strong free
cash flow has enabled us to maintain our R&D investments and to
expand IBM's cloud and cognitive capabilities through capital
investments," said Martin Schroeter, IBM senior vice president and
chief financial officer. "In addition, we have returned nearly $8
billion to shareholders through dividends and share
repurchases."
Strategic Imperatives Revenue
Third-quarter cloud revenues increased 20 percent to $4.1
billion. Cloud revenue over the last 12 months was $15.8 billion,
including $8.8 billion delivered as-a-service and $7.0 billion for
hardware, software and services to enable IBM clients to implement
comprehensive cloud solutions. The annual exit run rate for
as-a-service revenue increased to $9.4 billion from $7.5 billion in
the third quarter of 2016. In the quarter, revenues from analytics
increased 5 percent. Revenues from mobile increased 7 percent and
revenues from security increased 51 percent (up 49 percent
adjusting for currency).
Full-Year 2017 Expectations
The company continues to expect 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 continues to expect free cash flow
to be relatively flat year to year.
Cash Flow and Balance Sheet
In the third quarter, the company generated net cash from
operating activities of $3.6 billion, or $3.3 billion excluding
Global Financing receivables. IBM's free cash flow was $2.5
billion. IBM returned $1.4 billion in dividends and $0.9 billion of
gross share repurchases to shareholders. At the end of September
2017, IBM had $1.5 billion remaining in the current share
repurchase authorization.
IBM ended the third quarter of 2017 with $11.5 billion of cash
on hand. Debt totaled $45.6 billion, including Global Financing
debt of $29.4 billion. The balance sheet remains strong and is well
positioned over the long term.
Segment Results for Third Quarter
-- Cognitive Solutions (includes solutions software and transaction
processing software) -- revenues of $4.4 billion, up 4 percent
(up
3 percent adjusting for currency), driven by solutions
software,
including security and analytics, and transaction processing
software.
-- Global Business Services (includes consulting, global process
services and application management) -- revenues of $4.1
billion,
down 2 percent. Strategic imperatives revenue grew 10 percent
led by
the cloud practice.
-- Technology Services & Cloud Platforms (includes
infrastructure services, technical support services and
integration
software) -- revenues of $8.5 billion, down 3 percent (down
4
percent adjusting for currency). Strategic imperatives revenue
grew 12
percent, driven by hybrid cloud services, security and
mobile.
-- Systems (includes systems hardware and operating systems software)
-- revenues of $1.7 billion, up 10 percent, driven by growth in
z
Systems and storage.
-- Global Financing (includes financing and used equipment sales) --
revenues of $427 million, up 4 percent (up 3 percent adjusting
for
currency).
Expense and Other Income
Third-quarter GAAP expense and other income year-to-year
performance reflects lower IP income of $221 million, an impact of
$105 million year to year related to several commercial disputes
and a benefit of $91 million resulting from the favorable
resolution of pension-related litigation in the U.K.
Operating (non-GAAP) expense and other income for the third
quarter of 2017 compared to 2016 reflects lower IP income of $221
million and an impact of $105 million year to year related to
several commercial disputes.
Tax Rate
IBM's third-quarter effective GAAP and operating (non-GAAP) tax
rates were 11.0 percent and 14.7 percent, respectively. The company
continues to expect a full-year effective operating (non-GAAP) tax
rate of 15 percent, plus or minus 3 points, excluding discrete
items.
Year-To-Date 2017 Results
Consolidated diluted earnings per share were $7.24 compared to
$7.67, down 6 percent year to year. Consolidated net income was
$6.8 billion compared to $7.4 billion in the year-ago period, a
decrease of 8 percent. Revenues from continuing operations for the
nine-month period totaled $56.6 billion, a decrease of 3 percent
year to year (decrease of 2 percent adjusting for currency)
compared with $58.1 billion for the first nine months of 2016.
Operating (non-GAAP) diluted earnings per share from continuing
operations were $8.64 compared with $8.59 per diluted share for the
2016 period, an increase of 1 percent. Operating (non-GAAP) net
income for the nine months ended September 30, 2017 was $8.1
billion compared with $8.3 billion in the year-ago period, a
decrease of 2 percent.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained
herein, statements contained in this release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are based on the company's current assumptions regarding
future business and financial performance. These statements involve
a number of risks, uncertainties and other factors that could cause
actual results to differ materially, including the following: a
downturn in economic environment and 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. EDT, today. The Webcast may be accessed via a
link at http://www.ibm.com/investor/events/earnings/3q17.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 Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
REVENUE
Cognitive Solutions $ 4,400 $ 4,235 $ 13,021 $ 12,889
Global Business 4,093 4,191 12,196 12,578
Services
Technology Services 8,457 8,748 25,079 26,029
& Cloud Platforms
Systems 1,721 1,558 4,863 5,184
Global Financing 427 412 1,246 1,245
Other 56 81 192 223
TOTAL REVENUE 19,153 19,226 56,597 58,149
GROSS PROFIT 8,800 9,013 25,365 27,401
GROSS PROFIT MARGIN
Cognitive Solutions 78.7 % 80.4 % 78.4 % 81.5 %
Global Business 27.3 % 28.8 % 25.3 % 27.0 %
Services
Technology Services 41.1 % 42.0 % 40.2 % 41.5 %
& Cloud Platforms
Systems 53.6 % 51.1 % 51.5 % 55.1 %
Global Financing 25.2 % 37.8 % 29.2 % 39.6 %
TOTAL GROSS PROFIT 45.9 % 46.9 % 44.8 % 47.1 %
MARGIN
EXPENSE AND OTHER
INCOME
S,G&A 4,648 4,732 14,959 16,093
R,D&E 1,342 1,397 4,360 4,320
Intellectual
property and
custom development (308 ) (528 ) (1,118 ) (1,110 )
income
Other (income) (114 ) (8 ) (218 ) 281
and expense
Interest expense 168 158 451 473
TOTAL EXPENSE AND 5,735 5,751 18,434 20,056
OTHER INCOME
INCOME FROM
CONTINUING
OPERATIONS
BEFORE INCOME TAXES 3,065 3,263 6,931 7,345
Pre-tax margin 16.0 % 17.0 % 12.2 % 12.6 %
Provision for 339 409 120 (31 )
/ (Benefit
from) income taxes
Effective tax rate 11.0 % 12.5 % 1.7 % (0.4 %)
INCOME FROM $ 2,726 $ 2,854 $ 6,811 $ 7,375
CONTINUING
OPERATIONS
DISCONTINUED
OPERATIONS
Income/(Loss) from (0 ) (1 ) (3 ) (4 )
discontinued
operations, net
of taxes
NET INCOME $ 2,726 $ 2,853 $ 6,807 $ 7,371
EARNINGS PER SHARE
OF COMMON STOCK:
Assuming Dilution
Continuing Operations $ 2.92 $ 2.98 $ 7.24 $ 7.67
Discontinued $ 0.00 $ 0.00 $ 0.00 $ 0.00
Operations
TOTAL $ 2.92 $ 2.98 $ 7.24 $ 7.67
Basic
Continuing Operations $ 2.93 $ 2.99 $ 7.28 $ 7.70
Discontinued $ 0.00 $ 0.00 $ 0.00 $ 0.00
Operations
TOTAL $ 2.93 $ 2.99 $ 7.28 $ 7.70
WEIGHTED-AVERAGE
NUMBER
OF COMMON SHARES
OUTSTANDING (M's):
Assuming Dilution 933.2 957.3 940.2 960.7
Basic 929.4 954.0 935.6 957.7
INTERNATIONAL BUSINESS
MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
At At
(Dollars in Millions) September 30, December 31,
2017 2016
ASSETS:
Current Assets:
Cash and cash equivalents $ 10,915 $ 7,826
Marketable securities 600 701
Notes and accounts receivable 8,150 9,182
- trade, net
Short-term financing receivables, net 18,050 19,006
Other accounts receivable, net 926 1,057
Inventory 1,711 1,553
Prepaid expenses and 4,389 4,564
other current assets
Total Current Assets 44,742 43,888
Property, plant and equipment, net 11,057 10,830
Long-term financing receivables, net 8,459 9,021
Prepaid pension assets 4,521 3,034
Deferred taxes 7,289 5,224
Goodwill and intangibles, net 40,763 40,887
Investments and sundry assets 4,806 4,585
Total Assets $ 121,636 $ 117,470
LIABILITIES:
Current Liabilities:
Taxes $ 3,038 $ 3,235
Short-term debt 4,299 7,513
Accounts payable 5,442 6,209
Deferred income 10,649 11,035
Other liabilities 8,270 8,283
Total Current Liabilities 31,697 36,275
Long-term debt 41,327 34,655
Retirement related obligations 17,554 17,070
Deferred income 3,579 3,600
Other liabilities 7,723 7,477
Total Liabilities 101,879 99,078
EQUITY:
IBM Stockholders' Equity:
Common stock 54,395 53,935
Retained earnings 155,565 152,759
Treasury stock -- at cost (162,812 ) (159,050 )
Accumulated other comprehensive (27,521 ) (29,398 )
income/(loss)
Total IBM stockholders' equity 19,627 18,246
Noncontrolling interests 130 146
Total Equity 19,757 18,392
Total Liabilities and Equity $ 121,636 $ 117,470
INTERNATIONAL
BUSINESS
MACHINES
CORPORATION
CASH FLOW
ANALYSIS
(Unaudited)
Three Months Ended Nine Months Ended
(Dollars September 30, September 30,
in
Millions)
2017 2016 2017 2016
Net Cash $ 3,570 $ 4,118 * ** $ 10,991 $ 13,105 * **
Provided
by
Operating
Activities
per GAAP:
Less:
change
in Global
Financing
(GF)
Receivables 258 835 * 2,468 3,336 *
Capital (780 ) (851 ) (2,347 ) (2,801 )
Expenditures,
Net
Free Cash 2,532 2,431 ** 6,176 6,969 **
Flow
Acquisitions (274 ) (40 ) (442 ) (5,445 )
Divestitures 6 0 35 35
Dividends (1,396 ) (1,337 ) (4,119 ) (3,927 )
Share (949 ) (856 ) (3,674 ) (2,632 )
Repurchase
Non-GF (467 ) (1,696 ) 1,896 3,365
Debt
Other (233 ) 850 * ** 3,117 3,408 * **
(includes
GF
Receivables
and GF
Debt)
Change in
Cash,
Cash
Equivalents
and
Short-term ($780 ) ($648 ) $ 2,988 $ 1,773
Marketable
Securities
*
Revised
classification
of
certain
financing
receivables.
**
Reclassified
to
reflect
adoption
of
the FASB
guidance
on
stock-based
compensation.
INTERNATIONAL
BUSINESS
MACHINES CORPORATION
CASH FLOW
(Unaudited)
Three Months Ended Nine Months Ended
(Dollars in September 30, September 30,
Millions)
2017 2016 2017 2016
Net Income from $ 2,726 $ 2,853 $ 6,807 $ 7,371
Operations
Depreciation/Amortization 1,175 1,126 3,392 3,253
of Intangibles
Stock-based 123 142 388 403
Compensation
Working Capital (713 ) (839 ) ** (2,064 ) (1,258 ) **
/ Other
Global Financing A/R 258 835 * 2,468 3,336 *
Net Cash Provided by $ 3,570 $ 4,118 * ** $ 10,991 $ 13,105 * **
Operating Activities
Capital (780 ) (851 ) (2,347 ) (2,801 )
Expenditures,
net
of payments
& proceeds
Divestitures, net of 6 - 35 35
cash transferred
Acquisitions, net (274 ) (40 ) (442 ) (5,445 )
of cash acquired
Marketable (875 ) (60 ) * (523 ) 921 *
Securities
/
Other Investments,
net
Net Cash Used ($1,923 ) ($951 ) * ($3,278 ) ($7,289 ) *
in Investing
Activities
Debt, net of (446 ) (2,041 ) 2,310 1,888
payments
& proceeds
Dividends (1,396 ) (1,337 ) (4,119 ) (3,927 )
Common Stock (949 ) (856 ) (3,674 ) (2,632 )
Repurchases
Common Stock 35 49 ** (15 ) 52 **
Transactions
- Other
Net Cash Used ($2,756 ) ($4,185 ) ** ($5,499 ) ($4,619 ) **
in Financing
Activities
Effect of Exchange 328 41 875 155
Rate
changes on Cash
Net Change in Cash ($781 ) ($978 ) $ 3,089 $ 1,352
& Cash Equivalents
*
Revised
classification
of certain
financing
receivables.
** Reclassified
to reflect
adoption of the FASB
guidance on
stock-based
compensation.
INTERNATIONAL
BUSINESS
MACHINES
CORPORATION
SEGMENT
DATA
(Unaudited)
THIRD - QUARTER 2017
Cognitive Solutions &
Industry Services
Technology
Global Services &
(Dollars Cognitive Business Cloud Global
in
Millions)
Solutions Services Platforms Systems Financing
Revenue
External $ 4,400 $ 4,093 $ 8,457 $ 1,721 $ 427
Internal 629 92 164 227 272
Total $ 5,030 $ 4,185 $ 8,621 $ 1,948 $ 698
Segment
Revenue
Pre-tax 1,649 453 1,192 339 244
Income
from
Continuing
Operations
Pre-tax 32.8 % 10.8 % 13.8 % 17.4 % 34.9 %
margin
Change 3.9 % (2.3 )% (3.3 )% 10.4 % 3.7 %
YTY
Revenue
-
External
Change 3.0 % (2.2 )% (4.1 )% 9.6 % 2.8 %
YTY
Revenue
-
External
@constant
currency
THIRD - QUARTER 2016
Cognitive Solutions &
Industry Services
Technology
Global Services &
(Dollars Cognitive Business Cloud Global
in
Millions)
Solutions Services Platforms Systems Financing
Revenue
External $ 4,235 $ 4,191 $ 8,748 $ 1,558 $ 412
Internal 667 93 180 176 352
Total $ 4,902 $ 4,284 $ 8,929 $ 1,734 $ 763
Segment
Revenue
Pre-tax 1,574 544 1,288 136 355
Income
from
Continuing
Operations
Pre-tax 32.1 % 12.7 % 14.4 % 7.8 % 46.5 %
margin
INTERNATIONAL
BUSINESS
MACHINES
CORPORATION
SEGMENT
DATA
(Unaudited)
NINE - MONTHS 2017
Cognitive Solutions &
Industry Services
Technology
Global Services &
(Dollars Cognitive Business Cloud Global
in
Millions)
Solutions Services Platforms Systems Financing
Revenue
External $ 13,021 $ 12,196 $ 25,079 $ 4,863 $ 1,246
Internal 2,001 271 497 571 925
Total $ 15,022 $ 12,467 $ 25,576 $ 5,434 $ 2,171
Segment
Revenue
Pre-tax 4,539 1,065 2,888 227 836
Income
from
Continuing
Operations
Pre-tax 30.2 % 8.5 % 11.3 % 4.2 % 38.5 %
margin
Change 1.0 % (3.0 )% (3.7 )% (6.2 )% 0.1 %
YTY
Revenue
-
External
Change 1.3 % (1.9 )% (3.3 )% (5.9 )% (0.4 )%
YTY
Revenue
-
External
@constant
currency
NINE - MONTHS 2016
Cognitive Solutions &
Industry Services
Technology
Global Services &
(Dollars Cognitive Business Cloud Global
in
Millions)
Solutions Services Platforms Systems Financing
Revenue
External $ 12,889 $ 12,578 $ 26,029 $ 5,184 $ 1,245
Internal 1,929 310 501 594 1,340
Total $ 14,818 $ 12,888 $ 26,530 $ 5,778 $ 2,585
Segment
Revenue
Pre-tax 4,039 1,210 2,825 354 1,208
Income
from
Continuing
Operations
Pre-tax 27.3 % 9.4 % 10.6 % 6.1 % 46.7 %
margin
INTERNATIONAL
BUSINESS
MACHINES
CORPORATION
U.S. GAAP TO
OPERATING
(Non-GAAP)
RESULTS
RECONCILIATION
(Unaudited;
Dollars
in millions
except per share
amounts)
THIRD - QUARTER 2017
CONTINUING OPERATIONS
Acquisition- Retirement-
Related Related Operating
GAAP Adjustments* Adjustments** (Non-GAAP)
Gross Profit $ 8,800 $ 114 $ 203 $ 9,116
Gross Profit 45.9 % 0.6Pts 1.1Pts 47.6 %
Margin
S,G&A 4,648 (125 ) (53 ) 4,470
R,D&E 1,342 - (51 ) 1,291
Other (Income) (114 ) 0 - (114 )
& Expense
Total Expense & 5,735 (125 ) (103 ) 5,507
Other (Income)
Pre-tax Income 3,065 238 306 3,609
from
Continuing
Operations
Pre-tax Income 16.0 % 1.2Pts 1.6Pts 18.8 %
Margin from
Continuing
Operations
Provision for 339 79 113 531
/ (Benefit
from) Income
Taxes***
Effective 11.0 % 1.5Pts 2.2Pts 14.7 %
Tax Rate
Income from 2,726 159 193 3,079
Continuing
Operations
Income Margin 14.2 % 0.8Pts 1.0Pts 16.1 %
from
Continuing
Operations
Diluted Earnings $ 2.92 $ 0.17 $ 0.21 $ 3.30
Per Share:
Continuing
Operations
THIRD - QUARTER 2016
CONTINUING OPERATIONS
Acquisition- Retirement-
Related Related Operating
GAAP Adjustments* Adjustments** (Non-GAAP)
Gross Profit $ 9,013 $ 129 $ 79 $ 9,221
Gross Profit 46.9 % 0.7Pts 0.4Pts 48.0 %
Margin
S,G&A 4,732 (138 ) (53 ) 4,541
R,D&E 1,397 - (7 ) 1,390
Other (Income) (8 ) (2 ) - (10 )
& Expense
Total Expense & 5,751 (140 ) (60 ) 5,550
Other (Income)
Pre-tax Income 3,263 269 139 3,671
from
Continuing
Operations
Pre-tax Income 17.0 % 1.4Pts 0.7Pts 19.1 %
Margin from
Continuing
Operations
Provision for 409 73 40 521
/ (Benefit
from) Income
Taxes***
Effective 12.5 % 1.1Pts 0.6Pts 14.2 %
Tax Rate
Income from 2,854 197 99 3,149
Continuing
Operations
Income Margin 14.8 % 1.0Pts 0.5Pts 16.4 %
from
Continuing
Operations
Diluted Earnings $ 2.98 $ 0.21 $ 0.10 $ 3.29
Per Share:
Continuing
Operations
* 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)
NINE - MONTHS 2017
CONTINUING OPERATIONS
Acquisition- Retirement-
Related Related Operating
GAAP Adjustments* Adjustments** (Non-GAAP)
Gross $ 25,365 $ 349 $ 591 $ 26,305
Profit
Gross 44.8 % 0.6Pts 1.0Pts 46.5 %
Profit
Margin
S,G&A 14,959 (393 ) (326 ) 14,240
R,D&E 4,360 - (148 ) 4,212
Other (218 ) (7 ) - (225 )
(Income)
& Expense
Total Expense 18,434 (401 ) (474 ) 17,559
&
Other
(Income)
Pre-tax 6,931 750 1,065 8,746
Income
from
Continuing
Operations
Pre-tax 12.2 % 1.3Pts 1.9Pts 15.5 %
Income
Margin from
Continuing
Operations
Provision 120 212 288 621
for
/ (Benefit
from)
Income
Taxes***
Effective 1.7 % 2.3Pts 3.1Pts 7.1 %
Tax Rate
Income from 6,811 537 777 8,125
Continuing
Operations
Income 12.0 % 0.9Pts 1.4Pts 14.4 %
Margin
from
Continuing
Operations
Diluted $ 7.24 $ 0.57 $ 0.83 $ 8.64
Earnings
Per Share:
Continuing
Operations
NINE - MONTHS 2016
CONTINUING OPERATIONS
Acquisition- Retirement-
Related Related Operating
GAAP Adjustments* Adjustments** (Non-GAAP)
Gross $ 27,401 $ 371 $ 238 $ 28,010
Profit
Gross 47.1 % 0.6Pts 0.4Pts 48.2 %
Profit
Margin
S,G&A 16,093 (365 ) (183 ) 15,545
R,D&E 4,320 - (23 ) 4,297
Other 281 (7 ) - 274
(Income)
& Expense
Total Expense 20,056 (372 ) (206 ) 19,478
&
Other
(Income)
Pre-Tax 7,345 743 444 8,532
Income
from
Continuing
Operations
Pre-tax 12.6 % 1.3Pts 0.8Pts 14.7 %
Income
Margin from
Continuing
Operations
Provision (31 ) 201 106 277
for
/ (Benefit
from)
Income
Taxes***
Effective (0.4 )% 2.4Pts 1.3Pts 3.2 %
Tax Rate
Income from 7,375 542 338 8,255
Continuing
Operations
Income 12.7 % 0.9Pts 0.6Pts 14.2 %
Margin
from
Continuing
Operations
Diluted $ 7.67 $ 0.57 $ 0.35 $ 8.59
Earnings
Per Share:
Continuing
Operations
* 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 September 30, 2017
IBMIan Colley, 914-434-3043colley@us.ibm.comorJohn Bukovinsky,
732-618-3531jbuko@us.ibm.com
View source version on businesswire.com:
http://www.businesswire.com/news/home/20171017006759/en/
This information is provided by Business Wire
(END) Dow Jones Newswires
October 18, 2017 02:00 ET (06:00 GMT)
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