Continued Strong Growth in Strategic Imperatives Led by IBM Cloud
Highlights
-
Diluted EPS: GAAP of $2.61; Operating (non-GAAP) of $2.95
-
Revenue from continuing operations of $20.2 billion
-
Strategic imperatives revenue of $30.7 billion over the last 12 months
represents 38 percent of IBM revenue
- Strategic
imperatives revenue of $8.3 billion in the quarter, up 12 percent year
to year
-
Cloud revenue of $11.6 billion over the last 12 months
-
Cloud as-a-service annual run rate of $6.7 billion in the quarter, up
50 percent year to year
Company Website:
http://www.ibm.com
ARMONK, N.Y. -- (Business Wire)
IBM (NYSE:IBM) today announced second-quarter 2016 earnings results.
"IBM continues to establish itself as the leading cognitive solutions
and cloud platform company. In doing so, IBM is pioneering new business
opportunities beyond the traditional IT marketplace," said Ginni
Rometty, IBM chairman, president and chief executive officer. "In the
second quarter we delivered double-digit revenue growth in our strategic
imperatives, driven by innovations in areas such as analytics, security,
cloud video services and Watson Health, all powered by the IBM Cloud and
differentiated by industry. And we continue to invest for growth with
recent breakthroughs in quantum computing, Internet of Things and
Blockchain solutions for the IBM Cloud."
| |
|
| SECOND-QUARTER 2016 |
| | | | |
|
| |
|
| |
| | | | | | | | | | Gross Profit |
| | | | Diluted EPS |
|
| Net Income |
|
| Margin |
| | | | | | | | | |
|
| GAAP from Continuing Operations | | | $2.61 | | | $2.5B | | | 47.9% |
|
Year/Year
|
|
|
-27%
|
|
|
-29%
|
|
|
-2.0Pts
|
| | | | | | | | | |
|
| Operating (Non-GAAP) | | | $2.95 | | | $2.8B | | | 49.0% |
|
Year/Year
|
|
|
-23%
|
|
|
-25%
|
|
|
-1.9Pts
|
| | | | | | |
|
| | | | | | | Strategic | | | |
| REVENUE |
|
| Total IBM |
|
| Imperatives |
|
| Cloud |
| | | | | | | | | |
|
| As reported (US$) | | | $20.2B | | | $8.3B | | | $3.4B |
|
Year/Year
| | |
-3%
| | |
12%
| | |
30%
|
|
|
“In the first half of 2016, we grew our R&D investment, closed 11
acquisitions for more than $5 billion and invested nearly $2 billion in
capital expenditures, while returning more than $4 billion to
shareholders through dividends and gross share repurchases,” said Martin
Schroeter, IBM senior vice president and chief financial officer. “These
investments are key in helping us build new markets and maintain our
leadership in enterprise IT.”
Strategic Imperatives
Second-quarter revenues from the company’s strategic imperatives ---
cloud, analytics and engagement --- increased 12 percent year to year.
Cloud revenues (public, private and hybrid) for the quarter increased 30
percent. Cloud revenue over the trailing 12 months was $11.6 billion.
The annual run rate for cloud as-a-service revenue --- a subset of total
cloud revenue --- increased to $6.7 billion from $4.5 billion in the
second quarter of 2015. Revenues from analytics increased 5 percent (up
4 percent adjusting for currency). Revenues from mobile increased 43
percent and from security increased 18 percent.
Full-Year 2016 Expectations
The company continues to expect operating (non-GAAP) diluted earnings
per share of at least $13.50. This excludes $1.27 per share of charges
for amortization of purchased intangible assets, other
acquisition-related charges and retirement-related charges. As a result,
GAAP diluted earnings per share are now expected to be at least $12.23.
There is no change to IBM's previously provided free cash flow guidance.
Cash Flow and Balance Sheet
The company generated net cash from operating activities of $3.4
billion; or $3.1 billion excluding Global Financing receivables. IBM’s
free cash flow was $2.1 billion in the second quarter. IBM returned $1.3
billion in dividends and $0.8 billion of gross share repurchases to
shareholders. At the end of June 2016, IBM had $3.9 billion remaining in
the current share repurchase authorization.
IBM ended the second-quarter 2016 with $10.6 billion of cash on hand.
Debt, including Global Financing debt of $26.5 billion, totaled $44.5
billion. Core (non-global financing) debt totaled $18.0 billion. The
balance sheet remains strong and is well positioned to support the
business over the long term.
Segment Results
- Cognitive Solutions (includes solutions software and transaction
processing software) -- revenues of $4.7 billion, up 3.5 percent
(up 3.8 percent adjusting for currency). Cloud revenue within the
segment grew 54 percent. Solutions software revenue grew, led by
Analytics (including Watson) and Security.
- Global Business Services (includes consulting, global process
services, application management) -- revenues of $4.3 billion,
down 2.0 percent (down 2.5 percent adjusting for currency). Strategic
imperatives revenue within the segment was up 14 percent (up 13
percent adjusting for currency).
- Technology Services & Cloud Platforms (includes
infrastructure services, technical support services, integration
software) -- revenues of $8.9 billion, down 0.5 percent (flat
adjusting for currency). Growth of 35 percent in strategic imperatives
revenue within the segment was driven by strong hybrid cloud
infrastructure services performance.
- Systems (includes systems hardware and operating systems software)
-- revenues of $2.0 billion, down 23.2 percent (down 23.3 percent
adjusting for currency). Revenue reflects z Systems product cycle
dynamics; gross profit margin improved in both z Systems and Power.
- Global Financing (includes financing and used equipment sales) --
revenues of $424 million, down 11.3 percent (down 10.0 percent
adjusting for currency).
Year-To-Date 2016 Results
Diluted earnings per share from continuing operations were $4.69, down
22 percent compared to the 2015 period. Net income from continuing
operations for the six months ended June 30, 2016 was $4.5 billion
compared with $5.9 billion in the year-ago period, a decrease of 24
percent.
Consolidated net income was $4.5 billion compared to $5.8 billion in the
year-ago period. Consolidated diluted earnings per share were $4.69
compared to $5.84, down 20 percent year to year. Revenues from
continuing operations for the six-month period totaled $38.9 billion, a
decrease of 4 percent (down 2 percent year to year, adjusting for
currency) compared with $40.4 billion for the first six months of 2015.
Operating (non-GAAP) diluted earnings per share from continuing
operations were $5.30 compared with $6.75 per diluted share for the 2015
period, a decrease of 21 percent. Operating (non-GAAP) net income from
continuing operations for the six months ended June 30, 2016 was $5.1
billion compared with $6.7 billion in the year-ago period, a decrease of
24 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/2q16.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 |
| Six Months Ended |
| | June 30, | | June 30, |
| | |
| | | |
| |
| | 2016 |
| 2015* | | 2016 |
| 2015* |
| | | | | | | |
|
REVENUE | | | | | | | | |
Cognitive Solutions
| |
$4,675
| |
$4,516
| |
$8,654
| |
$8,564
|
Global Business Services
| |
4,255
| |
4,345
| |
8,387
| |
8,663
|
Technology Services & Cloud Platforms
| |
8,857
| |
8,898
| |
17,280
| |
17,452
|
Systems
| |
1,950
| |
2,541
| |
3,626
| |
4,683
|
Global Financing
| |
424
| |
478
| |
834
| |
939
|
Other
| |
76
|
|
35
| |
142
|
|
102
|
TOTAL REVENUE | |
20,238
| |
20,813
| |
38,923
| |
40,403
|
| | | | | | | |
|
GROSS PROFIT | |
9,702
| |
10,390
| |
18,388
| |
19,842
|
| | | | | | | |
|
GROSS PROFIT MARGIN | | | | | | | | |
Cognitive Solutions
| |
82.2%
| |
85.7%
| |
82.1%
| |
85.1%
|
Global Business Services
| |
26.3%
| |
27.4%
| |
26.1%
| |
27.4%
|
Technology Services & Cloud Platforms
| |
41.6%
| |
42.2%
| |
41.3%
| |
42.1%
|
Systems
| |
56.5%
| |
56.5%
| |
56.9%
| |
55.7%
|
Global Financing
| |
38.7%
| |
44.7%
| |
40.5%
| |
47.1%
|
| | | | | | | |
|
TOTAL GROSS PROFIT MARGIN | |
47.9%
| |
49.9%
| |
47.2%
| |
49.1%
|
| | | | | | | |
|
| | | | | | | |
|
EXPENSE AND OTHER INCOME | | | | | | | | |
S,G&A
| |
5,349
| |
5,179
| |
11,361
| |
10,541
|
| | | | | | | |
|
R,D&E
| |
1,465
| |
1,300
| |
2,923
| |
2,598
|
| | | | | | | |
|
Intellectual property and
| | | | | | | | |
custom development income
| |
(365)
| |
(128)
| |
(582)
| |
(301)
|
| | | | | | | |
|
Other (income) and expense
| |
37
| |
(301)
| |
289
| |
(444)
|
| | | | | | | |
|
Interest expense
| |
167
| |
115
| |
315
| |
223
|
| |
|
|
| |
|
|
|
TOTAL EXPENSE AND OTHER INCOME | |
6,653
| |
6,165
| |
14,306
| |
12,617
|
| | | | | | | |
|
INCOME FROM CONTINUING OPERATIONS | | | | | | | | |
BEFORE INCOME TAXES | |
3,049
| |
4,224
| |
4,082
| |
7,225
|
Pre-tax margin
| |
15.1%
| |
20.3%
| |
10.5%
| |
17.9%
|
| | | | | | | |
|
Provision for / (Benefit) from income taxes
| |
544
| |
698
| |
(439)
| |
1,283
|
Effective tax rate
| |
17.8%
| |
16.5%
| |
(10.8%)
| |
17.8%
|
| | | | | | | |
|
INCOME FROM CONTINUING OPERATIONS | |
$2,505
| |
$3,526
| |
$4,521
| |
$5,942
|
| | | | | | | |
|
DISCONTINUED OPERATIONS | | | | | | | | |
Loss from discontinued operations, net of taxes
| |
0
|
|
(77)
| |
(3)
|
|
(165)
|
| | | | | | | |
|
NET INCOME | |
$2,504
|
|
$3,449
| |
$4,518
|
|
$5,777
|
| | | | | | | |
|
| | | | | | | |
|
EARNINGS PER SHARE OF COMMON STOCK: | | | | | | | | |
Assuming Dilution
| | | | | | | | |
Continuing Operations
| |
$2.61
| |
$3.58
| |
$4.69
| |
$6.01
|
Discontinued Operations
| |
$0.00
|
|
($0.08)
| |
$0.00
|
|
($0.17)
|
TOTAL
| |
$2.61
|
|
$3.50
| |
$4.69
|
|
$5.84
|
| | | | | | | |
|
Basic
| | | | | | | | |
Continuing Operations
| |
$2.62
| |
$3.59
| |
$4.71
| |
$6.03
|
Discontinued Operations
| |
$0.00
|
|
($0.08)
| |
$0.00
|
|
($0.17)
|
TOTAL
| |
$2.62
|
|
$3.51
| |
$4.71
|
|
$5.86
|
| | | | | | | |
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES | | | | | | | | |
OUTSTANDING (M's): | | | | | | | | |
Assuming Dilution
| |
960.5
| |
986.7
| |
962.4
| |
989.5
|
Basic
| |
957.4
| |
982.3
| |
959.5
| |
985.2
|
|
*Recast to conform with 2016 segment presentation. |
INTERNATIONAL BUSINESS MACHINES CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEET |
(Unaudited) |
|
|
| At |
| At |
(Dollars in Millions) | | June 30, | | December 31, |
| | 2016 | | 2015 |
ASSETS: | |
| | | |
| | | | |
|
Current Assets: | | | | | |
Cash and cash equivalents
| | |
$10,017
| |
$7,686
|
Marketable securities
| | |
600
| |
508
|
Notes and accounts receivable - trade, net
| | |
8,782
| |
8,333
|
Short-term financing receivables, net
| | |
16,635
| |
19,020
|
Other accounts receivable, net
| | |
1,130
| |
1,201
|
Inventory
| | |
1,685
| |
1,551
|
Prepaid expenses and other current assets
| | |
4,676
| |
4,205
|
| |
|
| |
|
Total Current Assets | | | 43,524 | | 42,504 |
| | | | |
|
Property, plant and equipment, net
| | |
11,092
| |
10,727
|
Long-term financing receivables, net
| | |
9,267
| |
10,013
|
Prepaid pension assets
| | |
2,957
| |
1,734
|
Deferred taxes
| | |
4,387
| |
4,822
|
Goodwill and intangibles, net
| | |
41,570
| |
35,508
|
Investments and sundry assets
| | |
5,259
| |
5,187
|
| |
|
| |
|
Total Assets | |
| $118,056 | | $110,495 |
| | | | |
|
| | | | |
|
LIABILITIES: | | | | | |
| | | | |
|
Current Liabilities: | | | | | |
Taxes
| | |
$2,275
| |
$2,847
|
Short-term debt
| | |
4,887
| |
6,461
|
Accounts payable
| | |
5,484
| |
6,028
|
Deferred income
| | |
11,508
| |
11,021
|
Other liabilities
| | |
9,430
| |
7,913
|
| |
|
| |
|
Total Current Liabilities | | | 33,585 | | 34,269 |
| | | | |
|
Long-term debt
| | |
39,638
| |
33,428
|
Retirement related obligations
| | |
16,723
| |
16,504
|
Deferred income
| | |
3,837
| |
3,771
|
Other liabilities
| | |
8,385
| |
8,099
|
| |
|
| |
|
Total Liabilities | | | 102,167 | | 96,071 |
| | | | |
|
| | | | |
|
EQUITY: | | | | | |
| | | | |
|
IBM Stockholders' Equity: | | | | | |
Common stock
| | |
53,565
| |
53,262
|
Retained earnings
| | |
148,071
| |
146,124
|
Treasury stock -- at cost
| | |
(157,298)
| |
(155,518)
|
Accumulated other comprehensive income/(loss)
| | |
(28,604)
| |
(29,607)
|
| |
|
| |
|
Total IBM stockholders' equity | | | 15,733 | | 14,262 |
| | | | |
|
Noncontrolling interests
| | |
156
| |
162
|
| |
|
| |
|
Total Equity | | | 15,889 | | 14,424 |
| |
|
| |
|
Total Liabilities and Equity | |
| $118,056 | | $110,495 |
|
INTERNATIONAL BUSINESS MACHINES CORPORATION |
CASH FLOW ANALYSIS |
(Unaudited) |
|
|
| Three Months Ended |
| Six Months Ended |
(Dollars in Millions) | | June 30 | | June 30 |
| | |
| | | |
| |
| | 2016 | | 2015 | | 2016 | | 2015 |
| | | | | | | |
|
Net Cash Provided by Operating Activities per GAAP: | | $3,443 | | $3,884 | | $9,088 | | $7,494 |
| | | | | | | |
|
Less: change in Global Financing (GF)
| | | | | | | | |
Receivables
| |
334
| |
(392)
| |
2,713
| |
1,214
|
Capital Expenditures, Net
| |
(979)
| |
(906)
| |
(1,949)
| |
(1,830)
|
| | | | | | | |
|
Free Cash Flow | | 2,130 | | 3,369 | | 4,426 | | 4,450 |
| | | | | | | |
|
Acquisitions
| |
(2,815)
| |
(560)
| |
(5,405)
| |
(708)
|
Divestitures
| |
(12)
| |
61
| |
35
| |
81
|
Dividends
| |
(1,340)
| |
(1,278)
| |
(2,590)
| |
(2,366)
|
Share Repurchase
| |
(836)
| |
(1,138)
| |
(1,775)
| |
(2,303)
|
Non-GF Debt
| |
(810)
| |
30
| |
5,061
| |
391
|
Other (includes GF Receivables, and GF Debt)
| |
(570)
| |
(528)
| |
2,670
| |
739
|
| | | | | | | |
|
Change in Cash, Cash Equivalents and | | | | | | | | |
Short-term Marketable Securities | | ($4,253) |
| ($43) | | $2,421 | | $284 |
|
INTERNATIONAL BUSINESS MACHINES CORPORATION |
CASH FLOW |
(Unaudited) |
|
|
| Three Months Ended |
| Six Months Ended |
(Dollars in Millions) | | June 30 | | June 30 |
| | |
| | | |
| |
| | 2016 | | 2015 | | 2016 | | 2015 |
| | | | | | | |
|
Net Income from Operations | | $2,504 | | $3,449 | | $4,518 | | $5,777 |
Depreciation/Amortization of Intangibles
| |
1,103
| |
961
| |
2,127
| |
1,930
|
Stock-based Compensation
| |
128
| |
131
| |
261
| |
257
|
Working Capital / Other
| |
(626)
| |
(302)
| |
(531)
| |
(1,721)
|
Global Financing A/R
| |
334
| |
(392)
| |
2,713
| |
1,214
|
Loss on Microelectronics Business Disposal
| |
0
| |
37
| |
0
| |
37
|
Net Cash Provided by Operating Activities | | $3,443 | | $3,884 | | $9,088 | | $7,494 |
Capital Expenditures, net of payments & proceeds
| |
(979)
| |
(906)
| |
(1,949)
| |
(1,830)
|
Divestitures, net of cash transferred
| |
(12)
| |
61
| |
35
| |
81
|
Acquisitions, net of cash acquired
| |
(2,815)
| |
(560)
| |
(5,405)
| |
(708)
|
Marketable Securities / Other Investments, net
| |
(717)
| |
(526)
| |
769
| |
1,086
|
Net Cash Used in Investing Activities | | ($4,522) | | ($1,931) | | ($6,550) | | ($1,371) |
Debt, net of payments & proceeds
| |
(1,035)
| |
(212)
| |
3,929
| |
(1,522)
|
Dividends
| |
(1,340)
| |
(1,278)
| |
(2,590)
| |
(2,366)
|
Common Stock Repurchases
| |
(836)
| |
(1,138)
| |
(1,775)
| |
(2,303)
|
Common Stock Transactions - Other
| |
55
| |
59
| |
115
| |
221
|
Net Cash Used in Financing Activities | | ($3,156) | | ($2,568) | | ($322) | | ($5,970) |
Effect of Exchange Rate changes on Cash
| | (103) | | 213 | | 114 | | (236) |
Net Change in Cash & Cash Equivalents | | ($4,338) | | ($402) | | $2,330 | | ($83) |
|
INTERNATIONAL BUSINESS MACHINES CORPORATION |
SEGMENT DATA |
(Unaudited) |
|
|
| SECOND - QUARTER 2016 |
| | Cognitive Solutions & |
| |
| |
| |
| | Industry Services | | | | | | |
| | |
| | | Technology | | | | |
| | | | Global | | Services & | | | | |
(Dollars in Millions) | | Cognitive | | Business | | Cloud | | | | Global |
| | Solutions |
| Services |
| Platforms |
| Systems |
| Financing |
Revenue | | | | | | | | | | |
External
| |
$4,675
| |
$4,255
| |
$8,857
| |
$1,950
| |
$424
|
Internal
| |
594
|
|
103
|
|
156
|
|
206
|
|
502
|
Total Segment Revenue | |
$5,269
| |
$4,359
| |
$9,013
| |
$2,156
| |
$926
|
| | | | | | | | | |
|
Pre-tax Income / (Loss) from Continuing Operations | |
1,451
| |
476
| |
1,279
| |
229
| |
467
|
| | | | | | | | | |
|
Pre-tax margin | |
27.5%
| |
10.9%
| |
14.2%
| |
10.6%
| |
50.5%
|
| | | | | | | | | |
|
| | | | | | | | | |
|
Change YTY Revenue - External | | 3.5% | | (2.0)% | | (0.5)% | | (23.2)% | | (11.3)% |
Change YTY Revenue - External @constant currency | | 3.8% | | (2.5)% | | 0.0% | | (23.3)% | | (10.0)% |
|
|
| | SECOND - QUARTER 2015* |
| | Cognitive Solutions & | | | | | | |
| | Industry Services | | | | | | |
| | | | | | Technology | | | | |
| | | | Global | | Services & | | | | |
(Dollars in Millions) | | Cognitive | | Business | | Cloud | | | | Global |
| | Solutions |
| Services |
| Platforms |
| Systems |
| Financing |
Revenue | | | | | | | | | | |
External
| |
$4,516
| |
$4,345
| |
$8,898
| |
$2,541
| |
$478
|
Internal
| |
532
|
|
130
|
|
173
|
|
189
|
|
704
|
Total Segment Revenue | |
$5,049
| |
$4,475
| |
$9,071
| |
$2,730
| |
$1,182
|
| | | | | | | | | |
|
Pre-tax Income / (Loss) from Continuing Operations | |
1,825
| |
643
| |
1,414
| |
538
| |
613
|
| | | | | | | | | |
|
Pre-tax margin | |
36.1%
| |
14.4%
| |
15.6%
| |
19.7%
| |
51.9%
|
|
*Recast to conform with 2016 segment presentation. |
|
INTERNATIONAL BUSINESS MACHINES CORPORATION |
SEGMENT DATA |
(Unaudited) |
|
|
| SIX - MONTHS 2016 |
| | Cognitive Solutions & |
| |
| |
| |
| | Industry Services | | | | | | |
| | |
| | | Technology | | | | |
| | | | Global | | Services & | | | | |
(Dollars in Millions) | | Cognitive | | Business | | Cloud | | | | Global |
| | Solutions |
| Services |
| Platforms |
| Systems |
| Financing |
Revenue | | | | | | | | | | |
External
| |
$8,654
| |
$8,387
| |
$17,280
| |
$3,626
| |
$834
|
Internal
| |
1,262
|
|
216
|
|
321
|
|
418
|
|
988
|
Total Segment Revenue | |
$9,916
| |
$8,603
| |
$17,602
| |
$4,044
| |
$1,822
|
| | | | | | | | | |
|
Pre-tax Income / (Loss) from Continuing Operations | |
2,465
| |
665
| |
1,537
| |
218
| |
853
|
| | | | | | | | | |
|
Pre-tax margin | |
24.9%
| |
7.7%
| |
8.7%
| |
5.4%
| |
46.8%
|
| | | | | | | | | |
|
| | | | | | | | | |
|
Change YTY Revenue - External | | 1.1% | | (3.2)% | | (1.0)% | | (22.6)% | | (11.2)% |
Change YTY Revenue - External @constant currency | | 2.2% | | (2.4)% | | 0.9% | | (22.1)% | | (8.2)% |
|
|
| | SIX - MONTHS 2015* |
| | Cognitive Solutions & | | | | | | |
| | Industry Services | | | | | | |
| | | | | | Technology | | | | |
| | | | Global | | Services & | | | | |
(Dollars in Millions) | | Cognitive | | Business | | Cloud | | | | Global |
| | Solutions |
| Services |
| Platforms |
| Systems |
| Financing |
Revenue | | | | | | | | | | |
External
| |
$8,564
| |
$8,663
| |
$17,452
| |
$4,683
| |
$939
|
Internal
| |
1,167
|
|
261
|
|
339
|
|
362
|
|
1,290
|
Total Segment Revenue | |
$9,731
| |
$8,923
| |
$17,791
| |
$5,044
| |
$2,229
|
| | | | | | | | | |
|
Pre-tax Income / (Loss) from Continuing Operations | |
3,353
| |
1,231
| |
2,544
| |
800
| |
1,128
|
| | | | | | | | | |
|
Pre-tax margin | |
34.5%
| |
13.8%
| |
14.3%
| |
15.9%
| |
50.6%
|
|
*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) |
|
| |
| | SECOND - QUARTER 2016 |
| | CONTINUING OPERATIONS |
| | |
| Acquisition- |
| Retirement- |
| |
| | | | Related | | Related | | Operating |
| | GAAP |
| Adjustments* |
| Adjustments** |
| (Non-GAAP) |
| | | | | | | |
|
Gross Profit | |
$9,702
| |
$129
| |
$81
| |
$9,912
|
| | | | | | | |
|
Gross Profit Margin | |
47.9%
| |
0.6Pts
| |
0.4Pts
| |
49.0%
|
| | | | | | | |
|
S,G&A | |
5,349
| |
(159)
| |
(75)
| |
5,114
|
| | | | | | | |
|
R,D&E | |
1,465
| |
-
| |
(7)
| |
1,458
|
| | | | | | | |
|
Other (Income) & Expense | |
37
| |
-
| |
-
| |
37
|
| | | | | | | |
|
Total Expense & Other (Income) | |
6,653
| |
(159)
| |
(83)
| |
6,411
|
| | | | | | | |
|
Pre-tax Income from Continuing Operations | |
3,049
| |
289
| |
163
| |
3,501
|
| | | | | | | |
|
Pre-tax Income Margin from Continuing Operations | |
15.1%
| |
1.4Pts
| |
0.8Pts
| |
17.3%
|
| | | | | | | |
|
Provision for Income Taxes*** | |
544
| |
82
| |
39
| |
665
|
| | | | | | | |
|
Effective Tax Rate | |
17.8%
| |
0.9Pts
| |
0.3Pts
| |
19.0%
|
| | | | | | | |
|
Income from Continuing Operations | |
2,505
| |
207
| |
124
| |
2,835
|
| | | | | | | |
|
Income Margin from Continuing Operations | |
12.4%
| |
1.0Pts
| |
0.6Pts
| |
14.0%
|
| | | | | | | |
|
Diluted Earnings Per Share: Continuing Operations | |
$2.61
| |
$0.21
| |
$0.13
| |
$2.95
|
|
| | SECOND - QUARTER 2015 |
| | CONTINUING OPERATIONS |
| | | | Acquisition- | | Retirement- | | |
| | | | Related | | Related | | Operating |
| | GAAP |
| Adjustments* |
| Adjustments** |
| (Non-GAAP) |
| | | | | | | |
|
Gross Profit | |
$10,390
| |
$88
| |
$112
| |
$10,590
|
| | | | | | | |
|
Gross Profit Margin | |
49.9%
| |
0.4Pts
| |
0.5Pts
| |
50.9%
|
| | | | | | | |
|
S,G&A | |
5,179
| |
(74)
| |
(63)
| |
5,042
|
| | | | | | | |
|
R,D&E | |
1,300
| |
-
| |
(11)
| |
1,289
|
| | | | | | | |
|
Other (Income) & Expense | |
(301)
| |
(5)
| |
-
| |
(306)
|
| | | | | | | |
|
Total Expense & Other (Income) | |
6,165
| |
(80)
| |
(74)
| |
6,012
|
| | | | | | | |
|
Pre-tax Income from Continuing Operations | |
4,224
| |
168
| |
186
| |
4,578
|
| | | | | | | |
|
Pre-tax Income Margin from Continuing Operations | |
20.3%
| |
0.8Pts
| |
0.9Pts
| |
22.0%
|
| | | | | | | |
|
Provision for Income Taxes*** | |
698
| |
28
| |
61
| |
788
|
| | | | | | | |
|
Effective Tax Rate | |
16.5%
| |
0.0Pts
| |
0.7Pts
| |
17.2%
|
| | | | | | | |
|
Income from Continuing Operations | |
3,526
| |
140
| |
124
| |
3,790
|
| | | | | | | |
|
Income Margin from Continuing Operations | |
16.9%
| |
0.7Pts
| |
0.6Pts
| |
18.2%
|
| | | | | | | |
|
Diluted Earnings Per Share: Continuing Operations | |
$3.58
| |
$0.14
| |
$0.12
| |
$3.84
|
* |
| 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) |
|
| |
| | SIX - MONTHS 2016 |
|
| CONTINUING OPERATIONS |
| | |
| Acquisition- |
| Retirement- |
| |
| | | | Related | | Related | | Operating |
| | GAAP |
| Adjustments* |
| Adjustments** |
| (Non-GAAP) |
| | | | | | | |
|
Gross Profit | |
$18,388
| |
$241
| |
$160
| |
$18,789
|
| | | | | | | |
|
Gross Profit Margin | |
47.2%
| |
0.6Pts
| |
0.4Pts
| |
48.3%
|
| | | | | | | |
|
S,G&A | |
11,361
| |
(227)
| |
(130)
| |
11,004
|
| | | | | | | |
|
R,D&E | |
2,923
| |
-
| |
(16)
| |
2,907
|
| | | | | | | |
|
Other (Income) & Expense | |
289
| |
(6)
| |
-
| |
284
|
| | | | | | | |
|
Total Expense & Other (Income) | |
14,306
| |
(232)
| |
(146)
| |
13,928
|
| | | | | | | |
|
Pre-tax Income from Continuing Operations | |
4,082
| |
473
| |
306
| |
4,861
|
| | | | | | | |
|
Pre-tax Income Margin from Continuing Operations | |
10.5%
| |
1.2Pts
| |
0.8Pts
| |
12.5%
|
| | | | | | | |
|
Provision for / (Benefit) from Income Taxes*** | |
(439)
| |
129
| |
66
| |
(244)
|
| | | | | | | |
|
Effective Tax Rate | |
(10.8)%
| |
3.9Pts
| |
2.3Pts
| |
(5.0)%
|
| | | | | | | |
|
Income from Continuing Operations | |
4,521
| |
345
| |
239
| |
5,105
|
| | | | | | | |
|
Income Margin from Continuing Operations | |
11.6%
| |
0.9Pts
| |
0.6Pts
| |
13.1%
|
| | | | | | | |
|
Diluted Earnings Per Share: Continuing Operations | |
$4.69
| |
$0.36
| |
$0.25
| |
$5.30
|
|
|
| | SIX - MONTHS 2015 |
| | CONTINUING OPERATIONS |
| | | | Acquisition- | | Retirement- | | |
| | | | Related | | Related | | Operating |
| | GAAP |
| Adjustments* |
| Adjustments** |
| (Non-GAAP) |
| | | | | | | |
|
Gross Profit | |
$19,842
| |
$179
| |
$233
| |
$20,253
|
| | | | | | | |
|
Gross Profit Margin | |
49.1%
| |
0.4Pts
| |
0.6Pts
| |
50.1%
|
| | | | | | | |
|
S,G&A | |
10,541
| |
(154)
| |
(371)
| |
10,017
|
| | | | | | | |
|
R,D&E | |
2,598
| |
-
| |
(24)
| |
2,574
|
| | | | | | | |
|
Other (Income) & Expense | |
(444)
| |
(5)
| |
-
| |
(450)
|
| | | | | | | |
|
Total Expense & Other (Income) | |
12,617
| |
(159)
| |
(395)
| |
12,063
|
| | | | | | | |
|
Pre-Tax Income from Continuing Operations | |
7,225
| |
338
| |
627
| |
8,190
|
| | | | | | | |
|
Pre-tax Income Margin from Continuing Operations | |
17.9%
| |
0.8Pts
| |
1.6Pts
| |
20.3%
|
| | | | | | | |
|
Provision for Income Taxes*** | |
1,283
| |
56
| |
170
| |
1,510
|
| | | | | | | |
|
Effective Tax Rate | |
17.8%
| |
0.0Pts
| |
0.7Pts
| |
18.4%
|
| | | | | | | |
|
Income from Continuing Operations | |
5,942
| |
281
| |
457
| |
6,680
|
| | | | | | | |
|
Income Margin from Continuing Operations | |
14.7%
| |
0.7Pts
| |
1.1Pts
| |
16.5%
|
| | | | | | | |
|
Diluted Earnings Per Share: Continuing Operations | |
$6.01
| |
$0.28
| |
$0.46
| |
$6.75
|
* |
| 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 |
|
|
|
|
|
|
|
| 2016 |
EPS Guidance | | | | | | | Expectations |
| | | | | | |
|
IBM GAAP EPS
| | | | | | |
at least $12.23
|
| | | | | | |
|
IBM Operating EPS (non-GAAP)
| | | | | | |
at least $13.50
|
| | | | | | |
|
| | | | | | |
|
| | | | | | |
|
Adjustments
| | | | | | | |
| | | | | | |
|
Acquisition related charges *
| | | | | | |
$0.84
|
| | | | | | |
|
Non-Operating Retirement-Related Items
| | | | | | |
$0.43
|
|
* Includes acquisitions through June 30, 2016
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160718006295/en/
Contacts:
IBM
Ian Colley, 914-434-3043
colley@us.ibm.com
or
John
Bukovinsky, 732-618-3531
jbuko@us.ibm.com
Source: IBM
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