International Business Machines Corp 8-K 2017-01-19
Sign in or join
Add a note by highlighting text or Replying to an existing note.
Add a note by highlighting text or Replying to an existing note.
EXHIBIT 99.1
IBM REPORTS 2016 FOURTH-QUARTER AND FULL-YEAR RESULTS
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
ARMONK, N.Y., January 19, 2017 . . . 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 industrys leading cognitive solutions and cloud platform company, said Ginni Rometty, IBM chairman, president and chief executive officer. IBM Watson is the worlds 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 |
|
$ |
4.5 |
B |
50.0 |
% |
|
Year/Year |
|
3 |
% |
1 |
% |
-1.7 |
Pts | ||
|
Operating (Non-GAAP) |
|
$ |
5.01 |
|
$ |
4.8 |
B |
51.0 |
% |
|
Year/Year |
|
4 |
% |
1 |
% |
-1.8 |
Pts | ||
|
|
|
|
|
Strategic |
|
|
| |||
|
REVENUE |
|
Total IBM |
|
Imperatives |
|
Cloud |
| |||
|
|
|
|
|
|
|
|
| |||
|
As reported (US$) |
|
$ |
21.8 |
B |
$ |
9.5 |
B |
$ |
4.2 |
B |
|
|
|
|
|
|
|
|
| |||
|
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. IBMs 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 |
|
$ |
11.9 |
B |
47.9 |
% |
|
Year/Year |
|
-9 |
% |
-11 |
% |
-1.9 |
Pts | ||
|
Operating (Non-GAAP) |
|
$ |
13.59 |
|
$ |
13.0 |
B |
48.9 |
% |
|
Year/Year |
|
-9 |
% |
-11 |
% |
-1.9 |
Pts | ||
|
|
|
|
|
Strategic |
|
|
| |||
|
REVENUE |
|
Total IBM |
|
Imperatives |
|
Cloud |
| |||
|
As reported (US$) |
|
$ |
79.9 |
B |
$ |
32.8 |
B |
$ |
13.7 |
B |
|
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 companys 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 companys failure to meet growth and productivity objectives, a failure of the companys innovation initiatives; risks from investing in growth opportunities; failure of the companys 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 companys pension plans; ineffective internal controls; the companys use of accounting estimates; the companys 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 companys 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 companys Form 10-Qs, Form 10-K and in the companys 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 companys 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 managements 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
IBMs 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).
|
Contact: |
IBM |
|
|
Ian Colley, 914-434-3043 |
|
|
colley@us.ibm.com |
|
|
|
|
|
John Bukovinsky, 732-618-3531 |
|
|
jbuko@us.ibm.com |
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 (Ms): |
|
|
|
|
|
|
|
|
| ||||
|
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 |
| ||
|
|
|
December 31, |
|
December 31, |
| ||
|
(Dollars in Millions) |
|
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 |
| ||||||||
|
|
|
December 31, |
|
December 31, |
| ||||||||
|
(Dollars in Millions) |
|
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 |
| ||||||||
|
|
|
December 31, |
|
December 31, |
| ||||||||
|
(Dollars in Millions) |
|
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 & |
|
|
|
|
| |||||
|
|
|
Cognitive |
|
Business |
|
Cloud |
|
|
|
Global |
| |||||
|
(Dollars in Millions) |
|
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 & |
|
|
|
|
| |||||
|
|
|
Cognitive |
|
Business |
|
Cloud |
|
|
|
Global |
| |||||
|
(Dollars in Millions) |
|
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 & |
|
|
|
|
| |||||
|
|
|
Cognitive |
|
Business |
|
Cloud |
|
|
|
Global |
| |||||
|
(Dollars in Millions) |
|
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 & |
|
|
|
|
| |||||
|
|
|
Cognitive |
|
Business |
|
Cloud |
|
|
|
Global |
| |||||
|
(Dollars in Millions) |
|
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 |
% |
0.6 |
Pts |
0.4 |
Pts |
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 |
% |
1.2 |
Pts |
0.7 |
Pts |
24.8 |
% | ||||
|
Provision for Income Taxes*** |
|
480 |
|
66 |
|
77 |
|
623 |
| ||||
|
Effective Tax Rate |
|
9.6 |
% |
0.8 |
Pts |
1.2 |
Pts |
11.5 |
% | ||||
|
Income from Continuing Operations |
|
4,505 |
|
193 |
|
77 |
|
4,776 |
| ||||
|
Income Margin from Continuing Operations |
|
20.7 |
% |
0.9 |
Pts |
0.4 |
Pts |
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 |
% |
0.5 |
Pts |
0.5 |
Pts |
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 |
% |
0.9 |
Pts |
1.0 |
Pts |
25.0 |
% | ||||
|
Provision for Income Taxes*** |
|
638 |
|
89 |
|
82 |
|
809 |
| ||||
|
Effective Tax Rate |
|
12.5 |
% |
1.2 |
Pts |
1.0 |
Pts |
14.7 |
% | ||||
|
Income from Continuing Operations |
|
4,460 |
|
110 |
|
137 |
|
4,707 |
| ||||
|
Income Margin from Continuing Operations |
|
20.2 |
% |
0.5 |
Pts |
0.6 |
Pts |
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 |
% |
0.6 |
Pts |
0.4 |
Pts |
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 |
% |
1.3 |
Pts |
0.7 |
Pts |
17.4 |
% | ||||
|
Provision for / (Benefit) from Income Taxes*** |
|
449 |
|
268 |
|
183 |
|
900 |
| ||||
|
Effective Tax Rate |
|
3.6 |
% |
1.7 |
Pts |
1.2 |
Pts |
6.5 |
% | ||||
|
Income from Continuing Operations |
|
11,881 |
|
735 |
|
415 |
|
13,031 |
| ||||
|
Income Margin from Continuing Operations |
|
14.9 |
% |
0.9 |
Pts |
0.5 |
Pts |
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 |
% |
0.5 |
Pts |
0.6 |
Pts |
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 |
% |
0.9 |
Pts |
1.3 |
Pts |
21.6 |
% | ||||
|
Provision for Income Taxes*** |
|
2,581 |
|
141 |
|
316 |
|
3,037 |
| ||||
|
Effective Tax Rate |
|
16.2 |
% |
0.2 |
Pts |
0.9 |
Pts |
17.2 |
% | ||||
|
Income from Continuing Operations |
|
13,364 |
|
562 |
|
734 |
|
14,659 |
| ||||
|
Income Margin from Continuing Operations |
|
16.3 |
% |
0.7 |
Pts |
0.9 |
Pts |
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
