ARMONK, N.Y.--(BUSINESS WIRE)--IBM (NYSE:IBM)
Fourth-Quarter 2015:
o Diluted EPS from continuing operations:
- Operating (non-GAAP): $4.84, down 17 percent; impact of 20 points from prior year System x divestiture gain;
- GAAP: $4.59, down 17 percent;
o Net income from continuing operations:
- Operating (non-GAAP): $4.7 billion, down 19 percent; impact of 19 points from prior year System x divestiture gain;
- GAAP: $4.5 billion, down 19 percent;
o Revenue from continuing operations: $22.1 billion:
- Down 2 percent adjusting for currency; down 9 percent as reported;
o Services backlog of $121 billion, up 1 percent adjusting for currency.
Full-Year 2015:
o Diluted EPS from continuing operations:
- Operating (non-GAAP): $14.92, down 10 percent; impact of 7 points from prior year System x and customer care divestiture gains;
- GAAP: $13.60, down 13 percent;
o Net income from continuing operations:
- Operating (non-GAAP): $14.7 billion, down 12 percent; impact of 7 points from prior year System x and customer care divestiture gains;
- GAAP: $13.4 billion, down 15 percent;
o Gross profit margin from continuing operations:
- Operating (non-GAAP): 50.8 percent, up 20 basis points;
- GAAP: 49.8 percent, down 20 basis points;
o Revenue from continuing operations: $81.7 billion:
- Down 1 percent adjusting for currency (8 points or more than $7 billion) and divestitures (3 points or nearly $3 billion); down 12 percent as reported;
o Strategic imperatives revenue of $28.9 billion now represents 35 percent of total IBM revenue, up 26 percent adjusting for currency and the System x divestiture; up 17 percent as reported:
- Total Cloud revenue of $10.2 billion up 57 percent adjusting for currency and the System x divestiture, up 43 percent as reported;
-- Cloud delivered as a service revenues of $4.5 billion, up 61 percent adjusting for currency, up 50 percent as reported;
-- Annual run rate of $5.3 billion vs. $3.5 billion in the fourth quarter 2014 for cloud delivered as a service;
- Business analytics revenue up 16 percent adjusting for currency, up 7 percent as reported to $17.9 billion;
- Mobile revenue more than tripled;
- Security revenue up 12 percent adjusting for currency, up 5 percent as reported;
o Free cash flow of $13.1 billion, up $0.7 billion;
- Free cash flow realization equaled 98 percent of GAAP net income from continuing operations;
o Total capital return to shareholders of $9.5 billion; dividends of $4.9 billion and gross share repurchases of $4.6 billion;
o The company will discuss 2016 during today’s quarterly earnings conference call.
IBM (NYSE: IBM) today announced fourth-quarter 2015 diluted earnings from continuing operations of $4.59 per share, down 17 percent year-to-year. Operating (non-GAAP) diluted earnings from continuing operations were $4.84 per share, compared with operating diluted earnings of $5.81 per share in the fourth quarter of 2014, down 17 percent. The prior-year gain from the divestiture of the System x business impacted operating diluted earnings per share from continuing operations by 20 points.
"We continue to make significant progress in our transformation to higher value. In 2015, our strategic imperatives of cloud, analytics, mobile, social and security grew 26 percent to $29 billion and now represent 35 percent of our total revenue," said Ginni Rometty, IBM chairman, president and chief executive officer. "We strengthened our existing portfolio while investing aggressively in new opportunities like Watson Health, Watson Internet of Things and hybrid cloud. As we transform to a cognitive solutions and cloud platform company, we are well positioned to continue delivering greater value to our clients and returning capital to our shareholders."
Fourth-quarter net income from continuing operations was $4.5 billion compared with $5.5 billion in the fourth quarter of 2014, down 19 percent. Operating (non-GAAP) net income was $4.7 billion compared with $5.8 billion in the fourth quarter of 2014, down 19 percent. The prior-year gain from the divestiture of the System x business impacted operating net income by 19 points.
Total revenues from continuing operations for the fourth quarter of 2015 of $22.1 billion were down 9 percent (down 2 percent adjusting for currency) from the fourth quarter of 2014.
GAAP – Operating (non-GAAP) Reconciliation
Fourth-quarter operating (non-GAAP) diluted earnings exclude $0.25 per share of charges: $0.11 per share for the amortization of purchased intangible assets and other acquisition-related charges, and $0.14 per share for non-operating retirement-related charges driven by changes to plan assets and liabilities primarily related to past market performance.
Full-year operating (non-GAAP) diluted earnings exclude $1.32 per share of charges: $0.57 per share for the amortization of purchased intangible assets and other acquisition-related charges, and $0.75 per share for non-operating retirement-related charges driven by changes to plan assets and liabilities primarily related to past market performance.
Strategic Imperatives
Fourth-quarter revenues from the company’s strategic imperatives --- cloud, analytics and engagement --- increased 10 percent year to year (up 16 percent adjusting for currency). For the full year, revenues from strategic imperatives increased 17 percent (up 26 percent adjusting for currency and the divested System x business) to $28.9 billion and now represent 35 percent of total IBM consolidated revenue.
For the full year, total cloud revenues (public, private and hybrid) increased 43 percent (up 57 percent adjusting for currency and the divested System x business) to $10.2 billion. Revenues for cloud delivered as a service -- a subset of the total cloud revenue -- increased 50 percent to $4.5 billion; and the annual as-a-service run rate increased to $5.3 billion from $3.5 billion in the fourth quarter of 2014. Revenues from business analytics increased 7 percent (up 16 percent adjusting for currency) to $17.9 billion. Revenues from mobile more than tripled and from security increased 5 percent (up 12 percent adjusting for currency).
Geographic Regions
The Americas’ fourth-quarter revenues were $10.3 billion, a decrease of 8 percent (down 4 percent adjusting for currency) from the 2014 period. Revenues from Europe/Middle East/Africa were $7.3 billion, down 9 percent (up 1 percent adjusting for currency). Asia-Pacific revenues decreased 10 percent (down 3 percent adjusting for currency) to $4.4 billion. Revenues from the BRIC countries were down 21 percent as reported (down 11 percent adjusting for currency).
Services
Global Technology Services segment revenues were down 7 percent (up 1 percent adjusting for currency) to $8.1 billion. Global Business Services segment revenues were down 10 percent (down 4 percent adjusting for currency) to $4.3 billion.
The estimated services backlog as of December 31 was $121 billion, up 1 percent year to year adjusting for currency.
Software
Revenues from the Software segment were down 11 percent to $6.8 billion (down 6 percent adjusting for currency) compared with the fourth quarter of 2014.
Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Workforce Solutions and Rational products, were $4.9 billion, down 10 percent (down 6 percent adjusting for currency) year to year. Operating systems revenues of $0.5 billion were down 12 percent (down 7 percent adjusting for currency) year to year.
Hardware
Revenues from the Systems Hardware segment totaled $2.4 billion for the quarter, down 1 percent (up 3 percent adjusting for currency) year to year.
Revenues from z Systems mainframe server products increased 16 percent compared with the year-ago period (up 21 percent adjusting for currency). Total delivery of z Systems computing power, as measured in MIPS (millions of instructions per second), increased 28 percent. Revenues from Power Systems were up 4 percent compared with the 2014 period (up 8 percent adjusting for currency). Revenues from System Storage decreased 11 percent (down 7 percent adjusting for currency).
Financing
Global Financing segment revenues decreased 15 percent (down 6 percent adjusting for currency) in the fourth quarter at $0.5 billion.
Gross Profit
The company’s total gross profit margin from continuing operations was 51.7 percent in the 2015 fourth quarter compared with 53.3 percent in the 2014 fourth quarter. Total operating (non-GAAP) gross profit margin from continuing operations was 52.7 percent in the 2015 fourth quarter compared with 53.9 percent in the 2014 fourth quarter.
Expense
Total expense and other income from continuing operations increased to $6.3 billion, up 9 percent compared to the prior-year period. S,G&A expense of $5.2 billion decreased 15 percent year over year. R,D&E expense of $1.4 billion increased 3 percent year to year; the related expense-to-revenue ratio increased to 6.2 percent compared with 5.5 percent in the year-ago period. Other (income) and expense was income of $146 million compared with prior-year income of $1.5 billion. Intellectual property and custom development income was $193 million and interest expense was $128 million.
Total operating (non-GAAP) expense and other income from continuing operations increased to $6.1 billion, up 9 percent compared with the prior-year period, driven by the prior-year $1.4 billion gain from the divested System x business and the prior-year expense of $0.6 billion for workforce rebalancing. Operating (non-GAAP) S,G&A expense of $5.0 billion decreased 15 percent compared with prior-year expense. Operating (non-GAAP) R,D&E expense of $1.4 billion increased 1 percent year to year; the related expense-to-revenue ratio increased to 6.1 percent compared with 5.6 percent in the year-ago period.
Pre-Tax Income
Pre-tax income from continuing operations decreased 28 percent to $5.1 billion. Pre-tax margin from continuing operations decreased 6.3 points to 23.1 percent. Operating (non-GAAP) pre-tax income from continuing operations decreased 25 percent to $5.5 billion and pre-tax margin was 25.0 percent, a decrease of 5.7 points year to year.
***
IBM’s tax rate from continuing operations was 12.5 percent, down 9.7 points year over year; the operating (non-GAAP) tax rate was 14.7 percent, down 7.1 points compared to the year-ago period driven by current period discrete items.
Net income margin from continuing operations decreased 2.7 points to 20.2 percent. Total operating (non-GAAP) net income margin from continuing operations decreased 2.7 points to 21.3 percent.
The weighted-average number of diluted common shares outstanding in the fourth-quarter 2015 was 973 million compared with 995 million shares in the same period of 2014. As of December 31, 2015, there were 966 million basic common shares outstanding.
Debt, including Global Financing, totaled $39.9 billion, compared with $40.7 billion at year-end 2014. From a management segment view, Global Financing debt totaled $27.2 billion versus $29.1 billion at year-end 2014, resulting in a debt-to-equity ratio of 7.3 to 1. Core (non-global financing) debt totaled $12.7 billion, an increase of $1.1 billion since year-end 2014. IBM ended the fourth-quarter 2015 with $8.2 billion of cash on hand.
The company generated full-year free cash flow of $13.1 billion, excluding Global Financing receivables, up $0.7 billion compared to 2014. The company returned $9.5 billion to shareholders through $4.9 billion in dividends and $4.6 billion of gross share repurchases. The balance sheet remains strong and is well positioned to support the business over the long term.
At the end of December 2015, IBM had approximately $5.6 billion remaining from the current share repurchase authorization.
Full-Year 2015 Results
Diluted earnings per share from continuing operations were $13.60, down 13 percent compared to the 2014 period. Net income from continuing operations for the twelve months ended December 31, 2015 was $13.4 billion compared with $15.8 billion in the year-ago period, a decrease of 15 percent.
Consolidated net income was $13.2 billion compared to $12.0 billion in the year-ago period, including operating net losses in discontinued operations related to the divested Microelectronics business. Consolidated diluted earnings per share were $13.42 compared to $11.90, up 13 percent year to year. Revenues from continuing operations for the twelve-month period totaled $81.7 billion, a decrease of 12 percent (down 1 percent year to year, adjusting for currency and divested businesses) compared with $92.8 billion for the first twelve months of 2014.
Operating (non-GAAP) diluted earnings per share from continuing operations were $14.92 compared with $16.53 per diluted share for the 2014 period, a decrease of 10 percent. The prior-year gain from the divestitures of the System x and the customer care outsourcing businesses impacted earnings per share from continuing operations by 7 points. Operating (non-GAAP) net income from continuing operations for the twelve months ended December 31, 2015 was $14.7 billion compared with $16.7 billion in the year-ago period, a decrease of 12 percent. The prior-year gain from the divestitures of the System x and the customer care outsourcing businesses impacted net income from continuing operations by 7 points.
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 and 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; 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 --
o presenting operating (non-GAAP) earnings per share amounts and related income statement items;
o adjusting for free cash flow;
o adjusting for currency (i.e., at constant currency);
o adjusting for the divestiture of the System x and the customer care outsourcing businesses.
The rationale for management’s use of non-GAAP measures is included as part of the supplemental materials presented within the fourth-quarter earnings materials. These materials are available via a link on the IBM investor relations Web site at www.ibm.com/investor and are being included in Attachment II (“Non-GAAP Supplemental Materials”) to 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/4q15.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 | |||||||||||||||||
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(Unaudited; Dollars in millions except per share amounts) |
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Three Months Ended |
Twelve Months Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| Percent | Percent | ||||||||||||||||
| 2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||
| REVENUE | |||||||||||||||||
| Global Technology Services * | $ | 8,126 | $ | 8,746 | -7.1% | $ | 32,017 | $ | 35,442 | -9.7% | |||||||
| Gross profit margin | 37.7% | 39.1% | 37.4% | 39.0% | |||||||||||||
| Global Business Services * | 4,297 | 4,771 | -9.9% | 17,166 | 19,512 | -12.0% | |||||||||||
| Gross profit margin | 28.2% | 31.5% | 28.2% | 30.4% | |||||||||||||
| Software | 6,767 | 7,578 | -10.7% | 22,932 | 25,434 | -9.8% | |||||||||||
| Gross profit margin | 88.0% | 90.0% | 87.3% | 88.6% | |||||||||||||
| Systems Hardware | 2,372 | 2,406 | -1.4% | 7,581 | 9,996 | -24.2% | |||||||||||
| Gross profit margin | 48.0% | 49.6% | 46.6% | 39.5% | |||||||||||||
| Global Financing | 454 | 532 | -14.6% | 1,840 | 2,034 | -9.5% | |||||||||||
| Gross profit margin | 39.9% | 48.7% | 45.6% | 49.4% | |||||||||||||
| Other | 43 | 82 | -47.1% | 206 | 374 | -45.0% | |||||||||||
| Gross profit margin | -312.7% | -401.7% | -253.0% | -215.0% | |||||||||||||
| TOTAL REVENUE | 22,059 | 24,113 | -8.5% | 81,741 | 92,793 | -11.9% | |||||||||||
| GROSS PROFIT | 11,407 | 12,862 | -11.3% | 40,684 | 46,407 | -12.3% | |||||||||||
| Gross profit margin | 51.7% | 53.3% | 49.8% | 50.0% | |||||||||||||
| EXPENSE AND OTHER INCOME | |||||||||||||||||
| S,G&A | 5,157 | 6,034 | -14.5% | 20,430 | 23,180 | -11.9% | |||||||||||
| Expense to revenue | 23.4% | 25.0% | 25.0% | 25.0% | |||||||||||||
| R,D&E | 1,362 | 1,320 | 3.1% | 5,247 | 5,437 | -3.5% | |||||||||||
| Expense to revenue | 6.2% | 5.5% | 6.4% | 5.9% | |||||||||||||
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Intellectual property and |
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| custom development income | (193) | (199) | -2.9% | (682) | (742) | -8.1% | |||||||||||
| Other (income) and expense | (146) | (1,506) | -90.3% | (724) | (1,938) | -62.6% | |||||||||||
| Interest expense | 128 | 117 | 9.7% | 468 | 484 | -3.2% | |||||||||||
| TOTAL EXPENSE AND | |||||||||||||||||
| OTHER INCOME | 6,308 | 5,767 | 9.4% | 24,740 | 26,421 | -6.4% | |||||||||||
| Expense to revenue | 28.6% | 23.9% | 30.3% | 28.5% | |||||||||||||
| INCOME FROM CONTINUING | |||||||||||||||||
| OPERATIONS BEFORE INCOME TAXES | 5,098 | 7,094 | -28.1% | 15,945 | 19,986 | -20.2% | |||||||||||
| Pre-tax margin | 23.1% | 29.4% | 19.5% | 21.5% | |||||||||||||
| Provision for income taxes | 638 | 1,580 | -59.6% | 2,581 | 4,234 | -39.1% | |||||||||||
| Effective tax rate | 12.5% | 22.3% | 16.2% | 21.2% | |||||||||||||
| INCOME FROM CONTINUING | |||||||||||||||||
| OPERATIONS | $ | 4,460 | $ | 5,515 | -19.1% | $ | 13,364 | $ | 15,751 | -15.2% | |||||||
| Net margin | 20.2% | 22.9% | 16.3% | 17.0% | |||||||||||||
| DISCONTINUED OPERATIONS | |||||||||||||||||
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Income / (loss) from discontinued |
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| operations, net of taxes | 3 | (31) | (174) | (3,729) | |||||||||||||
| NET INCOME | $ | 4,463 | $ | 5,484 | -18.6% | $ | 13,190 | $ | 12,022 | 9.7% | |||||||
| EARNINGS PER SHARE | |||||||||||||||||
| OF COMMON STOCK: | |||||||||||||||||
| Assuming Dilution | |||||||||||||||||
| Continuing Operations | $ | 4.59 | $ | 5.54 | -17.1% | $ | 13.60 | $ | 15.59 | -12.8% | |||||||
| Discontinued Operations | $ | 0.00 | ($0.03) | ($0.18) | ($3.69) | ||||||||||||
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| TOTAL | $ | 4.59 | $ | 5.51 | -16.7% | $ | 13.42 | $ | 11.90 | 12.8% | |||||||
| Basic | |||||||||||||||||
| Continuing Operations | $ | 4.60 | $ | 5.57 | -17.4% | $ | 13.66 | $ | 15.68 | -12.9% | |||||||
| Discontinued Operations | $ | 0.00 | ($0.03) | ($0.18) | ($3.71) | ||||||||||||
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| TOTAL | $ | 4.60 | $ | 5.54 | -17.0% | $ | 13.48 | $ | 11.97 | 12.6% | |||||||
| WEIGHTED-AVERAGE NUMBER | |||||||||||||||||
| OF COMMON SHARES | |||||||||||||||||
| OUTSTANDING (M's): | |||||||||||||||||
| Assuming Dilution | 972.8 | 995.4 | 982.7 | 1,010.0 | |||||||||||||
| Basic | 969.4 | 990.4 | 978.7 | 1,004.3 | |||||||||||||
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*Reclassified to conform with 2015 presentation. |
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| INTERNATIONAL BUSINESS MACHINES CORPORATION | |||||||
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | |||||||
| (Unaudited) | |||||||
| At | At | ||||||
| (Dollars in Millions) | December 31, | December 31, | |||||
| 2015 | 2014 * ** | ||||||
| ASSETS: | |||||||
| Current Assets: | |||||||
| Cash and cash equivalents | $ | 7,686 | $ | 8,476 | |||
| Marketable securities | 508 | 0 | |||||
| Notes and accounts receivable - trade | |||||||
| (net of allowances of $367 in 2015 and $336 in 2014) | 8,333 | 9,090 | |||||
| Short-term financing receivables | |||||||
| (net of allowances of $490 in 2015 and $452 in 2014) | 19,020 | 19,835 | |||||
| Other accounts receivable | |||||||
| (net of allowances of $51 in 2015 and $40 in 2014) | 1,201 | 2,906 | |||||
| Inventories, at lower of average cost or market: | |||||||
| Finished goods | 352 | 430 | |||||
| Work in process and raw materials | 1,199 | 1,674 | |||||
| Total inventories | 1,551 | 2,103 | |||||
| Prepaid expenses and other current assets | 4,205 | 4,967 | |||||
| Total Current Assets * | 42,504 | 47,377 | |||||
| Property, plant and equipment | 29,342 | 39,034 | |||||
| Less: Accumulated depreciation | 18,615 | 28,263 | |||||
| Property, plant and equipment - net | 10,727 | 10,771 | |||||
| Long-term financing receivables | |||||||
| (net of allowances of $118 in 2015 and $126 in 2014) | 10,013 | 11,109 | |||||
| Prepaid pension assets | 1,734 | 2,160 | |||||
| Deferred taxes * | 4,822 | 6,675 | |||||
| Goodwill | 32,021 | 30,556 | |||||
| Intangible assets - net | 3,487 | 3,104 | |||||
| Investments and sundry assets ** | 5,187 | 5,520 | |||||
| Total Assets * ** | $ | 110,495 | $ | 117,271 | |||
| LIABILITIES: | |||||||
| Current Liabilities: | |||||||
| Taxes | $ | 2,847 | $ | 5,084 | |||
| Short-term debt ** | 6,461 | 5,731 | |||||
| Accounts payable | 6,028 | 6,864 | |||||
| Compensation and benefits | 3,560 | 4,031 | |||||
| Deferred income | 11,021 | 11,877 | |||||
| Other accrued expenses and liabilities * | 4,353 | 5,994 | |||||
| Total Current Liabilities * ** | 34,269 | 39,581 | |||||
| Long-term debt ** | 33,428 | 34,991 | |||||
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Retirement and nonpension post retirement |
|||||||
| benefit obligations | 16,504 | 18,261 | |||||
| Deferred income | 3,771 | 3,691 | |||||
| Other liabilities * | 8,099 | 8,733 | |||||
| Total Liabilities * ** | 96,071 | 105,257 | |||||
| EQUITY: | |||||||
| IBM Stockholders' Equity: | |||||||
| Common stock | 53,262 | 52,666 | |||||
| Retained earnings | 146,124 | 137,793 | |||||
| Treasury stock -- at cost | (155,518) | (150,715) | |||||
| Accumulated other comprehensive income/(loss) | (29,607) | (27,875) | |||||
| Total IBM stockholders' equity | 14,262 | 11,868 | |||||
| Noncontrolling interests | 162 | 146 | |||||
| Total Equity | 14,424 | 12,014 | |||||
| Total Liabilities and Equity * ** | $ | 110,495 | $ | 117,271 | |||
* Reclassified to reflect adoption of the FASB guidance on deferred taxes in consolidated financial statements.
** Reclassified to reflect adoption of the FASB guidance on debt issuance costs in consolidated financial statements.
| INTERNATIONAL BUSINESS MACHINES CORPORATION | |||||||||||||
| CASH FLOW ANALYSIS | |||||||||||||
| (Unaudited) | |||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||
| (Dollars in Millions) | December 31, | December 31, | |||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| Net Cash from Operating Activities per GAAP: | $ | 5,278 | $ | 6,059 | $ | 17,008 | $ | 16,868 | |||||
| Less: the change in Global Financing (GF) | |||||||||||||
| Receivables | (1,810) | (1,505) | 152 | 718 | |||||||||
| Net Cash from Operating Activities | |||||||||||||
| (Excluding GF Receivables) | 7,088 | 7,564 | 16,855 | 16,151 | |||||||||
| Capital Expenditures, Net | (1,016) | (976) | (3,780) | (3,779) | |||||||||
| Free Cash Flow | |||||||||||||
| (Excluding GF Receivables) | 6,072 | 6,588 | 13,075 | 12,372 | |||||||||
| Acquisitions | (2,529) | (6) | (3,349) | (656) | |||||||||
| Divestitures | 87 | 1,869 | (401) | 2,357 | |||||||||
| Dividends | (1,261) | (1,089) | (4,897) | (4,265) | |||||||||
| Share Repurchase | (764) | (132) | (4,609) | (13,679) | |||||||||
| Non-GF Debt | (898) | (5,883) | (128) | (1,348) | |||||||||
| Other (includes GF Receivables, and | |||||||||||||
| GF Debt) | (2,080) | (2,435) | 28 | 2,629 | |||||||||
| Change in Cash, Cash Equivalents and | |||||||||||||
| Short-term Marketable Securities | ($1,373) | ($1,088) | ($282) | ($2,589) | |||||||||
| INTERNATIONAL BUSINESS MACHINES CORPORATION | |||||||||||||||
| SEGMENT DATA | |||||||||||||||
| (Unaudited) | |||||||||||||||
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FOURTH-QUARTER 2015 |
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Pre-tax |
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Income/ |
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(Loss) |
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Continuing | Pre-tax | ||||||||||||
| External | Internal | Total |
Operations |
Margin |
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| SEGMENTS | |||||||||||||||
| Global Technology Services | $ | 8,126 | $ | 234 | $ | 8,359 | $ | 1,486 | 17.8% | ||||||
| Y-T-Y change | -7.1% | 20.0% | -6.5% | 4.5% | |||||||||||
| Global Business Services | 4,297 | 118 | 4,415 | 708 | 16.0% | ||||||||||
| Y-T-Y change | -9.9% | -6.4% | -9.8% | -8.6% | |||||||||||
| Software | 6,767 | 748 | 7,515 | 2,959 | 39.4% | ||||||||||
| Y-T-Y change | -10.7% | -11.5% | -10.8% | -21.4% | |||||||||||
| Systems Hardware | 2,372 | 131 | 2,503 | 349 | 13.9% | ||||||||||
| Y-T-Y change | -1.4% | 23.1% | -0.4% | -10.1% | |||||||||||
| Global Financing | 454 | 763 | 1,216 | 674 | 55.4% | ||||||||||
| Y-T-Y change | -14.6% | 29.7% | 8.7% | 28.3% | |||||||||||
| TOTAL REPORTABLE SEGMENTS | $ | 22,015 | $ | 1,994 | $ | 24,009 | $ | 6,177 | 25.7% | ||||||
| Y-T-Y change | -8.4% | 7.2% | -7.3% | -10.2% | |||||||||||
| Eliminations / Other | 43 | (1,994) | (1,950) | (1,078) | |||||||||||
| TOTAL IBM CONSOLIDATED | $ | 22,059 | $ | 0 | $ | 22,059 | $ | 5,098 | 23.1% | ||||||
| Y-T-Y change | -8.5% | -8.5% | -28.1% | ||||||||||||
| FOURTH-QUARTER 2014 | |||||||||||||||
|
|
Pre-tax |
||||||||||||||
|
|
Income/ |
||||||||||||||
|
|
(Loss) |
||||||||||||||
| (Dollars in Millions) |
--------- Revenue --------- |
Continuing |
Pre-tax | ||||||||||||
| External | Internal | Total |
Operations |
Margin |
|||||||||||
| SEGMENTS | |||||||||||||||
| Global Technology Services * | $ | 8,746 | $ | 195 | $ | 8,941 | $ | 1,422 | 15.9% | ||||||
| Global Business Services * | 4,771 | 127 | 4,897 | 775 | 15.8% | ||||||||||
| Software | 7,578 | 845 | 8,422 | 3,765 | 44.7% | ||||||||||
| Systems Hardware | 2,406 | 107 | 2,512 | 388 | 15.5% | ||||||||||
| Global Financing | 532 | 588 | 1,119 | 526 | 47.0% | ||||||||||
| TOTAL REPORTABLE SEGMENTS | $ | 24,031 | $ | 1,860 | $ | 25,891 | $ | 6,876 | 26.6% | ||||||
| Eliminations / Other | 82 | (1,860) | (1,778) | 219 | |||||||||||
| TOTAL IBM CONSOLIDATED | $ | 24,113 | $ | 0 | $ | 24,113 | $ | 7,094 | 29.4% | ||||||
| *Reclassified to conform with 2015 presentation. | |||||||||||||||
| INTERNATIONAL BUSINESS MACHINES CORPORATION | |||||||||||||||
| SEGMENT DATA | |||||||||||||||
| (Unaudited) | |||||||||||||||
| TWELVE-MONTHS 2015 | |||||||||||||||
| Pre-tax | |||||||||||||||
| Income/ | |||||||||||||||
| (Loss) | |||||||||||||||
| (Dollars in Millions) |
--------- Revenue --------- |
Continuing | Pre-tax | ||||||||||||
| External | Internal | Total | Operations | Margin | |||||||||||
| Global Technology Services | $ | 32,017 | $ | 823 | $ | 32,840 | $ | 5,002 | 15.2% | ||||||
| Y-T-Y change | -9.7% | -11.9% | -9.7% | -15.7% | |||||||||||
| Global Business Services | 17,166 | 499 | 17,664 | 2,634 | 14.9% | ||||||||||
| Y-T-Y change | -12.0% | -8.1% | -11.9% | -22.7% | |||||||||||
| Software | 22,932 | 3,267 | 26,199 | 9,066 | 34.6% | ||||||||||
| Y-T-Y change | -9.8% | -6.6% | -9.4% | -15.3% | |||||||||||
| Systems Hardware | 7,581 | 451 | 8,032 | 604 | 7.5% | ||||||||||
| Y-T-Y change | -24.2% | -30.3% | -24.5% | NM | |||||||||||
| Global Financing | 1,840 | 2,637 | 4,477 | 2,364 | 52.8% | ||||||||||
| Y-T-Y change | -9.5% | 6.0% | -1.0% | 8.0% | |||||||||||
| TOTAL REPORTABLE SEGMENTS | $ | 81,535 | $ | 7,676 | $ | 89,211 | $ | 19,670 | 22.0% | ||||||
| Y-T-Y change | -11.8% | -5.3% | -11.3% | -11.6% | |||||||||||
| Eliminations / Other | 206 | (7,676) | (7,470) | (3,726) | |||||||||||
| TOTAL IBM CONSOLIDATED | $ | 81,741 | $ | 0 | $ | 81,741 | $ | 15,945 | 19.5% | ||||||
| Y-T-Y change | -11.9% | -11.9% | -20.2% | ||||||||||||
| TWELVE-MONTHS 2014 | |||||||||||||||
| Pre-tax | |||||||||||||||
| Income | |||||||||||||||
| (Loss)/ | |||||||||||||||
| (Dollars in Millions) |
--------- Revenue --------- |
Continuing | Pre-tax | ||||||||||||
| External | Internal | Total | Operations | Margin | |||||||||||
| SEGMENTS | |||||||||||||||
| Global Technology Services * | $ | 35,442 | $ | 934 | $ | 36,376 | $ | 5,931 | 16.3% | ||||||
| Global Business Services * | 19,512 | 543 | 20,055 | 3,408 | 17.0% | ||||||||||
| Software | 25,434 | 3,496 | 28,931 | 10,699 | 37.0% | ||||||||||
| Systems Hardware | 9,996 | 647 | 10,643 | 34 | 0.3% | ||||||||||
| Global Financing | 2,034 | 2,488 | 4,522 | 2,189 | 48.4% | ||||||||||
| TOTAL REPORTABLE SEGMENTS | $ | 92,418 | $ | 8,108 | $ | 100,527 | $ | 22,262 | 22.1% | ||||||
| Eliminations / Other | 374 | (8,108) | (7,734) | (2,276) | |||||||||||
| TOTAL IBM CONSOLIDATED | $ | 92,793 | $ | 0 | $ | 92,793 | $ | 19,986 | 21.5% | ||||||
|
*Reclassified to conform with 2015 presentation. |
|||||||||||||||
| NM = Not Meaningful | |||||||||||||||
| INTERNATIONAL BUSINESS MACHINES CORPORATION | |||||||||||||
| U.S. GAAP TO OPERATING RESULTS RECONCILIATION | |||||||||||||
|
(Unaudited; Dollars in millions except per share amounts) |
|||||||||||||
| 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 | |||||
| FOURTH-QUARTER 2014 | |||||||||||||
| CONTINUING OPERATIONS | |||||||||||||
|
|
Acquisition- |
Retirement- | |||||||||||
|
|
Related |
Related | Operating | ||||||||||
|
GAAP |
Adjustments* |
Adjustments** | (Non-GAAP) | ||||||||||
| Gross Profit | $ | 12,862 | $ | 101 | $ | 33 | $ | 12,996 | |||||
| Gross Profit Margin | 53.3% | 0.4Pts | 0.1Pts | 53.9% | |||||||||
| S,G&A | 6,034 | (94) | (95) | 5,845 | |||||||||
| R,D&E | 1,320 | - | 21 | 1,341 | |||||||||
| Other (Income) & Expense | (1,506) | (1) | - | (1,506) | |||||||||
| Total Expense & Other (Income) | 5,767 | (95) | (74) | 5,598 | |||||||||
| Pre-tax Income from | |||||||||||||
| Continuing Operations | 7,094 | 196 | 107 | 7,398 | |||||||||
| Pre-tax Income Margin from | |||||||||||||
| Continuing Operations | 29.4% | 0.8Pts | 0.4Pts | 30.7% | |||||||||
| Provision for Income Taxes*** | 1,580 | 10 | 24 | 1,613 | |||||||||
| Effective Tax Rate | 22.3% | -0.5Pts | 0.0Pts | 21.8% | |||||||||
| Income from Continuing Operations | 5,515 | 186 | 84 | 5,785 | |||||||||
| Income Margin from | |||||||||||||
| Continuing Operations | 22.9% | 0.8Pts | 0.3Pts | 24.0% | |||||||||
| Diluted Earnings Per Share: | |||||||||||||
| Continuing Operations | $ | 5.54 | $ | 0.19 | $ | 0.08 | $ | 5.81 | |||||
* Includes amortization of acquired intangible assets and other acquisition-related charges.
** Includes retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.
*** Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the GAAP pre-tax income which employs an annual effective tax rate method to the results.
| INTERNATIONAL BUSINESS MACHINES CORPORATION | |||||||||||||
| U.S. GAAP TO OPERATING RESULTS RECONCILIATION | |||||||||||||
|
(Unaudited; Dollars in millions except per share amounts) |
|||||||||||||
| 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 | |||||
| TWELVE-MONTHS 2014 | |||||||||||||
| CONTINUING OPERATIONS | |||||||||||||
| Acquisition- | Retirement- | ||||||||||||
| Related | Related | Operating | |||||||||||
| GAAP | Adjustments* | Adjustments** | (Non-GAAP) | ||||||||||
| Gross Profit | $ | 46,407 | $ | 416 | $ | 173 | $ | 46,996 | |||||
| Gross Profit Margin | 50.0% | 0.4Pts | 0.2Pts | 50.6% | |||||||||
| S,G&A | 23,180 | (385) | (257) | 22,537 | |||||||||
| R,D&E | 5,437 | - | 77 | 5,514 | |||||||||
| Other (Income) & Expense | (1,938) | (1) | - | (1,939) | |||||||||
| Total Expense & Other (Income) | 26,421 | (386) | (180) | 25,855 | |||||||||
| Pre-tax Income from | |||||||||||||
| Continuing Operations | 19,986 | 803 | 353 | 21,142 | |||||||||
| Pre-tax Income Margin from | |||||||||||||
| Continuing Operations | 21.5% | 0.9Pts | 0.4Pts | 22.8% | |||||||||
| Provision for Income Taxes*** | 4,234 | 133 | 73 | 4,440 | |||||||||
| Effective Tax Rate | 21.2% | -0.2Pts | 0.0Pts | 21.0% | |||||||||
| Income from Continuing Operations | 15,751 | 670 | 280 | 16,702 | |||||||||
| Income Margin from | |||||||||||||
| Continuing Operations | 17.0% | 0.7Pts | 0.3Pts | 18.0% | |||||||||
| Diluted Earnings Per Share: | |||||||||||||
| Continuing Operations | $ | 15.59 | $ | 0.66 | $ | 0.28 | $ | 16.53 | |||||
* Includes amortization of acquired intangible assets and other acquisition-related charges.
** Includes retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.
*** Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the GAAP pre-tax income which employs an annual effective tax rate method to the results.
