8-K 1 a13-2074_18k.htm 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report:  January 22, 2013

(Date of earliest event reported)

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

(Exact name of registrant as specified in its charter)

 

New York

 

1-2360

 

13-0871985

(State of Incorporation)

 

(Commission File Number)

 

(IRS employer Identification No.)

 

ARMONK, NEW YORK

 

10504

(Address of principal executive offices)

 

(Zip Code)

 

914-499-1900

(Registrant’s telephone number)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02.     Results of Operations and Financial Condition.

 

The registrant’s press release dated January 22, 2013, regarding its financial results for the periods ended December 31, 2012, including consolidated financial statements for the periods ended December 31, 2012, is Attachment I of this Form 8-K.  Attachment II are the slides for IBM’s Chief Financial Officer Mark Loughridge’s fourth quarter earnings presentation on January 22, 2013, as well as certain reconciliation and other information (“Non-GAAP Supplemental Materials”) for information in Attachment I (press release), Attachment II (slides) and in Mr. Loughridge’s presentation. All of the information in Attachment I and II is hereby filed.

 

IBM’s web site (www.ibm.com) contains a significant amount of information about IBM, including financial and other information for investors (www.ibm.com/investor/).  IBM encourages investors to visit its various web sites from time to time, as information is updated and new information is posted.

 

2



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

Date: January 22, 2013

 

 

 

 

By:

/s/ James J. Kavanaugh

 

 

 

 

 

James J. Kavanaugh

 

 

Vice President and Controller

 

3



 

ATTACHMENT I

 

IBM REPORTS 2012 FOURTH-QUARTER AND FULL-YEAR RESULTS

 

Fourth-Quarter 2012:

 

·    Diluted EPS:

·        GAAP: $5.13, up 11 percent;

·        Operating (non-GAAP): $5.39, up 14 percent;

·    Net income:

·        GAAP: $5.8 billion, up 6 percent;

·        Operating (non-GAAP): $6.1 billion, up 10 percent;

·    Gross profit margin:

·        GAAP: 51.8 percent, up 1.8 points;

·        Operating (non-GAAP): 52.3 percent, up 2.1 points;

·    Revenue of $29.3 billion, down 1 percent, flat adjusting for currency:

·        Up 1 percent excluding divested RSS business adjusting for currency;

·    Free cash flow of $9.5 billion, up $0.6 billion;

·    Software revenue up 3 percent, up 4 percent adjusting for currency;

·    Services revenue down 2 percent, down 1 percent adjusting for currency;

·    Services backlog of $140 billion, flat, up $1 billion adjusting for currency;

·    Systems and Technology revenue down 1 percent, up 4 percent excluding RSS:

·        System z mainframe up 56 percent.

 

Full-Year 2012:

 

·    Diluted EPS, up double-digits for 10th consecutive year:

·        GAAP: $14.37, up 10 percent;

·        Operating (non-GAAP): $15.25, up 13 percent;

·    Net income:

·        GAAP: $16.6 billion, up 5 percent;

·        Operating (non-GAAP): $17.6 billion, up 8 percent;

·    Revenue of $104.5 billion, down 2 percent, flat adjusting for currency;

·    Free cash flow of $18.2 billion, up $1.6 billion;

·    Growth markets revenue up 4 percent, up 7 percent adjusting for currency:

·        BRIC countries up 7 percent, up 12 percent adjusting for currency;

·    Business analytics revenue up 13 percent;

·    Smarter Planet revenue up more than 25 percent;

·    Cloud revenue up 80 percent.

 

Full-Year 2013 Expectation:

 

·    GAAP EPS of at least $15.53 and operating (non-GAAP) EPS of at least $16.70.

 

ARMONK, N.Y., January 22, 2013 . . . IBM (NYSE: IBM) today announced fourth-quarter 2012 diluted earnings of $5.13 per share, compared with diluted earnings of $4.62 per share in the fourth quarter of 2011, an increase of 11 percent.  Operating (non-GAAP) diluted earnings were $5.39 per share, compared with operating diluted earnings of $4.71 per share in the fourth quarter of 2011, an increase of 14 percent.

 

Fourth-quarter net income was $5.8 billion compared with $5.5 billion in the fourth quarter of 2011, an increase of 6 percent. Operating (non-GAAP) net income was $6.1 billion compared with $5.6 billion in the fourth quarter of 2011, an increase of 10 percent.

 

Total revenues for the fourth quarter of 2012 of $29.3 billion decreased 1 percent (flat adjusting for currency) from the fourth quarter of 2011.  Without the impact of the divested Retail Store Solutions (RSS) business, revenue increased 1 percent, adjusting for currency.

 

“We achieved record profit, earnings per share and free cash flow in 2012.  Our performance in the fourth quarter and for the full year was driven by our strategic growth initiatives — growth markets, analytics, cloud computing, Smarter Planet solutions — which support our continued shift to higher-value businesses,” said Ginni Rometty, IBM chairman, president and chief executive officer.

 

“Looking ahead, we continue to invest to deliver innovations for the enterprise in key areas such as big data, mobile solutions, social business and security, while

 

4



 

expanding into new markets and reaching new clients.  We are well on track toward our long-term roadmap for operating EPS of at least $20 in 2015.”

 

Fourth-Quarter GAAP - Operating (non-GAAP) Reconciliation

 

Fourth-quarter operating (non-GAAP) diluted earnings exclude $0.26 per share of net charges: $0.21 per share for the amortization of purchased intangible assets and other acquisition-related charges, and $0.05 per share for retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.

 

Full-Year 2013 Expectation

 

IBM said that it expects to deliver full-year 2013 GAAP earnings per share of at least $15.53; and operating (non-GAAP) earnings per share of at least $16.70.  The 2013 operating (non-GAAP) earnings exclude $1.17 per share of charges for amortization of purchased intangible assets, other acquisition-related charges, and retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.

 

Geographic Regions

 

The Americas’ fourth-quarter revenues were $12.5 billion, flat (up 1 percent, adjusting for currency) from the 2011 period.  Revenues from Europe/Middle East/Africa were $9.1 billion, down 5 percent (down 3 percent, adjusting for currency).  Asia-Pacific revenues increased 4 percent (up 5 percent, adjusting for currency) to $7.0 billion.  OEM revenues were $679 million, down 5 percent compared with the 2011 fourth quarter.

 

Growth Markets

 

Revenues from the company’s growth markets increased 7 percent.  Revenues in the BRIC countries — Brazil, Russia, India and China — increased 11 percent (up 14 percent, adjusting for currency).

 

Services

 

Global Technology Services segment revenues decreased 2 percent (flat adjusting for currency) to $10.3 billion.  Global Business Services segment revenues were down 3 percent (down 2 percent, adjusting for currency) at $4.7 billion.

 

Pre-tax income from Global Technology Services increased 5 percent; pre-tax margin increased to 19.2 percent.  Global Business Services pre-tax income was flat; pre-tax margin increased to 17.2 percent.

 

The estimated services backlog at December 31 was $140 billion, flat (up $1 billion, adjusting for currency).

 

Software

 

Revenues from the Software segment were $7.9 billion, an increase of 3 percent (up 4 percent, adjusting for currency) from the fourth quarter of 2011.  Software pre-tax income of $4.0 billion increased 8 percent year over year.

 

Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Lotus and Rational products, were $5.5 billion, an increase of 5 percent (up 6 percent, adjusting for currency) versus the fourth quarter of 2011.  Operating systems revenues of $709 million were flat (up 1 percent, adjusting for currency) compared with the prior-year quarter.

 

Revenues from the WebSphere family of software products increased 11 percent year over year.  Information Management software revenues increased 2 percent.  Revenues from Tivoli software increased 4 percent.  Revenues from Lotus software increased 9 percent, and Rational software increased 12 percent.

 

Hardware

 

Revenues from the Systems and Technology segment totaled $5.8 billion for the quarter, down 1 percent from the fourth quarter of 2011.  Excluding Retail Store Solutions (RSS), revenues were up 4 percent.  Systems and Technology pre-tax income was $1.0 billion, an increase of 23 percent.

 

5



 

Total systems revenues, excluding RSS, increased 4 percent.  Revenues from System z mainframe server products increased 56 percent compared with the year-ago period; revenue in the growth markets increased 68 percent.  Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), increased 66 percent versus the prior year and represented the largest MIPS shipment quarter in the company’s history.  New workload specialty engines, including Linux, represented  one-half of the MIPS shipped.  Revenues from Power Systems decreased 19 percent compared with the 2011 period.  Revenues from System x decreased 2 percent.  Revenues from System Storage decreased 5 percent.  Revenues from Retail Store Solutions decreased $239 million year over year as a result of the divestiture in the third quarter.  Revenues from Microelectronics OEM increased 4 percent.

 

Financing

 

Global Financing segment revenues were down 2 percent (down 1 percent, adjusting for currency) in the fourth quarter to $535 million.  Pre-tax income for the segment increased 1 percent to $518 million.

 

Gross Profit

 

The company’s total gross profit margin was 51.8 percent in the 2012 fourth quarter compared with 49.9 percent in the 2011 fourth-quarter period.  Total operating (non-GAAP) gross profit margin was 52.3 percent in the 2012 fourth quarter compared with 50.2 percent in the 2011 fourth-quarter period, with increases in Services, Software and Hardware.

 

Expense

 

Total expense and other income decreased 2 percent to $7.3 billion compared with the prior-year period.  S,G&A expense of $5.9 billion decreased 3 percent year over year compared with prior-year expense.  R,D&E expense of $1.6 billion increased 2 percent compared with the year-ago period.  Intellectual property and custom development income decreased to $227 million compared with $253 million a year ago.  Other (income) and expense was income of $47 million compared with prior-year income of $44 million.  Interest expense decreased to $109 million compared with $113 million in the prior year.

 

Total operating (non-GAAP) expense and other income decreased 2 percent to $7.2 billion compared with the prior-year period.  Operating (non-GAAP) S,G&A expense of $5.8 billion decreased 3 percent year over year compared with prior-year expense.  Operating (non-GAAP) R,D&E expense of $1.6 billion increased 1 percent compared with the year-ago period.

 

***

 

Pre-tax income increased 8 percent to $7.8 billion; total operating (non-GAAP) pre-tax income increased 10 percent to $8.1 billion.  Pre-tax margin was 26.7 percent, up 2.1 points; total operating (non-GAAP) pre-tax margin was 27.7 percent, up 2.6 points.

 

IBM’s tax rate was 25.5 percent, up 1.0 points year over year; total operating (non-GAAP) tax rate was 24.4 percent, flat compared to the year-ago period.

 

Net income margin increased 1.3 points to 19.9 percent; total operating (non-GAAP) net income margin was 20.9 percent, an increase of 1.9 points.

 

The weighted-average number of diluted common shares outstanding in the fourth-quarter 2012 was 1.14 billion compared with 1.19 billion shares in the same period of 2011.

 

In the quarter, IBM generated free cash flow of $9.5 billion excluding Global Financing receivables, up $0.6 billion year over year.

 

Full-Year 2012 Results

 

Net income for the year ended December 31, 2012 was $16.6 billion compared with $15.9 billion in the prior year, an increase of 5 percent.  Operating (non-GAAP) net income was $17.6 billion compared with $16.3 billion in 2011, an increase of 8 percent.

 

6



 

Diluted earnings were $14.37 per share compared with $13.06 per diluted share in 2011, an increase of 10 percent.  Operating (non-GAAP) diluted earnings were $15.25 per share, compared with operating diluted earnings of $13.44 per share in 2011, an increase of 13 percent.  This was the company’s 10th consecutive year of double-digit EPS growth.

 

Revenues for 2012 totaled $104.5 billion, a decrease of 2 percent (flat adjusting for currency), compared with $106.9 billion in 2011.

 

GAAP - Operating (non-GAAP) Reconciliation

 

Operating (non-GAAP) diluted earnings for the year exclude $0.88 per share of net charges: $0.55 per share for the amortization of purchased intangible assets and other acquisition-related charges, and $0.33 per share for retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.

 

Geographic Regions

 

From a geographic perspective, the Americas’ full-year revenues were $44.6 billion, a decrease of 1 percent (flat adjusting for currency) from the 2011 period.  Revenues from Europe/Middle East/Africa were $31.8 billion, a decrease of 6 percent (down 1 percent, adjusting for currency).  Asia-Pacific revenues increased 3 percent to $25.9 billion.  OEM revenues were $2.2 billion, down 18 percent compared with 2011.

 

Growth Markets

 

Revenues from the company’s growth markets increased 4 percent (up 7 percent, adjusting for currency), and represents 24 percent of IBM’s total geographic revenue.  Revenues in the BRIC countries — Brazil, Russia, India and China — increased 7 percent (up 12 percent, adjusting for currency).

 

Segments

 

Total Global Services revenues decreased 2 percent (flat adjusting for currency).  Revenues from the Global Technology Services segment totaled $40.2 billion, a decrease of 2 percent (up 1 percent, adjusting for currency) compared with 2011.  Revenues from the Global Business Services segment were $18.6 billion, down 4 percent (down 2 percent, adjusting for currency).  Software segment revenues in 2012 totaled $25.4 billion, an increase of 2 percent (up 4 percent, adjusting for currency).  Systems and Technology segment revenues were $17.7 billion, a decrease of 7 percent (down 6 percent, adjusting for currency); excluding Retail Store Solutions, revenues were down 5 percent (down 4 percent adjusting for currency).  Global Financing segment revenues totaled $2.0 billion, a decrease of 4 percent (down 1 percent, adjusting for currency).

 

***

 

The company’s total gross profit margin was 48.1 percent in 2012 compared with 46.9 percent in 2011.  Overall gross profit margins improved year over year for the 9th consecutive year.  Total operating (non-GAAP) gross profit margin was 48.7 percent in the 2012 period compared with 47.2 percent in the 2011 period, with increases in Services and Software.

 

The weighted-average number of diluted common shares outstanding in 2012 was 1.16 billion compared with 1.21 billion shares in 2011.  As of December 31, 2012, there were 1.12 billion basic common shares outstanding.

 

Debt, including Global Financing, totaled $33.3 billion, compared with $31.3 billion at year-end 2011.  From a management segment view, Global Financing debt totaled $24.5 billion versus $23.3 billion at year-end 2011, resulting in a debt-to-equity ratio of 7.0 to 1.  Non-global financing debt totaled $8.8 billion, an increase of $0.8 billion since year-end 2011, resulting in a debt-to-capitalization ratio of 36.1 percent from 32.0 percent.

 

IBM ended 2012 with $11.1 billion of cash on hand and generated free cash flow of $18.2 billion excluding Global Financing receivables, up approximately $1.6 billion year over year.  The company returned $15.8 billion to shareholders through $3.8 billion in dividends and $12.0 billion of share repurchases.  The company’s balance

 

7



 

sheet remains strong and is well positioned to support the business over the long term.

 

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 corporate IT 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 and purchases, 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 and alliances; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company’s Form 10-Q, 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 and expectations —

·             presenting operating (non-GAAP) earnings per share amounts and related income statement items;

·             presenting non-global financing debt-to-capitalization ratio;

·             adjusting for free cash flow;

·             adjusting for currency (i.e., at constant currency);

·             adjusting for the divestiture of RSS.

 

The rationale for management’s use of non-GAAP measures is included as part of the supplementary materials presented within the fourth-quarter earnings materials.  These materials are available on the IBM investor relations Web site at www.ibm.com/investor and are being included in Attachment II (“Non-GAAP Supplementary 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 4:30 p.m. EST, today.  The Webcast may be viewed at www.ibm.com/investor/4q12.  Presentation charts will be available on the Web site 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).

 

8



 

INTERNATIONAL BUSINESS MACHINES CORPORATION

COMPARATIVE FINANCIAL RESULTS

(Dollars in millions except per share amounts)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

 

 

 

 

Percent

 

 

 

 

 

Percent

 

 

 

2012

 

2011

 

Change

 

2012

 

2011

 

Change

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Technology Services

 

$

10,284

 

$

10,452

 

-1.6

%

$

40,236

 

$

40,879

 

-1.6

%

Gross profit margin

 

37.6

%

36.6

%

 

 

36.6

%

35.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Business Services

 

4,720

 

4,877

 

-3.2

%

18,566

 

19,284

 

-3.7

%

Gross profit margin

 

29.9

%

29.3

%

 

 

30.0

%

28.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

7,915

 

7,648

 

3.5

%

25,448

 

24,944

 

2.0

%

Gross profit margin

 

90.6

%

89.8

%

 

 

88.7

%

88.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System and Technology

 

5,763

 

5,803

 

-0.7

%

17,667

 

18,985

 

-6.9

%

Gross profit margin

 

44.1

%

40.5

%

 

 

39.1

%

39.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Financing

 

535

 

548

 

-2.3

%

2,013

 

2,102

 

-4.2

%

Gross profit margin

 

43.8

%

49.7

%

 

 

46.5

%

49.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

87

 

159

 

-45.3

%

577

 

722

 

-20.1

%

Gross profit margin

 

-73.2

%

-11.0

%

 

 

-71.6

%

-54.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL REVENUE

 

29,304

 

29,486

 

-0.6

%

104,507

 

106,916

 

-2.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

15,167

 

14,722

 

3.0

%

50,298

 

50,138

 

0.3

%

Gross profit margin

 

51.8

%

49.9

%

 

 

48.1

%

46.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSE AND OTHER INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

S,G&A

 

5,921

 

6,076

 

-2.6

%

23,553

 

23,594

 

-0.2

%

Expense to revenue

 

20.2

%

20.6

%

 

 

22.5

%

22.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R,D&E

 

1,580

 

1,555

 

1.6

%

6,302

 

6,258

 

0.7

%

Expense to revenue

 

5.4

%

5.3

%

 

 

6.0

%

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intellectual property and custom development income

 

(227

)

(253

)

-10.1

%

(1,074

)

(1,108

)

-3.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) and expense

 

(47

)

(44

)

7.3

%

(843

)

(20

)

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

109

 

113

 

-3.8

%

459

 

411

 

11.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL EXPENSE AND OTHER INCOME

 

7,336

 

7,448

 

-1.5

%

28,396

 

29,135

 

-2.5

%

Expense to revenue

 

25.0

%

25.3

%

 

 

27.2

%

27.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

7,831

 

7,274

 

7.7

%

21,902

 

21,003

 

4.3

%

Pre-tax margin

 

26.7

%

24.7

%

 

 

21.0

%

19.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

1,998

 

1,784

 

12.0

%

5,298

 

5,148

 

2.9

%

Effective tax rate

 

25.5

%

24.5

%

 

 

24.2

%

24.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

5,833

 

$

5,490

 

6.3

%

$

16,604

 

$

15,855

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income margin

 

19.9

%

18.6

%

 

 

15.9

%

14.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE OF COMMON STOCK:

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSUMING DILUTION

 

$

5.13

 

$

4.62

 

11.0

%

$

14.37

 

$

13.06

 

10.0

%

BASIC

 

$

5.19

 

$

4.68

 

10.9

%

$

14.53

 

$

13.25

 

9.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M’s):

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSUMING DILUTION

 

1,136.4

 

1,188.7

 

 

 

1,155.4

 

1,213.8

 

 

 

BASIC

 

1,124.7

 

1,172.2

 

 

 

1,142.5

 

1,197.0

 

 

 

 

NM — Not Meaningful

 

9



 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

 

At

 

At

 

 

 

December 31,

 

December 31,

 

(Dollars in Millions)

 

2012

 

2011

 

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

10,412

 

$

11,922

 

Marketable securities

 

717

 

 

Notes and accounts receivable - trade
(net of allowances of $255 in 2012 and $256 in 2011)

 

10,667

 

11,179

 

Short-term financing receivables
(net of allowances of $288 in 2012 and $311 in 2011)

 

18,038

 

16,901

 

Other accounts receivable
(net of allowances of $17 in 2012 and $11 in 2011)

 

1,873

 

1,481

 

Inventories, at lower of average cost or market:

 

 

 

 

 

Finished goods

 

475

 

589

 

Work in process and raw materials

 

1,812

 

2,007

 

 

 

 

 

 

 

Total inventories

 

2,287

 

2,595

 

Deferred taxes

 

1,415

 

1,601

 

Prepaid expenses and other current assets

 

4,024

 

5,249

 

 

 

 

 

 

 

Total Current Assets

 

49,433

 

50,928

 

 

 

 

 

 

 

Property, plant and equipment

 

40,501

 

40,124

 

Less: Accumulated depreciation

 

26,505

 

26,241

 

 

 

 

 

 

 

Property, plant and equipment - net

 

13,996

 

13,883

 

Long-term financing receivables
(net of allowances of $66 in 2012 and $38 in 2011)

 

12,812

 

10,776

 

Prepaid pension assets

 

945

 

2,843

 

Deferred taxes

 

3,973

 

3,503

 

Goodwill

 

29,247

 

26,213

 

Intangible assets - net

 

3,787

 

3,392

 

Investments and sundry assets

 

5,021

 

4,895

 

 

 

 

 

 

 

Total Assets

 

$

119,213

 

$

116,433

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Taxes

 

$

4,948

 

$

3,313

 

Short-term debt

 

9,181

 

8,463

 

Accounts payable

 

7,952

 

8,517

 

Compensation and benefits

 

4,745

 

5,099

 

Deferred income

 

11,952

 

12,197

 

Other accrued expenses and liabilities

 

4,847

 

4,535

 

 

 

 

 

 

 

Total Current Liabilities

 

43,625

 

42,123

 

 

 

 

 

 

 

Long-term debt

 

24,088

 

22,857

 

Retirement and nonpension postretirement benefit obligations

 

20,418

 

18,374

 

Deferred income

 

4,491

 

3,847

 

Other liabilities

 

7,607

 

8,996

 

 

 

 

 

 

 

Total Liabilities

 

100,229

 

96,197

 

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

IBM Stockholders’ Equity:

 

 

 

 

 

Common stock

 

50,110

 

48,129

 

Retained earnings

 

117,641

 

104,857

 

Treasury stock — at cost

 

(123,131

)

(110,963

)

Accumulated other comprehensive income/(loss)

 

(25,759

)

(21,885

)

 

 

 

 

 

 

Total IBM stockholders’ equity

 

18,860

 

20,138

 

 

 

 

 

 

 

Noncontrolling interests

 

124

 

97

 

 

 

 

 

 

 

Total Equity

 

18,984

 

20,236

 

 

 

 

 

 

 

Total Liabilities and Equity

 

$

119,213

 

$

116,433

 

 

10



 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW ANALYSIS

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

(Dollars in Millions)

 

2012

 

2011

 

2012

 

2011

 

Net Cash from Operating Activities per GAAP:

 

$

6,346

 

$

7,097

 

$

19,586

 

$

19,846

 

 

 

 

 

 

 

 

 

 

 

Less: the change in Global Financing (GF) Receivables

 

(4,151

)

(2,927

)

(2,906

)

(817

)

 

 

 

 

 

 

 

 

 

 

Net Cash from Operating Activities

 

 

 

 

 

 

 

 

 

(Excluding GF Receivables)

 

10,497

 

10,024

 

22,492

 

20,663

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures, Net

 

(981

)

(1,059

)

(4,307

)

(4,059

)

 

 

 

 

 

 

 

 

 

 

Free Cash Flow

 

 

 

 

 

 

 

 

 

(Excluding GF Receivables)

 

9,515

 

8,965

 

18,185

 

16,604

 

 

 

 

 

 

 

 

 

 

 

Acquisitions

 

(1,455

)

(1,588

)

(3,722

)

(1,811

)

Divestitures

 

13

 

10

 

599

 

14

 

Dividends

 

(957

)

(880

)

(3,773

)

(3,473

)

Share Repurchase

 

(3,006

)

(3,581

)

(11,995

)

(15,046

)

Non-GF Debt

 

(1,571

)

599

 

713

 

1,692

 

Other (includes GF Receivables, and GF Debt)

 

(3,664

)

(2,906

)

(802

)

2,291

 

 

 

 

 

 

 

 

 

 

 

Change in Cash, Cash Equivalents and Short-term Marketable Securities

 

$

(1,125

)

$

619

 

$

(794

)

$

271

 

 

11



 

INTERNATIONAL BUSINESS MACHINES CORPORATION

SEGMENT DATA

 

 

 

FOURTH-QUARTER 2012

 

 

 

 

 

 

 

 

 

Pre-tax

 

 

 

 

 

 

 

Revenue

 

 

 

Income/

 

Pre-tax

 

(Dollars in Millions)

 

External

 

Internal

 

Total

 

(Loss)

 

Margin

 

SEGMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Technology Services

 

$

10,284

 

$

297

 

$

10,581

 

$

2,027

 

19.2

%

Y-T-Y change

 

-1.6

%

-0.6

%

-1.6

%

5.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Business Services

 

4,720

 

181

 

4,901

 

841

 

17.2

%

Y-T-Y change

 

-3.2

%

-5.9

%

-3.3

%

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

7,915

 

815

 

8,730

 

4,017

 

46.0

%

Y-T-Y change

 

3.5

%

-4.2

%

2.7

%

8.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Systems and Technology

 

5,763

 

186

 

5,949

 

974

 

16.4

%

Y-T-Y change

 

-0.7

%

0.0

%

-0.7

%

23.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Financing

 

535

 

568

 

1,103

 

518

 

46.9

%

Y-T-Y change

 

-2.3

%

-0.1

%

-1.2

%

0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL REPORTABLE SEGMENTS

 

$

29,217

 

$

2,048

 

$

31,265

 

$

8,377

 

26.8

%

Y-T-Y change

 

-0.4

%

-2.4

%

-0.5

%

7.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eliminations / Other

 

87

 

(2,048

)

(1,961

)

(546

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL IBM CONSOLIDATED

 

$

29,304

 

$

0

 

$

29,304

 

$

7,831

 

26.7

%

Y-T-Y change

 

-0.6

%

 

 

-0.6

%

7.7

%

 

 

 

 

 

FOURTH-QUARTER 2011

 

 

 

 

 

 

 

 

 

Pre-tax

 

 

 

 

 

 

 

Revenue

 

 

 

Income/

 

Pre-tax

 

(Dollars in Millions)

 

External

 

Internal

 

Total

 

(Loss)

 

Margin

 

SEGMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Technology Services

 

$

10,452

 

$

299

 

$

10,751

 

$

1,930

 

18.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Global Business Services

 

4,877

 

193

 

5,069

 

841

 

16.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

7,648

 

851

 

8,499

 

3,710

 

43.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Systems and Technology

 

5,803

 

186

 

5,989

 

790

 

13.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Global Financing

 

548

 

569

 

1,116

 

514

 

46.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL REPORTABLE SEGMENTS

 

$

29,328

 

$

2,098

 

$

31,425

 

$

7,786

 

24.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Eliminations / Other

 

159

 

(2,098

)

(1,939

)

(512

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL IBM CONSOLIDATED

 

$

29,486

 

$

0

 

$

29,486

 

$

7,274

 

24.7

%

 

12



 

INTERNATIONAL BUSINESS MACHINES CORPORATION

SEGMENT DATA

 

 

 

TWELVE-MONTHS 2012

 

 

 

 

 

 

 

 

 

Pre-tax

 

 

 

 

 

 

 

Revenue

 

 

 

Income/

 

Pre-tax

 

(Dollars in Millions)

 

External

 

Internal

 

Total

 

(Loss)

 

Margin

 

SEGMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Technology Services

 

$

40,236

 

$

1,166

 

$

41,402

 

$

6,961

 

16.8

%

Y-T-Y change

 

-1.6

%

-6.2

%

-1.7

%

10.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Business Services

 

18,566

 

719

 

19,286

 

2,983

 

15.5

%

Y-T-Y change

 

-3.7

%

-9.7

%

-4.0

%

-0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

25,448

 

3,274

 

28,722

 

10,810

 

37.6

%

Y-T-Y change

 

2.0

%

-0.1

%

1.8

%

8.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Systems and Technology

 

17,667

 

676

 

18,343

 

1,227

 

6.7

%

Y-T-Y change

 

-6.9

%

-19.3

%

-7.5

%

-24.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Financing

 

2,013

 

2,060

 

4,073

 

2,034

 

49.9

%

Y-T-Y change

 

-4.2

%

-1.6

%

-2.9

%

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL REPORTABLE SEGMENTS

 

$

103,930

 

$

7,896

 

$

111,826

 

$

24,015

 

21.5

%

Y-T-Y change

 

-2.1

%

-4.3

%

-2.3

%

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eliminations / Other

 

577

 

(7,896

)

(7,319

)

(2,113

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL IBM CONSOLIDATED

 

$

104,507

 

$

0

 

$

104,507

 

$

21,902

 

21.0

%

Y-T-Y change

 

-2.3

%

 

 

-2.3

%

4.3

%

 

 

 

 

 

TWELVE-MONTHS 2011

 

 

 

 

 

 

 

 

 

Pre-tax

 

 

 

 

 

 

 

Revenue

 

 

 

Income/

 

Pre-tax

 

(Dollars in Millions)

 

External

 

Internal

 

Total

 

(Loss)

 

Margin

 

SEGMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Technology Services

 

$

40,879

 

$

1,242

 

$

42,121

 

$

6,284

 

14.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Global Business Services

 

19,284

 

797

 

20,081

 

3,006

 

15.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

24,944

 

3,276

 

28,219

 

9,970

 

35.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Systems and Technology

 

18,985

 

838

 

19,823

 

1,633

 

8.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Global Financing

 

2,102

 

2,092

 

4,195

 

2,011

 

47.9

%

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL REPORTABLE SEGMENTS

 

$

106,194

 

$

8,246

 

$

114,440

 

$

22,904

 

20.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Eliminations / Other

 

722

 

(8,246

)

(7,524

)

(1,901

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL IBM CONSOLIDATED

 

$

106,916

 

$

0

 

$

106,916

 

$

21,003

 

19.6

%

 

13



 

INTERNATIONAL BUSINESS MACHINES CORPORATION

U.S. GAAP TO OPERATING RESULTS RECONCILIATION

(Dollars in millions except per share amounts)

 

 

 

FOURTH-QUARTER 2012

 

 

 

 

 

Acquisition-

 

Retirement-

 

 

 

 

 

 

 

Related

 

Related

 

Operating

 

 

 

GAAP

 

Adjustments*

 

Adjustments**

 

(Non-GAAP)

 

Gross Profit

 

$

15,167

 

$

100

 

$

60

 

$

15,327

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Margin

 

51.8

%

0.3

Pts

0.2

Pts

52.3

%

 

 

 

 

 

 

 

 

 

 

S,G&A

 

5,921

 

(91

)

(29

)

5,801

 

 

 

 

 

 

 

 

 

 

 

R,D&E

 

1,580

 

0

 

6

 

1,586

 

 

 

 

 

 

 

 

 

 

 

Other (Income) & Expense

 

(47

)

(7

)

0

 

(54

)

 

 

 

 

 

 

 

 

 

 

Total Expense & Other (Income)

 

7,336

 

(98

)

(23

)

7,215

 

 

 

 

 

 

 

 

 

 

 

Pre-Tax Income

 

7,831

 

198

 

83

 

8,112

 

 

 

 

 

 

 

 

 

 

 

Pre-Tax Income Margin

 

26.7

%

0.7

Pts

0.3

Pts

27.7

%

 

 

 

 

 

 

 

 

 

 

Provision for Income Taxes***

 

1,998

 

(45

)

30

 

1,983

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

25.5

%

-1.2

Pts

0.1

Pts

24.4

%

 

 

 

 

 

 

 

 

 

 

Net Income

 

5,833

 

243

 

53

 

6,129

 

 

 

 

 

 

 

 

 

 

 

Net Income Margin

 

19.9

%

0.8

Pts

0.2

Pts

20.9

%

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

5.13

 

$

0.21

 

$

0.05

 

$

5.39

 

 

 

 

FOURTH-QUARTER 2011

 

 

 

 

 

Acquisition-

 

Retirement-

 

 

 

 

 

 

 

Related

 

Related

 

Operating

 

 

 

GAAP

 

Adjustments*

 

Adjustments**

 

(Non-GAAP)

 

Gross Profit

 

$

14,722

 

$

81

 

$

(10

)

$

14,793

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Margin

 

49.9

%

0.3

Pts

-0.0

Pts

50.2

%

 

 

 

 

 

 

 

 

 

 

S,G&A

 

6,076

 

(82

)

2

 

5,996

 

 

 

 

 

 

 

 

 

 

 

R,D&E

 

1,555

 

0

 

23

 

1,578

 

 

 

 

 

 

 

 

 

 

 

Other (Income) & Expense

 

(44

)

(2

)

0

 

(46

)

 

 

 

 

 

 

 

 

 

 

Total Expense & Other (Income)

 

7,448

 

(85

)

25

 

7,388

 

 

 

 

 

 

 

 

 

 

 

Pre-Tax Income

 

7,274

 

166

 

(35

)

7,405

 

 

 

 

 

 

 

 

 

 

 

Pre-Tax Income Margin

 

24.7

%

0.6

Pts

-0.1

Pts

25.1

%

 

 

 

 

 

 

 

 

 

 

Provision for Income Taxes***

 

1,784

 

47

 

(24

)

1,808

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

24.5

%

0.1

Pts

-0.2

Pts

24.4

%

 

 

 

 

 

 

 

 

 

 

Net Income

 

5,490

 

119

 

(12

)

5,597

 

 

 

 

 

 

 

 

 

 

 

Net Income Margin

 

18.6

%

0.4

Pts

-0.0

Pts

19.0

%

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

4.62

 

$

0.10

 

$

(0.01

)

$

4.71

 

 


*  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 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.

 

14



 

INTERNATIONAL BUSINESS MACHINES CORPORATION

U.S. GAAP TO OPERATING RESULTS RECONCILIATION

(Dollars in millions except per share amounts)

 

 

 

TWELVE-MONTHS 2012

 

 

 

 

 

Acquisition-

 

Retirement-

 

 

 

 

 

 

 

Related

 

Related

 

Operating

 

 

 

GAAP

 

Adjustments*

 

Adjustments**

 

(Non-GAAP)

 

Gross Profit

 

$

50,298

 

$

376

 

$

264

 

$

50,938

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Margin

 

48.1

%

0.4

Pts

0.3

Pts

48.7

%

 

 

 

 

 

 

 

 

 

 

S,G&A

 

23,553

 

(349

)

(294

)

22,910

 

 

 

 

 

 

 

 

 

 

 

R,D&E

 

6,302

 

0

 

20

 

6,322

 

 

 

 

 

 

 

 

 

 

 

Other (Income) & Expense

 

(843

)

(13

)

0

 

(857

)

 

 

 

 

 

 

 

 

 

 

Total Expense & Other (Income)

 

28,396

 

(363

)

(274

)

27,760

 

 

 

 

 

 

 

 

 

 

 

Pre-Tax Income

 

21,902

 

739

 

538

 

23,179

 

 

 

 

 

 

 

 

 

 

 

Pre-Tax Income Margin

 

21.0

%

0.7

Pts

0.5

Pts

22.2

%

 

 

 

 

 

 

 

 

 

 

Provision for Income Taxes***

 

5,298

 

98

 

156

 

5,552

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

24.2

%

-0.4

Pts

0.1

Pts

24.0

%

 

 

 

 

 

 

 

 

 

 

Net Income

 

16,604

 

641

 

381

 

17,627

 

 

 

 

 

 

 

 

 

 

 

Net Income Margin

 

15.9

%

0.6

Pts

0.4

Pts

16.9

%

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

14.37

 

$

0.55

 

$

0.33

 

$

15.25

 

 

 

 

TWELVE-MONTHS 2011

 

 

 

 

 

Acquisition-

 

Retirement-

 

 

 

 

 

 

 

Related

 

Related

 

Operating

 

 

 

GAAP

 

Adjustments*

 

Adjustments**

 

(Non-GAAP)

 

Gross Profit

 

$

50,138

 

$

341

 

$

2

 

$

50,481

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Margin

 

46.9

%

0.3

Pts

0.0

Pts

47.2

%

 

 

 

 

 

 

 

 

 

 

S,G&A

 

23,594

 

(309

)

(13

)

23,272

 

 

 

 

 

 

 

 

 

 

 

R,D&E

 

6,258

 

0

 

88

 

6,345

 

 

 

 

 

 

 

 

 

 

 

Other (Income) & Expense

 

(20

)

(25

)

0

 

(45

)

 

 

 

 

 

 

 

 

 

 

Total Expense & Other (Income)

 

29,135

 

(334

)

74

 

28,875

 

 

 

 

 

 

 

 

 

 

 

Pre-Tax Income

 

21,003

 

675

 

(72

)

21,605

 

 

 

 

 

 

 

 

 

 

 

Pre-Tax Income Margin

 

19.6

%

0.6

Pts

-0.1

Pts

20.2

%

 

 

 

 

 

 

 

 

 

 

Provision for Income Taxes***

 

5,148

 

179

 

(40

)

5,287

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

24.5

%

0.1

Pts

-0.1

Pts

24.5

%

 

 

 

 

 

 

 

 

 

 

Net Income

 

15,855

 

495

 

(32

)

16,318

 

 

 

 

 

 

 

 

 

 

 

Net Income Margin

 

14.8

%

0.5

Pts

-0.0

Pts

15.3

%

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

13.06

 

$

0.41

 

$

(0.03

)

$

13.44

 

 


*  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 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.

 

15



 

Contact:

 

IBM

 

 

Mike Fay, 914-525-8476

 

 

mikefay@us.ibm.com

 

 

 

 

 

John Bukovinsky, 732-618-3531

 

 

jbuko@us.ibm.com

 

16



 

ATTACHMENT II

 

 4Q 2012 Earnings Presentation January 22, 2013

 


GRAPHIC

Forward Looking Statements and Non-GAAP Information Certain comments made in this presentation may be characterized as forward looking under 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. Those statements by their nature address matters that are uncertain to different degrees. Those statements involve a number of factors that could cause actual results to differ materially. Additional information concerning these factors is contained in the Company's filings with the SEC. Copies are available from the SEC, from the IBM web site, or from IBM Investor Relations. Any forward-looking statement made during this presentation speaks only as of the date on which it is made. The company assumes no obligation to update or revise any forward-looking statements. These charts and the associated remarks and comments are integrally related, and are intended to be presented and understood together. In an effort to provide additional and useful information regarding the company’s financial results and other financial information as determined by generally accepted accounting principles (GAAP), the company also discusses, in its earnings press release and earnings presentation materials, certain non-GAAP information including "operating earnings" and other "operating" financial measures. The rationale for management’s use of this non-GAAP information, the reconciliation of that information to GAAP, and other related information are included in supplemental materials entitled “Non-GAAP Supplemental Materials” that are posted on the Company’s investor relations web site at http://www.ibm.com/investor/4q12/ The Non-GAAP Supplemental Materials are also included as Attachment II to the Company’s Form 8-K dated January 22, 2013.

 


GRAPHIC

2012 Summary Expect at least $16.70 of Operating EPS in 2013 4Q Segment highlights: Software growth across the portfolio Services revenue growth fairly consistent with 3Q, strength in growth initiatives Systems led by successful mainframe ramp Expanded operating gross, pre-tax and net margins for 4Q and full year 10th consecutive year of double-digit EPS growth +$1.6B $18.2B +$0.6B $9.5B Free Cash Flow Flat +1% @CC excl. RSS