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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
International Business Machines Corporation | LSE:IBM | London | Ordinary Share | COM STK USD0.20 (CDI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 118.95 | 1,542 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Computer Communication Equip | 61.86B | 7.5B | 8.1833 | 20.09 | 150.74B |
TIDMIBM
IBM (NYSE:IBM)
Highlights
-- Fourth-quarter GAAP EPS from continuing operations of $(1.14)
--
Includes a one-time charge of $5.5 billion associated with the
enactment of U.S. tax reform
-- Fourth-quarter operating (non-GAAP) EPS of $5.18
--
Excludes the one-time charge of $5.5 billion associated with the
enactment of U.S. tax reform
-- Consistent with the basis
of previously-provided 2017 expectations
-- Fourth-quarter revenue of $22.5 billion, up 4 percent (up 1 percent
adjusting for currency)
-- Full-year strategic imperatives revenue of $36.5 billion, up 11
percent; represents 46 percent of IBM revenue
--
Fourth-quarter strategic imperatives revenue up 17 percent (up 14
percent adjusting for currency)
-- Full-year cloud revenue of $17.0 billion, up 24 percent year to year
--
As-a-service annual exit run rate of $10.3 billion in the quarter, up
20 percent year to year (up 18 percent adjusting for currency)
IBM (NYSE:IBM) today announced fourth-quarter and full-year 2017 earnings results.
"Our strategic imperatives revenue again grew at a double-digit rate and now represents 46 percent of our total revenue, and we are pleased with our overall revenue growth in the quarter," said Ginni Rometty, IBM chairman, president and chief executive officer. "During 2017, we strengthened our position as the leading enterprise cloud provider and established IBM as the blockchain leader for business. Looking ahead, we are uniquely positioned to help clients use data and AI to build smarter businesses."
FOURTH QUARTER 2017 Net Income Gross Profit Diluted EPS (Loss) Margin GAAP from Continuing $(1.14) * $(1.1B) * 48.2% Operations Year/Year -124% * -123% * -1.9Pts Operating (Non-GAAP) $5.18 $4.8B 49.5% Year/Year 3% 1% -1.4Pts As-a-service Strategic annual exit REVENUE Total IBM Imperatives Cloud run rate As reported (US$) $22.5B $11.1B $5.5B $10.3B Year/Year 4% 17% 30% 20% Year/Year adjusting 1% 14% 27% 18% for currency * Includes a one-time charge of $5.5 billion associated with the enactment of U.S. tax reform.
"Over the past several years we have invested aggressively in technology and our people to reposition IBM," said James Kavanaugh, IBM senior vice president and chief financial officer. "2018 will be all about reinforcing IBM's leadership position in key high-value segments of the IT industry, including cloud, AI, security and blockchain."
Strategic Imperatives Revenue
Fourth-quarter cloud revenues increased 30 percent to $5.5 billion (up 27 percent adjusting for currency). Cloud revenue over the last 12 months was $17.0 billion, including $9.3 billion delivered as-a-service and $7.8 billion for hardware, software and services to enable IBM clients to implement comprehensive cloud solutions. The annual exit run rate for as-a-service revenue increased to $10.3 billion from $8.6 billion in the fourth quarter of 2016. In the quarter, revenues from analytics increased 9 percent (up 6 percent adjusting for currency). Revenues from mobile increased 23 percent (up 21 percent adjusting for currency) and revenues from security increased 132 percent (up 127 percent adjusting for currency).
Full-Year 2018 Expectations
The company will discuss 2018 expectations during today's quarterly earnings conference call.
Cash Flow and Balance Sheet
In the fourth quarter, the company generated net cash from operating activities of $5.7 billion, or $7.8 billion excluding Global Financing receivables. IBM's free cash flow was $6.8 billion. IBM returned $1.4 billion in dividends and $0.7 billion of gross share repurchases to shareholders. At the end of December 2017, IBM had $3.8 billion remaining in the current share repurchase authorization.
The company generated full-year free cash flow of $13.0 billion, excluding Global Financing receivables. The company returned $9.8 billion to shareholders through $5.5 billion in dividends and $4.3 billion of gross share repurchases.
IBM ended the fourth quarter of 2017 with $12.6 billion of cash on hand. Debt totaled $46.8 billion, including Global Financing debt of $31.4 billion. The balance sheet remains strong and is well positioned over the long term.
Segment Results for Fourth Quarter
-- Cognitive Solutions (includes solutions software and transaction
processing software) --
revenues of $5.4 billion, up 3 percent
(flat adjusting for currency), driven by security and transaction
processing software.
-- Global Business Services (includes consulting, global process
services and application management) --
revenues of $4.2 billion,
up 1 percent (down 2 percent adjusting for currency). Strategic
imperatives revenue grew 9 percent led by the cloud practice, mobile
and analytics.
-- Technology Services & Cloud Platforms
(
includes
infrastructure services, technical support services and integration
software) --
revenues of $9.2 billion, down 1 percent (down 4
percent adjusting for currency). Strategic imperatives revenue grew 15
percent, driven by hybrid cloud services, security and mobile.
-- Systems (includes systems hardware and operating systems software)
--
revenues of $3.3 billion, up 32 percent (up 28 percent
adjusting for currency) driven by growth in IBM Z, Power Systems and
storage.
-- Global Financing (includes financing and used equipment sales) --
revenues of $450 million, up 1 percent (down 2 percent adjusting for
currency).
Tax Rate
The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in a one-time charge of $5.5 billion in the fourth quarter. The charge encompasses several elements, including a tax on accumulated overseas profits and the revaluation of deferred tax assets and liabilities. As a result, IBM's reported GAAP tax rate, which includes the one-time charge, was 124 percent for the fourth quarter, and 49 percent for the full year. IBM's operating (non-GAAP) tax rate, which excludes the one-time charge, was 6 percent for the fourth quarter; and 7 percent for the full year, which includes the effect of discrete tax benefits in the first and second quarters. Without discrete tax items, the full-year operating (non-GAAP) tax rate was 12 percent, at the low end of the company's previously estimated range.
Full-Year Results
-- Full-year GAAP EPS from continuing operations of $6.14
--
Includes a one-time charge of $5.5 billion associated with the
enactment of U.S. tax reform
-- Full-year operating (non-GAAP) EPS of $13.80
-- Excludes
the one-time charge of $5.5 billion associated with the enactment of
U.S. tax reform
-- Full-year revenue of $79.1 billion, down 1 percent FULL YEAR 2017 Gross Profit Diluted EPS Net Income Margin GAAP from Continuing $6.14 * $5.8B * 45.8% Operations Year/Year -50% * -52% * -2.1Pts Operating (Non-GAAP) $13.80 $12.9B 47.4% Year/Year 2% -1% -1.6Pts As-a-service Strategic annual exit REVENUE Total IBM Imperatives Cloud run rate As reported (US$) $79.1B $36.5B $17.0B $10.3B Year/Year -1% 11% 24% 20% Year/Year adjusting -1% 11% 24% 18% for currency * Includes a one-time charge of $5.5 billion associated with the enactment of U.S. tax reform.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the following: a downturn in economic environment and client spending budgets; the company's failure to meet growth and productivity objectives, a failure of the company's innovation initiatives; risks from investing in growth opportunities; failure of the company's intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; cybersecurity and data privacy considerations; fluctuations in financial results, impact of local legal, economic, political and health conditions; adverse effects from environmental matters, tax matters and the company's pension plans; ineffective internal controls; the company's use of accounting estimates; the company's ability to attract and retain key personnel and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; reliance on third party distribution channels and ecosystems; the company's ability to successfully manage acquisitions, alliances and dispositions; risks from legal proceedings; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company's Form 10-Qs, Form 10-K and in the company's other filings with the U.S. Securities and Exchange Commission (SEC) or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. The company assumes no obligation to update or revise any forward-looking statements.
Presentation of Information in this Press Release
In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information which management believes provides useful information to investors:
IBM results --
-- presenting operating (non-GAAP) earnings per share amounts and related
income statement items;
-- adjusting for free cash flow; -- adjusting for currency (i.e., at constant currency).
Free cash flow guidance is derived using an estimate of profit, working capital and operational cash outflows. The company views Global Financing receivables as a profit-generating investment, which it seeks to maximize and therefore it is not considered when formulating guidance for free cash flow. As a result, the company does not estimate a GAAP Net Cash from Operations expectation metric.
The rationale for management's use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8-K that includes this press release and is being submitted today to the SEC.
Conference Call and Webcast
IBM's regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. EST, today. The Webcast may be accessed via a link at http://www.ibm.com/investor/events/earnings/4q17.html . Presentation charts will be available shortly before the Webcast.
Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).
INTERNATIONAL BUSINESS MACHINES CORPORATION COMPARATIVE FINANCIAL RESULTS (Unaudited; Dollars in millions except per share amounts) Three Months Ended Twelve Months Ended December 31, December 31, 2017 2016 2017 2016 REVENUE Cognitive Solutions $ 5,432 $ 5,297 $ 18,453 $ 18,187 Global Business 4,152 4,121 16,348 16,700 Services Technology Services 9,198 9,308 34,277 35,337 & Cloud Platforms Systems 3,332 2,530 8,194 7,714 Global Financing 450 447 1,696 1,692 Other (20 ) 66 171 289 TOTAL REVENUE 22,543 21,770 79,139 79,919 GROSS PROFIT 10,862 10,893 36,227 38,294 GROSS PROFIT MARGIN Cognitive Solutions 79.2 % 82.7 % 78.6 % 81.9 % Global Business 24.8 % 26.9 % 25.2 % 27.0 % Services Technology Services 40.9 % 42.9 % 40.4 % 41.9 % & Cloud Platforms Systems 55.7 % 56.9 % 53.2 % 55.7 % Global Financing 29.5 % 36.2 % 29.3 % 38.7 % TOTAL GROSS PROFIT 48.2 % 50.0 % 45.8 % 47.9 % MARGIN EXPENSE AND OTHER INCOME S,G&A 5,147 4,976 20,107 21,069 R,D&E 1,427 1,431 5,787 5,751 Intellectual property and custom development (348 ) (521 ) (1,466 ) (1,631 ) income Other (income) 2 (136 ) (216 ) 145 and expense Interest expense 164 157 615 630 TOTAL EXPENSE AND 6,393 5,907 24,827 25,964 OTHER INCOME INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 4,469 4,986 11,400 12,330 Pre-tax margin 19.8 % 22.9 % 14.4 % 15.4 % Provision for 5,522 480 5,642 449 / (Benefit from) income taxes Effective tax rate 123.6 % 9.6 % 49.5 % 3.6 % INCOME / (LOSS) FROM ($1,053 ) $ 4,505 $ 5,758 $ 11,881 CONTINUING OPERATIONS DISCONTINUED OPERATIONS Income/(Loss) from (1 ) (4 ) (5 ) (9 ) discontinued operations, net of taxes NET INCOME / (LOSS) ($1,054 ) $ 4,501 $ 5,753 $ 11,872 EARNINGS / (LOSS) PER SHARE OF COMMON STOCK: Assuming Dilution Continuing Operations ($1.14 ) $ 4.73 $ 6.14 $ 12.39 Discontinued $ 0.00 ($0.01 ) $ 0.00 ($0.01 ) Operations TOTAL ($1.14 ) $ 4.72 $ 6.14 $ 12.38 Basic Continuing Operations ($1.14 ) $ 4.75 $ 6.17 $ 12.44 Discontinued $ 0.00 ($0.01 ) $ 0.00 ($0.01 ) Operations TOTAL ($1.14 ) $ 4.74 $ 6.17 $ 12.43 WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M's): Assuming Dilution 928.9 952.7 937.4 958.7 Basic 924.5 948.6 932.8 955.4 INTERNATIONAL BUSINESS MACHINES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) At At (Dollars in Millions) December 31, December 31, 2017 2016 ASSETS: Current Assets: Cash and cash equivalents $ 11,972 $ 7,826 Marketable securities 608 701 Notes and accounts receivable 8,928 9,182 - trade, net Short-term financing receivables, net 21,721 19,006 Other accounts receivable, net 981 1,057 Inventory 1,583 1,553 Prepaid expenses and 3,942 4,564 other current assets Total Current Assets 49,735 43,888 Property, plant and equipment, net 11,116 10,830 Long-term financing receivables, net 9,550 9,021 Prepaid pension assets 4,643 3,034 Deferred taxes 4,862 5,224 Goodwill and intangibles, net 40,531 40,887 Investments and sundry assets 4,919 4,585 Total Assets $ 125,356 $ 117,470 LIABILITIES: Current Liabilities: Taxes $ 4,219 $ 3,235 Short-term debt 6,987 7,513 Accounts payable 6,451 6,209 Deferred income 11,552 11,035 Other liabilities 8,153 8,283 Total Current Liabilities 37,363 36,275 Long-term debt 39,837 34,655 Retirement related obligations 16,720 17,070 Deferred income 3,746 3,600 Other liabilities 9,965 7,477 Total Liabilities 107,631 99,078 EQUITY: IBM Stockholders' Equity: Common stock 54,566 53,935 Retained earnings 153,126 152,759 Treasury stock -- at cost (163,507 ) (159,050 ) Accumulated other comprehensive (26,592 ) (29,398 ) income/(loss) Total IBM stockholders' equity 17,594 18,246 Noncontrolling interests 131 146 Total Equity 17,725 18,392 Total Liabilities and Equity $ 125,356 $ 117,470 INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW ANALYSIS (Unaudited) Three Months Ended Twelve Months Ended (Dollars in December 31, December 31, Millions) 2017 2016 2017 2016
Net Cash $ 5,733 $ 3,979 * $ 16,724 $ 17,084 * Provided by Operating Activities per GAAP: Less: change in Global Financing (GF) Receivables (2,049 ) (1,678 ) 419 1,658 Capital (965 ) (925 ) (3,312 ) (3,726 ) Expenditures, Net Free Cash Flow 6,817 4,731 * 12,992 11,700 * Acquisitions (53 ) (235 ) (496 ) (5,679 ) Divestitures (240 ) (490 ) (205 ) (454 ) Dividends (1,387 ) (1,329 ) (5,506 ) (5,256 ) Share Repurchase (666 ) (871 ) (4,340 ) (3,502 ) Non-GF Debt (840 ) (2,048 ) 1,056 1,317 Other (includes (2,565 ) (1,200 ) * 552 2,208 * GF Receivables and GF Debt) Change in Cash, Cash Equivalents and Short-term $ 1,065 ($1,441 ) $ 4,053 $ 332 Marketable Securities * Reclassified to reflect adoption of the FASB guidance on stock-based compensation. INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW (Unaudited) Three Months Ended Twelve Months Ended (Dollars in December 31, December 31, Millions) 2017 2016 2017 2016 Net Income from ($1,054 ) $ 4,501 $ 5,753 $ 11,872 Operations Depreciation/Amortization 1,150 1,127 4,541 4,381 of Intangibles Stock-based 146 141 534 544 Compensation Working Capital 7,540 (113 ) * 5,476 (1,371 ) * / Other Global Financing A/R (2,049 ) (1,678 ) 419 1,658 Net Cash Provided by $ 5,733 $ 3,979 * $ 16,724 $ 17,084 * Operating Activities Capital (965 ) (925 ) (3,312 ) (3,726 ) Expenditures, net of payments & proceeds Divestitures, net of (240 ) (490 ) (205 ) (454 ) cash transferred Acquisitions, net (53 ) (235 ) (496 ) (5,679 ) of cash acquired Marketable (2,559 ) (2,038 ) (3,083 ) (1,116 ) Securities / Other Investments, net Net Cash Used ($3,818 ) ($3,687 ) ($7,096 ) ($10,976 ) in Investing Activities Debt, net of 1,137 875 3,446 2,763 payments & proceeds Dividends (1,387 ) (1,329 ) (5,506 ) (5,256 ) Common Stock (666 ) (871 ) (4,340 ) (3,502 ) Repurchases Common Stock (3 ) 26 * (18 ) 78 * Transactions - Other Net Cash Used ($919 ) ($1,298 ) * ($6,418 ) ($5,917 ) * in Financing Activities Effect of Exchange 62 (206 ) 937 (51 ) Rate changes on Cash Net Change in Cash $ 1,057 ($1,213 ) $ 4,146 $ 140 & Cash Equivalents * Reclassified to reflect adoption of the FASB guidance on stock-based compensation. INTERNATIONAL BUSINESS MACHINES CORPORATION SEGMENT DATA (Unaudited) FOURTH - QUARTER 2017 Cognitive Solutions & Industry Services Technology Global Services & (Dollars Cognitive Business Cloud Global in Millions) Solutions Services Platforms Systems Financing Revenue External $ 5,432 $ 4,152 $ 9,198 $ 3,332 $ 450 Internal 646 92 160 179 546 Total $ 6,078 $ 4,244 $ 9,358 $ 3,511 $ 997 Segment Revenue Pre-tax 2,279 337 1,456 908 443 Income from Continuing Operations Pre-tax 37.5 % 7.9 % 15.6 % 25.9 % 44.4 % margin Change 2.5 % 0.7 % (1.2 )% 31.7 % 0.8 % YTY Revenue - External Change 0.0 % (1.5 )% (4.0 )% 28.5 % (1.8 )% YTY Revenue - External @constant currency FOURTH - QUARTER 2016 Cognitive Solutions & Industry Services Technology Global Services & (Dollars Cognitive Business Cloud Global 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 $ 5,999 $ 4,221 $ 9,522 $ 2,686 $ 909 Segment Revenue Pre-tax 2,313 522 1,882 579 448 Income from Continuing Operations Pre-tax 38.6 % 12.4 % 19.8 % 21.6 % 49.3 % margin INTERNATIONAL BUSINESS MACHINES CORPORATION SEGMENT DATA (Unaudited) TWELVE - MONTHS 2017 Cognitive Solutions & Industry Services Technology Global Services & (Dollars Cognitive Business Cloud Global in Millions) Solutions Services Platforms Systems Financing Revenue External $ 18,453 $ 16,348 $ 34,277 $ 8,194 $ 1,696 Internal 2,647 363 657 750 1,471 Total $ 21,100 $ 16,711 $ 34,934 $ 8,945 $ 3,168 Segment Revenue Pre-tax 6,817 1,401 4,344 1,135 1,279 Income from Continuing Operations Pre-tax 32.3 % 8.4 % 12.4 % 12.7 % 40.4 % margin Change 1.5 % (2.1 )% (3.0 )% 6.2 % 0.3 % YTY Revenue - External Change 1.0 % (1.8 )% (3.4 )% 5.4 % (0.7 )% YTY Revenue - External @constant currency TWELVE - MONTHS 2016 Cognitive Solutions & Industry Services Technology Global Services & (Dollars Cognitive Business Cloud Global 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 $ 20,817 $ 17,109 $ 36,052 $ 8,464 $ 3,494 Segment Revenue Pre-tax 6,352 1,732 4,707 933 1,656 Income from Continuing Operations Pre-tax 30.5 % 10.1 % 13.1 % 11.0 % 47.4 % margin INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts) FOURTH - QUARTER 2017 CONTINUING OPERATIONS Acquisition- Retirement- Tax Reform Related Related One-Time Operating GAAP Adjustments* Adjustments** Charge (1) (Non-GAAP) Gross $ 10,862 $ 99 $ 209 - $ 11,170 Profit Gross 48.2 % 0.4Pts 0.9Pts - 49.5 % Profit Margin S,G&A 5,147 (116 ) (145 ) - 4,886 R,D&E 1,427 - (50 ) - 1,378 Other 2 (32 ) - - (30 ) (Income) & Expense Total 6,393 (148 ) (195 ) - 6,050 Expense & Other (Income) Pre-tax 4,469 247 404 - 5,120 Income from Continuing Operations Pre-tax 19.8 % 1.1Pts 1.8Pts - 22.7 % Income Margin from Continuing Operations Provision 5,522 67 197 (5,475 ) 310 for Income Taxes*** Effective 123.6 % -4.7Pts -5.9Pts -106.9Pts 6.1 % Tax Rate Income / (1,053 ) 181 206 5,475 4,809 (Loss) from Continuing Operations Income / (4.7 )% 0.8Pts 0.9Pts 24.3Pts 21.3 % (Loss) Margin from Continuing Operations Diluted ($1.14 ) $ 0.19 $ 0.22 $ 5.91 $ 5.18 Earnings / (Loss) Per Share: Continuing Operations (1) Operating (non-GAAP) earnings excludes a one-time charge of $5.5 billion associated with the enactment of U.S. tax reform due to its unique non-recurring nature. FOURTH - QUARTER 2016 CONTINUING OPERATIONS Acquisition- Retirement- Related Related Operating GAAP Adjustments* Adjustments** (Non-GAAP) Gross $ 10,893 $ 124 $ 78 $ 11,095 Profit Gross 50.0 % 0.6Pts 0.4Pts 51.0 % Profit Margin S,G&A 4,976 (136 ) (69 ) 4,771
R,D&E 1,431 - (6 ) 1,425 Other (136 ) 0 - (136 ) (Income) & Expense Total Expense 5,907 (136 ) (76 ) 5,696 & Other (Income) Pre-tax 4,986 260 154 5,399 Income from Continuing Operations Pre-tax 22.9 % 1.2Pts 0.7Pts 24.8 % Income Margin from Continuing Operations Provision 480 66 77 623 for Income Taxes*** Effective 9.6 % 0.8Pts 1.1Pts 11.5 % Tax Rate Income from 4,505 193 77 4,776 Continuing Operations Income 20.7 % 0.9Pts 0.4Pts 21.9 % Margin from Continuing Operations Diluted $ 4.73 $ 0.20 $ 0.08 $ 5.01 Earnings Per Share: Continuing Operations * Includes amortization of purchased intangible assets, in process R&D, severance cost for acquired employees, vacant space for acquired companies, deal costs and acquisition integration tax charges. ** Includes retirement-related interest cost, expected return on plan assets, recognized actuarial losses or gains, amortization of transition assets, other settlements, curtailments, multi-employer plans and insolvency insurance. *** Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As Reported pre-tax income under ASC 740, which employs an annual effective tax rate method to the results. INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts) TWELVE - MONTHS 2017 CONTINUING OPERATIONS Acquisition- Retirement- Tax Reform Related Related One-Time Operating GAAP Adjustments* Adjustments** Charge (1) (Non-GAAP) Gross $ 36,227 $ 449 $ 799 - $ 37,475 Profit Gross 45.8 % 0.6Pts 1.0Pts - 47.4 % Profit Margin S,G&A 20,107 (509 ) (472 ) - 19,126 R,D&E 5,787 - (197 ) - 5,590 Other (216 ) (39 ) - - (255 ) (Income) & Expense Total 24,827 (548 ) (669 ) - 23,609 Expense & Other (Income) Pre-tax 11,400 997 1,468 - 13,866 Income from Continuing Operations Pre-tax 14.4 % 1.3Pts 1.9Pts - 17.5 % Income Margin from Continuing Operations Provision 5,642 279 485 (5,475 ) 931 for Income Taxes*** Effective 49.5 % -1.5Pts -1.7Pts -39.5Pts 6.7 % Tax Rate Income 5,758 718 983 5,475 12,935 from Continuing Operations Income 7.3 % 0.9Pts 1.2Pts 6.9Pts 16.3 % Margin from Continuing Operations Diluted $ 6.14 $ 0.77 $ 1.05 $ 5.84 $ 13.80 Earnings Per Share: Continuing Operations (1) Operating (non-GAAP) earnings excludes a one-time charge of $5.5 billion associated with the enactment of U.S. tax reform due to its unique non-recurring nature. 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% 0.6Pts 0.4Pts 48.9% S,G&A 21,069 (501) (253) 20,315 R,D&E 5,751 - (29) 5,722 Other (Income) 145 (7) - 138 & Expense Total Expense & 25,964 (508) (282) 25,174 Other (Income) Pre-Tax Income from 12,330 1,003 598 13,931 Continuing Operations Pre-tax Income 15.4% 1.3Pts 0.7Pts 17.4% Margin from Continuing Operations Provision for Income 449 268 183 900 Taxes*** Effective Tax Rate 3.6% 1.7Pts 1.2Pts 6.5% Income from Continuing 11,881 735 415 13,031 Operations Income Margin from 14.9% 0.9Pts 0.5Pts 16.3% Continuing Operations Diluted Earnings $12.39 $0.77 $0.43 $13.59 Per Share: Continuing Operations * Includes amortization of purchased intangible assets, in process R&D, severance cost for acquired employees, vacant space for acquired companies, deal costs and acquisition integration tax charges. ** Includes retirement-related interest cost, expected return on plan assets, recognized actuarial losses or gains, amortization of transition assets, other settlements, curtailments, multi-employer plans and insolvency insurance. *** Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As Reported pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.
IBM Ian Colley, 914-434-3043 colley@us.ibm.com or John Bukovinsky, 732-618-3531 jbuko@us.ibm.com
View source version on businesswire.com:http://www.businesswire.com/news/home/20180118006388/en/
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