TIDMIBM
IBM (NYSE:IBM) today announced second-quarter results.
"In the second quarter, we continued to grow in the high-value
areas of the business, led by a strong performance across our Cloud
and Cognitive Software segment," said Ginni Rometty, IBM chairman,
president and chief executive officer. "With the completion of our
acquisition of Red Hat, we will provide the only true open hybrid
multicloud platform in the industry, strengthening our leadership
position and uniquely helping clients succeed in chapter 2 of their
digital reinventions."
SECOND QUARTER 2019
Pre-tax Gross
Diluted Net Pre-tax Income Profit
EPS Income Income Margin Margin
GAAP $ 2.81 $ 2.5B $ 2.8B 14.4 % 47.0 %
from Continuing
Operations
Year/Year 8 % 4 % 0 % 0.6 Pts 1.0 Pts
Operating $ 3.17 $ 2.8B $ 3.2B 16.6 % 47.4 %
(Non-GAAP)
Year/Year 3 % 0 % (6) % (0.3) Pts 1.0 Pts
"We maintained our momentum in the second quarter, again
expanding gross profit margin and growing free cash flow, driven to
a great extent by our increasing mix of high-value offerings for
clients," said James Kavanaugh, IBM senior vice president and chief
financial officer. "On August 2, we will discuss how the
acquisition of Red Hat will accelerate IBM's revenue growth,
contribute to our high-value model and enhance our free cash flow
generation going forward."
Cash Flow and Balance Sheet
In the second quarter, the company generated net cash from
operating activities of $2.9 billion, or $2.8 billion, excluding
Global Financing receivables. IBM's free cash flow was $2.4
billion. IBM returned $1.8 billion to shareholders through $1.4
billion in dividends and $0.3 billion in gross share repurchases.
The company suspended its share repurchase program on July 9.
IBM ended the second quarter with $46.4 billion of cash on hand,
of which approximately $34 billion was used in July to close the
acquisition of Red Hat. Debt totaled $73.0 billion, including
Global Financing debt of $25.0 billion.
Segment Results for Second Quarter
-- Cloud & Cognitive Software (includes cloud and data platforms, cognitive applications and transaction processing platforms) --revenues of $5.6 billion, up 3.2 percent (up 5.4 percent adjusting for currency), with growth in cloud and data platforms, up 5 percent (up 7 percent adjusting for currency); cognitive applications, up 3 percent (up 5 percent adjusting for currency); and transaction processing platforms, up 2 percent (up 4 percent adjusting for currency).
-- Global Business Services (includes consulting, application management and global process services) -- revenues of $4.2 billion, up 0.5 percent (up 3.4 percent adjusting for currency), with broad-based strength led by growth in consulting, up 2 percent (up 5 percent adjusting for currency).
-- Global Technology Services (includes infrastructure and cloud services and technology support services) -- revenues of $6.8 billion, down 6.7 percent (down 3.5 percent adjusting for currency). Gross profit margin increased 120 basis points.
-- Systems (includes systems hardware and operating systems software) -- revenues of $1.8 billion, down 19.5 percent (down 18.0 percent adjusting for currency), with growth in Power, more than offset by the impact of product cycle dynamics in IBM Z and Storage.
-- Global Financing (includes financing and used equipment sales) -- revenues of $351 million, down 11.0 percent (down 8.5 percent adjusting for currency), reflects the wind-down of OEM commercial financing.
Full-Year 2019 Expectations
Through the second quarter, IBM remains on track to achieve GAAP
diluted earnings per share of at least $12.45, operating (non-GAAP)
diluted earnings per share of at least $13.90 and free cash flow of
approximately $12 billion, all excluding the impact of Red Hat and
related activity. Operating (non-GAAP) diluted earnings per share
expectations exclude $1.45 per share of charges for amortization of
purchased intangible assets and other acquisition-related charges,
including pre-closing charges, such as financing costs associated
with the Red Hat acquisition; retirement-related charges; and tax
reform enactment impacts. It does not include any other amounts for
Red Hat or Red Hat related activity. The company will provide an
update to these full-year expectations (including GAAP EPS
expectations) on August 2, 2019 to reflect the addition of the
recently-closed Red Hat acquisition. IBM continues to expect Red
Hat, including related activity, to be accretive to free cash flow
in the first year; accretive to operating (non-GAAP) earnings per
share by the end of the second year after closing; and dilutive to
full-year 2019 earnings per share due primarily to a non-cash
purchase accounting adjustment.
Year-To-Date 2019 Results
Consolidated diluted earnings per share was $4.58 compared to
$4.43, up 3 percent year to year. Consolidated net income was $4.1
billion, flat year to year. Revenues for the six-month period ended
June 30, 2019 totaled $37.3 billion, a decrease of 4 percent year
to year (down 1 percent adjusting for currency) compared with $39.1
billion for the first six months of 2018.
Operating (non-GAAP) diluted earnings per share from continuing
operations was $5.42 compared with $5.53 per diluted share for the
2018 period, a decrease of 2 percent. Operating (non-GAAP) net
income for the six months ended June 30, 2019 was $4.8 billion
compared with $5.1 billion in the prior-year period, a decrease of
5 percent.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained
herein, statements contained in this release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are based on the company's current assumptions regarding
future business and financial performance. These statements involve
a number of risks, uncertainties and other factors that could cause
actual results to differ materially, including, but not limited to,
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; damage to the company's reputation; 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 employees 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, including integration
challenges, failure to achieve objectives, the assumption of
liabilities, and higher debt levels; legal proceedings and
investigatory risks; 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. Except
as required by law, 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;
-- net cash from operating activities, excluding Global Financing receivables;
-- adjusting for currency (i.e., at constant currency).
Free cash flow guidance is derived using an estimate of profit,
working capital and operational cash outflows. The company views
Global Financing receivables as a profit-generating investment,
which it seeks to maximize and therefore it is not considered when
formulating guidance for free cash flow. As a result, the company
does not estimate a GAAP Net Cash from Operations expectation
metric.
The rationale for management's use of these non-GAAP measures is
included in Exhibit 99.2 in the Form 8-K that includes this press
release and is being submitted today to the SEC.
Conference Call and Webcast
IBM's regular quarterly earnings conference call is scheduled to
begin at 5:00 p.m. EDT, today. The Webcast may be accessed via a
link at http://www.ibm.com/investor/events/earnings/2q19.html.
Presentation charts will be available shortly before the
Webcast.
Financial Results Below (certain amounts may not add due to use
of rounded numbers; percentages presented are calculated from the
underlying whole-dollar amounts).
INTERNATIONAL BUSINESS
MACHINES CORPORATION
COMPARATIVE FINANCIAL RESULTS
(Unaudited; Dollars
in millions
except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
REVENUE
Cloud & Cognitive Software $ 5,645 $ 5,470 * $ 10,682 $ 10,586 *
Global Business Services 4,155 4,135 * 8,274 8,250 *
Global Technology Services 6,837 7,325 * 13,711 14,746 *
Systems 1,753 2,177 3,081 3,676
Global Financing 351 394 757 799
Other 420 503 * 837 1,017 *
TOTAL REVENUE 19,161 20,003 37,342 39,075
GROSS PROFIT 9,010 9,199 17,053 17,445
GROSS PROFIT MARGIN
Cloud & Cognitive Software 77.3 % 77.7 % * 76.3 % 77.1 % *
Global Business Services 26.0 % 26.0 % * 26.1 % 24.7 % *
Global Technology Services 34.4 % 33.2 % * 34.1 % 32.9 % *
Systems 53.5 % 50.6 % 50.3 % 47.8 %
Global Financing 35.0 % 26.6 % 34.9 % 30.6 %
TOTAL GROSS PROFIT MARGIN 47.0 % 46.0 % 45.7 % 44.6 %
EXPENSE AND OTHER INCOME
S,G&A 5,456 4,857 10,147 10,302
R,D&E 1,407 1,364 2,840 2,769
Intellectual property (222 ) (250 ) (323 ) (567 )
and custom
development income
Other (income) and expense (747 ) 280 (820 ) 692
Interest expense 348 173 558 338
TOTAL EXPENSE AND 6,242 6,423 12,402 13,534
OTHER INCOME
INCOME FROM CONTINUING
OPERATIONS
BEFORE INCOME TAXES 2,768 2,776 4,651 3,911
Pre-tax margin 14.4 % 13.9 % 12.5 % 10.0 %
Provision for / (Benefit 269 373 558 (166 )
from) income taxes
Effective tax rate 9.7 % 13.5 % 12.0 % (4.3 ) %
INCOME FROM CONTINUING $ 2,499 $ 2,402 $ 4,093 $ 4,078
OPERATIONS
DISCONTINUED OPERATIONS
Income / (Loss) from (1 ) 1 (4 ) 5
discontinued
operations, net of taxes
NET INCOME $ 2,498 $ 2,404 $ 4,089 $ 4,083
EARNINGS / (LOSS) PER SHARE
OF COMMON STOCK
Assuming Dilution
Continuing Operations $ 2.81 $ 2.61 $ 4.58 $ 4.42
Discontinued Operations $ 0.00 $ 0.00 $ 0.00 $ 0.01
TOTAL $ 2.81 $ 2.61 $ 4.58 $ 4.43
Basic
Continuing Operations $ 2.82 $ 2.63 $ 4.61 $ 4.44
Discontinued Operations $ 0.00 $ 0.00 $ 0.00 $ 0.01
TOTAL $ 2.82 $ 2.63 $ 4.61 $ 4.45
WEIGHTED-AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING (M's)
Assuming Dilution 890.8 919.4 892.4 922.4
Basic 886.3 915.1 887.9 917.9
_________________________________*
Recast
to conform with 2019
presentation.
INTERNATIONAL BUSINESS
MACHINES CORPORATION
CONDENSED CONSOLIDATED
BALANCE SHEET
(Unaudited)
At At
June 30, December 31,
(Dollars in Millions) 2019 2018
ASSETS:
Current Assets:
Cash and cash equivalents $ 45,399 $ 11,379
Restricted cash 135 225
Marketable securities 874 618
Notes and accounts 7,414 7,432
receivable
- trade, net
Short-term financing 15,543 22,388
receivables, net
Other accounts receivable, 1,781 743
net
Inventories 1,745 1,682
Deferred costs 2,217 2,300
Prepaid expenses and 2,409 2,378
other current assets
Total Current Assets 77,517 49,146
Property, plant and 10,202 10,792
equipment, net
Operating right-of-use 4,998 -
assets, net*
Long-term financing 8,441 9,148
receivables, net
Prepaid pension assets 5,319 4,666
Deferred costs 2,662 2,676
Deferred taxes 5,274 5,216
Goodwill and intangibles, 38,011 39,353
net
Investments and 2,228 2,386
sundry assets
Total Assets $ 154,652 $ 123,382
LIABILITIES:
Current Liabilities:
Taxes $ 2,439 $ 3,046
Short-term debt 14,594 10,207
Accounts payable 4,724 6,558
Deferred income 11,261 11,165
Operating lease 1,319 -
liabilities*
Other liabilities 8,014 7,251
Total Current Liabilities 42,351 38,227
Long-term debt 58,445 35,605
Retirement related 16,471 17,002
obligations
Deferred income 3,474 3,445
Operating lease 3,946 -
liabilities*
Other liabilities 12,190 12,174
Total Liabilities 136,876 106,452
EQUITY:
IBM Stockholders' Equity:
Common stock 55,404 55,151
Retained earnings 160,467 159,206
Treasury stock - at cost (169,385 ) (168,071 )
Accumulated other (28,841 ) (29,490 )
comprehensive
income/(loss)
Total IBM Stockholders' 17,645 16,796
Equity
Noncontrolling interests 131 134
Total Equity 17,776 16,929
Total Liabilities $ 154,652 $ 123,382
and Equity
________________________*
Reflects the adoption
of the FASB guidance
on leases.
INTERNATIONAL
BUSINESS
MACHINES
CORPORATION
CASH FLOW
ANALYSIS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in 2019 2018 2019 2018
Millions)
Net Cash $ 2,941 $ 2,295 $ 7,700 $ 6,896
Provided
by Operating
Activities
per GAAP:
Less: change 119 (582 ) 2,577 1,778
in Global
Financing
(GF) Receivables
Capital (431 ) (1,004 ) (1,045 ) (1,897 )
Expenditures,
Net
Free Cash Flow 2,391 1,873 4,078 3,221
Acquisitions (42 ) (51 ) (43 ) (122 )
Divestitures 855 - 888 -
Dividends (1,435 ) (1,437 ) (2,833 ) (2,819 )
Share Repurchase (316 ) (989 ) (1,236 ) (1,767 )
Non-GF Debt 27,509 (65 ) 33,399 (611 )
Other (includes (698 ) (559 ) (68 ) 1,182
GF
Net Receivables
and GF Debt)
Change in Cash, $ 28,264 $ (1,229 ) $ 34,186 $ (916 )
Cash
Equivalents,
Restricted
Cash
and Short-term
Marketable
Securities
INTERNATIONAL
BUSINESS
MACHINES CORPORATION
CASH FLOW
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in 2019 2018 2019 2018
Millions)
Net Income from $ 2,498 $ 2,404 $ 4,089 $ 4,083
Operations
Depreciation/Amortization 1,294 1,116 2,740 2,230
of Intangibles
Stock-based 135 125 248 242
Compensation
Working Capital (1,106 ) (768 ) (1,954 ) (1,436 )
/ Other
Global Financing A/R 119 (582 ) 2,577 1,778
Net Cash Provided by $ 2,941 $ 2,295 $ 7,700 $ 6,896
Operating Activities
Capital (431 ) (1,004 ) (1,045 ) (1,897 )
Expenditures,
net
of payments
& proceeds
Divestitures, net of 855 - 888 -
cash transferred
Acquisitions, net (42 ) (51 ) (43 ) (122 )
of cash acquired
Marketable Securities 3,779 420 3,509 (380 )
/
Other Investments,
net
Net Cash Provided $ 4,162 $ (634 ) $ 3,309 $ (2,399 )
by / (Used
in) Investing
Activities
Debt, net of 22,841 (37 ) 27,073 (751 )
payments
& proceeds
Dividends (1,435 ) (1,437 ) (2,833 ) (2,819 )
Common Stock (316 ) (989 ) (1,236 ) (1,767 )
Repurchases
Common Stock (59 ) (55 ) (111 ) (91 )
Transactions
- Other
Net Cash Provided $ 21,031 $ (2,519 ) $ 22,894 $ (5,428 )
by / (Used
in) Financing
Activities
Effect of Exchange 129 (444 ) 27 (344 )
Rate
changes on Cash
Net Change in Cash, $ 28,263 $ (1,302 ) $ 33,930 $ (1,274 )
Cash Equivalents
and Restricted Cash
INTERNATIONAL
BUSINESS
MACHINES
CORPORATION
SEGMENT DATA
(Unaudited)
SECOND - QUARTER 2019
Cloud & Global Global
Cognitive Business Technology Global
(Dollars in Software Services Services Systems Financing
Millions)
Revenue
External $ 5,645 $ 4,155 $ 6,837 $ 1,753 $ 351
Internal 607 69 302 171 281
Total Segment $ 6,252 $ 4,224 $ 7,139 $ 1,924 $ 632
Revenue
Pre-tax Income 2,001 300 235 61 239
/ (Loss) from
Continuing
Operations
Pre-tax margin 32.0 % 7.1 % 3.3 % 3.2 % 37.8 %
Change YTY 3.2 % 0.5 % (6.7 ) % (19.5 ) % (11.0 ) %
Revenue
- External
Change YTY 5.4 % 3.4 % (3.5 ) % (18.0 ) % (8.5 ) %
Revenue
- External
@constant
currency
SECOND - QUARTER 2018
Cloud & Global Global
Cognitive Business Technology Global
(Dollars in Software* Services* Services* Systems Financing
Millions)
Revenue
External $ 5,470 $ 4,135 $ 7,325 $ 2,177 $ 394
Internal 811 83 169 242 473
Total Segment $ 6,280 $ 4,218 $ 7,494 $ 2,419 $ 867
Revenue
Pre-tax Income 2,029 372 451 346 357
/ (Loss) from
Continuing
Operations
Pre-tax margin 32.3 % 8.8 % 6.0 % 14.3 % 41.2 %
______________________*
Recast to
conform with 2019
presentation.
INTERNATIONAL
BUSINESS
MACHINES
CORPORATION
SEGMENT DATA
(Unaudited)
SIX MONTHS 2019
Cloud & Global Global
Cognitive Business Technology Global
(Dollars in Software Services Services Systems Financing
Millions)
Revenue
External $ 10,682 $ 8,274 $ 13,711 $ 3,081 $ 757
Internal 1,448 143 591 334 581
Total Segment $ 12,131 $ 8,417 $ 14,303 $ 3,415 $ 1,338
Revenue
Pre-tax Income 3,768 615 510 (141 ) 527
/ (Loss) from
Continuing
Operations
Pre-tax margin 31.1 % 7.3 % 3.6 % (4.1 ) % 39.4 %
Change YTY 0.9 % 0.3 % (7.0 ) % (16.2 ) % (5.3 ) %
Revenue
- External
Change YTY 3.6 % 3.9 % (3.3 ) % (14.2 ) % (2.2 ) %
Revenue
- External
@constant
currency
SIX MONTHS 2018
Cloud & Global Global
Cognitive Business Technology Global
(Dollars in Software* Services* Services* Systems Financing
Millions)
Revenue
External $ 10,586 $ 8,250 $ 14,746 $ 3,676 $ 799
Internal 1,741 172 310 395 902
Total Segment $ 12,327 $ 8,422 $ 15,055 $ 4,072 $ 1,701
Revenue
Pre-tax Income 3,709 497 517 143 734
/ (Loss) from
Continuing
Operations
Pre-tax margin 30.1 % 5.9 % 3.4 % 3.5 % 43.1 %
___________________*
Recast to
conform
with
2019
presentation.
INTERNATIONAL
BUSINESS
MACHINES
CORPORATION
U.S. GAAP TO
OPERATING
(Non-GAAP)
RESULTS
RECONCILIATION
(Unaudited;
Dollars
in millions
except per share
amounts)
SECOND - QUARTER 2019
CONTINUING OPERATIONS
Acquisition- Retirement- Tax
Related Related Reform Operating
GAAP Adjustments* Adjustments** Impacts (Non-GAAP)
Gross Profit $ 9,010 $ 73 - - $ 9,083
Gross Profit 47.0 % 0.4 Pts - - 47.4 %
Margin
S,G&A 5,456 (149 ) - - 5,307
R,D&E 1,407 - - - 1,407
Other (Income) (747 ) 119 (136 ) - (764 )
& Expense
Interest Expense 348 (168 ) - - 180
Total Expense & 6,242 (198 ) (136 ) - 5,907
Other (Income)
Pre-tax Income 2,768 272 136 - 3,176
from
Continuing
Operations
Pre-tax Income 14.4 % 1.4 Pts 0.7 Pts - 16.6 %
Margin from
Continuing
Operations
Provision for 269 55 40 (14 ) 349
Income
Taxes***
Effective 9.7 % 0.9 Pts 0.8 Pts (0.4 ) Pts 11.0 %
Tax Rate
Income from 2,499 217 97 14 2,827
Continuing
Operations
Income Margin 13.0 % 1.1 Pts 0.5 Pts 0.1 Pts 14.8 %
from
Continuing
Operations
Diluted Earnings $ 2.81 $ 0.24 $ 0.11 $ 0.01 $ 3.17
/ (Loss) Per
Share: Continuing
Operations
SECOND - QUARTER 2018
CONTINUING OPERATIONS
Acquisition- Retirement- Tax
Related Related Reform Operating
GAAP Adjustments* Adjustments** Impacts (Non-GAAP)
Gross Profit $ 9,199 $ 94 - - $ 9,292
Gross Profit 46.0 % 0.5 Pts - - 46.5 %
Margin
S,G&A 4,857 (110 ) - - 4,746
R,D&E 1,364 - - - 1,364
Other (Income) 280 - (394 ) - (115 )
& Expense
Interest Expense 173 - - - 173
Total Expense & 6,423 (110 ) (394 ) - 5,918
Other (Income)
Pre-tax Income 2,776 204 394 - 3,374
from
Continuing
Operations
Pre-tax Income 13.9 % 1.0 Pts 2.0 Pts - 16.9 %
Margin from
Continuing
Operations
Provision for 373 44 109 14 540
Income
Taxes***
Effective 13.5 % 0.5 Pts 1.6 Pts 0.4 Pts 16.0 %
Tax Rate
Income from 2,402 160 286 (14 ) 2,834
Continuing
Operations
Income Margin 12.0 % 0.8 Pts 1.4 Pts (0.1 ) Pts 14.2 %
from
Continuing
Operations
Diluted Earnings $ 2.61 $ 0.17 $ 0.31 $ (0.01 ) $ 3.08
/ (Loss) Per
Share: Continuing
Operations
______________________________
* Includes amortization of purchased intangible assets, in process
R&D, transaction costs, applicable restructuring and
related expenses, tax charges related to acquisition integration
and pre-closing charges, such as financing costs.
** Includes amortization of prior service costs, interest cost,
expected return on plan assets, amortized actuarial
gains/losses, the impacts of any plan curtailments/settlements
and pension insolvency costs and other costs.
***Tax impact on operating (non-GAAP) pre-tax income from continuing
operations is calculated under the same accounting principles
applied to the As Reported pre-tax income under ASC 740, which
employs an annual effective tax rate method to the results.
INTERNATIONAL
BUSINESS
MACHINES
CORPORATION
U.S. GAAP TO
OPERATING
(Non-GAAP)
RESULTS
RECONCILIATION
(Unaudited;
Dollars
in millions
except per share
amounts)
SIX MONTHS 2019
CONTINUING OPERATIONS
Acquisition- Retirement- Tax
Related Related Reform Operating
GAAP Adjustments* Adjustments** Impacts (Non-GAAP)
Gross Profit $ 17,053 $ 149 - - $ 17,202
Gross Profit 45.7 % 0.4 Pts - - 46.1 %
Margin
S,G&A 10,147 (273) - - 9,873
R,D&E 2,840 - - - 2,840
Other (Income) (820) 142 (274) - (951)
& Expense
Interest Expense 558 (204) - - 354
Total Expense & 12,402 (335) (274) - 11,793
Other (Income)
Pre-tax Income 4,651 484 274 - 5,409
from
Continuing
Operations
Pre-tax Income 12.5 % 1.3 Pts 0.7 Pts - 14.5 %
Margin from
Continuing
Operations
Provision for 558 104 66 (155) 574
/ (Benefit
from) Income
Taxes***
Effective 12.0 % 0.8 Pts 0.6 Pts (2.9) Pts 10.6 %
Tax Rate
Income from 4,093 381 208 155 4,836
Continuing
Operations
Income Margin 11.0 % 1.0 Pts 0.6 Pts 0.4 Pts 13.0 %
from
Continuing
Operations
Diluted Earnings $ 4.58 $ 0.44 $ 0.23 $ 0.17 $ 5.42
/ (Loss) Per
Share: Continuing
Operations
SIX MONTHS 2018
CONTINUING OPERATIONS
Acquisition- Retirement- Tax
Related Related Reform Operating
GAAP Adjustments* Adjustments** Impacts (Non-GAAP)
Gross Profit $ 17,445 $ 187 - - $ 17,633
Gross Profit 44.6 % 0.5 Pts - - 45.1 %
Margin
S,G&A 10,302 (220) - - 10,082
R,D&E 2,769 - - - 2,769
Other (Income) 692 - (796) - (104)
& Expense
Interest Expense 338 - - - 338
Total Expense & 13,534 (220) (796) - 12,518
Other (Income)
Pre-tax Income 3,911 407 796 - 5,114
from
Continuing
Operations
Pre-tax Income 10.0 % 1.0 Pts 2.0 Pts - 13.1 %
Margin from
Continuing
Operations
Provision for (166) 83 185 (93) 8
/ (Benefit
from) Income
Taxes***
Effective (4.3) % 2.0 Pts 4.3 Pts (1.8) Pts 0.2 %
Tax Rate
Income from 4,078 324 611 93 5,106
Continuing
Operations
Income Margin 10.4 % 0.8 Pts 1.6 Pts 0.2 Pts 13.1 %
from
Continuing
Operations
Diluted Earnings $ 4.42 $ 0.35 $ 0.66 $ 0.10 $ 5.53
/ (Loss) Per
Share: Continuing
Operations
____________________________
* Includes amortization of purchased intangible assets, in process
R&D, transaction costs, applicable restructuring and
related expenses, tax charges related to acquisition integration
and pre-closing charges, such as financing costs.
** Includes amortization of prior service costs, interest cost,
expected return on plan assets, amortized actuarial
gains/losses, the impacts of any plan curtailments/settlements
and pension insolvency costs and other costs.
***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
NON - GAAP RECONCILIATION
(Unaudited)
EPS expectations (GAAP and Operating
(non-GAAP)) will be updated
on August 2 to include the impact
of the Red Hat acquisition.
2019 Full Year Expectations
(through second-quarter 2019, prior to the
completion of the Red Hat acquisition)
GAAP Diluted EPS at least $12.45
Operating EPS (non-GAAP) at least $13.90
Adjustments
Acquisition-related Charges * $ 0.76
Non-Operating Retirement-Related Items $ 0.45
Tax Reform Enactment Impacts $ 0.24
_______________________
* Includes acquisitions as of June 30, 2019. This amount includes
pre-closing charges, such as financing costs, associated
with the Red Hat acquisition. It does not include any other
amounts for Red Hat or Red Hat related activity.
IBMMelinda Zurich, 914-499-4034melinda.zurich@us.ibm.com
John Bukovinsky, 732-618-3531jbuko@us.ibm.com
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190717005781/en/
This information is provided by Business Wire
(END) Dow Jones Newswires
July 18, 2019 02:00 ET (06:00 GMT)
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