IBM Results -
-- adjusting for revenues relating to the sale of the Printing System Division;
-- adjusting for free cash flow;
-- adjusting for currency (i.e., at constant currency).
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 was scheduled on January 17, 2008. Investors may participate by viewing the Webcast at www.ibm.com/investor/4q07. Presentation charts will be available on the Web site prior to 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
(Dollars in millions except per share amounts)
Three Months Twelve Months
Ended December 31, Ended December 31,
Percent Percent
2007 2006 Change 2007 2006 Change
------- ------- ------- ------- ------- -------
REVENUE
Global Technology
Services $9,997 $8,590 16.4% $36,103 $32,322 11.7%
Gross margin 30.1% 29.9% 29.9% 29.8%
Global Business
Services 4,933 4,223 16.8% 18,041 15,969 13.0%
Gross margin 23.1% 24.7% 23.5% 23.1%
Systems and
Technology 6,796 7,070 -3.9% 21,317 21,970 -3.0%
Gross margin 45.7% 41.8% 39.7% 37.7%
Software 6,259 5,607 11.6% 19,982 18,161 10.0%
Gross margin 87.1% 86.5% 85.2% 85.2%
Global Financing 668 620 7.7% 2,502 2,365 5.8%
Gross margin 45.5% 48.6% 46.7% 50.3%
Other 212 147 44.8% 842 637 32.1%
Gross margin -15.8% -6.9% 4.4% 5.7%
TOTAL REVENUE 28,866 26,257 9.9% 98,786 91,424 8.1%
GROSS PROFIT 12,970 11,701 10.8% 41,729 38,295 9.0%
Gross margin 44.9% 44.6% 42.2% 41.9%
EXPENSE AND OTHER
INCOME
S,G&A 6,016 5,620 7.0% 22,060 20,259 8.9%
% of revenue 20.8% 21.4% 22.3% 22.2%
R,D&E 1,586 1,587 -0.1% 6,153 6,107 0.8%
% of revenue 5.5% 6.0% 6.2% 6.7%
Intellectual
property
and custom
development
income (236) (241) -1.7% (958) (900) 6.4%
Other (income)
and expense (98) (150) -34.5% (626) (766) -18.3%
Interest expense 214 71 203.6% 611 278 119.6%
TOTAL EXPENSE AND
OTHER INCOME 7,481 6,887 8.6% 27,240 24,978 9.1%
% of revenue 25.9% 26.2% 27.6% 27.3%
INCOME FROM
CONTINUING
OPERATIONS BEFORE
INCOME TAXES 5,489 4,814 14.0% 14,489 13,317 8.8%
Pre-tax margin 19.0% 18.3% 14.7% 14.6%
Provision for
income taxes 1,537 1,350 13.9% 4,071 3,901 4.4%
Effective tax
rate 28.0% 28.0% 28.1% 29.3%
INCOME FROM
CONTINUING
OPERATIONS 3,951 3,464 14.1% 10,418 9,416 10.6%
Net margin 13.7% 13.2% 10.5% 10.3%
DISCONTINUED
OPERATIONS
Income/(loss) from
discontinued opera-
tions 1 76 (0) 76
NET INCOME $3,952 $3,541 11.6% $10,418 $9,492 9.7%
======= ======= ======= =======
EARNINGS/(LOSS)PER
SHARE OF
COMMON STOCK:
ASSUMING DILUTION
CONTINUING
OPERATIONS $2.80 $2.26 23.9% $7.18 $6.06 18.5%
DISCONTINUED
OPERATIONS 0.00 0.05 (0.00) 0.05
------- ------- ------- -------
TOTAL $2.80 $2.31 21.2% $7.18 $6.11 17.5%
======= ======= ======= =======
BASIC
CONTINUING
OPERATIONS $2.85 $2.30 23.9% $7.32 $6.15 19.0%
DISCONTINUED
OPERATIONS 0.00 0.05 (0.00) 0.05
------- ------- ------- -------
TOTAL $2.86 $2.35 21.7% $7.32 $6.20 18.1%
======= ======= ======= =======
WEIGHTED-AVERAGE
NUMBER COMMON
SHARES OUT-
STANDING (M's)
ASSUMING DILUTION 1,412.9 1,532.5 1,450.6 1,553.5
BASIC 1,384.1 1,507.3 1,423.0 1,530.8
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At At
(Dollars in millions) December 31, December 31, Percent
2007 2006 Change
------------ ------------ --------
ASSETS
Cash, cash equivalents,
and marketable securities $16,146 $10,657 51.5%
Receivables - net, inventories,
prepaid expenses 37,031 34,003 8.9%
Plant, rental machines,
and other property - net 15,081 14,440 4.4%
Investments and other assets 52,172 44,134 18.2%
------------ ------------
TOTAL ASSETS $120,431 $103,234 16.7%
============ ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Short-term debt $15,735 $8,902 76.8%
Long-term debt 19,539 13,780 41.8%
------------ ------------
Total debt 35,274 22,682 55.5%
Accounts payable, taxes,
and accruals 32,076 31,189 2.8%
Other liabilities 24,612 20,857 18.0%
------------ ------------
TOTAL LIABILITIES 91,962 74,728 23.1%
STOCKHOLDERS' EQUITY 28,470 28,506 -0.1%
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $120,431 $103,234 16.7%
============ ============
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
FOURTH QUARTER 2007
-----------------------------------------------
Pre-tax
Income
(Loss)
From
(Dollars in millions) --------- Revenue -------- Continuing Pre-tax
External Internal Total Operations Margin
--------- -------- -------- ---------- --------
SEGMENTS
Global Technology
Services $9,997 $393 $10,390 $1,061 10.2%
Y-T-Y Change 16.4% -9.6% 15.1% 25.8%
Global Business
Services 4,933 287 5,220 588 11.3%
Y-T-Y Change 16.8% -17.8% 14.2% 9.2%
Systems and Technology 6,796 240 7,036 1,364 19.4%
Y-T-Y Change -3.9% -33.6% -5.3% 17.8%
Software 6,259 712 6,971 2,433 34.9%
Y-T-Y Change 11.6% 12.7% 11.7% 20.8%
Global Financing 668 445 1,113 341 30.7%
Y-T-Y Change 7.7% -8.8% 0.4% -11.8%
TOTAL REPORTABLE
SEGMENTS 28,654 2,077 30,731 5,787 18.8%
Y-T-Y Change 9.7% -8.3% 8.3% 17.1%
Eliminations / Other 212 (2,077) (1,865) (298)
TOTAL IBM CONSOLIDATED $28,866 $0 $28,866 $5,489 19.0%
Y-T-Y Change 9.9% 9.9% 14.0%
FOURTH QUARTER 2006
-----------------------------------------------
Pre-tax
Income
(Loss)
From
(Dollars in millions) --------- Revenue -------- Continuing Pre-tax
External Internal Total Operations Margin
--------- -------- -------- ---------- --------
SEGMENTS
Global Technology
Services $8,590 $435 $9,025 $843 9.3%
Global Business
Services 4,223 349 4,572 538 11.8%
Systems and Technology 7,070 362 7,432 1,158 15.6%
Software 5,607 632 6,239 2,015 32.3%
Global Financing 620 488 1,108 387 34.9%
TOTAL REPORTABLE
SEGMENTS 26,111 2,266 28,377 4,940 17.4%
Eliminations / Other 147 (2,266) (2,120) (126)
TOTAL IBM CONSOLIDATED $26,257 $0 $26,257 $4,814 18.3%
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
TWELVE MONTHS 2007
-----------------------------------------------
Pre-tax
Income
(Loss)
From
(Dollars in millions) --------- Revenue -------- Continuing Pre-tax
External Internal Total Operations Margin
--------- -------- -------- ---------- --------
SEGMENTS
Global Technology
Services $36,103 $1,636 $37,739 $3,557 9.4%
Y-T-Y Change 11.7% -7.2% 10.7% 8.2%
Global Business
Services 18,041 1,193 19,234 2,064 10.7%
Y-T-Y Change 13.0% -13.1% 10.9% 21.0%
Systems and Technology 21,317 998 22,315 2,153 9.6%
Y-T-Y Change -3.0% -14.5% -3.6% 23.8%
Software 19,982 2,416 22,398 6,002 26.8%
Y-T-Y Change 10.0% 7.5% 9.7% 9.3%
Global Financing 2,502 1,482 3,984 1,386 34.8%
Y-T-Y Change 5.8% -3.0% 2.4% -4.7%
TOTAL REPORTABLE
SEGMENTS 97,944 7,726 105,670 15,163 14.3%
Y-T-Y Change 7.9% -4.4% 6.9% 10.8%
Eliminations / Other 842 (7,726) (6,884) (674)
TOTAL IBM CONSOLIDATED $98,786 $0 $98,786 $14,489 14.7%
Y-T-Y Change 8.1% 8.1% 8.8%
TWELVE MONTHS 2006
-----------------------------------------------
Pre-tax
Income
(Loss)
From
(Dollars in millions) --------- Revenue -------- Continuing Pre-tax
External Internal Total Operations Margin
--------- -------- -------- ---------- --------
SEGMENTS
Global Technology
Services $32,322 $1,763 $34,086 $3,288 9.6%
Global Business
Services 15,969 1,373 17,341 1,706 9.8%
Systems and Technology 21,970 1,168 23,138 1,739 7.5%
Software 18,161 2,249 20,409 5,493 26.9%
Global Financing 2,365 1,527 3,892 1,455 37.4%
TOTAL REPORTABLE
SEGMENTS 90,787 8,080 98,867 13,682 13.8%
Eliminations / Other 637 (8,080) (7,443) (365)
TOTAL IBM CONSOLIDATED $91,424 $0 $91,424 $13,317 14.6%
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