EX-99.1 2 a19-7644_1ex99d1.htm EX-99.1

Exhibit 99.1

 

IBM Provides Historical Data as a Result of 2019 Segment Reporting Change 4 April 2019 On March 27th, IBM posted an article to the company’s investor website that discussed select changes made to its management system and organization structure that brought cloud and cognitive software under one organization, to more effectively address evolving client needs and prepare for the acquisition of Red Hat. With these changes, the company has updated its reportable segments. There is no change to IBM’s consolidated results. The company will implement the new segment structure starting with first quarter 2019 results, which will be reported in mid-April. Today, the company is providing a view of the segment results on the new basis for the last 2 years, to allow investors to update their historical financial models in advance of the first quarter earnings report. The attached exhibits provide data for 2017 and 2018 under the new segment structure. A description of the segment reporting changes was provided in the March 27th article, which is available on IBM’s investor website.

 

Exhibit 1: 2018 Recast Segment Results Snapshot in 2019 Structure Revenue growth rates @cc; $ in billions Refer to Exhibit 4 for a reconciliation of these non-GAAP financial measures to GAAP

 

Exhibi t 2 : Ext e r n a l Re v e nue a n d Gro s s P r o fit I n fo r m a t ion I nt e rna t iona l B us ine ss Ma chines Corpora t ion Ext erna l Re ve nue and Gross Profit GLOB AL FI NANCING SEGMENT1 Q' 1 7 2Q' 1 7 3 Q'174Q'1 7 Tot a l Exter nal Re ve nue4 0 541 5427450 Gros s P rofit $ (Ext e rna l)12 91 2 8108133 Gros s Ma rg in % (Ext e rna l) 3 1 .8 % 3 0.8% 2 5 .2 % 2 9.5 % FY'17 1,696 497 29 .3 % 1Q'1 82 Q'183 Q'1 84 Q'18 4053943 8 84 02 1391051 0 21 17 3 4 .4 % 26 .6 % 2 6 .3 % 29 .1 % FY '1 8 1 ,5 9 0 4 6 3 29.1% SY STEM S SEGMENT1 Q' 1 7 2Q' 1 7 3 Q'174Q'1 7 Tot a l Exter nal Re ve nue1 ,3 9 51,7471,7213,332 Systems Hardware 1,000 1,328 1,301 2,865 Operating Systems Software 394 419 420 467 Gros s P rofit $ (Ext e rna l)66 29 2 09231,857 Gros s Ma rg in % (Ext e rna l) 4 7 .5 % 5 2.7% 5 3 .6 % 5 5.7 % FY'17 8,194 6,494 1,701 4,362 53 .2 % 1Q'1 82 Q'183 Q'1 84 Q'18 1,5002,1771,7 3 62 ,6 21 1,093 1,756 1,339 2,175 407 421 397 446 6551,1019 1 41 ,3 33 4 3 .7 % 50 .6 % 5 2 .7 % 50 .8 % FY '1 8 8 ,0 3 4 6,363 1,671 4 ,0 0 2 49.8% GLOB AL TECHNOLOGY SERV ICES SEGM ENT1Q' 1 72 Q' 173Q'1 74 Q'17 Tot a l Exter nal Re ve nue7 ,1 0 47,1817,2947,634 Infrastructure & Cloud Services 5,342 5,387 5,493 5,795 Technology Support Services 1,761 1,794 1,801 1,840 Gros s P rofit $ (Ext e rna l)2,37 92 ,4822,6092,553 Gros s Ma rg in % (Ext e rna l) 3 3 .5 % 3 4.6% 3 5 .8 % 3 3.4 % FY '1 7 2 9 ,213 22,016 7,196 1 0 ,022 34 .3 % 1 Q'182 Q'1 8 3 Q'184 Q'1 8 7,4217,3257,1 0 17 ,2 99 5,639 5,575 5,393 5,577 1,782 1,750 1,707 1,722 2,4212,4352,6 2 92 ,5 50 3 2 .6 % 33 .2 % 3 7 .0 % 34 .9 % FY'18 29 ,1 46 22,185 6,961 10 ,0 35 34.4% GLOB AL B U SI NESS SERV I CES SEGMENT1 Q' 1 7 2 Q' 1 7 3 Q'1 7 4 Q'1 7 Tot a l Exter nal Re ve nue3 ,9 3 24,0254,0274,089 Consulting 1,769 1,822 1,803 1,867 Application Management1,923 1,956 1,976 1,967 Global Process Services 241 247 248 255 Gros s P rofit $ (Ext e rna l)93 19 9 81,0961,008 Gros s Ma rg in % (Ext e rna l) 2 3 .7 % 2 4.8% 2 7 .2 % 2 4.7 % FY '1 7 1 6 ,073 7,261 7,822 990 4,033 25 .1 % 1 Q'1 8 2 Q'1 8 3 Q'1 8 4 Q'1 8 4,1154,1354,0 7 64 ,2 69 1,867 1,931 1,900 2,008 2,002 1,946 1,915 1,989 246 258 260 273 9621,0771,2 2 41 ,1 85 2 3 .4 % 26 .0 % 3 0 .0 % 27 .8 % FY '1 8 16 ,5 95 7,705 7,852 1,037 4 ,4 4 8 26.8% CLOUD & COGNITIV E SOFTWARE SEGM ENT1Q' 1 72 Q' 173Q'1 74 Q'17 Tot a l Exter nal Re ve nue4 ,7 9 05,3365,1356,490 Cognitive Applications 1,198 1,353 1,329 1,653 Cloud & Data Platforms 1,848 2,101 1,948 2,484 Transaction Processing Platforms 1,744 1,883 1,859 2,352 Gros s P rofit $ (Ext e rna l)3,67 14 ,1733,9995,143 Gros s Ma rg in % (Ext e rna l) 7 6 .6 % 7 8.2% 7 7 .9 % 7 9.2 % FY '1 7 2 1 ,751 5,533 8,381 7,838 1 6 ,986 78 .1 % 1 Q'182 Q'1 8 3 Q'184 Q'1 8 5,1165,4704,9 6 26 ,6 61 1,286 1,413 1,324 1,610 1,950 2,079 1,968 2,606 1,880 1,978 1,669 2,446 3,9064,2523,7 7 85 ,2 88 7 6 .3 % 77 .7 % 7 6 .1 % 79 .4 % FY'18 22 ,2 09 5,633 8,603 7,974 17 ,2 24 77.6%

 

Exhibi t 3 : Recas t Manag e m e nt Sy s t e m Se g m e n t V i e w I nt e rna t iona l B usine s s Ma chines Corpora t ion M a na g e me nt System Se g ment View CLOUD & COGNI TI VE GLOB AL B U SI NESS GLOB AL TECHNOLOGY SOF T W AR E SERVI C ES SERVI C ES SY ST EM S G L OB AL F I NANC I NG T OTAL SEGM ENT S ($ M ) TOTAL REVENUE EXTERNAL REVENUE INTERNAL REVENUE SEGM ENT PRE-TAX INCOME PRE-TAX I NCOME M ARGI N REVENUE YR/YR CHANGE PRE-TAX INCOME YR/YR CHANGE 2 5 ,399 22,209 3,190 8,8 8 2 3 5 % 2.0% 10.1% 16,9 2 1 16,595 326 1 ,62 9 1 0 % 2.9% 25.0% 3 0 ,01 8 29,146 872 1 ,7 81 6% 0.5% -32.0% 8 ,8 48 8,034 815 90 4 10 % -1.1% -19.9% 3,20 0 1,590 1,610 1 ,3 61 43% 1.0% 6.5% 84,3 8 6 77,573 6,813 1 4 ,55 7 17 % 1.3% 1.1% ($ M ) TOTAL REVENUE EXTERNAL REVENUE INTERNAL REVENUE SEGM ENT PRE-TAX INCOME PRE-TAX I NCOME M ARGI N REVENUE YR/YR CHANGE PRE-TAX INCOME YR/YR CHANGE 2 4 ,910 21,751 3,159 8,0 6 8 3 2 % 2.0% 7.3% 16,4 3 6 16,073 363 1 ,30 3 8 % -1.9% -18.4% 2 9 ,87 0 29,213 657 2 ,6 18 9 % -3.6% -13.2% 8 ,9 45 8,194 750 1 ,12 8 1 3 % 5.7% 21.9% 3,16 8 1,696 1,471 1 ,2 78 40% -9.3% -22.8% 83,3 2 9 76,927 6,401 1 4 ,39 6 17 % -0.9% -2.2% Re concilia t ions of I B M a s Re port e d: F o r t h e y e ar ende d Dece m ber 3 1 : 2018 2 017 Re ve nue : Total reportable segments Other - Divested businesses* Other revenue Elimination of internal transactions Tot a l I B M consolida t e d re ve nue 84,386 1,810 207 83,329 2,041 171 (6,813) (6,401) 79,591 79,139 Pre -t a x income from cont inuing ope ra t ions: Total reportable segments Amortization of acquired intangible assets Acquisition-related charges Non-operating retirement-related (costs)/income Elimination of internal transactions Other - Divested businesses* Unallocated corporate amounts Tot a l pre -t a x income from cont inuing ope ra t ions 14,557 (809) (16) (1,572) (725) 292 14,396 (945) (52) (1,341) (742) 468 (385) (385) 11,342 11,400 *Reflects divested software and services businesses 201 7 201 8

 

Exhibi t 3 (C onti nued): Re c a s t Manag e ment Sy s t e m Se g m e nt V i e w I nt er na t iona l B us ine s s Ma chine s Corpora t ion Ma na g e me nt Sys t em Se g me nt V ie w CLOU D & COGNI TI V EGLOB AL B U SI NESS GLOB AL TECHNOLOGY SOF T W AR E SERVI C ES SERVI C ES SY ST EM S G L OB AL F I NANCI NG T OT AL SEGM ENTS ($ M) TOTAL REV ENU E EXTERNAL REVENUE INTERNAL REVENUE SEGMENT PRE-TAX I NCOME P RE-TAX I NC OME MARGI N REVENUE YR/YR CHANGE PRE-TAX INCOME YR/YR CHANGE 6 ,047 5,116 931 1,680 2 8 % 6.6% 5.8% 4,204 4,115 89 12 5 3 % 4.6% -53.8% 7,562 7,421 141 6 6 1 % 4.1% -83.7% 1,653 1,500 153 -203 -1 2 % 5.8% 7.9% 83 4 405 429 37 7 4 5 % 8.6% 21.3% 20,299 18,557 1,743 2 ,045 1 0 % 5.3% -14.3% TOTAL REV ENU E EXTERNAL REVENUE INTERNAL REVENUE SEGMENT PRE-TAX I NCOME P RE-TAX I NC OME MARGI N REVENUE YR/YR CHANGE PRE-TAX INCOME YR/YR CHANGE 6 ,280 5,470 811 2,029 3 2 % 3.2% 11.0% 4,218 4,135 83 37 2 9 % 2.4% 25.7% 7,494 7,325 169 4 5 1 6 % 1.9% -29.9% 2,419 2,177 242 34 6 1 4 % 25.7% 376.8% 86 7 394 473 3 5 7 4 1 % 23.0% 26.8% 21,278 19,500 1,778 3,556 1 7 % 5.4% 13.9% TOTAL REV ENU E EXTERNAL REVENUE INTERNAL REVENUE SEGMENT PRE-TAX I NCOME P RE-TAX INC OME MARGIN REVENUE YR/YR CHANGE PRE-TAX INCOME YR/YR CHANGE 5 ,738 4,962 777 2,050 3 6 % -2.6% 7.8% 4,153 4,076 77 56 6 1 4% 0.8% 32.9% 7,380 7,101 279 6 0 7 8% -1.0% -25.4% 1,917 1,736 181 20 9 1 1 % -1.6% -37.9% 72 6 388 338 3 0 8 4 2% 4.0% 26.9% 19,914 18,262 1,652 3,741 1 9 % -1.0% 0.5% TOTAL REV ENU E EXTERNAL REVENUE INTERNAL REVENUE SEGMENT PRE-TAX I NCOME P RE-TAX INC OME MARGIN REVENUE YR/YR CHANGE PRE-TAX INCOME YR/YR CHANGE 7 ,334 6,661 672 3,122 4 3 % 1.1% 13.5% 4,346 4,269 77 56 6 1 3% 3.9% 81.9% 7,583 7,299 283 6 5 6 9% -2.7% -13.0% 2,860 2,621 238 55 1 1 9 % -18.6% -39.2% 77 3 402 370 3 1 9 4 1% -22.5% -27.9% 22,894 21,253 1,641 5,215 2 3 % -3.6% 1.0% Exhibi t 3 (C onti nued): Re c a s t Manag e ment Sy s t e m Se g m e nt V i e w I nt er na t iona l B us ine s s Ma chine s Corpora t ion Ma na g e me nt Sys t em Se g me nt V ie w CLOU D & COGNI TI V EGLOB AL B U SI NESS GLOB AL TECHNOLOGY SOF T W AR E SERVI C ES SERVI C ES SY ST EM S G L OB AL F I NANCI NG T OT AL SEGM ENTS ($ M) TOTAL REV ENU E EXTERNAL REVENUE INTERNAL REVENUE SEGMENT PRE-TAX I NCOME P RE-TAX I NC OME MARGI N REVENUE YR/YR CHANGE PRE-TAX INCOME YR/YR CHANGE 5 ,671 4,790 881 1,588 2 8 % 4.5% 42.1% 4,019 3,932 86 27 0 7 % -3.2% 80.0% 7,263 7,104 160 4 0 6 6 % -2.6% 232.4% 1,562 1,395 167 -188 -1 2 % -17.3% NM 76 8 405 363 31 1 4 0 % -14.3% -19.5% 19,282 17,625 1,657 2 ,386 1 2 % -2.7% 35.4% TOTAL REV ENU E EXTERNAL REVENUE INTERNAL REVENUE SEGMENT PRE-TAX I NCOME P RE-TAX I NC OME MARGI N REVENUE YR/YR CHANGE PRE-TAX INCOME YR/YR CHANGE 6 ,089 5,336 752 1,828 3 0 % -0.5% 0.1% 4,118 4,025 93 29 6 7 % -3.5% -33.1% 7,354 7,181 173 6 4 4 9 % -5.6% -24.5% 1,924 1,747 177 73 4 % -10.8% -68.0% 70 5 415 290 28 2 4 0 % -23.9% -39.6% 20,189 18,704 1,485 3 ,122 1 5 % -5.0% -18.1% TOTAL REV ENU E EXTERNAL REVENUE INTERNAL REVENUE SEGMENT PRE-TAX I NCOME P RE-TAX I NC OME MARGI N REVENUE YR/YR CHANGE PRE-TAX INCOME YR/YR CHANGE 5 ,893 5,135 759 1,902 32 % 2.2% 1.4% 4,118 4,027 92 42 6 1 0 % -1.9% -16.9% 7,458 7,294 164 8 1 4 11 % -4.1% -13.9% 1,948 1,721 227 33 7 1 7 % 12.3% 152.3% 69 8 427 272 2 4 3 35 % -8.5% -31.4% 20,116 18,603 1,513 3,722 1 9 % -0.6% -2.6% TOTAL REV ENU E EXTERNAL REVENUE INTERNAL REVENUE SEGMENT PRE-TAX I NCOME P RE-TAX I NC OME MARGI N REVENUE YR/YR CHANGE PRE-TAX INCOME YR/YR CHANGE 7 ,257 6,490 767 2,751 38 % 2.2% 1.8% 4,181 4,089 92 31 1 7 % 1.0% -36.8% 7,795 7,634 160 7 5 5 1 0 % -2.2% -31.2% 3,511 3,332 179 90 6 26 % 30.7% 57.0% 99 7 450 546 4 4 3 4 4 % 9.6% -1.2% 23,741 21,995 1,745 5,165 22 % 4.1% -2.9% 4Q17 3Q17 2Q17 1Q17 4Q18 3Q18 2Q18 1Q18