Financial Snapshot of IBM

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Financial Snapshot of IBM

  1. 1. IBM Corporation Financial Profile June 2009 Recent Highlights: 2Q'09 IBM's ongoing transformation drove strong results and improved operating leverage Expanded gross margin by 2.3pts and pre-tax margin by 4.1pts, led by software and services Delivered 18% Yr/Yr EPS growth Generated $4.5B Free Cash Flow excluding GF receivables, up $200M Yr/Yr Expect FY'09 EPS of at least $9.70; well ahead of track to IBM 2010 roadmap of $10- $11 of EPS ($ in Billions) ($ in Billions) FY 1H'09 Dec Jun INCOME STATEMENT 2008 Yr/Yr* Yr/Yr BALANCE SHEET 2008 2009 Revenue $103.6 5% (12%) Assets @ constant currency 2% (5%) Cash & Marketable Securities $12.9 $12.5 Global Financing Assets* $34.9 $30.9 Gross Profit $45.7 9% (8%) Non-Global Financing Assets* $61.8 $60.2 Gross Profit Margin 44.1% 1.8 pts 2.1 pts $109.5 $103.7 Liabilities Expense / Revenue % 27.9% 0.4 pts 0.7 pts Global Financing Debt $24.4 $22.8 Non-Global Financing Debt $9.6 $6.6 Pre-Tax Income $16.7 15% 5% Other Liabilities $62.0 $58.8 Pre-Tax Income Margin 16.1% 1.5 pts 2.8 pts $95.9 $88.2 Tax Rate 26.2% (1.9 pts) (0.6 pts) Equity $13.6 $15.5 * Excludes Cash & Marketable Securities Net Income from cont. ops. $12.3 18% 6% Dec Jun Net Income Margin 11.9% 1.4 pts 2.1 pts KEY METRICS 2008 2009 EPS (Diluted) $8.89 24% 11% Non GF Debt/Cap 49% 35% Average Shares (Diluted) 1,388 (5%) (5%) Global Financing Leverage 7.0 6.9 Dividend Yield 2.3% 2.1% Net Cash Credit Rating (Moody's, S&P) A1, A+ A1, A+ from Operations (excl. GF Receivables) $18.8 8% (9%) *FY 2007 results include $81M pre-tax gain ($0.05 EPS) on 2Q '07 sale of printer business. 2008 2008 2008 Revenue by Geography (excludes OEM) Revenue by Business Segment Pre-Tax Profit by Business Segment U.S. Systems & Systems & Financing Financing 34% Comm's 21% Services Asia Pacific Services 18% 21% 42% 8% Can/ 57% Software Software EMEA LA 22% 40% 37% Five Year Summary Margins Earnings Per Share (1) Operating Cash Flow ($B) (2) $18.8 $17.4 50% $8.89 Gross Profit Margin $15.3 40% 44.1% $7.15 $12.9 $13.1 41.9% 42.2% 40.1% $6.05 36.9% 30% $4.90 $4.39 20% Pre-Tax Income Margin 14.7% 16.1% 10% 13.4% 14.6% 11.1% 0% '04 '05 '06 '07 '08 '04 '05 '06 '07 '08 '04 '05 '06 '07 '08 (1) From Continuing Operations (2) Net Cash from Operations, excluding GF Receivables In an effort to provide additional and useful information regarding the company’s results as determined by generally accepted accounting principles (GAAP), these materials contain the following non-GAAP financial measures: (i) revenue at constant currency, (ii) net cash from operations excluding Global Financing receivables, (iii) free cash flows excluding Global Financing receivables and (iv) non GF debt-to-capital ratio. For reconciliation to GAAP and other information about (i) revenue at constant currency and (ii) net cash from operations excluding Global Financing receivables for FY 2008, see "Non GAAP Supplementary Materials" in the Form 8K submitted to the SEC on January 20, 2009. For reconciliation to GAAP and other information about (i) revenue at constant currency, (ii) net cash from operations excluding Global Financing receivables for 2Q'09, (iii) free cash flows excluding Global Financing receivables for 2Q09 and (iv) non GF debt-to-capital ratio for December 2008 and June 2009, see "Non GAAP Supplementary Materials" in Form 8K submitted to the SEC on July 16, 2009.
  2. 2. IBM Corporation Key Segment Profiles Services Revenue Profile Services 2008 Global Services Revenue = $58.9B, +9% yr/yr (+6% @cc) Global Technology Services Global Business Services Global Technology Services Global Business Services • Focus on higher-growth segments • Deeper Client Relationships $39.3B, +9% yr/yr (+6% @cc) $19.6B, +9% yr/yr (+5% @cc) - Service Management - Operational Excellence Consulting - Converged Communications Maintenance Systems Integration - Continuity and compliance • Differentiated Solutions $7.2B, +9% yr/yr Application Management and Services • Continue market leadership in - Differentiated Solutions Integrated Tech. outsourcing Services - Global delivery model • Delivered Globally $9.3B, +10% yr/yr - Service quality - Flexible Delivery Model - Cloud computing Business Transformation • Margin Expansion Strategy provides distinctive Outsourcing - Lead through service quality competitive advantage enabling $2.6B, +11% yr/yr - Standardize delivery processes continuous margin expansion - Leverage IBM IP and assets Strategic Outsourcing $20.2B, +8% yr/yr Long-term Pre-tax income growth model 10%-12% Software Revenue Profile Software 2008 Software Revenue = $22.1B, +11% yr/yr (+8% @cc) • Deliver value through: - Mission critical software PLM - Short-term ROI and transformation projects $1.0B, -9% yr/yr • Utilize core middleware to drive Industry Framework solutions Other Branded Middleware - Leverage IBM's unique assets/deliverables $1.5B, +34% yr/yr $12.4B, +14% yr/yr - Cross-brand opportunity WebSphere +6% - New revenue sources Information Mgmt +24% Operating Systems Tivoli +3% • Leverage Smarter Planet and Business Analytics & Optimization $2.3B, +1% yr/yr Lotus +10% opportunities Rational +13% • Continue profit growth and IBM margin expansion Other Middleware $4.9B, +5% yr/yr Long-Term pre-tax income growth Model: 12%-15% (14%-17% excluding amortization of purchased intangibles) Systems & Technology Revenue Profile Systems & Technology 2008 Systems & Technology Revenue = $19.3B, -10% yr/yr (-11% @cc) • Continue Systems leadership to gain share and capture growth Other $0.4B, -7% yr/yr Retail Store Solutions • Extend leadership in virtualization and consolidation $0.7B, -15% yr/yr Microelectronics OEM Servers • Position IBM to win the future computing infrastructure opportunity $1.9B, -28% yr/yr $12.7B, -5% yr/yr System z +12% Converged System p +11% • Drive additional growth and margin opportunity through: Storage Legacy System i -66% - System Design $3.6B, -3% yr/yr System x -17% - Virtualization - Workload Management • Capture emerging workloads for Smarter Planet Long-term Pre-tax income growth Model: 7%-9%

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