Attached files
| file | filename |
|---|---|
| EX-99.2 - EX-99.2 - INTERNATIONAL BUSINESS MACHINES CORP | ibm-20200420xex99d2.htm |
| EX-99.1 - EX-99.1 - INTERNATIONAL BUSINESS MACHINES CORP | ibm-20200420xex99d1.htm |
| 8-K - 8-K - INTERNATIONAL BUSINESS MACHINES CORP | ibm-20200421x8k.htm |
Exhibit 99.3
IBM Provides Recast Historical Segment Financials To Reflect Offering Realignment
20 April 2020
In 2019, IBM updated its reportable segments and in 2020, this segment structure remains consistent. During the first quarter of 2020, the company realigned offerings and the related management system to reflect divestitures completed in the second half of 2019 and tighter integration of certain industry-related consulting services. Accordingly, IBM is updating its Cloud & Cognitive Software segment, Global Business Services segment and the Other – divested businesses category in the first quarter of 2020 and recasting historical information in these areas for consistency with the go-forward performance. To provide some context of the magnitude of these changes, total recast revenue in 2019 is approximately $0.3 billion of IBM’s total $77 billion. There is no change to the Global Technology Services, Systems, or Global Financing segments, and there is no impact to IBM’s consolidated results.
Management System Change | Resulting Segment Implications |
Divestitures of IBM’s risk analytics and regulatory offerings and sales performance management offerings | - Cloud & Cognitive Software (Cognitive Applications) + Other – divested businesses |
Realignment of certain industry-related consulting offerings to the Global Business Services segment | - Cloud & Cognitive Software (Cognitive Applications) + Global Business Services (Consulting) |
These changes are effective in the first quarter of 2020. Two years of historical recast data is provided in Appendix A. Subsequent to the first quarter, on April 6, 2020, Arvind Krishna became Chief Executive Officer of IBM and announced a number of management changes, which did not impact the company’s reportable segments.
APPENDIX A
Exhibit 1: Recast External Revenue and Gross Profit Information
International Business Machines Corporation
External Revenue and Gross Profit
Note: Items in bold reflect changes from previously reported results
CLOUD & COGNITIVE SOFTWARE SEGMENT | 1Q'18 | 2Q'18 | 3Q'18 | 4Q'18 | FY'18 | 1Q'19 | 2Q'19 | 3Q'19 | 4Q'19 | FY'19 |
| | | | | | | | | | |
Total External Revenue | 5,025 | 5,368 | 4,890 | 6,574 | 21,857 | 4,967 | 5,563 | 5,201 | 7,160 | 22,891 |
Cognitive Applications | 1,195 | 1,311 | 1,252 | 1,522 | 5,280 | 1,238 | 1,372 | 1,305 | 1,542 | 5,456 |
Cloud & Data Platforms | 1,950 | 2,079 | 1,968 | 2,606 | 8,603 | 1,917 | 2,173 | 2,308 | 3,101 | 9,499 |
Transaction Processing Platforms | 1,880 | 1,978 | 1,669 | 2,446 | 7,974 | 1,812 | 2,018 | 1,589 | 2,517 | 7,936 |
| | | | | | | | | | |
Gross Profit $ (External) | 3,870 | 4,206 | 3,750 | 5,243 | 17,068 | 3,753 | 4,325 | 3,876 | 5,695 | 17,650 |
Gross Margin % (External) | 77.0% | 78.4% | 76.7% | 79.8% | 78.1% | 75.6% | 77.7% | 74.5% | 79.5% | 77.1% |
| | | | | | | | | | |
GLOBAL BUSINESS SERVICES SEGMENT | 1Q'18 | 2Q'18 | 3Q'18 | 4Q'18 | FY'18 | 1Q'19 | 2Q'19 | 3Q'19 | 4Q'19 | FY'19 |
| | | | | | | | | | |
Total External Revenue | 4,175 | 4,196 | 4,116 | 4,309 | 16,795 | 4,155 | 4,197 | 4,160 | 4,285 | 16,798 |
Consulting | 1,927 | 1,992 | 1,940 | 2,047 | 7,906 | 2,001 | 2,020 | 2,016 | 2,120 | 8,157 |
Application Management | 2,002 | 1,946 | 1,915 | 1,989 | 7,852 | 1,908 | 1,919 | 1,897 | 1,922 | 7,646 |
Global Process Services | 246 | 258 | 260 | 273 | 1,037 | 247 | 258 | 247 | 243 | 995 |
| | | | | | | | | | |
Gross Profit $ (External) | 985 | 1,098 | 1,235 | 1,200 | 4,519 | 1,087 | 1,093 | 1,293 | 1,181 | 4,655 |
Gross Margin % (External) | 23.6% | 26.2% | 30.0% | 27.9% | 26.9% | 26.2% | 26.0% | 31.1% | 27.6% | 27.7% |
No changes to Global Technology Services, Systems, or Global Financing historical amounts.
Exhibit 2: Recast Management System Segment View
International Business Machines Corporation
Management System Segment View
Note: Items in bold reflect changes from previously reported results
CLOUD & | GLOBAL | GLOBAL | SYSTEMS | GLOBAL | TOTAL | ||
($M) | |||||||
2018 |
|
|
|
|
|
|
|
TOTAL REVENUE | 25,047 | 17,121 |
|
|
| 84,235 | |
EXTERNAL REVENUE | 21,857 | 16,795 |
|
| 77,421 | ||
INTERNAL REVENUE | 3,190 | 326 | No changes to previously reported information | 6,813 | |||
SEGMENT PRE-TAX INCOME | 8,914 | 1,602 | 14,562 | ||||
PRE-TAX INCOME MARGIN | 36% | 9% | 17% | ||||
REVENUE YR/YR CHANGE | 2.0% | 3.0% |
|
| 1.3% | ||
PRE-TAX INCOME YR/YR CHANGE | 10.0% | 26.2% |
|
|
| 1.2% | |
($M) | |||||||
2019 |
|
|
|
|
|
|
|
TOTAL REVENUE | 25,718 | 17,076 |
|
|
| 82,274 | |
EXTERNAL REVENUE | 22,891 | 16,798 |
|
| 76,054 | ||
INTERNAL REVENUE | 2,827 | 278 | No changes to previously reported information | 6,220 | |||
SEGMENT PRE-TAX INCOME | 7,811 | 1,623 | 12,835 | ||||
PRE-TAX INCOME MARGIN | 30% | 10% | 16% | ||||
REVENUE YR/YR CHANGE | 2.7% | -0.3% |
|
| -2.3% | ||
PRE-TAX INCOME YR/YR CHANGE | -12.4% | 1.3% |
|
|
| -11.9% | |
Reconciliations of IBM as Reported:
Note: Items in bold reflect changes from previously reported results
For the year ended December 31: | | 2018 | 2019 | |
Revenue: | | | | |
Total reportable segments | | | 84,235 | 82,274 |
Other - divested businesses | | | 1,961 | 930 |
Other revenue | | | 207 | 162 |
Elimination of internal transactions | | | (6,813) | (6,220) |
Total IBM consolidated revenue | | | 79,591 | 77,147 |
| | | | |
Pre-tax income from continuing operations: | | | | |
Total reportable segments | | | 14,562 | 12,835 |
Amortization of acquired intangible assets | | | (809) | (1,298) |
Acquisition-related charges | | | (16) | (423) |
Non-operating retirement-related (costs)/income | | | (1,572) | (615) |
Elimination of internal transactions | | | (725) | (290) |
Other - divested businesses | | | 287 | 574 |
Unallocated corporate amounts | | | (385) | (617) |
Total pre-tax income from continuing operations | | | 11,342 | 10,166 |
Exhibit 2 (Continued): Recast Management System Segment View
International Business Machines Corporation
Management System Segment View
Note: Items in bold reflect changes from previously reported results
CLOUD & | GLOBAL | GLOBAL | SYSTEMS | GLOBAL | TOTAL | ||
($M) | |||||||
1Q18 |
|
|
|
|
|
|
|
TOTAL REVENUE | 5,956 | 4,264 |
|
|
| 20,268 | |
EXTERNAL REVENUE | 5,025 | 4,175 |
|
| 18,526 | ||
INTERNAL REVENUE | 931 | 89 | No changes to previously reported information | 1,743 | |||
SEGMENT PRE-TAX INCOME | 1,691 | 121 | 2,052 | ||||
PRE-TAX INCOME MARGIN | 28% | 3% | 10% | ||||
REVENUE YR/YR CHANGE | 6.6% | 4.8% |
|
| 5.3% | ||
PRE-TAX INCOME YR/YR CHANGE | 5.5% | -54.1% |
|
|
| -14.3% | |
2Q18 |
|
|
|
|
|
|
|
TOTAL REVENUE | 6,179 | 4,279 |
|
|
| 21,238 | |
EXTERNAL REVENUE | 5,368 | 4,196 |
|
| 19,460 | ||
INTERNAL REVENUE | 811 | 83 | No changes to previously reported information | 1,778 | |||
SEGMENT PRE-TAX INCOME | 2,032 | 368 | 3,554 | ||||
PRE-TAX INCOME MARGIN | 33% | 9% | 17% | ||||
REVENUE YR/YR CHANGE | 2.9% | 2.7% |
|
| 5.4% | ||
PRE-TAX INCOME YR/YR CHANGE | 10.7% | 27.5% |
|
|
| 13.8% | |
3Q18 |
|
|
|
|
|
|
|
TOTAL REVENUE | 5,667 | 4,193 |
|
|
| 19,883 | |
EXTERNAL REVENUE | 4,890 | 4,116 |
|
| 18,231 | ||
INTERNAL REVENUE | 777 | 77 | No changes to previously reported information | 1,652 | |||
SEGMENT PRE-TAX INCOME | 2,067 | 556 | 3,747 | ||||
PRE-TAX INCOME MARGIN | 36% | 13% | 19% | ||||
REVENUE YR/YR CHANGE | -2.3% | 0.7% |
|
| -0.9% | ||
PRE-TAX INCOME YR/YR CHANGE | 8.6% | 32.8% |
|
|
| 0.9% | |
4Q18 |
|
|
|
|
|
|
|
TOTAL REVENUE | 7,246 | 4,385 |
|
|
| 22,846 | |
EXTERNAL REVENUE | 6,574 | 4,309 |
|
| 21,206 | ||
INTERNAL REVENUE | 672 | 77 | No changes to previously reported information | 1,641 | |||
SEGMENT PRE-TAX INCOME | 3,125 | 556 | 5,208 | ||||
PRE-TAX INCOME MARGIN | 43% | 13% | 23% | ||||
REVENUE YR/YR CHANGE | 1.2% | 3.6% |
|
| -3.6% | ||
PRE-TAX INCOME YR/YR CHANGE | 13.3% | 86.8% |
|
|
| 0.9% | |
Exhibit 2 (Continued): Recast Management System Segment View
International Business Machines Corporation
Management System Segment View
Note: Items in bold reflect changes from previously reported results
CLOUD & | GLOBAL | GLOBAL | SYSTEMS | GLOBAL | TOTAL | ||
($M) | |||||||
1Q19 |
|
|
|
|
|
|
|
TOTAL REVENUE | 5,808 | 4,229 |
|
|
| 19,398 | |
EXTERNAL REVENUE | 4,967 | 4,155 |
|
| 17,731 | ||
INTERNAL REVENUE | 841 | 74 | No changes to previously reported information | 1,668 | |||
SEGMENT PRE-TAX INCOME | 1,785 | 298 | 2,445 | ||||
PRE-TAX INCOME MARGIN | 31% | 7% | 13% | ||||
REVENUE YR/YR CHANGE | -2.5% | -0.8% |
|
| -4.3% | ||
PRE-TAX INCOME YR/YR CHANGE | 5.6% | 145.7% |
|
|
| 19.1% | |
2Q19 |
|
|
|
|
|
|
|
TOTAL REVENUE | 6,170 | 4,266 |
|
|
| 20,131 | |
EXTERNAL REVENUE | 5,563 | 4,197 |
|
| 18,701 | ||
INTERNAL REVENUE | 607 | 69 | No changes to previously reported information | 1,430 | |||
SEGMENT PRE-TAX INCOME | 2,007 | 290 | 2,832 | ||||
PRE-TAX INCOME MARGIN | 33% | 7% | 14% | ||||
REVENUE YR/YR CHANGE | -0.1% | -0.3% |
|
| -5.2% | ||
PRE-TAX INCOME YR/YR CHANGE | -1.2% | -21.4% |
|
|
| -20.3% | |
3Q19 |
|
|
|
|
|
|
|
TOTAL REVENUE | 5,888 | 4,230 |
|
|
| 19,427 | |
EXTERNAL REVENUE | 5,201 | 4,160 |
|
| 17,886 | ||
INTERNAL REVENUE | 686 | 70 | No changes to previously reported information | 1,541 | |||
SEGMENT PRE-TAX INCOME | 1,290 | 567 | 2,661 | ||||
PRE-TAX INCOME MARGIN | 22% | 13% | 14% | ||||
REVENUE YR/YR CHANGE | 3.9% | 0.9% |
|
| -2.3% | ||
PRE-TAX INCOME YR/YR CHANGE | -37.6% | 1.9% |
|
|
| -29.0% | |
4Q19 |
|
|
|
|
|
|
|
TOTAL REVENUE | 7,853 | 4,350 |
|
|
| 23,318 | |
EXTERNAL REVENUE | 7,160 | 4,285 |
|
| 21,737 | ||
INTERNAL REVENUE | 692 | 65 | No changes to previously reported information | 1,581 | |||
SEGMENT PRE-TAX INCOME | 2,729 | 469 | 4,897 | ||||
PRE-TAX INCOME MARGIN | 35% | 11% | 21% | ||||
REVENUE YR/YR CHANGE | 8.4% | -0.8% |
|
| 2.1% | ||
PRE-TAX INCOME YR/YR CHANGE | -12.7% | -15.8% |
|
|
| -6.0% | |