UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report:  March 21, 2006

(Date of earliest event reported)

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

(Exact name of registrant as specified in its charter)

 

New York

 

1-2360

 

13-0871985

(State of Incorporation)

 

(Commission File Number)

 

(IRS employer Identification No.)

 

 

 

 

 

ARMONK, NEW YORK

 

10504

(Address of principal executive offices)

 

(Zip Code)

 

 

 

 

 

914-499-1900

(Registrant’s telephone number)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 


 

Item 7.01 (Regulation FD Disclosure)

 

Attachment I of this Form 8-K contains information that is being posted on IBM’s Investor Relations web site (www.ibm.com/investor/).  All of the information in Attachment I is hereby furnished.

 

IBM’s web site (www.ibm.com) contains a significant amount of information about IBM, including financial and other information for investors (www.ibm.com/investor/). IBM encourages investors to visit its various web sites from time to time, as information is updated and new information is posted.

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

Date:  March 21, 2006

 

 

 

By:

/s/Timothy S. Shaughnessy

 

 

 

 

 

(Timothy S. Shaughnessy)

 

 

 

Vice President and Controller

 

 


 

ATTACHMENT I

 

IBM ANNOUNCES CHANGES TO MANAGEMENT SYSTEM

 

IBM has made changes to its management system effective as of the first quarter of 2006. In accordance with SFAS No. 131, these changes will impact the company’s reportable segments and will result in the reclassification of certain revenue and cost within its Consolidated Statement of Earnings. The changes do not impact IBM’s total revenue, cost, expense, net income, earnings per share, Consolidated Statement of Financial Position or Consolidated Statement of Cash Flows.

 

In this document, IBM is providing historical information to assist investors in understanding the new structure. Specifically, IBM is providing unaudited reclassified information on the impacted line items of the quarterly Consolidated Statement of Earnings for 2005 and for the full year 2005, 2004 and 2003. In addition, the company is providing segment information for those same time periods. Subsequent to our earnings announcement and the filing of Form 10-Q for the first quarter of 2006, the company intends to file a Form 8-K reclassifying its financial statements and related footnotes to reflect these management system changes.

 

The changes to previously reported information are primarily driven by two events:

 

•      The transfer of products and services from the Enterprise Investments Segment to other reportable segments. These changes impact reportable segments and the revenue and cost classifications within the Consolidated Statement of Earnings.

•      Changes in the management system within Global Services. These changes impact the reportable segments, but not the Consolidated Statement of Earnings.

 

Enterprise Investments

 

The company reorganized the management of the products and services currently reported in the Enterprise Investment Segment, resulting in the dissolution of the Enterprise Investment Segment. The primary change is the transfer of the Product Lifecycle Management business to Software. In addition, certain investments and products previously managed as Enterprise Investments will now be included in the Software, Systems and Technology, and Global Services Segments. (See exhibits 2 and 3 for revised segments.)  These changes will also be reflected in the Consolidated Statement of Earnings. (See exhibit 1 for the reclassified Consolidated Revenue and Cost.)

 


 

Global Services

 

The company has made changes in the management system of its Global Services business. These changes include the separation of the Global Services segment into two new reportable segments:  Global Technology Services and Global Business Services. Accordingly, beginning with the first quarter of 2006, the company will report its financial results separately for these segments. (See exhibits 2 and 3 for revised segments.)  We will continue to reflect our services business in one category within the Consolidated Statement of Earnings.

 

The two new services segments consist of the following:

 

Global Technology Services Segment primarily reflects infrastructure services, delivering value through our global scale, standardization, and automation. It includes outsourcing, both Strategic Outsourcing and Business Transformation Outsourcing,  Integrated Technology Services and Maintenance.

 

Global Business Services Segment primarily reflects professional services, delivering business value and innovation to clients through solutions which leverage industry and business process expertise. It will include consulting, systems integration, and application management services.

 

The table below (table 1) reflects the new management system. In addition to the creation of two new reportable segments, there are two primary differences to previously reported information.

 

First, we have aligned the Business Transformation Outsourcing (BTO) business within the Global Technology Services Segment. This brings our outsourcing businesses together, and drives synergies within our offerings and delivery capabilities. US Federal BTO remains with the US Federal business within Global Business Services, to continue to leverage the synergy in our Federal offerings and delivery capabilities.

 

Second, the Application Management Services (AMS) business has been consolidated under our Global Business Services Segment. As a result, the AMS for custom and legacy applications previously reported in Strategic Outsourcing revenue will now be included in Global Business Services.

 

(See exhibit 4 for reclassified revenue information.)

 


 

Table 1

 

New Management System – Global Services

 

Global Technology Services

Strategic Outsourcing

 

Business Transformation Outsourcing

 

Integrated Technology Services

 

Maintenance

 

Global Business Services

Consulting, Systems Integration, and Application Management Services

 

See the following exhibits for the reclassified information resulting from the management system changes:

 

Exhibit 1:

 

Consolidated Revenue and Cost

Exhibit 2:

 

Management System Segment View

Exhibit 3:

 

Management System Segment View without Incremental 2Q 2005 Restructuring Charge

Exhibit 4:

 

Global Services Segments External Revenue

 


Exhibit 1

 

Reclassified Consolidated Revenue and Cost*

2005, 2004 and 2003

(Unaudited)

 

 

 

Reclassified

 

Change

 

Reclassified

 

Change

 

Reclassified

 

Change

 

 

 

Full Year

 

From

 

Full Year

 

From

 

Full Year

 

From

 

(Dollars in millions)

 

2005

 

Reported

 

2004

 

Reported

 

2003

 

Reported

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Services

 

$

47,407

 

$

50

 

$

46,283

 

$

70

 

$

42,714

 

$

79

 

Hardware

 

24,343

 

29

 

31,193

 

39

 

28,315

 

76

 

Software

 

16,830

 

1,077

 

16,141

 

1,047

 

15,201

 

890

 

Global Financing

 

2,407

 

—

 

2,608

 

—

 

2,826

 

—

 

Other

 

147

 

(1,156

)

68

 

(1,156

)

75

 

(1,045

)

Total revenue

 

91,134

 

—

 

96,293

 

—

 

89,131

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Services

 

35,093

 

23

 

35,078

 

40

 

32,351

 

47

 

Hardware

 

15,803

 

32

 

22,008

 

32

 

20,503

 

50

 

Software

 

2,534

 

562

 

2,489

 

556

 

2,426

 

483

 

Global Financing

 

1,091

 

—

 

1,046

 

—

 

1,249

 

—

 

Other

 

81

 

(617

)

103

 

(628

)

55

 

(580

)

Total cost

 

54,602

 

—

 

60,724

 

—

 

56,584

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

36,532

 

—

 

$

35,569

 

—

 

$

32,547

 

—

 

 

* See IBM’s Form 10-K dated February 28, 2006, Form 8-K submitted on January 17, 2006 and the applicable Form 10-Qs for the respective periods, for previously reported amounts.

 

Reclassified Consolidated Revenue and Cost*

2005 By Quarter

(Unaudited)

 

 

 

Reclassified
1Q

 

Change
From

 

Reclassified
2Q

 

Change
From

 

Reclassified
3Q

 

Change
From

 

Reclassified
4Q

 

Change
From

 

(Dollars in millions)

 

2005

 

Reported

 

2005

 

Reported

 

2005

 

Reported

 

2005

 

Reported

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Services

 

$

11,709

 

$

13

 

$

12,001

 

$

16

 

$

11,697

 

$

10

 

$

12,000

 

$

11

 

Hardware

 

6,754

 

5

 

5,562

 

6

 

5,130

 

9

 

6,897

 

9

 

Software

 

3,814

 

263

 

4,056

 

235

 

4,059

 

240

 

4,901

 

339

 

Global Financing

 

580

 

—

 

622

 

—

 

600

 

—

 

605

 

—

 

Other

 

51

 

(281

)

29

 

(257

)

43

 

(259

)

24

 

(359

)

Total revenue

 

22,908

 

—

 

22,270

 

—

 

21,529

 

—

 

24,427

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Services

 

8,866

 

8

 

8,868

 

6

 

8,648

 

5

 

8,711

 

4

 

Hardware

 

4,898

 

7

 

3,676

 

6

 

3,228

 

9

 

4,001

 

10

 

Software

 

618

 

136

 

634

 

127

 

611

 

128

 

671

 

171

 

Global Financing

 

266

 

—

 

295

 

—

 

273

 

—

 

257

 

—

 

Other

 

6

 

(151

)

22

 

(139

)

31

 

(142

)

22

 

(185

)

Total cost

 

14,654

 

—

 

13,495

 

—

 

12,791

 

—

 

13,662

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

8,254

 

—

 

$

8,775

 

—

 

$

8,738

 

—

 

$

10,765

 

—

 

 

* See IBM’s Form 10-K dated February 28, 2006, Form 8-K submitted on January 17, 2006 and the applicable Form 10-Qs for the respective periods, for previously reported amounts.

 


Exhibit 2

 

Reclassified Management System Segment View*

2005, 2004 and 2003

(Unaudited)

 

 

 

Global Services Segments

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

 

Global

 

Systems &

 

 

 

 

 

Personal

 

 

 

 

 

Technology

 

Business

 

Technology

 

 

 

Global

 

Computing

 

Total

 

(Dollars in millions)

 

Services

 

Services

 

Group

 

Software

 

Financing

 

Division

 

Segments

 

FOR THE YEAR ENDED DECEMBER 31:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

31,501

 

$

15,906

 

$

20,981

 

$

16,830

 

$

2,401

 

$

2,876

 

$

90,495

 

Internal revenue

 

2,102

 

1,339

 

1,118

 

1,979

 

1,506

 

33

 

8,077

 

Total revenue

 

$

33,603

 

$

17,245

 

$

22,099

 

$

18,809

 

$

3,907

 

$

2,909

 

$

98,572

 

Pre-tax income

 

$

2,619

 

$

786

 

$

1,883

 

$

4,779

 

$

1,583

 

$

(165

)

$

11,485

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Y-T-Y change

 

3.5

%

-1.9

%

4.9

%

4.8

%

0.3

%

NM

 

-5.0

%

Pre-tax income Y-T-Y change

 

-10.9

%

-28.9

%

-7.9

%

19.1

%

8.6

%

NM

 

-0.6

%

Pre-tax income margin

 

7.8

%

4.6

%

8.5

%

25.4

%

40.5

%

NM

 

11.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2004:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

30,082

 

$

16,201

 

$

19,973

 

$

16,141

 

$

2,607

 

$

10,737

 

$

95,741

 

Internal revenue

 

2,376

 

1,373

 

1,095

 

1,813

 

1,287

 

129

 

8,073

 

Total revenue

 

$

32,458

 

$

17,574

 

$

21,068

 

$

17,954

 

$

3,894

 

$

10,866

 

$

103,814

 

Pre-tax income

 

$

2,940

 

$

1,105

 

$

2,045

 

$

4,014

 

$

1,458

 

$

(10

)

$

11,552

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Y-T-Y change

 

11.3

%

3.0

%

8.6

%

6.7

%

-5.6

%

14.4

%

8.1

%

Pre-tax income Y-T-Y change

 

8.0

%

-2.0

%

27.1

%

26.3

%

26.6

%

97.1

%

22.4

%

Pre-tax income margin

 

9.1

%

6.3

%

9.7

%

22.4

%

37.4

%

-0.1

%

11.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2003:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

26,932

 

$

15,782

 

$

18,505

 

$

15,201

 

$

2,827

 

$

9,351

 

$

88,598

 

Internal revenue

 

2,231

 

1,272

 

890

 

1,619

 

1,300

 

146

 

7,458

 

Total revenue

 

$

29,163

 

$

17,054

 

$

19,395

 

$

16,820

 

$

4,127

 

$

9,497

 

$

96,056

 

Pre-tax income

 

$

2,722

 

$

1,127

 

$

1,609

 

$

3,177

 

$

1,152

 

$

(349

)

$

9,438

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

9.3

%

6.6

%

8.3

%

18.9

%

27.9

%

-3.7

%

9.8

%

 

NM - Not Meaningful

 

* See IBM’s Form 10-K dated February 28, 2006, Form 8-K submitted on January 17, 2006 and the applicable Form 10-Qs for the respective periods, for previously reported amounts.  Internal revenue for the two Global Services segments reflects inter-segment activity between those segments.

 


 

Exhibit 2 (cont.)

 

Reclassified Management System Segment View

2005 By Quarter

(Unaudited)

 

 

 

Global Services Segments

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

 

Global

 

Systems &

 

 

 

 

 

Personal

 

 

 

 

 

Technology

 

Business

 

Technology

 

 

 

Global

 

Computing

 

Total

 

(Dollars in millions)

 

Services

 

Services

 

Group

 

Software

 

Financing

 

Division

 

Segments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QUARTER ENDED
DECEMBER 31, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

8,020

 

$

3,980

 

$

6,849

 

$

4,901

 

$

603

 

—

 

$

24,353

 

Internal revenue

 

467

 

307

 

355

 

556

 

493

 

—

 

2,178

 

Total revenue

 

$

8,487

 

$

4,287

 

$

7,204

 

$

5,457

 

$

1,096

 

—

 

$

26,531

 

Pre-tax income

 

$

1,104

 

$

406

 

$

1,209

 

$

1,935

 

$

491

 

—

 

$

5,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Y-T-Y change

 

-3.4

%

-10.9

%

6.9

%

0.9

%

2.6

%

NM

 

-11.0

%

Pre-tax income Y-T-Y change

 

27.3

%

-1.5

%

16.9

%

20.1

%

18.9

%

NM

 

17.7

%

Pre-tax income margin

 

13.0

%

9.5

%

16.8

%

35.5

%

44.8

%

NM

 

19.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QUARTER ENDED SEPTEMBER 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

7,787

 

$

3,910

 

$

4,988

 

$

4,059

 

$

599

 

—

 

$

21,343

 

Internal revenue

 

526

 

335

 

268

 

486

 

289

 

—

 

1,904

 

Total revenue

 

$

8,313

 

$

4,245

 

$

5,256

 

$

4,545

 

$

888

 

—

 

$

23,247

 

Pre-tax income

 

$

871

 

$

288

 

$

365

 

$

1,130

 

$

363

 

—

 

$

3,017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Y-T-Y change

 

3.1

%

1.1

%

6.4

%

6.1

%

-5.8

%

NM

 

-7.7

%

Pre-tax income Y-T-Y change

 

11.8

%

29.7

%

-0.8

%

30.3

%

6.5

%

NM

 

17.0

%

Pre-tax income margin

 

10.5

%

6.8

%

6.9

%

24.9

%

40.9

%

NM

 

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QUARTER ENDED
JUNE 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

7,872

 

$

4,129

 

$

4,855

 

$

4,056

 

$

620

 

$

557

 

$

22,089

 

Internal revenue

 

535

 

374

 

254

 

474

 

275

 

7

 

1,919

 

Total revenue

 

$

8,407

 

$

4,503

 

$

5,109

 

$

4,530

 

$

895

 

$

564

 

$

24,008

 

Pre-tax income

 

$

(16

)

$

(68

)

$

269

 

$

909

 

$

338

 

$

(149

)

$

1,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Y-T-Y change

 

6.2

%

5.0

%

3.7

%

9.1

%

-4.6

%

NM

 

-3.7

%

Pre-tax income Y-T-Y change

 

NM

 

NM

 

-50.2

%

10.3

%

-0.3

%

NM

 

-51.0

%

Pre-tax income margin

 

-0.2

%

-1.5

%

5.3

%

20.1

%

37.8

%

-26.4

%

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QUARTER ENDED
MARCH 31, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

7,822

 

$

3,887

 

$

4,289

 

$

3,814

 

$

579

 

$

2,319

 

$

22,710

 

Internal revenue

 

574

 

323

 

241

 

463

 

449

 

26

 

2,076

 

Total revenue

 

$

8,396

 

$

4,210

 

$

4,530

 

$

4,277

 

$

1,028

 

$

2,345

 

$

24,786

 

Pre-tax income

 

$

660

 

$

160

 

$

40

 

$

805

 

$

391

 

$

(16

)

$

2,040

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Y-T-Y change

 

9.2

%

-1.6

%

1.5

%

4.1

%

8.8

%

-2.1

%

3.8

%

Pre-tax income Y-T-Y change

 

3.3

%

-19.6

%

-61.2

%

13.1

%

7.1

%

57.9

%

3.0

%

Pre-tax income margin

 

7.9

%

3.8

%

0.9

%

18.8

%

38.0

%

-0.7

%

8.2

%

 

NM-Not Meaningful

 

* See IBM’s Form 10-K dated February 28, 2006, Form 8-K submitted on January 17, 2006 and the applicable Form 10-Qs for the respective periods, for previously reported amounts.  Internal revenue for the two Global Services segments reflects inter-segment activity between those segments.

 


Exhibit 3

 

Reclassified Management System Segment View without Incremental 2Q 2005 Restructuring Charges*

2005 by Quarter

(Unaudited)

 

 

 

Global Services Segments

 

 

 

 

 

 

 

 

 

 

 

 

 

Global
Technology

 

Global
Business

 

Systems &
Technology

 

 

 

Global

 

Personal

 

Total

 

(Dollars in millions)

 

Services

 

Services

 

Group

 

Software

 

Financing

 

Systems

 

Segments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOR THE YEAR ENDED DECEMBER 31, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income

 

$

2,619

 

$

786

 

$

1,883

 

$

4,779

 

$

1,583

 

$

(165

)

$

11,485

 

Incremental charges

 

686

 

451

 

130

 

93

 

13

 

—

 

1,373

 

Pre-tax income w/o incremental charges

 

$

3,305

 

$

1,237

 

$

2,013

 

$

4,872

 

$

1,596

 

$

(165

)

$

12,858

 

Pre-tax income Y-T-Y change w/o incremental charges

 

12.4

%

11.9

%

-1.6

%

21.4

%

9.5

%

NM

 

11.3

%

Pre-tax income margin w/o incremental charges

 

9.8

%

7.2

%

9.1

%

25.9

%

40.8

%

NM

 

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QUARTER ENDED DECEMBER 31, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income

 

$

1,104

 

$

406

 

$

1,209

 

$

1,935

 

$

491

 

$

—

 

$

5,145

 

Incremental charges

 

(10

)

(4

)

—

 

(1

)

—

 

—

 

(15

)

Pre-tax income w/o incremental charges

 

$

1,094

 

$

402

 

$

1,209

 

$

1,934

 

$

491

 

$

—

 

$

5,130

 

Pre-tax income Y-T-Y change w/o incremental charges

 

26.2

%

-2.4

%

16.9

%

20.0

%

18.9

%

NM

 

17.3

%

Pre-tax income margin w/o incremental charges

 

12.9

%

9.4

%

16.8

%

35.4

%

44.8

%

NM

 

19.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QUARTER ENDED SEPTEMBER 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income

 

$

871

 

$

288

 

$

365

 

$

1,130

 

$

363

 

$

—

 

$

3,017

 

Incremental charges

 

(13

)

(4

)

—

 

(2

)

3

 

—

 

(16

)

Pre-tax income w/o incremental charges

 

$

858

 

$

284

 

$

365

 

$

1,128

 

$

366

 

$

—

 

$

3,001

 

Pre-tax income Y-T-Y change w/o incremental charges

 

10.1

%

27.9

%

-0.8

%

30.1

%

7.3

%

NM

 

16.4

%

Pre-tax income margin w/o incremental charges

 

10.3

%

6.7

%

6.9

%

24.8

%

41.2

%

NM

 

12.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QUARTER ENDED JUNE 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income

 

$

(16

)

$

(68

)

$

269

 

$

909

 

$

338

 

$

(149

)

$

1,283

 

Incremental charges

 

709

 

459

 

130

 

96

 

10

 

—

 

1,404

 

Pre-tax Income w/o Incremental charges

 

$

693

 

$

391

 

$

399

 

$

1,005

 

$

348

 

$

(149

)

$

2,687

 

Pre-tax income Y-T-Y change w/o incremental charges

 

5.8

%

43.8

%

-26.1

%

22.0

%

2.7

%

NM

 

2.6

%

Pre-tax income margin w/o incremental charges

 

8.2

%

8.7

%

7.8

%

22.2

%

38.9

%

-26.4

%

11.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QUARTER ENDED MARCH 31, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income

 

$

660

 

$

160

 

$

40

 

$

805

 

$

391

 

$

(16

)

$

2,040

 

Incremental charges

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Pre-tax income w/o incremental charges

 

$

660

 

$

160

 

$

40

 

$

805

 

$

391

 

$

(16

)

$

2,040

 

Pre-tax income Y-T-Y change w/o incremental charges

 

3.3

%

-19.6

%

-61.2

%

13.1

%

7.1

%

57.9

%

3.0

%

Pre-tax income margin w/o incremental charges

 

7.9

%

3.8

%

0.9

%

18.8

%

38.0

%

-0.7

%

8.2

%

 

NM - Not Meaningful

 

*      Incremental restructuring charges are in addition to the company’s normal rebalancing activity. See IBM’s Form 10-K dated February 28, 2006, Form 8-Ks dated January 17, 2006 and the applicable Form 10-Qs for the respective periods, for previously reported amounts and management’s rationale for presenting results without incremental restructuring charges.

 


Exhibit 4

 

Reclassified Global Services Segment External Revenue*

2005 and 2004

(Unaudited)

 

 

 

Full Year

 

Full Year

 

(Dollars in millions)

 

2005

 

2004

 

 

 

 

 

 

 

Global Technology Services Revenue:

 

$

31,501

 

$

30,082

 

Strategic Outsourcing

 

16,522

 

15,957

 

Integrated Technology Services

 

7,538

 

7,441

 

Business Transformation Outsourcing

 

1,573

 

988

 

Maintenance

 

5,868

 

5,696

 

 

 

 

 

 

 

Global Business Services Revenue

 

$

15,906

 

$

16,201

 

 

* See IBM’s Form 10-K dated February 28,2006 and the applicable Form 10-Q for the respective periods, for previously reported amounts.

 

Reclassified Global Services Segment External Revenue*

2005 and 2004 By Quarter

(Unaudited)

 

 

 

2005

 

2004

 

(Dollars in millions)

 

1Q05

 

2Q05

 

3Q05

 

4Q05

 

1Q04

 

2Q04

 

3Q04

 

4Q04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Technology Services Revenue:

 

$

7,822

 

$

7,872

 

$

7,787

 

$

8,020

 

$

7,087

 

$

7,352

 

$

7,465

 

$

8,178

 

Strategic Outsourcing

 

4,239

 

4,105

 

4,049

 

4,129

 

3,793

 

3,890

 

3,982

 

4,292

 

Integrated Technology Services

 

1,801

 

1,899

 

1,854

 

1,984

 

1,699

 

1,811

 

1,832

 

2,099

 

Business Transformation Outsourcing

 

333

 

390

 

418

 

432

 

172

 

248

 

246

 

322

 

Maintenance

 

1,449

 

1,478

 

1,466

 

1,475

 

1,423

 

1,403

 

1,405

 

1,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Business Services Revenue

 

$

3,887

 

$

4,129

 

$

3,910

 

$

3,980

 

$

3,954

 

$

3,939

 

$

3,863

 

$

4,445

 

* See IBM’s Form 10-K dated February 28, 2006, and the applicable Form 10-Q for the respective periods, for previously reported amounts.