IBM 2012 Annual Report Download - page 44

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43
Management Discussion
International Business Machines Corporation and Subsidiary Companies
GAAP Reconciliation
The tables below provide a reconciliation of the company’s income statement results as reported under GAAP to its operating earnings
presentation which is a non-GAAP measure. The company’s calculation of operating earnings, as presented, may differ from similarly titled
measures reported by other companies. Please refer to the “Operating (non-GAAP) Earnings” section on page 18 for the company’s rationale
for presenting operating earnings information.
($ in millions except per share amounts)
For the fourth quarter 2012: GAAP
Acquisition-
Related
Adjustments
Retirement-
Related
Adjustments
Operating
(non-GAAP)
Gross profit $15,167 $ 100 $ 60 $15,327
Gross profit margin 51.8%0.3 pts. 0.2 pts. 52.3%
SG&A $ 5,921 $ (91) $ (29) $ 5,801
RD&E 1,580 0 6 1,586
Other (income) and expense (47) (7) 0 (54)
Total expense and other (income) 7,336 (98) (23) 7,215
Pre-tax income 7,831 198 83 8,112
Pre-tax income margin 26.7%0.7 pts. 0.3 pts. 27.7%
Provision for income taxes* $ 1,998 $ (45) $ 30 $ 1,983
Effective tax rate 25.5%(1.2) pts. 0.1 pts. 24.4%
Net income $ 5,833 $ 243 $ 53 $ 6,129
Net income margin 19.9%0.8 pts. 0.2 pts. 20.9%
Diluted earnings per share $ 5.13 $0.21 $ 0.05 $ 5.39
*
The tax impact on operating (non-GAAP) pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income which employs an annual effective
tax rate method to the results.
($ in millions except per share amounts)
For the fourth quarter 2011: GAAP
Acquisition-
Related
Adjustments
Retirement-
Related
Adjustments
Operating
(non-GAAP)
Gross profit $14,722 $ 81 $ (10)$14,793
Gross profit margin 49.9% 0.3 pts. (0.0) pts. 50.2%
SG&A $ 6,076 $ (82) $ 2 $ 5,996
RD&E 1,555 0 23 1,578
Other (income) and expense (44) (2) 0 (46)
Total expense and other (income) 7,448 (85) 25 7,388
Pre-tax income 7,274 166 (35)7,405
Pre-tax income margin 24.7% 0.6 pts. (0.1) pts. 25.1%
Provision for income taxes* $ 1,784 $ 47 $ (24)$ 1,808
Effective tax rate 24.5% 0.1 pts. (0.2) pts. 24.4%
Net income $ 5,490 $ 119 $ (12)$ 5,597
Net income margin 18.6% 0.4 pts. (0.0) pts. 19.0%
Diluted earnings per share $ 4.62 $0.10 $(0.01)$ 4.71
*
The tax impact on operating (non-GAAP) pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income which employs an annual effective
tax rate method to the results.