<PAGE>
EXHIBIT 99.1
ATTACHMENT I
IBM ANNOUNCES 2000 FOURTH-QUARTER, FULL-YEAR RESULTS
4Q00 EPS increased 32%
ARMONK, N.Y., January 17, 2001 . . . IBM today announced fourth-quarter
2000 diluted earnings per common share of $1.48, a 32 percent increase over
diluted earnings per common share of $1.12 in the fourth quarter of 1999.
Fourth-quarter 2000 net income was $2.7 billion, a 28 percent increase from the
year-earlier period. IBM's fourth-quarter 2000 revenues totaled $25.6 billion,
an increase of 6 percent (12 percent at constant currency) compared with the
fourth quarter of 1999. For full-year 2000, IBM's diluted earnings per common
share grew 19 percent, to $4.44, while net income increased 16 percent to $8.1
billion compared with full-year 1999 (after excluding an after-tax net benefit
from the sale of the IBM Global Network and other 1999 actions).
Louis V. Gerstner, Jr., IBM chairman and chief executive officer, said: "We
had a very solid fourth quarter which, in many respects, reflects momentum that
was building steadily all year. On one level, this momentum is due to strong
execution, and we have increased our market share in many of our most strategic
product areas. More significantly, this momentum is a strong affirmation of the
strategies we put in place three years ago. Those strategies start with three
premises: the marketplace is increasingly driven by services and solutions, not
products; the marketplace is now driven by powerful, scalable servers, not PCs;
and success will require open, heterogeneous platforms.
"The power of these strategies is very apparent in our results. For
example, in services we started the year with external skepticism fueled by
dot-com mania and the boutique services companies. We were not distracted. IBM
Global Services ended the year with a backlog of $85 billion, up from $60
billion at year-end 1999. The marketplace has moved clearly to our strengths:
building serious applications and serious infrastructure. Similar strategic
gains are evident in our server and software businesses, which are now leading
the industry in technical excellence and relevance to an Internet world.
"As we look to 2001," Mr. Gerstner said, "there is uncertainty about the
economic climate in the U.S. However, IBM's broad portfolio should position us
well relative to our competitors. In addition to our strong product portfolio,
our very large businesses in Asia and Europe should counterbalance short-term
disruptions in the U.S. We look forward to another good year for IBM."
In the Americas, fourth-quarter revenues were $10.8 billion, an increase of
3 percent (4 percent at constant currency) from the 1999 period. Revenues from
Europe/Middle East/Africa were $7.4 billion, up 3 percent (18 percent at
constant currency). Asia-Pacific revenues increased 13 percent (20 percent at
constant currency) to
Page 1
<PAGE>
$5.0 billion. OEM revenues increased 13 percent (14 percent at constant
currency) to $2.4 billion compared with the fourth quarter of 1999.
Hardware revenues increased 10 percent (15 percent at constant currency) to
$11.4 billion from the fourth quarter of 1999, with revenue growth across all
server, storage and technology hardware categories. The company began shipping
its new z900 server in mid-December, contributing to a 100 percent increase in
shipments of mainframe computing capacity in the fourth quarter, as measured in
MIPS (millions of instructions per second). Revenues grew strongly for the
pSeries UNIX servers, with particular strength in the mid-range and high-end Web
server models. Revenues for the mid-range iSeries servers also increased, with
growth across all geographic areas. Personal computer revenues grew
significantly and the unit was profitable in the quarter. Microelectronics
revenues also increased strongly, principally due to continued acceleration in
growth for sophisticated, leading-edge custom chips. Storage revenues increased
for both the advanced Shark product line as well as for hard disk drives.
Revenues from IBM Global Services, including maintenance, grew 5 percent
(12 percent at constant currency) in the fourth quarter to $9.2 billion,
reflecting revenue growth across all services categories. E-business services
revenues grew more than 70 percent year over year. Revenue comparisons for IBM
Global Services were adversely affected by a year-over-year decline in the Y2K
services business and the sale of the IBM Global Network to AT&T in 1999. After
adjusting for these factors, Global Services revenues (excluding maintenance)
increased 10 percent (17 percent at constant currency). IBM signed more than
$12.5 billion in services contracts in the fourth quarter.
Software revenues totaled $3.6 billion, down 1 percent (up 6 percent at
constant currency) over the prior year's final quarter. Revenues continued to
grow strongly in the company's middleware segment, with significant growth in
database and Web-management software. For example, revenues from IBM's premier
Web-management software, WebSphere, nearly tripled year over year. Tivoli
revenues declined in the quarter, reflecting an ongoing transition in this
product area.
IBM Global Financing revenues increased 6 percent (10 percent at constant
currency) in the fourth quarter to $1.0 billion.
Revenues from the Enterprise Investments/Other area, which includes custom
hardware and software products for specialized customer uses, declined 11
percent (3 percent at constant currency) year over year to $425 million.
The company's total gross profit margin was 37.7 percent in the 2000 fourth
quarter compared with 36.7 percent in the 1999 fourth quarter.
Fourth-quarter expenses were $5.9 billion. The company's expense-to-revenue
ratio improved by 1.4 points year over year to 23.0 percent.
IBM's tax rate in the fourth quarter was 29.5 percent compared
Page 2
<PAGE>
with 30.0 percent in the fourth quarter of last year.
IBM spent approximately $1.4 billion on share repurchases in the fourth
quarter. The average number of basic common shares outstanding in the quarter
was 1.75 billion compared with 1.79 billion in the same period of 1999.
Full-year 2000 Results
Net income for the year ended December 31, 2000 was $8.1 billion, or $4.44
per diluted common share, compared with net income of $7.7 billion, or $4.12 per
diluted common share, in 1999 (or net income of $7.0 billion, or $3.72 per
diluted share, in 1999 after excluding the after-tax net benefit from the sale
of the Global Network and other 1999 actions). Revenues in 2000 totaled $88.4
billion, an increase of 1 percent (4 percent at constant currency), versus
revenues of $87.5 billion in 1999.
In the Americas, full-year revenues were $38.6 billion, down 1 percent
(flat at constant currency) from the 1999 period. Revenues from Europe/Middle
East/Africa were $24.3 billion, a decrease of 5 percent (up 6 percent at
constant currency). Asia-Pacific revenues grew 16 percent (15 percent at
constant currency) to $17.7 billion. OEM revenues decreased 1 percent (1 percent
at constant currency) to $7.8 billion.
Hardware revenues in 2000 were $37.8 billion, essentially flat year over
year (up 2 percent at constant currency). Global Services revenues totaled $33.2
billion, an increase of 3 percent (6 percent at constant currency). Software
revenues totaled $12.6 billion, a decrease of 1 percent (up 4 percent at
constant currency). Global Financing revenues totaled $3.4 billion, an increase
of 10 percent (13 percent at constant currency). Revenues from the Enterprise
Investments/Other area declined 17 percent (13 percent at constant currency)
year over year to $1.4 billion.
Common share repurchases totaled approximately $6.7 billion in 2000. The
average number of basic shares outstanding was 1.76 billion in 2000 compared
with 1.81 billion in 1999. There were 1.74 billion basic common shares
outstanding at December 31, 2000.
IBM completed 2000 with $3.7 billion in cash, after major expenditures
which included the share repurchases, capital investments of $5.6 billion and an
8 percent dividend increase.
The company's debt in support of operations, excluding global financing,
decreased $493 million from year-end 1999 to $1.1 billion, resulting in a
debt-to-capitalization ratio of 6 percent at year-end 2000. Global financing
debt grew $715 million from year-end 1999 to a total of $27.5 billion, resulting
in a debt-to-equity ratio of 6.6 to 1.
Effective in the first quarter of 2000, results reflect changes the company
made in the organization of its business segments, including the transfer of the
system-level product businesses from the Technology segment to the Enterprise
Systems segment and the transfer of point-of-sale products from the Enterprise
Investments segment to the Personal Systems segment. Also reflected are changes
Page 3
<PAGE>
the company made in its expense allocation methodology, allocating expense items
previously unallocated and enhancing shared expense allocation. Fourth-quarter
and full-year 1999 results have been reclassified to conform with the 2000
presentation.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein,
statements contained in this release may constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements involve a number of risks, uncertainties and other factors that
could cause actual results to differ materially, as discussed in the company's
filings with the Securities and Exchange Commission.
Financial Results Attached
INTERNATIONAL BUSINESS MACHINES CORPORATION
COMPARATIVE FINANCIAL RESULTS
(Dollars in millions except per share amounts)
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended December 31, Ended December 31,
Percent Percent
2000 1999(a) Change 2000 1999(a) Change
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
REVENUE
Hardware $11,463 $10,450 9.7% $37,777 $37,888 -0.3%
Gross margin 30.4% 26.9% 28.4% 27.2%
Global Services 9,186 8,736 5.2% 33,152 32,172 3.0%
Gross margin 27.0% 27.9% 26.7% 27.6%
Software 3,571 3,606 -1.0% 12,598 12,662 -0.5%
Gross margin 83.4% 83.4% 81.9% 82.3%
Global Financing 971 915 6.2% 3,465 3,137 10.4%
Gross margin 54.9% 48.8% 54.0% 53.9%
Enterprise Investments/
Other 425 475 -10.7% 1,404 1,689 -16.9%
Gross margin 44.9% 38.3% 46.8% 38.5%
TOTAL REVENUE 25,616 24,182 5.9% 88,396 87,548 1.0%
GROSS PROFIT 9,669 8,883 8.9% 32,424 31,929 1.6%
Gross margin 37.7% 36.7% 36.7% 36.4%
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended December 31, Ended December 31,
Percent Percent
2000 1999(a) Change 2000 1999(a) Change
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
EXPENSE
S,G&A 4,340 4,445 -2.4% 15,639 14,729 6.2%
% of revenue 16.9% 18.4% 17.7% 16.8%
R,D&E 1,449 1,416 2.4% 5,151 5,273 -2.3%
% of revenue 5.7% 5.9% 5.8% 6.0%
Other income 125 134 -6.2% 617 557 10.9%
Interest expense 218 171 27.4% 717 727 -1.4%
TOTAL EXPENSE 5,882 5,898 -0.3% 20,890 20,172 3.6%
% of revenue 23.0% 24.4% 23.6% 23.0%
INCOME BEFORE
INCOME TAXES (1) 3,787 2,985 26.9% 11,534 11,757 -1.9%
Pre-tax margin 14.8% 12.3% 13.0% 13.4%
Provision for
income taxes 1,117 896 24.7% 3,441 4,045 -14.9%
Effective tax
rate 29.5% 30.0% 29.8% 34.4%
NET INCOME (1) $2,670 $2,089 27.9% $8,093 $7,712 4.9%
Net margin 10.4% 8.6% 9.2% 8.8%
Preferred stock
dividends 5 5 20 20
NET INCOME
APPLICABLE TO COMMON
STOCKHOLDERS $2,665 $2,084 27.9% $8,073 $7,692 5.0%
====== ====== ====== ======
EARNINGS PER SHARE
OF COMMON STOCK -
ASSUMING DILUTION $1.48 $1.12 32.1% $4.44 $4.12 7.8%
====== ====== ====== ======
EARNINGS PER SHARE
OF COMMON STOCK -
BASIC $1.52 $1.16 31.0% $4.58 $4.25 7.8%
====== ====== ====== ======
AVERAGE NUMBER OF
COMMON SHARES OUT-
STANDING (M's)
DILUTED 1,790.6 1,847.8 1,812.1 1,871.1
BASIC 1,749.2 1,793.0 1,763.0 1,808.5
</TABLE>
Page 5
<PAGE>
(a) Reclassified to conform with 2000 presentation.
(1) Twelve-months 1999 results include a pre-tax benefit of $1.8 billion
(after-tax benefit of $750 million, or $.40 per diluted common share) due to a
gain from the sale of the IBM Global Network, charges for acquired in-process
research and development related to acquisitions, a charge for other actions, as
well as a change in PC depreciable lives.
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Dollars in millions)
<TABLE>
<CAPTION>
FOURTH QUARTER 2000
-----------------------------------------------
Pre-tax
(Dollars in millions) ---------- Revenue --------- Pre-tax Income
External Internal Total Income Margin
-------- -------- ------- ------- -------
At At
December 31, December 31, Percent
2000 1999 Change
----------- ----------- -------
<S> <C> <C> <C>
ASSETS
Cash, cash equivalents,
and marketable securities $3,722 $5,831 -36.2%
Receivables - net, inventories,
and prepaid expenses 38,985 37,324 4.5%
Plant, rental machines,
and other property - net 16,714 17,590 -5.0%
Investments and other assets 28,928 26,750 8.1%
-------- --------
TOTAL ASSETS $88,349 $87,495 1.0%
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $10,205 $14,230 -28.3%
Long-term debt 18,371 14,124 30.1%
-------- --------
Total debt 28,576 28,354 0.8%
Accounts payable, taxes,
and accruals 26,201 25,348 3.4%
Other liabilities 12,948 13,282 -2.5%
-------- --------
TOTAL LIABILITIES 67,725 66,984 1.1%
</TABLE>
Page 6
<PAGE>
<TABLE>
<CAPTION>
At At
December 31, December 31, Percent
2000 1999 Change
----------- ----------- -------
<S> <C> <C> <C>
STOCKHOLDERS' EQUITY 20,624 20,511 0.6%
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $88,349 $87,495 1.0%
======== ========
</TABLE>
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
<TABLE>
<CAPTION>
FOURTH QUARTER 2000
-----------------------------------------------
Pre-tax
(Dollars in millions) ---------- Revenue --------- Pre-tax Income
External Internal Total Income Margin
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
SEGMENTS
Technology $3,193 $839 $4,032 $327 8.1%
% change 15.7% -16.9% 6.9% 80.7%
Personal Systems 4,680 30 4,710 34 0.7%
% change 8.4% 57.9% 8.6% 117.6%
Enterprise Systems 3,792 166 3,958 912 23.0%
% change 20.0% 12.2% 19.6% 132.7%
Global Services 9,186 590 9,776 1,303 13.3%
% change 5.2% -9.4% 4.1% 6.1%
Software 3,571 233 3,804 961 25.3%
% change -1.0% 13.1% -0.2% -0.7%
Global Financing 975 249 1,224 288 23.5%
% change 3.2% 5.5% 3.6% 3.6%
Enterprise Investments 430 0 430 (87) -20.2%
% change -6.1% -6.3% 46.0%
TOTAL SEGMENTS 25,827 2,107 27,934 3,738 13.4%
% change 7.7% -7.2% 6.4% 38.8%
Eliminations / Other (211) (2,107) (2,318) 49
TOTAL IBM $25,616 $0 $25,616 $3,787 14.8%
% change 5.9% 5.9% 26.9%
</TABLE>
Page 7
<PAGE>
<TABLE>
<CAPTION>
FOURTH QUARTER 1999 (a)
-----------------------------------------------
Pre-tax
(Dollars in millions) ---------- Revenue --------- Pre-tax Income
External Internal Total Income Margin
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
SEGMENTS
Technology $2,760 $1,010 $3,770 $181 4.8%
Personal Systems 4,319 19 4,338 (193) -4.4%
Enterprise Systems 3,160 148 3,308 392 11.9%
Global Services 8,736 651 9,387 1,228 13.1%
Software 3,606 206 3,812 968 25.4%
Global Financing 945 236 1,181 278 23.5%
Enterprise Investments 458 1 459 (161) -35.1%
TOTAL SEGMENTS 23,984 2,271 26,255 2,693 10.3%
Eliminations / Other 198 (2,271) (2,073) 292
TOTAL IBM $24,182 $0 $24,182 $2,985 12.3%
</TABLE>
(a) Reclassified to conform with 2000 presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
<TABLE>
<CAPTION>
TWELVE MONTHS 2000
-----------------------------------------------
Pre-tax
(Dollars in millions) ---------- Revenue --------- Pre-tax Income
External Internal Total Income Margin
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
SEGMENTS
Technology $10,221 $3,017 $13,238 $758 5.7%
% change 4.0% -20.1% -2.7% 29.4%
Personal Systems 16,250 85 16,335 (148) -0.9%
% change 0.8% 88.9% 1.1% 58.9%
Enterprise Systems 11,340 624 11,964 2,092 17.5%
% change -1.4% 10.4% -0.9% 14.2%
</TABLE>
Page 8
<PAGE>
<TABLE>
<CAPTION>
TWELVE MONTHS 2000
-----------------------------------------------
Pre-tax
(Dollars in millions) ---------- Revenue --------- Pre-tax Income
External Internal Total Income Margin
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Global Services 33,152 2,439 35,591 4,517 12.7%
% change 3.0% -7.5% 2.2% 1.2%
Software 12,598 828 13,426 2,793 20.8%
% change -0.5% 8.0% -0.0% -9.9%
Global Financing 3,500 944 4,444 1,176 26.5%
% change 8.7% 13.1% 9.6% 12.3%
Enterprise Investments 1,369 3 1,372 (297) -21.6%
% change -17.1% -84.2% -17.8% 57.4%
TOTAL SEGMENTS 88,430 7,940 96,370 10,891 11.3%
% change 1.5% -8.1% 0.6% 9.2%
Eliminations / Other (34) (7,940) (7,974) 643
TOTAL IBM $88,396 $0 $88,396 $11,534 13.0%
% change 1.0% 1.0% -1.9%
</TABLE>
<TABLE>
<CAPTION>
TWELVE MONTHS 1999 (a)
-----------------------------------------------
Pre-tax
(Dollars in millions) ---------- Revenue --------- Pre-tax Income
External Internal Total Income Margin
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
SEGMENTS
Technology $9,832 $3,777 $13,609 $586 4.3%
Personal Systems 16,118 45 16,163 (360) -2.2%
Enterprise Systems 11,503 565 12,068 1,832 15.2%
Global Services 32,172 2,636 34,808 4,464 12.8%
Software 12,662 767 13,429 3,099 23.1%
Global Financing 3,219 835 4,054 1,047 25.8%
Enterprise Investments 1,651 19 1,670 (697) -41.7%
TOTAL SEGMENTS 87,157 8,644 95,801 9,971 10.4%
Eliminations / Other 391 (8,644) (8,253) 1,786 (1)
TOTAL IBM $87,548 $0 $87,548 $11,757 13.4%
</TABLE>
(a) Reclassified to conform with 2000 presentation.
Page 9
<PAGE>
(1) Pre-tax income includes a net benefit of $1.8 billion due to a gain from the
sale of the IBM Global Network, charges for acquired in-process research and
development related to acquisitions, a charge for other actions, as well as a
change in PC depreciable lives.
Page 10
