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: February 5, 2019
(Date of earliest event reported)
INTERNATIONAL BUSINESS MACHINES
CORPORATION
(Exact name of registrant as specified in its charter)
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New York |
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1-2360 |
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13-0871985 |
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(State of Incorporation) |
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(Commission File Number) |
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(IRS employer Identification No.) |
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ARMONK, NEW YORK |
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10504 |
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(Address of principal executive offices) |
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(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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 8.01. Other Events.
The company will begin winding down the portion of its commercial financing operations within its Global Financing segment which provides short-term working capital solutions for OEM information technology suppliers, distributors and resellers. Exhibit 99.1 contains information about this wind down that has been posted on IBM’s Investor Relations website (www.ibm.com/investor/).
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.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibit is being filed as part of this report:
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Exhibit No. |
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Description of Exhibit |
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99.1 |
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IBM Global Financing to Wind Down OEM IT Commercial Financing Operations
5 Feb 2019
Strategic Rationale
IBM Global Financing is a leading worldwide information technology financier, providing client and commercial financing for IBM and Original Equipment Manufacturer (OEM) hardware, software and services.
During 2019, IBM Global Financing will wind down the portion of its commercial financing operations which provides short-term working capital solutions for OEM information technology suppliers, distributors and resellers. This action results in a more focused financing portfolio with lower overall debt levels and refinancing requirements for IBM’s financing business. The wind down is expected to begin in the second quarter of 2019 and conclude by the end of the year.
Delivering a high-value model requires ongoing investment prioritization, considering factors such as market attractiveness, differentiation, and the importance of products and services to IBM’s integrated model. The wind down of OEM IT commercial financing operations is further evidence of IBM’s continued, disciplined approach to both portfolio and financial management. IBM Global Financing will continue to provide differentiated end-to-end financing solutions, including commercial financing in support of IBM partner relationships.
Financial Implications
The OEM commercial financing activity generated about $0.3 billion of revenue in 2018 and accounted for approximately $9 billion of financing receivables on IBM’s balance sheet at the end of the year. With this action, the receivables and associated borrowings will wind down in 2019, as receivables are collected in the normal course of business. T he reduction in these assets will improve the overall credit quality of the receivable portfolio. IBM Global Financing will continue to target a debt-to-equity ratio of 9:1.
The wind down of this activity will reduce IBM’s revenue, with a nominal impact to profit. This action does not change IBM’s earnings per share and free cash flow expectations for 2019 provided during its earnings call on January 22, 2019.