REG-Intnl Bus. Mach: Final Results
25/01/2022 07:05
IBM RELEASES FOURTH QUARTER RESULTS
Software and Consulting Growth Driven by Hybrid Cloud Adoption; Strong Profit
Performance
ARMONK, N.Y., Jan. 24, 2022 /PRNewswire/ -- IBM (NYSE: IBM
(https://c212.net/c/link/?t=0&l=en&o=3421722-1&h=4016882753&u=http%3A%2F%2Fwww.ibm.com%2Finvestor&a=IBM))
today announced fourth-quarter 2021 earnings results.
Logo - https://mma.prnewswire.com/media/95470/ibm_logo.jpg
"We increased revenue in the fourth quarter with hybrid cloud adoption driving
growth in software and consulting," said Arvind Krishna, IBM chairman and
chief executive officer. "Our fourth-quarter results give us confidence in our
ability to deliver our objectives of sustained mid-single digit revenue growth
and strong free cash flow in 2022."
On November 3, 2021, IBM completed the separation of Kyndryl. Unless otherwise
specified, fourth-quarter and full-year results are presented on a continuing
operations basis.
Fourth-Quarter Highlights
* Revenue
- Revenue of $16.7 billion, up 6.5 percent, up 8.6 percent at constant
currency (including about 3.5 points from incremental external sales to
Kyndryl)
- Software revenue up 8 percent, up 10 percent at constant currency
(including about 5 points from incremental external sales to Kyndryl)
- Consulting revenue up 13 percent, up 16 percent at constant currency
- Infrastructure revenue flat, up 2 percent at constant currency (including
about 5 points from incremental external sales to Kyndryl)
- Hybrid cloud revenue:
-- Fourth Quarter: $6.2 billion, up 16 percent, up 18 percent at
constant currency
-- Full Year: $20.2 billion, up 20 percent, up 19 percent at
constant currency
* Pre-tax Income:
- GAAP: $2.9 billion, up 183 percent, including 167 points from the impact of
fourth-quarter 2020 charge for structural actions
- Operating (Non-GAAP): $3.5 billion, up 102 percent, including 92 points
from the impact of fourth-quarter 2020 charge for structural actions
FOURTH QUARTER 2021 INCOME STATEMENT SUMMARY
Pre-tax
Gross Pre-tax Income Net Diluted
Revenue Profit Income** Margin** Income** EPS**
GAAP from $ 16.7B $ 9.5B $ 2.9B 17.2 % $ 2.5B $ 2.72
Continuing
Operations
Year/Year 6.5 %* 2.8 % 183 % 10.7 Pts 107 % 106 %
Operating $ $ 9.7B $ 3.5B 21.2 % $ 3.0B $ 3.35
(Non-GAAP)
Year/Year 2.8 % 102 % 10.0 Pts 80 % 78 %
* 8.6% at constant currency
** Year-to-year results include impact of $1.5 billion pre-tax charge for structural actions in fourth quarter of 2020
"In 2021, we continued to invest for the future by increasing R&D spending,
expanding our ecosystem and acquiring 15 companies to strengthen our hybrid
cloud and AI capabilities," said James Kavanaugh, IBM senior vice president
and chief financial officer. "With the separation of Kyndryl we now have taken
the next step in the evolution of our strategy, creating value through focus
and strengthening our financial profile."
Segment Results for Fourth Quarter
* Software (includes Hybrid Platform & Solutions, Transaction Processing)—
revenues of $7.3 billion, up 8.2 percent, up 10.1 percent at constant currency
(including about 5 points from incremental external sales to Kyndryl):
- Hybrid Platform & Solutions up 7 percent, up 9 percent at constant currency
(including about 1 point from incremental external sales to Kyndryl):
-- Red Hat up 19 percent, up 21 percent at constant currency
-- Automation up 13 percent, up 15 percent at constant currency
-- Data & AI up 1 percent, up 3 percent at constant currency
-- Security down 2 percent, down 1 percent at constant currency
- Transaction Processing up 11 percent, up 14 percent at constant currency
(including about 16 points from incremental external sales to Kyndryl)
- Software segment hybrid cloud revenue up 22 percent, up 24 percent at
constant currency
* Consulting (includes Business Transformation, Technology Consulting and
Application Operations)— revenues of $4.7 billion, up 13.1 percent, up 15.7
percent at constant currency:
- Business Transformation up 18 percent, up 20 percent at constant currency
- Technology Consulting up 14 percent, up 19 percent at constant currency
- Application Operations up 6 percent, up 8 percent at constant currency
- Consulting segment hybrid cloud revenue up 31 percent, up 34 percent at
constant currency
* Infrastructure (includes Hybrid Infrastructure, Infrastructure Support)—
revenues of $4.4 billion, down 0.2 percent, up 1.7 percent at constant
currency (including about 5 points from incremental external sales to
Kyndryl):
- Hybrid Infrastructure flat, up 2 percent at constant currency (including
about 4 points from incremental external sales to Kyndryl)
-- IBM Z down 6 percent, down 4 percent at constant currency
-- Distributed Infrastructure up 5 percent, up 7 percent at
constant currency
- Infrastructure Support down 1 percent, up 1 percent at constant currency
(including about 6 points from incremental external sales to Kyndryl)
- Infrastructure segment hybrid cloud revenue down 12 percent, down 11
percent at constant currency
* Financing (includes client and commercial financing)— revenues of $0.2
billion, down 29.4 percent, down 28.8 percent at constant currency
Cash Flow and Balance Sheet
On a consolidated basis, full-year cash from operating activities was $12.8
billion and free cash flow was $6.5 billion. These consolidated results
include ten months of Kyndryl results, and reflect cash paid in 2021 for
separation charges and fourth-quarter 2020 structural actions.
IBM's post-separation baseline free cash flow for the year was $7.9 billion
excluding Kyndryl charges and pre-separation activity. This view is aligned to
the company's go-forward business. Payments for IBM-related structural actions
and deferred cash taxes paid in 2021 contributed to the year-to-year decline
in the post-separation baseline free cash flow.
IBM ended the year with $7.6 billion of cash on hand (which includes
marketable securities), down $6.7 billion from year-end 2020, reflecting
acquisitions of $3.3 billion and debt reduction payments consistent with the
company's previously-stated intention to deleverage. Debt, including Financing
debt of $13.9 billion, totaled $51.7 billion, down $9.6 billion since the end
of 2020, and down more than $21 billion since closing the Red Hat acquisition.
The company returned $5.9 billion to shareholders in dividends.
Full-Year 2022 Expectations
The company will discuss 2022 expectations during today's quarterly earnings
conference call.
Continuing Operations
With the separation completed on November 3, 2021, Kyndryl's operational
activity has been reclassified to IBM's discontinued operations results in
accordance with U.S. Generally Accepted Accounting Principles (GAAP). As
discussed in previous communications, discontinued operations does not include
historical intercompany transactions between IBM and Kyndryl (e.g., purchases
of IBM hardware and software) which were previously eliminated in
consolidation. It also does not include the spending for shared services
(e.g., finance, marketing, human resources, global sales coverage) that has
already been transferred to Kyndryl. IBM results on a continuing operations
basis after separation reflect the new commercial relationship with Kyndryl
and do not include shared services costs, which have been transferred to
Kyndryl.
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.
Forward-looking statements are based on the company's current assumptions
regarding future business and financial performance. These statements involve
a number of risks, uncertainties and other factors that could cause actual
results to differ materially, including, but not limited to, the following: a
downturn in economic environment and client spending budgets; a failure of the
company's innovation initiatives; damage to the company's reputation; risks
from investing in growth opportunities; failure of the company's intellectual
property portfolio to prevent competitive offerings and the failure of the
company to obtain necessary licenses; the company's ability to successfully
manage acquisitions, alliances and dispositions, including integration
challenges, failure to achieve objectives, the assumption of liabilities, and
higher debt levels; fluctuations in financial results; impact of local legal,
economic, political, health and other conditions; the company's failure to
meet growth and productivity objectives; ineffective internal controls; the
company's use of accounting estimates; impairment of the company's goodwill or
amortizable intangible assets; the company's ability to attract and retain key
employees and its reliance on critical skills; impacts of relationships with
critical suppliers; product quality issues; impacts of business with
government clients; reliance on third party distribution channels and
ecosystems; cybersecurity and data privacy considerations; adverse effects
from environmental matters, tax matters; legal proceedings and investigatory
risks; the company's pension plans; currency fluctuations and customer
financing risks; impact of changes in market liquidity conditions and customer
credit risk on receivables; risk factors related to IBM securities; and other
risks, uncertainties and factors discussed in the company's Form 10-Qs, Form
10-K and in the company's other filings with the U.S. Securities and Exchange
Commission or in materials incorporated therein by reference. Any
forward-looking statement in this release speaks only as of the date on which
it is made. Except as required by law, the company assumes no obligation to
update or revise any forward-looking statements.
Presentation of Information in this Press Release
In an effort to provide investors with additional information regarding the
company's results as determined by generally accepted accounting principles
(GAAP), the company has also disclosed in this press release the following
non-GAAP information, which management believes provides useful information to
investors:
IBM results —
* adjusting for currency (i.e., at constant currency);
* presenting operating (non-GAAP) earnings per share amounts and related
income statement items;
* consolidated free cash flow;
* post-separation baseline free cash flow.
The rationale for management's use of these non-GAAP measures is included in
Exhibit 99.2 in the Form 8–K that includes this press release and is being
submitted today to the SEC.
Conference Call and Webcast
IBM's regular quarterly earnings conference call is scheduled to begin at
5:00 p.m. EST, today. The Webcast may be accessed via a link at
https://www.ibm.com/investor/events/earnings-4q21. Presentation charts will be
available shortly before the Webcast.
Financial Results Below (certain amounts may not add due to use of rounded
numbers; percentages presented are calculated from the underlying
whole-dollar amounts).
Contact: IBM
Sarah Meron, 347–891–1770
sarah.meron@ibm.com
Tim Davidson, 914–844–7847
tfdavids@us.ibm.com
INTERNATIONAL BUSINESS MACHINES CORPORATION COMPARATIVE FINANCIAL RESULTS (Unaudited; Dollars in millions except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
2021 2020 2021 2020
REVENUE
Software $ 7,273 $ 6,719 $ 24,141 $ 22,927
Consulting 4,746 4,196 17,844 16,257
Infrastructure 4,414 4,425 14,188 14,533
Financing 172 244 774 975
Other 89 98 404 488
TOTAL REVENUE 16,695 15,682 57,350 55,179
GROSS PROFIT 9,500 9,238 31,486 30,865
GROSS PROFIT MARGIN
Software 80.9 % 80.5 % 78.8 % 78.3 %
Consulting 27.0 % 29.7 % 28.0 % 29.3 %
Infrastructure 54.8 % 60.1 % 55.3 % 57.5 %
Financing 32.5 % 36.0 % 31.7 % 41.6 %
TOTAL GROSS PROFIT MARGIN 56.9 % 58.9 % 54.9 % 55.9 %
EXPENSE AND OTHER INCOME
S,G&A 4,903 6,256 18,745 20,561
R,D&E 1,625 1,592 6,488 6,262
Intellectual property and custom development income (181) (171) (612) (620)
Other (income) and expense (18) 230 873 802
Interest expense 303 317 1,155 1,288
TOTAL EXPENSE AND OTHER INCOME 6,632 8,224 26,649 28,293
INCOME/(LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 2,869 1,014 4,837 2,572
Pre-tax margin 17.2 % 6.5 % 8.4 % 4.7 %
Provision for/(Benefit from) income taxes 407 (175) 124 (1,360)
Effective tax rate 14.2 % (17.3) % 2.6 % (52.9) %
INCOME FROM CONTINUING OPERATIONS $ 2,462 $ 1,190 $ 4,712 $ 3,932
DISCONTINUED OPERATIONS
Income/(Loss) from discontinued operations, net of taxes (129) 166 1,030 1,658
NET INCOME $ 2,332 $ 1,356 $ 5,743 $ 5,590
EARNINGS/(LOSS) PER SHARE OF COMMON STOCK
Assuming Dilution
Continuing Operations $ 2.72 $ 1.32 $ 5.21 $ 4.38
Discontinued Operations $ (0.14) $ 0.19 $ 1.14 $ 1.85
TOTAL $ 2.57 $ 1.51 $ 6.35 $ 6.23
Basic
Continuing Operations $ 2.74 $ 1.33 $ 5.26 $ 4.42
Discontinued Operations $ (0.14) $ 0.19 $ 1.15 $ 1.86
TOTAL $ 2.60 $ 1.52 $ 6.41 $ 6.28
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M's)
Assuming Dilution 906.6 899.0 904.6 896.6
Basic 898.2 892.6 896.0 890.3
INTERNATIONAL BUSINESS MACHINES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
At At
December 31, December 31,
(Dollars in Millions) 2021 2020
ASSETS:
Current Assets:
Cash and cash equivalents $ 6,650 $ 13,188
Restricted cash 307 463
Marketable securities 600 600
Notes and accounts receivable - trade, net 6,754 5,790
Short-term financing receivables, net 8,014 10,892
Other accounts receivable, net 1,002 695
Inventories 1,649 1,812
Deferred costs 1,097 1,018
Prepaid expenses and other current assets 3,466 2,089
Current assets of discontinued operations — 2,618
Total Current Assets 29,539 39,165
Property, plant and equipment, net 5,694 6,205
Operating right-of-use assets, net 3,222 3,566
Long-term financing receivables, net 5,425 7,086
Prepaid pension assets 9,850 7,557
Deferred costs 924 1,150
Deferred taxes 7,370 8,404
Goodwill 55,643 53,765
Intangibles, net 12,511 13,739
Investments and sundry assets 1,823 2,187
Non-current assets of discontinued operations — 13,147
Total Assets $ 132,001 $ 155,971
LIABILITIES:
Current Liabilities:
Taxes $ 2,289 $ 3,198
Short-term debt 6,787 7,116
Accounts payable 3,955 4,033
Deferred income 12,518 11,980
Operating lease liabilities 974 1,035
Other liabilities 7,097 8,688
Current liabilities of discontinued operations — 3,820
Total Current Liabilities 33,619 39,869
Long-term debt 44,917 54,217
Retirement related obligations 14,435 17,184
Deferred income 3,577 3,758
Operating lease liabilities 2,462 2,720
Other liabilities 13,996 14,180
Non-current liabilities of discontinued operations — 3,317
Total Liabilities 113,005 135,244
EQUITY:
IBM Stockholders' Equity:
Common stock 57,319 56,556
Retained earnings 154,209 162,717
Treasury stock — at cost (169,392) (169,339)
Accumulated other comprehensive income/(loss) (23,234) (29,337)
Total IBM Stockholders' Equity 18,901 20,597
Noncontrolling interests 95 129
Total Equity 18,996 20,727
Total Liabilities and Equity $ 132,001 $ 155,971
INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW ANALYSIS (Unaudited)
Three Months Ended Year Ended
December 31, December 31,
(Dollars in Millions) 2021 2020 2021 2020
Consolidated Net Cash from Operations per GAAP $ 2,543 $ 5,859 $ 12,796 $ 18,197
Less: change in IBM Financing receivables (1,328) (974) 3,907 4,349
Capital Expenditures, net (526) (780) (2,381) (3,042)
Consolidated Free Cash Flow 3,345 6,054 6,508 10,805
Acquisitions (275) (299) (3,293) (336)
Divestitures 88 (7) 114 503
Dividends (1,474) (1,455) (5,869) (5,797)
Non-IBM Financing debt (20) (4,814) (1,191) 221
Other (includes IBM Financing net receivables and debt)* (2,514) (958) (2,987) (130)
Change in Cash, Cash Equivalents, Restricted Cash and Short-term $ (850) $ (1,478) $ (6,718) $ 5,265
Marketable Securities**
____________________
* The three months and year ended December 31, 2021 include distribution from Kyndryl of $0.9 billion.
** Cash flows above are presented on an IBM consolidated basis and therefore include an immaterial amount of cash and cash equivalents presented in current assets of discontinued operations in the IBM Condensed Consolidated Balance Sheet at December 31, 2020.
INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW (Unaudited)
Three Months Ended Year Ended
December 31, December 31,
(Dollars in Millions) 2021 2020 2021 2020
Net Income from Operations $ 2,332 $ 1,356 $ 5,743 $ 5,590
Depreciation/Amortization of Intangibles 1,380 1,699 6,416 6,695
Stock-based Compensation 264 279 982 937
Working Capital / Other (105) 3,499 (4,253) 625
IBM Financing A/R (1,328) (974) 3,907 4,349
Net Cash Provided by Operating Activities $ 2,543 $ 5,859 $ 12,796 $ 18,197
Capital Expenditures, net of payments & proceeds (526) (780) (2,381) (3,042)
Divestitures, net of cash transferred 88 (7) 114 503
Acquisitions, net of cash acquired (275) (299) (3,293) (336)
Marketable Securities / Other Investments, net 38 528 (414) (153)
Net Cash Provided by/(Used in) Investing Activities $ (675) $ (558) $ (5,975) $ (3,028)
Debt, net of payments & proceeds (2,030) (4,781) (8,116) (3,714)
Dividends (1,474) (1,455) (5,869) (5,797)
Financing - Other* 811 (57) 630 (210)
Net Cash Provided by/(Used in) Financing Activities $ (2,692) $ (6,293) $ (13,354) $ (9,721)
Effect of Exchange Rate changes on Cash (26) 113 (185) (87)
Net Change in Cash, Cash Equivalents and Restricted Cash** $ (850) $ (878) $ (6,718) $ 5,361
____________________
* Represents Common Stock Transactions and other financing activities. The three months and year ended December 31, 2021 include distribution from Kyndryl of $0.9 billion.
** Cash flows above are presented on an IBM consolidated basis and therefore include an immaterial amount of cash and cash equivalents presented in current assets of discontinued operations in the IBM Condensed Consolidated Balance Sheet at December 31, 2020.
INTERNATIONAL BUSINESS MACHINES CORPORATION SEGMENT DATA (Unaudited)
Three Months Ended December 31, 2021
(Dollars in Millions) Software Consulting Infrastructure Financing
Revenue $ 7,273 $ 4,746 $ 4,414 $ 172
Pre-tax Income/(Loss) from Continuing Operations 2,109 436 1,036 79
Pre-tax Margin 29.0 % 9.2 % 23.5 % 46.0 %
Change YTY Revenue 8.2 % 13.1 % (0.2) % (29.4) %
Change YTY Revenue - constant currency 10.1 % 15.7 % 1.7 % (28.8) %
Three Months Ended December 31, 2020
(Dollars in Millions) Software Consulting Infrastructure Financing
Revenue $ 6,719 $ 4,196 $ 4,425 $ 244
Pre-tax Income/(Loss) from Continuing Operations 1,151 62 629 110
Pre-tax Margin 17.1 % 1.5 % 14.2 % 45.1 %
Year Ended December 31, 2021
(Dollars in Millions) Software Consulting Infrastructure Financing
Revenue $ 24,141 $ 17,844 $ 14,188 $ 774
Pre-tax Income/(Loss) from Continuing Operations 4,722 1,449 2,025 441
Pre-tax Margin 19.6 % 8.1 % 14.3 % 57.0 %
Change YTY Revenue 5.3 % 9.8 % (2.4) % (20.6) %
Change YTY Revenue - constant currency 4.1 % 8.3 % (3.4) % (21.9) %
Year Ended December 31, 2020
(Dollars in Millions) Software Consulting Infrastructure Financing
Revenue $ 22,927 $ 16,257 $ 14,533 $ 975
Pre-tax Income/(Loss) from Continuing Operations 3,341 1,034 1,654 449
Pre-tax Margin 14.6 % 6.4 % 11.4 % 46.1 %
INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts)
Three Months Ended December 31, 2021
Continuing Operations
Acquisition- Retirement- Tax Kyndryl-
Related Related Reform Related Operating
GAAP Adjustments ((1)) Adjustments ((2)) Impacts Impacts ((4)) (Non-GAAP)
Gross Profit $ 9,500 $ 182 $ — $ — $ — $ 9,682
Gross Profit Margin 56.9 % 1.1 Pts — Pts — Pts — Pts 58.0 %
S,G&A 4,903 (290) — — (8) 4,605
Other (Income) & Expense (18) (1) (315) — 126 (208)
Total Expense & Other (Income) 6,632 (290) (315) — 118 6,145
Pre-tax Income from Continuing Operations 2,869 472 315 — (118) 3,537
Pre-tax Income Margin from Continuing Operations 17.2 % 2.8 Pts 1.9 Pts — Pts (0.7) Pts 21.2 %
Provision for/(Benefit from) Income Taxes ((3)) 407 117 109 (94) (37) 502
Effective Tax Rate 14.2 % 1.4 Pts 1.8 Pts (2.7) Pts (0.6) Pts 14.2 %
Income from Continuing Operations 2,462 355 206 94 (81) 3,035
Income Margin from Continuing Operations 14.7 % 2.1 Pts 1.2 Pts 0.6 Pts (0.5) Pts 18.2 %
Diluted Earnings/(Loss) Per Share: Continuing Operations $ 2.72 $ 0.39 $ 0.23 $ 0.10 $ (0.09) $ 3.35
Three Months Ended December 31, 2020
Continuing Operations
Acquisition- Retirement- Tax Kyndryl-
Related Related Reform Related Operating
GAAP Adjustments ((1)) Adjustments ((2)) Impacts Impacts ((4)) (Non-GAAP)
Gross Profit $ 9,238 $ 176 $ — $ — $ — $ 9,414
Gross Profit Margin 58.9 % 1.1 Pts — Pts — Pts — Pts 60.0 %
S,G&A 6,256 (283) — — — 5,973
Other (Income) & Expense 230 (1) (278) — — (49)
Total Expense & Other (Income) 8,224 (283) (278) — — 7,662
Pre-tax Income/(Loss) from Continuing Operations 1,014 459 278 — — 1,752
Pre-tax Income Margin from Continuing Operations 6.5 % 2.9 Pts 1.8 Pts — Pts — Pts 11.2 %
Provision for/(Benefit from) Income Taxes ((3)) (175) 102 156 (18) — 66
Effective Tax Rate (17.3) % 10.4 Pts 11.7 Pts (1.0) Pts — Pts 3.7 %
Income from Continuing Operations 1,190 357 122 18 — 1,686
Income Margin from Continuing Operations 7.6 % 2.3 Pts 0.8 Pts 0.1 Pts — Pts 10.8 %
Diluted Earnings/(Loss) Per Share: Continuing Operations $ 1.32 $ 0.40 $ 0.14 $ 0.02 $ — $ 1.88
____________________
(1) Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax charges related to acquisition integration and pre-closing charges, such as financing costs.
(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/ settlements and pension insolvency costs and other costs.
(3) Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As Reported pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.
(4) Primarily relates to fair value changes in shares of Kyndryl common stock that were retained by IBM, employee awards, and separation related tax impacts.
INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts)
Year Ended December 31, 2021
Continuing Operations
Acquisition- Retirement- Tax Kyndryl-
Related Related Reform Related Operating
GAAP Adjustments ((1)) Adjustments ((2)) Impacts Impacts ((4)) (Non-GAAP)
Gross Profit $ 31,486 $ 719 $ — $ — $ — $ 32,205
Gross Profit Margin 54.9 % 1.3 Pts — Pts — Pts — Pts 56.2 %
S,G&A 18,745 (1,160) — — (8) 17,577
Other (Income) & Expense 873 (2) (1,282) — 126 (285)
Total Expense & Other (Income) 26,649 (1,162) (1,282) — 118 24,324
Pre-tax Income from Continuing Operations 4,837 1,881 1,282 — (118) 7,881
Pre-tax Income Margin from Continuing Operations 8.4 % 3.3 Pts 2.2 Pts — Pts (0.2) Pts 13.7 %
Provision for/(Benefit from) Income Taxes ((3)) 124 457 251 (89) (37) 706
Effective Tax Rate 2.6 % 5.2 Pts 2.8 Pts (1.1) Pts (0.4) Pts 9.0 %
Income from Continuing Operations 4,712 1,424 1,031 89 (81) 7,174
Income Margin from Continuing Operations 8.2 % 2.5 Pts 1.8 Pts 0.2 Pts (0.1) Pts 12.5 %
Diluted Earnings/(Loss) Per Share: Continuing Operations $ 5.21 $ 1.57 $ 1.14 $ 0.10 $ (0.09) $ 7.93
Year Ended December 31, 2020
Continuing Operations
Acquisition- Retirement- Tax Kyndryl-
Related Related Reform Related Operating
GAAP Adjustments ((1)) Adjustments ((2)) Impacts Impacts ((4)) (Non-GAAP)
Gross Profit $ 30,865 $ 726 $ — $ — $ — $ 31,591
Gross Profit Margin 55.9 % 1.3 Pts — Pts — Pts — Pts 57.3 %
S,G&A 20,561 (1,117) — — — 19,445
Other (Income) & Expense 802 (2) (1,073) — — (273)
Total Expense & Other (Income) 28,293 (1,119) (1,073) — — 26,101
Pre-tax Income from Continuing Operations 2,572 1,845 1,073 — — 5,490
Pre-tax Income Margin from Continuing Operations 4.7 % 3.3 Pts 1.9 Pts — Pts — Pts 9.9 %
Provision for/(Benefit from) Income Taxes ((3)) (1,360) 411 208 110 — (630)
Effective Tax Rate (52.9) % 25.3 Pts 14.1 Pts 2.0 Pts — Pts (11.5) %
Income from Continuing Operations 3,932 1,434 864 (110) — 6,120
Income Margin from Continuing Operations 7.1 % 2.6 Pts 1.6 Pts (0.2) Pts — Pts 11.1 %
Diluted Earnings/(Loss) Per Share: Continuing Operations $ 4.38 $ 1.60 $ 0.96 $ (0.12) $ — $ 6.82
____________________
(1) Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax charges related to acquisition integration and pre-closing charges, such as financing costs.
(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/ settlements and pension insolvency costs and other costs.
(3) Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As Reported pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.
(4) Primarily relates to fair value changes in shares of Kyndryl common stock that were retained by IBM, employee awards, and separation related tax impacts.
INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in billions)
Year Ended
IBM post-separation baseline Free Cash Flow Reconciliation December 31, 2021
Consolidated Net Cash from Operations per GAAP $ 12.8
Less: change in Financing receivables 3.9
Capital Expenditures, net (2.4)
Consolidated Free Cash Flow 6.5
Less: Kyndryl charges and pre-separation activity* (1.4) *
IBM post-separation baseline Free Cash Flow 7.9
____________________
* Includes Kyndryl portion of cash impacts incurred in the period related to structural actions initiated in 4Q20 and separation related costs. Kyndryl's estimated free cash flow was deemed immaterial.
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AnnouncementREG-International Business Machines Corp: Doc re: Form 8-K
AnnouncementREG-International Business Machines Corp: Doc re Form 8-K
AnnouncementREG-International Business Machines Corp: 1st Quarter Results
AnnouncementREG-International Business Machines Corp: Doc re: Form DEF A14A
Announcement