REG-Intnl Bus. Mach: Half-year Report
19/07/2022 07:15
IBM RELEASES SECOND QUARTER RESULTS
Growth Across Key Segments Led by Hybrid Cloud Adoption; Solid Cash and Profit
Generation
ARMONK, N.Y., July 19, 2022 /PRNewswire/ -- IBM (NYSE: IBM
(http://www.ibm.com/investor)) today announced second-quarter 2022 earnings
results.
"In the quarter we delivered good revenue performance with balanced growth
across our geographies, driven by client demand for our hybrid cloud and AI
offerings. The IBM team executed our strategy well," said Arvind Krishna, IBM
chairman and chief executive officer. "With our first half results, we
continue to expect full-year revenue growth at the high end of our mid-single
digit model."
Second-Quarter Highlights
* Revenue
- Revenue of $15.5 billion, up 9 percent, up 16 percent at constant currency
(about 5 points from sales to Kyndryl)
- Software revenue up 6 percent, up 12 percent at constant currency (about 7
points from sales to Kyndryl)
- Consulting revenue up 10 percent, up 18 percent at constant currency
- Infrastructure revenue up 19 percent, up 25 percent at constant currency
(about 7 points from sales to Kyndryl)
- Hybrid cloud revenue, over the last 12 months, of $21.7 billion, up 16
percent, up 19 percent at constant currency
* Cash Flow
- On a consolidated basis, year to date, net cash from operating activities
of $4.6 billion; free cash flow of $3.3 billion
SECOND QUARTER 2022 INCOME STATEMENT SUMMARY
Pre-tax
Gross Pre-tax Income Net Diluted
Revenue Profit Income Margin Income EPS
GAAP from $ 15.5B $ 8.3B $ 1.7B 11.1 % $ 1.5B $ 1.61
Continuing
Operations
Year/Year 9 %* 6 % 89 % 4.7 Pts 81 % 79 %
Operating $ 8.5B $ 2.5B 16.2 % $ 2.1B $ 2.31
(Non-GAAP)
Year/Year 5 % 48 % 4.2 Pts 45 % 43 %
*16% at constant currency
"We are a faster-growing, focused, disciplined company with sound business
fundamentals," said James Kavanaugh, IBM senior vice president and chief
financial officer. "Our recurring revenue stream and solid cash generation
position us well to continue to invest in R&D, acquire new companies, and
strengthen our talent in every part of the business, while also returning
value to shareholders through our dividend."
Segment Results for Second Quarter
* Software (includes Hybrid Platform & Solutions, Transaction Processing)—
revenues of $6.2 billion, up 6.4 percent, up 11.6 percent at constant currency
(about 7 points from sales to Kyndryl):
- Hybrid Platform & Solutions up 4 percent, up 9 percent at constant currency
(about 1.5 points from sales to Kyndryl):
-- Red Hat up 12 percent, up 17 percent at constant currency
-- Automation up 4 percent, up 8 percent at constant currency
-- Data & AI flat, up 4 percent at constant currency
-- Security flat, up 5 percent at constant currency
- Transaction Processing up 12 percent, up 19 percent at constant currency
(about 22 points from sales to Kyndryl)
- Software segment hybrid cloud revenue up 14 percent, up 18 percent at
constant currency
* Consulting (includes Business Transformation, Technology Consulting and
Application Operations)— revenues of $4.8 billion, up 9.8 percent, up 17.8
percent at constant currency:
- Business Transformation up 9 percent, up 16 percent at constant currency
- Technology Consulting up 14 percent, up 23 percent at constant currency
- Application Operations up 9 percent, up 17 percent at constant currency
- Consulting segment hybrid cloud revenue up 20 percent, up 29 percent at
constant currency
* Infrastructure (includes Hybrid Infrastructure, Infrastructure
Support)— revenues of $4.2 billion, up 19.0 percent, up 25.4 percent at
constant currency (about 7 points from sales to Kyndryl):
- Hybrid Infrastructure up 34 percent, up 41 percent at constant currency
(about 7 points from sales to Kyndryl)
-- IBM z Systems up 69 percent, up 77 percent at constant currency
-- Distributed Infrastructure up 11 percent, up 17 percent at constant
currency
- Infrastructure Support down 2 percent, up 5 percent at constant currency
(about 8 points from sales to Kyndryl)
- Infrastructure segment hybrid cloud revenue up 24 percent, up 30 percent at
constant currency
* Financing (includes client and commercial financing)— revenues of $0.1
billion, down 29.9 percent, down 26.6 percent at constant currency
Cash Flow and Balance Sheet
On a consolidated basis, in the second quarter, the company generated net cash
from operating activities of $1.3 billion or $2.6 billion excluding IBM
Financing receivables. IBM's free cash flow was $2.1 billion. The company
returned $1.5 billion to shareholders in dividends in the second quarter.
On a consolidated basis, for the first six months of the year, the company
generated net cash from operating activities of $4.6 billion or $4.2 billion
excluding IBM Financing receivables. IBM's free cash flow was $3.3 billion,
which includes cash impacts from the company's structural actions initiated at
the end of 2020.
IBM ended the second quarter with $7.8 billion of cash on hand (which includes
marketable securities), up $0.2 billion from year-end 2021. Debt, including
IBM Financing debt of $12.3 billion, totaled $50.3 billion, down $1.4 billion
since the end of 2021.
Full-Year 2022 Expectations
* Revenue growth: The company continues to expect constant currency revenue
growth at the high end of its mid-single digit model. The company also expects
an additional 3.5 point contribution from incremental sales to Kyndryl. At
mid-July 2022 foreign exchange rates, currency is expected to be about a
six-point headwind.
* Free Cash Flow: The company now expects about $10 billion in consolidated
free cash flow.
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
related to climate change and 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; potential
failure of the separation of Kyndryl Holdings, Inc. to qualify for tax-free
treatment; 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
On November 3, 2021, IBM completed the separation of Kyndryl. Unless otherwise
specified, results are presented on a continuing operations basis. All
references to revenue impacts from sales to Kyndryl are incremental sales
post-separation.
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;
* consolidated cash from operating activities excluding IBM Financing
receivables;
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. EDT, today. The Webcast may be accessed via a link
at https://www.ibm.com/investor/events/earnings-2q22. 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 Six Months Ended
June 30, June 30,
2022 2021* 2022 2021*
REVENUE
Software $ 6,166 $ 5,795 $ 11,938 $ 10,933
Consulting 4,809 4,378 9,637 8,641
Infrastructure 4,235 3,560 7,453 6,853
Financing 146 209 300 417
Other 180 277 404 561
TOTAL REVENUE 15,535 14,218 29,732 27,405
GROSS PROFIT 8,290 7,852 15,625 14,879
GROSS PROFIT MARGIN
Software 79.2 % 79.7 % 79.0 % 78.8 %
Consulting 24.2 % 27.6 % 24.3 % 27.7 %
Infrastructure 53.8 % 57.1 % 52.4 % 56.7 %
Financing 35.3 % 29.9 % 36.5 % 32.7 %
TOTAL GROSS PROFIT MARGIN 53.4 % 55.2 % 52.6 % 54.3 %
EXPENSE AND OTHER INCOME
S,G&A 4,855 4,849 9,452 9,536
R,D&E 1,673 1,641 3,352 3,257
Intellectual property and custom development income (176) (133) (297) (278)
Other (income) and expense (81) 302 166 647
Interest expense 297 281 607 561
TOTAL EXPENSE AND OTHER INCOME 6,568 6,940 13,280 13,724
INCOME/(LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 1,722 912 2,345 1,155
Pre-tax margin 11.1 % 6.4 % 7.9 % 4.2 %
Provision for/(Benefit from) income taxes 257 101 218 (58)
Effective tax rate 14.9 % 11.1 % 9.3 % (5.0) %
INCOME FROM CONTINUING OPERATIONS $ 1,465 $ 810 $ 2,127 $ 1,213
DISCONTINUED OPERATIONS
Income/(Loss) from discontinued operations, net of taxes (73) 515 (2) 1,067
NET INCOME $ 1,392 $ 1,325 $ 2,125 $ 2,280
EARNINGS/(LOSS) PER SHARE OF COMMON STOCK
Assuming Dilution
Continuing Operations $ 1.61 $ 0.90 $ 2.34 $ 1.34
Discontinued Operations $ (0.08) $ 0.57 $ 0.00 $ 1.18
TOTAL $ 1.53 $ 1.47 $ 2.34 $ 2.52
Basic
Continuing Operations $ 1.62 $ 0.91 $ 2.36 $ 1.36
Discontinued Operations $ (0.08) $ 0.57 $ 0.00 $ 1.19
TOTAL $ 1.54 $ 1.48 $ 2.36 $ 2.55
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M's)
Assuming Dilution 910.7 904.2 910.0 903.0
Basic 901.5 895.0 900.4 894.3
____________________
* Recast to conform with 2022 presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
At At
June 30, December 31,
(Dollars in Millions) 2022 2021
ASSETS:
Current Assets:
Cash and cash equivalents $ 7,034 $ 6,650
Restricted cash 220 307
Marketable securities 524 600
Notes and accounts receivable - trade, net 5,867 6,754
Short-term financing receivables, net 7,233 8,014
Other accounts receivable, net 909 1,002
Inventories 1,684 1,649
Deferred costs 1,010 1,097
Prepaid expenses and other current assets 3,414 3,466
Total Current Assets 27,896 29,539
Property, plant and equipment, net 5,275 5,694
Operating right-of-use assets, net 2,848 3,222
Long-term financing receivables, net 5,316 5,425
Prepaid pension assets 9,930 9,850
Deferred costs 865 924
Deferred taxes 7,073 7,370
Goodwill 55,039 55,643
Intangibles, net 11,571 12,511
Investments and sundry assets 1,689 1,823
Total Assets $ 127,503 $ 132,001
LIABILITIES:
Current Liabilities:
Taxes $ 1,742 $ 2,289
Short-term debt 5,981 6,787
Accounts payable 3,707 3,955
Deferred income 12,522 12,518
Operating lease liabilities 884 974
Other liabilities 7,008 7,097
Total Current Liabilities 31,844 33,619
Long-term debt 44,328 44,917
Retirement related obligations 13,118 14,435
Deferred income 3,069 3,577
Operating lease liabilities 2,182 2,462
Other liabilities 13,486 13,996
Total Liabilities 108,026 113,005
EQUITY:
IBM Stockholders' Equity:
Common stock 57,802 57,319
Retained earnings 153,298 154,209
Treasury stock — at cost (169,522) (169,392)
Accumulated other comprehensive income/(loss) (22,169) (23,234)
Total IBM Stockholders' Equity 19,409 18,901
Noncontrolling interests 67 95
Total Equity 19,476 18,996
Total Liabilities and Equity $ 127,503 $ 132,001
INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW ANALYSIS (Unaudited)
Trailing Twelve
Three Months Ended Six Months Ended Months Ended
June 30, June 30, June 30,
(Dollars in Millions) 2022 2021 2022 2021 2022
Consolidated Net Cash from Operations per GAAP $ 1,321 $ 2,625 $ 4,569 $ 7,539 $ 9,826
Less: change in IBM Financing receivables (1,264) 900 367 3,763 511
Capital Expenditures, net (494) (688) (871) (1,217) (2,035)
Consolidated Free Cash Flow 2,091 1,037 3,331 2,559 7,279
Acquisitions (260) (1,747) (958) (2,866) (1,385)
Divestitures 1,207 (10) 1,268 (25) 1,408
Dividends (1,488) (1,467) (2,963) (2,924) (5,907)
Non-Financing Debt (2,934) (586) 1,740 (2,331) 2,880
Other (includes IBM Financing net receivables and debt) (1,607) (335) (2,197) (522) (4,661)
Change in Cash, Cash Equivalents, Restricted Cash and Short-term $ (2,991) $ (3,108) $ 221 $ (6,110) $ (387)
Marketable Securities*
____________________
* Cash flows are presented on a consolidated basis.
INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in Millions) 2022 2021 2022 2021
Net Income from Operations $ 1,392 $ 1,325 $ 2,125 $ 2,280
Depreciation/Amortization of Intangibles 1,245 1,680 2,501 3,352
Stock-based Compensation 254 243 488 457
Working Capital / Other (307) (1,524) (912) (2,313)
IBM Financing A/R (1,264) 900 367 3,763
Net Cash Provided by Operating Activities $ 1,321 $ 2,625 $ 4,569 $ 7,539
Capital Expenditures, net of payments & proceeds (494) (688) (871) (1,217)
Divestitures, net of cash transferred 1,207 (10) 1,268 (25)
Acquisitions, net of cash acquired (260) (1,747) (958) (2,866)
Marketable Securities / Other Investments, net (281) (227) (625) (562)
Net Cash Provided by/(Used in) Investing Activities $ 172 $ (2,671) $ (1,186) $ (4,671)
Debt, net of payments & proceeds (2,514) (1,500) 434 (5,799)
Dividends (1,488) (1,467) (2,963) (2,924)
Financing - Other (195) (163) (290) (190)
Net Cash Provided by/(Used in) Financing Activities $ (4,197) $ (3,131) $ (2,819) $ (8,914)
Effect of Exchange Rate changes on Cash (262) 69 (267) (65)
Net Change in Cash, Cash Equivalents and Restricted Cash* $ (2,965) $ (3,108) $ 297 $ (6,110)
____________________
* Cash flows are presented on a consolidated basis.
INTERNATIONAL BUSINESS MACHINES CORPORATION SEGMENT DATA (Unaudited)
Three Months Ended June 30, 2022
(Dollars in Millions) Software Consulting Infrastructure Financing
Revenue $ 6,166 $ 4,809 $ 4,235 $ 146
Pre-tax Income/(Loss) from Continuing Operations $ 1,375 $ 343 $ 757 $ 102
Pre-tax Margin 22.3 % 7.1 % 17.9 % 69.7 %
Change YTY Revenue 6.4 % 9.8 % 19.0 % (29.9) %
Change YTY Revenue - constant currency 11.6 % 17.8 % 25.4 % (26.6) %
Three Months Ended June 30, 2021*
(Dollars in Millions) Software Consulting Infrastructure Financing
Revenue $ 5,795 $ 4,378 $ 3,560 $ 209
Pre-tax Income/(Loss) from Continuing Operations $ 1,059 $ 270 $ 489 $ 131
Pre-tax Margin 18.3 % 6.2 % 13.7 % 63.0 %
____________________
* Recast to conform with 2022 presentation.
Six Months Ended June 30, 2022
(Dollars in Millions) Software Consulting Infrastructure Financing
Revenue $ 11,938 $ 9,637 $ 7,453 $ 300
Pre-tax Income/(Loss) from Continuing Operations $ 2,509 $ 691 $ 956 $ 186
Pre-tax Margin 21.0 % 7.2 % 12.8 % 62.0 %
Change YTY Revenue 9.2 % 11.5 % 8.8 % (28.0) %
Change YTY Revenue - constant currency 13.4 % 17.6 % 13.4 % (25.5) %
Six Months Ended June 30, 2021*
(Dollars in Millions) Software Consulting Infrastructure Financing
Revenue $ 10,933 $ 8,641 $ 6,853 $ 417
Pre-tax Income/(Loss) from Continuing Operations $ 1,717 $ 547 $ 780 $ 229
Pre-tax Margin 15.7 % 6.3 % 11.4 % 55.0 %
____________________
* Recast to conform with 2022 presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts)
Three Months Ended June 30, 2022
Continuing Operations
Acquisition- Retirement- Tax Kyndryl-
Related Related Reform Related Operating
GAAP Adjustments ((1)) Adjustments ((2)) Impacts Impacts ((3)) (Non-GAAP)
Gross Profit $ 8,290 $ 180 $ — $ — $ — $ 8,470
Gross Profit Margin 53.4 % 1.2 pts. — pts. — pts. — pts. 54.5 %
S,G&A $ 4,855 $ (279) $ — $ — $ (0) $ 4,576
Other (Income) & Expense (81) (1) (192) — (145) (418)
Total Expense & Other (Income) 6,568 (280) (192) — (145) 5,952
Pre-tax Income from Continuing Operations 1,722 460 192 — 145 2,518
Pre-tax Income Margin from Continuing Operations 11.1 % 3.0 pts. 1.2 pts. — pts. 0.9 pts. 16.2 %
Provision for/(Benefit from) Income Taxes ((4)) $ 257 $ 115 $ 46 $ (4) $ — $ 413
Effective Tax Rate 14.9 % 1.8 pts. 0.7 pts. (0.2) pts. (0.9) pts. 16.4 %
Income from Continuing Operations $ 1,465 $ 345 $ 146 $ 4 $ 145 $ 2,105
Income Margin from Continuing Operations 9.4 % 2.2 pts. 0.9 pts. 0.0 pts. 0.9 pts. 13.5 %
Diluted Earnings/(Loss) Per Share: Continuing Operations $ 1.61 $ 0.38 $ 0.16 $ 0.00 $ 0.16 $ 2.31
Three Months Ended June 30, 2021
Continuing Operations
Acquisition- Retirement- Tax Kyndryl-
Related Related Reform Related Operating
GAAP Adjustments ((1)) Adjustments ((2)) Impacts Impacts ((3)) (Non-GAAP)
Gross Profit $ 7,852 $ 179 $ — $ — $ — $ 8,031
Gross Profit Margin 55.2 % 1.3 pts. — pts. — pts. — pts. 56.5 %
S,G&A $ 4,849 $ (294) $ — $ — $ — $ 4,555
Other (Income) & Expense 302 (1) (317) — — (16)
Total Expense & Other (Income) 6,940 (294) (317) — — 6,329
Pre-tax Income/(Loss) from Continuing Operations 912 474 317 — — 1,702
Pre-tax Income Margin from Continuing Operations 6.4 % 3.3 pts. 2.2 pts. — pts. — pts. 12.0 %
Provision for/(Benefit from) Income Taxes ((4)) $ 101 $ 105 $ 53 $ (14) $ — $ 246
Effective Tax Rate 11.1 % 3.1 pts. 1.0 pts. (0.8) pts. — pts. 14.5 %
Income from Continuing Operations $ 810 $ 368 $ 264 $ 14 $ — $ 1,456
Income Margin from Continuing Operations 5.7 % 2.6 pts. 1.9 pts. 0.1 pts. — pts. 10.2 %
Diluted Earnings/(Loss) Per Share: Continuing Operations $ 0.90 $ 0.41 $ 0.29 $ 0.01 $ — $ 1.61
____________________
(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) Primarily relates to the fair value changes in the retained Kyndryl common stock and the related cash-settled swap.
(4) 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.
INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts)
Six Months Ended June 30, 2022
Continuing Operations
Acquisition- Retirement- Tax Kyndryl-
Related Related Reform Related Operating
GAAP Adjustments ((1)) Adjustments ((2)) Impacts Impacts ((3)) (Non-GAAP)
Gross Profit $ 15,625 $ 361 $ — $ — $ — $ 15,986
Gross Profit Margin 52.6 % 1.2 pts. — pts. — pts. — pts. 53.8 %
S,G&A $ 9,452 $ (565) $ — $ — $ (0) $ 8,887
Other (Income) & Expense 166 (1) (394) — (367) (596)
Total Expense & Other (Income) 13,280 (566) (394) — (367) 11,953
Pre-tax Income from Continuing Operations 2,345 928 394 — 367 4,033
Pre-tax Income Margin from Continuing Operations 7.9 % 3.1 pts. 1.3 pts. — pts. 1.2 pts. 13.6 %
Provision for/(Benefit from) Income Taxes ((4)) $ 218 $ 224 $ 104 $ 112 $ — $ 657
Effective Tax Rate 9.3 % 3.4 pts. 1.7 pts. 2.8 pts. (0.8) pts. 16.3 %
Income from Continuing Operations $ 2,127 $ 704 $ 290 $ (112) $ 367 $ 3,376
Income Margin from Continuing Operations 7.2 % 2.4 pts. 1.0 pts. (0.4) pts. 1.2 pts. 11.4 %
Diluted Earnings/(Loss) Per Share: Continuing Operations $ 2.34 $ 0.77 $ 0.32 $ (0.12) $ 0.40 $ 3.71
Six Months Ended June 30, 2021
Continuing Operations
Acquisition- Retirement- Tax Kyndryl-
Related Related Reform Related Operating
GAAP Adjustments ((1)) Adjustments ((2)) Impacts Impacts ((3)) (Non-GAAP)
Gross Profit $ 14,879 $ 353 $ — $ — $ — $ 15,232
Gross Profit Margin 54.3 % 1.3 pts. — pts. — pts. — pts. 55.6 %
S,G&A $ 9,536 $ (582) $ — $ — $ — $ 8,954
Other (Income) & Expense 647 (1) (649) — — (3)
Total Expense & Other (Income) 13,724 (583) (649) — — 12,491
Pre-tax Income from Continuing Operations 1,155 936 649 — — 2,741
Pre-tax Income Margin from Continuing Operations 4.2 % 3.4 pts. 2.4 pts. — pts. — pts. 10.0 %
Provision for/(Benefit from) Income Taxes ((4)) $ (58) $ 238 $ 86 $ 6 $ — $ 272
Effective Tax Rate (5.0) % 10.4 pts. 4.3 pts. 0.2 pts. — pts. 9.9 %
Income from Continuing Operations $ 1,213 $ 699 $ 563 $ (6) $ — $ 2,469
Income Margin from Continuing Operations 4.4 % 2.5 pts. 2.1 pts. (0.0) pts. — pts. 9.0 %
Diluted Earnings/(Loss) Per Share: Continuing Operations $ 1.34 $ 0.77 $ 0.62 $ (0.01) $ — $ 2.73
____________________
(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) Primarily relates to the fair value changes in the retained Kyndryl common stock and the related cash-settled swap.
(4) 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.
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