IBM RELEASES
FIRST-QUARTER RESULTS
Software and Consulting Led Revenue
Growth; Strong Gross Profit Margin Expansion
ARMONK, N.Y., April 19, 2023 / IBM (NYSE: IBM)
today announced first-quarter 2023 earnings results.
"Our first quarter results demonstrate that clients continue
turning to IBM for our unique combination of an open hybrid cloud
platform, enterprise-focused AI, and business expertise to unlock
productivity and drive efficiency in their operations," said
Arvind Krishna, IBM chairman and
chief executive officer. "This gives us confidence in our current
growth expectations for revenue and free cash flow for the
year."
First-Quarter Highlights
- Revenue
- Revenue of $14.3 billion, up 0.4
percent, up 4.4 percent at constant currency
- Software revenue up 3 percent, up 6 percent at constant
currency
- Consulting revenue up 3 percent, up 8 percent at constant
currency
- Infrastructure revenue down 4 percent, flat at constant
currency
- Cash Flow
- Net cash from operating activities of $3.8 billion, up $0.5
billion; free cash flow of $1.3
billion, up $0.1 billion
FIRST QUARTER 2023
INCOME STATEMENT SUMMARY |
Results include impact
of charges for stranded costs related to portfolio actions* |
|
|
|
|
|
|
|
|
|
|
|
Pre-tax |
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
Gross |
|
|
Pre-tax |
|
Income |
|
|
Net |
|
|
Earnings |
|
|
|
|
Revenue |
|
|
Profit |
|
|
Income* |
|
Margin* |
|
|
Income* |
|
|
Per Share* |
|
GAAP from
Continuing
Operations |
|
$ |
14.3B |
|
$ |
7.5B |
|
$ |
1.1B |
|
7.4 |
% |
$ |
0.9B |
|
$ |
1.02 |
|
Year/Year |
|
|
0.4 |
%** |
|
2 |
% |
|
70 |
% |
3.0 |
Pts |
|
41 |
% |
|
40 |
% |
Operating
(Non-GAAP) |
|
|
|
|
$ |
7.7B |
|
$ |
1.4B |
|
10.2 |
% |
$ |
1.2B |
|
$ |
1.36 |
|
Year/Year |
|
|
|
|
|
2 |
% |
|
(4) |
% |
(0.5) |
Pts |
|
(2) |
% |
|
(3) |
% |
* Results include the impact of
charges for stranded costs related to portfolio
actions. YTY impact of charges for GAAP and Operating
(Non-GAAP)
results: Pre-Tax Income ($0.25B); Pre-Tax Income Margin
(1.8 Pts); Net Income ($0.20B); EPS ($0.22). |
** 4% at constant currency |
"In the quarter, we remained focused on the fundamentals of our
business, increasing productivity and generating operating
leverage," said James Kavanaugh, IBM
senior vice president and chief financial officer. "As a result, we
again expanded our gross profit margin, improved our underlying
profit performance and increased our cash generation. We are
well-positioned to continue investing for growth and returning
value to shareholders through dividends."
Segment Results for First Quarter
- Software — revenues of $5.9
billion, up 2.6 percent, up 5.6 percent at constant
currency:
- Hybrid Platform & Solutions up 2 percent, up 5 percent
at constant currency:
-- Red Hat up 8 percent, up 11 percent at constant
currency
-- Automation down 1 percent, up 2 percent at constant
currency
-- Data & AI up 1 percent, up 3 percent at
constant currency
-- Security down 1 percent, up 2 percent at
constant currency
- Transaction Processing up 3 percent, up 7 percent at
constant currency
- Consulting — revenues of $5.0 billion, up 2.8 percent, up 8.2 percent at
constant currency:
- Business Transformation up 1 percent, up 6 percent at
constant currency
- Technology Consulting down 1 percent, up 4 percent at
constant currency
- Application Operations up 7 percent, up 13 percent at
constant currency
- Infrastructure — revenues of $3.1 billion, down 3.7 percent, up 0.1 percent at
constant currency:
- Hybrid Infrastructure up 1 percent, up 4 percent at constant
currency:
-- z Systems up 7 percent, up 11 percent at
constant currency
-- Distributed Infrastructure down 3 percent,
flat at constant currency
- Infrastructure Support down 9 percent, down 4 percent at
constant currency
- Financing — revenues of $0.2
billion, up 27.3 percent, up 31.0 percent at constant
currency
Cash Flow and Balance Sheet
In the first quarter, the company generated net cash from operating
activities of $3.8 billion, up
$0.5 billion year to year. Net cash
from operating activities excluding IBM Financing receivables was
$1.8 billion. IBM's free cash flow
was $1.3 billion, up $0.1 billion year to year.
IBM ended the first quarter with $17.6
billion of cash and marketable securities, up $8.8 billion from year-end 2022. Debt, including
IBM Financing debt of $10.5 billion,
totaled $58.7 billion, up
$7.8 billion since the end of 2022.
The company returned $1.5 billion to
shareholders in dividends in the first quarter.
Full-Year 2023 Expectations
- Revenue: The company expects constant currency revenue growth
of three percent to five percent. At current foreign exchange
rates, currency is expected to be neutral to revenue growth.
- Free cash flow: The company continues to expect about
$10.5 billion in free cash flow, up
more than $1 billion year to
year.
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
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;
- free cash flow;
- 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-1q23. 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 |
|
|
|
|
March 31, |
|
|
|
|
2023 |
|
2022 |
|
|
REVENUE BY SEGMENT |
|
|
|
|
|
|
|
|
Software |
|
$ |
5,921 |
|
$ |
5,772 |
|
|
Consulting |
|
|
4,962 |
|
|
4,829 |
|
|
Infrastructure |
|
|
3,098 |
|
|
3,219 |
|
|
Financing |
|
|
196 |
|
|
154 |
|
|
Other |
|
|
75 |
|
|
224 |
|
|
TOTAL REVENUE |
|
|
14,252 |
|
|
14,197 |
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
7,509 |
|
|
7,335 |
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT MARGIN |
|
|
|
|
|
|
|
|
Software |
|
|
79.5 |
% |
|
78.8 |
% |
|
Consulting |
|
|
25.2 |
% |
|
24.3 |
% |
|
Infrastructure |
|
|
51.7 |
% |
|
50.5 |
% |
|
Financing |
|
|
43.9 |
% |
|
37.7 |
% |
|
|
|
|
|
|
|
|
|
|
TOTAL GROSS PROFIT MARGIN |
|
|
52.7 |
% |
|
51.7 |
% |
|
|
|
|
|
|
|
|
|
|
EXPENSE AND OTHER INCOME |
|
|
|
|
|
|
|
|
S,G&A |
|
|
4,853 |
|
|
4,597 |
|
|
R,D&E |
|
|
1,655 |
|
|
1,679 |
|
|
Intellectual property and custom development
income |
|
|
(180) |
|
|
(121) |
|
|
Other (income) and expense |
|
|
(245) |
|
|
246 |
|
|
Interest expense |
|
|
367 |
|
|
311 |
|
|
TOTAL EXPENSE AND OTHER INCOME |
|
|
6,451 |
|
|
6,712 |
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS |
|
|
|
|
|
|
|
|
BEFORE INCOME TAXES |
|
|
1,058 |
|
|
623 |
|
|
Pre-tax margin |
|
|
7.4 |
% |
|
4.4 |
% |
|
Provision for/(Benefit from) income taxes |
|
|
124 |
|
|
(39) |
|
|
Effective tax rate |
|
|
11.7 |
% |
|
(6.3) |
% |
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS |
|
$ |
934 |
|
$ |
662 |
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
Income/(loss) from discontinued operations, net of
taxes |
|
|
(7) |
|
|
71 |
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
927 |
|
$ |
733 |
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE OF COMMON STOCK |
|
|
|
|
|
|
|
|
Assuming Dilution |
|
|
|
|
|
|
|
|
Continuing Operations |
|
$ |
1.02 |
|
$ |
0.73 |
|
|
Discontinued Operations |
|
$ |
(0.01) |
|
$ |
0.08 |
|
|
TOTAL |
|
$ |
1.01 |
|
$ |
0.81 |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
Continuing Operations |
|
$ |
1.03 |
|
$ |
0.74 |
|
|
Discontinued Operations |
|
$ |
(0.01) |
|
$ |
0.08 |
|
|
TOTAL |
|
$ |
1.02 |
|
$ |
0.82 |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (M's) |
|
|
|
|
|
|
|
|
Assuming Dilution |
|
|
917.8 |
|
|
909.2 |
|
|
Basic |
|
|
907.5 |
|
|
899.3 |
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited) |
|
|
|
At |
|
At |
|
|
March 31, |
|
December 31, |
(Dollars in Millions) |
|
2023 |
|
2022 |
ASSETS: |
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
9,337 |
|
$ |
7,886 |
Restricted cash |
|
|
198 |
|
|
103 |
Marketable securities |
|
|
8,057 |
|
|
852 |
Notes and accounts receivable - trade,
net |
|
|
5,757 |
|
|
6,541 |
Short-term financing receivables, net |
|
|
6,662 |
|
|
7,790 |
Other accounts receivable, net |
|
|
812 |
|
|
817 |
Inventories |
|
|
1,603 |
|
|
1,552 |
Deferred costs |
|
|
1,055 |
|
|
967 |
Prepaid expenses and other current assets |
|
|
2,501 |
|
|
2,611 |
Total Current Assets |
|
|
35,982 |
|
|
29,118 |
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
5,344 |
|
|
5,334 |
Operating right-of-use assets, net |
|
|
2,789 |
|
|
2,878 |
Long-term financing receivables, net |
|
|
5,065 |
|
|
5,806 |
Prepaid pension assets |
|
|
8,487 |
|
|
8,236 |
Deferred costs |
|
|
846 |
|
|
866 |
Deferred taxes |
|
|
6,419 |
|
|
6,256 |
Goodwill |
|
|
56,193 |
|
|
55,949 |
Intangibles, net |
|
|
10,905 |
|
|
11,184 |
Investments and sundry assets |
|
|
1,607 |
|
|
1,617 |
Total Assets |
|
$ |
133,637 |
|
$ |
127,243 |
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
Taxes |
|
$ |
1,650 |
|
$ |
2,196 |
Short-term debt |
|
|
4,887 |
|
|
4,760 |
Accounts payable |
|
|
3,728 |
|
|
4,051 |
Deferred income |
|
|
13,220 |
|
|
12,032 |
Operating lease liabilities |
|
|
869 |
|
|
874 |
Other liabilities |
|
|
6,638 |
|
|
7,592 |
Total Current Liabilities |
|
|
30,993 |
|
|
31,505 |
|
|
|
|
|
|
|
Long-term debt |
|
|
53,826 |
|
|
46,189 |
Retirement related obligations |
|
|
9,509 |
|
|
9,596 |
Deferred income |
|
|
3,443 |
|
|
3,499 |
Operating lease liabilities |
|
|
2,094 |
|
|
2,190 |
Other liabilities |
|
|
12,099 |
|
|
12,243 |
Total Liabilities |
|
|
111,964 |
|
|
105,222 |
|
|
|
|
|
|
|
EQUITY: |
|
|
|
|
|
|
IBM Stockholders' Equity: |
|
|
|
|
|
|
Common stock |
|
|
58,675 |
|
|
58,343 |
Retained earnings |
|
|
149,253 |
|
|
149,825 |
Treasury stock — at cost |
|
|
(169,544) |
|
|
(169,484) |
Accumulated other comprehensive income/(loss) |
|
|
(16,780) |
|
|
(16,740) |
Total IBM Stockholders' Equity |
|
|
21,604 |
|
|
21,944 |
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
68 |
|
|
77 |
Total Equity |
|
|
21,672 |
|
|
22,021 |
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
$ |
133,637 |
|
$ |
127,243 |
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH FLOW ANALYSIS
(Unaudited) |
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
March 31, |
|
(Dollars in Millions) |
|
2023 |
|
2022* |
|
Net Cash from Operations per GAAP |
|
$ |
3,774 |
|
$ |
3,248 |
|
|
|
|
|
|
|
|
|
Less: change in IBM Financing receivables |
|
|
1,977 |
|
|
1,631 |
|
Capital Expenditures, net |
|
|
(457) |
|
|
(378) |
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
|
1,340 |
|
|
1,240 |
|
|
|
|
|
|
|
|
|
Acquisitions |
|
|
(22) |
|
|
(698) |
|
Divestitures |
|
|
— |
|
|
61 |
|
Dividends |
|
|
(1,497) |
|
|
(1,475) |
|
Non-Financing Debt |
|
|
9,692 |
|
|
4,675 |
|
Other (includes IBM Financing net receivables and
debt) |
|
|
(762) |
|
|
(590) |
|
|
|
|
|
|
|
|
|
Change in Cash, Cash Equivalents, Restricted
Cash and Short-term Marketable Securities |
|
$ |
8,752 |
|
$ |
3,213 |
|
____________________ |
* Includes immaterial cash flows from
discontinued operations. |
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH FLOW
(Unaudited) |
|
|
|
Three Months
Ended |
|
|
March 31, |
(Dollars in Millions) |
|
2023 |
|
2022* |
Net Income from Operations |
|
$ |
927 |
|
$ |
733 |
Depreciation/Amortization of Intangibles |
|
|
1,074 |
|
|
1,257 |
Stock-based Compensation |
|
|
268 |
|
|
234 |
Working Capital / Other |
|
|
(473) |
|
|
(606) |
IBM Financing A/R |
|
|
1,977 |
|
|
1,631 |
Net Cash Provided by Operating
Activities |
|
$ |
3,774 |
|
$ |
3,248 |
|
|
|
|
|
|
|
Capital Expenditures, net of payments &
proceeds |
|
|
(457) |
|
|
(378) |
Divestitures, net of cash transferred |
|
|
— |
|
|
61 |
Acquisitions, net of cash acquired |
|
|
(22) |
|
|
(698) |
Marketable Securities / Other Investments,
net |
|
|
(7,481) |
|
|
(344) |
Net Cash Provided by/(Used in) Investing
Activities |
|
$ |
(7,960) |
|
$ |
(1,358) |
|
|
|
|
|
|
|
Debt, net of payments & proceeds |
|
|
7,304 |
|
|
2,948 |
Dividends |
|
|
(1,497) |
|
|
(1,475) |
Financing - Other |
|
|
(99) |
|
|
(95) |
Net Cash Provided by/(Used in) Financing
Activities |
|
$ |
5,708 |
|
$ |
1,377 |
|
|
|
|
|
|
|
Effect of Exchange Rate changes on Cash |
|
|
24 |
|
|
(5) |
Net Change in Cash, Cash Equivalents and
Restricted Cash |
|
$ |
1,547 |
|
$ |
3,263 |
____________________ |
* Includes immaterial cash flows from
discontinued operations. |
INTERNATIONAL
BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited) |
|
|
|
Three Months Ended
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
Consulting |
|
Infrastructure |
|
Financing |
|
Revenue |
|
$ |
5,921 |
|
$ |
4,962 |
|
$ |
3,098 |
|
$ |
196 |
|
Pre-tax Income from Continuing
Operations* |
|
$ |
1,164 |
|
$ |
382 |
|
$ |
216 |
|
$ |
100 |
|
Pre-tax Margin* |
|
|
19.7 |
% |
|
7.7 |
% |
|
7.0 |
% |
|
51.3 |
% |
Change YTY Revenue |
|
|
2.6 |
% |
|
2.8 |
% |
|
(3.7) |
% |
|
27.3 |
% |
Change YTY Revenue -
constant currency |
|
|
5.6 |
% |
|
8.2 |
% |
|
0.1 |
% |
|
31.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
Consulting |
|
Infrastructure |
|
Financing |
|
Revenue |
|
$ |
5,772 |
|
$ |
4,829 |
|
$ |
3,219 |
|
$ |
154 |
|
Pre-tax Income from Continuing
Operations |
|
$ |
1,134 |
|
$ |
348 |
|
$ |
199 |
|
$ |
84 |
|
Pre-tax Margin |
|
|
19.7 |
% |
|
7.2 |
% |
|
6.2 |
% |
|
54.6 |
% |
____________________ |
|
* The first quarter 2023 pre-tax
charge of approximately $0.26 billion for stranded costs related to
portfolio actions is not included in the measure of segment
pre-tax income, consistent with the company's
management system. |
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; Dollars in millions except per share
amounts) |
|
|
|
Three Months Ended
March 31, 2023 |
|
|
|
Continuing Operations |
|
|
|
|
|
|
Acquisition- |
|
Retirement- |
|
Tax |
|
Kyndryl- |
|
|
|
|
|
|
|
|
|
Related |
|
Related |
|
Reform |
|
Related |
|
Operating |
|
|
|
GAAP |
|
Adjustments (1) |
|
Adjustments (2) |
|
Impacts |
|
Impacts (3) |
|
(Non-GAAP) |
|
Gross Profit |
|
$ |
7,509 |
|
$ |
148 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
7,658 |
|
Gross Profit Margin |
|
|
52.7 |
% |
|
1.0 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
— |
pts. |
|
53.7 |
% |
S,G&A |
|
$ |
4,853 |
|
$ |
(246) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
4,607 |
|
Other (Income) & Expense |
|
|
(245) |
|
|
(2) |
|
|
5 |
|
|
— |
|
|
— |
|
|
(242) |
|
Total Expense & Other (Income) |
|
|
6,451 |
|
|
(247) |
|
|
5 |
|
|
— |
|
|
— |
|
|
6,209 |
|
Pre-tax Income from Continuing
Operations |
|
|
1,058 |
|
|
396 |
|
|
(5) |
|
|
— |
|
|
— |
|
|
1,449 |
|
Pre-tax Income Margin from
Continuing Operations |
|
|
7.4 |
% |
|
2.8 |
pts. |
|
0.0 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
10.2 |
% |
Provision for/(Benefit from) Income
Taxes (4) |
|
$ |
124 |
|
$ |
91 |
|
$ |
(10) |
|
$ |
(5) |
|
$ |
— |
|
$ |
200 |
|
Effective Tax Rate |
|
|
11.7 |
% |
|
3.1 |
pts. |
|
(0.7) |
pts. |
|
(0.3) |
pts. |
|
— |
pts. |
|
13.8 |
% |
Income from Continuing Operations |
|
$ |
934 |
|
$ |
305 |
|
$ |
5 |
|
$ |
5 |
|
$ |
— |
|
$ |
1,249 |
|
Income Margin from Continuing
Operations |
|
|
6.6 |
% |
|
2.1 |
pts. |
|
0.0 |
pts. |
|
0.0 |
pts. |
|
— |
pts. |
|
8.8 |
% |
Diluted Earnings Per Share: Continuing
Operations |
|
$ |
1.02 |
|
$ |
0.33 |
|
$ |
0.01 |
|
$ |
0.01 |
|
$ |
— |
|
$ |
1.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2022 |
|
|
|
Continuing Operations |
|
|
|
|
|
|
Acquisition- |
|
Retirement- |
|
Tax |
|
Kyndryl- |
|
|
|
|
|
|
|
|
|
Related |
|
Related |
|
Reform |
|
Related |
|
Operating |
|
|
|
GAAP |
|
Adjustments (1) |
|
Adjustments (2) |
|
Impacts |
|
Impacts (3) |
|
(Non-GAAP) |
|
Gross Profit |
|
$ |
7,335 |
|
$ |
181 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
7,516 |
|
Gross Profit Margin |
|
|
51.7 |
% |
|
1.3 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
— |
pts. |
|
52.9 |
% |
S,G&A |
|
$ |
4,597 |
|
$ |
(286) |
|
$ |
— |
|
$ |
— |
|
$ |
(0) |
|
$ |
4,311 |
|
Other (Income) & Expense |
|
|
246 |
|
|
(1) |
|
|
(202) |
|
|
— |
|
|
(222) |
|
|
(179) |
|
Total Expense & Other (Income) |
|
|
6,712 |
|
|
(287) |
|
|
(202) |
|
|
— |
|
|
(222) |
|
|
6,001 |
|
Pre-tax Income from Continuing
Operations |
|
|
623 |
|
|
468 |
|
|
202 |
|
|
— |
|
|
222 |
|
|
1,515 |
|
Pre-tax Income Margin from
Continuing Operations |
|
|
4.4 |
% |
|
3.3 |
pts. |
|
1.4 |
pts. |
|
— |
pts. |
|
1.6 |
pts. |
|
10.7 |
% |
Provision for/(Benefit from) Income
Taxes (4) |
|
$ |
(39) |
|
$ |
109 |
|
$ |
58 |
|
$ |
116 |
|
$ |
— |
|
$ |
244 |
|
Effective Tax Rate |
|
|
(6.3) |
% |
|
9.1 |
pts. |
|
4.6 |
pts. |
|
7.7 |
pts. |
|
0.9 |
pts. |
|
16.1 |
% |
Income from Continuing Operations |
|
$ |
662 |
|
$ |
359 |
|
$ |
144 |
|
$ |
(116) |
|
$ |
222 |
|
$ |
1,271 |
|
Income Margin from Continuing
Operations |
|
|
4.7 |
% |
|
2.5 |
pts. |
|
1.0 |
pts. |
|
(0.8) |
pts. |
|
1.6 |
pts. |
|
9.0 |
% |
Diluted Earnings Per Share: Continuing
Operations |
|
$ |
0.73 |
|
$ |
0.39 |
|
$ |
0.16 |
|
$ |
(0.13) |
|
$ |
0.24 |
|
$ |
1.40 |
|
____________________ |
(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 fair
value changes in shares of Kyndryl common stock that were retained
by IBM. |
(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.
|