ARMONK, N.Y., Jan. 24, 2022 /PRNewswire/ -- IBM (NYSE:
IBM) today announced fourth-quarter 2021 earnings results.
"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): $3.5 billion,
up 102 percent, including 92 points from the impact of
fourth-quarter 2020 charge for structural actions
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FOURTH QUARTER
2021 INCOME STATEMENT SUMMARY
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Pre-tax
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Gross
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Pre-tax
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Income
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Net
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Diluted
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Revenue
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Profit
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Income**
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Margin**
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Income**
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EPS**
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GAAP from
Continuing
Operations
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$
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16.7B
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$
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9.5B
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$
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2.9B
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17.2
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%
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$
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2.5B
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$
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2.72
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Year/Year
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6.5
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%*
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2.8
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%
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183
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%
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10.7
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Pts
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107
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%
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106
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%
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Operating
(Non-GAAP)
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$
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$
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9.7B
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$
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3.5B
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21.2
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%
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$
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3.0B
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$
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3.35
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Year/Year
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2.8
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%
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102
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%
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10.0
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Pts
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80
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%
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78
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%
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* 8.6% at constant
currency
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** Year-to-year
results include impact of $1.5 billion pre-tax charge for
structural actions in fourth quarter of 2020
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"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)
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Three Months
Ended
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Year
Ended
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December 31,
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December 31,
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2021
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2020
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2021
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2020
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REVENUE
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Software
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$
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7,273
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$
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6,719
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$
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24,141
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$
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22,927
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Consulting
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4,746
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|
4,196
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17,844
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|
16,257
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|
Infrastructure
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4,414
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|
|
4,425
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|
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|
14,188
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|
14,533
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Financing
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|
172
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|
244
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|
774
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|
975
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|
Other
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|
89
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|
98
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|
404
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|
488
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TOTAL
REVENUE
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|
16,695
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15,682
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57,350
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55,179
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GROSS
PROFIT
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|
9,500
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|
9,238
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|
|
|
31,486
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|
30,865
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GROSS PROFIT
MARGIN
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|
Software
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|
80.9
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%
|
|
80.5
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%
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|
|
78.8
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%
|
|
78.3
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%
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|
Consulting
|
|
|
27.0
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%
|
|
29.7
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%
|
|
|
|
28.0
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%
|
|
29.3
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%
|
|
Infrastructure
|
|
|
54.8
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%
|
|
60.1
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%
|
|
|
|
55.3
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%
|
|
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
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%
|
|
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
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%
|
|
(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
Marketable Securities**
|
|
$
|
(850)
|
|
$
|
(1,478)
|
|
$
|
(6,718)
|
|
$
|
5,265
|
____________________
|
* 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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SOURCE IBM