IBM RELEASES THIRD
QUARTER RESULTS
Revenue Growth in All Key Segments Led
by Global Hybrid Cloud Adoption; Solid Cash Generation
ARMONK, N.Y., Oct. 19, 2022 -- IBM (NYSE: IBM) today announced
third-quarter 2022 earnings results.
Logo - https://mma.prnewswire.com/media/95470/ibm_logo.jpg
"IBM delivered strong revenue growth in the quarter, reflecting
our continued focus on the execution of our strategy. Globally,
clients view technology as an opportunity to enhance their
business, which is evident in the results across our portfolio,"
said Arvind Krishna, IBM chairman
and chief executive officer. "With our year-to-date performance, we
now expect full-year revenue growth above our mid-single digit
model."
Third-Quarter Highlights
- Revenue
- Revenue of $14.1 billion, up 6
percent, up 15 percent at constant currency (about 5 points from
sales to Kyndryl)
- Software revenue up 7 percent, up 14 percent at constant currency
(about 8 points from sales to Kyndryl)
- Consulting revenue up 5 percent, up 16 percent at constant
currency
- Infrastructure revenue up 15 percent, up 23 percent at constant
currency (about 9 points from sales to Kyndryl)
- Hybrid cloud revenue, over the last 12 months, of $22.2 billion, up 15 percent, up 20 percent at
constant currency
- Cash Flow
- On a consolidated basis, year to date, net cash from operating
activities of $6.5 billion; free cash
flow of $4.1 billion
|
|
THIRD QUARTER 2022
INCOME STATEMENT SUMMARY |
|
|
GAAP results
include impact of one-time, non-cash pension settlement
charge* |
|
|
|
|
|
|
|
|
|
|
|
Pre-tax |
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
Gross |
|
|
Pre-tax |
|
Income/(Loss) |
|
|
Net |
|
|
Earnings/(Loss) |
|
|
|
|
Revenue |
|
|
Profit |
|
|
Income/(Loss) |
|
Margin |
|
|
Income/(Loss) |
|
|
Per Share |
|
GAAP from
Continuing
Operations |
|
$ |
14.1B |
|
$ |
7.4B |
|
$ |
(4.5B) |
* |
(31.9) |
%* |
$ |
(3.2B) |
* |
$ |
(3.55) |
* |
Year/Year |
|
|
6 |
%** |
|
5 |
% |
|
NM |
* |
(38.0) |
Pts* |
|
NM |
* |
|
NM |
* |
Operating
(Non-GAAP) |
|
|
|
|
$ |
7.6B |
|
$ |
2.0B |
|
13.9 |
% |
$ |
1.7B |
|
$ |
1.81 |
|
Year/Year |
|
|
|
|
|
4 |
% |
|
23 |
% |
1.8 |
Pts |
|
(1) |
% |
|
(2) |
% |
* GAAP results include the
impact of a one-time, non-cash pension settlement charge of $5.9
billion ($4.4 billion net of tax) related to the transfer of a
portion of the company's U.S. defined benefit pension obligations
and related plan assets to third party insurers, announced on
September 13, 2022. |
** 15% at constant currency |
"Both our revenue growth and operating profit profile for the
first three quarters of the year align to the investment thesis we
outlined last fall," said James
Kavanaugh, IBM senior vice president and chief financial
officer. "Our portfolio mix, business fundamentals, strong
recurring revenue stream and solid cash generation allow us to
invest for continued growth and return value to shareholders
through dividends."
Segment Results for Third Quarter
- Software (includes Hybrid Platform & Solutions,
Transaction Processing)— revenues of $5.8 billion, up 7.5 percent, up 14.2 percent at
constant currency (about 8 points from sales to Kyndryl):
- Hybrid Platform & Solutions up 2 percent, up 8 percent at
constant currency (about 1.5 points from sales to Kyndryl):
-- Red Hat up 12 percent, up 18 percent at constant
currency
-- Automation down 2 percent, up 3 percent at constant
currency
-- Data & AI down 1 percent, up 4 percent at
constant currency
-- Security down 1 percent, up 6 percent at constant
currency
- Transaction Processing up 23 percent, up 33 percent at constant
currency (about 26 points from sales to Kyndryl)
- Consulting (includes Business Transformation, Technology
Consulting and Application Operations)— revenues of
$4.7 billion, up 5.4 percent, up 15.6
percent at constant currency:
- Business Transformation up 5 percent, up 14 percent at constant
currency
- Technology Consulting up 6 percent, up 17 percent at constant
currency
- Application Operations up 6 percent, up 17 percent at constant
currency
- Infrastructure (includes Hybrid Infrastructure,
Infrastructure Support)— revenues of $3.4 billion, up 14.8 percent, up 23.1 percent at
constant currency (about 9 points from sales to Kyndryl):
- Hybrid Infrastructure up 33 percent, up 41 percent at constant
currency (about 11 points from sales to Kyndryl):
-- IBM z Systems up 88 percent, up 98 percent at
constant currency
-- Distributed Infrastructure up 13 percent, up 21
percent at constant currency
- Infrastructure Support down 3 percent, up 5 percent at constant
currency (about 7 points from sales to Kyndryl)
- Financing (includes client and commercial financing)—
revenues of $0.2 billion, down 5.7
percent, down 0.6 percent at constant currency
Cash Flow and Balance Sheet
On a consolidated basis, in the third quarter, the company
generated net cash from operating activities of $1.9 billion or $1.2
billion excluding IBM Financing receivables. IBM's free cash
flow was $0.8 billion. The company
returned $1.5 billion to shareholders
in dividends in the third quarter.
On a consolidated basis, for the first nine months of the year,
the company generated net cash from operating activities of
$6.5 billion or $5.4 billion excluding IBM Financing receivables.
IBM's free cash flow was $4.1
billion, which includes cash impacts from the company's
structural actions initiated at the end of 2020.
IBM ended the third quarter with $9.7
billion of cash on hand (which includes marketable
securities), up $2.2 billion from
year-end 2021. Debt, including IBM Financing debt of $11.2 billion, totaled $50.9 billion, down $0.8
billion since the end of 2021.
Full-Year 2022 Expectations
- Revenue Growth: The company now expects constant currency
revenue growth above its mid-single digit model. The company
continues to expect an additional contribution of approximately 3.5
points from sales to Kyndryl, concentrated in the first three
quarters. At mid-October 2022 foreign
exchange rates, currency is expected to be about a seven-point
headwind.
- Free Cash Flow: The company continues to expect 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-3q22. 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 |
|
|
|
Nine Months
Ended |
|
|
|
|
September 30, |
|
|
|
September 30, |
|
|
|
|
2022* |
|
2021** |
|
|
|
2022* |
|
2021** |
|
|
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software |
|
$ |
5,811 |
|
$ |
5,406 |
|
|
|
$ |
17,749 |
|
$ |
16,339 |
|
|
Consulting |
|
|
4,700 |
|
|
4,457 |
|
|
|
|
14,337 |
|
|
13,098 |
|
|
Infrastructure |
|
|
3,352 |
|
|
2,921 |
|
|
|
|
10,805 |
|
|
9,774 |
|
|
Financing |
|
|
174 |
|
|
184 |
|
|
|
|
474 |
|
|
601 |
|
|
Other |
|
|
70 |
|
|
282 |
|
|
|
|
475 |
|
|
844 |
|
|
TOTAL REVENUE |
|
|
14,107 |
|
|
13,251 |
|
|
|
|
43,840 |
|
|
40,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
7,430 |
|
|
7,106 |
|
|
|
|
23,055 |
|
|
21,985 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT MARGIN |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software |
|
|
79.0 |
% |
|
78.6 |
% |
|
|
|
79.0 |
% |
|
78.7 |
% |
|
Consulting |
|
|
26.0 |
% |
|
29.5 |
% |
|
|
|
24.8 |
% |
|
28.3 |
% |
|
Infrastructure |
|
|
50.8 |
% |
|
52.8 |
% |
|
|
|
51.9 |
% |
|
55.6 |
% |
|
Financing |
|
|
32.8 |
% |
|
28.7 |
% |
|
|
|
35.1 |
% |
|
31.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GROSS PROFIT MARGIN |
|
|
52.7 |
% |
|
53.6 |
% |
|
|
|
52.6 |
% |
|
54.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE AND OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S,G&A |
|
|
4,391 |
|
|
4,306 |
|
|
|
|
13,843 |
|
|
13,842 |
|
|
R,D&E |
|
|
1,611 |
|
|
1,606 |
|
|
|
|
4,963 |
|
|
4,863 |
|
|
Intellectual property and custom development
income |
|
|
(121) |
|
|
(153) |
|
|
|
|
(418) |
|
|
(431) |
|
|
Other (income) and expense |
|
|
5,755 |
|
|
244 |
|
|
|
|
5,921 |
|
|
891 |
|
|
Interest expense |
|
|
295 |
|
|
290 |
|
|
|
|
903 |
|
|
852 |
|
|
TOTAL EXPENSE AND OTHER INCOME |
|
|
11,931 |
|
|
6,293 |
|
|
|
|
25,212 |
|
|
20,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME/(LOSS) FROM CONTINUING
OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BEFORE INCOME TAXES |
|
|
(4,501) |
|
|
813 |
|
|
|
|
(2,156) |
|
|
1,968 |
|
|
Pre-tax margin |
|
|
(31.9) |
% |
|
6.1 |
% |
|
|
|
(4.9) |
% |
|
4.8 |
% |
|
Provision for/(Benefit from) income taxes |
|
|
(1,287) |
|
|
(224) |
|
|
|
|
(1,070) |
|
|
(282) |
|
|
Effective tax rate |
|
|
28.6 |
% |
|
(27.6) |
% |
|
|
|
49.6 |
% |
|
(14.4) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME/(LOSS) FROM CONTINUING
OPERATIONS |
|
$ |
(3,214) |
|
$ |
1,037 |
|
|
|
$ |
(1,087) |
|
$ |
2,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of
taxes |
|
|
18 |
|
|
93 |
|
|
|
|
16 |
|
|
1,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME/(LOSS) |
|
$ |
(3,196) |
|
$ |
1,130 |
|
|
|
$ |
(1,071) |
|
$ |
3,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS/(LOSS) PER SHARE OF COMMON
STOCK |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming Dilution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations |
|
$ |
(3.55) |
|
$ |
1.14 |
|
|
|
$ |
(1.21) |
|
$ |
2.49 |
|
|
Discontinued Operations |
|
$ |
0.02 |
|
$ |
0.10 |
|
|
|
$ |
0.02 |
|
$ |
1.28 |
|
|
TOTAL |
|
$ |
(3.54) |
|
$ |
1.25 |
|
|
|
$ |
(1.19) |
|
$ |
3.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations |
|
$ |
(3.55) |
|
$ |
1.16 |
|
|
|
$ |
(1.21) |
|
$ |
2.51 |
|
|
Discontinued Operations |
|
$ |
0.02 |
|
$ |
0.10 |
|
|
|
$ |
0.02 |
|
$ |
1.30 |
|
|
TOTAL |
|
$ |
(3.54) |
|
$ |
1.26 |
|
|
|
$ |
(1.19) |
|
$ |
3.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (M's) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming Dilution |
|
|
904.1 |
|
|
906.0 |
|
|
|
|
901.6 |
|
|
904.0 |
|
|
Basic |
|
|
904.1 |
|
|
897.1 |
|
|
|
|
901.6 |
|
|
895.3 |
|
|
_________________________ |
* Includes a one-time,
non-cash pension settlement charge of $5.9 billion ($4.4 billion
net of tax). |
** Recast to conform with 2022
presentation. |
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited) |
|
|
|
At |
|
At |
|
|
September 30, |
|
December 31, |
(Dollars in Millions) |
|
2022 |
|
2021 |
ASSETS: |
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,816 |
|
$ |
6,650 |
Restricted cash |
|
|
159 |
|
|
307 |
Marketable securities |
|
|
1,753 |
|
|
600 |
Notes and accounts receivable - trade,
net |
|
|
5,526 |
|
|
6,754 |
Short-term financing receivables, net |
|
|
6,676 |
|
|
8,014 |
Other accounts receivable, net |
|
|
902 |
|
|
1,002 |
Inventories |
|
|
1,794 |
|
|
1,649 |
Deferred costs |
|
|
921 |
|
|
1,097 |
Prepaid expenses and other current assets |
|
|
3,452 |
|
|
3,466 |
Total Current Assets |
|
|
28,999 |
|
|
29,539 |
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
5,150 |
|
|
5,694 |
Operating right-of-use assets, net |
|
|
2,740 |
|
|
3,222 |
Long-term financing receivables, net |
|
|
4,781 |
|
|
5,425 |
Prepaid pension assets |
|
|
9,695 |
|
|
9,850 |
Deferred costs |
|
|
818 |
|
|
924 |
Deferred taxes |
|
|
6,868 |
|
|
7,370 |
Goodwill |
|
|
54,218 |
|
|
55,643 |
Intangibles, net |
|
|
10,967 |
|
|
12,511 |
Investments and sundry assets |
|
|
1,614 |
|
|
1,823 |
Total Assets |
|
$ |
125,850 |
|
$ |
132,001 |
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
Taxes |
|
$ |
1,667 |
|
$ |
2,289 |
Short-term debt |
|
|
5,937 |
|
|
6,787 |
Accounts payable |
|
|
3,806 |
|
|
3,955 |
Deferred income |
|
|
11,139 |
|
|
12,518 |
Operating lease liabilities |
|
|
844 |
|
|
974 |
Other liabilities |
|
|
7,072 |
|
|
7,097 |
Total Current Liabilities |
|
|
30,466 |
|
|
33,619 |
|
|
|
|
|
|
|
Long-term debt |
|
|
44,942 |
|
|
44,917 |
Retirement related obligations |
|
|
11,760 |
|
|
14,435 |
Deferred income |
|
|
3,018 |
|
|
3,577 |
Operating lease liabilities |
|
|
2,103 |
|
|
2,462 |
Other liabilities |
|
|
13,413 |
|
|
13,996 |
Total Liabilities |
|
|
105,703 |
|
|
113,005 |
|
|
|
|
|
|
|
EQUITY: |
|
|
|
|
|
|
IBM Stockholders' Equity: |
|
|
|
|
|
|
Common stock |
|
|
58,117 |
|
|
57,319 |
Retained earnings |
|
|
148,611 |
|
|
154,209 |
Treasury stock — at cost |
|
|
(169,514) |
|
|
(169,392) |
Accumulated other comprehensive income/(loss) |
|
|
(17,138) |
|
|
(23,234) |
Total IBM Stockholders' Equity |
|
|
20,076 |
|
|
18,901 |
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
71 |
|
|
95 |
Total Equity |
|
|
20,147 |
|
|
18,996 |
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
$ |
125,850 |
|
$ |
132,001 |
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH FLOW ANALYSIS
(Unaudited) |
|
|
|
|
|
|
|
Trailing
Twelve |
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
Months
Ended |
|
|
September 30, |
|
September 30, |
|
September 30, |
(Dollars in Millions) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
2022 |
Consolidated Net Cash from Operations per
GAAP |
|
$ |
1,901 |
|
$ |
2,713 |
|
$ |
6,470 |
|
$ |
10,252 |
|
$ |
9,014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: change in IBM Financing receivables |
|
|
704 |
|
|
1,472 |
|
|
1,071 |
|
|
5,235 |
|
|
(257) |
Capital Expenditures, net |
|
|
(445) |
|
|
(638) |
|
|
(1,317) |
|
|
(1,855) |
|
|
(1,843) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Free Cash Flow |
|
|
752 |
|
|
603 |
|
|
4,082 |
|
|
3,162 |
|
|
7,428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions |
|
|
(62) |
|
|
(152) |
|
|
(1,020) |
|
|
(3,018) |
|
|
(1,295) |
Divestitures |
|
|
3 |
|
|
51 |
|
|
1,271 |
|
|
26 |
|
|
1,359 |
Dividends |
|
|
(1,491) |
|
|
(1,471) |
|
|
(4,454) |
|
|
(4,395) |
|
|
(5,927) |
Non-Financing Debt |
|
|
2,946 |
|
|
1,187 |
|
|
4,686 |
|
|
(1,143) |
|
|
4,638 |
Other (includes IBM Financing net receivables and
debt) |
|
|
(198) |
|
|
22 |
|
|
(2,395) |
|
|
(500) |
|
|
(4,881) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Cash, Cash Equivalents, Restricted
Cash and Short-term
Marketable Securities* |
|
$ |
1,950 |
|
$ |
241 |
|
$ |
2,171 |
|
$ |
(5,868) |
|
$ |
1,322 |
_________________________ |
* Cash flows are presented on a
consolidated basis. |
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH FLOW
(Unaudited) |
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
September 30, |
|
September 30, |
(Dollars in Millions) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net Income/(Loss) from Operations |
|
$ |
(3,196) |
|
$ |
1,130 |
|
$ |
(1,071) |
|
$ |
3,410 |
Pension Settlement Charge |
|
|
5,894 |
|
|
- |
|
|
5,894 |
|
|
- |
Depreciation/Amortization of Intangibles |
|
|
1,163 |
|
|
1,684 |
|
|
3,665 |
|
|
5,036 |
Stock-based Compensation |
|
|
251 |
|
|
262 |
|
|
739 |
|
|
719 |
Working Capital / Other |
|
|
(2,914) |
|
|
(1,834) |
|
|
(3,827) |
|
|
(4,147) |
IBM Financing A/R |
|
|
704 |
|
|
1,472 |
|
|
1,071 |
|
|
5,235 |
Net Cash Provided by Operating
Activities |
|
$ |
1,901 |
|
$ |
2,713 |
|
$ |
6,470 |
|
$ |
10,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures, net of payments &
proceeds |
|
|
(445) |
|
|
(638) |
|
|
(1,317) |
|
|
(1,855) |
Divestitures, net of cash transferred |
|
|
3 |
|
|
51 |
|
|
1,271 |
|
|
26 |
Acquisitions, net of cash acquired |
|
|
(62) |
|
|
(152) |
|
|
(1,020) |
|
|
(3,018) |
Marketable Securities / Other Investments,
net |
|
|
(1,193) |
|
|
109 |
|
|
(1,818) |
|
|
(453) |
Net Cash Provided by/(Used in) Investing
Activities |
|
$ |
(1,697) |
|
$ |
(629) |
|
$ |
(2,883) |
|
$ |
(5,300) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, net of payments & proceeds |
|
|
2,138 |
|
|
(287) |
|
|
2,572 |
|
|
(6,086) |
Dividends |
|
|
(1,491) |
|
|
(1,471) |
|
|
(4,454) |
|
|
(4,395) |
Financing - Other |
|
|
67 |
|
|
9 |
|
|
(223) |
|
|
(181) |
Net Cash Provided by/(Used in) Financing
Activities |
|
$ |
714 |
|
$ |
(1,748) |
|
$ |
(2,106) |
|
$ |
(10,662) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate changes on Cash |
|
|
(197) |
|
|
(94) |
|
|
(463) |
|
|
(159) |
Net Change in Cash, Cash Equivalents and
Restricted Cash* |
|
$ |
721 |
|
$ |
241 |
|
$ |
1,018 |
|
$ |
(5,868) |
_________________________ |
* Cash flows are presented on a
consolidated basis. |
INTERNATIONAL
BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited) |
|
|
|
Three Months Ended
September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
Consulting |
|
Infrastructure |
|
Financing |
|
Revenue |
|
$ |
5,811 |
|
$ |
4,700 |
|
$ |
3,352 |
|
$ |
174 |
|
Pre-tax Income/(Loss) from Continuing
Operations |
|
$ |
1,306 |
|
$ |
462 |
|
$ |
280 |
|
$ |
79 |
|
Pre-tax Margin |
|
|
22.5 |
% |
|
9.8 |
% |
|
8.3 |
% |
|
45.4 |
% |
Change YTY Revenue |
|
|
7.5 |
% |
|
5.4 |
% |
|
14.8 |
% |
|
(5.7) |
% |
Change YTY Revenue -
constant currency |
|
|
14.2 |
% |
|
15.6 |
% |
|
23.1 |
% |
|
(0.6) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2021* |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
Consulting |
|
Infrastructure |
|
Financing |
|
Revenue |
|
$ |
5,406 |
|
$ |
4,457 |
|
$ |
2,921 |
|
$ |
184 |
|
Pre-tax Income/(Loss) from Continuing
Operations |
|
$ |
990 |
|
$ |
466 |
|
$ |
209 |
|
$ |
132 |
|
Pre-tax Margin |
|
|
18.3 |
% |
|
10.5 |
% |
|
7.1 |
% |
|
71.7 |
% |
_________________________ |
* Recast to conform with 2022
presentation. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
Consulting |
|
Infrastructure |
|
Financing |
|
Revenue |
|
$ |
17,749 |
|
$ |
14,337 |
|
$ |
10,805 |
|
$ |
474 |
|
Pre-tax Income/(Loss) from Continuing
Operations |
|
$ |
3,816 |
|
$ |
1,154 |
|
$ |
1,236 |
|
$ |
265 |
|
Pre-tax Margin |
|
|
21.5 |
% |
|
8.0 |
% |
|
11.4 |
% |
|
55.9 |
% |
Change YTY Revenue |
|
|
8.6 |
% |
|
9.5 |
% |
|
10.6 |
% |
|
(21.2) |
% |
Change YTY Revenue -
constant currency |
|
|
13.7 |
% |
|
16.9 |
% |
|
16.3 |
% |
|
(17.9) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2021* |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
Consulting |
|
Infrastructure |
|
Financing |
|
Revenue |
|
$ |
16,339 |
|
$ |
13,098 |
|
$ |
9,774 |
|
$ |
601 |
|
Pre-tax Income/(Loss) from Continuing
Operations |
|
$ |
2,707 |
|
$ |
1,013 |
|
$ |
989 |
|
$ |
362 |
|
Pre-tax Margin |
|
|
16.6 |
% |
|
7.7 |
% |
|
10.1 |
% |
|
60.1 |
% |
_________________________ |
* 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
September 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 |
|
$ |
7,430 |
|
$ |
165 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
7,595 |
|
Gross Profit Margin |
|
|
52.7 |
% |
|
1.2 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
— |
pts. |
|
53.8 |
% |
S,G&A |
|
$ |
4,391 |
|
$ |
(253) |
|
$ |
— |
|
$ |
— |
|
$ |
(0) |
|
$ |
4,138 |
|
Other (Income) & Expense |
|
|
5,755 |
|
|
(1) |
|
|
(6,062) |
|
|
— |
|
|
14 |
|
|
(293) |
|
Total Expense & Other (Income) |
|
|
11,931 |
|
|
(253) |
|
|
(6,062) |
|
|
— |
|
|
14 |
|
|
5,630 |
|
Pre-tax Income/(Loss) from Continuing
Operations |
|
|
(4,501) |
|
|
418 |
|
|
6,062 |
|
|
— |
|
|
(14) |
|
|
1,965 |
|
Pre-tax Income/(Loss) Margin from
Continuing Operations |
|
|
(31.9) |
% |
|
3.0 |
pts. |
|
43.0 |
pts. |
|
— |
pts. |
|
(0.1) |
pts. |
|
13.9 |
% |
Provision for/(Benefit from) Income
Taxes (4) |
|
$ |
(1,287) |
|
$ |
103 |
|
$ |
1,495 |
|
$ |
— |
|
$ |
— |
|
$ |
312 |
|
Effective Tax Rate |
|
|
28.6 |
% |
|
(0.8) |
pts. |
|
(12.1) |
pts. |
|
— |
pts. |
|
0.2 |
pts. |
|
15.9 |
% |
Income/(Loss) from Continuing
Operations |
|
$ |
(3,214) |
|
$ |
315 |
|
$ |
4,566 |
|
$ |
— |
|
$ |
(14) |
|
$ |
1,653 |
|
Income/(Loss) Margin from Continuing
Operations |
|
|
(22.8) |
% |
|
2.2 |
pts. |
|
32.4 |
pts. |
|
— |
pts. |
|
(0.1) |
pts. |
|
11.7 |
% |
Diluted Earnings/(Loss) Per Share:
Continuing Operations ** |
|
$ |
(3.55) |
|
$ |
0.35 |
|
$ |
5.05 |
|
$ |
— |
|
$ |
(0.02) |
|
$ |
1.81 |
|
_________________________ |
* Includes a one-time,
non-cash, pre-tax pension settlement charge of $5.9 billion ($4.4
billion net of tax). |
** Operating (non-GAAP) earnings per
share was calculated using 912.8 million shares, which includes 8.8
million dilutive potential shares under our stock-based
compensation plans and
contingently issuable shares. Due to the GAAP net
loss for the three months ended September 30, 2022, these dilutive
potential shares were excluded from the GAAP loss per share
calculation as the effect would have been antidilutive. The
difference in share count resulted in an additional ($0.02)
reconciling item. |
|
|
|
|
|
|
Three Months Ended
September 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 |
|
$ |
7,106 |
|
$ |
183 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
7,290 |
|
Gross Profit Margin |
|
|
53.6 |
% |
|
1.4 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
— |
pts. |
|
55.0 |
% |
S,G&A |
|
$ |
4,306 |
|
$ |
(288) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
4,018 |
|
Other (Income) & Expense |
|
|
244 |
|
|
(1) |
|
|
(318) |
|
|
— |
|
|
— |
|
|
(74) |
|
Total Expense & Other (Income) |
|
|
6,293 |
|
|
(289) |
|
|
(318) |
|
|
— |
|
|
— |
|
|
5,687 |
|
Pre-tax Income/(Loss) from Continuing
Operations |
|
|
813 |
|
|
472 |
|
|
318 |
|
|
— |
|
|
— |
|
|
1,603 |
|
Pre-tax Income/(Loss) Margin from
Continuing Operations |
|
|
6.1 |
% |
|
3.6 |
pts. |
|
2.4 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
12.1 |
% |
Provision for/(Benefit from) Income
Taxes (4) |
|
$ |
(224) |
|
$ |
102 |
|
$ |
55 |
|
$ |
— |
|
$ |
— |
|
$ |
(67) |
|
Effective Tax Rate |
|
|
(27.6) |
% |
|
14.5 |
pts. |
|
8.9 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
(4.2) |
% |
Income/(Loss) from Continuing
Operations |
|
$ |
1,037 |
|
$ |
370 |
|
$ |
262 |
|
$ |
— |
|
$ |
— |
|
$ |
1,670 |
|
Income/(Loss) Margin from Continuing
Operations |
|
|
7.8 |
% |
|
2.8 |
pts. |
|
2.0 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
12.6 |
% |
Diluted Earnings/(Loss) Per Share:
Continuing Operations |
|
$ |
1.14 |
|
$ |
0.41 |
|
$ |
0.29 |
|
$ |
— |
|
$ |
— |
|
$ |
1.84 |
|
_________________________ |
(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 realized
gain/(loss) and unrealized fair value changes in 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) |
|
|
|
Nine Months Ended
September 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 |
|
$ |
23,055 |
|
$ |
526 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
23,582 |
|
Gross Profit Margin |
|
|
52.6 |
% |
|
1.2 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
— |
pts. |
|
53.8 |
% |
S,G&A |
|
$ |
13,843 |
|
$ |
(818) |
|
$ |
— |
|
$ |
— |
|
$ |
(0) |
|
$ |
13,025 |
|
Other (Income) & Expense |
|
|
5,921 |
|
|
(2) |
|
|
(6,455) |
|
|
— |
|
|
(353) |
|
|
(889) |
|
Total Expense & Other
(Income) |
|
|
25,212 |
|
|
(820) |
|
|
(6,455) |
|
|
— |
|
|
(353) |
|
|
17,584 |
|
Pre-tax Income/(Loss) from
Continuing
Operations |
|
|
(2,156) |
|
|
1,346 |
|
|
6,455 |
|
|
— |
|
|
353 |
|
|
5,998 |
|
Pre-tax Income/(Loss) Margin from
Continuing Operations |
|
|
(4.9) |
% |
|
3.1 |
pts. |
|
14.7 |
pts. |
|
— |
pts. |
|
0.8 |
pts. |
|
13.7 |
% |
Provision for/(Benefit from)
Income
Taxes (4) |
|
$ |
(1,070) |
|
$ |
327 |
|
$ |
1,599 |
|
$ |
112 |
|
$ |
— |
|
$ |
969 |
|
Effective Tax Rate |
|
|
49.6 |
% |
|
(5.7) |
pts. |
|
(26.7) |
pts. |
|
1.9 |
pts. |
|
(2.9) |
pts. |
|
16.1 |
% |
Income/(Loss) from Continuing
Operations |
|
$ |
(1,087) |
|
$ |
1,019 |
|
$ |
4,856 |
|
$ |
(112) |
|
$ |
353 |
|
$ |
5,029 |
|
Income/(Loss) Margin from
Continuing
Operations |
|
|
(2.5) |
% |
|
2.3 |
pts. |
|
11.1 |
pts. |
|
(0.3) |
pts. |
|
0.8 |
pts. |
|
11.5 |
% |
Diluted Earnings/(Loss) Per Share:
Continuing Operations ** |
|
$ |
(1.21) |
|
$ |
1.13 |
|
$ |
5.39 |
|
$ |
(0.12) |
|
$ |
0.39 |
|
$ |
5.52 |
|
_________________________ |
* Includes a one-time,
non-cash, pre-tax pension settlement charge of $5.9 billion ($4.4
billion net of tax). |
** Operating (non-GAAP) earnings per
share was calculated using 911.1 million shares, which includes 9.4
million dilutive potential shares under our stock-based
compensation plans and
contingently issuable shares. Due to the GAAP net
loss for the nine months ended September 30, 2022, these dilutive
potential shares were excluded from the GAAP loss per share
calculation as the effect would have been antidilutive. The
difference in share count resulted in an additional ($0.06)
reconciling item. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 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 |
|
$ |
21,985 |
|
$ |
537 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
22,522 |
|
Gross Profit Margin |
|
|
54.1 |
% |
|
1.3 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
— |
pts. |
|
55.4 |
% |
S,G&A |
|
$ |
13,842 |
|
$ |
(870) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
12,972 |
|
Other (Income) & Expense |
|
|
891 |
|
|
(2) |
|
|
(967) |
|
|
— |
|
|
— |
|
|
(77) |
|
Total Expense & Other
(Income) |
|
|
20,017 |
|
|
(872) |
|
|
(967) |
|
|
— |
|
|
— |
|
|
18,179 |
|
Pre-tax Income/(Loss) from
Continuing
Operations |
|
|
1,968 |
|
|
1,409 |
|
|
967 |
|
|
— |
|
|
— |
|
|
4,343 |
|
Pre-tax Income/(Loss) Margin from
Continuing Operations |
|
|
4.8 |
% |
|
3.5 |
pts. |
|
2.4 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
10.7 |
% |
Provision for/(Benefit from)
Income
Taxes (4) |
|
$ |
(282) |
|
$ |
340 |
|
$ |
141 |
|
$ |
6 |
|
$ |
— |
|
$ |
204 |
|
Effective Tax Rate |
|
|
(14.4) |
% |
|
12.5 |
pts. |
|
6.5 |
pts. |
|
0.1 |
pts. |
|
— |
pts. |
|
4.7 |
% |
Income/(Loss) from Continuing
Operations |
|
$ |
2,250 |
|
$ |
1,069 |
|
$ |
825 |
|
$ |
(6) |
|
$ |
— |
|
$ |
4,139 |
|
Income/(Loss) Margin from
Continuing
Operations |
|
|
5.5 |
% |
|
2.6 |
pts. |
|
2.0 |
pts. |
|
(0.0) |
pts. |
|
— |
pts. |
|
10.2 |
% |
Diluted Earnings/(Loss) Per Share:
Continuing Operations |
|
$ |
2.49 |
|
$ |
1.18 |
|
$ |
0.91 |
|
$ |
(0.01) |
|
$ |
— |
|
$ |
4.58 |
|
_________________________ |
(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 realized
gain/(loss) and unrealized fair value changes in 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|