TIDMIBM
IBM RELEASES SECOND-QUARTER RESULTS
Solid Software and Consulting Revenue Growth; Strong Gross Profit Margin
Expansion
ARMONK, N.Y.,July 20, 2023-- IBM (NYSE:IBM (http://www.ibm.com/investor)) today
announced second-quarter 2023 earnings results.
"Organizations are using our hybrid cloud and AI technology, and our consulting
capabilities, to transform their operations," said Arvind Krishna, IBM chairman
and chief executive officer. "We continue to respond to the needs of our clients
who seek trusted, enterprise AI solutions, and we are particularly excited about
the response to the recently launched watsonx AI platform. Finally, we remain
confident in our revenue and free cash flow growth expectations for the full
year."
Second-Quarter Highlights
· Revenue
- Revenue of $15.5 billion, down 0.4 percent, up 0.4 percent at constant
currency
- Software revenue up 7 percent, up 8 percent at constant currency
- Consulting revenue up 4 percent, up 6 percent at constant currency
- Infrastructure revenue down 15 percent, down 14 percent at constant currency
· Profit Margin
- Gross Profit Margin: GAAP: 54.9 percent, up 160 basis points; Operating (Non
-GAAP): 55.9 percent, up 140 basis points
- Pre-Tax Income Margin: GAAP: 12.9 percent, up 180 basis points; Operating (Non
-GAAP): 15.5 percent, down 70 basis points
· Cash Flow
- Year to date net cash from operating activities of $6.4 billion, up $1.8
billion; free cash flow of $3.4 billion, up $0.1 billion
SECONDQUARTER
2023 INCOME
STATEMENT
SUMMARY
Results
include YTY
impact from
gains on the
2Q22 sale of
healthcare
software
assets*
Revenue Gross Gross Pre-tax Pre-tax
Net Diluted
Profit Profit Income* Income
Income* Earnings
Margin Margin*
Per
Share*
GAAP from $ 15.5 B $ 8.5 54.9 % $ 2.0 B 12.9 %
$ 1.6 B $ 1.72
B
Continuing
Operations
Year/Year (0.4) %** 3 % 1.6 Pts 16 % 1.8 Pts
8 % 7 %
Operating $ 8.7 55.9 % $ 2.4 B 15.5 %
$ 2.0 B $ 2.18
B
(Non-GAAP)
Year/Year 2 % 1.4 Pts (5) % (0.7) Pts
(5) % (6) %
* Results
include
the YTY
impact
from the
gains on
the 2Q22
sale of
healthcare
software
assets.
GAAP: Pre
-Tax
Income (17
pts);Pre
-Tax
Income
Margin(1.4
pts);Net
Income (15
pts);EPS
(15 pts).
Operating
(Non
-GAAP):
Pre-Tax
Income (9
pts); Pre
-Tax
Income
Margin
(1.4
pts); Net
Income (9
pts); EPS
(9 pts).
** 0.4% at
constant
currency
"In the quarter, revenue performance was led by our growth vectors of software
and consulting, and we continued to expand our gross profit margin, driven by
our improving portfolio mix and productivity initiatives," said James Kavanaugh,
IBM senior vice president and chief financial officer. "This year we have
leveraged our strong cash position to invest for growth, announcing seven
acquisitions to bolster our hybrid cloud and AI strategy, while continuing to
return value to shareholders through dividends."
Segment Results for Second Quarter
· Software -revenues of $6.6 billion, up 7.2 percent, up 7.5 percent at
constant currency:
- Hybrid Platform & Solutions up 6 percent, up 7 percent at constant currency:
-- Red Hat up 11 percent
-- Automation up 1 percent, up 2 percent at constant currency
-- Data & AI up 10 percent, up 11 percent at constant currency
-- Security down 2 percent, down 1 percent at constant currency
- Transaction Processing up 9 percent, up 10 percent at constant currency
· Consulting -revenues of $5.0 billion, up 4.3 percent, up 5.9 percent at
constant currency:
- Business Transformation up 3 percent, up 5 percent at constant currency
- Technology Consulting up 4 percent, up 5 percent at constant currency
- Application Operations up 6 percent, up 8 percent at constant currency
· Infrastructure -revenues of $3.6 billion, down 14.6 percent, down 13.8
percent at constant currency:
- Hybrid Infrastructure down 18 percent:
-- IBM z Systems down 30 percent
-- Distributed Infrastructure down 6 percent
- Infrastructure Support down 8 percent, down 6 percent at constant currency
· Financing -revenues of $0.2 billion, up 26.2 percent, up 27.1 percent at
constant currency
Cash Flow and Balance Sheet
In the second quarter, the company generated net cash from operating activities
of $2.6 billion, up $1.3 billion year to year. Net cash from operating
activities excluding IBM Financing receivables was $2.6 billion. IBM's free cash
flow was $2.1 billion, flat year to year. The company returned $1.5 billion to
shareholders in dividends in the second quarter.
For the first six months of the year, the company generated net cash from
operating activities of $6.4 billion, up $1.8 billion year to year. Net cash
from operating activities excluding IBM Financing receivables was $4.4 billion.
IBM's free cash flow was $3.4 billion, up $0.1 billion year to year.
IBM ended the second quarter with $16.3 billion of cash and marketable
securities, up $7.5 billion from year-end 2022. Debt, including IBM Financing
debt of $10.6 billion, totaled $57.5 billion, up $6.5 billion since the end of
2022.
Full-Year 2023 Expectations
· Revenue: The company continues to expect 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
athttps://www.ibm.com/investor/events/earnings-2q23.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 Six
Months Months
Ended Ended
June June
30, 30,
2023 2022 2023 2022
REVENUE BY
SEGMENT
Software $ 6,608 $ 6,166 $ 12,52 $ 11,93
9 8
Consulting 5,013 4,809 9,975 9,637
Infrastructure 3,618 4,235 6,716 7,453
Financing 185 146 380 300
Other 51 180 126 404
TOTAL REVENUE 15,475 15,535 29,727 29,732
GROSS PROFIT 8,501 8,290 16,010 15,625
GROSS PROFIT
MARGIN
Software 79.3 % 79.2 % 79.4 % 79.0 %
Consulting 25.9 % 24.2 % 25.6 % 24.3 %
Infrastructure 55.8 % 53.8 % 53.9 % 52.4 %
Financing 49.2 % 35.3 % 46.5 % 36.5 %
TOTAL GROSS 54.9 % 53.4 % 53.9 % 52.6 %
PROFIT MARGIN
EXPENSE AND
OTHER INCOME
S,G&A 4,900 4,855 9,754 9,452
R,D&E 1,687 1,673 3,342 3,352
Intellectual (248) (176) (428) (297)
property and
custom
development
income
Other (income) (261) (81) (506) 166
and expense
Interest 423 297 790 607
expense
TOTAL EXPENSE 6,501 6,568 12,952 13,280
AND OTHER
INCOME
INCOME FROM 2,000 1,722 3,058 2,345
CONTINUING
OPERATIONS
BEFORE INCOME
TAXES
Pre-tax margin 12.9 % 11.1 % 10.3 % 7.9 %
Provision 419 257 543 218
for/(Benefit
from)
income taxes
Effective tax 21.0 % 14.9 % 17.8 % 9.3 %
rate
INCOME FROM $ 1,581 $ 1,465 $ 2,515 $ 2,127
CONTINUING
OPERATIONS
DISCONTINUED
OPERATIONS
Income/(loss) 2 (73) (4) (2)
from
discontinued
operations,
net
of taxes
NET INCOME $ 1,583 $ 1,392 $ 2,511 $ 2,125
EARNINGS/(LOSS)
PER SHARE OF
COMMON STOCK
Assuming
Dilution
Continuing $ 1.72 $ 1.61 $ 2.74 $ 2.34
Operations
Discontinued $ 0.00 $ (0.08 $ 0.00 $ 0.00
Operations )
TOTAL $ 1.72 $ 1.53 $ 2.73 $ 2.34
Basic
Continuing $ 1.74 $ 1.62 $ 2.77 $ 2.36
Operations
Discontinued $ 0.00 $ (0.08 $ 0.00 $ 0.00
Operations )
TOTAL $ 1.74 $ 1.54 $ 2.76 $ 2.36
WEIGHTED
-AVERAGE
NUMBER OF
COMMON
SHARES
OUTSTANDING
(M's)
Assuming 919.5 910.7 918.6 910.0
Dilution
Basic 909.9 901.5 908.7 900.4
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in Millions) At At
June 30, December 31,
2023 2022
ASSETS:
Current Assets:
Cash and cash equivalents $ 9,394 $ 7,886
Restricted cash 31 103
Marketable securities 6,904 852
Notes and accounts receivable - trade, net 5,673 6,541
Short-term financing receivables, net 6,429 7,790
Other accounts receivable, net 838 817
Inventories 1,501 1,552
Deferred costs 957 967
Prepaid expenses and other current assets 2,730 2,611
Total Current Assets 34,458 29,118
Property, plant and equipment, net 5,443 5,334
Operating right-of-use assets, net 2,653 2,878
Long-term financing receivables, net 5,221 5,806
Prepaid pension assets 8,735 8,236
Deferred costs 897 866
Deferred taxes 6,340 6,256
Goodwill 56,385 55,949
Intangibles, net 10,496 11,184
Investments and sundry assets 1,585 1,617
Total Assets $ 132,213 $ 127,243
LIABILITIES:
Current Liabilities:
Taxes $ 1,606 $ 2,196
Short-term debt 6,785 4,760
Accounts payable 3,732 4,051
Deferred income 12,712 12,032
Operating lease liabilities 842 874
Other liabilities 6,836 7,592
Total Current Liabilities 32,513 31,505
Long-term debt 50,691 46,189
Retirement related obligations 9,385 9,596
Deferred income 3,264 3,499
Operating lease liabilities 1,986 2,190
Other liabilities 12,103 12,243
Total Liabilities 109,942 105,222
EQUITY:
IBM Stockholders' Equity:
Common stock 58,963 58,343
Retained earnings 149,318 149,825
Treasury stock - at cost (169,581) (169,484)
Accumulated other comprehensive income/(loss) (16,499) (16,740)
Total IBM Stockholders' Equity 22,201 21,944
Noncontrolling interests 70 77
Total Equity 22,271 22,021
Total Liabilities and Equity $ 132,213 $ 127,243
INTERNATIONAL
BUSINESS
MACHINES CORPORATION
CASH FLOW ANALYSIS
(Unaudited)
Three Six Trailing
Months Months Twelve
Ended Ended
June June Months
30, 30, Ended
June 30,
(Dollars in 2023 2022* 2023 2022* 2023
Millions)
Net Cash from $ 2,638 $ 1,321 $ 6,412 $ 4,569 $ 12,278
Operations
per GAAP
Less: change in IBM 50 (1,264) 2,028 367 944
Financing
receivables
Capital (487) (494) (944) (871) (1,933)
Expenditures, net
Free Cash Flow 2,101 2,091 3,441 3,331 9,402
Acquisitions (334) (260) (356) (958) (1,747)
Divestitures 6 1,207 6 1,268 10
Dividends (1,510) (1,488) (3,007) (2,963) (5,992)
Non-Financing Debt (1,178) (2,934) 8,514 1,740 8,683
Other (includes IBM (347) (1,607) (1,109) (2,197) (1,805)
Financing net
receivables
and debt)
Change in Cash, Cash $ (1,263 $ (2,991 $ 7,489 $ 221 $ 8,551
Equivalents, ) )
Restricted
Cash
and Short-term
Marketable
Securities
____________________
* Includes
immaterial cash
flows from
discontinued
operations.
INTERNATIONAL BUSINESS
MACHINES CORPORATION
CASH FLOW
(Unaudited)
Three Six Months Ended
Months June 30,
Ended
June
30,
(Dollars in Millions) 2023 2022* 2023 2022*
Net Income from Operations $ 1,583 $ 1,392 $ 2,511 $ 2,125
Depreciation/Amortization of 1,076 1,245 2,150 2,501
Intangibles
Stock-based Compensation 288 254 556 488
Working Capital / Other (359) (307) (832) (912)
IBM Financing A/R 50 (1,264) 2,028 367
Net Cash Provided by $ 2,638 $ 1,321 $ 6,412 $ 4,569
Operating Activities
Capital Expenditures, net of (487) (494) (944) (871)
payments & proceeds
Divestitures, net of cash 6 1,207 6 1,268
transferred
Acquisitions, net of cash (334) (260) (356) (958)
acquired
Marketable Securities / 822 (281) (6,659) (625)
Other Investments, net
Net Cash Provided by/(Used $ 7 $ 172 $ (7,953) $ (1,186)
in) Investing Activities
Debt, net of payments & (1,135) (2,514) 6,169 434
proceeds
Dividends (1,510) (1,488) (3,007) (2,963)
Financing - Other (86) (195) (185) (290)
Net Cash Provided by/(Used $ (2,731 $ (4,197) $ 2,978 $ (2,819)
in) Financing Activities )
Effect of Exchange Rate (25) (262) (1) (267)
changes on Cash
Net Change in Cash, Cash $ (110) $ (2,965) $ 1,436 $ 297
Equivalents and Restricted
Cash
____________________
* Includes immaterial cash
flows from discontinued
operations.
INTERNATIONAL
BUSINESS MACHINES
CORPORATION
SEGMENT DATA
(Unaudited)
Three
Months
Ended
June 30,
2023
(Dollars in Software Consulting Infrastructure
Financing
Millions)
Revenue $ 6,608 $ 5,013 $ 3,618 $
185
Pre-tax Income from $ 1,504 $ 446 $ 633 $
64
Continuing
Operations*
Pre-tax Margin* 22.8 % 8.9 % 17.5 %
34.9 %
Change YTY Revenue 7.2 % 4.3 % (14.6) %
26.2 %
Change YTY Revenue - 7.5 % 5.9 % (13.8) %
27.1 %
Constant Currency
Three
Months
Ended
June 30,
2022
(Dollars in Software Consulting Infrastructure
Financing
Millions)
Revenue $ 6,166 $ 4,809 $ 4,235 $
146
Pre-tax Income from $ 1,375 $ 343 $ 757 $
102
Continuing
Operations
Pre-tax Margin 22.3 % 7.1 % 17.9 %
69.7 %
____________________
* The second quarter
2023 pre-tax charge
of approximately
$0.12 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.
Six
Months
Ended
June 30,
2023
(Dollars in Software Consulting Infrastructure
Financing
Millions)
Revenue $ 12,529 $ 9,975 $ 6,716 $
380
Pre-tax Income from $ 2,668 $ 828 $ 849 $
165
Continuing
Operations*
Pre-tax Margin* 21.3 % 8.3 % 12.6 %
43.3 %
Change YTY Revenue 5.0 % 3.5 % (9.9) %
26.8 %
Change YTY Revenue - 6.6 % 7.0 % (7.8) %
29.1 %
Constant Currency
Six
Months
Ended
June 30,
2022
(Dollars in Software Consulting Infrastructure
Financing
Millions)
Revenue $ 11,938 $ 9,637 $ 7,453 $
300
Pre-tax Income from $ 2,509 $ 691 $ 956 $
186
Continuing
Operations
Pre-tax Margin 21.0 % 7.2 % 12.8 %
62.0 %
____________________
* The year-to-date
2023 pre-tax charge
of approximately
$0.38 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 June
30, 2023
Continuing
Operations
GAAP Acquisition- Retirement-
Tax Kyndryl- Operating
Related Related
Reform Related (Non
-GAAP)
Adjustments(1) Adjustments(2)
Impacts Impacts(3)
Gross Profit $8,501 $150 $-
$- $- $8,650
Gross Profit Margin 54.9 % 1.0 pts. - pts.
- pts. - pts. 55.9 %
S,G&A $4,900 $ (245) $-
$- $ - $4,655
Other (Income) & (261) 0 (1)
- - (262)
Expense
Total Expense & 6,501 (246) (1)
- - 6,254
Other
(Income)
Pre-tax Income from 2,000 395 1
- - 2,396
Continuing
Operations
Pre-tax Income 12.9 % 2.6 pts. 0.0 pts.
- pts. - pts. 15.5 %
Margin from
Continuing
Operations
Provision $419 $87 $ (3)
$ (110) $- $393
for/(Benefit from)
Income Taxes(4)
Effective Tax Rate 21.0 % 0.2 pts. (0.2) pts.
(4.6) pts. - pts. 16.4 %
Income from $ 1,581 $ 308 $5
$ 110 $- $
Continuing
2,003
Operations
Income Margin from 10.2 % 2.0 pts. 0.0 pts.
0.7 pts. - pts. 12.9 %
Continuing
Operations
Diluted Earnings Per $1.72 $ 0.34 $ 0.00
$ 0.12 $- $ 2.18
Share:
Continuing
Operations
Three
Months
Ended June
30, 2022
Continuing
Operations
GAAP Acquisition- Retirement-
Tax Kyndryl- Operating
Related Related
Reform Related (Non
-GAAP)
Adjustments(1) Adjustments(2)
Impacts Impacts(3)
Gross Profit $ 8,290 $ 180 $-
$- $- $ 8,470
Gross Profit Margin 53.4 % 1.2 pts. - pts.
- pts. - pts. 54.5 %
S,G&A $ 4,855 $ (279) $-
$- $ 0 $ 4,576
Other (Income) & (81) (1) (192)
- (145) (418)
Expense
Total Expense & 6,568 (280) (192)
- (145) 5,952
Other
(Income)
Pre-tax Income from 1,722 460 192
- 145 2,518
Continuing
Operations
Pre-tax Income 11.1 % 3.0 pts. 1.2 pts.
- pts. 0.9 pts. 16.2 %
Margin from
Continuing
Operations
Provision $257 $ 115 $ 46
$ (4) $ - $ 413
for/(Benefit from)
Income Taxes(4)
Effective Tax Rate 14.9 % 1.8 pts. 0.7 pts.
(0.2) pts. (0.9) pts. 16.4 %
Income from $ 1,465 $ 345 $ 146
$4 $ 145 $ 2,105
Continuing
Operations
Income Margin from 9.4 % 2.2 pts. 0.9 pts.
0.0 pts. 0.9 pts. 13.5 %
Continuing
Operations
Diluted Earnings Per $1.61 $ 0.38 $ 0.16
$ 0.00 $ 0.16 $ 2.31
Share:
Continuing
Operations
____________________
(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/s
ettlements
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 and the
related cash
-settled
swap.
(4) Tax impact on
operating
(non-GAAP)
pre-tax
income from
continuing
operations is
calculated
under the
same
accounting
principles
applied to
the As
Reported pre
-tax
income under
ASC 740,
which employs
an annual
effective tax
rate method
to the
results.
INTERNATIONAL
BUSINESS MACHINES
CORPORATION
U.S. GAAP TO
OPERATING (Non-GAAP)
RESULTS
RECONCILIATION
(Unaudited; Dollars
in millions except
per share amounts)
Six Months
Ended June
30, 2023
Continuing
Operations
GAAP Acquisition- Retirement-
Tax Kyndryl- Operating
Related Related
Reform Related (Non
-GAAP)
Adjustments(1) Adjustments(2)
Impacts Impacts(3)
Gross Profit $16,010 $298 $-
$- $- $ 16,308
Gross Profit Margin 53.9 % 1.0 pts. -
pts. - pts. - pts. 54.9 %
S,G&A $9,754 $(491) $-
$- $- $9,263
Other (Income) & (506) (2) 4
- - (504)
Expense
Total Expense & 12,952 (493) 4
- - 12,463
Other
(Income)
Pre-tax Income from 3,058 791 (4)
- - 3,845
Continuing
Operations
Pre-tax Income 10.3 % 2.7 pts. 0.0
pts. - pts. - pts. 12.9 %
Margin from
Continuing
Operations
Provision $543 $178 $ (14)
$ (115) $- $593
for/(Benefit from)
Income Taxes(4)
Effective Tax Rate 17.8 % 1.0 pts. (0.3)
pts. (3.0) pts. - pts. 15.4 %
Income from $ 2,515 $613 $ 10
$ 115 $- $ 3,252
Continuing
Operations
Income Margin from 8.5 % 2.1 pts. 0.0
pts. 0.4 pts. - pts. 10.9 %
Continuing
Operations
Diluted Earnings Per $2.74 $0.67 $ 0.01
$ 0.13 $- $ 3.54
Share:
Continuing
Operations
Six Months
Ended June
30, 2022
Continuing
Operations
GAAP Acquisition- Retirement-
Tax Kyndryl- Operating
Related Related
Reform Related (Non
-GAAP)
Adjustments(1) Adjustments(2)
Impacts Impacts(3)
Gross Profit $ 15,625 $361 $ -
$- $- $ 15,986
Gross Profit Margin 52.6 % 1.2 pts. -
pts. - pts. - pts. 53.8 %
S,G&A $ 9,452 $(565) $ -
$- $ 0 $ 8,887
Other (Income) & 166 (1) (394)
- (367) (596)
Expense
Total Expense & 13,280 (566) (394)
- (367) 11,953
Other
(Income)
Pre-tax Income from 2,345 928 394
- 367 4,033
Continuing
Operations
Pre-tax Income 7.9 % 3.1 pts. 1.3
pts. - pts. 1.2 pts. 13.6 %
Margin from
Continuing
Operations
Provision $218 $224 $ 104
$ 112 $- $657
for/(Benefit from)
Income Taxes(4)
Effective Tax Rate 9.3 % 3.4 pts. 1.7
pts. 2.8 pts. (0.8) pts. 16.3 %
Income from $ 2,127 $704 $ 290
$ (112) $ 367 $ 3,376
Continuing
Operations
Income Margin from 7.2 % 2.4 pts. 1.0
pts. (0.4) pts. 1.2 pts. 11.4 %
Continuing
Operations
Diluted Earnings Per $2.34 $0.77 $ 0.32
$ (0.12) $ 0.40 $ 3.71
Share:
Continuing
Operations
____________________
(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/s
ettlements
and
pension
insolvency
costs and
other costs.
(3) Primarily
relates to
fair value
changes in
shares
ofKyndryl
common stock
that were
retained by
IBM 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.
This information was brought to you by Cision http://news.cision.com
END
(END) Dow Jones Newswires
July 20, 2023 02:00 ET (06:00 GMT)
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