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IBM Reports 2021 Third-Quarter Results

IBM (NYSE: IBM) today announced third-quarter 2021 earnings results.

“With the separation of Kyndryl early next month, IBM takes the next step in our evolution as a platform-centric hybrid cloud and AI company," said Arvind Krishna, IBM chairman and chief executive officer. “We continue to make progress in our software and consulting businesses, which represent our higher growth opportunities. With our increased focus and agility to better serve clients, we are confident in achieving our medium-term objectives of mid-single digit revenue growth and strong free cash flow generation.”

 

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THIRD QUARTER 2021

 

 

All GAAP results include the impact of Kyndryl separation costs*

 

 

 

 

 

 

 

 

Pre-tax

Gross

 

 

 

Diluted

 

Net

 

Pre-tax

Income

Profit

 

 

 

EPS

 

Income

 

Income

Margin

Margin

GAAP from Continuing Operations

 

$

1.25

 

$

1.1B

 

$

1.3B

7.5

%

46.4

%

Year/Year

 

 

(34

)%

 

(33

)%

 

(28

)%

(2.9

)Pts

(1.6

)Pts

 

 

 

 

 

 

 

 

 

 

Operating (Non-GAAP)

 

$

2.52

 

$

2.3B

 

$

2.4B

 

13.6

%

48.0

%

Year/Year

 

 

(2

)%

 

(1

)%

 

(7

)%

(1.0

)Pts

(1.0

)Pts

GAAP EPS results include impacts related to the amortization of purchased intangible assets and other acquisition-related charges, retirement-related charges, U.S. tax reform enactment impacts, and transaction costs associated with the Kyndryl separation.

* Impact of Kyndryl separation costs for third quarter 2021 GAAP results: EPS ($0.56) per share; Net Income ($0.5B); Pre-tax Income ($0.3B); Pre-Tax Income Margin (1.6) points; Gross Profit Margin (0.6) points

“We again had solid cash generation for the quarter and over the last year, while maintaining a strong balance sheet and the liquidity to support our hybrid cloud and AI strategy,” said James Kavanaugh, IBM senior vice president and chief financial officer. "Our post-separation portfolio mix is shifted toward our growth vectors, with a higher-value recurring revenue stream and strong cash generation, allowing us to continue to invest in the business and provide attractive shareholder returns.”

Cash Flow and Balance Sheet

In the third quarter, the company generated net cash from operating activities of $2.7 billion. IBM’s free cash flow was $0.6 billion, which includes $0.6 billion of cash impacts from the company’s structural actions initiated in the fourth quarter of 2020 and the transaction costs associated with the separation of Kyndryl. IBM’s adjusted free cash flow, excluding these cash impacts, was $1.2 billion. The company returned $1.5 billion to shareholders in dividends.

Over the last 12 months, the company generated net cash from operating activities of $16.1 billion. IBM’s free cash flow for the last 12 months was $9.2 billion. The company’s adjusted free cash flow, excluding cash impacts of $1.8 billion for the structural actions and transaction separation costs, was $11.1 billion.

IBM ended the third quarter with $8.4 billion of cash on hand (includes marketable securities), down $5.9 billion from year-end 2020 reflecting acquisitions of $3.0 billion and debt reduction payments. Debt, including Global Financing debt of $15.9 billion, totaled $54.5 billion, down $7.0 billion since the end of 2020, and down $18.5 billion since closing the Red Hat acquisition.

Segment Results for Third Quarter

  • Cloud & Cognitive Software (includes Cloud & Data Platforms, Cognitive Applications and Transaction Processing Platforms) —revenues of $5.7 billion, up 2.5 percent (up 1.9 percent adjusting for currency). Cloud & Data Platforms grew 10 percent (up 9 percent adjusting for currency), Cognitive Applications revenue was flat (down 1 percent adjusting for currency) and Transaction Processing Platforms declined 9 percent. Cloud revenue up 21 percent (up 20 percent adjusting for currency).
  • Global Business Services (includes Consulting, Application Management and Global Process Services) — revenues of $4.4 billion, up 11.6 percent (up 11.0 percent adjusting for currency), with growth in Consulting, up 17 percent (up 16 percent adjusting for currency), Application Management up 5 percent, and Global Process Services up 19 percent. Cloud revenue up 38 percent (up 37 percent adjusting for currency).
  • Global Technology Services (includes Infrastructure & Cloud Services and Technology Support Services) — revenues of $6.2 billion, down 4.8 percent (down 5.4 percent adjusting for currency). Infrastructure & Cloud Services declined 5 percent (down 6 percent adjusting for currency) and Technology Support Services declined 4 percent (down 5 percent adjusting for currency). Cloud revenue up 1 percent (flat adjusting for currency). Gross profit margin up 120 basis points.
  • Systems (includes Systems Hardware and Operating Systems Software) — revenues of $1.1 billion, down 11.9 percent (down 12.4 percent adjusting for currency), driven by declines in IBM Z (down 33 percent) and Power systems down 24 percent (down 25 percent adjusting for currency). Storage Systems grew 11 percent. Cloud revenue down 42 percent (down 43 percent adjusting for currency).
  • Global Financing (includes financing and used equipment sales) — revenues of $220 million, down 19.2 percent (down 19.8 percent adjusting for currency).

Year-To-Date 2021 Results

Revenues for the nine-month period ended September 30, 2021 totaled $54.1 billion, an increase of 1.6 percent year to year (down 1 percent adjusting for divested businesses and currency) compared with $53.3 billion for the first nine months of 2020. Net income was $3.4 billion, down 19 percent year to year, reflecting the impact of $0.7 billion of transaction costs associated with the Kyndryl separation. Diluted earnings per share was $3.77 compared with $4.72 per diluted share for the 2020 period, a decrease of 20 percent.

GAAP earnings per share results include a ($2.85) per-share impact for charges related to amortization of purchased intangible assets and other acquisition-related charges, retirement-related charges, U.S. tax reform enactment impacts, and transaction costs associated with the Kyndryl separation. The impact of the Kyndryl separation costs was ($0.76) per share.

Operating (non-GAAP) net income for the nine months ended September 30, 2021 was $6.0 billion compared with $5.9 billion in the prior-year period, an increase of 1.3 percent. Operating (non-GAAP) diluted earnings per share from continuing operations was $6.62 compared with $6.60 per diluted share for the 2020 period, flat 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 possibility that the proposed separation of the managed infrastructure services unit of the company’s Global Technology Services segment will not be completed within the anticipated time period or at all, the possibility of disruption or unanticipated costs in connection with the proposed separation or the possibility that the separation will not achieve its intended benefits; 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);
  • total revenue and cloud revenue adjusting for divested businesses and currency;
  • total revenue normalized to exclude Kyndryl to be separated in November;
  • Red Hat revenue normalized for historical comparability;
  • presenting operating (non-GAAP) earnings per share amounts and related income statement items;
  • free cash flow;
  • adjusted 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. EDT, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-3q21. 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).

 

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,

 

 

 

2021

 

2020

 

 

2021

 

2020

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cloud & Cognitive Software

 

$

5,692

 

$

5,553

 

 

 

$

17,227

 

$

16,540

 

 

Global Business Services

 

 

4,427

 

 

3,965

 

 

 

 

13,002

 

 

11,992

 

 

Global Technology Services

 

 

6,154

 

 

6,462

 

 

 

 

18,866

 

 

19,245

 

 

Systems

 

 

1,107

 

 

1,257

 

 

 

 

4,251

 

 

4,477

 

 

Global Financing

 

 

220

 

 

273

 

 

 

 

702

 

 

837

 

 

Other

 

 

18

 

 

50

 

 

 

 

45

 

 

163

 

 

TOTAL REVENUE

 

 

17,618

 

 

 

17,560

 

 

 

 

54,093

 

 

53,253

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

8,171

 

 

8,430

 

 

 

 

25,379

 

 

25,052

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT MARGIN

 

 

 

 

 

 

 

 

 

 

 

 

Cloud & Cognitive Software

 

 

77.0

 

%

 

77.1

 

%

 

 

77.1

 

%

 

76.6

 

%

Global Business Services

 

 

29.8

 

%

 

32.9

 

%

 

 

28.6

 

%

 

29.5

 

%

Global Technology Services

 

 

36.2

 

%

 

35.0

 

%

 

 

35.3

 

%

 

34.4

 

%

Systems

 

 

41.3

 

%

 

51.2

 

%

 

 

51.3

 

%

 

53.7

 

%

Global Financing

 

 

25.6

 

%

 

37.5

 

%

 

 

28.4

 

%

 

39.0

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL GROSS PROFIT MARGIN

 

 

46.4

 

%

 

48.0

 

%

 

 

46.9

 

%

 

47.0

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSE AND OTHER INCOME

 

 

 

 

 

 

 

 

 

 

 

 

S,G&A

 

 

4,860

 

 

4,647

 

 

 

 

15,368

 

 

15,849

 

 

R,D&E

 

 

1,621

 

 

1,515

 

 

 

 

4,907

 

 

4,722

 

 

Intellectual property and custom development income

 

 

(153

)

 

 

(134

)

 

 

 

(435

)

 

(453

)

 

Other (income) and expense

 

 

234

 

 

253

 

 

 

 

911

 

 

614

 

 

Interest expense

 

 

291

 

 

323

 

 

 

 

852

 

 

971

 

 

TOTAL EXPENSE AND OTHER INCOME

 

 

6,852

 

 

6,603

 

 

 

 

21,603

 

 

21,704

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME/(LOSS) FROM CONTINUING OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

BEFORE INCOME TAXES

 

 

1,319

 

 

1,827

 

 

 

 

3,776

 

 

3,348

 

 

Pre-tax margin

 

 

7.5

 

%

 

10.4

 

%

 

 

7.0

 

%

 

6.3

 

%

Provision for/(Benefit from) income taxes

 

 

188

 

 

128

 

 

 

 

365

 

 

(888

)

 

Effective tax rate

 

 

14.3

 

%

 

7.0

 

%

 

 

9.7

 

%

 

(26.5

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM CONTINUING OPERATIONS

 

$

1,130

 

 

$

1,698

 

 

$

3,411

 

$

4,237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DISCONTINUED OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

Income/(Loss) from discontinued operations, net of taxes

 

 

 

 

 

(1

)

 

 

(1

)

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

1,130

 

 

$

1,698

 

 

$

3,410

 

 

$

4,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS/(LOSS) PER SHARE OF COMMON STOCK

 

 

 

 

 

 

 

 

 

 

 

 

Assuming Dilution

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

1.25

 

 

$

1.89

 

 

$

3.77

 

$

4.72

 

 

Discontinued Operations

 

$

0.00

 

 

$

0.00

 

 

$

0.00

 

$

0.00

 

 

TOTAL

 

$

1.25

 

 

$

1.89

 

 

$

3.77

 

$

4.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

1.26

 

 

$

1.90

 

 

$

3.81

 

$

4.76

 

 

Discontinued Operations

 

$

0.00

 

 

$

0.00

 

 

$

0.00

 

$

0.00

 

 

TOTAL

 

$

1.26

 

 

$

1.90

 

 

$

3.81

 

$

4.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M’s)

 

 

 

 

 

 

 

 

 

 

 

 

Assuming Dilution

 

 

906.0

 

 

 

897.3

 

 

 

904.0

 

 

895.8

 

 

Basic

 

 

897.1

 

 

 

891.4

 

 

 

895.3

 

 

889.6

 

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

 

 

 

 

 

 

 

 

 

At

 

At

 

 

September 30,

 

December 31,

(Dollars in Millions)

 

2021

 

2020

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,455

 

 

$

13,212

 

Restricted cash

 

 

352

 

 

 

463

 

Marketable securities

 

 

600

 

 

 

600

 

Notes and accounts receivable - trade, net

 

 

6,609

 

 

 

7,132

 

Short-term financing receivables, net

 

 

7,161

 

 

 

10,892

 

Other accounts receivable, net

 

 

899

 

 

 

714

 

Inventories

 

 

1,891

 

 

 

1,839

 

Deferred costs

 

 

2,046

 

 

 

2,107

 

Prepaid expenses and other current assets

 

 

2,954

 

 

 

2,206

 

Total Current Assets

 

 

29,967

 

 

 

39,165

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

9,138

 

 

 

10,040

 

Operating right-of-use assets, net

 

 

4,253

 

 

 

4,686

 

Long-term financing receivables, net

 

 

5,046

 

 

 

7,086

 

Prepaid pension assets

 

 

8,197

 

 

 

7,610

 

Deferred costs

 

 

2,248

 

 

 

2,449

 

Deferred taxes

 

 

8,967

 

 

 

9,241

 

Goodwill

 

 

61,378

 

 

 

59,617

 

Intangibles, net

 

 

13,025

 

 

 

13,796

 

Investments and sundry assets

 

 

1,996

 

 

 

2,282

 

Total Assets

 

$

144,214

 

 

$

155,971

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Taxes

 

$

2,159

 

 

$

3,301

 

Short-term debt

 

 

7,575

 

 

 

7,183

 

Accounts payable

 

 

4,248

 

 

 

4,908

 

Deferred income

 

 

12,264

 

 

 

12,833

 

Operating lease liabilities

 

 

1,285

 

 

 

1,357

 

Other liabilities

 

 

8,300

 

 

 

10,287

 

Total Current Liabilities

 

 

35,832

 

 

 

39,869

 

 

 

 

 

 

 

 

Long-term debt

 

 

46,926

 

 

 

54,355

 

Retirement related obligations

 

 

16,764

 

 

 

18,248

 

Deferred income

 

 

3,965

 

 

 

4,301

 

Operating lease liabilities

 

 

3,192

 

 

 

3,574

 

Other liabilities

 

 

15,179

 

 

 

14,897

 

Total Liabilities

 

 

121,858

 

 

 

135,244

 

 

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

 

 

 

 

 

 

 

 

IBM Stockholders’ Equity:

 

 

 

 

 

 

Common stock

 

 

57,189

 

 

 

56,556

 

Retained earnings

 

 

161,747

 

 

 

162,717

 

Treasury stock — at cost

 

 

(169,406

)

 

 

(169,339

)

Accumulated other comprehensive income/(loss)

 

 

(27,302

)

 

 

(29,337

)

Total IBM Stockholders’ Equity

 

 

22,228

 

 

 

20,597

 

 

 

 

 

 

 

 

Noncontrolling interests

 

 

129

 

 

 

129

 

Total Equity

 

 

22,357

 

 

 

20,727

 

 

 

 

 

 

 

 

Total Liabilities and Equity

 

$

144,214

 

 

$

155,971

 

 

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)

 

2021

 

2020

 

2021

 

2020

 

2021

Net Cash Provided by Operating Activities per GAAP:

 

$

2,713

 

 

$

4,286

 

 

$

10,252

 

 

$

12,337

 

 

$

16,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Change in Global Financing (GF) Receivables

 

 

1,472

 

 

 

2,353

 

 

 

5,235

 

 

 

5,324

 

 

 

4,260

 

Capital Expenditures, net

 

 

(638

)

 

 

(829

)

 

 

(1,855

)

 

 

(2,262

)

 

 

(2,635

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow

 

 

603

 

 

 

1,104

 

 

 

3,162

 

 

 

4,751

 

 

 

9,216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Structural actions initiated in 4Q20 & Separation charges (1)

 

 

566

 

 

 

 

 

 

1,792

 

 

 

 

 

 

1,841

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Free Cash Flow

 

 

1,170

 

 

 

1,104

 

 

 

4,954

 

 

 

4,751

 

 

 

11,057

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow

 

 

603

 

 

 

1,104

 

 

 

3,162

 

 

 

4,751

 

 

 

9,216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions

 

 

(152

)

 

 

(17

)

 

 

(3,018

)

 

 

(37

)

 

 

(3,317

)

Divestitures

 

 

51

 

 

 

(248

)

 

 

26

 

 

 

510

 

 

 

19

 

Dividends

 

 

(1,471

)

 

 

(1,453

)

 

 

(4,395

)

 

 

(4,343

)

 

 

(5,850

)

Non-GF Debt

 

 

1,187

 

 

 

1,019

 

 

 

(1,143

)

 

 

4,977

 

 

 

(5,899

)

Other (includes GF Net Receivables and GF Debt)

 

 

22

 

 

 

1,098

 

 

 

(500

)

 

 

886

 

 

 

(1,516

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Cash, Cash Equivalents, Restricted Cash and Short-term Marketable Securities

 

$

241

 

 

$

1,503

 

 

$

(5,868

)

 

$

6,744

 

 

$

(7,347

)

_______________

(1)

Includes cash impacts incurred in the period related to structural actions initiated in 4Q20 and separation related costs.

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

(Dollars in Millions)

 

2021

 

2020

 

2021

 

2020

Net Income from Operations

 

$

1,130

 

 

$

1,698

 

 

$

3,410

 

 

$

4,234

 

Depreciation/Amortization of Intangibles

 

 

1,684

 

 

 

1,683

 

 

 

5,036

 

 

 

4,996

 

Stock-based Compensation

 

 

262

 

 

 

222

 

 

 

719

 

 

 

658

 

Working Capital / Other

 

 

(1,834

)

 

 

(1,670

)

 

 

(4,147

)

 

 

(2,874

)

Global Financing A/R

 

 

1,472

 

 

 

2,353

 

 

 

5,235

 

 

 

5,324

 

Net Cash Provided by Operating Activities

 

$

2,713

 

 

$

4,286

 

 

$

10,252

 

 

$

12,337

 

Capital Expenditures, net of payments & proceeds

 

 

(638

)

 

 

(829

)

 

 

(1,855

)

 

 

(2,262

)

Divestitures, net of cash transferred

 

 

51

 

 

 

(248

)

 

 

26

 

 

 

510

 

Acquisitions, net of cash acquired

 

 

(152

)

 

 

(17

)

 

 

(3,018

)

 

 

(37

)

Marketable Securities / Other Investments, net

 

 

109

 

 

 

762

 

 

 

(453

)

 

 

(680

)

Net Cash Provided by/(Used in) Investing Activities

 

$

(629

)

 

$

(332

)

 

$

(5,300

)

 

$

(2,470

)

Debt, net of payments & proceeds

 

 

(287

)

 

 

(252

)

 

 

(6,086

)

 

 

1,067

 

Dividends

 

 

(1,471

)

 

 

(1,453

)

 

 

(4,395

)

 

 

(4,343

)

Common Stock Transactions - Other

 

 

9

 

 

 

16

 

 

 

(181

)

 

 

(152

)

Net Cash Provided by/(Used in) Financing Activities

 

$

(1,748

)

 

$

(1,689

)

 

$

(10,662

)

 

$

(3,428

)

Effect of Exchange Rate changes on Cash

 

 

(94

)

 

 

101

 

 

 

(159

)

 

 

(200

)

Net Change in Cash, Cash Equivalents and Restricted Cash

 

$

241

 

 

$

2,366

 

 

$

(5,868

)

 

$

6,239

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

SEGMENT DATA

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2021

 

 

 

Cloud &

 

Global

 

Global

 

 

 

 

 

 

 

 

 

Cognitive

 

Business

 

Technology

 

 

 

 

Global

 

(Dollars in Millions)

 

Software

 

Services

 

Services

 

Systems

 

Financing

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External

 

$

5,692

 

$

4,427

 

$

6,154

 

 

$

1,107

 

 

$

220

 

 

Internal

 

 

764

 

 

53

 

 

317

 

 

 

176

 

 

 

153

 

 

Total Segment Revenue

 

$

6,456

 

$

4,480

 

$

6,471

 

 

$

1,283

 

 

$

373

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Income/(Loss) from Continuing Operations

 

 

1,675

 

 

587

 

 

383

 

 

 

(207

)

 

 

206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Margin

 

 

25.9

%

 

13.1

%

 

5.9

 

%

 

(16.1

)

%

 

55.1

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change YTY Revenue - External

 

 

2.5

%

 

11.6

%

 

(4.8

)

%

 

(11.9

)

%

 

(19.2

)

%

Change YTY Revenue - External @constant currency

 

 

1.9

%

 

11.0

%

 

(5.4

)

%

 

(12.4

)

%

 

(19.8

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

 

 

Cloud &

 

Global

 

Global

 

 

 

 

 

 

 

 

 

Cognitive

 

Business

 

Technology

 

 

 

 

Global

 

(Dollars in Millions)

 

Software

 

Services

 

Services

 

Systems

 

Financing

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External

 

$

5,553

 

$

3,965

 

$

6,462

 

$

1,257

 

 

$

273

 

Internal

 

 

875

 

 

49

 

 

312

 

 

240

 

 

 

208

 

Total Segment Revenue

 

$

6,428

 

$

4,014

 

$

6,774

 

$

1,497

 

 

$

480

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Income/(Loss) from Continuing Operations

 

 

1,834

 

 

570

 

 

399

 

 

(37

)

 

 

196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Margin

 

 

28.5

%

 

14.2

%

 

5.9

%

 

(2.5

)

%

 

40.7

%

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

SEGMENT DATA

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2021

 

 

 

Cloud &

 

Global

 

Global

 

 

 

 

 

 

 

 

 

Cognitive

 

Business

 

Technology

 

 

 

 

Global

 

(Dollars in Millions)

 

Software

 

Services

 

Services

 

Systems

 

Financing

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External

 

$

17,227

 

$

13,002

 

$

18,866

 

 

$

4,251

 

 

$

702

 

 

Internal

 

 

2,322

 

 

166

 

 

956

 

 

 

606

 

 

 

581

 

 

Total Segment Revenue

 

$

19,549

 

$

13,168

 

$

19,822

 

 

$

4,857

 

 

$

1,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Income/(Loss) from Continuing Operations

 

 

4,822

 

 

1,349

 

 

903

 

 

 

(33

)

 

 

618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Margin

 

 

24.7

%

 

10.2

%

 

4.6

 

%

 

(0.7

)

%

 

48.1

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change YTY Revenue - External

 

 

4.2

%

 

8.4

%

 

(2.0

)

%

 

(5.1

)

%

 

(16.2

)

%

Change YTY Revenue - External @constant currency

 

 

1.7

%

 

5.5

%

 

(4.9

)

%

 

(7.0

)

%

 

(18.0

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2020

 

 

 

Cloud &

 

Global

 

Global

 

 

 

 

 

 

 

 

 

Cognitive

 

Business

 

Technology

 

 

 

 

Global

 

(Dollars in Millions)

 

Software

 

Services

 

Services

 

Systems

 

Financing

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External

 

$

16,540

 

$

11,992

 

$

19,245

 

$

4,477

 

 

$

837

 

Internal

 

 

2,431

 

 

150

 

 

911

 

 

628

 

 

 

660

 

Total Segment Revenue

 

$

18,971

 

$

12,142

 

$

20,155

 

$

5,106

 

 

$

1,497

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Income/(Loss) from Continuing Operations

 

 

4,475

 

 

1,203

 

 

471

 

 

(7

)

 

 

566

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Margin

 

 

23.6

%

 

9.9

%

 

2.3

%

 

(0.1

)

%

 

37.8

%

 

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, 2021

 

 

 

Continuing Operations

 

 

 

 

 

 

Acquisition-

 

Retirement-

 

Tax

 

Separation-

 

 

 

 

 

 

 

 

 

Related

 

Related

 

Reform

 

Related

 

Operating

 

 

 

GAAP

 

Adjustments (1)

 

Adjustments (2)

 

Impacts

 

Charges (4)

 

(Non-GAAP)

 

Gross Profit

 

$

8,171

 

$

184

 

$

 

$

 

$

108

 

$

8,463

 

Gross Profit Margin

 

 

46.4

%

 

1.0

Pts

 

Pts

 

Pts

 

0.6

Pts

 

48.0

%

S,G&A

 

 

4,860

 

 

(293)

 

 

 

 

 

 

(169)

 

 

4,398

 

R,D&E

 

 

1,621

 

 

 

 

 

 

 

 

(1)

 

 

1,620

 

Other (Income) & Expense

 

 

234

 

 

(1)

 

 

(328)

 

 

 

 

 

 

(94)

 

Interest Expense

 

 

291

 

 

 

 

 

 

 

 

 

 

291

 

Total Expense & Other (Income)

 

 

6,852

 

 

(294)

 

 

(328)

 

 

 

 

(169)

 

 

6,061

 

Pre-tax Income from Continuing Operations

 

 

1,319

 

 

478

 

 

328

 

 

 

 

277

 

 

2,402

 

Pre-tax Income Margin from Continuing Operations

 

 

7.5

%

 

2.7

Pts

 

1.9

Pts

 

Pts

 

1.6

Pts

 

13.6

%

Provision for/(Benefit from) Income Taxes (3)

 

 

188

 

 

103

 

 

57

 

 

 

 

(233)

 

 

115

 

Effective Tax Rate

 

 

14.3

%

 

1.5

Pts

 

0.4

Pts

 

Pts

 

(11.4)

Pts

 

4.8

%

Income from Continuing Operations

 

 

1,130

 

 

375

 

 

271

 

 

 

 

510

 

 

2,286

 

Income Margin from Continuing Operations

 

 

6.4

%

 

2.1

Pts

 

1.5

Pts

 

Pts

 

2.9

Pts

 

13.0

%

Diluted Earnings/(Loss) Per Share: Continuing Operations

 

$

1.25

 

$

0.41

 

$

0.30

 

$

 

$

0.56

 

$

2.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

 

 

Continuing Operations

 

 

 

 

 

 

Acquisition-

 

Retirement-

 

Tax

 

Separation-

 

 

 

 

 

 

 

 

 

Related

 

Related

 

Reform

 

Related

 

Operating

 

 

 

GAAP

 

Adjustments (1)

 

Adjustments (2)

 

Impacts

 

Charges (4)

 

(Non-GAAP)

 

Gross Profit

 

$

8,430

 

$

180

 

$

 

$

 

$

 

$

8,610

 

Gross Profit Margin

 

 

48.0

%

 

1.0

Pts

 

Pts

 

Pts

 

Pts

 

49.0

%

S,G&A

 

 

4,647

 

 

(279)

 

 

 

 

 

 

 

 

4,367

 

R,D&E

 

 

1,515

 

 

 

 

 

 

 

 

 

 

1,515

 

Other (Income) & Expense

 

 

253

 

 

(1)

 

 

(291)

 

 

 

 

 

 

(39)

 

Interest Expense

 

 

323

 

 

 

 

 

 

 

 

 

 

323

 

Total Expense & Other (Income)

 

 

6,603

 

 

(280)

 

 

(291)

 

 

 

 

 

 

6,032

 

Pre-tax Income/(Loss) from Continuing Operations

 

 

1,827

 

 

460

 

 

291

 

 

 

 

 

 

2,578

 

Pre-tax Income Margin from Continuing Operations

 

 

10.4

%

 

2.6

Pts

 

1.7

Pts

 

Pts

 

Pts

 

14.7

%

Provision for/(Benefit from) Income Taxes (3)

 

 

128

 

 

102

 

 

54

 

 

(21)

 

 

 

 

263

 

Effective Tax Rate

 

 

7.0

%

 

2.7

Pts

 

1.3

Pts

 

(0.8)

Pts

 

Pts

 

10.2

%

Income from Continuing Operations

 

 

1,698

 

 

358

 

 

237

 

 

21

 

 

 

 

2,315

 

Income Margin from Continuing Operations

 

 

9.7

%

 

2.0

Pts

 

1.4

Pts

 

0.1

Pts

 

Pts

 

13.2

%

Diluted Earnings/(Loss) Per Share: Continuing Operations

 

$

1.89

 

$

0.40

 

$

0.26

 

$

0.03

 

$

 

$

2.58

 

_______________

(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)

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)

Kyndryl separation charges primarily relate to transaction and third-party support costs, business separation and applicable employee retention fees, pension settlements and related tax separation charges.

 

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, 2021

 

 

 

Continuing Operations

 

 

 

 

 

 

Acquisition-

 

Retirement-

 

Tax

 

Separation-

 

 

 

 

 

 

 

 

 

Related

 

Related

 

Reform

 

Related

 

Operating

 

 

 

GAAP

 

Adjustments (1)

 

Adjustments (2)

 

Impacts

 

Charges (4)

 

(Non-GAAP)

 

Gross Profit

 

$

25,379

 

$

540

 

$

 

$

 

$

168

 

$

26,087

 

Gross Profit Margin

 

 

46.9

%

 

1.0

Pts

 

Pts

 

Pts

 

0.3

Pts

 

48.2

%

S,G&A

 

 

15,368

 

 

(884)

 

 

 

 

 

 

(343)

 

 

14,141

 

R,D&E

 

 

4,907

 

 

 

 

 

 

 

 

(1)

 

 

4,906

 

Other (Income) & Expense

 

 

911

 

 

(2)

 

 

(998)

 

 

 

 

 

 

(90)

 

Interest Expense

 

 

852

 

 

 

 

 

 

 

 

 

 

852

 

Total Expense & Other (Income)

 

 

21,603

 

 

(886)

 

 

(998)

 

 

 

 

(344)

 

 

19,374

 

Pre-tax Income from Continuing Operations

 

 

3,776

 

 

1,426

 

 

998

 

 

 

 

513

 

 

6,713

 

Pre-tax Income Margin from Continuing Operations

 

 

7.0

%

 

2.6

Pts

 

1.8

Pts

 

Pts

 

0.9

Pts

 

12.4

%

Provision for/(Benefit from) Income Taxes (3)

 

 

365

 

 

344

 

 

185

 

 

6

 

 

(174)

 

 

725

 

Effective Tax Rate

 

 

9.7

%

 

3.1

Pts

 

1.3

Pts

 

0.1

Pts

 

(3.3)

Pts

 

10.8

%

Income from Continuing Operations

 

 

3,411

 

 

1,082

 

 

813

 

 

(6)

 

 

687

 

 

5,988

 

Income Margin from Continuing Operations

 

 

6.3

%

 

2.0

Pts

 

1.5

Pts

 

(0.0)

Pts

 

1.3

Pts

 

11.1

%

Diluted Earnings/(Loss) Per Share: Continuing Operations

 

$

3.77

 

$

1.20

 

$

0.90

 

$

(0.01)

 

$

0.76

 

$

6.62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2020

 

 

 

Continuing Operations

 

 

 

 

 

 

Acquisition-

 

Retirement-

 

Tax

 

Separation-

 

 

 

 

 

 

 

 

 

Related

 

Related

 

Reform

 

Related

 

Operating

 

 

 

GAAP

 

Adjustments (1)

 

Adjustments (2)

 

Impacts

 

Charges (4)

 

(Non-GAAP)

 

Gross Profit

 

$

25,052

 

$

556

 

$

 

$

 

$

 

$

25,608

 

Gross Profit Margin

 

 

47.0

%

 

1.0

Pts

 

Pts

 

Pts

 

Pts

 

48.1

%

S,G&A

 

 

15,849

 

 

(849)

 

 

 

 

 

 

 

 

15,000

 

R,D&E

 

 

4,722

 

 

 

 

 

 

 

 

 

 

4,722

 

Other (Income) & Expense

 

 

614

 

 

(2)

 

 

(829)

 

 

 

 

 

 

(217)

 

Interest Expense

 

 

971

 

 

 

 

 

 

 

 

 

 

971

 

Total Expense & Other (Income)

 

 

21,704

 

 

(851)

 

 

(829)

 

 

 

 

 

 

20,024

 

Pre-tax Income from Continuing Operations

 

 

3,348

 

 

1,407

 

 

829

 

 

 

 

 

 

5,584

 

Pre-tax Income Margin from Continuing Operations

 

 

6.3

%

 

2.6

Pts

 

1.6

Pts

 

Pts

 

Pts

 

10.5

%

Provision for/(Benefit from) Income Taxes (3)

 

 

(888)

 

 

312

 

 

119

 

 

128

 

 

 

 

(329)

 

Effective Tax Rate

 

 

(26.5)

%

 

12.3

Pts

 

6.1

Pts

 

2.3

Pts

 

Pts

 

(5.9)

%

Income from Continuing Operations

 

 

4,237

 

 

1,095

 

 

710

 

 

(128)

 

 

 

 

5,913

 

Income Margin from Continuing Operations

 

 

8.0

%

 

2.1

Pts

 

1.3

Pts

 

(0.2)

Pts

 

Pts

 

11.1

%

Diluted Earnings/(Loss) Per Share: Continuing Operations

 

$

4.72

 

$

1.23

 

$

0.79

 

$

(0.14)

 

$

 

$

6.60

 

_______________

(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)

Kyndryl separation charges primarily relate to transaction and third-party support costs, business separation and applicable employee retention fees, pension settlements and related tax separation charges.

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION

(Unaudited; Dollars in millions except per share amounts)

 

 

 

 

 

 

 

 

 

Trailing

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

Twelve Months Ended

 

 

 

September 30, 2021

 

 

September 30, 2021

 

 

September 30, 2021

 

 

 

Change YTY

 

 

Change YTY

 

 

Change YTY

 

Revenue Adjusting for Divested Businesses and Currency

 

Total IBM

 

 

Total IBM

 

 

Cloud

 

 

 

 

 

 

 

 

 

 

 

Revenue as reported

 

0.3

%

 

1.6

%

 

13.6

%

Impact from divested businesses

 

0.0

Pts

 

0.1

Pts

 

0.3

Pts

Currency impact

 

(0.6)

Pts

 

(2.7)

Pts

 

(2.8)

Pts

Revenue adjusting for divested businesses and currency (non-GAAP)

 

(0.2)

%

 

(1.0)

%

 

11.1

%

 

 

 

 

 

Three Months Ended

 

 

 

September 30, 2021

 

Total IBM Revenue, Normalized to Exclude Kyndryl

 

Change YTY

 

 

 

 

 

Revenue as reported

 

0.3

%

Impact from Kyndryl (1)

 

2.1

Pts

Revenue normalized to exclude Kyndryl (non-GAAP)

 

2.5

%

Impact from divested businesses

 

0.1

Pts

Currency impact

 

(0.7)

Pts

Revenue normalized to exclude Kyndryl, adjusted for divested businesses and currency (non-GAAP)

 

1.9

%

_______________

(1)

Estimated as of September 30, 2021.

 

 

Three Months Ended

 

 

 

September 30, 2021

 

Red Hat Revenue, Normalized for Historical Comparability

 

Change YTY

 

 

 

 

 

Red Hat Revenue GAAP growth rate (1)

 

23

%

Impact from purchase accounting deferred revenue and intercompany adjustments (2)

 

(6)

Pts

Red Hat revenue growth rate, normalized for historical comparability (non-GAAP)

 

17

%

Impact from currency

 

(0)

Pts

Red Hat revenue growth rate, normalized for historical comparability and adjusting for currency (non-GAAP)

 

17

%

_______________

(1)

Represents change in GAAP revenue as reported by IBM, which is included in the Cloud & Cognitive Software segment.

(2)

Represents change in the third-quarter 2021 impact of the deferred revenue purchase accounting adjustment and adjustments to add back revenue which was eliminated for sales between Red Hat and IBM. This line represents revenue that would have been recognized by Red Hat under GAAP if the acquisition had not occurred, but was not recognized by IBM due to purchase accounting and intercompany adjustments.

 

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Nachrichtenquelle: Business Wire (engl.)
20.10.2021, 22:08  |  173   |   |   

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Disclaimer

IBM Reports 2021 Third-Quarter Results IBM (NYSE: IBM) today announced third-quarter 2021 earnings results. “With the separation of Kyndryl early next month, IBM takes the next step in our evolution as a platform-centric hybrid cloud and AI company," said Arvind Krishna, IBM chairman and …

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