Revenue Growth in All Key Segments; Expanded Margins; Solid
Cash Generation
ARMONK,
N.Y., Jan. 25, 2023 /PRNewswire/ -- IBM (NYSE:
IBM) today announced fourth-quarter 2022 earnings results.
"Our solid fourth-quarter performance capped a year in which we
grew revenue above our mid-single digit model. Clients in all
geographies increasingly embraced our hybrid cloud and AI solutions
as technology remains a differentiating force in today's business
environment," said Arvind Krishna,
IBM chairman and chief executive officer. "Looking ahead to 2023,
we expect full-year revenue growth consistent with our mid-single
digit model."
Fourth-Quarter Highlights
- Revenue of $16.7 billion, flat,
up 6 percent at constant currency
- Software revenue up 3 percent, up 8 percent at constant
currency
- Consulting revenue up 0.5 percent, up 9 percent at constant
currency
- Infrastructure revenue up 2 percent, up 7 percent at constant
currency
Full-Year Highlights
- Revenue of $60.5 billion, up 6
percent, up 12 percent at constant currency (about 4 points from
sales to Kyndryl)
- Hybrid cloud revenue of $22.4
billion, up 11 percent, up 17 percent at constant
currency
- On a consolidated basis, net cash from operating activities of
$10.4 billion; free cash flow of
$9.3 billion
Full-Year 2023 Expectations
- The company expects constant currency revenue growth consistent
with its mid-single digit model and about $10.5 billion in consolidated free cash flow, up
more than $1 billion year to
year
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FOURTH QUARTER 2022
INCOME STATEMENT SUMMARY
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Pre-tax
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Diluted
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Gross
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Pre-tax
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Income
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Net
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Earnings
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Revenue
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Profit
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Income
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Margin
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Income
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Per
Share
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GAAP from
Continuing
Operations
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$
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16.7B
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$
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9.6B
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$
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3.3B
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19.8
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%
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$
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2.9B
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$
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3.13
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Year/Year
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0
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%*
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1
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%
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15
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%
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2.7
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Pts
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17
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%
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15
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%
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Operating
(Non-GAAP)
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$
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9.8B
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$
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3.8B
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22.9
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%
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$
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3.3B
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$
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3.60
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Year/Year
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1
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%
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8
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%
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1.7
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Pts
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9
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%
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7
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%
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* 6% at constant
currency
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"IBM's revenue growth and operating profit in 2022 demonstrate
the strength and multiplier effect of our platform-centric approach
to hybrid cloud and AI," said James
Kavanaugh, IBM senior vice president and chief financial
officer. "Our client-focused portfolio and strong recurring revenue
stream position IBM well for continued growth, solid cash
generation and returning value to shareholders through
dividends."
Segment Results for Fourth Quarter
- Software (includes Hybrid Platform & Solutions,
Transaction Processing)— revenues of $7.3 billion, up 2.8 percent, up 8.0 percent at
constant currency:
- Hybrid Platform & Solutions up 5 percent, up 10 percent
at constant currency:
-- Red Hat up 10 percent, up 15 percent
at constant currency
-- Automation up 4 percent, up 9 percent at
constant currency
-- Data & AI up 4 percent, up 8 percent at
constant currency
-- Security up 4 percent, up 10 percent at
constant currency
- Transaction Processing down 3 percent, up 3 percent at constant
currency
- Consulting (includes Business Transformation, Technology
Consulting and Application Operations)— revenues of
$4.8 billion, up 0.5 percent, up 9.3
percent at constant currency:
- Business Transformation down 1 percent, up 7 percent at
constant currency
- Technology Consulting up 1 percent, up 10 percent at
constant currency
- Application Operations up 2 percent, up 12 percent at constant
currency
- Infrastructure (includes Hybrid Infrastructure,
Infrastructure Support)— revenues of $4.5 billion, up 1.6 percent, up 7.4 percent at
constant currency:
- Hybrid Infrastructure up 6 percent, up 11 percent at
constant currency:
-- IBM z Systems up 16 percent, up 21 percent
at constant currency
-- Distributed Infrastructure flat, up 5
percent at constant currency
- Infrastructure Support down 8 percent, flat at constant
currency
- Financing (includes client and commercial
financing)— revenues of $0.2
billion, down 0.4 percent, up 3.9 percent at constant
currency
Cash Flow and Balance Sheet
On a consolidated basis,
in the fourth quarter, the company generated net cash from
operating activities of $4.0 billion,
up $1.4 billion. Net cash from
operating activities excluding IBM Financing receivables was
$5.8 billion, up $1.9 billion. IBM's free cash flow was
$5.2 billion, up $1.9 billion. The company returned $1.5 billion to shareholders in dividends in the
fourth quarter.
On a consolidated basis, for the full year, the company
generated net cash from operating activities of $10.4 billion, down $2.4
billion. Net cash from operating activities excluding IBM
Financing receivables was $11.2
billion, up $2.3 billion.
IBM's free cash flow was $9.3
billion, up $2.8
billion. IBM returned $5.9
billion to shareholders in dividends.
IBM ended the fourth quarter with $8.8
billion of cash on hand (which includes marketable
securities), up $1.3 billion from
year-end 2021. Debt, including IBM Financing debt of $12.9 billion, totaled $50.9 billion, down $0.8
billion since the end of 2021.
Full-Year 2022 Results
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FULL-YEAR 2022
INCOME STATEMENT
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GAAP results include
impact of one-time, non-cash pension settlement
charge*
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Pre-tax
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Gross
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Pre-tax
|
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Income
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Net
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Diluted
|
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Revenue
|
|
|
Profit
|
|
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Income
|
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Margin
|
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Income
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EPS
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GAAP from
Continuing
Operations
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$
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60.5B
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$
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32.7B
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$
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1.2B
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*
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1.9
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%*
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$
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1.8B
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*
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$
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1.95
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*
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Year/Year
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6
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%**
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4
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%
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(76)
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%*
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(6.5)
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Pts*
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(62)
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%*
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(63)
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%*
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Operating
(Non-GAAP)
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$
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33.4B
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$
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9.8B
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16.2
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%
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$
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8.3B
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$
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9.13
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Year/Year
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|
|
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4
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%
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25
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%
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2.5
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Pts
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16
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%
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15
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%
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* GAAP results include
the impact of a one-time, non-cash pension settlement charge in the
third quarter 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.
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** 12% at constant
currency
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Full-Year 2023 Expectations
- Revenue Growth: The company expects constant currency revenue
growth consistent with its mid-single digit model. At current
foreign exchange rates, currency is expected to be neutral to a
one-point tailwind to revenue growth.
- Free Cash Flow: The company expects about $10.5 billion in consolidated 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
On
November 3, 2021, IBM completed the
separation of Kyndryl. Unless otherwise specified, results are
presented on a continuing operations basis. The reference in
Full-Year Highlights to the revenue impacts from sales to Kyndryl
are incremental sales post-separation, year to date through
October.
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. EST, today. The Webcast may be accessed via a
link at https://www.ibm.com/investor/events/earnings-4q22.
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
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INTERNATIONAL
BUSINESS MACHINES CORPORATION
COMPARATIVE
FINANCIAL RESULTS
(Unaudited; Dollars
in millions except per share amounts)
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Three Months
Ended
|
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|
Year
Ended
|
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|
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December 31,
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December 31,
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2022
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2021*
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2022**
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2021*
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REVENUE BY
SEGMENT
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|
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|
|
|
|
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Software
|
|
$
|
7,288
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|
$
|
7,087
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|
|
|
$
|
25,037
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|
$
|
23,426
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|
|
Consulting
|
|
|
4,770
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|
|
4,746
|
|
|
|
|
19,107
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|
|
17,844
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|
|
Infrastructure
|
|
|
4,483
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|
|
4,414
|
|
|
|
|
15,288
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|
|
14,188
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|
|
|
Financing
|
|
|
172
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|
|
172
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|
|
|
|
645
|
|
|
774
|
|
|
|
Other
|
|
|
(22)
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|
|
275
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|
|
|
|
453
|
|
|
1,119
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|
|
|
TOTAL
REVENUE
|
|
|
16,690
|
|
|
16,695
|
|
|
|
|
60,530
|
|
|
57,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
|
9,632
|
|
|
9,500
|
|
|
|
|
32,687
|
|
|
31,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
81.2
|
%
|
|
81.6
|
%
|
|
|
|
79.6
|
%
|
|
79.6
|
%
|
|
|
Consulting
|
|
|
27.4
|
%
|
|
27.0
|
%
|
|
|
|
25.5
|
%
|
|
28.0
|
%
|
|
|
Infrastructure
|
|
|
54.9
|
%
|
|
54.8
|
%
|
|
|
|
52.8
|
%
|
|
55.3
|
%
|
|
|
Financing
|
|
|
47.1
|
%
|
|
32.5
|
%
|
|
|
|
38.3
|
%
|
|
31.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GROSS PROFIT
MARGIN
|
|
|
57.7
|
%
|
|
56.9
|
%
|
|
|
|
54.0
|
%
|
|
54.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE AND OTHER
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S,G&A
|
|
|
4,765
|
|
|
4,903
|
|
|
|
|
18,609
|
|
|
18,745
|
|
|
|
R,D&E
|
|
|
1,604
|
|
|
1,625
|
|
|
|
|
6,567
|
|
|
6,488
|
|
|
|
Intellectual property
and custom development income
|
|
|
(245)
|
|
|
(181)
|
|
|
|
|
(663)
|
|
|
(612)
|
|
|
|
Other (income) and
expense
|
|
|
(118)
|
|
|
(18)
|
|
|
|
|
5,803
|
|
|
873
|
|
|
|
Interest
expense
|
|
|
313
|
|
|
303
|
|
|
|
|
1,216
|
|
|
1,155
|
|
|
|
TOTAL EXPENSE AND
OTHER INCOME
|
|
|
6,320
|
|
|
6,632
|
|
|
|
|
31,531
|
|
|
26,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BEFORE INCOME
TAXES
|
|
|
3,312
|
|
|
2,869
|
|
|
|
|
1,156
|
|
|
4,837
|
|
|
|
Pre-tax
margin
|
|
|
19.8
|
%
|
|
17.2
|
%
|
|
|
|
1.9
|
%
|
|
8.4
|
%
|
|
|
Provision for/(Benefit
from) income taxes
|
|
|
443
|
|
|
407
|
|
|
|
|
(626)
|
|
|
124
|
|
|
|
Effective tax
rate
|
|
|
13.4
|
%
|
|
14.2
|
%
|
|
|
|
(54.2)
|
%
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
CONTINUING OPERATIONS
|
|
$
|
2,869
|
|
$
|
2,462
|
|
|
|
$
|
1,783
|
|
$
|
4,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) from
discontinued operations, net of taxes
|
|
|
(159)
|
|
|
(129)
|
|
|
|
|
(143)
|
|
|
1,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
$
|
2,711
|
|
$
|
2,332
|
|
|
|
$
|
1,639
|
|
$
|
5,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE
OF COMMON STOCK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming
Dilution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
$
|
3.13
|
|
$
|
2.72
|
|
|
|
$
|
1.95
|
|
$
|
5.21
|
|
|
|
Discontinued
Operations
|
|
$
|
(0.17)
|
|
$
|
(0.14)
|
|
|
|
$
|
(0.16)
|
|
$
|
1.14
|
|
|
|
TOTAL
|
|
$
|
2.96
|
|
$
|
2.57
|
|
|
|
$
|
1.80
|
|
$
|
6.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
$
|
3.17
|
|
$
|
2.74
|
|
|
|
$
|
1.97
|
|
$
|
5.26
|
|
|
|
Discontinued
Operations
|
|
$
|
(0.18)
|
|
$
|
(0.14)
|
|
|
|
$
|
(0.16)
|
|
$
|
1.15
|
|
|
|
TOTAL
|
|
$
|
2.99
|
|
$
|
2.60
|
|
|
|
$
|
1.82
|
|
$
|
6.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING (M's)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming
Dilution
|
|
|
915.9
|
|
|
906.6
|
|
|
|
|
912.3
|
|
|
904.6
|
|
|
|
Basic
|
|
|
905.8
|
|
|
898.2
|
|
|
|
|
902.7
|
|
|
896.0
|
|
|
|
____________________
|
|
* Recast to
conform with 2022 presentation.
|
|
** Includes a one-time,
non-cash pension settlement charge of $5.9 billion ($4.4 billion
net of tax).
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEET
(Unaudited)
|
|
|
|
At
|
|
At
|
|
|
December 31,
|
|
December 31,
|
|
(Dollars in
Millions)
|
|
2022
|
|
2021
|
|
ASSETS:
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
7,886
|
|
$
|
6,650
|
|
Restricted
cash
|
|
|
103
|
|
|
307
|
|
Marketable
securities
|
|
|
852
|
|
|
600
|
|
Notes and accounts
receivable - trade, net
|
|
|
6,541
|
|
|
6,754
|
|
Short-term financing
receivables, net
|
|
|
7,790
|
|
|
8,014
|
|
Other accounts
receivable, net
|
|
|
817
|
|
|
1,002
|
|
Inventories
|
|
|
1,552
|
|
|
1,649
|
|
Deferred
costs
|
|
|
967
|
|
|
1,097
|
|
Prepaid expenses and
other current assets
|
|
|
2,611
|
|
|
3,466
|
|
Total Current
Assets
|
|
|
29,118
|
|
|
29,539
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
5,334
|
|
|
5,694
|
|
Operating right-of-use
assets, net
|
|
|
2,878
|
|
|
3,222
|
|
Long-term financing
receivables, net
|
|
|
5,806
|
|
|
5,425
|
|
Prepaid pension
assets
|
|
|
8,236
|
|
|
9,850
|
|
Deferred
costs
|
|
|
866
|
|
|
924
|
|
Deferred
taxes
|
|
|
6,256
|
|
|
7,370
|
|
Goodwill
|
|
|
55,949
|
|
|
55,643
|
|
Intangibles,
net
|
|
|
11,184
|
|
|
12,511
|
|
Investments and sundry
assets
|
|
|
1,617
|
|
|
1,823
|
|
Total
Assets
|
|
$
|
127,243
|
|
$
|
132,001
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
Taxes
|
|
$
|
2,196
|
|
$
|
2,289
|
|
Short-term
debt
|
|
|
4,760
|
|
|
6,787
|
|
Accounts
payable
|
|
|
4,051
|
|
|
3,955
|
|
Deferred
income
|
|
|
12,032
|
|
|
12,518
|
|
Operating lease
liabilities
|
|
|
874
|
|
|
974
|
|
Other
liabilities
|
|
|
7,592
|
|
|
7,097
|
|
Total Current
Liabilities
|
|
|
31,505
|
|
|
33,619
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
46,189
|
|
|
44,917
|
|
Retirement related
obligations
|
|
|
9,596
|
|
|
14,435
|
|
Deferred
income
|
|
|
3,499
|
|
|
3,577
|
|
Operating lease
liabilities
|
|
|
2,190
|
|
|
2,462
|
|
Other
liabilities
|
|
|
12,243
|
|
|
13,996
|
|
Total
Liabilities
|
|
|
105,222
|
|
|
113,005
|
|
|
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
|
|
|
IBM Stockholders'
Equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
58,343
|
|
|
57,319
|
|
Retained
earnings
|
|
|
149,825
|
|
|
154,209
|
|
Treasury stock —
at cost
|
|
|
(169,484)
|
|
|
(169,392)
|
|
Accumulated other
comprehensive income/(loss)
|
|
|
(16,740)
|
|
|
(23,234)
|
|
Total IBM
Stockholders' Equity
|
|
|
21,944
|
|
|
18,901
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
|
77
|
|
|
95
|
|
Total
Equity
|
|
|
22,021
|
|
|
18,996
|
|
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
|
$
|
127,243
|
|
$
|
132,001
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH FLOW
ANALYSIS
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December 31,
|
|
December 31,
|
|
(Dollars in
Millions)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Consolidated Net
Cash from Operations per GAAP
|
|
$
|
3,965
|
|
$
|
2,543
|
|
$
|
10,435
|
|
$
|
12,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: change in IBM
Financing receivables
|
|
|
(1,788)
|
|
|
(1,328)
|
|
|
(717)
|
|
|
3,907
|
|
Capital Expenditures,
net
|
|
|
(544)
|
|
|
(526)
|
|
|
(1,860)
|
|
|
(2,381)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Free
Cash Flow
|
|
|
5,209
|
|
|
3,345
|
|
|
9,291
|
|
|
6,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
|
(1,329)
|
|
|
(275)
|
|
|
(2,348)
|
|
|
(3,293)
|
|
Divestitures
|
|
|
1
|
|
|
88
|
|
|
1,272
|
|
|
114
|
|
Dividends
|
|
|
(1,494)
|
|
|
(1,474)
|
|
|
(5,948)
|
|
|
(5,869)
|
|
Non-Financing
Debt
|
|
|
(2,777)
|
|
|
(20)
|
|
|
1,909
|
|
|
(1,191)
|
|
Other (includes IBM
Financing net receivables and debt)
|
|
|
(498)
|
|
|
(2,514)
|
|
|
(2,893)
|
|
|
(2,987)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Cash, Cash
Equivalents, Restricted Cash and Short-term
Marketable Securities*
|
|
$
|
(888)
|
|
$
|
(850)
|
|
$
|
1,283
|
|
$
|
(6,718)
|
|
____________________
|
|
* Cash flows are
presented on a consolidated basis.
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH
FLOW
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December 31,
|
|
December 31,
|
|
(Dollars in
Millions)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net Income from
Operations
|
|
$
|
2,711
|
|
$
|
2,332
|
|
$
|
1,639
|
|
$
|
5,743
|
|
Pension Settlement
Charge
|
|
|
-
|
|
|
-
|
|
|
5,894
|
|
|
-
|
|
Depreciation/Amortization of Intangibles
|
|
|
1,137
|
|
|
1,380
|
|
|
4,802
|
|
|
6,416
|
|
Stock-based
Compensation
|
|
|
248
|
|
|
264
|
|
|
987
|
|
|
982
|
|
Working Capital /
Other
|
|
|
1,657
|
|
|
(105)
|
|
|
(2,170)
|
|
|
(4,253)
|
|
IBM Financing
A/R
|
|
|
(1,788)
|
|
|
(1,328)
|
|
|
(717)
|
|
|
3,907
|
|
Net Cash Provided by
Operating Activities
|
|
$
|
3,965
|
|
$
|
2,543
|
|
$
|
10,435
|
|
$
|
12,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures,
net of payments & proceeds
|
|
|
(544)
|
|
|
(526)
|
|
|
(1,860)
|
|
|
(2,381)
|
|
Divestitures, net of
cash transferred
|
|
|
1
|
|
|
88
|
|
|
1,272
|
|
|
114
|
|
Acquisitions, net of
cash acquired
|
|
|
(1,329)
|
|
|
(275)
|
|
|
(2,348)
|
|
|
(3,293)
|
|
Marketable Securities
/ Other Investments, net
|
|
|
553
|
|
|
38
|
|
|
(1,265)
|
|
|
(414)
|
|
Net Cash Provided
by/(Used in) Investing Activities
|
|
$
|
(1,318)
|
|
$
|
(675)
|
|
$
|
(4,202)
|
|
$
|
(5,975)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, net of
payments & proceeds
|
|
|
(1,350)
|
|
|
(2,030)
|
|
|
1,221
|
|
|
(8,116)
|
|
Dividends
|
|
|
(1,494)
|
|
|
(1,474)
|
|
|
(5,948)
|
|
|
(5,869)
|
|
Financing -
Other
|
|
|
(8)
|
|
|
811
|
|
|
(231)
|
|
|
630
|
|
Net Cash Provided
by/(Used in) Financing Activities
|
|
$
|
(2,852)
|
|
$
|
(2,692)
|
|
$
|
(4,958)
|
|
$
|
(13,354)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate
changes on Cash
|
|
|
219
|
|
|
(26)
|
|
|
(244)
|
|
|
(185)
|
|
Net Change in Cash,
Cash Equivalents and Restricted Cash*
|
|
$
|
13
|
|
$
|
(850)
|
|
$
|
1,032
|
|
$
|
(6,718)
|
|
____________________
|
|
* Cash flows are
presented on a consolidated basis.
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
SEGMENT
DATA
(Unaudited)
|
|
|
|
Three Months Ended
December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
Consulting
|
|
Infrastructure
|
|
Financing
|
|
|
Revenue
|
|
$
|
7,288
|
|
$
|
4,770
|
|
$
|
4,483
|
|
$
|
172
|
|
|
Pre-tax Income from
Continuing Operations
|
|
$
|
2,347
|
|
$
|
523
|
|
$
|
1,026
|
|
$
|
75
|
|
|
Pre-tax
Margin
|
|
|
32.2
|
%
|
|
11.0
|
%
|
|
22.9
|
%
|
|
43.6
|
%
|
|
Change YTY
Revenue
|
|
|
2.8
|
%
|
|
0.5
|
%
|
|
1.6
|
%
|
|
(0.4)
|
%
|
|
Change YTY
Revenue - constant currency
|
|
|
8.0
|
%
|
|
9.3
|
%
|
|
7.4
|
%
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
*
|
|
Consulting
|
|
Infrastructure
|
|
Financing
|
|
|
Revenue
|
|
$
|
7,087
|
|
$
|
4,746
|
|
$
|
4,414
|
|
$
|
172
|
|
|
Pre-tax Income from
Continuing Operations
|
|
$
|
2,142
|
|
$
|
436
|
|
$
|
1,036
|
|
$
|
79
|
|
|
Pre-tax
Margin
|
|
|
30.2
|
%
|
|
9.2
|
%
|
|
23.5
|
%
|
|
46.0
|
%
|
|
____________________
|
|
* Recast to conform
with 2022 presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
Consulting
|
|
Infrastructure
|
|
Financing
|
|
|
Revenue
|
|
$
|
25,037
|
|
$
|
19,107
|
|
$
|
15,288
|
|
$
|
645
|
|
|
Pre-tax Income from
Continuing Operations
|
|
$
|
6,162
|
|
$
|
1,677
|
|
$
|
2,262
|
|
$
|
340
|
|
|
Pre-tax
Margin
|
|
|
24.6
|
%
|
|
8.8
|
%
|
|
14.8
|
%
|
|
52.6
|
%
|
|
Change YTY
Revenue
|
|
|
6.9
|
%
|
|
7.1
|
%
|
|
7.8
|
%
|
|
(16.6)
|
%
|
|
Change YTY
Revenue - constant currency
|
|
|
11.9
|
%
|
|
14.9
|
%
|
|
13.5
|
%
|
|
(13.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
*
|
|
Consulting
|
|
Infrastructure
|
|
Financing
|
|
|
Revenue
|
|
$
|
23,426
|
|
$
|
17,844
|
|
$
|
14,188
|
|
$
|
774
|
|
|
Pre-tax Income from
Continuing Operations
|
|
$
|
4,849
|
|
$
|
1,449
|
|
$
|
2,025
|
|
$
|
441
|
|
|
Pre-tax
Margin
|
|
|
20.7
|
%
|
|
8.1
|
%
|
|
14.3
|
%
|
|
57.0
|
%
|
|
____________________
|
|
* 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
December 31, 2022
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
Acquisition-
|
|
Retirement-
|
|
Tax
|
|
Kyndryl-
|
|
|
|
|
|
|
|
|
|
Related
|
|
Related
|
|
Reform
|
|
Related
|
|
Operating
|
|
|
|
GAAP
|
|
Adjustments
(1)
|
|
Adjustments
(2)
|
|
Impacts
|
|
Impacts
(3)
|
|
(Non-GAAP)
|
|
|
Gross Profit
|
|
$
|
9,632
|
|
$
|
156
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
9,788
|
|
|
Gross Profit
Margin
|
|
|
57.7
|
%
|
|
0.9
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
58.6
|
%
|
|
S,G&A
|
|
$
|
4,765
|
|
$
|
(262)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(0)
|
|
$
|
4,503
|
|
|
Other
(Income) & Expense
|
|
|
(118)
|
|
|
(1)
|
|
|
(93)
|
|
|
—
|
|
|
2
|
|
|
(210)
|
|
|
Total
Expense & Other (Income)
|
|
|
6,320
|
|
|
(263)
|
|
|
(93)
|
|
|
—
|
|
|
2
|
|
|
5,965
|
|
|
Pre-tax Income from
Continuing
Operations
|
|
|
3,312
|
|
|
419
|
|
|
93
|
|
|
—
|
|
|
(2)
|
|
|
3,823
|
|
|
Pre-tax Income Margin
from
Continuing Operations
|
|
|
19.8
|
%
|
|
2.5
|
pts.
|
|
0.6
|
pts.
|
|
—
|
pts.
|
|
(0.0)
|
pts.
|
|
22.9
|
%
|
|
Provision for/(Benefit
from) Income
Taxes (4)
|
|
$
|
443
|
|
$
|
109
|
|
$
|
16
|
|
$
|
(42)
|
|
$
|
—
|
|
$
|
526
|
|
|
Effective Tax
Rate
|
|
|
13.4
|
%
|
|
1.4
|
pts.
|
|
0.1
|
pts.
|
|
(1.1)
|
pts.
|
|
0.0
|
pts.
|
|
13.8
|
%
|
|
Income from Continuing
Operations
|
|
$
|
2,869
|
|
$
|
310
|
|
$
|
77
|
|
$
|
42
|
|
$
|
(2)
|
|
$
|
3,296
|
|
|
Income Margin from
Continuing
Operations
|
|
|
17.2
|
%
|
|
1.9
|
pts.
|
|
0.5
|
pts.
|
|
0.3
|
pts.
|
|
(0.0)
|
pts.
|
|
19.8
|
%
|
|
Diluted Earnings Per
Share:Continuing
Operations
|
|
$
|
3.13
|
|
$
|
0.34
|
|
$
|
0.08
|
|
$
|
0.05
|
|
$
|
(0.00)
|
|
$
|
3.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2021
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
Acquisition-
|
|
Retirement-
|
|
Tax
|
|
Kyndryl-
|
|
|
|
|
|
|
|
|
|
Related
|
|
Related
|
|
Reform
|
|
Related
|
|
Operating
|
|
|
|
GAAP
|
|
Adjustments
(1)
|
|
Adjustments
(2)
|
|
Impacts
|
|
Impacts
(3)
|
|
(Non-GAAP)
|
|
|
Gross Profit
|
|
$
|
9,500
|
|
$
|
182
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
9,682
|
|
|
Gross Profit
Margin
|
|
|
56.9
|
%
|
|
1.1
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
58.0
|
%
|
|
S,G&A
|
|
$
|
4,903
|
|
$
|
(290)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(8)
|
|
$
|
4,605
|
|
|
Other
(Income) & Expense
|
|
|
(18)
|
|
|
(1)
|
|
|
(315)
|
|
|
—
|
|
|
126
|
|
|
(208)
|
|
|
Total
Expense & Other (Income)
|
|
|
6,632
|
|
|
(290)
|
|
|
(315)
|
|
|
—
|
|
|
118
|
|
|
6,145
|
|
|
Pre-tax Income from
Continuing
Operations
|
|
|
2,869
|
|
|
472
|
|
|
315
|
|
|
—
|
|
|
(118)
|
|
|
3,537
|
|
|
Pre-tax Income Margin
from
Continuing Operations
|
|
|
17.2
|
%
|
|
2.8
|
pts.
|
|
1.9
|
pts.
|
|
—
|
pts.
|
|
(0.7)
|
pts.
|
|
21.2
|
%
|
|
Provision for/(Benefit
from) Income
Taxes (4)
|
|
$
|
407
|
|
$
|
117
|
|
$
|
109
|
|
$
|
(94)
|
|
$
|
(37)
|
|
$
|
502
|
|
|
Effective Tax
Rate
|
|
|
14.2
|
%
|
|
1.4
|
pts.
|
|
1.8
|
pts.
|
|
(2.7)
|
pts.
|
|
(0.6)
|
pts.
|
|
14.2
|
%
|
|
Income from Continuing
Operations
|
|
$
|
2,462
|
|
$
|
355
|
|
$
|
206
|
|
$
|
94
|
|
$
|
(81)
|
|
$
|
3,035
|
|
|
Income Margin from
Continuing
Operations
|
|
|
14.7
|
%
|
|
2.1
|
pts.
|
|
1.2
|
pts.
|
|
0.6
|
pts.
|
|
(0.5)
|
pts.
|
|
18.2
|
%
|
|
Diluted Earnings Per
Share: Continuing
Operations
|
|
$
|
2.72
|
|
$
|
0.39
|
|
$
|
0.23
|
|
$
|
0.10
|
|
$
|
(0.09)
|
|
$
|
3.35
|
|
|
____________________
|
|
(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 2022 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)
|
|
|
|
Year Ended
December 31, 2022
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
Acquisition-
|
|
Retirement-
|
|
Tax
|
|
Kyndryl-
|
|
|
|
|
|
|
|
|
|
Related
|
|
Related
|
|
Reform
|
|
Related
|
|
Operating
|
|
|
|
GAAP
|
|
Adjustments
(1)
|
|
Adjustments*
(2)
|
|
Impacts
|
|
Impacts
(3)
|
|
(Non-GAAP)
|
|
|
Gross Profit
|
|
$
|
32,687
|
|
$
|
682
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
33,370
|
|
|
Gross Profit
Margin
|
|
|
54.0
|
%
|
|
1.1
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
55.1
|
%
|
|
S,G&A
|
|
$
|
18,609
|
|
$
|
(1,080)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(0)
|
|
$
|
17,529
|
|
|
Other
(Income) & Expense
|
|
|
5,803
|
|
|
(3)
|
|
|
(6,548)
|
|
|
—
|
|
|
(351)
|
|
|
(1,099)
|
|
|
Total
Expense & Other (Income)
|
|
|
31,531
|
|
|
(1,083)
|
|
|
(6,548)
|
|
|
—
|
|
|
(351)
|
|
|
23,549
|
|
|
Pre-tax Income from
Continuing
Operations
|
|
|
1,156
|
|
|
1,765
|
|
|
6,548
|
|
|
—
|
|
|
351
|
|
|
9,821
|
|
|
Pre-tax Income Margin
from
Continuing Operations
|
|
|
1.9
|
%
|
|
2.9
|
pts.
|
|
10.8
|
pts.
|
|
—
|
pts.
|
|
0.6
|
pts.
|
|
16.2
|
%
|
|
Provision for/(Benefit
from) Income
Taxes (4)
|
|
$
|
(626)
|
|
$
|
436
|
|
$
|
1,615
|
|
$
|
70
|
|
$
|
—
|
|
$
|
1,495
|
|
|
Effective Tax
Rate
|
|
|
(54.2)
|
%
|
|
14.2
|
pts.
|
|
52.6
|
pts.
|
|
0.7
|
pts.
|
|
1.9
|
pts.
|
|
15.2
|
%
|
|
Income from Continuing
Operations
|
|
$
|
1,783
|
|
$
|
1,329
|
|
$
|
4,933
|
|
$
|
(70)
|
|
$
|
351
|
|
$
|
8,326
|
|
|
Income Margin from
Continuing
Operations
|
|
|
2.9
|
%
|
|
2.2
|
pts.
|
|
8.1
|
pts.
|
|
(0.1)
|
pts.
|
|
0.6
|
pts.
|
|
13.8
|
%
|
|
Diluted Earnings Per
Share: Continuing
Operations
|
|
$
|
1.95
|
|
$
|
1.46
|
|
$
|
5.41
|
|
$
|
(0.08)
|
|
$
|
0.38
|
|
$
|
9.13
|
|
|
____________________
|
|
* Includes a one-time,
non-cash, pre-tax pension settlement charge of $5.9 billion ($4.4
billion net of tax).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2021
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
Acquisition-
|
|
Retirement-
|
|
Tax
|
|
Kyndryl-
|
|
|
|
|
|
|
|
|
|
Related
|
|
Related
|
|
Reform
|
|
Related
|
|
Operating
|
|
|
|
GAAP
|
|
Adjustments
(1)
|
|
Adjustments
(2)
|
|
Impacts
|
|
Impacts
(3)
|
|
(Non-GAAP)
|
|
|
Gross Profit
|
|
$
|
31,486
|
|
$
|
719
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
32,205
|
|
|
Gross Profit
Margin
|
|
|
54.9
|
%
|
|
1.3
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
56.2
|
%
|
|
S,G&A
|
|
$
|
18,745
|
|
$
|
(1,160)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(8)
|
|
$
|
17,577
|
|
|
Other
(Income) & Expense
|
|
|
873
|
|
|
(2)
|
|
|
(1,282)
|
|
|
—
|
|
|
126
|
|
|
(285)
|
|
|
Total
Expense & Other (Income)
|
|
|
26,649
|
|
|
(1,162)
|
|
|
(1,282)
|
|
|
—
|
|
|
118
|
|
|
24,324
|
|
|
Pre-tax Income from
Continuing
Operations
|
|
|
4,837
|
|
|
1,881
|
|
|
1,282
|
|
|
—
|
|
|
(118)
|
|
|
7,881
|
|
|
Pre-tax Income Margin
from
Continuing Operations
|
|
|
8.4
|
%
|
|
3.3
|
pts.
|
|
2.2
|
pts.
|
|
—
|
pts.
|
|
(0.2)
|
pts.
|
|
13.7
|
%
|
|
Provision for/(Benefit
from) Income
Taxes (4)
|
|
$
|
124
|
|
$
|
457
|
|
$
|
251
|
|
$
|
(89)
|
|
$
|
(37)
|
|
$
|
706
|
|
|
Effective Tax
Rate
|
|
|
2.6
|
%
|
|
5.2
|
pts.
|
|
2.8
|
pts.
|
|
(1.1)
|
pts.
|
|
(0.4)
|
pts.
|
|
9.0
|
%
|
|
Income from Continuing
Operations
|
|
$
|
4,712
|
|
$
|
1,424
|
|
$
|
1,031
|
|
$
|
89
|
|
$
|
(81)
|
|
$
|
7,174
|
|
|
Income Margin from
Continuing
Operations
|
|
|
8.2
|
%
|
|
2.5
|
pts.
|
|
1.8
|
pts.
|
|
0.2
|
pts.
|
|
(0.1)
|
pts.
|
|
12.5
|
%
|
|
Diluted Earnings Per
Share: Continuing
Operations
|
|
$
|
5.21
|
|
$
|
1.57
|
|
$
|
1.14
|
|
$
|
0.10
|
|
$
|
(0.09)
|
|
$
|
7.93
|
|
|
____________________
|
|
(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 2022 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.
|
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SOURCE IBM