UK Regulatory Announcement: IBM Reports 2020 Fourth-Quarter and Full-Year Results

Strong hybrid cloud adoption; Gross margin expansion; Solid cash generation

ARMONK, N.Y.–(BUSINESS WIRE)– 

IBM (NYSE: IBM) today announced fourth-quarter and full-year 2020 earnings results.

“We made progress in 2020 growing our hybrid cloud platform as the foundation for our clients’ digital transformations while dealing with the broader uncertainty of the macro environment,” said Arvind Krishna, IBM chairman and chief executive officer. “The actions we are taking to focus on hybrid cloud and AI will take hold, giving us confidence we can achieve revenue growth in 2021.”

Highlights

Fourth Quarter:

  • GAAP EPS from continuing operations of $1.41; Operating (non-GAAP) EPS of $2.07

    — EPS includes the impact of a pre-tax charge of more than $2.0 billion for structural actions in the fourth quarter
  • Revenue of $20.4 billion, down 6 percent (down 8 percent adjusting for divested businesses and currency)
  • Total cloud revenue of $7.5 billion, up 10 percent (up 8 percent adjusting for divested businesses and currency)
  • Red Hat revenue up 19 percent (up 17 percent adjusting for currency), normalized for historical comparability
  • GAAP gross profit margin of 51.7 percent, up 70 basis points; Operating (non-GAAP) gross profit margin of 52.5 percent, up 70 basis points
  • Debt reduced by $3.9 billion since end of third quarter

Full Year:

  • GAAP EPS from continuing operations of $6.13; Operating (non-GAAP) EPS of $8.67
  • Revenue of $73.6 billion, down 5 percent (down 4 percent adjusting for divested businesses and currency)
  • Total cloud revenue of $25.1 billion, up 19 percent (up 20 percent adjusting for divested businesses and currency)
  • Red Hat revenue up 18 percent, normalized for historical comparability
  • GAAP gross profit margin up 100 basis points; operating (non-GAAP) gross profit margin up 130 basis points
  • Net cash from operating activities of $18.2 billion; free cash flow of $10.8 billion
  • Cash on hand of $14.3 billion; debt reduced by more than $11 billion since closing the Red Hat acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOURTH QUARTER 2020

 

 

Results include the impact of $2.04 billion pre-tax charge

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

Gross

 

 

 

 

Diluted

 

 

Net

 

 

Pre-tax

 

Income

 

Profit

 

 

 

 

EPS *

 

 

Income *

 

 

Income *

 

Margin *

 

Margin

 

GAAP from Continuing Operations

 

$

1.41

 

$

1.3B

 

$

1.3B

 

6.3

%

51.7

%

Year/Year

 

 

(66)

%

 

(66)

%

 

(68)

%

(12.0)

Pts

0.7

Pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (Non-GAAP)

 

$

2.07

 

$

1.9B

 

$

2.1B

 

10.2

%

52.5

%

Year/Year

 

 

(56)

%

 

(56)

%

 

(56)

%

(11.4)

Pts

0.7

Pts

* Results include the impact of pre-tax charge of $2.04 billion for structural actions in the fourth quarter.

“In 2020 we increased investment in our business across R&D and CAPEX, and since October, announced the acquisition of seven companies focused on hybrid cloud and AI,” said James Kavanaugh, IBM senior vice president and chief financial officer. “With solid cash generation, steadily expanding gross profit margins, disciplined financial management and ample liquidity, we are well positioned for success as the leading hybrid cloud platform company.”

Cash Flow and Balance Sheet

In the fourth quarter, the company generated net cash from operating activities of $5.9 billion, or $6.8 billion excluding Global Financing receivables. IBM’s free cash flow was $6.1 billion. The company returned $1.5 billion to shareholders in dividends.

For the full year, the company generated net cash from operating activities of $18.2 billion, or $13.8 billion excluding Global Financing receivables. Net capital expenditures of $3 billion increased $0.7 billion, primarily for cloud infrastructure. Free cash flow was $10.8 billion. IBM returned $5.8 billion to shareholders in dividends.

IBM ended the fourth quarter with $14.3 billion of cash on hand, which includes marketable securities, up $5.3 billion from year-end 2019. Debt, including Global Financing debt of $21.2 billion, totaled $61.5 billion, down $3.9 billion since the end of the third quarter, and down $11.5 billion since closing the Red Hat acquisition.

Segment Results for Fourth Quarter

Segment pre-tax results reflect the impact of the $2.04 billion pre-tax charge for structural actions in the fourth quarter.

  • Cloud & Cognitive Software (includes Cloud & Data Platforms which includes Red Hat, Cognitive Applications and Transaction Processing Platforms) — revenues of $6.8 billion, down 4.5 percent (down 6.6 percent adjusting for currency). Cloud & Data Platforms grew 9 percent (up 6 percent adjusting for currency) led by Red Hat. Cognitive Applications revenue was flat (down 2 percent adjusting for currency), with growth in Security and IoT. Transaction Processing Platforms declined 24 percent (down 26 percent adjusting for currency). Cloud revenue up 39 percent (up 36 percent adjusting for currency). Gross profit margin up 20 basis points.
  • Global Business Services (includes Consulting, Application Management and Global Process Services) — revenues of $4.2 billion, down 2.7 percent (down 5.2 percent adjusting for currency), driven by declines in Application Management and Consulting. Global Process Services revenue grew. Cloud revenue up 16 percent (up 14 percent adjusting for currency). Gross profit margin up 260 basis points.
  • Global Technology Services (includes Infrastructure & Cloud Services and Technology Support Services) — revenues of $6.6 billion, down 5.5 percent (down 7.8 percent adjusting for currency). Cloud revenue up 4 percent (up 1 percent adjusting for currency). Gross profit margin up 70 basis points.
  • Systems (includes Systems Hardware and Operating Systems Software) — revenues of $2.5 billion, down 17.8 percent (down 19.4 percent adjusting for currency), as a result of declines in all Systems Hardware platforms, reflecting the impact of product cycle dynamics. Cloud revenue down 18 percent (down 19 percent adjusting for currency). Gross profit margin up 380 basis points.
  • Global Financing (includes financing and used equipment sales) — revenues of $286 million, down 4.8 percent (down 6.0 percent adjusting for currency), reflecting the wind-down of OEM commercial financing.

Full-year 2020 Results

Full-year results reflect transaction-related impacts associated with the Red Hat acquisition, which closed in July 2019, and the impact of the $2.04 billion pre-tax charge for structural actions in the fourth quarter.

Diluted earnings per share from continuing operations was $6.13 compared to $10.57 in 2019, a decrease of 42 percent. Net income from continuing operations was $5.5 billion, down 42 percent year to year. Revenues for the full year 2020 totaled $73.6 billion, a decrease of 4.6 percent year to year (down 3.5 percent adjusting for divested businesses and currency) compared with $77.1 billion for the full year 2019.

Operating (non-GAAP) diluted earnings per share from continuing operations was $8.67 compared with $12.81 per diluted share for 2019, a decrease of 32 percent. Operating (non-GAAP) net income for the full year ended December 31, 2020 was $7.8 billion compared with $11.4 billion in the prior-year period, a decrease of 32 percent.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FULL YEAR 2020

 

 

Results include the impact of $2.04 billion pre-tax charge

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

Gross

 

 

 

 

Diluted

 

 

Net

 

 

Pre-tax

 

Income

 

Profit

 

 

 

 

EPS *

 

 

Income *

 

 

Income *

 

Margin *

 

Margin

 

GAAP from Continuing Operations

 

$

6.13

**

$

5.5B

**

$

4.6B

 

6.3

%

48.3

%

Year/Year

 

 

(42)

%

 

(42)

%

 

(54)

%

(6.9)

Pts

1.0

Pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (Non-GAAP)

 

$

8.67

 

$

7.8B

 

$

7.7B

 

10.4

%

49.3

%

Year/Year

 

 

(32)

%

 

(32)

%

 

(39)

%

(5.8)

Pts

1.3

Pts

* Results include the impact of pre-tax charge of $2.04 billion for structural actions in the fourth quarter.

** Consolidated diluted earnings per share was $6.23 compared to $10.56 in 2019, a decrease of 41 percent. Consolidated net income was $5.6 billion, down 41 percent year to year.

Full-Year 2021 Expectations

The company expects to grow revenue for the full year 2021 based on the current foreign exchange rates. The company also expects adjusted free cash flow of $11 billion to $12 billion in 2021. Adjusted free cash flow excludes approximately $3 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 the managed infrastructure services business.

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; the company’s failure to meet growth and productivity objectives; 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; cybersecurity and data privacy considerations; fluctuations in financial results; 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; impact of local legal, economic, political, health and other conditions; adverse effects from environmental matters, tax matters and the company’s pension plans; 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; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; reliance on third party distribution channels and ecosystems; 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; legal proceedings and investigatory risks; 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 (SEC) 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;
  • Red Hat revenue normalized for historical comparability;
  • presenting operating (non-GAAP) earnings per share amounts and related income statement items;
  • net cash from operating activities, excluding Global Financing receivables;
  • free cash flow;
  • adjusted free cash flow (expectations).

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-4q20. 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

 

 

 

Year Ended

 

 

 

 

December 31,

 

 

 

December 31,

 

 

 

 

2020

 

2019

 

 

 

2020

 

2019

 

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cloud & Cognitive Software

 

$

6,837

 

$

7,160

*

 

 

$

23,376

 

$

22,891

*

 

Global Business Services

 

 

4,170

 

 

4,285

*

 

 

 

16,162

 

 

16,798

*

 

Global Technology Services

 

 

6,568

 

 

6,949

 

 

 

 

25,812

 

 

27,361

 

 

Systems

 

 

2,501

 

 

3,042

 

 

 

 

6,978

 

 

7,604

 

 

Global Financing

 

 

286

 

 

301

 

 

 

 

1,123

 

 

1,400

 

 

Other

 

 

6

 

 

40

*

 

 

 

169

 

 

1,092

*

 

TOTAL REVENUE

 

 

20,367

 

 

21,777

 

 

 

 

73,620

 

 

77,147

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

10,523

 

 

11,100

 

 

 

 

35,575

 

 

36,488

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT MARGIN

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cloud & Cognitive Software

 

 

79.8

%

 

79.5

%

*

 

 

77.5

%

 

77.1

%

*

Global Business Services

 

 

30.1

%

 

27.6

%

*

 

 

29.7

%

 

27.7

%

*

Global Technology Services

 

 

35.9

%

 

35.2

%

 

 

 

34.8

%

 

34.8

%

 

Systems

 

 

59.9

%

 

56.0

%

 

 

 

55.9

%

 

53.1

%

 

Global Financing

 

 

33.8

%

 

35.6

%

 

 

 

37.7

%

 

35.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL GROSS PROFIT MARGIN

 

 

51.7

%

 

51.0

%

 

 

 

48.3

%

 

47.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSE AND OTHER INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

S,G&A

 

 

7,232

 

 

5,433

 

 

 

 

23,082

 

 

20,604

 

 

R,D&E

 

 

1,611

 

 

1,596

 

 

 

 

6,333

 

 

5,989

 

 

Intellectual property and custom development income

 

 

(173)

 

 

(159)

 

 

 

 

(626)

 

 

(648)

 

 

Other (income) and expense

 

 

247

 

 

(117)

 

 

 

 

861

 

 

(968)

 

 

Interest expense

 

 

317

 

 

354

 

 

 

 

1,288

 

 

1,344

 

 

TOTAL EXPENSE AND OTHER INCOME

 

 

9,234

 

 

7,107

 

 

 

 

30,937

 

 

26,322

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM CONTINUING OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BEFORE INCOME TAXES

 

 

1,289

 

 

3,993

 

 

 

 

4,637

 

 

10,166

 

 

Pre-tax margin

 

 

6.3

%

 

18.3

%

 

 

 

6.3

%

 

13.2

%

 

Provision for/(Benefit from) income taxes

 

 

25

 

 

324

 

 

 

 

(864)

 

 

731

 

 

Effective tax rate

 

 

1.9

%

 

8.1

%

 

 

 

(18.6)

%

 

7.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM CONTINUING OPERATIONS

 

$

1,264

 

$

3,669

 

 

 

$

5,501

 

$

9,435

 

 

DISCONTINUED OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

92

 

 

0

 

 

 

 

89

 

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

1,356

 

$

3,670

 

 

 

$

5,590

 

$

9,431

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS/(LOSS) PER SHARE OF COMMON STOCK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assuming Dilution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

1.41

 

$

4.11

 

 

 

$

6.13

 

$

10.57

 

 

Discontinued Operations

 

$

0.10

 

$

0.00

 

 

 

$

0.10

 

$

(0.01)

 

 

TOTAL

 

$

1.51

 

$

4.11

 

 

 

$

6.23

 

$

10.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

1.42

 

$

4.14

 

 

 

$

6.18

 

$

10.63

 

 

Discontinued Operations

 

$

0.10

 

$

0.00

 

 

 

$

0.10

 

$

0.00

 

 

TOTAL

 

$

1.52

 

$

4.14

 

 

 

$

6.28

 

$

10.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assuming Dilution

 

 

899.0

 

 

893.7

 

 

 

 

896.6

 

 

892.8

 

 

Basic

 

 

892.6

 

 

887.1

 

 

 

 

890.3

 

 

887.2

 

 

_____________________

* Recast to conform with 2020 presentation.

INTERNATIONAL BUSINESS MACHINES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

 

 

 

At

 

At

 

 

December 31,

 

December 31,

(Dollars in Millions)

 

2020

 

2019

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,212

 

$

8,172

Restricted cash

 

 

463

 

 

141

Marketable securities

 

 

600

 

 

696

Notes and accounts receivable – trade, net

 

 

7,132

 

 

7,870

Short-term financing receivables, net

 

 

10,892

 

 

14,192

Other accounts receivable, net

 

 

714

 

 

1,733

Inventories

 

 

1,839

 

 

1,619

Deferred costs

 

 

2,107

 

 

1,896

Prepaid expenses and other current assets

 

 

2,206

 

 

2,101

Total Current Assets

 

 

39,165

 

 

38,420

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

10,040

 

 

10,010

Operating right-of-use assets, net

 

 

4,686

 

 

4,996

Long-term financing receivables, net

 

 

7,086

 

 

8,712

Prepaid pension assets

 

 

7,610

 

 

6,865

Deferred costs

 

 

2,449

 

 

2,472

Deferred taxes

 

 

9,241

 

 

5,182

Goodwill

 

 

59,617

 

 

58,222

Intangibles, net

 

 

13,796

 

 

15,235

Investments and sundry assets

 

 

2,282

 

 

2,074

Total Assets

 

$

155,971

 

$

152,186

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Taxes

 

$

3,301

 

$

2,839

Short-term debt

 

 

7,183

 

 

8,797

Accounts payable

 

 

4,908

 

 

4,896

Deferred income

 

 

12,833

 

 

12,026

Operating lease liabilities

 

 

1,357

 

 

1,380

Other liabilities

 

 

10,287

 

 

7,763

Total Current Liabilities

 

 

39,869

 

 

37,701

 

 

 

 

 

 

 

Long-term debt

 

 

54,355

 

 

54,102

Retirement related obligations

 

 

18,248

 

 

17,142

Deferred income

 

 

4,301

 

 

3,851

Operating lease liabilities

 

 

3,574

 

 

3,879

Other liabilities

 

 

14,897

 

 

14,526

Total Liabilities

 

 

135,244

 

 

131,202

 

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

 

 

 

 

 

 

 

 

IBM Stockholders’ Equity:

 

 

 

 

 

 

Common stock

 

 

56,556

 

 

55,895

Retained earnings

 

 

162,717

 

 

162,954

Treasury stock — at cost

 

 

(169,339)

 

 

(169,413)

Accumulated other comprehensive income/(loss)

 

 

(29,337)

 

 

(28,597)

Total IBM Stockholders’ Equity

 

 

20,597

 

 

20,841

 

 

 

 

 

 

 

Noncontrolling interests

 

 

129

 

 

144

Total Equity

 

 

20,727

 

 

20,985

 

 

 

 

 

 

 

Total Liabilities and Equity

 

$

155,971

 

$

152,186

INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW ANALYSIS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

(Dollars in Millions)

 

2020

 

2019

 

2020

 

2019

Net Cash Provided by Operating Activities per GAAP:

 

$

5,859

 

$

3,451

 

$

18,197

 

$

14,770

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: change in Global Financing (GF) Receivables

 

 

(974)

 

 

(3,220)

 

 

4,349

 

 

491

Capital Expenditures, Net

 

 

(780)

 

 

(645)

 

 

(3,042)

 

 

(2,370)

 

 

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow

 

 

6,054

 

 

6,027

 

 

10,805

 

 

11,909

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions

 

 

(299)

 

 

 

 

(336)

 

 

(32,630)

Divestitures

 

 

(7)

 

 

149

 

 

503

 

 

1,076

Dividends

 

 

(1,455)

 

 

(1,438)

 

 

(5,797)

 

 

(5,707)

Share Repurchase

 

 

 

 

 

 

 

 

(1,361)

Non-GF Debt

 

 

(4,756)

 

 

(5,640)

 

 

221

 

 

22,792

Other (includes GF Net Receivables and GF Debt)

 

 

(1,016)

 

 

(1,046)

 

 

(130)

 

 

709

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

(1,478)

 

$

(1,948)

 

$

5,265

 

$

(3,213)

INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

(Dollars in Millions)

 

2020

 

2019

 

2020

 

2019

Net Income from Operations

 

$

1,356

 

$

3,670

 

$

5,590

 

$

9,431

Depreciation/Amortization of Intangibles

 

 

1,699

 

 

1,650

 

 

6,695

 

 

6,059

Stock-based Compensation

 

 

279

 

 

210

 

 

937

 

 

679

Working Capital / Other

 

 

3,499

 

 

1,142

 

 

625

 

 

(1,890)

Global Financing A/R

 

 

(974)

 

 

(3,220)

 

 

4,349

 

 

491

Net Cash Provided by Operating Activities

 

$

5,859

 

$

3,451

 

$

18,197

 

$

14,770

Capital Expenditures, net of payments & proceeds

 

 

(780)

 

 

(645)

 

 

(3,042)

 

 

(2,370)

Divestitures, net of cash transferred

 

 

(7)

 

 

149

 

 

503

 

 

1,076

Acquisitions, net of cash acquired

 

 

(299)

 

 

 

 

(336)

 

 

(32,630)

Marketable Securities / Other Investments, net

 

 

528

 

 

624

 

 

(153)

 

 

6,988

Net Cash Provided by/(Used in) Investing Activities

 

$

(558)

 

$

127

 

$

(3,028)

 

$

(26,936)

Debt, net of payments & proceeds

 

 

(4,781)

 

 

(4,181)

 

 

(3,714)

 

 

16,284

Dividends

 

 

(1,455)

 

 

(1,438)

 

 

(5,797)

 

 

(5,707)

Common Stock Repurchases

 

 

 

 

 

 

 

 

(1,361)

Common Stock Transactions – Other

 

 

(57)

 

 

(55)

 

 

(210)

 

 

(173)

Net Cash Provided by/(Used in) Financing Activities

 

$

(6,293)

 

$

(5,674)

 

$

(9,721)

 

$

9,042

Effect of Exchange Rate changes on Cash

 

 

113

 

 

185

 

 

(87)

 

 

(167)

Net Change in Cash, Cash Equivalents and Restricted Cash

 

$

(878)

 

$

(1,911)

 

$

5,361

 

$

(3,290)

INTERNATIONAL BUSINESS MACHINES CORPORATION

SEGMENT DATA

(Unaudited)

 

 

 

Three Months Ended December 31, 2020

 

 

 

Cloud &

 

Global

 

Global

 

 

 

 

 

 

 

 

 

Cognitive

 

Business

 

Technology

 

 

 

 

Global

 

(Dollars in Millions)

 

Software

 

Services

 

Services

 

Systems

 

Financing

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External

 

$

6,837

 

$

4,170

 

$

6,568

 

$

2,501

 

$

286

 

Internal

 

 

738

 

 

43

 

 

316

 

 

196

 

 

233

 

Total Segment Revenue

 

$

7,575

 

$

4,213

 

$

6,884

 

$

2,697

 

$

519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Income/(Loss) from Continuing Operations

 

 

1,887

 

 

148

 

 

(353)

 

 

455

 

 

195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Margin

 

 

24.9

%

 

3.5

%

 

(5.1)

%

 

16.9

%

 

37.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change YTY Revenue – External

 

 

(4.5)

%

 

(2.7)

%

 

(5.5)

%

 

(17.8)

%

 

(4.8)

%

Change YTY Revenue – External @constant currency

 

 

(6.6)

%

 

(5.2)

%

 

(7.8)

%

 

(19.4)

%

 

(6.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2019

 

 

 

Cloud &

 

Global

 

Global

 

 

 

 

 

 

 

 

 

Cognitive

 

Business

 

Technology

 

 

 

 

Global

 

(Dollars in Millions)

 

Software*

 

Services*

 

Services

 

Systems

 

Financing

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External

 

$

7,160

 

$

4,285

 

$

6,949

 

$

3,042

 

$

301

 

Internal

 

 

692

 

 

65

 

 

278

 

 

198

 

 

348

 

Total Segment Revenue

 

$

7,853

 

$

4,350

 

$

7,227

 

$

3,240

 

$

649

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Income/(Loss) from Continuing Operations

 

 

2,729

 

 

469

 

 

645

 

 

802

 

 

252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Margin

 

 

34.8

%

 

10.8

%

 

8.9

%

 

24.8

%

 

38.9

%

_____________________

* Recast to conform with 2020 presentation.

INTERNATIONAL BUSINESS MACHINES CORPORATION

SEGMENT DATA

(Unaudited)

 

 

 

Year Ended December 31, 2020

 

 

 

Cloud &

 

Global

 

Global

 

 

 

 

 

 

 

 

 

Cognitive

 

Business

 

Technology

 

 

 

 

Global

 

(Dollars in Millions)

 

Software

 

Services

 

Services

 

Systems

 

Financing

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External

 

$

23,376

 

$

16,162

 

$

25,812

 

$

6,978

 

$

1,123

 

Internal

 

 

3,169

 

 

193

 

 

1,226

 

 

824

 

 

894

 

Total Segment Revenue

 

$

26,545

 

$

16,355

 

$

27,039

 

$

7,802

 

$

2,017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Income/(Loss) from Continuing Operations

 

 

6,362

 

 

1,351

 

 

117

 

 

449

 

 

761

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Margin

 

 

24.0

%

 

8.3

%

 

0.4

%

 

5.8

%

 

37.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change YTY Revenue – External

 

 

2.1

%

 

(3.8)

%

 

(5.7)

%

 

(8.2)

%

 

(19.8)

%

Change YTY Revenue – External @constant currency

 

 

1.9

%

 

(4.1)

%

 

(5.4)

%

 

(8.7)

%

 

(19.2)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2019

 

 

 

Cloud &

 

Global

 

Global

 

 

 

 

 

 

 

 

 

Cognitive

 

Business

 

Technology

 

 

 

 

Global

 

(Dollars in Millions)

 

Software*

 

Services*

 

Services

 

Systems

 

Financing

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External

 

$

22,891

 

$

16,798

 

$

27,361

 

$

7,604

 

$

1,400

 

Internal

 

 

2,827

 

 

278

 

 

1,157

 

 

726

 

 

1,232

 

Total Segment Revenue

 

$

25,718

 

$

17,076

 

$

28,518

 

$

8,330

 

$

2,632

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Income/(Loss) from Continuing Operations

 

 

7,811

 

 

1,623

 

 

1,645

 

 

701

 

 

1,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax Margin

 

 

30.4

%

 

9.5

%

 

5.8

%

 

8.4

%

 

40.1

%

_____________________

* Recast to conform with 2020 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, 2020

 

 

 

Continuing Operations

 

 

 

 

 

 

Acquisition-

 

Retirement-

 

Tax

 

Spin-off-

 

 

 

 

 

 

 

 

 

Related

 

Related

 

Reform

 

Related

 

Operating

 

 

 

GAAP

 

Adjustments (1)

 

Adjustments (2)

 

Impacts

 

Charges (4)

 

(Non-GAAP)

 

Gross Profit

 

$

10,523

 

$

177

 

$

 

$

 

$

1

 

$

10,700

 

Gross Profit Margin

 

 

51.7

%

 

0.9

Pts

 

Pts

 

Pts

 

0.0

Pts

 

52.5

%

S,G&A

 

 

7,232

 

 

(287)

 

 

 

 

 

 

(28)

 

 

6,917

 

R,D&E

 

 

1,611

 

 

 

 

 

 

 

 

 

 

1,611

 

Other (Income) & Expense

 

 

247

 

 

(1)

 

 

(295)

 

 

 

 

 

 

(48)

 

Interest Expense

 

 

317

 

 

 

 

 

 

 

 

 

 

317

 

Total Expense & Other (Income)

 

 

9,234

 

 

(288)

 

 

(295)

 

 

 

 

(28)

 

 

8,623

 

Pre-tax Income from Continuing Operations

 

 

1,289

 

 

465

 

 

295

 

 

 

 

28

 

 

2,077

 

Pre-tax Income Margin from Continuing Operations

 

 

6.3

%

 

2.3

Pts

 

1.4

Pts

 

Pts

 

0.1

Pts

 

10.2

%

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

 

 

25

 

 

105

 

 

96

 

 

(18)

 

 

7

 

 

216

 

Effective Tax Rate

 

 

1.9

%

 

4.6

Pts

 

4.4

Pts

 

(0.9)

Pts

 

0.3

Pts

 

10.4

%

Income from Continuing Operations

 

 

1,264

 

 

359

 

 

198

 

 

18

 

 

21

 

 

1,861

 

Income Margin from Continuing Operations

 

 

6.2

%

 

1.8

Pts

 

1.0

Pts

 

0.1

Pts

 

0.1

Pts

 

9.1

%

Diluted Earnings/(Loss) Per Share: Continuing Operations

 

$

1.41

 

$

0.40

 

$

0.22

 

$

0.02

 

$

0.02

 

$

2.07

 

Contacts

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