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Exhibit 99.1

IBM RELEASES FIRST QUARTER RESULTS

Double-Digit Software and Consulting Growth Led by Hybrid Cloud Adoption; Strong Profit Generation

ARMONK, N.Y., April 19, 2022 . . . IBM (NYSE: IBM) today announced first-quarter 2022 earnings results.

“Demand for hybrid cloud and AI drove growth in both Software and Consulting in the first quarter. Today we’re a more focused business and our results reflect the execution of our strategy," said Arvind Krishna, IBM chairman and chief executive officer. "We are off to a solid start for the year, and we now see revenue growth for 2022 at the high end of our model.

First-Quarter Highlights

Revenue
Revenue of $14.2 billion, up 8 percent, up 11 percent at constant currency (over 5 points from incremental sales to Kyndryl)
Software revenue up 12 percent, up 15 percent at constant currency (over 8 points from incremental sales to Kyndryl)
Consulting revenue up 13 percent, up 17 percent at constant currency
Infrastructure revenue down 2 percent, flat at constant currency (over 8 points from incremental sales to Kyndryl)
Hybrid cloud revenue:

-- First Quarter: $5.0 billion, up 14 percent, up 17 percent at constant currency

-- Last 12 months: $20.8 billion, up 17 percent

Free Cash Flow
On a consolidated basis, net cash from operating activities of $3.2 billion; free cash flow of $1.2 billion

FIRST QUARTER 2022 INCOME STATEMENT SUMMARY

    

    

 

    

Pre-tax

    

    

    

Gross

 

Pre-tax

Income

Net

Diluted

Revenue

Profit

 

Income

Margin

Income

EPS

GAAP from Continuing Operations

$

14.2B

$

7.3B

$

0.6B

 

4.4

%  

$

0.7B

$

0.73

Year/Year

 

8

%*

 

4

%  

 

156

%  

2.5

Pts

 

64

%  

 

62

%  

Operating
(Non-GAAP)

$

7.5B

$

1.5B

 

10.7

%  

$

1.3B

$

1.40

Year/Year

4

%  

 

46

%  

2.8

Pts

 

25

%  

 

25

%  

* 11% at constant currency

“In the first quarter we continued to strengthen the fundamentals of our business, consistent with our medium-term model," said James Kavanaugh, IBM senior vice president and chief financial officer. "We are a faster growing, more profitable company with a higher-value business mix, a significant recurring revenue base and strong cash generation.”


Segment Results for First Quarter

Software (includes Hybrid Platform & Solutions, Transaction Processing)— revenues of $5.8 billion, up 12.3 percent, up 15.4 percent at constant currency (over 8 points from incremental sales to Kyndryl):

- Hybrid Platform & Solutions up 7 percent, up 10 percent at constant currency (about 1.5 points from incremental sales to Kyndryl):

-- Red Hat up 18 percent, up 21 percent at constant currency

-- Automation up 3 percent, up 5 percent at constant currency

-- Data & AI up 2 percent, up 4 percent at constant currency

-- Security up 5 percent, up 8 percent at constant currency

- Transaction Processing up 26 percent, up 31 percent at constant currency (about 28 points from incremental sales to Kyndryl)

- Software segment hybrid cloud revenue up 22 percent, up 25 percent at constant currency

Consulting (includes Business Transformation, Technology Consulting and Application Operations)— revenues of $4.8 billion, up 13.3 percent, up 17.4 percent at constant currency:

- Business Transformation up 15 percent, up 19 percent at constant currency

- Technology Consulting up 14 percent, up 19 percent at constant currency

- Application Operations up 10 percent, up 14 percent at constant currency

- Consulting segment hybrid cloud revenue up 24 percent, up 29 percent at constant currency

Infrastructure (includes Hybrid Infrastructure, Infrastructure Support)— revenues of $3.2 billion, down 2.3 percent, up 0.3 percent at constant currency (over 8 points from incremental sales to Kyndryl):

- Hybrid Infrastructure down 5 percent, down 2 percent at constant currency (over 8 points from incremental sales to Kyndryl)

-- IBM z Systems down 19 percent, down 18 percent at constant currency

-- Distributed Infrastructure up 5 percent, up 8 percent at constant currency

- Infrastructure Support flat, up 4 percent at constant currency (over 8 points from incremental sales to Kyndryl)

- Infrastructure segment hybrid cloud revenue down 20 percent, down 18 percent at constant currency

Financing (includes client and commercial financing) revenues of $0.2 billion, down 26.2 percent, down 24.5 percent at constant currency

Cash Flow and Balance Sheet

On a consolidated basis, in the first quarter, the company generated net cash from operating activities of $3.2 billion or $1.6 billion excluding IBM Financing receivables. IBM’s free cash flow was $1.2 billion, which includes cash impacts from the company’s structural actions initiated at the end of 2020.

IBM ended the first quarter with $10.8 billion of cash on hand (which includes marketable securities), up $3.2 billion from year-end 2021. Debt, including IBM Financing debt of $12.2 billion, totaled $54.2 billion, up $2.5 billion since the end of 2021. The company returned $1.5 billion to shareholders in dividends in the first quarter.

Full-Year 2022 Expectations

Revenue growth: The company now expects constant currency revenue growth at the high end of the mid-single digit range. The company also expects an additional 3.5 point contribution from incremental sales to Kyndryl. At mid-April 2022 foreign exchange rates, currency is expected to be a three to four point headwind.
Free Cash Flow: The company continues to expect $10 billion to $10.5 billion in consolidated free cash flow.

Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company’s current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company’s innovation initiatives; damage to the company’s reputation;


risks from investing in growth opportunities; failure of the company’s intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the company’s ability to successfully manage acquisitions, alliances and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities, and higher debt levels; fluctuations in financial results; impact of local legal, economic, political, health and other conditions; the company’s failure to meet growth and productivity objectives; ineffective internal controls; the company’s use of accounting estimates; impairment of the company’s goodwill or amortizable intangible assets; the company’s ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; reliance on third party distribution channels and ecosystems; cybersecurity and data privacy considerations; adverse effects related to climate change and environmental matters, tax matters; legal proceedings and investigatory risks; the company’s pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; potential failure of the separation of Kyndryl Holdings, Inc. to qualify for tax-free treatment; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company’s Form 10-Qs, Form 10-K and in the company’s other filings with the U.S. Securities and Exchange Commission or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.

Presentation of Information in this Press Release

On November 3, 2021, IBM completed the separation of Kyndryl. Unless otherwise specified, results are presented on a continuing operations basis.

In an effort to provide investors with additional information regarding the company’s results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information, which management believes provides useful information to investors:

IBM results —

adjusting for currency (i.e., at constant currency);
presenting operating (non-GAAP) earnings per share amounts and related income statement items;
consolidated free cash flow;
consolidated cash from operating activities excluding IBM Financing receivables;

The rationale for management’s use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8-K that includes this press release and is being submitted today to the SEC.

Conference Call and Webcast

IBM’s regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. EDT, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-1q22. Presentation charts will be available shortly before the Webcast.

Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).

Contact:

IBM

Sarah Meron, 347-891-1770

sarah.meron@ibm.com

Tim Davidson, 914-844-7847

tfdavids@us.ibm.com


INTERNATIONAL BUSINESS MACHINES CORPORATION

COMPARATIVE FINANCIAL RESULTS

(Unaudited; Dollars in millions except per share amounts)

Three Months Ended

 

March 31, 

 

    

2022

    

2021*

REVENUE

 

  

 

  

Software

$

5,772

$

5,138

Consulting

 

4,829

 

4,262

Infrastructure

 

3,219

 

3,293

Financing

 

154

 

208

Other

 

224

 

284

TOTAL REVENUE

 

14,197

 

13,187

GROSS PROFIT

 

7,335

 

7,027

GROSS PROFIT MARGIN

 

 

Software

 

78.8

%

 

77.8

%

Consulting

 

24.3

%

 

27.8

%

Infrastructure

 

50.5

%

 

56.3

%

Financing

 

37.7

%

 

35.5

%

TOTAL GROSS PROFIT MARGIN

 

51.7

%  

 

53.3

%

EXPENSE AND OTHER INCOME

 

 

  

S,G&A

 

4,597

 

4,688

R,D&E

 

1,679

 

1,616

Intellectual property and custom development income

 

(121)

 

(146)

Other (income) and expense

 

246

 

346

Interest expense

 

311

 

280

TOTAL EXPENSE AND OTHER INCOME

 

6,712

 

6,784

INCOME/(LOSS) FROM CONTINUING OPERATIONS

 

 

BEFORE INCOME TAXES

 

623

 

244

Pre-tax margin

 

4.4

%  

 

1.8

%

Provision for/(Benefit from) income taxes

 

(39)

 

(160)

Effective tax rate

 

(6.3)

%  

 

(65.5)

%

INCOME FROM CONTINUING OPERATIONS

$

662

$

403

DISCONTINUED OPERATIONS

 

 

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

 

71

 

552

NET INCOME

$

733

$

955

EARNINGS/(LOSS) PER SHARE OF COMMON STOCK

 

 

  

Assuming Dilution

 

 

  

Continuing Operations

$

0.73

$

0.45

Discontinued Operations

$

0.08

$

0.61

TOTAL

$

0.81

$

1.06

Basic

 

 

Continuing Operations

$

0.74

$

0.45

Discontinued Operations

$

0.08

$

0.62

TOTAL

$

0.82

$

1.07

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

 

 

Assuming Dilution

 

909.2

 

901.7

Basic

 

899.3

 

893.6


* Recast to conform with 2022 presentation.


INTERNATIONAL BUSINESS MACHINES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

    

At

    

At

March 31, 

December 31, 

(Dollars in Millions)

2022

2021

ASSETS:

 

  

 

  

Current Assets:

 

  

 

  

Cash and cash equivalents

$

9,934

$

6,650

Restricted cash

 

286

 

307

Marketable securities

 

550

 

600

Notes and accounts receivable - trade, net

 

5,963

 

6,754

Short-term financing receivables, net

 

7,169

 

8,014

Other accounts receivable, net

 

1,003

 

1,002

Inventories

 

1,776

 

1,649

Deferred costs

 

1,103

 

1,097

Prepaid expenses and other current assets

 

3,548

 

3,466

Total Current Assets

 

31,330

 

29,539

Property, plant and equipment, net

 

5,559

 

5,694

Operating right-of-use assets, net

 

3,108

 

3,222

Long-term financing receivables, net

 

4,610

 

5,425

Prepaid pension assets

 

9,995

 

9,850

Deferred costs

 

916

 

924

Deferred taxes

 

7,567

 

7,370

Goodwill

 

56,106

 

55,643

Intangibles, net

12,312

12,511

Investments and sundry assets

 

1,771

 

1,823

Total Assets

$

133,275

$

132,001

LIABILITIES:

 

  

 

  

Current Liabilities:

 

  

 

  

Taxes

$

1,798

$

2,289

Short-term debt

 

7,690

 

6,787

Accounts payable

 

3,453

 

3,955

Deferred income

 

13,526

 

12,518

Operating lease liabilities

 

954

 

974

Other liabilities

 

6,635

 

7,097

Total Current Liabilities

 

34,056

 

33,619

Long-term debt

 

46,545

 

44,917

Retirement related obligations

 

13,937

 

14,435

Deferred income

 

3,423

 

3,577

Operating lease liabilities

 

2,358

 

2,462

Other liabilities

 

13,844

 

13,996

Total Liabilities

 

114,162

 

113,005

EQUITY:

 

 

IBM Stockholders’ Equity:

 

 

Common stock

 

57,603

 

57,319

Retained earnings

 

153,401

 

154,209

Treasury stock — at cost

 

(169,422)

 

(169,392)

Accumulated other comprehensive income/(loss)

 

(22,532)

 

(23,234)

Total IBM Stockholders’ Equity

 

19,050

 

18,901

Noncontrolling interests

 

62

 

95

Total Equity

 

19,112

 

18,996

Total Liabilities and Equity

$

133,275

$

132,001


INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW ANALYSIS

(Unaudited)

Three Months Ended

March 31, 

(Dollars in Millions)

2022

    

2021

Consolidated Net Cash from Operations per GAAP

$

3,248

$

4,914

Less: change in IBM Financing receivables

 

1,631

2,863

Capital Expenditures, net

 

(378)

(529)

Consolidated Free Cash Flow

 

1,240

1,522

Acquisitions

 

(698)

(1,120)

Divestitures

 

61

(15)

Dividends

 

(1,475)

(1,457)

Non-Financing Debt

 

4,675

(1,725)

Other (includes IBM Financing net receivables and debt)

 

(590)

(207)

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

$

3,213

$

(3,002)


* Cash flows are presented on a consolidated basis.


INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW

(Unaudited)

Three Months Ended

March 31, 

(Dollars in Millions)

2022

    

2021

    

Net Income from Operations

$

733

$

955

Depreciation/Amortization of Intangibles

 

1,257

 

1,672

Stock-based Compensation

 

234

 

213

Working Capital / Other

 

(606)

 

(789)

IBM Financing A/R

 

1,631

 

2,863

Net Cash Provided by Operating Activities

$

3,248

$

4,914

Capital Expenditures, net of payments & proceeds

 

(378)

 

(529)

Divestitures, net of cash transferred

 

61

 

(15)

Acquisitions, net of cash acquired

 

(698)

 

(1,120)

Marketable Securities / Other Investments, net

 

(344)

 

(335)

Net Cash Provided by/(Used in) Investing Activities

$

(1,358)

$

(2,000)

Debt, net of payments & proceeds

 

2,948

 

(4,299)

Dividends

 

(1,475)

 

(1,457)

Financing - Other

 

(95)

 

(26)

Net Cash Provided by/(Used in) Financing Activities

$

1,377

$

(5,783)

Effect of Exchange Rate changes on Cash

 

(5)

 

(134)

Net Change in Cash, Cash Equivalents and Restricted Cash*

$

3,263

$

(3,002)


* Cash flows are presented on a consolidated basis.


INTERNATIONAL BUSINESS MACHINES CORPORATION

SEGMENT DATA

(Unaudited)

Three Months Ended March 31, 2022

 

    

 

(Dollars in Millions)

Software

Consulting

Infrastructure

Financing

 

Revenue

$

5,772

$

4,829

$

3,219

$

154

Pre-tax Income/(Loss) from Continuing Operations

 

1,134

 

348

 

199

 

84

Pre-tax Margin

 

19.7

%  

 

7.2

%  

 

6.2

%  

 

54.6

%

Change YTY Revenue

 

12.3

%  

 

13.3

%  

 

(2.3)

%  

 

(26.2)

%

Change YTY Revenue - constant currency

 

15.4

%  

 

17.4

%  

 

0.3

%  

 

(24.5)

%

Three Months Ended March 31, 2021*

 

    

 

(Dollars in Millions)

Software

Consulting

Infrastructure

Financing

 

Revenue

$

5,138

$

4,262

$

3,293

$

208

Pre-tax Income/(Loss) from Continuing Operations

 

658

 

277

 

292

 

98

Pre-tax Margin

 

12.8

%  

 

6.5

%  

 

8.9

%  

 

47.0

%


* 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 March 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

$

7,335

$

181

$

$

$

$

7,516

Gross Profit Margin

 

51.7

%  

 

1.3

pts.  

pts.  

pts.  

pts.

 

52.9

%

S,G&A

$

4,597

$

(286)

$

$

$

(0)

$

4,311

Other (Income) & Expense

 

246

 

(1)

(202)

(222)

 

(179)

Total Expense & Other (Income)

 

6,712

 

(287)

(202)

(222)

 

6,001

Pre-tax Income from Continuing Operations

 

623

 

468

202

222

 

1,515

Pre-tax Income Margin from Continuing Operations

 

4.4

%  

 

3.3

pts.  

1.4

pts.  

pts.  

1.6

pts.

 

10.7

%

Provision for/(Benefit from) Income Taxes (4)

$

(39)

$

109

$

58

$

116

$

$

244

Effective Tax Rate

 

(6.3)

%  

 

9.1

pts.  

4.6

pts.  

7.7

pts.  

0.9

pts.

 

16.1

%

Income from Continuing Operations

$

662

$

359

$

144

$

(116)

$

222

$

1,271

Income Margin from Continuing Operations

 

4.7

%  

 

2.5

pts.  

1.0

pts.  

(0.8)

pts.  

1.6

pts.

 

9.0

%

Diluted Earnings/(Loss) Per Share: Continuing Operations

$

0.73

$

0.39

$

0.16

$

(0.13)

$

0.24

$

1.40

Three Months Ended March 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

$

7,027

$

174

$

$

$

$

7,201

Gross Profit Margin

 

53.3

%  

 

1.3

pts.  

pts.  

pts.  

pts.

 

54.6

%

S,G&A

$

4,688

$

(288)

$

$

$

$

4,399

Other (Income) & Expense

 

346

 

(1)

(332)

 

13

Total Expense & Other (Income)

 

6,784

 

(289)

(332)

 

6,162

Pre-tax Income/(Loss) from Continuing Operations

 

244

 

463

332

 

1,039

Pre-tax Income Margin from Continuing Operations

 

1.8

%  

 

3.5

pts.  

2.5

pts.  

pts.  

pts.

 

7.9

%

Provision for/(Benefit from) Income Taxes (4)

$

(160)

$

132

$

33

$

19

$

$

25

Effective Tax Rate

 

(65.5)

%  

 

41.9

pts.  

24.2

pts.  

1.8

pts.  

pts.

 

2.4

%

Income from Continuing Operations

$

403

$

330

$

299

$

(19)

$

$

1,013

Income Margin from Continuing Operations

 

3.1

%  

 

2.5

pts.  

2.3

pts.  

(0.1)

pts.  

pts.

 

7.7

%

Diluted Earnings/(Loss) Per Share: Continuing Operations

$

0.45

$

0.37

$

0.33

$

(0.02)

$

$

1.12


(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 fair value changes in shares of Kyndryl common stock that were retained by IBM.

(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.