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Title of each class
Trading symbol

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report: February 24, 2021

(Date of earliest event reported)

 

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

New York   1-2360   13-0871985
(State of Incorporation)   (Commission File Number)   (IRS employer Identification No.)

 

One New Orchard Road

   
Armonk, New York   10504
(Address of principal executive offices)   (Zip Code)

 

914-499-1900

(Registrant’s telephone number)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading symbol(s)   Name of each exchange
on which registered
Capital stock, par value $.20 per share   IBM   New York Stock Exchange
        NYSE Chicago
0.500% Notes due 2021   IBM 21B   New York Stock Exchange
2.625% Notes due 2022   IBM 22A   New York Stock Exchange
1.250% Notes due 2023   IBM 23A   New York Stock Exchange
0.375% Notes due 2023   IBM 23B   New York Stock Exchange
1.125% Notes due 2024   IBM 24A   New York Stock Exchange
2.875% Notes due 2025   IBM 25A   New York Stock Exchange
0.950% Notes due 2025   IBM 25B   New York Stock Exchange
0.875% Notes due 2025   IBM 25C   New York Stock Exchange
0.300% Notes due 2026   IBM 26B   New York Stock Exchange
1.250% Notes due 2027   IBM 27B   New York Stock Exchange
0.300% Notes due 2028   IBM 28B   New York Stock Exchange
1.750% Notes due 2028   IBM 28A   New York Stock Exchange
1.500% Notes due 2029   IBM 29   New York Stock Exchange
1.750% Notes due 2031   IBM 31   New York Stock Exchange
0.650% Notes due 2032   IBM 32A   New York Stock Exchange
1.200% Notes due 2040   IBM 40   New York Stock Exchange
7.00% Debentures due 2025   IBM 25   New York Stock Exchange
6.22% Debentures due 2027   IBM 27   New York Stock Exchange
6.50% Debentures due 2028   IBM 28   New York Stock Exchange
7.00% Debentures due 2045   IBM 45   New York Stock Exchange
7.125% Debentures due 2096   IBM 96   New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

Item 8.01. Other Events.

 

Redemption of Outstanding IBM Credit Notes

 

On February 24, 2021, IBM Credit LLC, a wholly owned subsidiary of IBM, notified The Bank of New York Mellon, as trustee, that it will redeem its $500 million aggregate principal amount of 3.600% Notes due 2021, $500 million aggregate principal amount of 2.200% Notes due 2022, and $750 million aggregate principal amount of 3.000% Notes due 2023, in each case in full at the applicable redemption price calculated in accordance with the terms of the notes, plus accrued and unpaid interest. The redemption date for the notes will be March 26, 2021. This Current Report on Form 8-K is not a notice of redemption.

 

Deregistration of IBM Credit

 

Consistent with IBM’s refocused Global Financing strategy, and expected capital needs, IBM Credit will no longer require direct access to the public capital markets. As part of IBM’s overall 2021 debt pay down strategy, in the first half of 2021, IBM Credit will redeem $1.75 billion of outstanding debt and deregister with the SEC.

 

Investor Relations Article

 

Exhibit 99.1 of this Form 8-K contains additional information on IBM’s refocused Global Financing strategy that IBM has posted on its Investor Relations website (www.ibm.com/investor/).

 

Exhibit 99.1 may contain forward-looking statements under the Private Securities Litigation Reform Act of 1995, which statements involve numerous factors that could cause actual results to differ materially. Additional information about these factors is contained in IBM’s filings with the SEC, available from the SEC, IBM’s website or IBM’s Investor Relations.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

The following exhibits are being filed as part of this report:

 

Exhibit No.   Description of Exhibit
99.1   Investor Relations Article, dated February 24, 2021  
     
104   Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

 

IBM’s web site (www.ibm.com) contains a significant amount of information about IBM, including financial and other information for investors (www.ibm.com/investor/). IBM encourages investors to visit its various web sites from time to time, as information is updated and new information is posted.

 

2

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

Date: February 24, 2021  
   
  By:   /s/ Frank Sedlarcik
    Frank Sedlarcik
    Vice President, Assistant General Counsel and Secretary

 

3

 

 

 

 

 

Exhibit 99.1

 

Strategic Update on IBM Global Financing

 

24 February 2021

 

IBM Global Financing (IGF) is continuing to take action to support IBM’s hybrid cloud and AI strategy and to optimize IBM’s capital structure with the announced make-whole call of the outstanding IBM Credit LLC (IBM Credit) public debt and intent to de-register IBM Credit with the SEC.

 

IBM Global Financing Strategy

 

IGF is the captive financing business of IBM that includes client and commercial financing as well as a hardware remanufacturing and remarketing business.

 

Over the last few years, IGF has taken several strategic actions to focus on higher-value opportunities supporting IBM’s hybrid cloud and AI strategy. These actions have improved its go-forward financial and risk profiles — continuing IBM’s disciplined portfolio and financial management approach and strengthening IBM’s liquidity and balance sheet position.

 

For example, in the second quarter of 2019, IGF began to wind down the portion of its operations that provided short-term working capital solutions for OEM IT suppliers, distributors, and resellers. Additionally, IGF implemented a robust process to reduce certain portions of its remaining financing portfolio as well as its originations in specific industries and geographies. Finally, in the fourth quarter of 2020, it entered into an agreement with a third party to sell up to $3 billion of short-term commercial financing receivables, at any one time, on a revolving basis.

 

Financial Implications

 

These actions have resulted in a more targeted and streamlined financing portfolio, lower overall debt, and an improved risk profile. From 2018 to 2020, IGF external financing receivables were reduced from $32 billion to $18 billion, with a corresponding $10 billion reduction in debt. IGF expects to further reduce external financing receivables and debt in 2021. As a reminder, changes to global financing receivables do not impact IBM’s Free Cash Flow.1

 

 

 

1IBM’s Free Cash Flow is defined as Net Cash from Operating Activities less the change in Global Financing Receivables and Net Capital Expenditures, including the investment in software.

 

 

 

 

 

 

IBM Credit LLC

 

In 2017, IGF’s legal entity structure was reorganized to consolidate its operations (except for the remanufacturing and remarketing business) under IBM Credit LLC, a wholly owned subsidiary of IBM. This enabled operational benefits as well as enhanced clarity around the financing business. At the same time, IBM Credit registered with the SEC to facilitate the issuance of its own public debt as an alternative funding source from its parent. Since the reorganization, IBM Credit has issued $7 billion of public term debt, of which $1.75 billion remains outstanding.

 

Due to the evolution of the IGF strategy, IBM Credit will no longer require direct access to the capital markets as its on-going financing requirements will be met through IBM. As a result, IBM Credit intends to de-register with the SEC and will no longer file its own financial information. To effectuate this change, on February 24, 2021, IBM Credit announced a make-whole call for its outstanding public debt of $1.75 billion, which will result in the retirement of all outstanding public debt issued by IBM Credit. To ensure visibility to the financing business, IBM’s future reporting will provide enhanced IGF segment disclosures including a separate segment balance sheet and additional relevant information previously reported in the IBM Credit SEC filings.

 

For additional information regarding IBM Global Financing including a detailed description of its business, please see the most recent IBM 10-K accessible through the IBM Investor Relations website at www.ibm.com/investor.