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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTIONpursuant to Section 13 ORor 15 (D) OF THE
SECURITIES EXCHANGE ACT OF(d) of the Securities Exchange Act of 1934
FOR THE YEAR ENDED DECEMBER 31, 19941996
1-2360
(Commission File Number)
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 13-0871985
(STATE OF INCORPORATION)(State of incorporation) (IRS EMPLOYER IDENTIFICATION NUMBER)employer identification number)
ARMONK, NEW YORK 10504
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
914-765-1900
(Registrant's telephone number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
(Address of principal executive offices) (Zip Code)
914-765-1900
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
VOTING SHARES
OUTSTANDING NAME OF EACH EXCHANGE
TITLE OF EACH CLASS AT MARCH 7, 199511, 1997 ON WHICH REGISTERED
- --------------------------------- -------------------------- -------------------------------------------------------------------------------------- ----------------- ------------------------------
Capital stock, par value 584,225,210$1.25 per share 498,985,928 New York Stock Exchange
$1.25 per share MidwestChicago Stock Exchange
Pacific Stock Exchange
Depositary shares each New York Stock Exchange
representing one-fourth of a share of New York Stock Exchange
7 1/2% preferred stock, par value $ .01$.01 per share
6 3/8% Notes due 1997 New York Stock Exchange
9% Notes due 1998 New York Stock Exchange
6 3/8% Notes due 2000 New York Stock Exchange
7 1/4% Notes due 2002 New York Stock Exchange
7 1/2% Debentures due 2013 New York Stock Exchange
8 3/8% Debentures due 2019 New York Stock Exchange
7% Debentures due 2025 New York Stock Exchange
7% Debentures due 2045 New York Stock Exchange
7 1/8% Debentures due 2096 New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X/X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
X
The aggregate market value of the voting stock held by non-affiliates of the
registrant at March 7, 199511, 1997 was $46.6$72.9 billion.
Documents incorporated by reference:
Portions of IBM's Annual Report to Stockholders for the year ended
December 31, 19941996 into Parts I and II of Form 10-K.
Portions of IBM's definitive Proxy Statement dated March 14, 199518, 1997 into
Part III of Form 10-K.
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PART I
ITEM 1. BUSINESS:
IBM has two fundamental missions. First, the company strives to lead in the
creation, developmentdevelops, manufactures and manufacture of the industry's mostsells advanced information technologies,processing
products, including computer systems,computers and microelectronic technology, software,
networking systems and microelectronics. Second, theinformation technology-related services. The company
translates these advanced
technologies intooffers value for our customers worldwide through its worldwide sales and professional servicesservice units in North America,
Europe/Middle East/Africa, Asia Pacific and Latin America.
Management continues to believe its decision, in 1993 to remain an
integrated provider of information technology rather then becoming an emerging
federation of companies, was the correct one. This single interface to the
customer allows IBM employees to better understand and address the full range of
the customers' information needs and to provide them withAmerica by providing
comprehensive and timely solutions.competitive product choices.
The value of unfilled orders is not a meaningful indicator of future
revenues due to the significant proportion of revenue from services, the volume
of products delivered from shelf inventories, and the shortening of product
delivery schedules. Therefore, the company believes that backlog information is
not material to an understanding of its business.
IBM owns or is licensed under a number of patents relating to its products.
Licenses under patents owned by IBM have been and are being granted to others.others
under reasonable terms and conditions. IBM believes its business as a whole is
not materially dependent upon any particular patent or license, or any
particular group of patents or licenses.
The following information is included in IBM's 19941996 Annual Report to
Stockholders and is incorporated herein by reference:
1.
Segment information and revenue by classes of similar products or
services--Pages 7482 and 75.
2.83.
Financial information by geographic areas--Pages 7684 and 77.
3.85.
Amount spent during each of the last three years on research and
development activities-- Page 68.
Financial information regarding environmental activities--Page 59.
4.69.
The number of persons employed by the registrant-- Page 47.
5.registrant--Page 55.
The management discussion overview--Page 36.44.
ITEM 2. PROPERTIES:
At December 31, 1994,1996, IBM's manufacturing and development facilities in the
United States had aggregate floor space of 55.249.7 million square feet, of which
43.441.3 million was owned and 11.88.4 million was leased. Of these amounts, 8.59.1 million
square feet was vacant and 1.02.5 million square feet was being leased to non-IBM
businesses. Similar facilities in 15 other countries totaled 21.015.1 million square
feet, of which 18.012.2 million was owned and 3.02.9 million was leased. Of these
amounts, 2.0.3 million square feet was vacant and .7.4 million square feet was being
leased to non-IBM businesses.
Although improved production techniques, productivity gains and
restructuring actions have resulted in reduced manufacturing floor space,
continuous upgrading of facilities is essential to 1
maintain technological
leadership, improve productivity and meet customer demand. For additional
information on expenditures for plant, rental machines and other property, refer
to "Investments" on page 4352 of IBM's 19941996 Annual Report to Stockholders which is
incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS:
Refer to note M "Contingencies" on page 62 of IBM's 1994 Annual Report to
Stockholders which is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS:
Refer to pages 78 and 79 and the inside back cover of IBM's 1994 Annual
Report to Stockholders which are incorporated herein by reference solely as they
relate to this item.
IBM common stock is listed on the New York Stock Exchange, Midwest Stock
Exchange and Pacific Stock Exchange. There were 705,318 common stockholders of
record at March 7, 1995.
On February 28, 1995, the Board of Directors authorized the company to
repurchase outstanding depositary shares representing the IBM Series A Preferred
Stock. The company plans to buy the shares from time to time on the open market.
As of February 28, 1995, approximately 10.5 million depositary shares were
outstanding.
ITEM 6. SELECTED FINANCIAL DATA:
Refer to page 79 of IBM's 1994 Annual Report to Stockholders which is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
Refer to pages 36 through 47 of IBM's 1994 Annual Report to Stockholders
which are incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
Refer to pages 34 and 35 and 48 through 78 of IBM's 1994 Annual Report to
Stockholders which are incorporated herein by reference. Also refer to the
Financial Statement Schedule on page S-1 of this Form.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE:
Not applicable.
21
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
Refer to pages 4 through 6 of IBM's definitive Proxy Statement dated March
14, 1995 which are incorporated herein by reference solely as they relate to
this item.
EXECUTIVE OFFICERS OF THE REGISTRANT (AT MARCH 28, 1995)26, 1997):
OFFICER
AGE SINCE
--- -------
Chairman of the Board of Directors and Chief
Executive Officer
Louis V. Gerstner, Jr.(1)................................... 53 1993
Senior Vice Presidents
J. Thomas Bouchard, Human Resources.........................
OFFICER
AGE SINCE
--- -----------
Chairman of the Board of Directors and Chief Executive Officer
Louis V. Gerstner, Jr.(1).................................................... 55 1993
Senior Vice Presidents
J. Thomas Bouchard, Human Resources.......................................... 56 1994
Nicholas M. Donofrio, Group Executive........................................ 51 1995
J. Bruce Harreld, Strategy................................................... 46 1995
Paul M. Horn, Research....................................................... 50 1996
Ned C. Lautenbach, Group Executive........................................... 53 1987
Lawrence R. Ricciardi, General Counsel....................................... 56 1995
Robert M. Stephenson, Group Executive........................................ 58 1995
G. Richard Thoman, Chief Financial Officer................................... 52 1993
John M. Thompson, Group Executive............................................ 54 1989
Vice Presidents
John E. Hickey, Secretary.................................................... 53 1994
John R. Joyce, Controller.................................................... 43 1996
Jeffrey D. Serkes, Treasurer................................................. 38 1994
James A. Cannavino, Strategy and Development(2)............. 50 1988
Nicholas M. Donofrio, Group Executive....................... 49 1995
Donato A. Evangelista, General Counsel...................... 62 1983
Ned C. Lautenbach, Group Executive.......................... 51 1987
G. Richard Thoman, Group Executive.......................... 50 1993
John M. Thompson, Group Executive........................... 52 1989
Patrick A. Toole, Group Executive........................... 57 1984
Jerome B. York, Chief Financial Officer(1).................. 56 1993
Vice President and Treasurer
Jeffrey D. Serkes........................................... 36 1994
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(1) Member of the Board of Directors.
(2) Will be retiring effective March 31, 1995.
All officers are elected by the Board of Directors and serve until the next
election of officers in conjunction with the annual meeting of the stockholders
as provided in the By-laws. Each officer named above, with the exception of J.
Thomas Bouchard, Louis V. Gerstner, Jr., J. Bruce Harreld, Lawrence R.
Ricciardi, Jeffrey D. Serkes, and G. Richard Thoman, and Jerome B. York, has been an an executive of
IBM or its subsidiaries during the past five years.
Mr. Bouchard was senior vice president, human resources, of U.S. West, Inc.,
a telecommunications company, from 1989 until joining IBM in 1994. Prior to
1989, he spent 15 years with United Technologies Corporation in a variety of
executive positions, including senior vice president of human resources.
Mr. Gerstner was the chairman of the board and chief executive officer of
RJR Nabisco Holdings Corporation, a food and tobaccoan international consumer products company,
from 1989 until joining IBM in 1993. From 1985 to 1989, he was president of
American Express Company, and from 1983 to 1989, he was chairman and chief
executive officer of American Express Travel Related Services Co., Inc.
Mr. Harreld was president of Boston Chicken, Inc., a company which operates
and franchises foodservice stores, from 1993 until joining IBM in 1995. Prior to
that he was senior vice president, marketing and information services, at Kraft
General Foods, Inc. where he also served as the company's chief information
officer from 1989 to 1992.
Mr. Ricciardi was president of RJR Nabisco, Inc., an international consumer
products company, from 1993 until joining IBM in 1995. From 1989 to 1993, he
also served as executive vice president and general counsel at RJR Nabisco, Inc.
Prior to 1989, he was executive vice president and general counsel of American
Express Travel Related Services Company, Inc.
Mr. Serkes was vice president and deputy treasurer ofat RJR Nabisco, Inc., a
food and tobaccoan
international consumer company, from 1993 until joining IBM in 1994. From 1987
to 1993, he also served as vice president and assistant treasurer, corporate
finance; director, capital markets; and manager, foreign exchange ofat RJR
Nabisco, Inc.
2
Mr. Thoman was the president of Nabisco International, Inc., a food company,
from 1992 until joining IBM in 1993. From 1985 to 1989, he was president of
American Express Travel Related Services International, and co-CEOco-chief executive
officer of American Express Travel Related Services Co., Inc., and CEOchief
executive officer of American Express International from 1989 to 1992.
Mr.ITEM 3. LEGAL PROCEEDINGS:
Refer to note L "Contingencies" on page 69 of IBM's 1996 Annual Report to
Stockholders which is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS:
Refer to page 86 and 87 of IBM's 1996 Annual Report to Stockholders which
are incorporated herein by reference.
IBM common stock is listed on the New York from 1979 until joiningStock Exchange, Chicago Stock
Exchange and Pacific Stock Exchange. There were 615,605 common stockholders of
record at March 11, 1997.
ITEM 6. SELECTED FINANCIAL DATA:
Refer to page 86 of IBM's 1996 Annual Report to Stockholders which is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
Refer to pages 44 through 55 of IBM's 1996 Annual Report to Stockholders
which are incorporated herein by reference.
On January 28, 1997, the IBM Board of Directors declared a two-for-one
common stock split, subject to the approval of stockholders of an increase in
1993, served in athe number of executive positions at Chrysler Corporation, an automotive manufacturer,
including executive vice president-financecommon shares authorized from 750 million to 1,875 million.
The record date for the split is currently expected to be on or after May 9,
1997, with distribution of the split shares to follow on or after May 27, 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
Refer to pages 42 and chief financial officer from 199043 and 56 through 85 of IBM's 1996 Annual Report to
1993Stockholders which are incorporated herein by reference. Also refer to the
Financial Statement Schedule on page S-1 of this Form.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE:
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
Refer to pages 5 through 7 and vice president and controller from 1989the section entitled "Section 16(a)
Beneficial Ownership Reporting Compliance" appearing on page 11 of IBM's
definitive Proxy Statement dated March 18, 1997 which are incorporated herein by
reference. Also refer to 1990. PriorItem 2 entitled "Executive Officers of the Registrant"
in Part I of this Form.
3
to joining Chrysler, he held a number of technical and management positions with
General Motors Corporation, Ford Motor Corporation, The Hertz Corporation and
Baker Industries, Inc.
ITEM 11. EXECUTIVE COMPENSATION:
Refer to pages 1213 through 2023 of IBM's definitive Proxy Statement dated March
14, 1995,18, 1997, which are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS:Security Ownership of Certain Beneficial Owners:
Refer to the section entitled "Stock Ownership""Security Ownership of Certain Beneficial
Owners" appearing on pages 9
throughpage 11 of IBM's definitive Proxy Statement dated
March 14, 1995,18, 1997, which is incorporated herein by reference solely as it relates to this
item.reference.
(b) SECURITY OWNERSHIP OF MANAGEMENT:Security Ownership of Management:
Refer to the section entitled "Stock Ownership""Common Stock and Total Stock-Based
Holdings of Management" appearing on pages 9
through 1112 and 13 of IBM's definitive
Proxy Statement dated March 14, 1995,18, 1997, which is incorporated herein by
reference solely as it relates to this
item.reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
Refer to page 8the section entitled "Other Relationships" appearing on page 10 of
IBM's definitive Proxy Statement dated March 14, 1995,18, 1997, which is incorporated
herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K:
(a) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:The following documents are filed as part of this report:
1. FINANCIAL STATEMENTS FROM IBM'S 1994 ANNUAL REPORT TO STOCKHOLDERS
WHICH ARE INCORPORATED HEREIN BY REFERENCE:Financial statements from IBM's 1996 Annual Report to Stockholders
which are incorporated herein by reference:
Report of Independent Accountants (page 35)43).
Consolidated Statement of OperationsEarnings for the years ended December 31,
1996, 1995 and 1994 1993 and 1992 (page 48)56).
Consolidated Statement of Financial Position at December 31, 19941996 and
19931995 (page 49)57).
Consolidated Statement of Cash Flows for the years ended December 31,
1996, 1995 and 1994 1993 and 1992 (page 50)58).
Consolidated Statement of Stockholders' Equity at December 31, 1996,
1995 and 1994 1993 and 1992 (page 51)59).
Notes to Consolidated Financial Statements (pages 5260 through 78).85)
2. FINANCIAL STATEMENT SCHEDULES REQUIRED TO BE FILED BY ITEMFinancial statement schedules required to be filed by Item 8 OF THIS
FORM:
SCHEDULE
PAGE NUMBER
- ---- --------
7 Report of Independent Accountants on Financial Statement
Schedules.
S-1 II--this
Form:
SCHEDULE
PAGE NUMBER
- ----------- -------------
8 Report of Independent Accountants on Financial Statement Schedule.
II Valuation and Qualifying Accounts
S-1
All other schedules are omitted as the required matter is not present,
the amounts are not significant or the information is shown in the
financial statements or the notes thereto.
4
3. EXHIBITS:
INCLUDED IN THIS FORMExhibits:
Included in this Form 10-K:
I-- ComputationI--Computation of Fully Diluted Earnings Per Share.
II-- ParentsComputation of Ratio of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preferred Stock Dividends.
III--Parents and Subsidiaries.
III-- ConsentIV--Consent of Independent Accountants.
IV--V-- Additional Exhibits
(a) Supplemental Consolidated Statement of Operations--1994Earnings--1996 and 1993.
V-- The1995.
VI--The By-laws of IBM as amended through February 1, 1995.
VI--April 30, 1996.
VII-- IBM's 19941996 Annual Report to Stockholders, certain sections of
which have been incorporated herein by reference.
VII-- PowersVIII--Powers of Attorney.
VIII-- FinancialIX--Financial Data Schedule.
IX-- IBM Supplemental Executive Retirement Plan.
X-- IBM Extended Tax Deferred Savings Plan.
XI-- IBM Board of Directors Deferred Compensation and Equity
Award Plan.
NOT INCLUDED IN THIS FORMNot included in this Form 10-K:
-- The Certificate of Incorporation of IBM is Exhibit VI to Form 10-K
for the year ended December 31, 1993, and is hereby incorporated by
reference.
-- A copy of theThe IBM 1994 Long-Term Performance Plan, a management compensatory
plan, is contained in Registration Statement No. 33-53777 on Form
S-8, filed on May 24, 1994, and is hereby incorporated by reference.
-- Board of Directors compensatory plans, as described under
"Directors' Compensation" on page 9pages 10 and 11 of IBM's definitive
Proxy Statement dated March 14, 1995,18, 1997, which is incorporated herein
by reference.
-- IBM Board of Directors Deferred Compensation and Equity Award Plan
is Exhibit X to Form 10-K for the year ended December 31, 1995 and
is hereby incorporated by reference.
-- The employment agreement for L.V. Gerstner, Jr. is Exhibit 19 to
Form 10-Q dated March 31, 1993, and is hereby incorporated by
reference.
-- Amendment to Employment Agreement for L.V. Gerstner, Jr. dated as
of January 1, 1996 is Exhibit XI to Form 10-K for the year ended
December 31, 1995, and is hereby incorporated by reference.
-- The instruments defining the rights of the holders of the 6 3/8%
Notes due 1997 and the 7 1/4% Notes due 2002 are Exhibits 4(a)
through 4(l) to Registration Statement No. 33-33590 on Form S-3,
filed on February 22, 1990, and are hereby incorporated by
reference.
-- The instruments defining the rights of the holders of the 9% Notes due
1998 are Exhibit 4 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1985, and Exhibit 4(b) to Registration
Statement No. 33-6889 on Form S-3, filed on July 1, 1986, and are
hereby incorporated by reference.
-- The instruments defining the rights of the holders of the 6 3/8%
Notes due 2000 and the 7 1/2% Debentures due 2013 are Exhibits 4(a)
through 4(l) to Registration Statement No. 33-49475(1) on Form S-3,
filed May 24, 1993, and are hereby incorporated by reference.
5
-- The instruments defining the rights of holders of the 8 3/8%
Debentures due 2019 are Exhibits 4(a)(b)(c) and (d) to Registration
Statement 33-31732 on Form S-3, filed on October 24, 1989, and are
hereby incorporated by reference.
-- The instruments defining the rights of holders of the 7% Debentures
due 2025 and the 7% Debentures due 2045 are Exhibit 2 and 3 to Form
8-K, filed on October 30, 1995, and are hereby incorporated by
reference.
-- The instrument defining the rights of holders of the 7 1/8%
Debentures due 2096 is Exhibit 2 to Form 8-K/A, filed on December 6,
1996, and is hereby incorporated by reference.
-- The IBM Supplemental Executive Retirement Plan is Exhibit IX to
Form 10-K for the year ended December 31, 1994, and is hereby
incorporated by reference.
-- The IBM Extended Tax Deferred Savings Plan as amended and restated
effective January 1, 1996, is Exhibit 10 to Form 10-Q for the
quarter ended March 31, 1996, and is hereby incorporated by
reference.
-- The IBM Tax Deferred Savings Plan as amended and restated as of
June 15, 1996, is Exhibit 4 to Registration Statment No. 333-09055
on form S-8, filed on July 29, 1996, and is hereby incorporated by
reference.
-- IBM's definitive Proxy Statement dated March 14, 1995,18, 1997, certain
sections of which have been incorporated herein by reference.
(b) REPORTS ON FORM 8-K:
-- No reportsReports on Form 8-K:
A Form 8-K dated October 21, 1996, was filed with respect to the
company's financial results for the periods ended September 30, 1996 and
included unaudited consolidated financial statements for the period
ended September 30, 1996.
A Form 8-K dated December 5, 1996 and a Form 8-K/A dated December 6,
1996, were filed duringto incorporate by reference into Registration Statement
No. 33-65119 on Form S-3, effective February 7, 1996, the last quarterUnderwriting
Agreement dated December 3, 1996, among International Business Machines
Corporation, Salomon Brothers Inc., Chase Securities Inc., CS First
Boston Corporation, Merrill Lynch, Pierce, Fenner and & Smith
Incorporated and Morgan Stanley & Co. Incorporated. In addition, the
Form of 1994.
5the $850 million 7 1/8% Debenture due 2096 was incorporated by
reference into Registration Statement No. 33-65119 on Form S-3,
effective February 7, 1996 and were part of this Form 8-K and Form
8-K/A. No financial statements were filed with the Form 8-K or Form
8-K/A.
6
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTIONPursuant to the requirements of Section 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OFor 15(d) of the Securities
Exchange Act of 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Registrant)
ByBy: /s/ LOUIS V. GERSTNER,JR.
...................................
(LOUIS------------------------------------------
Louis V. GERSTNER, JR.
CHAIRMANGerstner, Jr.
(CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER)
Date: March 28, 1995
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF26, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
-------------- ----- ----- ------------------------------ --------------------------- -------------------
/s/ JEROME B. YORK(G. RICHARD THOMAN) Senior Vice March 28, 1995
.............................. President
(JEROME B. YORK)- ------------------------------ and Chief Financial March 26, 1997
(G. Richard Thoman) Officer
acting/s/ (JOHN R. JOYCE) Vice President and
- ------------------------------ Controller and Director |
|
|
HAROLD BROWN Director |
JAMES E. BURKE Director |
FRITZ GERBER Director |
NANNERL O. KEOHANE Director |
CHARLES F. KNIGHT Director |
THOMAS S. MURPHY Director |
LUCIO A. NOTO Director | By /s/JOHN E. HICKEY
JOHN B. SLAUGHTER Director | ......................
ALEX TROTMAN Director | (JOHN E. HICKEY)
LODEWIJK C. VAN WACHEM Director | ATTORNEY-IN-FACT
CHARLES M. VEST Director |
EDGAR S. WOOLARD, JR. Director |
6March 26, 1997
(John R. Joyce)
CATHLEEN BLACK Director
HAROLD BROWN Director
JUERGEN DORMANN Director
NANNERL O. KEOHANE Director
CHARLES F. KNIGHT Director
LUCIO A. NOTO Director By: /s/JOHN E. HICKEY
JOHN B. SLAUGHTER Director (John E. Hickey)
ALEX TROTMAN Director Attorney-in-fact
CHARLES M. VEST Director March 26, 1997
7
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Stockholders and Board of Directors of
INTERNATIONAL BUSINESS MACHINES CORPORATIONInternational Business Machines Corporation
Our audits of the consolidated financial statements referred to in our
report dated January 20, 1995 (which refers to the changes in the methods of accounting
for postemployment benefits in 1993, and income taxes in 1992),1997, appearing on page 3543 of the 19941996 Annual Report to
Stockholders of International Business Machines Corporation, (which report and
consolidated financial statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the Financial Statement Schedule
listed in Item 14(a)2 of this Form 10-K. In our opinion, this Financial
Statement Schedule presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, N.Y. 10036
January 20, 1995
71997
8
SCHEDULE II
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31:
(DOLLARS IN MILLIONS)
BALANCE AT BALANCE AT
BEGINNING NET END
DESCRIPTION OF PERIOD NET CHANGE(A) OF PERIOD
- -------------------------------------------------------- ---------------------------------------------------------------------------------------- ------------- ----------------------- -------------
1996
Account deducted from assets:
Allowance for doubtful accounts
--Current................................................................. $ 790 $ (3) $ 787
----- --- -----
----- --- -----
--Non-current............................................................. $ 174 $ (10) $ 164
----- --- -----
----- --- -----
1995
Account deducted from assets:
Allowance for doubtful accounts
--Current................................................................. $ 719 $ 71 $ 790
----- --- -----
----- --- -----
--Non-current............................................................. $ 166 $ 8 $ 174
----- --- -----
----- --- -----
1994
Account deducted from assets:
Allowance for doubtful accounts
--Current........................................... $683--Current................................................................. $ 683 $ 36 $719$ 719
----- --- -----
----- --- -----
--Non-current............................................................. $ 187 $ (21) $ 166
----- --- -----
----- ----- -----
--Non-current....................................... $187 $ (21) $166
----- ----- -----
----- ----- -----
1993
Account deducted from assets:
Allowance for doubtful accounts
--Current........................................... $578 $ 105 $683
----- ----- -----
----- ----- -----
--Non-current....................................... $209 $ (22) $187
----- ----- -----
----- ----- -----
1992
Account deducted from assets:
Allowance for doubtful accounts
--Current........................................... $414 $ 164 $578
----- ----- -----
----- ----- -----
--Non-current....................................... $196 $ 13 $209
----- ----- -----
----- -------- -----
- ---------------------------------
(A) Includes additions charged to costs and expenses less accounts written off
and translation adjustments.
Note--
The receivables upon which the above allowances are based are highly
diversified by geography, industry and individual customer. WithThe allowances for
receivable losses for the growthyear ended 1996 approximate less than three and
one-half percent of the company's working capital financing business in 1994,current receivables and less than one and one-
half percent of the concentrationcompany's non-current receivables. The allowances for
receiveable losses for the year ended 1995 approximate less than three and
one-half percent of such financings for certain large dealersthe company's current receivables and remarketersone and one-half
percent of information
industry products has become more significant.non-current receivables. The allowances for receivable losses for the
year ended 1994 approximate less than three and one-quarter percent of the
company's current receivables and less than one and one-half percent of the
company's non-current receivables.
The allowances for the year
ended 1993, approximate less than three and one-half percent of the company's
current receivables and less than two percent of the company's non-current
receivables. The allowances for the year ended 1992, approximate less than three
percent of the company's current receivables and less than two percent of the
company's non-current receivables.
S-1
EXHIBIT INDEX
REFERENCE
NUMBER EXHIBIT
PER
ITEM 601 OF EXHIBIT
REGULATION NUMBER IN
REGULATION
S-K DESCRIPTION OF EXHIBITS THIS FORM 10-K
- --------------- ---------------------------------------------------------------------------------- ---------------- ----------------------------------------------------------- --------------
(2) Plan of acquisition, reorganization, arrangement, liquidation or succession. Not applicable
(3) Certificate of Incorporation and By-laws.
The Certificate of Incorporation of IBM is Exhibit VI to Form 10-K for the year
ended December 31, 1993, and is hereby incorporated by reference.
The By-laws of IBM as amended through February 1, 1995. VApril 30, 1996. VI
(4) Instruments defining the rights of security holders.
The instruments defining the rights of the holders of the 6 3/8% Notes due 1997
and the 7 1/4% Notes due 2002 are Exhibits 4(a) through 4(l) to Registration
Statement No. 33-33590 on Form S-3, filed February 22, 1990, and are hereby
incorporated by reference.
The instruments defining the rights of the holders of the 9% Notes due 1998 are Exhibit 4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June
30, 1985, and Exhibit 4(b) to Registration Statement No.
33-6889 on Form S-3 filed on July 1, 1986, and are hereby
incorporated by reference.
The instruments defining the rights of the holders of the 6 3/8% Notes due 2000
and the 7 1/2% Debentures due 2013 are Exhibits 4(a) through 4(l) to
Registration Statement No. 33-49475(l)33-49475(1) on Form S-3, filefiled on
May 24, 1993, and are hereby incorporated by reference.
The instruments defining the rights of the holders of the 8 3/8% Debentures due
2019 are Exhibits (4)(a)4(a)(b)(c) and (d) to Registration Statement No. 33-31732 on
Form S-3, filed on October 24, 1989, are hereby incorporated by reference.
The instruments defining the rights of the holders of the 7% Debentures due 2025
and the 7% Debentures due 2045 are Exhibits 2 and 3 to Form 8-K, filed on
October 30, 1995, and are hereby incorporated by reference.
The instrument defining the rights of the holders of the 7 1/8% Debentures due
2096 is Exhibit 2 to Form 8-K/A, filed on December 6, 1996, and is hereby
incorporated by reference.
(9) Voting trust agreement. Not applicable
(10) Material contracts.
A copy of the IBM 1994 Long-Term Performance Plan is contained in Registration
Statement No. 33-53777 on Form S-8, filed on May 24, 1994, and is hereby
incorporated by reference.
Board of Directors compensatory arrangements as described under "Director's"Directors'
Compensation" on page 910 of IBM's definitive Proxy Statement dated March 18,
1997, and is hereby incorporated by reference.
The IBM Supplemental Executive Retirement Plan is Exhibit IX to Form 10-K for the
year ended December 31, 1994, and is hereby incorporated by reference.
The IBM Extended Tax Deferred Savings Plan as amended and restated effective
January 1, 1996, is Exhibit 10 to Form 10-Q for the quarter ended March 31,
1996, and is hereby incorporated by reference.
The IBM Board of Directors Deferred Compensation and Equity Award Plan is Exhibit
X to Form 10-K for the year ended December 31, 1995, and is hereby incorporated
by reference.
The IBM Non-Employee Directors Stock Option Plan is Appendix B to IBM's definitive
Proxy Statement dated March 14, 1995, whichand is hereby incorporated herein by reference.
IBM Supplemental Executive Retirement Plan. IX
IBM Extended Tax Deferred Savings Plan. X
IBM Board of Directors Deferred Compensation and Equity XI
Award Plan.by reference.
REFERENCE
NUMBER PER
ITEM 601 OF EXHIBIT
REGULATION NUMBER IN
S-K DESCRIPTION OF EXHIBITS THIS FORM 10-K
- --------------- ---------------------------------------------------------------------------------- ----------------
The employment agreement for L.V. Gerstner, Jr. is Exhibit 19 to Form 10-Q dated
March 31, 1993, and is hereby incorporated by reference.
Amendment to Employment Agreement for L.V. Gerstner, Jr. dated as of January 1,
1996 is Exhibit XI to Form 10-K for the year ended December 31,1995, and is
hereby incorporated by reference.
The IBM Tax Deferred Savings Plan as amended and restated as of June 15, 1996, is
Exhibit 4 to Registration Statement No. 333-09055 on Form S-8, filed on July 29,
1996, and is hereby incorporated by reference.
(11) Statement re computation of per share earnings. I
(12) Statement re computation of ratios. Not applicableII
(13) Annual report to security holders. VI
REFERENCE NUMBER EXHIBIT
PER ITEM 601 OF NUMBER IN
REGULATION S-K DESCRIPTION OF EXHIBITS THIS FORM 10-K
- ---------------- ----------------------------------------------------------- --------------
VII
(18) Letter re change in accounting principles. Not applicable
(19) Previously unfiled documents. Not applicable
(21) Subsidiaries of the registrant. IIIII
(22) Published report regarding matters submitted to vote of security holders. Not applicable
security holders.
(23) Consents of experts and counsel. IIIIV
(24) Powers of attorney. VIIVIII
(27) Financial Data Schedule. VIIIIX
(28) Information from reports furnished to state insurance regulatory authorities. Not applicable
regulatory authorities.
(99) Additional exhibits. IVV
EXHIBIT I
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
UNDER TREASURY STOCK METHOD SET FORTH IN
ACCOUNTING PRINCIPLES BOARD OPINION NO. 15
YEAR ENDED DECEMBER 31:
-----------------------------------------------------------------------
1994 1993* 1992* 1991* 1990
----------- ----------- ----------- ----------- -----------
Number of shares on which
published earnings per
share is based:
Average outstanding
during year........ 584,958,699 573,239,240 570,896,489 572,003,382 572,647,906
Add--Incremental shares
under stock option and
stock purchase plans.. 4,308,269 -- -- -- 1,665,262
- --Incremental shares
related to 7 7/8% con-
vertible debentures
(average)............ -- -- -- -- 8,162,976
- --Incremental shares
related to 5 3/4% CGI
convertible bonds
(average)............ 7,715,391 -- -- -- --
----------- ----------- ----------- ----------- -----------
Number of shares on which
fully diluted earnings
per share is based..... 596,982,359 573,239,240 570,896,489 572,003,382 582,476,144
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net earnings (loss)
applicable to common
shareholders
(millions)........... $2,937 $(8,148) $(4,965) $(2,861) $5,967
Add--Net earnings (loss)
effect of interest on 7
7/8% convertible deben-
tures (millions)..... -- -- -- -- 65
- --Net earnings (loss)
effect of interest on 5
3/4% CGI convertible
bonds (millions)..... 19 -- -- -- --
----------- ----------- ----------- ----------- -----------
Net earnings (loss) on
which fully diluted
earnings per share is
based (millions)..... $2,956 $(8,148) $(4,965) $(2,861) $6,032
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Fully diluted earnings
(loss) per share......... $4.95 $(14.22) $(8.70) $(5.01) $10.36
Published earnings (loss)
per share.............. $5.02 $(14.22) $(8.70) $(5.01) $10.42
- ------------
* In 1993, 1992, and 1991, incremental shares under stock plans and the effect
of the convertible debentures and bonds were not considered for the fully
diluted earnings per share calculation due to their antidilutive effect. As
such, the amounts reported for primary and fully diluted earnings per share
are the same. The 7 7/8% convertible debentures were called and redeemed on
November 21, 1992.
EXHIBIT II
PARENTS AND SUBSIDIARIES
AS OF DECEMBER 31, 1994
STATE OR PERCENTAGE OF
COUNTRY VOTING
OF SECURITIES
INCORPORATION OWNED BY ITS
OR ORGANIZATION IMMEDIATE PARENT
--------------- ----------------
Registrant:
International Business Machines Corporation......... New York
Subsidiaries:
IBM Credit Corporation.............................. Delaware 100
Integrated Systems Solutions Corp. ................. Delaware 100
IBM World Trade Corporation......................... Delaware 100
IBM Asia Pacific Service Corporation.............. Japan 100
IBM China/Hong Kong Corporation................... Delaware 100
IBM World Trade Asia Corporation.................. Delaware 100
WTC Insurance Corporation, Ltd. .................. Bermuda 100
IBM Argentina, S.A. .............................. Argentina 100(E)
IBM Australia Ltd. ............................... Australia 100
IBM Bahamas Ltd. ................................. Bahamas 100
IBM de Bolivia, S.A. ............................. Bolivia 100
IBM Brasil-Industria, Maquinas e Servicos
Ltda. .......................................... Brazil 100(E)
IBM Canada Limited-- IBM Canada Limitee........... Canada 100
IBM China Company Limited......................... China 100
IBM de Chile, S.A.C. ............................. Chile 90(F)
IBM de Colombia, S.A. ............................ Colombia 90(E)
IBM del Ecuador, C.A. ............................ Ecuador 100
IBM Southeast Asia Services Ltd. ................. Hong Kong 100
Tata Information Systems Ltd. (TISL).............. India 50
IBM Japan, Ltd. .................................. Japan 100
IBM Korea Systems Corporation..................... Korea 100
IBM Korea, Inc. .................................. Korea (South) 100
Grupo IBM Mexico, S.A. de C.V. ................... Mexico 100(B)
IBM de Mexico, S.A. ............................ Mexico 100(B)
IBM New Zealand Ltd. ............................. New Zealand 100
IBM del Peru, S.A. ............................... Peru 100
IBM Latin American Region S.A. ................... Peru 100
IBM World Trade Asia-Pacific Corp. ............... Philippines 100(B)
IBM Philippines, Incorporated..................... Philippines 100(B)
IBM Singapore Pte. Ltd. .......................... Singapore 100
IBM Taiwan Corporation............................ Taiwan 100
Thai Systems Corporation Ltd. .................... Thailand 100
IBM Thailand Company Ltd. ........................ Thailand 100(B)
IBM del Uruguay, S.A. ............................ Uruguay 100
IBM de Venezuela, S.A. ........................... Venezuela 100
IBM World Trade Europe/Middle East/
Africa Corporation.............................. Delaware 100
IBM Central Europe & Russia Inc. ............... Delaware 100
PARENTS AND SUBSIDIARIES
AS OF DECEMBER 31, 1994--(CONTINUED)
STATE OR PERCENTAGE OF
COUNTRY VOTING
OF SECURITIES
INCORPORATION OWNED BY ITS
OR ORGANIZATION IMMEDIATE PARENT
--------------- ----------------
IBM World Trade Europe/Middle East/
Africa Corporation (continued)
IBM Oesterreich, Internationale Bueromaschinen
Gesellschaft m.b.H. .......................... Austria 100
International Business Machines of Belgium
S.A. ......................................... Belgium 100(D)
IBM Bulgaria Ltd. .............................. Bulgaria 100
C.T.S. d.o.o. .................................. Croatia 100
IBM Ceska Republika spol. s.r.o. ............... Czech Republic 100
IBM Slovensko spol. s.r.o. ..................... Slovak Republic 100
Compagnie IBM France, S.A. ..................... France 100(B)
IBM Eurocoordination, S.A. ..................... France --(C)
IBM Europe, S.A. ............................... France 100(B)
IBM Beteiligungs GmbH........................... Germany 100
IBM Deutschland GmbH............................ Germany 72(H)
International Business Machines Corporation
Magyarorszagi Kft............................. Hungary 100
IBM International Treasury Services Company..... Ireland --(K)
IBM Ireland Ltd. ............................... Ireland 100(D)
IBM SEMEA S.p.A. ............................... Italy 100
IBM Hellas Information Handling Systems
S.A. ....................................... Greece 100(D)
IBM Israel Ltd. .............................. Israel 100(D)
Companhia IBM Portuguesa, S.A. ............... Portugal 100
IBM (International Business Machines) Turk
Ltd. Sirketi................................ Turkey 98(A)
IBM International Centre for Asset Management
N.V. ......................................... Netherlands 100
International Maintenance Parts Logistics
B.V. ......................................... Netherlands --(J)
IBM Nederland N.V. ............................. Netherlands 100
IBM International Finance N.V. ............... Netherlands 100
IBM Polska Sp. z.o.o. .......................... Poland 100
International Business Machines A/S............. Norway 60(G)
IBM East Europe/Asia Ltd. ...................... Russia 100(D)
IBM Slovenija d.o.o. ........................... Slovenia 100
ISG Ltd. ....................................... South Africa 28(I)
International Business Machines, S.A. .......... Spain 100(B)
IBM Nordic Aktiebolag........................... Sweden 100
IBM Danmark A/S............................... Denmark 100
Oy International Business Machines AB......... Finland 100
IBM Svenska Aktiebolag........................ Sweden 100
IBM International Centre for Asset Management
A.G. ......................................... Switzerland 100
IBM (Schweiz)--IBM (Suisse)-- IBM
(Svizzera)--IBM (Switzerland)................. Switzerland 100
IBM United Kingdom Holdings Ltd................. United Kingdom 100
(Footnotes on following page)
(Footnotes for preceding page)
- ------------
(A) Remaining percentage owned by IBM World Trade Europe/Middle East/Africa Corporation.
(B) Minor percentage held by minority IBM shareholders, subject to repurchase option.
(C) IBM Eurocoordination, S.A. is owned approximately 14% each by subsidiaries located in
France, Germany, Italy and the United Kingdom and approximately 4% each by subsidiaries
located in Austria, Belgium, Denmark, Finland, Ireland, Netherlands, Norway, Portugal,
Spain, Sweden and Switzerland and by four other minority shareholders.
(D) Minor percentage owned by IBM World Trade Corporation.
(E) Remaining percentage owned by IBM World Trade Asia Corporation.
(F) Minor percentage owned by IBM Americas/Far East Systems Corporation.
(G) IBM Nordic Aktiebolag (100% owned by IBM World Trade Europe/ Middle East/Africa
Corporation) owns the remaining percentage.
(H) IBM World Trade Corporation owns 10% and IBM Beteiligungs GmbH owns 18%.
(I) IBM SEMEA S.p.A. holds an additional 24% of ISG Ltd.
(J) Owned jointly by nine IBM Europe/Middle East/Africa Corporation subsidiaries in Europe.
(K) IBM France and IBM Finland each own 16.6% and IBM Denmark and IBM Switzerland each own
33.3% of IBM International Treasury Services Company.
EXHIBIT III
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-8 (Nos. 2-77235,
2-77236, 33-5225, 33-29022, 33-33458 and 33-34406) and Form S-3 (No. 33-50537
and 33-54375) of International Business Machines Corporation of our report dated
January 20, 1995 appearing on page 35 of the 1994 Annual Report to Stockholders
which is incorporated in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement Schedule,
which appears on page 7 of this Form 10-K.
/s/ PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, N.Y. 10036
March 28, 1995