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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1994
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) (IRS 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:
VOTING SHARES OUTSTANDING NAME OF EACH EXCHANGE
TITLE OF EACH CLASS AT MARCH 7, 1995 ON WHICH REGISTERED
- --------------------------------- -------------------------- ------------------------
Capital stock, par value 584,225,210 New York Stock Exchange
$1.25 per share Midwest Stock Exchange
Pacific Stock Exchange
Depositary shares each New York Stock Exchange
representing one-fourth of a
share of 7 1/2% preferred
stock, par value $ .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
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 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, 1995 was $46.6 billion.
Documents incorporated by reference:
Portions of IBM's Annual Report to Stockholders for the year ended
December 31, 1994 into Parts I and II of Form 10-K.
Portions of IBM's definitive Proxy Statement dated March 14, 1995 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, development and manufacture of the industry's most advanced
information technologies, including computer systems, software, networking
systems, and microelectronics. Second, the company translates these advanced
technologies into value for our customers worldwide through its sales and
professional services 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 with comprehensive and
timely solutions.
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.
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 1994 Annual Report to
Stockholders and is incorporated herein by reference:
1. Segment information and revenue by classes of similar products or
services--Pages 74 and 75.
2. Financial information by geographic areas--Pages 76 and 77.
3. Amount spent during each of the last three years on research and
development activities--Page 59.
4. The number of persons employed by the registrant-- Page 47.
5. The management discussion overview--Page 36.
ITEM 2. PROPERTIES:
At December 31, 1994, IBM's manufacturing and development facilities in the
United States had aggregate floor space of 55.2 million square feet, of which
43.4 million was owned and 11.8 million was leased. Of these amounts, 8.5
million square feet was vacant and 1.0 million square feet was being leased to
non-IBM businesses. Similar facilities in 15 other countries totaled 21.0
million square feet, of which 18.0 million was owned and 3.0 million was leased.
Of these amounts, 2.0 million square feet was vacant and .7 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 43 of IBM's 1994 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.
2
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):
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......................... 54 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
- ------------
(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., Jeffrey D. Serkes, 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 tobacco 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. Serkes was vice president and deputy treasurer of RJR Nabisco, Inc., a
food and tobacco 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 of RJR
Nabisco, Inc.
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-CEO of American
Express Travel Related Services Co., Inc. and CEO of American Express
International from 1989 to 1992.
Mr. York, from 1979 until joining IBM in 1993, served in a number of
executive positions at Chrysler Corporation, an automotive manufacturer,
including executive vice president-finance and chief financial officer from 1990
to 1993 and vice president and controller from 1989 to 1990. Prior
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 12 through 20 of IBM's definitive Proxy Statement dated March
14, 1995, which are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS:
Refer to the section entitled "Stock Ownership" appearing on pages 9
through 11 of IBM's definitive Proxy Statement dated March 14, 1995,
which is incorporated herein by reference solely as it relates to this
item.
(b) SECURITY OWNERSHIP OF MANAGEMENT:
Refer to the section entitled "Stock Ownership" appearing on pages 9
through 11 of IBM's definitive Proxy Statement dated March 14, 1995,
which is incorporated herein by reference solely as it relates to this
item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
Refer to page 8 "Other Relationships" of IBM's definitive Proxy Statement
dated March 14, 1995, 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:
1. FINANCIAL STATEMENTS FROM IBM'S 1994 ANNUAL REPORT TO STOCKHOLDERS
WHICH ARE INCORPORATED HEREIN BY REFERENCE:
Report of Independent Accountants (page 35).
Consolidated Statement of Operations for the years ended December 31,
1994, 1993 and 1992 (page 48).
Consolidated Statement of Financial Position at December 31, 1994 and
1993 (page 49).
Consolidated Statement of Cash Flows for the years ended December 31,
1994, 1993 and 1992 (page 50).
Consolidated Statement of Stockholders' Equity at December 31, 1994,
1993 and 1992 (page 51).
Notes to Consolidated Financial Statements (pages 52 through 78).
2. FINANCIAL 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-- Valuation and Qualifying Accounts
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 FORM 10-K:
I-- Computation of Fully Diluted Earnings Per Share.
II-- Parents and Subsidiaries.
III-- Consent of Independent Accountants.
IV-- Additional Exhibits
(a) Supplemental Consolidated Statement of Operations--1994
and 1993.
V-- The By-laws of IBM as amended through February 1, 1995.
VI-- IBM's 1994 Annual Report to Stockholders, certain sections
of which have been incorporated herein by reference.
VII-- Powers of Attorney.
VIII-- 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 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 the 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 9 of IBM's definitive Proxy Statement dated
March 14, 1995, which is incorporated herein 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.
-- 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.
-- 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.
-- IBM's definitive Proxy Statement dated March 14, 1995, certain
sections of which have been incorporated herein by reference.
(b) REPORTS ON FORM 8-K:
-- No reports on Form 8-K were filed during the last quarter of 1994.
5
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 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.
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Registrant)
By /s/ LOUIS V. GERSTNER,JR.
...................................
(LOUIS V. GERSTNER, JR.
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER)
Date: March 28, 1995
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.
SIGNATURE TITLE DATE
-------------- ----- ----
/s/ JEROME B. YORK Senior Vice March 28, 1995
.............................. President,
(JEROME B. YORK) Chief
Financial
Officer,
acting
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 |
6
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of
INTERNATIONAL 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), appearing on
page 35 of the 1994 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
1177 Avenue of the Americas
New York, N.Y. 10036
January 20, 1995
7
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 END
DESCRIPTION OF PERIOD NET CHANGE(A) OF PERIOD
- -------------------------------------------------------- ---------- ------------- ----------
1994
Account deducted from assets:
Allowance for doubtful accounts
--Current........................................... $683 $ 36 $719
----- ----- -----
----- ----- -----
--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. With the growth of
the company's working capital financing business in 1994, the concentration of
such financings for certain large dealers and remarketers of information
industry products has become more significant. 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 NUMBER IN
REGULATION S-K DESCRIPTION OF EXHIBITS THIS FORM 10-K
- ---------------- ----------------------------------------------------------- --------------
(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. V
(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) on Form S-3, file 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)(b)(c) and
(d) to Registration Statement No. 33-31732 on Form S-3,
filed on October 24, 1989, are 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 Compensation" on page 9 of IBM's
definitive Proxy Statement dated March 14, 1995, which is
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.
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.
(11) Statement re computation of per share earnings. I
(12) Statement re computation of ratios. Not applicable
(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
- ---------------- ----------------------------------------------------------- --------------
(18) Letter re change in accounting principles. Not applicable
(19) Previously unfiled documents. Not applicable
(21) Subsidiaries of the registrant. II
(22) Published report regarding matters submitted to vote of Not applicable
security holders.
(23) Consents of experts and counsel. III
(24) Powers of attorney. VII
(27) Financial Data Schedule. VIII
(28) Information from reports furnished to state insurance Not applicable
regulatory authorities.
(99) Additional exhibits. IV
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)
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(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