International Business Machines (IBM) 10-Q 2014 Q3 Quarterly report

EXHIBIT 11

COMPUTATION OF BASIC AND DILUTED

EARNINGS PER SHARE

(UNAUDITED)

	For the Three Months Ended
	September 30, 2014		September 30 2013*
Number of shares on which basic earnings per share is calculated:
Weighted-average shares outstanding during period		991,835,307		1,090,922,993
Add – Incremental shares under stock-based compensation plans		4,308,983		5,933,962
Add – Incremental shares associated with contingently issuable shares		1,513,587		1,921,024
Number of shares on which diluted earnings per share is calculated		997,657,878		1,098,777,979
Income from continuing operations (millions)	$	3,455	$	4,139
Loss from discontinued operations, net of tax (millions)		(3,437)		(98)
Net income on which basic earnings per share is calculated (millions)	$	18	$	4,041
Income from continuing operations (millions)	$	3,455	$	4,139
Net income applicable to contingently issuable shares (millions)		–		–
Income from continuing operations on which diluted earnings per share is
calculated (millions)	$	3,455	$	4,139
Loss from discontinued operations, net of tax on which basic and diluted
earnings per share is calculated (millions)		(3,437)		(98)
Net income on which diluted earnings per share is calculated (millions)	$	18	$	4,041
Earnings per share of common stock:
Assuming dilution
Continuing operations	$	3.46	$	3.77
Discontinued operations		(3.44)		(0.09)
Total	$	0.02	$	3.68
Basic
Continuing operations	$	3.48	$	3.79
Discontinued operations		(3.46)		(0.09)
Total	$	0.02	$	3.70
Stock options to purchase 3,187 shares were outstanding as of September 30, 2013 but were not included in the
computation of diluted earnings per share because the options' exercise price during the respective period was greater than
the average market price of the common shares, and, therefore, the effect  would have been antidilutive. There were no
stock options outstanding at September 30, 2014 that were considered antidilutive.
* Reclassified to reflect discontinued operations presentation.

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EXHIBIT 11

COMPUTATION OF BASIC AND DILUTED

EARNINGS PER SHARE

(UNAUDITED)

	For the Nine Months Ended
	September 30, 2014		September 30 2013*
Number of shares on which basic earnings per share is calculated:
Weighted-average shares outstanding during period		1,008,895,540		1,101,830,931
Add – Incremental shares under stock compensation plans		4,615,009		7,206,259
Add – Incremental shares associated with contingently issuable shares		1,348,225		1,696,834
Number of shares on which diluted earnings per share is calculated		1,014,858,774		1,110,734,023
Income from continuing operations (millions)	$	10,237	$	10,665
Loss from discontinued operations, net of tax (millions)		(3,698)		(366)
Net income on which basic earnings per share is calculated (millions)	$	6,539	$	10,299
Income from continuing operations (millions)	$	10,237	$	10,665
Net income applicable to contingently issuable shares (millions)		0		(1)
Income from continuing operations on which diluted earnings per share is
calculated (millions)	$	10,236	$	10,663
Loss from discontinued operations, net of tax on which basic and diluted
earnings per share is calculated (millions)		(3,698)		(366)
Net income on which diluted earnings per share is calculated (millions)	$	6,538	$	10,298
Earnings per share of common stock:
Assuming dilution
Continuing operations	$	10.09	$	9.60
Discontinued operations		(3.65)		(0.33)
Total	$	6.44	$	9.27
Basic
Continuing operations	$	10.15	$	9.68
Discontinued operations		(3.67)		(0.33)
Total	$	6.48	$	9.35
Stock options to purchase 7,535 shares and 1,062 shares  (average of first, second and third quarter share amounts) were
outstanding as of September 30, 2014 and 2013, respectively, but were not included  in the computation of diluted earnings
per share because the options' exercise price during the respective periods was greater than the average market price
of the common shares, and, therefore, the effect would have been antidilutive.
* Reclassified to reflect discontinued operations presentation.

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