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: April 27, 1999
(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 (IRS employer
File Number) Identification No.)
Armonk, New York 10504
(Address of principal executive offices) (Zip Code)
914-499-1900
(Registrant's telephone number)
Item 5. Other Events.
On April 27, 1999, the stockholders of the company approved amendments to
the Certificate of Incorporation to increase the number of authorized shares of
common stock from 1,875 million to 4,687.5 million and to effect a two-for-one
stock split approved by the company's Board of Directors on January 26, 1999. In
addition, the amendments served to reduce the par value of the common shares
from $.50 per share to $.20 per share.
Common stockholders of record at the close of business on May 10, 1999
will receive one additional share for each share held. Distribution of the
additional shares is expected to occur on May 26, 1999, and will be effected in
book-entry form, through the mailing of an account statement to each stockholder
of record as of the stock split record date, thereby crediting the additional
shares of common stock due as a result of the stock split stock split.
Item 7. Financial Statements, Pro-Forma Financial Information and
Exhibits.
(b) Pro-Forma Financial Information
The following is presented to reflect the two-for-one stock split on
a historical basis. (See attachments I through V of this Form 8-K.)
I Consolidated Statement of Earnings for the years ended
December 31, 1998, 1997 and 1996.
II Consolidated Statement of Financial Position at December 31,
1998 and 1997.
III Computation of Basic and Diluted Earnings Per Share for the
years ended December 31, 1998, 1997 and 1996.
IV Five-year Comparison of Selected Financial Data 1994 through
1998.
V Selected Quarterly Data for 1998 and 1997.
(c) Exhibits
(3)(i) Certificate of Incorporation as amended through April 28,
1999.
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.
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Registrant)
Date: April 28, 1999
By: Mark Loughridge
---------------------------------
(Mark Loughridge)
Vice President and Controller
ATTACHMENT I
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
(Dollars in millions For the Year-Ended December 31:
except per share amounts) -------------------------------
1998 1997 1996
Revenue: ------- ------- -------
Hardware segments $35,419 $36,630 $36,634
Global Services segment 28,916 25,166 22,310
Software segment 11,863 11,164 11,426
Global Financing segment 2,877 2,806 3,045
Enterprise Investments
segment/Other 2,592 2,742 2,523
------- ------- -------
Total revenue 81,667 78,508 75,947
Cost:
Hardware segments 24,214 23,473 22,888
Global Services segment 21,125 18,464 16,270
Software segment 2,260 2,785 2,946
Global Financing segment 1,494 1,448 1,481
Enterprise Investments
segment/Other 1,702 1,729 1,823
------- ------- -------
Total cost 50,795 47,899 45,408
------- ------- -------
Gross profit 30,872 30,609 30,539
Operating expenses:
Selling, general and
administrative 16,662 16,634 16,854
Research, development and
engineering 5,046 4,877 5,089
------- ------- -------
Total operating expenses 21,708 21,511 21,943
Operating income 9,164 9,098 8,596
Other income, principally interest 589 657 707
Interest expense 713 728 716
------- ------- -------
Income before income taxes 9,040 9,027 8,587
Provision for income taxes 2,712 2,934 3,158
------- ------- -------
Net income 6,328 6,093 5,429
Preferred stock dividends 20 20 20
------- ------- -------
Net income applicable to
common shareholders $ 6,308 $ 6,073 $ 5,409
======= ======= =======
ATTACHMENT I
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF EARNINGS - (CONTINUED)
(UNAUDITED)
(Dollars in millions For the Year-Ended December 31:
except per share amounts) -----------------------------------------------
1998 1997 1996
------- ------- -------
Earnings per share
of common stock - basic* $ 3.38 $ 3.09 $ 2.56
Earnings per share
of common stock -
assuming dilution* $ 3.29 $ 3.00 $ 2.50
Average number of common
shares outstanding:
Basic* 1,869,005,570 1,966,572,722 2,113,408,376
Assuming dilution* 1,920,130,470 2,021,869,884 2,159,417,808
* Restated to reflect the two-for-one stock split effective on May 10, 1999.
ATTACHMENT II
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
ASSETS
(Dollars in millions) At December 31 At December 31
1998 1997
Current assets: -------------- --------------
Cash and cash equivalents $ 5,375 $ 7,106
Marketable securities 393 447
Notes and accounts receivable - trade,
net of allowances 18,958 16,850
Sales-type leases receivable 6,510 5,720
Other accounts receivable 1,313 1,256
Inventories 5,200 5,139
Prepaid expenses and other current assets 4,611 3,900
-------- --------
Total current assets 42,360 40,418
Plant, rental machines and other property 44,870 42,133
Less: Accumulated depreciation 25,239 23,786
-------- --------
Plant, rental machines and other property - net 19,631 18,347
Software, less accumulated
amortization (1998, $12,516; 1997, $12,610) 599 819
Investments and sundry assets 23,510 21,915
-------- --------
Total assets $ 86,100 $ 81,499
======== ========
ATTACHMENT II
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION - (CONTINUED)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollars in millions) At December 31 At December 31
1998 1997
--------------- --------------
Current liabilities:
Taxes $ 3,125 $ 2,381
Short-term debt 13,905 13,230
Accounts payable 6,252 5,215
Compensation and benefits 3,530 3,043
Deferred income 4,115 3,445
Other accrued expenses and liabilities 5,900 6,193
-------- --------
Total current liabilities 36,827 33,507
Long-term debt 15,508 13,696
Other liabilities 12,818 12,993
Deferred income taxes 1,514 1,487
-------- --------
Total liabilities 66,667 61,683
Contingencies
Stockholders' equity:
Preferred stock - par value $.01 per share 247 252
Shares authorized: 150,000,000
Shares issued: 1998 - 2,546,011
1997 - 2,597,261
Common stock - par value $.20* per share 10,121 8,601
Shares authorized: 4,687,500,000*
Shares issued: 1998 - 1,853,738,104*
1997 - 1,938,030,702*
Retained earnings 10,141 11,010
Treasury stock, at cost (133) (86)
Shares: 1998 - 1,924,292*
1997 - 1,847,910*
Employee benefits trust (1,854) (860)
Shares: 1998 - 20,000,000*
1997 - 20,000,000*
Accumulated gains and losses not affecting
retained earnings 911 899
-------- --------
Total stockholders' equity 19,433 19,816
-------- --------
Total liabilities and stockholders' equity $ 86,100 $ 81,499
======== ========
* Restated to reflect the two-for-one stock split effective on May 10, 1999.
ATTACHMENT III
COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE
(UNAUDITED)
For the year ended December 31
---------------------------------------------------
1998 1997 1996
------------- ------------- -------------
Number of shares
on which basic
earnings per share
is calculated:
Average outstanding
during year* 1,869,005,570 1,966,572,722 2,113,408,376
Add--Incremental
shares under stock
compensation plans* 51,124,900 55,297,162 46,009,432
------------- ------------- -------------
Number of shares on
which diluted
earnings per share
are calculated* 1,920,130,470 2,021,869,884 2,159,417,808
============= ============= ============
Net income (millions) $ 6,328 $ 6,093 $ 5,429
Less - Preferred stock
dividends (millions) 20 20 20
------------- ------------- -------------
Net income on which
basic and diluted
earnings per share
are calculated (millions) $ 6,308 $ 6,073 $ 5,409
============= ============ ============
Basic earnings
per share* $ 3.38 $ 3.09 $ 2.56
Diluted earnings
per share* $ 3.29 $ 3.00 $ 2.50
Stock options to purchase 4,124,730* shares in 1998, 331,666* shares in 1997 and
1,568,282* shares in 1996 were outstanding, but were not included in the
calculation of diluted earnings per share because the options' exercise price
was greater than the average market price of the common shares, and therefore,
the effect would be anti-dilutive. In addition, 5,131,038* restricted stock
units in 1998 relating to the company's Long-Term Performance Plan were not
included in the computation of diluted earnings as their effect would be
anti-dilutive.
* Restated to reflect the two-for-one stock split of May 10, 1999.
ATTACHMENT IV
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
(UNAUDITED)
FIVE YEAR COMPARISON OF SELECTED FINANCIAL DATA
(Dollars in millions
except per share amounts)
For the year: 1998 1997 1996 1995 1994
Revenue $ 81,667 $ 78,508 $ 75,947 $ 71,940 $ 64,052
Net income 6,328 6,093 5,429 4,178 3,021
Per share of common stock -
Basic* 3.38 3.09 2.56 1.81 1.26
Assuming dilution* 3.29 3.00 2.50 1.76 1.24
Cash dividends paid on common stock 814 763 686 572 585
Per share of common stock* .43 .3875 .325 .25 .25
Investment in plant, rental machines
and other property 6,520 6,793 5,883 4,744 3,078
Return on stockholders' equity 32.6% 29.7% 24.8% 18.5% 14.3%
At end of year:
Total assets $ 86,100 $ 81,499 $ 81,132 $ 80,292 $ 81,091
Net investment in plant, rental
machines and other property 19,631 18,347 17,407 16,579 16,664
Working capital 5,533 6,911 6,695 9,043 12,112
Total debt 29,413 26,926 22,829 21,629 22,118
Stockholders' equity 19,433 19,816 21,628 22,423 23,413
* Restated to reflect the two-for-one stock split effective on May 10, 1999
ATTACHMENT V
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
(UNAUDITED)
SELECTED QUARTERLY DATA
(Dollars in millions except
per share and stock prices)
Per Share Commom Stock
--------------------------------------------------
Earnings-
Gross Net Earnings- Assuming Stock Prices#
Revenue Profit Income Basic* Dilution* Dividends* High* Low*
1998
First quarter $ 17,618 $ 6,450 $ 1,036 $ .54 $ .53 $ .10 $ 54.19 $ 47.81
Second quarter 18,823 7,146 1,452 .77 .75 .11 64.66 51.66
Third quarter 20,095 7,467 1,494 .80 .78 .11 69.06 55.38
Fourth quarter 25,131 9,809 2,346 1.27 1.24 .11 94.97 58.41
-------- -------- ------- ------- -------- ------
Total $ 81,667 $ 30,872 $ 6,328 $ 3.38 $ 3.29** $ .43
======== ======== ======= ======= ======== ======
1997
First quarter $ 17,308 $ 6,592 $ 1,195 $ .59 $ .58 $.0875 $ 42.53 $ 32.50
Second quarter 18,872 7,401 1,446 .73 .71 .1000 46.88 31.78
Third quarter 18,605 7,098 1,359 .69 .67 .1000 54.72 45.06
Fourth quarter 23,723 9,518 2,093 1.08 1.05 .1000 56.75 44.31
-------- -------- ------- ------- -------- ------
Total $ 78,508 $ 30,609 $ 6,093 $ 3.09 $ 3.00** $.3875*
======== ======== ======= ======= ======== ======
* Restated to reflect the two-for-one stock split effective on May 10, 1999.
** The sum of the quarters' earnings per share does not equal the year-
to-date earnings per share due to changes in average share calculations.
This in accordance with prescribed reporting requirements.
1
# The stock prices reflect the high and low prices for IBM's common stock on
the New York Stock Exchange composite tape for the last two years.
2