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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 23, 1997
(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)
914-765-1900
(Registrant's telephone number)
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Item 5. Other Events
The registrant's press release dated April 23, 1997, regarding its
financial results for the period ended March 31, 1997, including
unaudited consolidated financial statements for the period ended
March 31, 1997, are attached.
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 23, 1997
By: John R. Joyce
______________________________
(John R. Joyce)
Vice President and Controller
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Exhibit 99
IBM Announces First-Quarter 1997 Results
April 23, 1997
IBM today announced first-quarter 1997 net earnings of
$1.2 billion, or $2.37 per common share. This compares with
earnings of $1.2 billion, or $2.21 per common share, in the first
quarter of 1996, excluding a charge associated with acquisitions.
Including this charge, first-quarter 1996 earnings were
$774 million, or $1.41 per common share. Revenues for the first
quarter of 1997 totaled $17.3 billion, a 5-percent increase
(9 percent at constant currency) over the same period of 1996.
Louis V. Gerstner, Jr., IBM chairman and chief executive officer,
said: "We continued to see strong performance in the first
quarter in fast-growth areas including services, personal
computers and certain distributed software such as Lotus Notes
and Tivoli systems management products. I'm also pleased by the
strength of our storage business.
"As we expected, our server business was adversely affected by
product transitions, most notably within our System/390 division,
and by ongoing weakness in Europe, which hurt our AS/400 sales.
However, the excellent results from the fast-growth areas of our
company more than offset the weakness from our server line. This
underscores the strength of our broad, diversified product line.
"Even more important," Mr. Gerstner said, "was the increasingly
strong response we saw in the first quarter to our network
computing strategy. IBM plays a unique role here by providing
customers with comprehensive solutions in areas such as
electronic commerce, data security, and network applications and
services for specific industries."
On an as-reported basis, first-quarter revenues in North America
were $7.9 billion, an increase of 14 percent from the same period
a year ago. Asia-Pacific revenues increased by 3 percent to
$3.4 billion while revenues from Latin America were up 2 percent
to $701 million. Revenues from Europe/Middle East/Africa
declined by 7 percent to $5.3 billion. On a constant currency
basis, Asia-Pacific revenues grew by 14 percent and Europe/Middle
East/Africa revenues grew by 1 percent.
Hardware sales totaled $7.8 billion in the first quarter,
essentially flat compared with the same period last year.
Personal computer and PC server revenues increased, while
RS/6000, AS/400, and System/390 revenues declined. Revenue from
the company's storage business increased, due in part to
continued strong sales of hard disk drive (HDD) products.
Services revenues climbed to $4.1 billion, a 28 percent increase
compared to the same quarter last year. IBM signed services
agreements totaling approximately $3 billion in the first
quarter.
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Software revenues declined 3 percent from the first quarter of
last year to $2.9 billion. Shipments of Tivoli systems
management distributed software more than doubled year over year.
The Lotus Notes installation base increased by approximately
1.7 million seats in the first quarter, bringing the total Notes
installation base to about 11 million seats. Also during the
first quarter, IBM announced plans to acquire a majority interest
in NetObjects, a leader in the development of advanced web sites.
This transaction was finalized on April 16.
On a constant currency basis, hardware revenues grew 5 percent,
services revenues grew 34 percent and software revenues grew
2 percent.
Maintenance revenues declined 8 percent year over year to
$1.6 billion, while revenues from rentals and financing increased
4 percent to $899 million.
The total gross profit margin was 38.1 percent in the first
quarter compared to 40.9 percent in the first quarter of last
year.
Total expenses were essentially flat compared with the first
quarter of 1996. The company's expense-to-revenue ratio improved
by 1.5 percentage points in the first quarter, compared with the
year-earlier period.
IBM's tax rate was 35.5 percent in the first quarter compared
with 39.0 percent a year ago.
IBM spent approximately $2.0 billion for share repurchases in the
first quarter, leaving about $800 million remaining under the
current repurchase authorization. The average number of common
shares outstanding in the quarter was 501.7 million compared with
544.3 million in the year-earlier period.
The company's "core" debt (excluding customer financing) was
unchanged from year-end 1996 at $2.2 billion. Debt supporting
IBM's global credit operations increased $817 million to
$21.4 billion from $20.6 billion at year-end 1996.
Financial results attached
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INTERNATIONAL BUSINESS MACHINES CORPORATION
SUPPLEMENTAL SCHEDULE - COMPARATIVE FINANCIAL RESULTS
(EXCLUDES EFFECT OF PURCHASED R&D) *
(Unaudited; Dollars in millions except per share amounts)
Three months ended March 31
Percent
1997 1996 Change
------- ------- -------
REVENUE
Hardware sales $7,761 $7,708 0.7%
Gross profit margin 32.4% 35.1%
Services 4,095 3,198 28.1%
Gross profit margin 19.5% 19.4%
Software 2,950 3,037 -2.9%
Gross profit margin 69.1% 70.0%
Maintenance 1,603 1,749 -8.3%
Gross profit margin 46.8% 47.8%
Rentals and financing 899 867 3.7%
Gross profit margin 54.4% 55.6%
TOTAL REVENUE 17,308 16,559 4.5%
GROSS PROFIT 6,592 6,769 -2.6%
Gross profit margin 38.1% 40.9%
OPERATING EXPENSES
S,G&A 3,684 3,697 -0.3%
% of revenue 21.3% 22.3%
R,D&E 1,069 1,091 -2.0%
% of revenue 6.2% 6.6%
OPERATING INCOME 1,839 1,981 -7.2%
Other income 185 150 23.5%
Interest expense 172 149 14.9%
EARNINGS BEFORE
INCOME TAXES 1,852 1,982 -6.6%
Pre-tax margin 10.7% 12.0%
Provision for
income taxes 657 773 -15.0%
Effective tax rate 35.5% 39.0%
NET EARNINGS * $1,195 $1,209 -1.2%
Net margin 6.9% 7.3%
Preferred stock
dividends 5 5
NET EARNINGS
APPLICABLE TO COMMON
SHAREHOLDERS $1,190 $1,204 -1.2%
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NET EARNINGS PER
SHARE OF COMMON STOCK $2.37 $2.21 7.2%
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AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING (M's) 501.7 544.3
* Supplemental information provided for comparative purposes:
Net earnings for the first quarter of 1996 excludes a
$435 million non-recurring, non-tax deductible charge
for purchased in-process research and development in
connection with the Tivoli Systems Inc. and Object
Technology International Inc. acquisitions in March 1996.
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INTERNATIONAL BUSINESS MACHINES CORPORATION
COMPARATIVE FINANCIAL RESULTS
(Unaudited; Dollars in millions except per share amounts)
Three months ended March 31
Percent
1997 1996 Change
------- ------- -------
REVENUE
Hardware sales $7,761 $7,708 0.7%
Gross profit margin 32.4% 35.1%
Services 4,095 3,198 28.1%
Gross profit margin 19.5% 19.4%
Software 2,950 3,037 -2.9%
Gross profit margin 69.1% 70.0%
Maintenance 1,603 1,749 -8.3%
Gross profit margin 46.8% 47.8%
Rentals and financing 899 867 3.7%
Gross profit margin 54.4% 55.6%
TOTAL REVENUE 17,308 16,559 4.5%
GROSS PROFIT 6,592 6,769 -2.6%
Gross profit margin 38.1% 40.9%
OPERATING EXPENSES
S,G&A 3,684 3,697 -0.3%
% of revenue 21.3% 22.3%
R,D&E 1,069 1,526 -29.9%
% of revenue 6.2% 9.2%
OPERATING INCOME 1,839 1,546 18.8%
Other income 185 150 23.5%
Interest expense 172 149 14.9%
EARNINGS BEFORE
INCOME TAXES 1,852 1,547 19.7%
Pre-tax margin 10.7% 9.3%
Provision for
income taxes 657 773 -15.0%
Effective tax rate 35.5% 50.0%
NET EARNINGS * $1,195 $774 54.2%
Net margin 6.9% 4.7%
Preferred stock
dividends 5 5
NET EARNINGS
APPLICABLE TO COMMON
SHAREHOLDERS $1,190 $769 54.6%
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NET EARNINGS PER
SHARE OF COMMON STOCK $2.37 $1.41 68.1%
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AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING (M's) 501.7 544.3
* Net earnings for the first quarter of 1996 includes
a $435 million non-recurring, non-tax deductible charge
for purchased in-process research and development in
connection with the Tivoli Systems Inc. and Object
Technology International Inc. acquisitions in March 1996.
Net earnings excluding the charge were $1,209 million,
or $2.21 per common share.
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INTERNATIONAL BUSINESS MACHINES CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited; Dollars in millions)
At At
March 31 December 31 Percent
1997 1996 Change
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ASSETS
Cash, cash equivalents,
and marketable securities $6,463 $8,137 -20.6%
Receivables - net, inventories,
and prepaid expenses 30,857 32,558 -5.2%
Plant, rental machines,
and other property - net 17,062 17,407 -2.0%
Investments and other assets 22,145 23,030 -3.8%
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TOTAL ASSETS $76,527 $81,132 -5.7%
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LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $13,243 $12,957 2.2%
Long-term debt 10,402 9,872 5.4%
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Total debt 23,645 22,829 3.6%
Accounts payable, taxes,
and accruals 17,998 21,043 -14.5%
Other liabilities and
deferred income taxes 14,933 15,632 -4.5%
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Total liabilities 56,576 59,504 -4.9%
Stockholders' equity 19,951 21,628 -7.8%
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $76,527 $81,132 -5.7%
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