ITEM 1. BUSINESS: IBM develops, manufactures and sells advanced information processing products, including computers and microelectronic technology, software, networking systems and information technology-related services. IBM offers value worldwide through its United States, Canada, Europe/Middle East/Africa, Latin America, and Asia/Pacific business units, by providing comprehensive and 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. 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 1993 Annual Report to Stockholders and is incorporated herein by reference:
1. Segment information and revenue by classes of similar products or services--Pages 59 and 60
2. Financial information by geographic areas--Pages 61 and 62
3. Amount spent during each of the last three years on research and development activities--Page 45
4. The number of persons employed by the registrant--Page 31
5. Management discussion overview --Pages 20 and 21
ITEM 2.
ITEM 2. PROPERTIES: At December 31, 1993, IBM's manufacturing and development facilities in the United States had aggregate floor space of 57.4 million square feet, of which 46.6 million was owned and 10.8 million was leased. Of these amounts, 4.3 million square feet was vacant and .7 million square feet was being leased to non-IBM businesses. Similar facilities in 15 other countries totaled 21.8 million square feet, of which 18.3 million was owned and 3.5 million was leased. Of these amounts, .6 million square feet was vacant and .3 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 maintain technological leadership, improve productivity, and meet customer demand. For additional information on expenditures for plant and other property, refer to page 27 (Investments) of IBM's 1993 Annual Report to Stockholders which is incorporated herein by reference.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS: No material pending legal proceedings.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: Not applicable.
PART I (CONTINUED)
EXECUTIVE OFFICERS OF THE REGISTRANT (AT MARCH 28, 1994):
- ------------ (1) Member of the Board of Directors.
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 Gerald M. Czarnecki, Louis V. Gerstner, Jr., Paul J. Rizzo, G. Richard Thoman, Jerome B. York, and Frederick W. Zuckerman has been an officer or an executive of IBM or its subsidiaries during the past five years.
Mr. Czarnecki was the chairman of the board and chief executive officer, of Bank of America-Hawaii from 1992 until joining IBM in 1993. From 1987 to 1992, he was chairman of the board and chief executive officer of HonFed Bank in Honolulu, Hawaii.
Mr. Gerstner was the chairman of the board and chief executive officer of RJR Nabisco Holdings Corporation from 1989 until joining IBM in 1993. From 1985 to 1989, he was chairman and chief executive officer of American Express Travel Related Services Co., Inc.
Mr. Rizzo was the Dean of the Kenan-Flagler Business School at the University of North Carolina-Chapel Hill from 1987 to 1992. He then became a partner in Franklin Street Partners, a Chapel Hill investment firm. He rejoined IBM in 1993, having previously retired in 1988.
Mr. Thoman was the president of Nabisco International 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., and CEO of American Express International from 1989 to 1992.
Mr. York was the executive vice president-finance and chief financial officer of Chrysler Corporation from 1990 until joining IBM in 1993. From 1979 to 1990, he had also served as vice president and controller at Chrysler, vice president in charge of the company's Dodge car and truck division, and managing director of its operations in Mexico.
Mr. Zuckerman was the senior vice president and treasurer of RJR Nabisco from 1991 until joining IBM in 1993. From 1981 to 1991, he was the corporate vice president and treasurer of Chrysler Corporation.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS:
Refer to page 63 and the inside back cover of IBM's 1993 Annual Report to Stockholders which are incorporated herein by reference solely as they relate to this item.
There were 738,948 common stockholders of record at February 10, 1994.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA:
Refer to page 63 of IBM's 1993 Annual Report to Stockholders which is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS:
Refer to pages 20 through 31 of IBM's 1993 Annual Report to Stockholders which are incorporated herein by reference.
On March 1, 1994, Loral Corporation completed its acquisition of the Federal Systems Company for $1.503 billion in cash. The amount of any gain resulting from this sale may be dependent on future performance of the Advanced Automation System contract for the Federal Aviation Authority and certain other open matters.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
Refer to pages 18 and 19 and 32 through 62 of IBM's 1993 Annual Report to Stockholders which are incorporated herein by reference. Also refer to the Financial Statement Schedules on pages S-1 to S-5 of this Form.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE:
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
Refer to pages 2 through 4 and 7 of IBM's definitive Proxy Statement dated March 14, 1994 which are incorporated herein by reference solely as they relate to this item. Also refer to the Item entitled "Executive Officers of the Registrant" in Part I of this Form.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION:
Refer to pages 9 through 16 of IBM's definitive Proxy Statement dated March 14, 1994, which are incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS:
Not applicable.
(B) SECURITY OWNERSHIP OF MANAGEMENT:
Refer to the section entitled "Stock Ownership" appearing on pages 7 and 8 of IBM's definitive Proxy Statement dated March 14, 1994, which is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
Refer to page 7 (Other Relationships) of IBM's definitive Proxy Statement dated March 14, 1994, which is incorporated herein by reference.
PART IV
ITEM 14.
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 1993 ANNUAL REPORT TO STOCKHOLDERS WHICH ARE INCORPORATED HEREIN BY REFERENCE:
Report of Independent Accountants (page 19).
Consolidated Statement of Operations for the years ended December 31, 1993, 1992 and 1991 (page 32).
Consolidated Statement of Financial Position at December 31, 1993 and 1992 (page 33).
Consolidated Statement of Cash Flows for the years ended December 31, 1993, 1992 and 1991 (page 34).
Consolidated Statement of Stockholders' Equity at December 31, 1993, 1992 and 1991 (page 35).
Notes to Consolidated Financial Statements (pages 36 through 62).
2. FINANCIAL STATEMENT SCHEDULES REQUIRED TO BE FILED BY ITEM 8 OF THIS FORM:
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.
3. EXHIBITS:
INCLUDED IN THIS FORM 10-K:
PART IV (CONTINUED)
NOT INCLUDED IN THIS FORM 10-K:
-- A copy of the IBM 1989 Long-Term Performance Plan, a management compensatory plan, is contained in Registration Statement No. 33-29022 on Form S-8, filed on May 31, 1989, and is hereby incorporated by reference.
-- Board of Directors compensatory plans, as described under Directors' Compensation on page 7 of IBM's definitive Proxy Statement dated March 14, 1994, which is incorporated herein 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(1) 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(1) 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, 1994, 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 1993.
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: LOUIS V. GERSTNER, JR. .................................. (LOUIS V. GERSTNER, JR. CHAIRMAN OF THE BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER)
Date: March 28, 1994
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.
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of INTERNATIONAL BUSINESS MACHINES CORPORATION
Our audits of the consolidated financial statements referred to in our report dated February 16, 1994 (which refers to the changes in the methods of accounting for postemployment benefits in 1993, income taxes in 1992, and nonpension postretirement benefits in 1991) appearing on page 19 of the 1993 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 Schedules listed in Item 14(a)2 of this Form 10-K. In our opinion, these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
PRICE WATERHOUSE
1177 Avenue of the Americas New York, N.Y. 10036 February 16, 1994
SCHEDULE V
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES PLANT, RENTAL MACHINES AND OTHER PROPERTY FOR THE YEAR ENDED DECEMBER 31: (DOLLARS IN MILLIONS)
DEPRECIATION: Plant, rental machines and other property are carried at cost and depreciated over their estimated useful lives using the straight-line method.
With minor exceptions, the estimated useful lives of depreciable properties are as follows:
Land improvements....................................... 20 years Buildings and building equipment........................ 5 to 50 years Plant, laboratory and office equipment.................. 2 to 16 years Rental machines......................................... 1 to 7 years
S-1
SCHEDULE VI
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES ACCUMULATED DEPRECIATION OF PLANT, RENTAL MACHINES AND OTHER PROPERTY FOR THE YEAR ENDED DECEMBER 31: (DOLLARS IN MILLIONS)
- ------------
(A) Includes charge for accelerated depreciation due to restructuring actions taken in 1993 of $1,068 million.
(B) Includes charge for accelerated depreciation due to restructuring actions taken in 1992 of $4,185 million.
(C) Includes charge for accelerated depreciation due to restructuring action taken in 1991 of $378 million.
S-2
SCHEDULE VIII
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES VALUATION AND QUALIFYING ACCOUNTS FOR THE YEAR ENDED DECEMBER 31: (DOLLARS IN MILLIONS)
- ------------
(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. The allowances for receivable losses 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, approproximate less than three 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 1991, approximate less than two percent in both categories of receivables.
S-3
SCHEDULE IX
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES SHORT-TERM BORROWINGS FOR THE YEAR ENDED DECEMBER 31: (DOLLARS IN MILLIONS)
- ------------
Note--
The balance at end of period excludes the current portion of long-term debt of $4,006 million, $3,256 million, and $4,363 million for the years 1993, 1992, and 1991, respectively.
Effective 1993, short-term loan amounts in subsidiaries where the economic environment is highly inflationary, were primarily denominated in U.S. dollars. In prior years, these loans were denominated in local currencies, and the high interest rates in those operations were largely offset by the effects of inflation on funds borrowed. If the inflationary effects of these loans were excluded, the weighted average interest rate at year-end would have been 7.5% and 8.7% for the years 1992 and 1991, respectively, and the weighted average interest rate during the year would have been 7.8% and 9.0% for 1992 and 1991, respectively.
The average amount outstanding during the year and the weighted average interest rate during the year were calculated by averaging the quarterly balances and rates.
S-4
SCHEDULE X
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES SUPPLEMENTARY INCOME STATEMENT INFORMATION FOR THE YEAR ENDED DECEMBER 31: (DOLLARS IN MILLIONS)
- ------------ (A) Includes amounts charged to all accounts, including inventories and fixed assets.
S-5
EXHIBIT INDEX