# Annual Report for the year ended December 31, 1978
International Business Machines Corporation

## Contents:
- 2 Letter to Stockholders: Management comments on the year's financial results, business conditions affecting IBM and significant developments within the company.
- 5 Innovation—in many forms it is lowering the cost of information processing for the benefit of people in all parts of the world.
- 18 Stockholder Information
- 19 IBM Organization
- 20 Financial Review
- 21 Report of Management Report of Independent Accountants
- 22 Earnings
- 23 Financial Position
- 24 Changes in Financial Position
- 25 Stockholders' Equity
- 26 Notes to Financial Statements
- 31 Five-Year Summary of Operations
- 32 Management's Discussion and Analysis of the Summary of Operations
- 34 Reports on other 1978 developments involving IBM employees and business programs
- 36 Directors and Officers

## Highlights of the year:
| 1978 (Dollars in thousands except per share amounts) | 1977 |
|---|---|
| Gross income from sales, rentals and services | $21,076,089 | $18,133,184 |
| Earnings before income taxes | $5,797,568 | $5,092,414 |
| U.S. Federal and non-U.S. income taxes | $2,687,000 | $2,373,000 |
| Net earnings | $3,110,568 | $2,719,414 |
| Per share | $21.29 | $18.30 |
| Cash dividends paid | $1,684,612 | $1,487,627 |
| Per share | $11.52 | $10.00 |
| Investment in plant, rental machines and other property | $4,045,539 | $3,394,741 |

## At end of year:
| 1978 | 1977 |
|---|---|
| Total assets | $20,771,374 | $18,978,445 |
| Net investment in plant, rental machines and other property | $9,302,228 | $7,889,326 |
| Long-term debt | $285,534 | $255,776 |
| Working capital | $4,510,789 | $4,864,073 |
| Number of employees | 325,517 | 310,155 |
| Number of stockholders | 580,572 | 581,513 |

## IBM's Operations:
IBM's operations, with very minor exceptions, are in the field of information-handling systems, equipment and services to solve the increasingly complex problems of business, government, science, space exploration, defense, education, medicine, and many other areas of human activity. IBM's products include data processing machines and systems, information processors, electric and electronic typewriters, copiers, dictation equipment, educational and testing materials, and related supplies and services. Most products are both leased and sold through IBM's worldwide marketing organizations.