# Financial Review

## Gross Income and Earnings
Gross income from worldwide IBM operations amounted to $21,076 million in 1978, an increase of $2,943 million over the $18,133 million for 1977.

Worldwide earnings before taxes totaled $5,798 million, which was $706 million more than the $5,092 million earned in 1977.

U.S. Federal and non-U.S. income taxes were $2,687 million in 1978, an increase of $314 million over the $2,373 million in 1977.

Earnings after taxes were $3,111 million, or $392 million more than the $2,719 million earned in 1977.

Earnings in 1978 equaled $21.29 per share, compared with $18.30 per share for 1977.

## Cash Dividends
Cash dividends totaling $1,685 million were paid to stockholders in 1978, compared with $1,488 million in the previous year.

The regular quarterly cash dividend, payable March 10, 1979, will be at the rate of $3.44 per share, an increase of $.56 a share over the previous rate. This dividend will be IBM's 256th consecutive quarterly cash dividend. Cash dividends for the last two years were as follows:

| Quarter | 1978 | 1977 |
|---------|------|------|
| First   | $ 2.88 | $ 2.50 |
| Second  | 2.88 | 2.50 |
| Third   | 2.88 | 2.50 |
| Fourth  | 2.88 | 2.50 |
|         | $ 11.52 | $ 10.00 |

## IBM Stock Prices
The high and low prices for IBM's capital stock on the New York Stock Exchange for the last two years were as follows:

| Quarter | High | Low | High | Low |
|---------|------|-----|------|-----|
| First   | $273.00 | $235.25 | $286.13 | $266.00 |
| Second  | 276.25 | 234.75 | 279.25 | 244.50 |
| Third   | 303.38 | 255.00 | 275.50 | 255.25 |
| Fourth  | 310.00 | 256.00 | 275.25 | 249.00 |

## IBM Stock Repurchase Program
In May, 1978, IBM completed a program of purchasing blocks of its capital stock. During 1978, 1.7 million shares were purchased, bringing to 2.4 million the total number of shares purchased under the program. The repurchased shares were canceled and restored to the status of authorized but unissued shares.

## Proposed Stock Split
In December, 1978, the Board of Directors voted to recommend to the stockholders a four-for-one stock split. If approved, the split would be made effective through issuance of three additional shares for each share held.

## Capital Expenditures
During 1978, IBM's growing business, together with the company's need to replace obsolete equipment, required a worldwide investment of $4,046 million, including $2,723 million for rental machines.

Retirements, covering obsolete and dismantled equipment, as well as rental machines sold that previously were under lease to customers, amounted to $1,941 million in 1978, including $1,713 million of rental machines. These retirements were charged against amounts provided out of prior and current years' earnings, or against cost of sales.

Listed below are the major IBM facilities that were completed or under construction throughout the world during the year.

| United States | Purpose | Sq. Ft. |
|---------------|---------|---------|
| Tucson, Arizona | Mfg. & Dev. | 1,075,000 |
| New York City, New York | Mktg. | 1,031,000 |
| Austin, Texas | Mfg. & Dev. | 761,000 |
| Charlotte, North Carolina | Mfg. & Dev. | 600,000 |
| Raleigh, North Carolina | Mfg. | 497,000 |
| Houston, Texas | Mktg. | 408,000 |
| Franklin Lakes, New Jersey | Dev. | 398,000 |
| St. Louis, Missouri | Adm. | 295,000 |
| Southfield, Michigan | Mktg. | 283,000 |
| Rochester, Minnesota | Adm. & Dev. | 245,000 |
| Boulder, Colorado | Dev. | 200,000 |
| East Fishkill, New York | Dev. | 190,000 |
| Armonk, New York | Adm. | 183,000 |
| Yorktown, New York | Adm. & Dev. | 175,000 |
| Brooklyn, New York | Mfg. | 168,000 |
| Lexington, Kentucky | Dev. | 152,000 |
| Boulder, Colorado | Mfg. | 150,000 |

| Non-U.S. Countries | Purpose | Sq. Ft. |
|-------------------|---------|---------|
| Brussels, Belgium | Adm. & Mktg. | 431,000 |
| Helsinki, Finland | Adm. & Mktg. | 399,000 |
| Düsseldorf, West Germany | Mktg. | 350,000 |
| Tel Aviv, Israel | Adm. & Mktg. | 321,000 |
| Stockholm, Sweden | Adm. & Mktg. | 319,000 |
| London, England | Mktg. | 233,000 |
| Vimercate, Italy | Mfg. | 200,000 |
| Hannover, West Germany | Mfg. | 185,000 |
| Havant, England | Mfg. | 181,000 |
| Montpellier, France | Mfg. | 167,000 |
| Paris, France | Mktg. | 166,000 |

*Completed in 1978.
*Additions to existing facilities