# International Business Machines Corporation Subsidiary Companies

## Consolidated Statement of Earnings for the year ended December 31:

|  | 1978 | 1977 |
| --- | --- | --- |
| **Gross Income from Sales, Rentals and Services:** |  |  |
| Sales | $ 8,754,794 | $ 7,090,157 |
| Rentals and services | 12,321,296 | 11,043,027 |
|  | 21,076,089 | 18,133,184 |
| Cost of sales | $ 2,838,225 | $ 2,256,135 |
| Cost of rentals and services | 4,645,800 | 4,042,448 |
| Selling, development and engineering, and general and administrative expenses | 8,151,129 | 7,177,080 |
| Interest on debt | 55,175 | 40,350 |
|  | 15,690,329 | 13,516,013 |
| Other income, principally interest | 5,385,760 | 4,617,171 |
| Earnings before income taxes | 411,808 | 475,243 |
| Provision for U.S. Federal and non-U.S. income taxes | 5,797,568 | 5,092,414 |
|  | 2,687,000 | 2,373,000 |
| Net Earnings | $ 3,110,568 | $ 2,719,414 |
| Per share | $ 21.29 | $ 18.30 |
| Average number of shares outstanding: |  |  |
| 1978 - 146,107,146 |  |  |
| 1977 - 148,574,612 |  |  |

The notes on pages 26 through 30 are an integral part of this statement.