# International Business Machines Corporation
Subsidiary Companies

## Consolidated Statement of Changes in Financial Position
for the year ended December 31:

|  | 1978 | 1977 |
| --- | --- | --- |
| **Source of Working Capital:** |  |  |
| Net earnings | $3,110,568 | $2,719,414 |
| Depreciation and other items not requiring the current use of working capital | 2,672,753 | 2,553,852 |
| Total from operations | 5,783,321 | 5,273,266 |
| Proceeds from stock sold under employee plans | 341,064 | 305,698 |
| Long-term borrowings | 74,142 | 22,701 |
| **Total** | **6,198,527** | **5,601,665** |
| **Application of Working Capital:** |  |  |
| Investment in plant and other property | 1,322,102 | 919,760 |
| Investment in rental machines | 2,723,437 | 2,474,981 |
| Less: Depreciation of manufacturing facilities capitalized in rental machines | 246,393 | 193,363 |
| Increase in deferred charges and other assets | 131,786 | 176,351 |
| Cash dividends paid or payable | 1,763,102 | 1,910,747 |
| Reduction of long-term debt | 44,384 | 42,052 |
| Treasury stock purchased for employee plan | 373,163 | 340,641 |
| Capital stock purchased and canceled | 440,230 | 904,538 |
| **Total** | **6,551,811** | **6,575,717** |
| **Increase (Decrease) in Working Capital** | **$(353,284)** | **$(974,052)** |
| **Changes in Working Capital:** |  |  |
| Cash and marketable securities | $(1,375,943) | $(749,632) |
| Notes and accounts receivable | 1,030,109 | 478,364 |
| Inventories and prepaid expenses | 594,075 | 423,618 |
| U.S. Federal and non-U.S. income taxes | 6,515 | (82,529) |
| Accounts payable and accruals | (460,473) | (564,224) |
| Loans payable | (69,077) | (56,529) |
| Dividend payable | (78,490) | (423,120) |
| Increase (decrease) in working capital | $(353,284) | $(974,052) |
| **Working Capital at beginning of year** | 4,864,073 | 5,838,125 |
| **Working Capital at end of year** | **4,510,789** | **4,864,073** |

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