Exhibit 1 Balance Sheet - [IBM]

(In Millions)

1993

1994

1995

1996

1997

Assets

Cash & cash equivalent

5,861

7,922

7,259

7,687

7,106

Marketable securities

1,272

2,632

442

450

447

Notes & accounts receivable

11,676

14,018

16,450

16,515

16,850

Sales-type leases receivable

6,428

6,351

5,961

5,721

5,720

Other accounts receivable

1,308

1,164

991

931

1,256

Inventories

7,565

6,334

6,323

5,870

5,139

Prepaid expenses & other c/a

5,092

2,917

3,265

3,521

3,900

Total current assets

39,202

41,338

40,691

40,695

40,418

Prop, plant & equip

47,504

44,820

43,981

41,893

42,133

Accumulated depreciation

29,983

28,156

27,402

24,486

23,786

Net prop, plant & equip

17,521

16,664

16,579

17,407

18,347

Software, less accu amort

3,703

2,963

2,419

1,435

819

Investments & sundry assets

20,687

20,126

20,603

21,595

21,915

Total Assets

81,113

81,091

80,292

81,132

81,499

Liabilities & Equity

Taxes

1,589

1,771

2,634

3,029

2,381

Short-term debt

12,097

9,570

11,569

12,957

13,230

Accounts payable

3,400

3,778

4,511

4,767

5,215

Compensation & benefits

2,053

2,702

2,914

2,950

3,043

Deferred income

3,575

3,475

3,469

3,640

3,445

Other accrued exp & liab

10,436

7,930

6,551

6,657

6,193

Total current liabilities

33,150

29,226

31,648

34,000

33,507

Long-term debt

15,245

12,548

10,060

9,872

13,696

Other liabilities

11,177

14,023

14,354

14,005

12,993

Deferred income taxes

1,803

1,881

1,807

1,627

1,487

Total liabilities

61,375

57,678

57,869

59,504

61,683

Preferred stock

1,091

1,081

253

253

252

Common stock net

6,980

7,342

7,488

7,752

8,601

Retained earnings

10,009

12,352

11,630

11,189

11,010

Translation adjustments

1,658

2,672

3,036

2,401

791

Treasury stock & other equities

(34)

(41)

(135)

(946)

Net unrealized gain on m/s

57

168

108

Total stockholders' equity

19,738

23,413

22,423

21,628

19,816

Total Liabilities & Equity

81,113

81,091

80,292

81,132

81,499

Exhibit 2 Income Statement - [IBM]

(In Millions)

1993

1994

1995

1996

1997

Hardware sales

30,591

32,344

35,600

36,316

36,229

Services

10,953

9,715

12,714

15,873

19,302

Software

9,711

11,346

12,657

13,052

12,844

Maintenance

7,295

7,222

7,409

6,981

6,402

Rentals and financing

4,166

3,425

3,560

3,725

3,731

Total revenue

62,716

64,052

71,940

75,947

78,508

Hardware sales

20,696

21,300

21,862

23,396

23,538

Services

4,310

7,769

10,042

12,647

15,281

Software

8,279

4,680

4,428

4,082

3,784

Maintenance

3,545

3,635

3,651

3,659

3,394

Rentals and financing

1,738

1,384

1,590

1,624

1,902

Total cost

38,568

38,768

41,573

45,408

47,899

Gross profit

24,148

25,284

30,367

30,539

30,609

Sell gen & admin exp

18,282

15,916

16,766

16,854

16,634

R&D expenditures

5,558

4,363

4,170

4,654

4,877

Purchased in-process R&D

8,945

-

1,840

435

-

Total operating expenses

32,785

20,279

22,776

21,943

21,511

Operating income

(8,637)

5,005

7,591

8,596

9,098

Other income

1,113

1,377

947

707

657

Interest expense

1,273

1,227

725

716

728

Earnings before income tax

(8,797)

5,155

7,813

8,587

9,027

Provision for income taxes

(810)

2,134

3,635

3,158

2,934

Net earnings before changes

in accounting principles

(7,987)

3,021

4,178

5,429

6,093

Effect of changes

(114)

-

-

-

-

Net earnings

(8,101)

3,021

4,178

5,429

6,093

Preferred stock dividends

47

84

62

20

20

Net earnings applicable

to common shareholders

(8,148)

2,937

4,116

5,409

6,073

Outstanding Shares

1,146

1,169

1,139

1,057

983

Net earnings per share

(7.11)

2.51

3.61

5.12

6.18

Exibit 3 Vertical Common-size Balance Sheet - [IBM]

1993

1994

1995

1996

1997

Assets

Cash & cash equivalent

7.2%

9.8%

9.0%

9.5%

8.7%

Marketable securities

1.6%

3.2%

0.6%

0.6%

0.5%

Notes & accounts receivable

14.4%

17.3%

20.5%

20.4%

20.7%

Sales-type leases receivable

7.9%

7.8%

7.4%

7.1%

7.0%

Other accounts receivable

1.6%

1.4%

1.2%

1.1%

1.5%

Inventories

9.3%

7.8%

7.9%

7.2%

6.3%

Prepaid expenses & other c/a

6.3%

3.6%

4.1%

4.3%

4.8%

Total current assets

48.3%

51.0%

50.7%

50.2%

49.6%

Prop, plant & equip

58.6%

55.3%

54.8%

51.6%

51.7%

Accumulated depreciation

37.0%

34.7%

34.1%

30.2%

29.2%

Net prop, plant & equip

21.6%

20.5%

20.6%

21.5%

22.5%

Software, less accu amort

4.6%

3.7%

3.0%

1.8%

1.0%

Investments & sundry assets

25.5%

24.8%

25.7%

26.6%

26.9%

Total Assets

100.0%

100.0%

100.0%

100.0%

100.0%

Liabilities & Equity

Taxes

2.0%

2.2%

3.3%

3.7%

2.9%

Short-term debt

14.9%

11.8%

14.4%

16.0%

16.2%

Accounts payable

4.2%

4.7%

5.6%

5.9%

6.4%

Compensation & benefits

2.5%

3.3%

3.6%

3.6%

3.7%

Deferred income

4.4%

4.3%

4.3%

4.5%

4.2%

Other accrued exp & liab

12.9%

9.8%

8.2%

8.2%

7.6%

Total current liabilities

75.7%

71.1%

72.1%

73.3%

75.7%

Long-term debt

18.8%

15.5%

12.5%

12.2%

16.8%

Other liabilities

13.8%

17.3%

17.9%

17.3%

15.9%

Deferred income taxes

2.2%

2.3%

2.3%

2.0%

1.8%

Total liabilities

75.7%

71.1%

72.1%

73.3%

75.7%

Preferred stock

1.3%

1.3%

0.3%

0.3%

0.3%

Common stock net

8.6%

9.1%

9.3%

9.6%

10.6%

Retained earnings

12.3%

15.2%

14.5%

13.8%

13.5%

Translation adjustments

2.0%

3.3%

3.8%

3.0%

1.0%

Treasury stick, at cost

0.0%

-0.1%

-0.2%

-1.2%

Net unrealized gain on m/s

0.1%

0.2%

0.1%

Total stockholders' equity

24.3%

28.9%

27.9%

26.7%

24.3%

Total Liabilities & Equity

100.0%

100.0%

100.0%

100.0%

100.0%

Exibit 4 Vertical Common-size Income Statement -[IBM]

1993

1994

1995

1996

1997

Hardware sales

48.8%

50.5%

49.5%

47.8%

46.1%

Services

17.5%

15.2%

17.7%

20.9%

24.6%

Software

15.5%

17.7%

17.6%

17.2%

16.4%

Maintenance

11.6%

11.3%

10.3%

9.2%

8.2%

Rentals and financing

6.6%

5.3%

4.9%

4.9%

4.8%

Total revenue

100.0%

100.0%

100.0%

100.0%

100.0%

Hardware sales

33.0%

33.3%

30.4%

30.8%

30.0%

Services

6.9%

12.1%

14.0%

16.7%

19.5%

Software

13.2%

7.3%

6.2%

5.4%

4.8%

Maintenance

5.7%

5.7%

5.1%

4.8%

4.3%

Rentals and financing

2.8%

2.2%

2.2%

2.1%

2.4%

Total cost

61.5%

60.5%

57.8%

59.8%

61.0%

Gross profit

38.5%

39.5%

42.2%

40.2%

39.0%

Sell gen & admin exp

29.2%

24.8%

23.3%

22.2%

21.2%

R&D expenditures

8.9%

6.8%

5.8%

6.1%

6.2%

Purchased in-process R&D

14.3%

-

2.6%

0.6%

-

Total operating expenses

52.3%

31.7%

31.7%

28.9%

27.4%

Operating income

-13.8%

7.8%

10.6%

11.3%

11.6%

Other income

1.8%

2.1%

1.3%

0.9%

0.8%

Interest expense

2.0%

1.9%

1.0%

0.9%

0.9%

Earnings before income tax

-14.0%

8.0%

10.9%

11.3%

11.5%

Provision for income taxes

-1.3%

3.3%

5.1%

4.2%

3.7%

Net earnings before changes

in accounting principles

-12.7%

4.7%

5.8%

7.1%

7.8%

Effect of changes

-0.2%

-

-

-

-

Net earnings

-12.9%

4.7%

5.8%

7.1%

7.8%

Preferred stock dividends

0.1%

0.1%

0.1%

0.0%

0.0%

Net earnings applicable

to common shareholders

-13.0%

4.6%

5.7%

7.1%

7.7%

Exibit 5 Horizontal Common-size Balance Sheet - [IBM]

1993

1994

1995

1996

1997

Assets

Cash & cash equivalent

100.0%

135.2%

123.9%

131.2%

121.2%

Marketable securities

100.0%

206.9%

34.7%

35.4%

35.1%

Notes & accounts receivable

100.0%

120.1%

140.9%

141.4%

144.3%

Sales-type leases receivable

100.0%

120.1%

92.7%

89.0%

89.0%

Other accounts receivable

100.0%

89.0%

75.8%

71.2%

96.0%

Inventories

100.0%

83.7%

83.6%

77.6%

67.9%

Prepaid expenses & other c/a

100.0%

57.3%

64.1%

69.1%

76.6%

Total current assets

100.0%

105.4%

103.8%

103.8%

103.1%

Prop, plant & equip

100.0%

94.3%

92.6%

88.2%

88.7%

Accumulated depreciation

100.0%

93.9%

91.4%

81.7%

79.3%

Net prop, plant & equip

100.0%

95.1%

94.6%

99.3%

104.7%

Software, less accu amort

100.0%

80.0%

65.3%

38.8%

22.1%

Investments & sundry assets

100.0%

97.3%

99.6%

104.4%

105.9%

Total Assets

100.0%

100.0%

99.0%

100.0%

100.5%

Liabilities & Equity

Taxes

100.0%

111.5%

165.8%

190.6%

149.8%

Short-term debt

100.0%

79.1%

95.6%

107.1%

109.4%

Accounts payable

100.0%

111.1%

132.7%

140.2%

153.4%

Compensation & benefits

100.0%

131.6%

141.9%

143.7%

148.2%

Deferred income

100.0%

104.3%

97.0%

101.8%

96.4%

Other accrued exp & liab

100.0%

76.0%

62.8%

63.8%

59.3%

Total current liabilities

100.0%

88.2%

95.5%

102.6%

101.1%

Long-term debt

100.0%

82.3%

66.0%

64.8%

89.8%

Other liabilities

100.0%

125.5%

128.4%

125.3%

116.2%

Deferred income taxes

100.0%

104.3%

100.2%

90.2%

82.5%

Total liabilities

100.0%

94.0%

94.3%

97.0%

100.5%

Preferred stock

100.0%

99.1%

23.2%

23.2%

23.1%

Common stock net

100.0%

105.2%

107.3%

111.1%

123.2%

Retained earnings

100.0%

123.4%

116.2%

111.8%

110.0%

Translation adjustments

100.0%

161.2%

183.1%

144.8%

47.7%

Treasury stick, at cost

100.0%

120.6%

397.1%

2782.4%

Net unrealized gain on m/s

100.0%

294.7%

189.5%

Total stockholders' equity

100.0%

118.6%

113.6%

109.6%

100.4%

Total Liabilities & Equity

100.0%

100.0%

99.0%

100.0%

100.5%

Exibit 6 Horizontal Commom-size Income Statement - [IBM]

1993

1994

1995

1996

1997

Hardware sales

100.0%

105.7%

116.4%

118.7%

118.4%

Services

100.0%

88.7%

116.1%

144.9%

176.2%

Software

100.0%

116.8%

130.3%

134.4%

132.3%

Maintenance

100.0%

99.0%

101.6%

95.7%

87.8%

Rentals and financing

100.0%

82.2%

85.5%

89.4%

89.6%

Total revenue

100.0%

102.1%

114.7%

121.1%

125.2%

Hardware sales

100.0%

102.9%

105.6%

113.0%

113.7%

Services

100.0%

180.3%

233.0%

293.4%

354.5%

Software

100.0%

56.5%

53.5%

49.3%

45.7%

Maintenance

100.0%

99.0%

103.0%

103.2%

95.7%

Rentals and financing

100.0%

79.6%

91.5%

93.4%

109.4%

Total cost

100.0%

100.5%

107.8%

117.7%

124.2%

Gross profit

100.0%

104.7%

125.8%

126.5%

126.8%

Sell gen & admin exp

100.0%

87.1%

91.7%

92.2%

91.0%

R&D expenditures

100.0%

78.5%

75.0%

83.7%

87.7%

Purchased in-process R&D

100.0%

-

20.6%

4.9%

-

Total operating expenses

100.0%

61.9%

69.5%

66.9%

65.6%

Operating income

100.0%

-57.9%

-87.9%

-99.5%

-105.3%

Other income

100.0%

123.7%

85.1%

63.5%

59.0%

Interest expense

100.0%

96.4%

57.0%

56.2%

57.2%

Earnings before income tax

100.0%

-58.6%

-88.8%

-97.6%

-102.6%

Provision for income taxes

100.0%

-263.5%

-448.8%

-389.9%

-362.2%

Net earnings before changes

in accounting principles

100.0%

-37.8%

-52.3%

-68.0%

-76.3%

Effect of changes

100.0%

-

-

-

-

Net earnings

100.0%

-37.3%

-51.6%

-67.0%

-75.2%

Preferred stock dividends

100.0%

178.7%

131.9%

42.6%

42.6%

Net earnings applicable

to common shareholders

100.0%

-36.0%

-50.5%

-66.4%

-74.5%

Outstanding Shares

100.0%

100.7%

97.9%

90.9%

169.2%

Net earnings per share

100.0%

-35.8%

-51.6%

-73.0%

-44.1%

Exibit 7 Ratio Analysis - [IBM]

1993

1994

1995

1996

1997

1. LIQUIDITY

Current Ratio

1.2

1.4

1.3

1.2

1.2

Quick Ratio

1.0

1.2

1.1

1.0

1.1

2. LEVERAGE

Debt Ratio

0.76

0.71

0.72

0.73

0.76

Long Term Debt To Assets

0.19

0.15

0.13

0.12

0.17

Times Interest Earned

(5.91)

5.20

11.78

12.99

13.40

3. ACTIVITY

Average Collection Period

111.4

121.0

117.1

109.8

109.3

Inventory Turnover

5.1

6.1

6.6

7.7

9.3

Fixed Asset Turnover

1.5

1.6

1.8

1.9

1.9

Total Asset Turnover

0.8

0.8

0.9

0.9

1.0

4. PROFITABILITY

Gross Margin

38.5%

39.5%

42.2%

40.2%

39.0%

Operating Margin

-12.0%

10.0%

11.9%

12.2%

12.4%

Net Profit Margin

-12.9%

4.7%

5.8%

7.1%

7.8%

Return On Assets

-10.0%

3.7%

5.2%

6.7%

7.5%

Return On Equity

-41.0%

12.9%

18.6%

25.1%

30.7%

Equity Multiplier

4.1

3.5

3.6

3.8

4.1

5. MARKET VALUE

Share price at the year end

28.25

36.75

45.69

75.75

104.63

Earning Per Share

(7.11)

2.51

3.61

5.12

6.18

Price To Earnings Ratio

(3.97)

14.63

12.64

14.80

16.94

Book Value Per Share

17.22

20.03

19.69

20.46

20.16

Market To Book Value Ratio

1.64

1.83