Consolidated Statement of Earnings

International Business Machines Corporation and Subsidiary Companies

Period End: Dec 31, 2012

($ in millions except per share amounts)
For the year ended December 31: 2008 2009
Revenue
Services $ 58,892 $ 55,128
Sales 42,156 38,300
Financing 2,582 2,331
Total revenue 103,630 95,758
Cost
Services 40,937 37,146
Sales 15,776 13,606
Financing 1,256 1,220
Total cost 57,969 51,973
Gross profit 45,661 43,785
Expense and other income
Selling, general and administrative 23,386 20,952
Research, development and engineering 6,337 5,820
Intellectual property and custom development income (1,153) (1,177)
Other (income) and expense (298) (351)
Interest expense 673 402
Total expense and other income 28,945 25,647
Income before income taxes 16,715 18,138
Provision for income taxes 4,381 4,713
Net income $ 12,334 $ 13,425
Earnings per share of common stock
Assuming dilution $ 8.89 $ 10.01
Basic $ 9.02 $ 10.12
Weighted-average number of common
shares outstanding
Assuming dilution 1,387,797,198 1,341,352,754
Basic 1,369,367,069 1,327,157,410
ubsidiary Companies

2010 2011 2012

$ 56,868 $ 60,721 $ 59,453

40,736 44,063 43,014
2,267 2,132 2,040
99,870 106,916 104,507

38,383 40,740 39,166

14,374 14,973 13,956
1,100 1,065 1,087
53,857 56,778 54,209
46,014 50,138 50,298

21,837 23,594 23,553

6,026 6,258 6,302
(1,154) (1,108) (1,074)
(787) (20) (843)
368 411 459
26,291 29,135 28,396
19,723 21,003 21,902
4,890 5,148 5,298
$ 14,833 $ 15,855 $ 16,604

$ 11.52 $ 13.06 $ 14.37

$ 11.69 $ 13.25 $ 14.53

1,287,355,388 1,213,767,985 1,155,449,317

1,268,789,202 1,196,951,006 1,142,508,521
International Business Machines Corporation and Subsidiary Companies

Consolidated Statement of Financial Position

($ in millions except per share amounts)

At December 31: 2009

Assets
Current assets
Cash and cash equivalents $ 12,183
Marketable securities 1,791
Notes and accounts receivable-trade (net of allowances) 10,736
Short-term financing receivables (net of allowances) 14,914
Other accounts receivable (net of allowances) 1,143
Inventories 2,494
Deferred taxes 1,730
Prepaid expenses and other current assets 3,946
Total current assets 48,935
Non-Current assets
Property, plant and equipment 39,596
Less: Accumulated depreciation 25,431
Property, plant and equipment-net 14,165
Long-term financing receivables (net of allowances) 10,644
Prepaid pension assets 3,001
Deferred taxes 4,195
Goodwill 20,190
Intangible assets-net 2,513
Investments and sundry assets 5,379
Total non-current assets 60,087
Total assets $ 109,022

Liabilities and equity

Current liabilities
Taxes $ 3,826
Short-term debt 4,168
Accounts payable 7,436
Compensation and benefits 4,505
Deferred income 10,845
Other accrued expenses and liabilities 5,223
Total current liabilities 36,002
Non-Current liabilities
Long-term debt 21,932
Retirement and nonpension postretirement benefit obligations 15,953
Deferred income 3,562
Other liabilities 8,819
Total non-current liabilities 50,265
 Total liabilities 86,267

Equity
IBM stockholders' equity
Common stock, par value $.20 per share, and additional paid-in capital 41,810
Retained earnings 80,900

Treasury stock, at cost (81,243)

Accumulated other comprehensive income/(loss) (18,830)
Total IBM stockholders' equity 22,637
Noncontrolling interests 118
Total equity 22,755
Total liabilities and equity $ 109,022

Shares authorized: 4,687,500,000

Shares issued (2012-2,197,561,159; 2011-2,182,469,838)
Shares issued (2010 - 2,161,800,054; 2009 - 2,127,016,668)
Treasury stock, at cost (shares: 2012-1,080,193,483; 2011-1,019,287,274)
Treasury stock, at cost (shares: 2010 - 933,806,510; 2009 - 821,679,245)
idiary Companies

2010 2011 2012

$ 10,661 $ 11,922 $ 10,412

990 0 717
10,834 11,179 10,667
16,257 16,901 18,038
1,134 1,481 1,873
2,450 2,595 2,287
1,564 1,601 1,415
4,226 5,249 4,024
48,116 50,928 49,433

40,289 40,124 40,501

26,193 26,241 26,505
14,096 13,883 13,996
10,548 10,776 12,812
3,068 2,843 945
3,220 3,503 3,973
25,136 26,213 29,247
3,488 3,392 3,787
5,778 4,895 5,021
65,336 65,505 69,780
$ 113,452 $ 116,433 $ 119,213

$ 4,216 $ 3,313 $ 4,948

6,778 8,463 9,181
7,804 8,517 7,952
5,028 5,099 4,745
11,580 12,197 11,952
5,156 4,535 4,847
40,562 42,123 43,625

21,846 22,857 24,088

15,978 18,374 20,418
3,666 3,847 4,491
8,226 8,996 7,607
49,717 54,074 56,604
 90,279 96,197 100,229

45,418 48,129 50,110

92,532 104,857 117,641

(96,161) (110,963) (123,131)

(18,743) (21,885) (25,759)
23,046 20,138 18,860
126 97 124
23,172 20,236 18,984
$ 113,452 $ 116,433 $ 119,213
Millions of Dollars 2011 2012 2013
Operating lease commitments in 12/31/2010 10-K:

Gross minimum rental operating lease commitments 1,521.00 1,184.00 917.00

Capital lease commitments 25.00 21.00 45.00

Millions of Dollars 2012 2013 2014

Operating lease commitments in 12/31/2011 10-K

Gross minimum rental operating lease commitments 1,562.00 1,324.00 1,000.00

Capital lease commitments 19.00 28.00 13.00

Millions of Dollars 2013 2014 2015

Operating lease commitments in 12/31/2012 10-K

Gross minimum rental operating lease commitments 1,466.00 1,268.00 1,044.00

Capital lease commitments 13.00 12.00 11.00
 Discount
Rate Used
2014 2015 Beyond 2015

5.60%
732.00 518.00 638.00
8.00 8.00 5.00

2015 2016 Beyond 2016

689.00 443.00 613.00 5.00%

14.00 7.00 5.00

2016 2017 Beyond 2017

4.20%
746.00 535.00 747.00
8.00 10.00 6.00
Life 5

For the Year ended December 31 2008 2009 2010 2011 2012

R&D & Engineering $ 6,337 $ 5,820 $ 6,026 $ 6,258 $ 6,302

Expense Year - Spend Money

2008 $ 634 $ 1,267 $ 1,267 $ $ 1,267
1,267
2009 $ 582 $ 1,164 $ $ 1,164
1,164
2010 $ 603 $ $ 1,205
1,205
2011 $ $ 626
1,252
2012 $ 630
Total R&D Expense $ 633.70 $ 1,849.40 $ 3,034.00 $ 4,262.40 $ 5,518.40

Restated R&D Asset

BB R&D $ - $ 5,703.30 $ 9,673.90 $ 12,665.90 $ 14,661.50
+ New R&D $ 6,337.00 $ 5,820.00 $ 6,026.00 $ 6,258.00 $ 6,302.00
- R&D Amort. $ (633.70) $ (1,849.40) $ (3,034.00) $ (4,262.40) $ (5,518.40)
EB R&D $ 5,703.30 $ 9,673.90 $ 12,665.90 $ 14,661.50 $ 15,445.10
 2013 2014 2015 2016 2017

$ 634
$ 1,164 $ 582
$ 1,205 $ 1,205 $ 603
$ 1,252 $ 1,252 $ 1,252 $ 626
$ 1,260 $ 1,260 $ 1,260 $ 1,260 $ 630
$ 5,514.90 $ 4,299.20 $ 3,114.60 $ 1,886.20 $ 630.20
Payments Made @ End of Month 16-Jan 16-Feb 16-Mar 16-Apr 16-May
Y1 CF $12,000 $12,000 $12,000 $12,000 $12,000
Y2 CF

Monthly Amortization
1 $500 $500 $500 $500
2 $500 $500 $500
3 $500 $500
4 $500
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Monthly Subtotal $0 $500 $1,000 $1,500 $2,000
Y1 Write-Of $33,000
Y2 Write-Of $105,000

Payments Made @ Beg. Of Month 16-Jan 16-Feb 16-Mar 16-Apr 16-May

Y1 CF $12,000 $12,000 $12,000 $12,000 $12,000
Y2 CF

Monthly Amortization
1 $500 $500 $500 $500 $500
2 $500 $500 $500 $500
3 $500 $500 $500
4 $500 $500
5 $500
6
7
8
9
10
11
12
13
 14
15
16
17
18
19
20
21
22
23
24
Monthly Subtotal $500 $1,000 $1,500 $2,000 $2,500
Y1 Write-Of $39,000
Y2 Write-Of $111,000
 16-Jun 16-Jul 16-Aug 16-Sep 16-Oct 16-Nov 16-Dec 17-Jan
$12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000
$12,000

$500 $500 $500 $500 $500 $500 $500 $500

$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500
$500 $500 $500 $500
$500 $500 $500
$500 $500
$500

$2,500 $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000

16-Jun 16-Jul 16-Aug 16-Sep 16-Oct 16-Nov 16-Dec 17-Jan

$12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000
$12,000

$500 $500 $500 $500 $500 $500 $500 $500

$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500
$500 $500 $500 $500
$500 $500 $500
$500 $500
$500
$3,000 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000 $6,500
 17-Feb 17-Mar 17-Apr 17-May 17-Jun 17-Jul 17-Aug 17-Sep 17-Oct 17-Nov

$12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000

$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500
$500 $500 $500 $500
$500 $500 $500
$500 $500
$500

$6,500 $7,000 $7,500 $8,000 $8,500 $9,000 $9,500 $10,000 $10,500 $11,000

17-Feb 17-Mar 17-Apr 17-May 17-Jun 17-Jul 17-Aug 17-Sep 17-Oct 17-Nov

$12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000

$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500
$500 $500 $500 $500
$500 $500 $500
$500 $500
$500

$7,000 $7,500 $8,000 $8,500 $9,000 $9,500 $10,000 $10,500 $11,000 $11,500
 17-Dec 18-Jan 18-Feb 18-Mar 18-Apr 18-May 18-Jun 18-Jul 18-Aug 18-Sep

$12,000

$500 $500
$500 $500 $500
$500 $500 $500 $500
$500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500
$11,500 $12,000 $11,500 $11,000 $10,500 $10,000 $9,500 $9,000 $8,500 $8,000

17-Dec 18-Jan 18-Feb 18-Mar 18-Apr 18-May 18-Jun 18-Jul 18-Aug 18-Sep

$12,000

$500
$500 $500
$500 $500 $500
$500 $500 $500 $500
$500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$12,000 $11,500 $11,000 $10,500 $10,000 $9,500 $9,000 $8,500 $8,000 $7,500
18-Oct 18-Nov 18-Dec 18-Jan 18-Feb 18-Mar 18-Apr 18-May 18-Jun 18-Jul

$500
$500 $500
$500 $500 $500
$500 $500 $500 $500
$500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$7,500 $7,000 $6,500 $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000

18-Oct 18-Nov 18-Dec 18-Jan 18-Feb 18-Mar 18-Apr 18-May 18-Jun 18-Jul

$500
$500 $500
$500 $500 $500
 $500 $500 $500 $500
$500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$7,000 $6,500 $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 $2,500
18-Aug 18-Sep 18-Oct 18-Nov 18-Dec 19-Jan

$500
$500 $500
$500 $500 $500
$500 $500 $500 $500
$500 $500 $500 $500 $500
$2,500 $2,000 $1,500 $1,000 $500

18-Aug 18-Sep 18-Oct 18-Nov 18-Dec 19-Jan

 $500
$500 $500
$500 $500 $500
$500 $500 $500 $500
$2,000 $1,500 $1,000 $500