New York

1-2360

13-0871985

(State of Incorporation)

(Commission File Number)

(IRS employer Identification No.)

ARMONK, NEW YORK

10504

(Address of principal executive offices)

(Zip Code)

Date: February 26, 2009

By:

/s/  James J. Kavanaugh

James J. Kavanaugh

Vice President and Controller

IBM Financial Performance History Revenue ($B) * Excluding Global Financing Receivables IBM Segment PTI Mix * Excludes Enterprise Investments segment and stock-based compensation 85 83 81 89 96 91 91 99 104 24% 16% 13% 18% 15% 13% 14% 9% 10% 10% 14% 12% 13% 14% 11% 9% 9% 40% 46% 44% 41% 35% 30% 37% 37% 42% 25% 28% 42% 34% 35% 42% 40% 40% 40% 1% 0% 20% 40% 60% 80% 100% '00* '01* '02 '03 '04 '05 '06 '07 '08 Hardware Financing Services Software $4 $6 $8 $10 $12 $14 $16 $18 $20 '00 '01 '02 '03 '04 '05 '06 '07 '08 Pre-tax Income & Free Cash Flow ($B) $2 $3 $4 $5 $6 $7 $8 $9 $10 EPS Pre-tax income Free Cash Flow* EPS

Non-GAAP Supplementary Materials In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company also discusses the following Non-GAAP information which management believes provides useful information to investors. Cash Flow Management includes presentations of both cash flow from operations and free cash flow that exclude the effect of Global Financing Receivables. For a financing business, increasing receivables is the basis for growth. Receivables are viewed as an investment and an income-producing asset. Therefore, management presents financing receivables as an investing activity. Management’s view is that this presentation gives the investor the best perspective of cash available for new investment or for distribution to shareholders. Constant Currency Management refers to growth rates at constant currency so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of the company's business performance. Generally, when the dollar either strengthens or weakens against other currencies, the growth at constant currency rates will be higher or lower than growth reported at actual exchange rates. Non-Recurring and Unique Items Management presents certain financial results excluding the effects of the operational performance of the company’s Enterprise Investments business for the 2000 and 2001 fiscal years. Given the unique and/or non-recurring nature of these items, management believes that presenting certain financial information without these items is more representative of the company’s operational performance and provides additional insight into, and clarifies the basis for, historical and/or future performance, which may be more useful for investors. Stock-Based Compensation Management excludes stock-based compensation from the presentation of certain financial results for fiscal years 2000 and 2001. Stock-based compensation expense was not recorded at the segment level in fiscal years 2000 and 2001, therefore stock-based compensation expense has been excluded from the Segment PTI analysis. Divested Businesses Management presents certain financial results without certain divestitures because management believes this presentation is more representative of the company's performance and provides additional insight into, and clarifies the basis for, historical and/or future performance, which may be more useful for investors.

Non-GAAP Supplementary Materials 9.1 (3.7) 12.9 2.5 $15.3 2004 8.7 (3.9) 12.6 1.9 $14.5 2003 5.9 (4.6) 10.5 3.3 $13.8 2002 6.8 6.7 Free Cash Flow (excluding GF Receivables) (4.9) (4.3) Net Capital Expenditures 2001 2000 11.7 11.1 Net Cash from Operations (excluding GF Receivables) 2.0 (2.5) Less: Global Financing Receivables $13.7 $8.6 Net Cash from Operations $ in Billions 14.3 (4.5) 18.8 0.0 $18.8 2008 12.4 (5.0) 17.4 (1.3) $16.1 2007 10.5 9.6 Free Cash Flow (excluding GF Receivables) (4.7) (3.5) Net Capital Expenditures 2006 2005 15.3 13.1 Net Cash from Operations (excluding GF Receivables) (0.3) 1.8 Less: Global Financing Receivables $15.0 $14.9 Net Cash from Operations Reconciliation of Free Cash Flows (excluding GF Receivables) The above serves to reconcile the Non-GAAP financial information contained in the preceding discussion related to free cash flow.

Reconciliation of the Difference in Revenue Growth between Growth Markets and Major Markets The above serves to reconcile the Non-GAAP financial information contained in the preceding discussion regarding revenue growth in growth markets as compared to major markets. Non-GAAP Supplementary Materials 8 pts 5 pts FY’08 7 pts (4 pts) Jan ’09 7 pts (2 pts) 4Q’08 9 pts 8 pts 3Q’08 9 pts 8 pts 2Q’08 7 pts 8 pts 1Q’08 @ Constant Currency As Reported

Non-GAAP Supplementary Materials Reconciliation of Impact on Segment PTI Mix The above serves to reconcile the Non-GAAP financial information contained in the preceding discussion regarding PTI mix in certain segments. $ 11,326 $ 11,205 16% 1,854 24% 2,719 Hardware 10% 1,143 10% 1,176 Financing 46% 5,161 40% 4,517 Services 28% $ 3,168 25% $ 2,793 Software %PTI 2001 %PTI 2000 Excludes Enterprise Investments Segment: $ 11,009 $ 10,908 -3% (317) -3% (297) Enterprise Investments 17% 1,854 25% 2,719 Hardware 10% 1,143 11% 1,176 Financing 47% 5,161 41% 4,517 Services 29% $ 3,168 26% $ 2,793 Software %PTI 2001 %PTI 2000 (in $ millions) As reported in 2000 and 2001 which excludes Stock-based compensation:

Reconciliation of Compound Growth Rate (CGR) The above serves to reconcile the Non-GAAP financial information contained in the preceding discussion regarding the exclusion of divestitures in the calculation of compound growth rates. Non-GAAP Supplementary Materials * - includes discontinued operations revenue 5% $ 104 $ 70 Revenue – Excluding Divestitures . 18 . Divestitures 2% $ 104 $ 88* Revenue – As Reported CGR% 2008 2000 ($ in billions)