International Business Machines (IBM) 10-K 23 Feb 10 2009 FY Annual report Financial data

Consolidated Statement of Earni

Consolidated Statement of Earnings (USD $)
In Millions, except Share data	12 Months Ended Dec. 31, 2009		12 Months Ended Dec. 31, 2008		12 Months Ended Dec. 31, 2007
Revenue:
Services	$55,128		$58,892		$54,057
Sales	38,300		42,156		42,202
Financing	2,331		2,582		2,526
Total revenue	95,758	[1]	103,630		98,786	[1]
Cost:
Services	37,146		40,937		39,160
Sales	13,606		15,776		16,552
Financing	1,220		1,256		1,345
Total cost	51,973	[1]	57,969		57,057
Gross profit	43,785		45,661		41,729
Expense and other income:
Selling, general and administrative	20,952		23,386		22,060
Research, development and engineering (Note Q)	5,820		6,337		6,153
Intellectual property and custom development income	(1,177)		(1,153)		(958)
Other (income) and expense	(351)		(298)		(626)
Interest expense (Notes K & L)	402		673		611
Total expense and other income	25,647	[1]	28,945		27,240
Income from continuing operations before income taxes	18,138		16,715	[1]	14,489
Provision for income taxes (Note P)	4,713		4,381		4,071
Income from continuing operations	13,425		12,334		10,418
Discontinued operations:
Income/(loss) from discontinued operations, net of tax					0
Net income	$13,425		$12,334		$10,418
Earnings/(loss) per share of common stock, assuming dilution:
Continuing operations (Note R)	10.01		8.89	[2]	7.15	[2]
Discontinued operations (Note R)					$0
Total (Note R)	10.01		8.89	[2]	7.15	[2]
Earnings/(loss) per share of common stock, basic:
Continuing operations (Note R)	10.12		9.02	[2]	7.27	[2]
Discontinued operations (Note R)					$0
Total (Note R)	10.12		9.02	[2]	7.27	[2]
Weighted-average number of common shares outstanding:
Assuming dilution	1,341,352,754		1,387,797,198	[2]	1,456,880,751	[2]
Basic	1,327,157,410		1,369,367,069	[2]	1,433,935,221	[2]
[1]Amounts may not add due to rounding.
[2]Reflects the adoption of the Financial Accounting Standards Board (FASB) guidance in determining whether instruments granted in share-based payment transactions are participating securities. See note B, "Accounting Changes," on pages 79 to 82 for additional information.

Consolidated Statement of Finan

Consolidated Statement of Financial Position (USD $)
In Millions	12 Months Ended Dec. 31, 2009		12 Months Ended Dec. 31, 2008
Current assets:
Cash and cash equivalents	$12,183		$12,741
Marketable securities (Note E)	1,791		166
Notes and accounts receivable - trade (net of allowances of $217 in 2009 and $226 in 2008)	10,736		10,906
Short-term financing receivables (net of allowances of $438 in 2009 and $351 in 2008) (Note G)	14,914		15,477
Other accounts receivable (net of allowances of $15 in 2009 and $55 in 2008)	1,143		1,172
Inventories (Note F)	2,494		2,701
Deferred taxes (Note P)	1,730		1,542
Prepaid expenses and other current assets	3,946		4,299
Total current assets	48,935	[1]	49,004
Plant, rental machines and other property (Note H)	39,596		38,445
Less: Accumulated depreciation (Note H)	25,431		24,140
Plant, rental machines and other property - net (Note H)	14,165		14,305
Long-term financing receivables (net of allowances of $97 in 2009 and $179 in 2008) (Note G)	10,644		11,183
Prepaid pension assets (Note U)	3,001		1,601
Deferred taxes (Note P)	4,195		7,270
Goodwill (Note J)	20,190		18,226
Intangible assets - net (Note J)	2,513		2,878
Investments and sundry assets (Note I)	5,379		5,058
Total assets	109,022		109,524	[1]
Current liabilities:
Taxes (Note P)	3,826		2,743
Short-term debt (Notes K&L)	4,168		11,236
Accounts payable	7,436		7,014
Compensation and benefits	4,505		4,623
Deferred income	10,845		10,239
Other accrued expenses and liabilities	5,223		6,580
Total current liabilities	36,002	[1]	42,435
Long-term debt (Notes K&L)	21,932		22,689
Retirement and nonpension postretirement benefit obligations (Note U)	15,953		19,452
Deferred income	3,562		3,171
Other liabilities (Note M)	8,819		8,192	[2]
Total liabilities	86,267	[1]	95,939	[2]
Contingencies and Commitments (Note O)	Note O		Note O
IBM Stockholders' equity: (Note N)
Common stock, par value $.20 per share and additional paid-in capital - Shares authorized: 4,687,500,000, Shares issued (2009 - 2,127,016,668; 2008 - 2,096,981,860)	41,810		39,129
Retained earnings	80,900		70,353
Treasury stock, at cost (shares: 2009 - 821,679,245; 2008 - 757,885,937)	(81,243)		(74,171)
Accumulated other comprehensive income/(loss)	(18,830)		(21,845)
Total IBM Stockholders' equity	22,637		13,465	[1],[2]
Noncontrolling interests (Note N)	118		119	[2]
Total equity	22,755		13,584	[2]
Total liabilities and equity	$109,022		$109,524	[1]
[1]Amounts may not add due to rounding.
[2]Reflects the adoption of the FASB guidance on noncontrolling interests in consolidated financial statements. See note B, "Accounting Changes," on pages 79 to 82 for additional information.

Statement of Financial Position

Statement of Financial Position Parenthetical (USD $)
In Millions, except Share data	Dec. 31, 2009	Dec. 31, 2008
Statement of Financial Position
Allowance for doubtful accounts - notes and accounts receivable - trade	$217	$226
Allowance for doubtful accounts - short-term financing receivables	438	351
Allowance for doubtful accounts - other accounts receivable	15	55
Allowance for doubtful accounts - long-term financing receivables	$97	$179
Common stock, par value per share	0.2	0.2
Common stock, shares authorized	4,687,500,000	4,687,500,000
Common stock, shares issued	2,127,016,668	2,096,981,860
Treasury stock, shares	821,679,245	757,885,937

Consolidated Statement of Cash

Consolidated Statement of Cash Flows (USD $)
In Millions	12 Months Ended Dec. 31, 2009		12 Months Ended Dec. 31, 2008		12 Months Ended Dec. 31, 2007
Cash flow from operating activities from continuing operations:
Net income	$13,425		$12,334		$10,418
(Income)/loss from discontinued operations					0
Adjustments to reconcile income from continuing operations to cash provided by operating activities:
Depreciation	3,773		4,140		4,038
Amortization of intangibles	1,221		1,310		1,163
Stock-based compensation	558		659		713
Deferred taxes	1,773		1,900		740
Net gain on asset sales and other	(395)		(338)		(89)
Change in operating assets and liabilities, net of acquisitions/divestitures:
Receivables (including financing receivables)	2,131		274		(1,408)
Retirement related	(2,465)		(1,773)		(228)
Inventories	263		(102)		182
Other assets/other liabilities	319		1,268		706
Accounts payable	170		(860)		(142)
Net cash provided by operating activities from continuing operations	20,773		18,812		16,094	[1]
Cash flow from investing activities from continuing operations:
Payments for plant, rental machines and other property	(3,447)		(4,171)		(4,630)
Proceeds from disposition of plant, rental machines and other property	330		350		537
Investment in software	(630)		(716)		(875)
Purchases of marketable securities and other investments	(5,604)		(4,590)		(24,117)
Proceeds from disposition of marketable securities and other investments	3,599		6,100		24,984
Non-operating finance receivables - net	(184)		(16)		125
Divestiture of businesses, net of cash transferred	400		71		310
Acquisition of businesses, net of cash acquired	(1,194)		(6,313)		(1,009)
Net cash used in investing activities from continuing operations	(6,729)	[1]	(9,285)		(4,675)
Cash flow from financing activities from continuing operations:
Proceeds from new debt	6,683		13,829		21,744
Payments to settle debt	(13,495)		(10,248)		(11,306)
Short-term (repayments)/borrowings less than 90 days - net	(651)		(6,025)		1,674
Common stock repurchases	(7,429)		(10,578)		(18,828)
Common stock transactions - other	3,052		3,774		4,123
Cash dividends paid	(2,860)		(2,585)		(2,147)
Net cash used in financing activities from continuing operations	(14,700)		(11,834)	[1]	(4,740)
Effect of exchange rate changes on cash and cash equivalents	98		58		294
Net cash used in discontinued operations from: operating activities					(5)
Net change in cash and cash equivalents	(558)		(2,250)	[1]	6,969	[1]
Cash and cash equivalents at January 1	12,741		14,991		8,022
Cash and cash equivalents at December 31	12,183		12,741		14,991
Supplemental data:
Income taxes paid - net of refunds received	1,567		2,111		2,608
Interest paid on debt	1,240		1,460		1,485
Capital lease obligations	$15		$41		$57
[1]Amounts may not add due to rounding.

Consolidated Statement of Chang

Consolidated Statement of Changes in Equity (USD $)
In Millions	12 Months Ended Dec. 31, 2009		12 Months Ended Dec. 31, 2008		12 Months Ended Dec. 31, 2007
Equity:
Equity, beginning balance	$13,584	[5]	$28,615	[5]	$28,635	[5]
Cumulative effect of change in accounting Principle					117	[4]
Net income plus other comprehensive Income/(loss):
Net income	13,425		12,334		10,418
Other comprehensive income/(loss), net of tax:
Net unrealized gains/(losses) on cash flow hedge derivatives (net of tax (benefit)/expense of $(256) in 2009, $79 in 2008 and $(32) in 2007	(556)		301		(123)
Foreign currency translation adjustments (net of tax (benefit) of $(57) in 2009, $(153) in 2008 and $(553) in 2007)	1,732	[2]	(3,552)	[2]	726	[2]
Retirement-related benefit plans:
Prior service costs/(credits) (net of tax (benefit)/expense of $146 in 2009, $(86) in 2008 and $31 in 2007)	229		(136)		44
Net (losses)/gains (net of tax (benefit)/expense of $439 in 2009, $(8,436) in 2008 and $1,913 in 2007)	994		(15,245)		3,611
Curtailments and settlements (net of tax (benefit)/expense of $(33) in 2009 and $9 in 2008)	(93)		16
Amortization of prior service (credits)/costs (net of tax (benefits) of $(55) in 2009, $(73) in 2008 and $(50) in 2007)	(107)		(132)		(85)
Amortization of net gains/(losses) (net of tax expense of $402 in 2009, $358 in 2008 and $654 in 2007)	704		640		1,110
Amortization of transition assets (net of tax (benefit) of $(1))					(2)
Net unrealized gains/(losses) on marketable securities (net of tax (benefit)/expense of $71 in 2009, $(207) in 2008 and $132 in 2007)	111		(324)		206
Total other comprehensive income/(loss)	3,015		(18,431)	[1]	5,487
Subtotal: Net income plus other comprehensive income/(loss)	16,440		(6,097)		15,905
Cash dividends declared - common stock	(2,860)		(2,585)		(2,147)
Common stock issued under employee plans (shares issued - 30,034,808 in 2009, 39,374,439 in 2008 and 49,137,038 in 2007)	3,011		3,919		4,332
Purchases (shares - 1,550,846 in 2009, 1,505,107 in 2008 and 1,282,131 in 2007) and sales (shares - 6,408,265 in 2009, 5,882,800 in 2008 and 9,282,055 in 2007) of treasury stock under employee plans - net	443		355		550
Other treasury shares purchased, not retired (shares - 68,650,727 in 2009, 89,890,347 in 2008 and 178,385,436 in 2007)	(7,534)		(10,563)		(18,783)
Changes in other equity	(330)		(33)	[3]	(10)	[3]
Changes in noncontrolling interests	(1)		(26)		16
Equity, ending balance	22,755		13,584	[5]	28,615	[5]
Total IBM Stockholders' Equity
Equity:
Equity, beginning balance	13,465	[5]	28,470	[5]	28,506	[5]
Cumulative effect of change in accounting Principle					117	[4]
Net income plus other comprehensive Income/(loss):
Net income	13,425		12,334		10,418
Other comprehensive income/(loss), net of tax:
Net unrealized gains/(losses) on cash flow hedge derivatives (net of tax (benefit)/expense of $(256) in 2009, $79 in 2008 and $(32) in 2007	(556)		301		(123)
Foreign currency translation adjustments (net of tax (benefit) of $(57) in 2009, $(153) in 2008 and $(553) in 2007)	1,732	[2]	(3,552)	[2]	726	[2]
Retirement-related benefit plans:
Prior service costs/(credits) (net of tax (benefit)/expense of $146 in 2009, $(86) in 2008 and $31 in 2007)	229		(136)		44
Net (losses)/gains (net of tax (benefit)/expense of $439 in 2009, $(8,436) in 2008 and $1,913 in 2007)	994		(15,245)		3,611
Curtailments and settlements (net of tax (benefit)/expense of $(33) in 2009 and $9 in 2008)	(93)		16
Amortization of prior service (credits)/costs (net of tax (benefits) of $(55) in 2009, $(73) in 2008 and $(50) in 2007)	(107)		(132)		(85)
Amortization of net gains/(losses) (net of tax expense of $402 in 2009, $358 in 2008 and $654 in 2007)	704		640		1,110
Amortization of transition assets (net of tax (benefit) of $(1))					(2)
Net unrealized gains/(losses) on marketable securities (net of tax (benefit)/expense of $71 in 2009, $(207) in 2008 and $132 in 2007)	111		(324)		206
Total other comprehensive income/(loss)	3,015		(18,431)		5,487
Subtotal: Net income plus other comprehensive income/(loss)	16,440		(6,097)		15,905
Cash dividends declared - common stock	(2,860)		(2,585)		(2,147)
Common stock issued under employee plans (shares issued - 30,034,808 in 2009, 39,374,439 in 2008 and 49,137,038 in 2007)	3,011		3,919		4,332
Purchases (shares - 1,550,846 in 2009, 1,505,107 in 2008 and 1,282,131 in 2007) and sales (shares - 6,408,265 in 2009, 5,882,800 in 2008 and 9,282,055 in 2007) of treasury stock under employee plans - net	443		355		550
Other treasury shares purchased, not retired (shares - 68,650,727 in 2009, 89,890,347 in 2008 and 178,385,436 in 2007)	(7,534)		(10,563)		(18,783)
Changes in other equity	(330)		(33)	[3]	(10)	[3]
Equity, ending balance	22,637	[5]	13,465	[5]	28,470	[5]
Common Stock and Additional Paid-in Capital
Equity:
Equity, beginning balance	39,129		35,188		31,271
Retirement-related benefit plans:
Common stock issued under employee plans (shares issued - 30,034,808 in 2009, 39,374,439 in 2008 and 49,137,038 in 2007)	3,011		3,919		4,332
Other treasury shares purchased, not retired (shares - 68,650,727 in 2009, 89,890,347 in 2008 and 178,385,436 in 2007)			54		(405)
Changes in other equity	(330)		(33)	[3]	(10)	[3]
Equity, ending balance	41,810		39,129		35,188
Retained Earnings
Equity:
Equity, beginning balance	70,353		60,640		52,432
Cumulative effect of change in accounting Principle					117	[4]
Net income plus other comprehensive Income/(loss):
Net income	13,425		12,334		10,418
Retirement-related benefit plans:
Cash dividends declared - common stock	(2,860)		(2,585)		(2,147)
Purchases (shares - 1,550,846 in 2009, 1,505,107 in 2008 and 1,282,131 in 2007) and sales (shares - 6,408,265 in 2009, 5,882,800 in 2008 and 9,282,055 in 2007) of treasury stock under employee plans - net	(19)		(36)		(179)
Equity, ending balance	80,900		70,353		60,640
Treasury Stock
Equity:
Equity, beginning balance	(74,171)		(63,945)		(46,296)
Retirement-related benefit plans:
Purchases (shares - 1,550,846 in 2009, 1,505,107 in 2008 and 1,282,131 in 2007) and sales (shares - 6,408,265 in 2009, 5,882,800 in 2008 and 9,282,055 in 2007) of treasury stock under employee plans - net	462		391		729
Other treasury shares purchased, not retired (shares - 68,650,727 in 2009, 89,890,347 in 2008 and 178,385,436 in 2007)	(7,534)		(10,618)		(18,378)
Equity, ending balance	(81,243)		(74,171)		(63,945)
Accumulated Other Comprehensive Income/(Loss)
Equity:
Equity, beginning balance	(21,845)		(3,414)		(8,901)
Other comprehensive income/(loss), net of tax:
Net unrealized gains/(losses) on cash flow hedge derivatives (net of tax (benefit)/expense of $(256) in 2009, $79 in 2008 and $(32) in 2007	(556)		301		(123)
Foreign currency translation adjustments (net of tax (benefit) of $(57) in 2009, $(153) in 2008 and $(553) in 2007)	1,732	[2]	(3,552)	[2]	726	[2]
Retirement-related benefit plans:
Prior service costs/(credits) (net of tax (benefit)/expense of $146 in 2009, $(86) in 2008 and $31 in 2007)	229		(136)		44
Net (losses)/gains (net of tax (benefit)/expense of $439 in 2009, $(8,436) in 2008 and $1,913 in 2007)	994		(15,245)		3,611
Curtailments and settlements (net of tax (benefit)/expense of $(33) in 2009 and $9 in 2008)	(93)		16
Amortization of prior service (credits)/costs (net of tax (benefits) of $(55) in 2009, $(73) in 2008 and $(50) in 2007)	(107)		(132)		(85)
Amortization of net gains/(losses) (net of tax expense of $402 in 2009, $358 in 2008 and $654 in 2007)	704		640		1,110
Amortization of transition assets (net of tax (benefit) of $(1))					(2)
Net unrealized gains/(losses) on marketable securities (net of tax (benefit)/expense of $71 in 2009, $(207) in 2008 and $132 in 2007)	111		(324)		206
Equity, ending balance	(18,830)		(21,845)		(3,414)
Noncontrolling Interests
Equity:
Equity, beginning balance	119	[5]	145	[5]	129	[5]
Retirement-related benefit plans:
Changes in noncontrolling interests	(1)		(26)		16
Equity, ending balance	$118	[5]	$119	[5]	$145	[5]
[1]Amounts may not add due to rounding.
[2]Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.
[3]Reclassified to conform with 2009 presentation.
[4]Reflects the adoption of the FASB guidance for uncertain tax positions. See note B, "Accounting Changes," on pages 79 to 82 for additional information.
[5]Reflects the adoption of the FASB guidance on noncontrolling interests in consolidated financial statements. See note B, "Accounting Changes," on pages 79 to 82 for additional information.

1_Consolidated Statement of Cha

Consolidated Statement of Changes in Equity (Parenthetical) (USD $)
In Millions, except Share data	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Consolidated Statement of Changes in Equity
Tax (benefit)/expense, net unrealized gains/(losses) on cash flow hedge derivatives	($256)	$79	($32)
Tax (benefit)/expense, foreign currency translation adjustments - net benefit/(expense)	(57)	(153)	(553)
Tax (benefit)/expense, retirement-related benefit plans - prior service credits - net benefit/(expense)	146	(86)	31
Tax (benefit)/expense, retirement-related benefit plans - net gains/(losses)	439	(8,436)	1,913
Tax (benefit)/expense, retirement-related benefit plans - curtailments and settlements - net benefit/(expense)	(33)	9
Tax (benefit)/expense, retirement-related benefit plans - amortization of prior service (credits)/costs	(55)	(73)	(50)
Tax (benefit)/expense, retirement-related benefit plans - amortization of net gains/(losses)	402	358	654
Tax (benefit)/expense, retirement-related benefit plans - amortization of transition assets - net gains/(losses)			(1)
Tax (benefit)/expense, net unrealized gains/(losses) on marketable securities	$71	($207)	$132
Common stock issued under employee plans, shares	30,034,808	39,374,439	49,137,038
Purchases of treasury stock under employee plans, shares	1,550,846	1,505,107	1,282,131
Sales of treasury stock under employee plans, shares	6,408,265	5,882,800	9,282,055
Other treasury shares purchased, not retired, shares	68,650,727	89,890,347	178,385,436

Significant Accounting Policies

Significant Accounting Policies
	12 Months Ended Dec. 31, 2009 USD / shares
Significant Accounting Policies
Significant Accounting Policies	Note A. Significant Accounting Policies Basis of Presentation The accompanying Consolidated Financial Statements and footnotes thereto of the International Business Machines Corporation (IBM and/or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). On December 31, 2002, the company sold its hard disk drive (HDD) business to Hitachi, Ltd. (Hitachi). The HDD business was accounted for as a discontinued operation and therefore, the HDD results of operations and cash flows have been removed from the companys results of continuing operations and cash flows for 2007. There was no activity in 2008 or 2009. The company evaluated subsequent events through February23, 2010, which is the date the financial statements were issued. Within the financial tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior year amounts have been reclassified to conform to the current year presentation. This is annotated where applicable. Principles of Consolidation The Consolidated Financial Statements include the accounts of IBM and its controlled subsidiaries, which are generally majority owned. The accounts of variable interest entities (VIEs) are included in the Consolidated Financial Statements, if required. Investments in business entities in which the company does not have control, but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method and the companys proportionate share of income or loss is recorded in other (income) and expense. The accounting policy for other investments in equity securities is described on page78 within Marketable Securities. Equity investments in non-publicly traded entities are primarily accounted for using the cost method. All intercompany transactions and accounts have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) that are reported in the Consolidated Financial Statements and accompanying disclosures. These estimates are based on managements best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates. See pages52 to 54 for a discussion of the companys critical accounting estimates. Revenue The company recognizes revenue when it is realized or realizable and earned. The company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Delivery does not occur until products have been shipped or services have b

Accounting Changes

Accounting Changes
	12 Months Ended Dec. 31, 2009 USD / shares
Accounting Changes
Accounting Changes	Note B. Accounting Changes New Standards to be Implemented In January2010, the Financial Accounting Standards Board (FASB) issued additional disclosure requirements for fair value measurements. According to the guidance, the fair value hierarchy disclosures are to be further disaggregated by class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. In addition, significant transfers between Levels 1 and 2 of the fair value hierarchy will be required to be disclosed. These additional requirements are effective January1, 2010 for quarterly and annual reporting. These amendments will not have an impact on the consolidated financial results as this guidance relates only to additional disclosures. In addition, the guidance requires more detailed disclosures of the changes in Level 3 instruments. These changes will be effective January1, 2011 and are not expected to have a material impact on the Consolidated Financial Statements. In October2009, the FASB issued amended revenue recognition guidance for arrangements with multiple deliverables. The new guidance eliminates the residual method of revenue recognition and allows the use of managements best estimate of selling price for individual elements of an arrangement when vendor-specific objective evidence (VSOE), vendor objective evidence (VOE) or third-party evidence (TPE) is unavailable. In accordance with the guidance, the company has elected to early adopt its provisions as of January1, 2010 on a prospective basis for all new or materially modified arrangements entered into on or after that date. The company does not expect a material impact on the Consolidated Financial Statements. In October2009, the FASB issued guidance which amends the scope of existing software revenue recognition accounting. Tangible products containing software components and non-software components that function together to deliver the products essential functionality would be scoped out of the accounting guidance on software and accounted for based on other appropriate revenue recognition guidance. This guidance must be adopted in the same period that the company adopts the amended accounting for arrangements with multiple deliverables described in the preceding paragraph. Therefore, the company will also early adopt this guidance as of January1, 2010 on a prospective basis for all new or materially modified arrangements entered into on or after that date. The company does not expect a material impact on the Consolidated Financial Statements. In June2009, the FASB issued amendments to the accounting rulesfor variable interest entities (VIEs) and for transfers of financial assets. The new guidance for VIEs eliminates the quantitative approach previously required for determining the primary beneficiary of a variable interest entity and requires ongoing qualitative reassessments of whether an enterprise is the primary beneficiary. In addition, qualifying special purpose entities (QSPEs) are no longer exempt from consolidation under the amended guidance. The amendments also limit the circumstances in which a financial

Acquisitions and Divestitures

Acquisitions and Divestitures
	12 Months Ended Dec. 31, 2009 USD / shares
Acquisitions and Divestitures
Acquisitions	Note C. Acquisitions/Divestitures Acquisitions 2009 In 2009, the company completed six acquisitions at an aggregate cost of $1,471 million. The SPSS,Inc. acquisition is shown separately given its significant purchase price. SPSS, INC. (SPSS)On October2, 2009, the company acquired 100 percent of the outstanding common shares of SPSS for cash consideration of $1,177 million. SPSS is a leading global provider of predictive analytics software and solutions and this acquisition will strengthen the companys business analytics and optimization capabilities. SPSS was integrated into the Software segment upon acquisition, and goodwill, as reflected in the table below, has been entirely assigned to the Software segment. Substantially all of the goodwill is not deductible for tax purposes. The overall weighted average useful life of the intangible assets acquired, excluding goodwill, is 7.0 years. OTHER ACQUISITIONSThe Software segment also completed acquisitions of four privately held companies: in the second quarter, Outblaze Limited, a messaging software provider, and Exeros,Inc., a data discovery firm; in the third quarter, security provider Ounce Labs,Inc.; and in the fourth quarter, Guardium,Inc., a database security company. Global Technology Services completed one acquisition in the fourth quarter: RedPill Solutions PTE Limited, a privately held company focused on business analytics. Purchase price consideration for the Other Acquisitions, as reflected in the table below, was paid all in cash. All acquisitions are reported in the Consolidated Statement of Cash Flows net of acquired cash and cash equivalents. 2009 ACQUISITIONS ($ in millions) Amortization Other Life (in Years) SPSS Acquisitions Current assets $ 397 $ 13 Fixed assets/noncurrent 20 1 Intangible assets: Goodwill N/A 748 255 Completed technology 4 to 7 105 39 Client relationships 5 to 7 30 20 In-process RD N/A Other identifiable assets 1 to 7 36 1 Total assets acquired 1,336 330 Current liabilities (157 ) (34 ) Noncurrent liabilities (2 ) (0 ) Total liabilities assumed (160 ) (35 ) Total purchase price $ 1,177 $ 295 N/ANot applicable The acquisitions were accounted for as business combinations, and accordingly, the assets and liabilities of the acquired entities were recorded at their estimated fair values at the date of acquisition. The primary items that generated the goodwill are the value of the synergies between the acquired companies and IBM and the acquired assembled workforce, neither of which qualify as an amortizable intangible asset. For the Other Acquisitions, the overall weighted-average life of the identified amortizable intangible assets acquired is 6.5 years. With the exception of goodwill, these identified intangible assets will be amortized on a straight-line basis over their useful lives. Goodwill of $255 million has been assigned to the Software ($246 million) and Global Technology Services ($10 million) segments. Substantially a
Divestitures	Divestitures 2009 On October26, 2009, the company announced that it had signed an agreement with Dassault Systemes (DS) under which DS would acquire the companys activities associated with sales and support of DSs product lifecycle management (PLM) software solutions, including customer contracts and related assets. This transaction is subject to customary closing conditions and is expected to close in the first quarter of 2010. The company expects to record a gain when this transaction is completed. On October1, 2009, the company completed the divestiture of its UniData and Universe software products and related tools to Rocket Software, a privately held global software development firm. The company recognized a gain on the transaction in the fourth quarter. On March16, 2009, the company completed the sale of certain processes, resources, assets and third-party contracts related to its core logistics operations to Geodis. The company received proceeds of $365 million and recognized a net gain of $298 million on the transaction in the first quarter of 2009. The gain was net of the fair value of certain contractual terms, certain transaction costs and related real estate charges. As part of this transaction, the company outsourced its logistics operations to Geodis which enables the company to leverage industry-leading skills and scale and improve the productivity of the companys supply chain. 2007 In January2007, the company announced an agreement with Ricoh Company Limited (Ricoh), a publicly traded company, to form a joint venture company based on the Printing System Division (a division of the Systems and Technology segment). The company initially created a wholly owned subsidiary, InfoPrint Solutions Company, LLC (InfoPrint), by contributing specific assets and liabilities from its printer business. The Printing Systems Division generated approximately $1 billion of revenue in 2006. The InfoPrint portfolio includes solutions for production printing for enterprises and commercial printers as well as solutions for office workgroup environments and industrial segments. On June1, 2007 (closing date), the company divested 51 percent of its interest in InfoPrint to Ricoh. The company will divest its remaining 49 percent ownership to Ricoh quarterly over the next three years from the closing date. At December31, 2009, the companys ownership in InfoPrint was 8.0 percent. The total consideration the company agreed to on January24, 2007 (the date the definitive agreement was signed) was $725 million which was paid in cash to the company on the closing date. The cash received was consideration for the initial 51 percent acquisition of InfoPrint by Ricoh as well as a prepayment for the remaining 49 percent to be acquired and certain royalties and services to be provided by the company to InfoPrint. Final consideration for this transaction will be determined at the end of the three-year period based upon the participation in the profits and losses recorded by the equity partners. The company concluded that InfoPrint met the requirements of a variable interest entity, the company is not the primary beneficiary of the entity

Fair Value

Fair Value
	12 Months Ended Dec. 31, 2009 USD / shares
Fair Value
Fair Value	Note D. Fair Value Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis The following table presents the companys financial assets and financial liabilities that are measured at fair value on a recurring basis at December31, 2009 and 2008. ($ in millions) At December31, 2009: Level 1 Level 2 Level 3 Netting(1) Total Assets: Cash and cash equivalents $ 2,780 $ 6,497 $ $ $ 9,277 Marketable securities 1,791 1,791 Derivative assets(2) 838 (573 ) 265 Investments and sundry assets 369 14 383 Total assets $ 3,149 $ 9,140 $ $ (573 ) $ 11,716 Liabilities: Derivative liabilities(3) $ $ 1,555 $ $ (573 ) $ 982 Total liabilities $ $ 1,555 $ $ (573 ) $ 982 (1) Represents netting of derivative exposures covered by a qualifying master netting agreement. (2) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Statement of Financial Position at December31, 2009 are $273 million and $565 million, respectively. (3) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Statement of Financial Position at December31, 2009 are $906 million and $649 million, respectively. ($ in millions) At December31, 2008: Level 1 Level 2 Level 3 Netting(1) Total Assets: Cash and cash equivalents $ 1,950 $ 8,059 $ $ $ 10,009 Marketable securities 166 166 Derivative assets(2) 56 1,834 (875 ) 1,015 Investments and sundry assets 165 6 171 Total assets $ 2,171 $ 10,065 $ $ (875 ) $ 11,361 Liabilities: Derivative liabilities(3) $ $ 2,116 $ $ (875 ) $ 1,241 Total liabilities $ $ 2,116 $ $ (875 ) $ 1,241 (1) Represents netting of derivative exposures covered by a qualifying master netting agreement. (2) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Statement of Financial Position at December31, 2008 are $773 million and $1,117 million, respectively. (3) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Statement of Financial Position at December31, 2008 are $1,414 million and $702 million, respectively. Items Measured at Fair Value on a Nonrecurring Basis In the fourth quarter of 2008, the company recorded an other-than-temporary impairment of $81 million for an equity method investment. The resulting investment which was classified as Level 3 in the fair value hierarchy was valued using a discounted cash flow model. The valuation inputs included an estimate of future cash flows, expectations about possible

Financial Instruments

Financial Instruments (Excluding Derivatives)
	12 Months Ended Dec. 31, 2009 USD / shares
Financial Instruments (Excluding Derivatives)
Financial Instruments (Excluding Derivatives)	Note E. Financial Instruments (Excluding Derivatives) Fair Value of Financial Instruments Cash and cash equivalents, debt and marketable equity securities and derivative financial instruments are recognized and measured at fair value in the companys financial statements. Notes and other accounts receivable and other investments are financial assets with carrying values that approximate fair value. Accounts payable, other accrued expenses and short-term debt are financial liabilities with carrying values that approximate fair value. In the absence of quoted prices in active markets, considerable judgment is required in developing estimates of fair value. Estimates are not necessarily indicative of the amounts the company could realize in a current market transaction. The following methods and assumptions are used to estimate fair values: Loans and Long-term Receivables Estimates of fair value are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. Long-term Debt Fair value of publicly traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturies is used to estimate fair value. The carrying amount of long-term debt is $21,932 million and $22,689 million and the estimated fair value is $23,748 million and $23,351 million at December31, 2009 and 2008, respectively. Debt and Marketable Equity Securities The following table summarizes the companys debt and marketable equity securities all of which are considered available-for-sale and recorded at fair value in the Consolidated Statement of Financial Position. ($ in millions) Fair Value At December31: 2009 2008 Cash and cash equivalents:* Time deposits and certificates of deposit $ 4,324 $ 4,805 Commercial paper 2,099 3,194 Money market funds 2,780 1,950 Other securities 74 60 Total $ 9,277 $ 10,009 Debt securitiescurrent:** Commercial paper $ 1,491 $ 166 Securities of U.S. Federal government and its agencies 300 Total $ 1,791 $ 166 Debt securitiesnoncurrent:*** Other securities $ 9 $ 6 Total $ 9 $ 6 Non-equity method alliance investments*** $ 374 $ 165 * Included within cash and cash equivalents in the Consolidated Statement of Financial Position. ** Reported as marketable securities within the Consolidated Statement of Financial Position. *** Included within investments and sundry assets in the Consolidated Statement of Financial Position. See note I, Investments and Sundry Assets, on page89. Gross unrealized gains (before taxes) on debt securities were less than $1 million and $1 million at December31, 2009 and 2008, respectively. Gross unrealized gains (before taxes) on marketable e

Inventories

Inventories
	12 Months Ended Dec. 31, 2009 USD / shares
Inventories
Inventories	Note F. Inventories ($ in millions) At December31: 2009 2008 Finished goods $ 533 $ 524 Work in process and raw materials 1,960 2,176 Total $ 2,494 $ 2,701

Financing Receivables

Financing Receivables
	12 Months Ended Dec. 31, 2009 USD / shares
Financing Receivables
Financing Receivables	Note G. Financing Receivables ($ in millions) At December31: 2009 2008 Current: Net investment in sales-type and direct financing leases $ 4,105 $ 4,226 Commercial financing receivables 5,604 5,781 Client loan receivables 4,475 4,861 Installment payment receivables 730 608 Total $ 14,914 $ 15,477 Noncurrent: Net investment in sales-type and direct financing leases $ 5,331 $ 5,938 Commercial financing receivables 58 94 Client loan receivables 4,759 4,718 Installment payment receivables 496 433 Total $ 10,644 $ 11,183 Net investment in sales-type and direct financing leases is for leases that relate principally to the companys systems products and are for terms ranging generally from two to six years. Net investment in sales-type and direct financing leases includes unguaranteed residual values of $849 million and $916 million at December31, 2009 and 2008, respectively, and is reflected net of unearned income of $905 million and $1,049 million and of allowance for doubtful accounts receivable of $159 million and $217 million at those dates, respectively. Scheduled maturities of minimum lease payments outstanding at December31, 2009, expressed as a percentage of the total, are approximately: 2010, 49 percent; 2011, 27 percent; 2012, 15 percent; 2013, 6 percent; and 2014 and beyond, 2 percent. Commercial financing receivables relate primarily to inventory and accounts receivable financing for dealers and remarketers of IBM and non-IBM products. Payment terms for inventory and accounts receivable financing generally range from 30 to 90 days. Client loan receivables are loans that are provided by Global Financing primarily to clients to finance the purchase of software and services. Separate contractual relationships on these financing arrangements are for terms ranging generally from two to seven years. Each financing contract is priced independently at competitive market rates. The company has a history of enforcing the terms of these separate financing agreements. The company utilizes certain of its financing receivables as collateral for non-recourse borrowings. Financing receivables pledged as collateral for borrowings were $271 million and $373 million at December31, 2009 and 2008, respectively. These borrowings are included in note K, Borrowings, on pages90 to 92. The company did not have any financing receivables held for sale as of December31, 2009 and 2008.

Plant, Rental Machines and Othe

Plant, Rental Machines and Other Property
	12 Months Ended Dec. 31, 2009 USD / shares
Plant, Rental Machines and Other Property
Plant, Rental Machines and Other Property	Note H. Plant, Rental Machines and Other Property ($ in millions) At December31: 2009 2008 Land and land improvements $ 737 $ 729 Buildings and building improvements 9,314 8,819 Plant, laboratory and office equipment 25,888 24,950 35,940 34,499 Less: Accumulated depreciation 23,485 22,178 Plant and other propertynet 12,455 12,321 Rental machines 3,656 3,946 Less: Accumulated depreciation 1,946 1,962 Rental machinesnet 1,710 1,984 Totalnet $ 14,165 $ 14,305

Investments and Sundry Assets

Investments and Sundry Assets
	12 Months Ended Dec. 31, 2009 USD / shares
Investments and Sundry Assets
Investments and Sundry Assets	Note I. Investments and Sundry Assets ($ in millions) At December31: 2009 2008* Deferred transition and setup costs and other deferred arrangements** $ 1,772 $ 1,548 Derivativesnoncurrent+ 565 1,117 Alliance investments: Equity method 115 167 Non-equity method 477 285 Prepaid software 312 370 Long-term deposits 310 277 Other receivables 617 238 Employee benefit-related 427 372 Other assets 783 685 Total $ 5,379 $ 5,058 * Reclassified to conform with 2009 presentation. ** Deferred transition and setup costs and other deferred arrangements are related to Global Services client arrangements. Also see note A, Significant Accounting Policies, on pages70 to 79 for additional information. + See note L, Derivatives and Hedging Transactions, on pages92 through 96 for the fair value of all derivatives reported in the Consolidated Statement of Financial Position.

Intangible Assets Including Goo

Intangible Assets Including Goodwill
	12 Months Ended Dec. 31, 2009 USD / shares
Intangible Assets Including Goodwill:
Intangible Assets Including Goodwill	Note J. Intangible Assets Including Goodwill Intangible Assets The following table details the companys intangible asset balances by major asset class. ($ in millions) At December31, 2009 Gross Net Carrying Accumulated Carrying Intangible Asset Class Amount Amortization Amount Capitalized software $ 1,765 $ (846 ) $ 919 Client-related 1,367 (677 ) 690 Completed technology 1,222 (452 ) 770 Patents/trademarks 174 (59 ) 115 Other* 94 (75 ) 19 Total $ 4,622 $ (2,109 ) $ 2,513 * Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems, and impacts from currency translator ($ in millions) At December31, 2008 Gross Net Carrying Accumulated Carrying Intangible asset class Amount Amortization Amount Capitalized software $ 1,861 $ (839 ) $ 1,022 Client-related 1,532 (663 ) 869 Completed technology 1,167 (327 ) 840 Patents/trademarks 188 (76 ) 112 Other* 154 (121 ) 35 Total $ 4,901 $ (2,023 ) $ 2,878 * Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems, and impacts from currency translation The net carrying amount of intangible assets decreased $365 million for the year ended December31, 2009, primarily due to amortization of acquired intangibles. No impairment of intangible assets was recorded in any of the periods presented. Total amortization was $1,221 million and $1,310 million for the years ended December31, 2009 and 2008, respectively. The aggregate intangible amortization expense for acquired intangibles (excluding capitalized software) was $489 million and $520 million for the years ended December31, 2009 and 2008, respectively. In addition, in 2009 the company retired $1,147 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization for this amount. The amortization expense for each of the five succeeding years relating to intangible assets currently recorded in the Consolidated Statement of Financial Position is estimated to be the following at December 31, 2009: ($ in millions) Capitalized Software Acquired Intangibles Total 2010 $ 570 $ 422 $ 992 2011 277 373 650 2012 72 306 377 2013 277 277 2014 149 149 Goodwill The changes in the goodwill balances by reportable segment, for the years ended December 31, 2009 and 2008, are as follows: ($ in millions) Segment BalanceJanuary1,2009 Goodwill Additions PurchasePriceAdjustments Divestitures ForeignCurrencyTranslationand OtherAdjustments BalanceDecember31,2009 Global Business Services $ 3,870 $ $ $ $ 172 $ 4,042 Global Technology Services 2,616 10 1 150 2,777 Software

Borrowings

Borrowings
	12 Months Ended Dec. 31, 2009 USD / shares
Borrowings
Borrowings	Note K. Borrowings Short-Term Debt ($ in millions) At December31: 2009 2008 Commercial paper $ 235 $ 468 Short-term loans 1,711 1,827 Long-term debt current maturities 2,222 8,942 Total $ 4,168 $ 11,236 The weighted-average interest rates for commercial paper at December 31, 2009 and 2008, were 0.1 percent and 3.1 percent, respectively. The weighted-average interest rates for short-term loans were 1.8 percent and 4.5 percent at December 31, 2009 and 2008, respectively. Long-Term Debt Pre-Swap Borrowing ($ in millions) At December31: Maturities 2009 2008 U.S. Dollar Notes and Debentures (average interest rate at December 31, 2009): 3.33% 2010-2012 $ 5,456 * $ 10,496 4.99% 2013-2014 3,332 5,053 6.63% 2015-2019 5,396 5,511 7.00% 2025 600 600 6.22% 2027 469 469 6.50% 2028 313 313 5.875% 2032 600 600 8.00% 2038 187 1,000 5.60% 2039 1,518 7.00% 2045 27 150 7.125% 2096 350 850 18,247 25,041 Other currencies (average interest rate at December 31, 2009, in parentheses): Euros (4.4%) 2010-2014 3,427 3,330 Japanese yen (1.5%) 2010-2014 1,565 1,457 Swiss francs (3.4%) 2011-2015 484 470 Other (5.5%) 2010-2013 285 203 24,008 30,502 Less: Net unamortized discount 527 81 Add: Fair value adjustment** 673 1,210 24,154 31,631 Less: Current maturities 2,222 8,942 Total $ 21,932 $ 22,689 * $1.6 billion in debt securities issued by IBM International Group Capital LLC, which is an indirect, 100 percent owned finance subsidiary of the company, is included in 20102012. Debt securities issued by IBM International Group Capital LLC are fully and unconditionally guaranteed by the company. ** The portion of the fixed-rate debt obligations that is hedged is reflected in the Consolidated Statement of Financial Position as an amount equal to the sum of the debts carrying value plus a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates. Post-Swap Borrowing (Long-term Debt, Including Current Portion) ($ in millions) 2009 2008 At December 31: Amount Average Rate Amount Average Rate Fixed-rate debt* $ 11,939 6.13 % $ 16,608 6.16 % Floating-rate debt** 12,215 1.22 % 15,023 3.35 % Total $ 24,154 $ 31,631 * Includes $0 in 2009 and $1,700 million in 2008 of notional interest rate swaps that effectively convert floating-rate long-term debt into fixed-rate debt. (See note L, Derivatives and Hedging Transactions, on pages92 through 96). ** Includes $9,054 million in 2009 and $7,435 million in 2008 of notional interest rate swaps that effectively convert the fixed-rate long-term debt into floating-rate debt. (See note L, Derivatives and Hedging Transactions, on pag

Derivatives and Hedging Transac

Derivatives and Hedging Transactions
	12 Months Ended Dec. 31, 2009 USD / shares
Derivatives and Hedging Transactions
Derivatives and Hedging Transactions	Note L. Derivatives and Hedging Transactions The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the companys lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations. As a result of the use of derivative instruments, the company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the company has a policy of only entering into contracts with carefully selected major financial institutions based upon their credit ratings and other factors. The companys established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. The right of set-off that exists under certain of these arrangements enables the legal entities of the company subject to the arrangement to net amounts due to and from the counterparty reducing the maximum loss from credit risk in the event of counterparty default. The company is also a party to collateral security arrangements with certain counterparties. These arrangements require the company to hold or post collateral (cash or U.S. Treasury securities) when the derivative fair values exceed contractually established thresholds. Posting thresholds can be fixed or can vary based on credit default swap pricing or credit ratings received from the major credit agencies. The aggregate fair value of all derivative instruments under these collateralized arrangements that were in a liability position at December 31, 2009 was $779 million for which the company has posted collateral of $37 million. Full overnight collateralization of these agreements would be required in the event that the companys credit rating falls below investment grade or if its credit default swap spread exceeds 250 basis points, as applicable, pursuant to the terms of the collateral security arrangements. The aggregate fair value of derivative instruments in net asset positions as of December 31, 2009 was $838 million. This amount represents the maximum exposure to loss at the reporting date as a result of the counterparties failing to perform as contracted. This exposure is reduced by $573 million of liabilities included in master netting arrangements with those c

Other Liabilities

Other Liabilities
	12 Months Ended Dec. 31, 2009 USD / shares
Other Liabilities
Other Liabilities	Note M. Other Liabilities ($ in millions) At December 31: 2009 2008* Income tax reserves $ 3,627 $ 3,557 Executive compensation accruals 1,160 860 Disability benefits 795 743 Derivative liabilities 649 702 Restructuring actions 441 476 Workforce reductions 409 415 Deferred taxes 470 270 Environmental accruals 245 246 Noncurrent warranty accruals 126 189 Asset retirement obligations 116 119 Other* 781 615 Total $ 8,819 $ 8,192 * Reflects the adoption of the FASB guidance on noncontrolling interests in consolidated financial statements. See note B, Accounting Changes, on pages79 to 82 for additional information. In response to changing business needs, the company periodically takes workforce reduction actions to improve productivity, cost competitiveness and to rebalance skills. The noncurrent contractually obligated future payments associated with these activities are reflected in the workforce reductions caption in the previous table. In addition, the company executed certain special actions as follows: (1)the second quarter of 2005 associated with Global Services segments, primarily in Europe, (2)the fourth quarter of 2002 associated with the acquisition of the PricewaterhouseCoopers consulting business, (3)the second quarter of 2002 associated with the Microelectronics Division and the rebalancing of both the companys workforce and leased space resources, (4) the 2002 actions associated with the HDD business for reductions in workforce, manufacturing capacity and space, (5)the actions taken in 1999, and (6)the actions that were executed prior to 1994. The table below provides a roll forward of the current and noncurrent liabilities associated with these special actions. The current liabilities presented in the table are included in other accrued expenses and liabilities in the Consolidated Statement of Financial Position. ($ in millions) Liability Liability as of Other as of Dec. 31, 2008 Payments Adjustments* Dec.31, 2009 Current: Workforce $ 95 $ (95 ) $ 71 $ 71 Space 23 (21 ) 13 16 Other 7 (7 ) Total current $ 125 $ (116 ) $ 77 $ 87 Noncurrent: Workforce $ 453 $ $ (26 ) $ 427 Space 23 (10 ) 14 Total Noncurrent $ 476 $ $ (36 ) $ 441 * The other adjustments column in the table above principally includes the reclassification of noncurrent to current, foreign currency translation adjustments and interest accretion. The workforce accruals primarily relate to terminated employees who are no longer working for the company who were granted annual payments to supplement their incomes in certain countries. Depending on the individual countrys legal requirements, these required payments will continue until the former employee begins receiving pension benefits or passes away. The space accruals are for ongoing obligations to pay rent for vacant

Equity Activity

Equity Activity
	12 Months Ended Dec. 31, 2009 USD / shares
Equity Activity
Equity Activity	Note N. Equity Activity The authorized capital stock of IBM consists of 4,687,500,000 shares of common stock with a $.20 per share par value, of which 1,305,337,423 shares were outstanding at December 31, 2009 and 150,000,000 shares of preferred stock with a $.01 per share par value, none of which were outstanding at December 31, 2009. Stock Repurchases The Board of Directors authorizes the company to repurchase IBM common stock. The company repurchased 68,650,727 common shares at a cost of $7,534 million, 89,890,347 common shares at a cost of $10,563 million and 178,385,436 common shares at a cost of $18,783 million in 2009, 2008 and 2007, respectively. These amounts reflect transactions executed through December 31 of each year. Actual cash disbursements for repurchased shares may differ due to varying settlement dates for these transactions. Included in the 2007 repurchases highlighted above, in May2007, IBM International Group (IIG), a wholly owned foreign subsidiary of the company, repurchased 118.8 million shares of common stock for $12.5 billion under accelerated share repurchase (ASR) agreements with three banks. Pursuant to the ASR agreements, executed on May25, 2007,IIG paid an initial purchase price of $105.18 per share for the repurchase. The initial purchase price was subject to adjustment based on the volume weighted-average price of IBM common stock over a settlement period of three months for each of the banks. The adjustment also reflected certain other amounts including the banks carrying costs, compensation for ordinary dividends declared by the company during the settlement period and interest benefits for receiving the $12.5 billion payment in advance of the anticipated purchases by each bank of shares in the open market during the respective settlement periods. The adjustment amount could be settled in cash, registered shares or unregistered shares at IIGs option. Under the ASR agreements,IIG had a separate settlement with each of the three banks. The first settlement occurred on September 6, 2007, resulting in a settlement payment to the bank of $151.8 million. The second settlement occurred on December 5, 2007, resulting in a settlement payment to the bank of $253.1 million. The third settlement occurred on March4, 2008, resulting in a settlement payment to the company of $54.2 million. The adjusted average price paid per share during the ASR was $108.13, resulting in a total purchase price of $12,581 million. The $351 million difference was settled in cash. The settlement amounts were paid in cash at the election of IIG in accordance with the provisions of the ASR agreements and were recorded as adjustments to equity in the Consolidated Statement of Financial Position on the settlement dates. The company issued 6,408,265 treasury shares in 2009, 5,882,800 treasury shares in 2008 and 9,282,055 treasury shares in 2007, as a result of exercises of stock options by employees of certain recently acquired businesses and by non-U.S. employees. At December 31, 2009, $6,113 million of Board common stock repurchase authorization was still available. The company plans to purchase shares on the open marke

Contingencies and Commitments

Contingencies and Commitments
	12 Months Ended Dec. 31, 2009 USD / shares
Contingencies and Commitments
Contingencies and Commitments	Note O. Contingencies and Commitments Contingencies The company is involved in a variety of claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business, including actions with respect to contracts, intellectual property (IP), product liability, employment, benefits, securities, foreign operations and environmental matters. These actions may be commenced by a number of different parties, including competitors, partners, clients, current or former employees, government and regulatory agencies, stockholders and representatives of the locations in which the company does business. The following is a summary of the more significant legal matters involving the company. The company is a defendant in an action filed on March6, 2003 in state court in Salt Lake City, Utah by the SCO Group (SCO v. IBM). The company removed the case to Federal Court in Utah. Plaintiff is an alleged successor in interest to some of ATTs UNIX IP rights, and alleges copyright infringement, unfair competition, interference with contract and breach of contract with regard to the companys distribution of AIX and Dynix and contribution of code to Linux. The company has asserted counterclaims, including breach of contract, violation of the Lanham Act, unfair competition, intentional torts, unfair and deceptive trade practices, breach of the General Public License that governs open source distributions, promissory estoppel and copyright infringement. In October 2005, the company withdrew its patent counterclaims in an effort to simplify and focus the issues in the case and to expedite their resolution. Motions for summary judgment were heard in March2007, and the court has not yet issued its decision. On August 10, 2007, the court in another suit, the SCO Group,Inc. v. Novell,Inc., issued a decision and order determining, among other things, that Novell is the owner of UNIX and UnixWare copyrights, and obligating SCO to recognize Novells waiver of SCOs claims against IBM and Sequent for breach of UNIX license agreements. At the request of the court in SCO v. IBM, on August 31, 2007, each of the parties filed a status report with the court concerning the effect of the August 10th Novell ruling on the SCO v. IBM case, including the pending motions. On September 14, 2007, plaintiff filed for bankruptcy protection, and all proceedings in this case were stayed. In the SCO v. Novell case, on November 25, 2008, SCO filed its notice of appeal to the U.S. Court of Appeals for the Tenth Circuit, which included an appeal of the August 10, 2007 ruling; on August 24, 2009, the U.S. Court of Appeals reversed the August 10, 2007 ruling and remanded the SCO v. Novell case for trial. On August 25, 2009, the U.S. Bankruptcy Court for the District of Delaware approved the appointment of a Chapter 11 Trustee of SCO. On November 29, 2006, the company filed a lawsuit against Platform Solutions,Inc. (PSI) in the United States District Court for the Southern District of New York, alleging that PSI violated certain intellectual property rights of IBM. PSI asserted counterclaims against IBM. On January11, 2008

Taxes

Taxes
	12 Months Ended Dec. 31, 2009 USD / shares
Taxes
Taxes	Note P. Taxes ($ in millions) For the year ended December 31: 2009 2008 2007 Income from continuing operations before income taxes: U.S. operations $ 9,524 $ 8,424 $ 7,667 Non-U.S. operations 8,614 8,291 6,822 Total income from continuing operations before income taxes $ 18,138 $ 16,715 $ 14,489 The continuing operations provision for income taxes by geographic operations is as follows: ($ in millions) For the year ended December 31: 2009 2008 2007 U.S. operations $ 2,427 $ 2,348 $ 2,280 Non-U.S. operations 2,286 2,033 1,791 Total continuing operations provision for income taxes $ 4,713 $ 4,381 $ 4,071 The components of the continuing operations provision for income taxes by taxing jurisdiction are as follows: ($ in millions) For the year ended December 31: 2009 2008 2007 U.S. federal: Current $ 473 $ 338 $ 1,085 Deferred 1,341 1,263 683 1,814 1,601 1,768 U.S. state and local: Current 120 216 141 Deferred 185 205 (19 ) 305 421 122 Non-U.S.: Current 2,347 1,927 2,105 Deferred 247 432 76 2,594 2,359 2,181 Total continuing operations provision for income taxes 4,713 4,381 4,071 Provision for social security, real estate, personal property and other taxes 3,986 4,076 3,832 Total taxes included in income from continuing operations $ 8,699 $ 8,457 $ 7,903 A reconciliation of the statutory U.S. federal tax rate to the companys continuing operations effective tax rate is as follows: For the year ended December 31: 2009 2008 2007 Statutory rate 35 % 35 % 35 % Foreign tax differential (9 ) (8 ) (6 ) State and local 1 1 1 Other (1 ) (2 ) (2 ) Effective rate 26 % 26 % 28 % The effect of tax law changes on deferred tax assets and liabilities did not have a material impact on the companys effective tax rate. The significant components of deferred tax assets and liabilities that are recorded in the Consolidated Statement of Financial Position were as follows: Deferred Tax Assets ($ in millions) At December 31: 2009 2008* Retirement benefits $ 3,921 $ 5,215 Share-based and other compensation 1,853 2,579 Domestic tax loss/credit carryforwards 859 862 Deferred income 847 739 Foreign tax loss/credit carryforwards 680 642 Bad debt, inventory and warranty reserves 605 561 Capitalized research and development 539 795 Depreciation 485 388 Other 1,999 1,863 Gross deferred tax assets 11,788 13,644 Less: valuation allowance 812 720 Net deferred tax assets $ 10,976 $ 12,924 * Reclassified to conform with 2009 presentation. Deferred Tax Liabilities ($ in millions) At December 31: 2009

Research, Development and Engin

Research, Development and Engineering
	12 Months Ended Dec. 31, 2009 USD / shares
Research, Development and Engineering
Research, Development and Engineering	Note Q. Research, Development and Engineering RDE expense was $5,820 million in 2009, $6,337 million in 2008 and $6,153 million in 2007. The company incurred expense of $5,523 million in 2009, $6,015 million in 2008 and $5,754 million in 2007 for scientific research and the application of scientific advances to the development of new and improved products and their uses, as well as services and their application. Within these amounts, software-related expense was $2,991 million, $3,359 million and $3,037 million in 2009, 2008 and 2007, respectively. In addition, included in the expense was a charge of $24 million in 2008 for acquired IPRD. Expense for product-related engineering was $297 million, $322 million and $399 million in 2009, 2008 and 2007, respectively.

Earnings Per Share of Common St

Earnings Per Share of Common Stock
	12 Months Ended Dec. 31, 2009 USD / shares
Earnings Per Share of Common Stock
Earnings Per Share of Common Stock	Note R. Earnings Per Share of Common Stock The following table presents the computation of basic and diluted earnings per share of common stock. For the year ended December 31: 2009 2008 2007 Weighted-average number of shares on which earnings per share calculations are based: Basic: 1,327,157,410 1,369,367,069 * 1,433,935,221 * Add incremental shares under stock-based compensation plans 12,258,864 16,617,801 * 18,145,715 * Add incremental shares associated with Accelerated Share Repurchase agreements 1,891,095 Add incremental shares associated with convertible notes 1,362,191 Add incremental shares associated with contingently issuable shares 1,936,480 1,812,328 1,546,529 Assuming dilution 1,341,352,754 1,387,797,198 * 1,456,880,751 * ($in millions except per share amounts) Basic: Income from continuing operations $ 13,425 $ 12,334 $ 10,418 Income/(loss) from discontinued operations (00 ) Net income from total operations on which basic earnings per share is calculated $ 13,425 $ 12,334 $ 10,418 Assuming dilution: Income from continuing operations $ 13,425 $ 12,334 $ 10,418 Less net income applicable to contingently issuable shares 1 Income/(loss) from discontinued operations (00 ) Net income from total operations on which diluted earnings per share is calculated $ 13,425 $ 12,333 $ 10,418 Earnings/(loss) per share of common stock: Assuming dilution: Continuing operations $ 10.01 $ 8.89 * $ 7.15 * Discontinued operations (0.00 ) Total assuming dilution $ 10.01 $ 8.89 * $ 7.15 * Basic: Continuing operations $ 10.12 $ 9.02 * $ 7.27 * Discontinued operations (0.00 ) Total basic $ 10.12 $ 9.02 * $ 7.27 * * Reflects the adoption of the FASB guidance in determining whether instruments granted in share-based payment transactions are participating securities. See note B, Accounting Changes, on pages79 to 82 for additional information. Stock options to purchase 612,272 common shares in 2009, 42,981,463 common shares in 2008 and 62,782,516 common shares in 2007 were outstanding, but were not included in the computation of diluted earnings per share because the exercise price of the options was greater than the average market price of the common shares for the applicable full year, and therefore, the effect would have been antidilutive.

Rental Expense and Lease Commit

Rental Expense and Lease Commitments
	12 Months Ended Dec. 31, 2009 USD / shares
Rental Expense and Lease Commitments
Rental Expense and Lease Commitments	Note S. Rental Expense and Lease Commitments Rental expense from continuing operations, including amounts charged to inventories and fixed assets, and excluding amounts previously reserved, was $1,677 million in 2009, $1,681 million in 2008 and $1,559 million in 2007. Rental expense in agreements with rent holidays and scheduled rent increases is recorded on a straight-line basis over the lease term. Contingent rentals are included in the determination of rental expense as accruable. The table below depicts gross minimum rental commitments from continuing operations under noncancelable leases, amounts related to vacant space associated with infrastructure reductions and restructuring actions taken through 1994, and in 1999, 2002 and 2005 (previously reserved), sublease income commitments and capital lease commitments. These amounts reflect activities primarily related to office space, as well as manufacturing facilities. ($ in millions) 2010 2011 2012 2013 2014 Beyond 2014 Operating lease commitments: Gross minimum rental commitments (including vacant space below) $ 1,504 $ 1,281 $ 982 $ 769 $ 626 $ 776 Vacant space $ 69 $ 37 $ 18 $ 9 $ 8 $ 9 Sublease income commitments $ 52 $ 27 $ 15 $ 8 $ 4 $ 2 Capital lease commitments $ 64 $ 25 $ 32 $ 31 $ 13

Stock-Based Compensation

Stock-Based Compensation
	12 Months Ended Dec. 31, 2009 USD / shares
Stock-Based Compensation
Stock-Based Compensation:	Note T. Stock-Based Compensation Stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. See note A, Significant Accounting Policies, on page76 for additional information. The following table presents total stock-based compensation cost included in the Consolidated Statement of Earnings. ($ in millions) For the year ended December 31: 2009 2008 2007 Cost $ 94 $ 116 $ 166 Selling, general and administrative 417 484 480 Research, development and engineering 47 58 68 Other (income) and expense* (1 ) Pre-tax stock-based compensation cost 558 659 713 Income tax benefits (221 ) (224 ) (248 ) Total stock-based compensation cost $ 337 $ 435 $ 464 * Reflects the one-time effects of the divestiture of the Printing Systems business in the second quarter of 2007. Total unrecognized compensation cost related to non-vested awards at December 31, 2009 and 2008 was $1,082 million and $1,076 million, respectively, and is expected to be recognized over a weighted-average period of approximately 2.5 years. There was no significant capitalized stock-based compensation cost at December 31, 2009, 2008 and 2007. Incentive Awards Stock-based incentive awards are provided to employees under the terms of the companys long-term performance plans (the Plans). The Plans are administered by the Executive Compensation and Management Resources Committee of the Board of Directors (the Committee). Awards available under the Plans principally include stock options, restricted stock units, performance share units or any combination thereof. The nonmanagement members of the IBM Board of Directors also received stock options under a director stock option plan through December 31, 2006. The director stock option plan was terminated effective January1, 2007. The amount of shares originally authorized to be issued under the companys existing Plans was 274.1 million at December 31, 2009 and 2008. In addition, certain incentive awards granted under previous Plans, if and when those awards were canceled, could be reissued under the companys existing Plans. As such, 66.4 million and 47.6 million additional awards were considered authorized to be issued under the companys existing Plans as of December 31, 2009 and 2008, respectively. There were 1.9 million and 23.8 million option awards outstanding (which were included in the total options outstanding at December 31, 2009 and 2008, respectively) under previous Plans that, if and when canceled, would increase the number of authorized shares. There were 140.4 million and 130.1million unused shares available to be granted under the Plans as of December 31, 2009 and 2008, respectively. Under the companys long-standing practices and policies, all awards are approved prior to or on the date of grant. The exercise price of at-the-money stock options is the average of the high and low market price on the date of grant. The options approval process specifies the individual

Retirement-Related Benefits

Retirement-Related Benefits
	12 Months Ended Dec. 31, 2009 USD / shares
Retirement-Related Benefits Disclosure:
Retirement-Related Benefits	Note U. Retirement-Related Benefits Description of Plans IBM sponsors defined benefit pension plans and defined contribution plans that cover substantially all regular employees, a supplemental retention plan that covers certain U.S. executives and nonpension postretirement benefit plans primarily consisting of retiree medical and dental benefits for eligible retirees and dependents. U.S. Plans DEFINED BENEFIT PENSION PLANS IBM Personal Pension Plan IBM provides U.S. regular, full-time and part-time employees hired prior to January1, 2005 with noncontributory defined benefit pension benefits via the IBM Personal Pension Plan. Prior to 2008, the IBM Personal Pension Plan consisted of a tax qualified (qualified) plan and a non-tax qualified (nonqualified) plan. Effective January1, 2008, the nonqualified plan was renamed the Excess Personal Pension Plan (Excess PPP) and the qualified plan is now referred to as the Qualified PPP. The combined plan is now referred to as the PPP. The Qualified PPP is funded by company contributions to an irrevocable trust fund, which is held for the sole benefit of participants and beneficiaries. The Excess PPP, which is unfunded, provides benefits in excess of IRS limitations for qualified plans. Benefits provided to the PPP participants are calculated using benefit formulas that vary based on the participant. Pension benefits are calculated using one of two methods based upon specified criteria used to determine each participants eligibility. The first method uses a five-year, final pay formula that determines benefits based on salary, years of service, mortality and other participant-specific factors. The second method is a cash balance formula that calculates benefits using a percentage of employees annual salary, as well as an interest crediting rate. Benefit accruals under the IBM Personal Pension Plan ceased December 31, 2007 for all participants. U.S. Supplemental Executive Retention Plan The company also sponsors a nonqualified U.S. Supplemental Executive Retention Plan (Retention Plan). The Retention Plan, which is unfunded, provides benefits to eligible U.S. executives based on average earnings, years of service and age at termination of employment. Effective July1, 1999, the company replaced the then effective Retention Plan with the current Retention Plan. Some participants in the previous Retention Plan will still be eligible for benefits under that prior plan if those benefits are greater than the benefits provided under the current plan. Benefit accruals under the Retention Plan ceased December 31, 2007 for all participants. DEFINED CONTRIBUTION PLANS IBM 401(k)Plus Plan U.S. regular, full-time and part-time employees are eligible to participate in the IBM 401(k)Plus Plan, which is a qualified defined contribution plan under section 401(k)of the Internal Revenue Code. Effective January1, 2008, under the IBM 401(k)Plus Plan, eligible employees receive a dollar-for-dollar match of their contributions up to 6 percent of eligible compensation for those hired prior to January1, 2005, and up to 5 percent of eligible compensation for those hired on or after J

Segment Information

Segment Information
	12 Months Ended Dec. 31, 2009 USD / shares
Segment Information
Segment Information	Note V. Segment Information The company creates business value for clients and solves business problems through integrated solutions that leverage information technology and deep knowledge of business processes. IBM solutions typically create value by reducing a clients operational costs or by enabling new capabilities that generate revenue. These solutions draw from an industry-leading portfolio of consulting, delivery and implementation services, enterprise software, systems and financing. The companys major operations comprise: a Global Technology Services segment; a Global Business Services segment; a Software segment; a Systems and Technology segment; and a Global Financing segment. The segments represent components of the company for which separate financial information is available that is utilized on a regular basis by the chief executive officer in determining how to allocate the companys resources and evaluate performance. The segments are determined based on several factors, including client base, homogeneity of products, technology, delivery channels and similar economic characteristics. Information about each segments business and the products and services that generate each segments revenue is located in the Description of Business section of the Management Discussion on pages20 to 25, and Segment Details, on pages25 to 31. Segment revenue and pre-tax income include transactions between the segments that are intended to reflect an arms-length transfer price. Systems and software that is used by the Global Technology Services segment in outsourcing engagements is primarily sourced internally from the Systems and Technology and Software segments. For the internal use of IT services, Global Technology Services and Global Business Services recover cost, as well as a reasonable fee, reflecting the arms-length value of providing the services. The Global Services segments enter into arms-length leases and loans at prices equivalent to market rates with the Global Financing segment to facilitate the acquisition of equipment used in services engagements. All internal transaction prices are reviewed annually, and reset if appropriate. The company utilizes globally integrated support organizations to realize economies of scale and efficient use of resources. As a result, a considerable amount of expense is shared by all of the segments. This shared expense includes sales coverage, marketing and support functions such as Accounting, Treasury, Procurement, Legal, Human Resources and Billing and Collections. Where practical, shared expenses are allocated based on measurable drivers of expense, e.g., headcount. When a clear and measurable driver cannot be identified, shared expenses are allocated on a financial basis that is consistent with the companys management system; e.g., advertising expense is allocated based on the gross profits of the segments. The unallocated corporate amounts arising from certain divestitures, indirect infrastructure reductions, miscellaneous tax items and the unallocated corporate expense pool are recorded in net income but are not allocated to the segments. The following tables reflect th

Subsequent Events

Subsequent Events
	12 Months Ended Dec. 31, 2009 USD / shares
Subsequent Events
Subsequent Events	Note W. Subsequent Events On January20, 2010, the company announced that it signed a definitive agreement to acquire National Interest Security Company, LLC (NISC). NISC, a privately held company, will strengthen the companys ability to deliver advanced analytics and IT solutions to the public sector. The transaction is subject to customary closing conditions, including regulatory reviews, and is expected to be completed in the first quarter of 2010. On January26, 2010, the company announced that the Board of Directors approved a quarterly dividend of $0.55 per common share. The dividend is payable March10, 2010 to shareholders of record on February10, 2010. On January26, 2010, the company announced that it completed the acquisition of Lombardi, a privately held software company based in Austin, Texas. Lombardi is a leading provider of business process management software and services. Lombardi will become a part of the companys application integration software portfolio. At the date of issuance of the financial statements, the initial purchase accounting was not complete. On February3, 2010, the company announced that it signed a definitive agreement to acquire Initiate Systems. Initiate Systems, a privately held company based in Chicago, Illinois is a leading provider of data integrity software for information sharing among healthcare and government organizations. The transaction is subject to customary closing conditions, including regulatory reviews, and is expected to be completed in the first quarter of 2010. On February 16, 2010, the company announced that it had completed the acquisition of Intelliden Inc., a privately held software company based in Menlo Park, California. Intelliden will extend the companys network management offerings. At the date of issuance of the financial statements, the initial purchase accounting was not complete.

Valuation and Qualifying Accoun

Valuation and Qualifying Accounts and Reserves
	12 Months Ended Dec. 31, 2009 USD / shares
Valuation and Qualifying Accounts and Reserves
Valuation and Qualifying Accounts and Reserves	SCHEDULE II INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the Years Ended December 31: (Dollars in Millions) SCHEDULE II INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the Years Ended December31: (Dollars in Millions) Description Balance at Beginning of Period Additions* Writeoffs Other** Balance at End of Period Allowance For Doubtful Accounts 2009 ?Current $ 633 $ 115 $ (189 ) $ 111 $ 669 ?Noncurrent $ 180 $ 33 $ (56 ) $ (58 ) $ 100 2008 ?Current $ 549 $ 170 $ (92 ) $ 5 $ 633 ?Noncurrent $ 59 $ 138 $ (19 ) $ 2 $ 180 2007 ?Current $ 543 $ 79 $ (112 ) $ 40 $ 549 ?Noncurrent $ 48 $ 23 $ (18 ) $ 5 $ 59 Allowance For Inventory Losses 2009 $ 643 $ 259 $ (242 ) $ 18 $ 679 2008 $ 669 $ 285 $ (248 ) $ (63 ) $ 643 2007 $ 612 $ 315 $ (308 ) $ 50 $ 669 Revenue Based Provisions 2009 $ 984 $ 3,969 $ (4,019 ) $ (65 ) $ 871 2008 $ 1,085 $ 6,145 $ (6,195 ) $ (52 ) $ 984 2007 $ 990 $ 5,812 $ (5,722 ) $ 5 $ 1,085 * Additions for Allowance for Doubtful Accounts and Allowance for Inventory Losses are charged to expense and cost accounts, respectively, while Revenue Based Provisions are charged to revenue accounts. ** Primarily comprises currency translation adjustments.

Document and Entity Information

Document and Entity Information (USD $)
In Billions, except Share data	12 Months Ended Dec. 31, 2009	Feb. 10, 2010	Jun. 30, 2009
Document and Entity Information
Document Type	10-K
Document Period End Date	2009-12-31
Amendment Flag	false
Entity Registrant Name	International Business Machines Corporation
Entity Central Index Key	0000051143
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding		1,299,003,390
Entity Public Float			136.8