IBM Corporation Financial Profile Recent Highlights: April 2011 1Q'11 8% revenue growth driven by Systems & Technology, Software, and Outsourcing Continued margin expansion: Gross, Pre-Tax, and Net Income Margins Delivered 21% Yr/Yr Operating (Non-GAAP) EPS growth Returned over $4.8B to shareholders; strong Balance Sheet Raised FY'11 Operating (Non-GAAP) EPS expectations to at least $13.15 ($ in Billions, except per share amounts) ($ in Billions) FY 2010 P&L Highlights Revenue @ constant currency $99.9 Pre-Tax Income - Operating Net Income - Operating EPS (Diluted) - Operating Free Cash Flow* Yr/Yr 1Q 2011 Yr/Yr 4% 3% $24.6 $19.9 10% $4.0 12% $15.0 12% $3.0 13% $11.67 16% $2.41 21% $16.3 8% 5% Assets Cash & Marketable Securities Global Financing Assets Non-Global Financing Assets* Liabilities Global Financing Debt Non-Global Financing Debt* Other Liabilities $0.8 Equity Key P&L Metrics - Operating Gross Profit Margin Expense / Revenue % Pre-Tax Income Margin Tax Rate Net Income Margin 46.1% 26.2% 19.9% 24.4% 15.0% Yr/Yr 0.5 0.5 1.0 1.4 1.0 pts pts pts pts pts 1Q 2011 Yr/Yr 44.5% 28.3% 16.2% 25.0% 12.1% 0.8 pts 0.2 pts 0.6 pts (0.8 pts) 0.6 pts 2010 Revenue by Geography (excludes OEM) Key Metrics Non GF Debt/Cap Global Financing Leverage Dividend Yield Credit Rating (Moody's, S&P) 2010 Revenue by Business Segment U.S. Comm's 34% Asia Pacific 24% $11.7 $34.5 $67.3 $113.5 $13.2 $32.3 $67.4 $113.0 $22.8 $5.8 $61.7 $90.3 $23.7 $6.5 $59.9 $90.2 $23.2 $22.8 Services 57% Mar 2011 23% 7.0 1.7% Aa3, A+ 25% 7.0 1.6% Aa3, A+ Systems & Financing Services 20% 17% 39% Software Software 23% LA Dec 2010 2010 Pre-Tax Profit by Business Segment Systems & Financing 9% Can/ EMEA Mar 2011 * Includes eliminations of inter-company activity * Net Cash from Ops excl GF Receivables, less Capital Expenditures Dec 2010 Dec 2010 Balance Sheet 44% 33% Five Year Summary Operating (Non-GAAP) EPS (1) Operating (Non-GAAP) Margins Free Cash Flow ($B) (2) $16.3 50% Gross Profit Margin 40% 42.2% 42.6% 43.9% $14.3 $11.67 45.7% 46.1% $15.1 $12.4 $10.03 $10.5 $8.86 $7.46 30% $6.31 Pre-Tax Income Margin 20% 10% 15.3% 15.4% 16.0% '06 '07 '08 18.9% 19.9% '09 '10 0% '06 '07 '08 '09 '10 (1) From Continuing Operations 2006-2008 reflects the adoption of amendments to ASC 260, "Earnings Per Share" '06 '07 '08 '09 '10 (2) Net Cash from Operations excluding GF Receivables, less Capital Expenditures In an effort to provide additional and useful information regarding the company’s results as determined by generally accepted accounting principles (GAAP), these materials contain certain non-GAAP financial measures. For reconciliation to GAAP and other information about (i) 1Q 2011 (A) operating EPS, operating pre-tax income, and operating net income, (B) free cash flow, (C) revenue at constant currency, and (D) operating gross profit margin, operating expense/revenue %, operating pre-tax income margin, operating tax rate and operating net income margin, and (ii) 2010 and 2011 non GF debt-to-capital ratio, see Non-GAAP Supplementary Materials and related information in the Form 8K submitted to the SEC on April 19, 2011. For reconciliation to GAAP and other information about (i) 2010 (A) operating EPS, operating pre-tax income, and operating net income, (B) free cash flow, (C) revenue at constant currency, and (D) operating gross profit margin, operating expense/revenue %, operating pre-tax income margin, operating tax rate and operating net income margin, and (ii) 2006 - 2010 free cash flow, see Non-GAAP Supplementary Materials and related information in the Form 8K submitted to the SEC on January 18, 2011. For reconciliation to GAAP and other information about 2006 to 2010 (i) operating gross profit margin and operating pre-tax income margin and (ii) operating EPS, see IBM Form 10Q (page 62) submitted to the SEC on April 26, 2011.