The International Business Machines Corporation is an American IT and consulting company based in Armonk, New York. IBM is one of the world's leading companies for hardware, software and services in the IT sector and one of the largest consulting companies.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 F O R M 1 0 - Q QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 1996 1-2360 ______________________ (Commission file number) INTERNATIONAL BUSINESS MACHINES CORPORATION ____________________________________________________ (Exact name of registrant as specified in its charter) New York 13-0871985 ______________________ __________________________________ (State of incorporation) (IRS employer identification number) Armonk, New York 10504 ______________________________________ ________ (Address of principal executive offices) (Zip Code) 914-765-1900 _____________________________ (Registrant's telephone number) The registrant has 539,671,178 shares of common stock outstanding at March 31, 1996. Indicate by check mark whether the registrant (1) has filed all re- ports required to be filed by Section l3 or l5(d) of the Securities Ex- change Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ________ ________.
INDEX _____ Page ____ Part I - Financial Information: Item 1. Consolidated Financial Statements Consolidated Statement of Operations for the three months ended March 31, 1996 and 1995 . . . . . . . . . . . . . 1 Consolidated Statement of Financial Position at March 31, 1996 and December 31, 1995 . . . . . . . . . . 2 Consolidated Statement of Cash Flows for the three months ended March 31, 1996 and 1995. . . . . . . . . . . . . . 4 Notes to Consolidated Financial Statements . . . . . . . . 5 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition . . 6 Part II - Other Information . . . . . . . . . . . . . . . . . . 14
ITEM 1. INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31: (UNAUDITED) (Dollars in millions except for per share amounts) 1996 1995 Revenue: _______ _______ Hardware sales $ 7,708 $ 7,727 Services 3,198 2,445 Software 3,037 2,873 Maintenance 1,749 1,821 Rentals and financing 867 869 _______ _______ Total revenue 16,559 15,735 Cost: Hardware sales 5,005 4,795 Services 2,577 1,974 Software 911 1,005 Maintenance 912 900 Rentals and financing 385 397 _______ _______ Total cost 9,790 9,071 _______ _______ Gross profit 6,769 6,664 Operating expenses: Selling, general and administrative 3,697 3,633 Research, development and engineering 1,091 913 Purchased in-process research and development 435 - _______ _______ Total operating expenses 5,223 4,546 _______ _______ Operating income 1,546 2,118 Other income, principally interest 150 246 Interest expense 149 180 _______ _______ Earnings before income taxes 1,547 2,184 Income tax provision 773 895 _______ _______ Net earnings 774 1,289 Preferred stock dividends and transaction costs 5 47 _______ _______ Net earnings applicable to common shareholders $ 769 $ 1,242 ======= ======= Net earnings per share of common stock $ 1.41 $ 2.12 Average number of common shares outstanding (millions) 544.3 585.2 Cash dividends per common share $ .25 $ .25 (The accompanying notes are an integral part of the financial statements.) - 1 -
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED) ASSETS (Dollars in millions) At March 31 At December 31 1996 1995 ___________ ______________ Current assets: Cash $ 1,449 $ 1,746 Cash equivalents 4,504 5,513 Marketable securities - at cost, which approximates market 443 442 Notes and accounts receivable - net of allowances 16,120 17,441 Sales-type leases receivable 5,848 5,961 Inventories, at lower of average cost or market Finished goods 1,651 1,241 Work in process 5,228 4,990 Raw materials 79 92 ________ ________ Total inventories 6,958 6,323 Prepaid expenses and other current assets 3,532 3,265 ________ ________ Total current assets 38,854 40,691 Plant, rental machines and other property 43,235 43,981 Less: accumulated depreciation 27,028 27,402 ________ ________ Plant, rental machines and other property - net 16,207 16,579 Software, less accumulated amortization (1996, $11,335; 1995, $11,276) 2,214 2,419 Investments and sundry assets 20,491 20,603 ________ ________ Total assets $ 77,766 $ 80,292 ======== ======== - 2 -
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION - (CONTINUED) (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (Dollars in millions) At March 31 At December 31 1996 1995 ___________ _____________ Current liabilities: Taxes $ 2,134 $ 2,634 Accounts payable and accruals 15,855 17,445 Short-term debt 12,343 11,569 _________ ________ Total current liabilities 30,332 31,648 Long-term debt 9,604 10,060 Other liabilities 14,156 14,354 Deferred income taxes 1,854 1,807 _________ ________ Total liabilities 55,946 57,869 Stockholders' equity: Preferred stock - par value $.01 per share 253 253 Shares authorized - 150,000,000 Shares issued: 1996 - 2,610,711 1995 - 2,610,711 Common stock - par value $1.25 per share 7,816 7,488 Shares authorized - 750,000,000 Shares issued: 1996 - 552,000,959 1995 - 548,199,013 Retained earnings 12,229 11,630 Translation adjustments 2,768 3,036 Treasury stock - at cost (1,354) (41) Shares: 1996 -12,329,781 1995 - 424,583 Net unrealized gain on marketable securities 108 57 _________ ________ Total stockholders' equity 21,820 22,423 _________ ________ Total liabilities and stockholders' equity $ 77,766 $ 80,292 ========= ======== (The accompanying notes are an integral part of the financial statements.) - 3 -
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31: (UNAUDITED) (Dollars in millions) 1996 1995 _______ _______ Cash flow from operating activities: Net earnings $ 774 $ 1,289 Adjustments to reconcile net earnings to cash provided from operating activities: Effect of restructuring charges (536) (864) Depreciation 891 1,033 Amortization of software 323 417 Purchased in-process research and development 435 -- Gain on disposition of fixed and other assets (110) (7) Changes in operating assets and liabilities (616) 597 _______ _______ Net cash provided from operating activities 1,161 2,465 Cash flow from investing activities: Payments for plant, rental machines and other property, net of proceeds (600) (567) Investment in software (62) (236) Purchases of marketable securities and other investments (494) (399) Proceeds from marketable securities and other investments 137 1,574 Acquisition of Tivoli Systems, Inc. - net (716) -- _______ _______ Net cash (used in) provided from investing activities (1,735) 372 _______ _______ Cash flow from financing activities: Proceeds from new debt 963 929 Payments to settle debt (1,458) (1,915) Short-term borrowings less than 90 days - net 977 572 Preferred stock transactions-net -- (826) Common stock transactions - net (1,014) (627) Cash dividends paid (141) (152) _______ _______ Net cash used in financing activities (673) (2,019) _______ _______ Effect of exchange rate changes on cash and cash equivalents (59) 332 _______ _______ Net change in cash and cash equivalents (1,306) 1,150 Cash and cash equivalents at January 1 7,259 7,922 _______ _______ Cash and cash equivalents at March 31 $ 5,953 $ 9,072 ======= ======= (The accompanying notes are an integral part of the financial statements.) - 4 -
Notes to Consolidated Financial Statements __________________________________________ 1. In the opinion of the management of International Business Machines Corporation (the company), all adjustments necessary to a fair statement of the results for the unaudited three month period have been made. 2. Earnings per share amounts were computed by dividing earnings after deduction of preferred stock dividends by the average number of common shares outstanding. 3. On March 1, 1996 the company acquired all outstanding shares of Tivoli Systems Inc. for approximately $800 million ($716 million in net cash). The company engaged a nationally recognized, independent appraisal firm to express an opinion on the fair market value of the assets acquired to serve as a basis for allocation of the purchase price to the various classes of assets. The company allocated the total purchase price as fol- lows: (Dollars in millions) Tangible net assets $ 41 Identifiable intangible assets 60 Current software products 39 Purchased in-process research and development 417 Goodwill 280 Deferred tax liabilities related to identifiable intangible assets (37) ----- Total $ 800 ===== Purchased in-process research and development included the value of soft- ware products still in development stage and not considered to have reached technological feasibility. As a result of the valuation, the fairmarket value of the in-process research and development was determined to be $417 million. In addition, an acquisition of Object-Technology International, Inc., re- sulted in a valuation of purchased in-process research and development amounting to $18 million, bringing the total amount of purchased in- process research and development to $435 million. In accordance with ap- plicable accounting rules, the $435 million was expensed upon acquisition in the first-quarter of 1996. 4. A supplemental Consolidated Statement of Operations schedule has been provided for informational purposes only, to exclude the effects of the write-offs of purchased in-process research and development associated with the Tivoli Systems Inc. and Object Technology International Inc. ac- quisitions and the work force separations recorded in the first quarter of 1996. This information is presented voluntarily and is provided solely to assist in understanding the effects of these items on the Consolidated Statement of Operations. 5. Subsequent Events: On April 17, 1996, the company announced that the board of directors had approved a quarterly dividend increase to $.35 per common share from $.25 per common share, payable June 10, 1996 to holders of record May 10, 1996. - 5 -
On April 18, 1996, the company filed a prospectus supplement with the Se- curities and Exchange Commission to the original prospectus dated February 7, 1996. More information concerning this filing can be found on page 13 of this Form 10-Q. On April 30, 1996, the company's board of directors authorized the company to repurchase up to an additional $2.5 billion of IBM common stock shares. The company plans to buy shares on the open market from time to time, de- pending on market conditions. Since January 31, 1995, the company has re- purchased approximately $6.5 billion of its common stock under prior repurchase authorizations totaling $7.5 billion. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS ____________________________________ OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION ________________________________________________ FOR THE THREE MONTHS ENDED MARCH 31, 1996 _________________________________________ The company's first quarter results were good but demonstrated uneven performance. On the positive side, revenue grew in all geographic areas. Services revenue increased 31 percent, continuing to show strong growth. The company completed its merger with Tivoli Systems, Inc., which is a critical part of its software strategy. Shipments of Lotus Notes seats more than tripled over the same period of last year. At the same time, the company's hardware revenue and gross profit margin were disappointing, mainly because of product transition in its System/390* and AS/400* product lines. Also, there was weak demand for personal computers in the United States and price pressures in many areas, including semiconductors and storage products. Results of Operations _____________________ (Dollars in millions) Three Months Ended March 31 __________________ 1996 1995 ________ _______ Revenue $ 16,559 $ 15,735 Cost 9,790 9,071 ________ ________ Gross profit $ 6,769 $ 6,664 Gross profit margin 40.9% 42.4% Net earnings $ 774 $ 1,289 - 6 -
Results of Operations - (continued) ___________________________________ The company recorded first-quarter 1996 earnings of $774 million or $1.41 per common share, compared with $1,289 million or $2.12 per common share in the first quarter of 1995. The company's first-quarter 1996 re- sults included a charge of $236 million ($.27 per common share) for work force separation costs and a charge of $435 million ($.80 per common share) relating to a non-recurring, non-tax deductible charge for pur- chased in-process research and development in connection with the acquisi- tion of Tivoli Systems Inc. ($417 million) and Object Technology International Inc. ($18 million). Excluding these items, the company's ad- justed earnings per common share was $2.48. The average number of common shares outstanding for the period was 544.3 million in 1996 versus 585.2 million in 1995. Reported revenue grew in all geographic areas in the first quarter. Revenue from the United States totaled $6.2 billion, an increase of 1.7 percent from last year's first quarter. Revenue from Europe/Middle East/Africa was $5.6 billion, an increase of 3.9 percent over the compara- ble period of last year, while revenue from Asia-Pacific was $3.3 billion, an increase of 11.4 percent. Revenue from Latin America totaled $684 million, a year-over-year increase of 4.1 percent. Revenue from Canada was $755 million, an increase of 23.0 percent over first quarter 1995. Currency had an approximately 1-percentage-point negative effect on revenue results in the first quarter. This negative effect was princi- pally a result of the U.S. dollar strengthening against the Japanese yen year over year. Total expenses increased 16.6 percent year over year, largely as a result of charges for work force separations and the software acquisi- tions. Hardware Sales ______________ (Dollars in millions) Three Months Ended March 31 __________________ 1996 1995 _______ _______ Total revenue $ 7,708 $ 7,727 Total cost 5,005 4,795 _______ _______ Gross profit $ 2,703 $ 2,932 Gross profit margin 35.1% 37.9% - 7 -
Results of Operations - (continued) ___________________________________ Personal computer client revenue increased year over year, with growth in Europe and Asia partially offset by weakness in the United States. The weakness in the United States was partially due to rebalanc- ing of inventories between dealers and the company. The rebalancing re- sulted in lower inventory levels for the dealers due to less restocking and therefore lower revenue for the company during the first quarter of 1996. RISC System/6000* revenue also increased compared with the first quarter of last year. OEM revenue grew, but at a much lower rate than the first quarter of 1995. The semiconductor products faced steep drops in memory prices and low-end storage products are facing capacity con- straints. AS/400 server revenue declined from the year-earlier period due to continuing transitions to new models. System/390 server revenue de- clined primarily as a result of year-over-year price and volume reductions in older bipolar technology. Storage product revenue also fell from the same period of last year. Hardware sales gross profit dollars decreased 7.8 percent when com- pared to the first quarter of 1995. The decrease was primarily driven by a change in the mix of products being sold, away from System/390 server content to more revenue from consumer personal computers which have a lower gross profit margin. In addition, downward price pressures contin- ued on System/390 servers, RAMAC* 2 storage product and personal comput- ers. Services Other Than Maintenance _______________________________ (Dollars in millions) Three Months Ended March 31 __________________ 1996 1995 _______ _______ Total revenue $ 3,198 $ 2,445 Total cost 2,577 1,974 _______ _______ Gross profit $ 621 $ 471 Gross profit margin 19.4% 19.3% Services revenue increased 30.8 percent, when compared to the first quarter of 1995. The increase was driven by strong growth across all cat- egories of service offerings. Services gross profit dollars increased 31.8 percent over the first quarter of 1995. Software ________ (Dollars in millions) Three Months Ended March 31 __________________ 1996 1995 _______ _______ Total revenue $ 3,037 $ 2,873 Total cost 911 1,005 _______ _______ Gross profit $ 2,126 $ 1,868 Gross profit margin 70.0% 65.0% - 8 -
Results of Operations - (continued) ___________________________________ Revenue from software increased 5.7 percent from the first quarter of 1995. The increase was primarily driven by products offered by Lotus whose revenue was included in the first quarter of 1996 results, but not the first-quarter 1995 results. Software gross profit dollars increased 13.8 percent from the first quarter of 1995. This increase was primarily driven by the company's shift towards a more iterative software development process which results in expensing a larger percentage of software development spending and cap- italizing less. This also results in lower amortization costs and im- proved software margins, with a corresponding increase in research, development and engineering expense. Maintenance ___________ (Dollars in millions) Three Months Ended March 31 __________________ 1996 1995 _______ _______ Total revenue $ 1,749 $ 1,821 Total cost 912 900 _______ _______ Gross profit $ 837 $ 921 Gross profit margin 47.8% 50.6% Maintenance revenue decreased 4.0 percent from the first quarter of 1995. The gross profit dollars decreased 9.1 percent when compared to the first quarter of 1995. Maintenance revenue and gross profit margins con- tinue to be adversely affected by the competitive environment and result- ing pricing pressures on maintenance offerings. Rentals and Financing _____________________ (Dollars in millions) Three Months Ended March 31 __________________ 1996 1995 _______ _______ Total revenue $ 867 $ 869 Total cost 385 397 _______ _______ Gross profit $ 482 $ 472 Gross profit margin 55.6% 54.4% Rentals and financing revenue was essentially flat when compared to the same period in 1995. Gross profit dollars increased 2.1 percent from the first quarter of 1995. - 9 -
Results of Operations - (continued) ___________________________________ Expenses ________ (Dollars in millions) Three Months Ended March 31 __________________ 1996 1995 _______ _______ Selling, general and administrative $ 3,697 $ 3,633 Percentage of revenue 22.3% 23.1% ________ _______ Research, development and engineering $ 1,091 $ 913 Percentage of revenue 6.6% 5.8% Selling, general and administrative expense increased 1.8 percent from first quarter 1995. The first-quarter 1996 results included a $236 million charge for work force separation charges. Excluding this charge, selling, general and administrative expense would have decreased by 4.8 percent. Research, development and engineering expense increased 19.4 percent from the first quarter of 1995. This increase was due to the acquisition of Lotus and its expenses being included in the first quarter 1996 re- sults, as well as lower capitalization rates for software development in 1996 versus 1995, which increases research, development and engineering expense, while improving the software gross profit margin. The first-quarter 1996 results included a non-tax deductible charge of $435 million for purchased-in process research and development expense associated with the acquisition of Tivoli Systems Inc. and Object Technol- ogy International, Inc. This amount has been separately identified on the company's Consolidated Statement of Operations. Interest on total borrowings of the company and its subsidiaries, which includes interest expense and interest costs associated with rentals and financing, amounted to $374 million for the first quarter of 1996. Of this amount, $7 million was capitalized. The effective tax rate for the three months of 1996 was 50.0 percent versus 41.0 percent for the same period in 1995. This increase was a re- sult of the $435 million charge associated with the Tivoli Systems Inc. and Object Technology International Inc. acquisitions, which does not give rise to a tax benefit. Excluding this charge, the effective tax rate from operations would have been 39.0 percent for the first quarter of 1996. This was a decline of 2.0 points from the prior year and was primarily the result of the mix of earnings and corresponding weighting of tax rates on a country-by-country basis. - 10 -
Financial Condition ___________________ The Consolidated Statement of Financial Position at March 31, 1996 was impacted by a number of actions taken by the company during the first quarter of 1996, including expenditures of $1.3 billion for the repurchase of common stock, $1.0 billion net cash for the acquisitions of Tivoli Sys- tems Inc., Object Technology International, Inc., Data Sciences Limited and others, and $.5 billion in work force separation payments relating to restructuring programs announced in prior years. Working Capital _______________ (Dollars in millions) At March 31 At December 31 1996 1995 ____________ ______________ Current assets $ 38,854 $ 40,691 Current liabilities 30,332 31,648 ________ ________ Working capital $ 8,522 $ 9,043 Total current assets declined $1.8 billion from year-end 1995 with declines in total cash, cash equivalents, and marketable securities of $1.3 billion and accounts receivable of $1.4 billion, offset by increases of $.6 billion in inventories and $.3 billion in prepaid expenses. The decline in total cash, cash equivalents, and marketable securities results primarily from the stock repurchases, strategic acquisitions, and work force separation payments, offset by cash generated from operations. The decrease in accounts receivable is attributable to the lower volumes normally associated with the first quarter. Inventories have generally increased to meet anticipated second quarter demand, primarily in microe- lectronics; while the increase in prepaid expenses is due to the normal increase in deferred account and prepaid activity from year-end levels. Total current liabilities declined $1.3 billion from December 31, 1995, with declines of $2.1 billion in accruals, taxes and accounts paya- ble, offset by an increase of $.8 billion in short-term debt. The de- crease in accruals, taxes and accounts payable relates to the seasonal decline in these balances from their normally higher year-end levels. The increase in short-term debt results largely from the reclassification of long-term debt, as well as an increase in debt to maintain a constant lev- erage within customer financing. Investments ___________ The company's capital expenditures for plant, rental machines and other property were approximately $1.0 billion for the three months ended March 31, 1996, an increase of approximately $.2 billion from the compara- ble 1995 period. In addition to software development expense included in research, de- velopment and engineering expense, the company capitalized $.1 billion of software costs during the three months ended March 31, 1996, down $.1 billion from the amount capitalized in the comparable 1995 period. Amortization of capitalized software costs amounted to $.3 billion during first quarter of 1996 versus $.4 billion for the comparable 1995 period. - 11 -
Financial Condition - (continued) _________________________________ Investments and sundry assets were $20.5 billion at March 31, 1996, a decrease of $.1 billion from December 31, 1995, resulting from a decrease of $.7 billion in non-current sales-type leases, offset by increases of $.3 billion in investments in business alliances and $.3 billion in good- will relative to the acquisition of Tivoli Systems, Inc. Long Term Liabilities and Stockholders' Equity ______________________________________________ Long-term debt was $9.6 billion at March 31, 1996, a decrease of $.5 billion from year-end 1995, due to the reclassification of long-term debt to short-term. Other non-current liabilities at March 31, 1996, of $14.2 billion decreased $.2 billion from December 31, 1995, primarily the re- sults of a stronger U.S. dollar versus the majority of worldwide curren- cies. Stockholders' equity declined from $22.4 billion at December 31, 1995 to $21.8 billion, resulting from $1.3 billion in common stock repurchases and a $.2 billion decline in equity translation adjustments, offset by $.3 billion in the exercise of stock options and an increase of $.6 billion in retained earnings. Cash Flow _________ (Dollars in millions) Three Months Ended March 31 __________________ 1996 1995 _______ _______ Net cash provided from (used in): Operating activities $ 1,161 $ 2,465 Investing activities (1,735) 372 Financing activities (673) (2,019) Effect of exchange rate changes on cash and cash equivalents (59) 332 _______ _______ Net change in cash and cash equivalents $(1,306) $ 1,150 _______ _______ For the three months ended March 31, 1996, the company had an overall net decrease in cash and cash equivalents of $1.3 billion compared to a net increase of $1.2 billion for the same period in 1995. - 12 -
Financial Condition - (continued) _________________________________ Net cash provided from operating activities was $1.2 billion for the three months ended March 31, 1996, versus $2.5 billion in the comparable period of 1995. The period-to-period decrease in cash flow from operations is primarily a result of lower cash in- flows relative to net changes in operating assets and liabilities in the 1996 period, partially offset by lower work force separation payments in the first quarter of 1996. Net cash used in investing activities was $1.7 billion for the three month period ended March 31, 1996, compared to a $.4 billion net source of funds in the comparable 1995 period. The increase in funds utilized in investing activities is attributable to the compa- ny's strategic acquisitions (including Tivoli Systems, Inc., Object Technology International, Inc., and Data Sciences Limited), and lower capitalization of software development in the 1996 period. Additionally, there were substantially less proceeds from the sale of marketable securities and other investments during the first quarter of 1996 versus the comparable 1995 period. Net cash used in financing activities amounted to $.7 billion for the three months ended March 31, 1996. This decrease of $1.3 billion from the comparable 1995 period was the result of decreased preferred stock repurchase activity partially offset by increased common stock transactions in the 1996 period. Additionally, overall debt financing activities provided $.5 billion in cash during the first quarter of 1996 versus cash utilization of $.4 billion during the comparable 1995 period. Liquidity _________ At March 31, 1996, the company had a net balance of $1.1 billion in assets under management from the securitization of lease and trade receivables. On February 7, 1996, a universal shelf registration filed by the company with the Securities and Exchange Commission to register up to $2.0 billion of debt and equity securities became effective. Subsequently, on April 18, 1996, the company filed a prospectus sup- plement to the original prospectus dated February 7, 1996, permit- ting the company to offer up to $2.0 billion of such securities as medium-term notes due one year or more from the date of issue. The company intends to use the net proceeds from the sale of these secu- rities, if and when issued, for general corporate purposes. - 13 -
Part II - Other Information ___________________________ Item 6(a). Exhibits ___________________ Exhibit Number ______________ 10 IBM Extended Tax Deferred Savings Plans amended and restated effective January 1, 1996. 11 Statement re: computation of per share earnings. 12 Statement re: computation of ratios. 99 Supplemental Consolidated Statement of Operations schedule. Item 6(b). Reports on Form 8-K A Form 8-K dated February 8, 1996, was filed to incorporate by reference into Registration Statement No. 33-65119 on Form S-3, ef- fective February 7, 1996, the Form of the Floating Non-Redeemable Medium Term Note, the Form of the Floating Redeemable Medium Term Note, the Form of the Fixed Rate Redeemable Medium Term Note, the Form of the Floating Non-Redeemable Medium Term Note and the Form of the Fixed Rate Redeemable Medium Term Note as they relate to the $2,000,000,000 aggregate initial offering price of Medium Term Notes of the Registrant. No financial statements were filed with the Form 8-K. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. International Business Machines Corporation ___________________________________________ (Registrant) Date: May 14, 1996 By: G. Richard Thoman _________________________________________________ G. Richard Thoman Senior Vice President and Chief Financial Officer * S/390, AS/400, RISC System/6000 and RAMAC are trademarks of the International Business Machines Corporation. - 14 -