New York

1-2360

13-0871985

(State of Incorporation)

(Commission File Number)

(IRS employer Identification No.)

ARMONK, NEW YORK

10504

(Address of principal executive offices)

(Zip Code)

 1Q 2011 Earnings Presentation April 19, 2011

Forward Looking Statements and Non-GAAP Information Certain comments made in this presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. Those statements by their nature address matters that are uncertain to different degrees. Those statements involve a number of factors that could cause actual results to differ materially. Additional information concerning these factors is contained in the Company's filings with the SEC. Copies are available from the SEC, from the IBM web site, or from IBM Investor Relations. Any forward-looking statement made during this presentation speaks only as of the date on which it is made. The company assumes no obligation to update or revise any forward-looking statements. These charts and the associated remarks and comments are integrally related, and are intended to be presented and understood together. In an effort to provide additional and useful information regarding the company’s financial results and other financial information as determined by generally accepted accounting principles (GAAP), the company also discusses, in its earnings press release and earnings presentation materials, certain non-GAAP information including "operating earnings" and other "operating" financial measures. The rationale for management’s use of this non-GAAP information, the reconciliation of that information to GAAP, and other related information are included in supplementary materials entitled “Non-GAAP Supplementary Materials” that are posted on the Company’s investor relations web site at http://www.ibm.com/investor/1q11/ The Non-GAAP Supplementary Materials are also included as Attachment II to the Company’s Form 8-K dated April 19, 2011.

1Q 2011 Highlights Increasing 2011 Operating (Non-GAAP) EPS expectations to at least $13.15 8% revenue growth driven by: Double-digit growth in every hardware platform Software growth of 10% excluding PLM Outsourcing growth of 7% Momentum in growth initiatives Growth markets +12% yr/yr @CC Business analytics +20% yr/yr Continued margin expansion Returned $5B to shareholders +21% yr/yr $2.41 Operating (Non-GAAP) EPS +8%, 5% yr/yr @CC $24.6B Revenue Cloud revenue 5X yr/yr Smarter Planet +20% yr/yr

Key Financial Metrics 0.6 pts 16.2% PTI Margin 0.8 pts 25.0% Tax Rate 0.6 pts 12.1% NI Margin 0.8 pts 44.5% GP Margin B/(W) Yr/Yr 1Q11 P&L Ratios (Operating) 5% @CC 12% $4.0 PTI – Operating 21% $2.41 EPS – Operating 8% $24.6 Revenue B/(W) Yr/Yr 1Q11 P&L Highlights $ in Billions, except EPS 3.3 15.4 $15.7 Last 12 Mos. Cash Balance @ Mar. 31 Dividends Share Repurchase Free Cash Flow (excl GF Receivables) Cash Highlights 13.2 0.8 4.0 $0.8 1Q11

Revenue by Geography 3% 5% Major Markets 12% 18% Growth Markets 22% 26% BRIC Countries 2% 3% 7.8 Europe/ME/A 13% 13% 0.6 OEM 5% 8% $24.6 IBM 1Q11 4% 12% 5.9 Asia Pacific 8% 9% $10.3 Americas Rptd @CC $ in Billions APac +14% @CC OEM +13% U.S. +7% EMEA Canada/ LA Japan - 5% @CC Performance led by Growth Markets and North America B/(W) Yr/Yr

Revenue and Gross Profit Margin by Segment 44.5% 53.5% 37.8% 87.0% 27.4% 33.8% 1Q11 0.8 pts 3.7 pts 4.7 pts 1.5 pts 0.2 pts (0.5 pts) B/(W) Yr/Yr Pts 8%* 10%* 5.3 Software 1Q11 5% 8% $24.6 Total Revenue & Operating GP Margin (6%) (4%) 0.5 Global Financing 16% 19% 4.0 Systems & Technology 3% 7% 4.7 Global Business Services 3% 6% $9.9 Global Technology Services B/(W) Yr/Yr Rptd @CC $ in Billions Gross Profit Margin Revenue Strong revenue growth and margin expansion * Software revenue growth excludes PLM; growth including divested PLM is 6% as reported and 4% @CC

Expense Summary (4 pts) 1 pts 2 pts Base (4 pts) (1 pts) (8%) $7.0 Operating Expense & Other Income (13%) 0.1 Interest Expense (62%) (0.2) Other (Income)/Expense (3) Flat (0.3) IP and Development Income (5 pts) (1 pts) (4%) 1.6 RD&E – Operating (3 pts) (1 pts) (2%) $5.7 SG&A – Operating (2) Acq. (1) Currency B/(W) Yr/Yr 1Q11 $ in Billions B/(W) Yr/Yr Drivers Expense growth in line with revenue growth Includes acquisitions made in the last twelve months, net of non-operating acquisition-related charges Includes yr/yr decrease of $336M in workforce rebalancing Includes investment gain of $203M in 1Q11 and PLM gain of $591M in 1Q10 (1) (2) (3)

Pre-Tax Income by Segment 0.6 pts 16.2% 12% $4.0 Total Operating PTI 51.3% 3.1% 28.3% 13.0% 12.2% PTI % 5.8 pts 8.6 pts (8.6 pts) 3.4 pts 2.2 pts B/(W) Yr/Yr 5.8 pts 7.5 pts 0.6 pts 1.5 pts 0.5 pts B/(W) Yr/Yr w/o Unique Items* 19% 44% 0.6 Global Business Services 21% $0.3 9% 10% B/(W) Yr/Yr w/o Unique Items* 29% $1.2 Global Technology Services (18%) 1.7 Software 0.5 0.1 PTI $ 22% $0.3 B/(W) Yr/Yr Global Financing Systems & Technology $ in Billions * 1Q11 Workforce Rebalancing charge of $221M 1Q10 PLM gain of $591M (Software) and Workforce Rebalancing charge of $557M Segment PTI $ Segment PTI Margin Broad-based profit growth and margin expansion

0.5 pts excluding Unique Items 2.2 pts 12.2% PTI Margin @CC Rptd 1Q11 (0.5 pts) 33.8% Gross Margin (External) 3% 6% $9.9 Revenue (External) B/(W) Yr/Yr Services Segments Global Technology Services (GTS) Global Business Services (GBS) Improved revenue growth, profit growth and margin 1Q11 Revenues (% of Total Services) $ in Billions 1.5 pts excluding Unique Items 3.4 pts 13.0% PTI Margin @CC Rptd 1Q11 0.2 pts 27.4% Gross Margin (External) 3% 7% $4.7 Revenue (External) B/(W) Yr/Yr $ in Billions @CC Rptd GTS 1Q11 +$1.5B 2% 6% 1% 4% 3% +$8B Services Backlog $142B 6% Consulting & Systems Integration 10% GBS Outsourcing GBS Yr/Yr 1Q11 Revenue 4% Maintenance 7% Integrated Technology Services 6% GTS Outsourcing GTS Outsourcing 40% GBS C&SI 25% Maint. 13% ITS 15% GBS Outsourcing 7%

Software Segment 0.6 pts excluding Unique Items 4% 6% including PLM @CC Rptd 1Q11 (8.6 pts) 28.3% PTI Margin 1.5 pts 87.0% Gross Margin (External) 8% 10% $5.3 Revenue (External) - excluding PLM B/(W) Yr/Yr @CC Rptd 8% 7% 14% 3% (1%) 6% 11% 50% 10% Total Software excl. PLM 9% Total Middleware 16% Key Branded Middleware 5% Rational 1% Lotus Yr/Yr 1Q11 Revenue 8% Tivoli 13% Information Management 51% WebSphere Family 1Q11 Revenue (% of Total Software) Key Branded Middleware 61% Operating Systems 10% Other Middleware 21% Other 8% $ in Billions Branded Middleware grew 16%, represents 61% of total Software

Systems & Technology Segment 7.5 pts excluding Unique Items @CC Rptd 1Q11 8.6 pts 3.1% PTI Margin 4.7 pts 37.8% Gross Margin (External) 16% 19% $4.0 Revenue (External) B/(W) Yr/Yr $ in Billions 1Q11 Revenue (% of Total Sys & Tech) Servers 65% Storage 19% Micro OEM 12% RSS Yr/Yr 1Q11 Revenue 16% 23% 16% 17% 8% 10% 17% 38% @CC 19% Power Systems 18% Total Systems 19% Total Systems & Technology 23% Microelectronics OEM 18% Retail Store Solutions 10% Storage 13% System x Rptd 41% System z Double-digit growth in every brand

Cash Flow Analysis ($2.3) $1.6 $1.6 Change in Cash & Marketable Securities 3.5 2.3 (15.4) (3.2) 0.1 (5.9) 16.3 (4.0) 20.3 (0.7) $19.5 FY10 0.9 4.7 Other (includes GF A/R & GF Debt) 0.7 1.0 Non-GF Debt 0.0 (4.0) Share Repurchases (0.1) (0.8) Dividends 0.0 0.0 Divestitures 0.8 (0.1) Acquisitions (0.6) 0.8 Free Cash Flow (excluding GF Receivables) (0.2) (1.1) Net Capital Expenditures B/(W) Yr/Yr * 1Q11 (0.5) 1.9 Net Cash from Operations (excluding GF Receivables) (0.2) (1.9) Less: Global Financing Receivables ($0.6) $3.8 Net Cash from Operations $ in Billions * Net Cash from Operations and Free Cash Flow include ($0.8B) yr/yr impact from net income tax settlement payments

7.0 25% 22.8 90.2 30.3 23.7 6.5 59.9 113.0 32.3 67.4 $13.2 Mar. 11 7.0 23% 23.2 90.3 28.6 22.8 5.8 61.7 113.5 34.5 67.3 $11.7 Dec. 10 22.1 Equity 83.1 Total Liabilities 26.3 Total Debt 22.2 Global Financing Debt 4.1 Non-GF Debt* 7.0 Global Financing Leverage 18% 56.7 105.2 29.9 61.3 $14.0 Mar. 10 Non-GF Debt / Capital Other Liabilities Total Assets Global Financing Assets Non-GF Assets* Cash & Marketable Securities Balance Sheet Summary $ in Billions * Includes eliminations of inter-company activity

1Q10 Operating EPS Revenue Growth @ Actual Margin Expansion Share Repurchases 1Q11 Operating EPS Operating EPS Bridge – 1Q10 to 1Q11 $0.15 $2.00 $2.41 $0.11 $0.15

1Q 2011 Summary Increasing 2011 Operating (Non-GAAP) EPS expectations to at least $13.15 Revenue growth driven by transaction businesses and outsourcing Momentum in growth initiatives Growth markets +12% yr/yr @CC, 48% of 1Q geographic revenue growth Business analytics +20% Cloud revenue on track to double in 2011 Smarter planet +20% Continued margin expansion Leveraging strong financial position to return value to shareholders 2010 2015 $11.67 At least $20 Operating EPS

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Supplemental Materials Currency – Year/Year Comparison Supplemental Segment Information – Global Services Outsourcing Services Backlog Run Out Supplemental Segment Information – Systems & Technology, Software Global Financing Portfolio Revenue by Key Industry Sales Unit Cash Flow (FAS 95) Non-GAAP Supplementary Materials Operating (Non-GAAP) Earnings Per Share and Related Income Statement Items, Constant Currency Cash Flow, Debt-to-Capital Ratio, Unique Items (PLM Sale and/or Workforce Rebalancing) Reconciliation of Operating Earnings Per Share GAAP to Operating (Non-GAAP) Bridge – 1Q 2011 GAAP to Operating (Non-GAAP) Bridge – 1Q 2010 Reconciliation of Free Cash Flow (excluding GF Receivables) Reconciliation of Revenue Growth Rates – Geographies, Segments Reconciliation of Revenue Growth – GTS Reconciliation of Yr/Yr Expense Drivers Reconciliation of Segment Pre-Tax Income / Margin Growth Reconciliation of Debt-to-Capital Ratio Reconciliation of Operating EPS Bridge 1Q10 to 1Q11 Some columns and rows in these materials, including the supplemental exhibits, may not add due to rounding Supplemental Materials

Currency – Year/Year Comparison 8% $24.6 Revenue As Reported 3 pts 0.6 Currency Impact 5% $24.0 Revenue @CC Yr/Yr (US$B) ~2-3 pts 0% 3% 5% 4Q11 ~6-7 pts 11% 8% 11% 2Q11 ~4-5 pts 4% 5% 9% 3Q11 82 0.62 0.70 4/18 Spot 3 pts 9% 3% (1%) Yr/Yr 1Q11 IBM Revenue Impact 82 Yen 0.62 Pound 0.73 Euro Yr/Yr @ 4/18 Spot Quarterly Averages per US $ Supplemental Materials

Supplemental Segment Information – 1Q 2011 (30%) (27%) $4.7 Outsourcing - GTS O/S, GBS O/S (AMS) (5%) (1%) 5.8 Transactional - ITS, Consulting & AMS SI (incl. US Federal) (18%) (14%) $10.5 Total Signings Backlog $ in Billions @CC Yr/Yr 1Q11 Global Services +~$1.5 +$8 $142 Total Backlog ~(0.5) +4 95 Outsourcing Backlog Signings $ in Billions @CC Yr/Yr 1Q11 Global Services Note: YTY signings growth reflects 2010 signings categories consistent with 2011 1% 4% Maintenance 3% 7% Total GBS 1% 4% Maintenance 4% 7% Integrated Tech Services 2% 6% GBS C&SI 4% 7% Total Outsourcing @CC Yr/Yr Global Services 3% 6% Total Transactional 3% 6% Total GTS Revenue Growth 6% 10% GBS Outsourcing 3% 6% GTS Outsourcing Supplemental Revenue Information Supplemental Backlog / Signings Information Supplemental Materials

Outsourcing Services Backlog Run Out As presented in the 4Q 2010 Earnings Presentation Revenue from Backlog +3% Yr/Yr @CC Revenue from 12/31/09 Backlog Projected Revenue from 12/31/10 Backlog Projected 2011 Revenue from Outsourcing Backlog +3% yr/yr @CC Revenue from base growth and new signings Revenue from Backlog Revenue from Base Growth Signings Revenue from New Signings Supplemental Materials 0 5 10 15 20 25 30 2010 2011 ($B)

Supplemental Segment Information – 1Q 2011 Share GP% @CC Yr/Yr Systems & Technology 16% 23% 16% 17% 8% 10% 17% 38% = = 19% Total Systems & Technology 23% Microelectronics OEM 18% Total Systems 18% Retail Store Solutions 10% Storage 13% System x Revenue Growth 19% Power Systems 41% System z 4% 6% Total Software incl. PLM Revenue Growth 8% 10% Total Software excl. PLM (20%) (19%) Other Software/Services 7% 9% Operating Systems 7% 9% Total Middleware (9%) (8%) Other Middleware 14% 16% Key Branded Middleware 3% 5% Rational (1%) 1% Lotus @CC Yr/Yr Software 6% 8% Tivoli 11% 13% Information Management 50% 51% WebSphere Family Supplemental Materials

22 Global Financing Portfolio 1Q11 4Q10 1Q10 Identified Loss Rate 1.2% 1.1% 1.9% Anticipated Loss Rate 0.3% 0.4% 0.4% Reserve Coverage 1.5% 1.5% 2.3% Client Days Delinquent Outstanding 3.3 2.4 3.3 Commercial A/R > 30 Days $25M $20M $49M 1Q11 – $23.9B Net External Receivables Supplemental Materials 26% 40% 18% 10% 4% 2% 0% 10% 20% 30% 40% 50% Aaa-A3 Baa1-Baa3 Ba1-Ba2 Ba3-B1 B2-B3 Caa-D Investment Grade 66% Non-Investment Grade 34%

 5% 8% $24.6 Total IBM 8% 10% 4.8 General Business 1Q11 5% 7% 2.3 Communications 2% 4% 2.4 Distribution (4%) (1%) 2.5 Industrial (1%) 1% 3.7 Public 10% 14% $7.3 Financial Services B/(W) Yr/Yr Rptd @CC Revenue by Key Industry Sales Unit $ in Billions General Business Comms Distribution Industrial Public Financial Services Supplemental Materials

Cash Flow (FAS 95) $0.3 (0.1) (3.4) 0.9 (4.0) (0.7) 0.5 (0.7) 1.0 (0.8) 0.0 (0.9) 4.4 2.1 (1.6) 0.2 1.2 $2.6 1Q10 $2.1 0.1 (2.3) 0.9 (4.0) (0.8) 1.6 0.5 1.6 (0.1) 0.0 (1.1) 3.8 1.9 (2.4) 0.2 1.2 $2.9 1Q11 Net Change in Cash & Cash Equivalents Working Capital / Other Effect of Exchange Rate changes on Cash Net Cash used in Financing Activities Common Stock Transactions - Other Common Stock Repurchases Dividends Debt, net of payments & proceeds Net Cash used in Investing Activities Marketable Securities / Other Investments, net Acquisitions, net of cash acquired Divestitures, net of cash transferred Capital Expenditures, net of payments & proceeds Net Cash provided by Operating Activities Global Financing A/R Stock-based Compensation Depreciation / Amortization of Intangibles Net Income from Operations $ in Billions Supplemental Materials

Non-GAAP Supplementary Materials In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company also discusses, in its earnings press release and earnings presentation materials, the following Non-GAAP information which management believes provides useful information to investors. Operating (Non-GAAP) Earnings Per Share and Related Income Statement Items Management presents certain financial measures excluding the effects of certain acquisition-related charges, non-operating retirement-related costs, and any related tax impacts. Management uses the term "operating" to describe this view of the company's financial results and other financial information. For acquisitions, these measures exclude the amortization of purchased intangible assets and acquisition-related charges such as in-process research and development, transaction costs, applicable restructuring and related expenses, and tax charges related to acquisition integration. For retirement-related costs, the company has characterized certain items as operating and others as non-operating. The company includes service cost, amortization of prior service cost and the cost of defined contribution plans in its operating results. Non-operating retirement-related costs include interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/settlements, multi-employer plan costs, pension insolvency costs, and other costs. Non-operating costs primarily relate to changes in pension plan assets and liabilities which are tied to market performance, and management considers these costs to be outside the operational performance of the business. Management’s calculation of these operating measures, as presented, may differ from similarly titled measures reported by other companies. Overall, management believes that providing investors with an operating view as described above provides increased transparency and clarity into both the operational results of the business and the performance of the company’s pension plans, improves visibility to management decisions and their impacts on operational performance, enables better comparison to peer companies, and allows the company to provide a long term strategic view of the business going forward. For the 2015 earnings per share roadmap, the company is utilizing an operating view to establish its objectives and track its progress. Effective January 1, 2011, the company’s segment financial results and performance reflect operating earnings, consistent with the company’s management and measurement system. Constant Currency Management refers to growth rates at constant currency or adjusting for currency so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of the company's business performance. Financial results adjusted for currency are calculated by translating current period activity in local currency using the comparable prior year period’s currency conversion rate. This approach is used for countries where the functional currency is the local currency. Generally, when the dollar either strengthens or weakens against other currencies, the growth at constant currency rates or adjusting for currency will be higher or lower than growth reported at actual exchange rates. Supplemental Materials

Non-GAAP Supplementary Materials Cash Flow Management uses a free cash flow measure to evaluate the company’s operating results, plan share repurchase levels, evaluate strategic investments and assess the company’s ability and need to incur and service debt. The entire free cash flow amount is not necessarily available for discretionary expenditures. The company defines free cash flow as net cash from operating activities less the change in Global Financing receivables and net capital expenditures, including the investment in software. A key objective of the Global Financing business is to generate strong returns on equity, and increasing receivables is the basis for growth. Accordingly, management considers Global Financing receivables as a profit-generating investment, not as working capital that should be minimized for efficiency. Therefore, management includes presentations of both free cash flow and cash flow from operations that exclude the effect of Global Financing receivables. Debt-to-Capital Ratio Management presents its debt-to-capital ratio excluding the Global Financing business. A financing business is managed on a leveraged basis. The company funds its Global Financing segment using a debt-to-equity ratio target of approximately 7 to 1. Given this significant leverage, the company presents a debt-to-capital ratio which excludes the Global Financing segment debt and equity because the company believes this is more representative of the company’s core business operations. Unique Items (PLM Sale and/or Workforce Rebalancing) Management presents certain financial results excluding the effects of the company's PLM sale and/or workforce rebalancing. In March 2010, the company completed the sale of its activities associated with the sales and support of Dassault Systemes’ (Dassault) product lifecycle management (PLM) software, including customer contracts and related assets to Dassault. In addition, the company has taken certain charges in connection with workforce rebalancing actions. Management believes that presenting certain financial information without one or both of these items is more representative of the company’s operational performance and provides additional insight into, and clarifies the basis for, historical and/or future performance, which may be more useful for investors. Supplemental Materials

Non-GAAP Supplementary Materials Reconciliation of Operating Earnings Per Share IBM Operating EPS (Non-GAAP) Acquisition-Related Charges * Amortization of Purchased Intangibles Other Acquisition-Related Charges Non-Operating Retirement-Related Charges IBM GAAP EPS Adjustments 2011 Expectations $13.15+ $12.73+ $0.38 $0.36 $0.03 $0.05 * Includes acquisitions as of 3/31/2011 The above serves to reconcile the Non-GAAP financial information contained in the “1Q 2011 Highlights” and “1Q 2011 Summary” discussion in the company’s earnings presentation. See Slide 25 of this presentation for additional information on the use of these Non-GAAP financial measures. Supplemental Materials

Non-GAAP Supplementary Materials GAAP to Operating (Non-GAAP) Bridge – 1Q 2011 6,971 10 (80) 7,041 Total Operating Expense & Other Income 997 (6) 48 954 Tax *** $2.41 $0.01 $0.09 $2.31 Diluted Earnings Per Share 2,990 10 117 2,863 Net Income 3,986 4 165 3,817 Pre-Tax Income 1,606 19 0 1,587 RD&E 5,740 (10) (76) 5,826 SG&A $10,957 $14 $85 $10,858 Gross Profit Operating (Non-GAAP) Retirement-related Adjustments** Acquisition-related Adjustments* GAAP $ in Millions, except EPS * Includes Amortization of Purchased Intangibles, In Process R&D, Severance Cost for Acquired employees, vacant space for acquired companies, deal costs ** Includes Retirement Related Interest Cost, Expected Return on Plan Assets, Recognized actuarial losses or gains, amortization of transition assets, other settlements, curtailments, multi-employer plans and insolvency insurance *** The tax impact on the Operating (Non-GAAP) Pre-Tax Income is calculated under the same accounting principles applied to the As Reported Pre-Tax Income under ACS 740, which employs an annual effective tax rate method to the results The above serves to reconcile the Non-GAAP financial information contained in the “1Q 2011 Financial Highlights,” “Key Financial Metrics” and “Expense Summary” discussion in the company’s earnings presentation. See Slide 25 of this presentation for additional information on the use of these Non-GAAP financial measures. Supplemental Materials

Non-GAAP Supplementary Materials GAAP to Operating (Non-GAAP) Bridge – 1Q 2010 6,441 40 (61) 6,462 Total Operating Expense & Other Income 917 (31) 34 914 Tax *** $2.00 ($0.03) $0.06 $1.97 Diluted Earnings Per Share 2,638 (45) 82 2,601 Net Income 3,556 (76) 116 3,515 Pre-Tax Income 1,539 30 0 1,509 RD&E 5,626 10 (61) 5,677 SG&A $9,996 ($35) $55 $9,976 Gross Profit Operating (Non-GAAP) Retirement-related Adjustments** Acquisition-related Adjustments* GAAP $ in Millions, except EPS * Includes Amortization of Purchased Intangibles, In Process R&D, Severance Cost for Acquired employees, vacant space for acquired companies, deal costs ** Includes Retirement Related Interest Cost, Expected Return on Plan Assets, Recognized actuarial losses or gains, amortization of transition assets, other settlements, curtailments, multi-employer plans and insolvency insurance *** The tax impact on the Operating (Non-GAAP) Pre-Tax Income is calculated under the same accounting principles applied to the As Reported Pre-Tax Income under ACS 740, which employs an annual effective tax rate method to the results The above serves to reconcile the Non-GAAP financial information contained in the “3Q 2010 Financial Highlights,” “Key Financial Metrics” and “Expense Summary” discussion in the company’s earnings presentation. See Slide 25 of this presentation for additional information on the use of these Non-GAAP financial measures. Supplemental Materials

Non-GAAP Supplementary Materials $15.7 Free Cash Flow (excluding GF Receivables) (4.1) Net Capital Expenditures 12 months ended 3/31/11 19.8 Net Cash from Operations (excluding GF Receivables) (0.9) Less: Global Financing Receivables $18.9 Net Cash from Operations $ in Billions Reconciliation of Free Cash Flow (excluding GF Receivables) The above serves to reconcile the Non-GAAP financial information contained in the “Key Financial Metrics” discussion in the company’s earnings presentation. See Slide 26 of this presentation for additional information on the use of these Non-GAAP financial measures. Supplemental Materials

Non-GAAP Supplementary Materials Reconciliation of Revenue Growth @CC As Rptd 14% (5%) 9% 33% 53% 19% 14% 16% 11% 11% 12% 6% 20% 5% 15% 36% 54% 22% 17% 20% 18% 16% 19% 7% Asia Pacific, other than Japan Japan Canada China Russia Growth Markets Systems and Technology Storage Hardware Software Global Technology Services Outsourcing Integrated Technology Services (ITS) Total Services Outsourcing Global Business Services – North America 1Q11 Yr/Yr The above serves to reconcile the Non-GAAP financial information contained in the “Revenue by Geography,” “Services Segments” and “Systems and Technology Segment” discussion in the company’s earnings presentation. See Slide 25 of this presentation for additional information on the use of these Non-GAAP financial measures. Supplemental Materials

Non-GAAP Supplementary Materials Reconciliation of Revenue Growth 2 pts 5 pts Global Technology Services Outsourcing @CC As Rptd 1Q11 Yr/Yr vs. 4Q10 Yr/Yr The above serves to reconcile the Non-GAAP financial information contained in the “Services Segments” discussion in the company’s earnings presentation. The above reconciles the sequential change from 4Q10 to 1Q11. See Slide 25 of this presentation for additional information on the use of these Non-GAAP financial measures. Supplemental Materials

(1 pt) 0 pts (1 pt) Currency (5 pts) 0 pts (5 pts) Acquisitions 1 pt 1 pt 1 pt Base Operating Expense & Other Income (1 pt) 0 pts (1 pt) Currency (4 pts) 0 pts (4 pts) Acquisitions SG&A (1 pt) 0 pts (1 pt) Currency (3 pts) 1 pt (4 pts) Acquisitions 2 pts 0 pts 2 pts Base RD&E (4 pts) 0 pts (4 pts) Base Operating (Non-GAAP) Non-GAAP Adjustments GAAP Non-GAAP Supplementary Materials Reconciliation of Yr/Yr Expense Drivers The above serves to reconcile the Non-GAAP financial information contained in the “Expense Summary” discussion in the company’s earnings presentation. See Slide 25 of this presentation for additional information on the use of these Non-GAAP financial measures. Supplemental Materials

Non-GAAP Supplementary Materials Reconciliation of Segment Pre-Tax Income/Margin Growth 29% 44% (18%) $329M 2.2 pts 3.4 pts (8.6 pts) 8.6 pts As Rptd 19 pts 24 pts 3 pts $38M 1.7 pts 1.8 pts 1.1 pts 1.2 pts Workforce Rebalancing 0 pts 0 pts (30 pts) $0 0 pts 0 pts (10.2 pts) 0 pts PLM Gain Normalized 10% 19% 9% $291M 0.5 pts 1.5 pts 0.6 pts 7.5 pts Pre-Tax Income Growth Global Technology Services Global Business Services Software Systems & Technology Pre-Tax Margin Growth Global Technology Services Global Business Services Software Systems & Technology 1Q11 Yr/Yr The above serves to reconcile the Non-GAAP financial information contained in the “Services Segments,” “Software Segment” and “Systems & Technology Segment” discussion in the company’s earnings presentation. See Slide 25 of this presentation for additional information on the use of these Non-GAAP financial measures. Supplemental Materials

Reconciliation of Debt-to-Capital Ratio 18% 54% 1Q10 23% 55% FY10 1Q11 25% 27% Non-Global Financing Debt / Capital IBM Consolidated Debt / Capital The above serves to reconcile the Non-GAAP financial information contained in the “Balance Sheet Summary” discussion regarding the non-Global Financing debt to capital ratio in the company’s earnings presentation. See Slide 26 of this presentation for additional information on the use of these Non-GAAP financial measures. Non-GAAP Supplementary Materials Supplemental Materials

* Includes Amortization of Purchased Intangibles, In Process R&D, Severance Cost for Acquired employees, vacant space for acquired companies, deal costs ** Includes Retirement Related Interest Cost, Expected Return of Plan Assets, Recognized actuarial losses or gains, amortization of transition assets, other settlements, curtailments, multi-employer plans and insolvency insurance Non-GAAP Supplementary Materials Reconciliation of Operating EPS Bridge 1Q10 to 1Q11 The above serves to reconcile the Non-GAAP financial information contained in the “Operating EPS Bridge – 1Q10 to 1Q11” discussion in the company’s earnings presentation. See Slide 25 of this presentation for additional information on the use of these Non-GAAP financial measures. $2.41 $0.01 $0.09 $2.31 1Q11 EPS 0.15 - 0.01 0.14 Share repurchases 0.11 0.04 0.02 0.05 Margin expansion 0.15 - - 0.15 Revenue growth @ actual $2.00 ($0.03) $0.06 $1.97 1Q10 EPS Operating (Non-GAAP) Retirement-related adjustments** Acquisition- related adjustments* GAAP Supplemental Materials

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