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Results of Operations and Financial

The registrants press release dated April18, 2016, regarding its financial results for the period ended March31, 2016, including consolidated financial statements for the period ended March31, 2016, is Attachment I of this Form8-K. Attachment II is the slides for IBMs Chief Financial Officer Martin Schroeters first quarter earnings presentation on April18, 2016. Certain non-GAAP reconciliation and other information is included in Attachment I (press release) and Attachment II (slides). All of the information in Attachment I and II is hereby filed.

IBMs web site (www.ibm.com) contains a significant amount of information about IBM, including financial and other information for investors (www.ibm.com/investor/). IBM encourages investors to visit its various web site s from time to time, as information is updated and new information is posted.

2

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, hereunto duly authorized.

By:

/s/ Stanley J. Sutula III

Stanley J. Sutula III

Vice President and Controller

3

ATTACHMENT I

IBM REPORTS 2016 FIRST-QUARTER EARNINGS

Transformation Progress Continues with Strong Growth in Strategic Imperatives

Highlights

Diluted EPS: Operating (non-GAAP) of $2.35; GAAP of $2.09

Revenue from continuing operations of $18.7 billion

Strategic imperatives revenue of $29.8 billion over the last 12 months represents 37 percent of IBM revenue

Cloud revenue of $10.8 billion over the last 12 months

For cloud delivered as a service, annual run rate of $5.4 billion in the quarter, up 46 percent adjusting for currency, up 42 percent as reported year to year

Free cash flow of $14.3 billion over last 12 months

Announced or closed 10 acquisitions during the quarter

Returned $2.2 billion to shareholders in the form of gross share repurchases and dividends

Maintains full-year operating (non-GAAP) EPS expectations of at least $13.50

Improves view of full-year free cash flow

ARMONK, N.Y., April18, 2016 . . . IBM (NYSE: IBM) today announced first-quarter 2016 earnings results.

We are pleased with the progress we have made helping our clients apply new cognitive solutions and hybrid cloud platforms, said Ginni Rometty,IBM chairman, president and chief executive officer. IBM has established itself as the industry leader in total cloud, analytics and cognitive, all of which helped drive our strategic imperatives revenue growth at a strong double-digit rate, substantially faster than the market.

FIRST-QUARTER2016

GrossProfit

DilutedEPS

NetIncome

Margin

Operating (Non-GAAP)

$

2.35

$

2.3

B

47.5

%

Year/Year

-19

%

-21

%

-1.8

Pts

GAAP from Continuing Operations

$

2.09

$

2.0

B

46.5

%

Year/Year

-14

%

-17

%

-1.8

Pts

Strategic

REVENUE

Total IBM

Imperatives

Cloud

As reported (US$)

$

18.7

B

$

7.0

B

$

2.6

B

Year/Year

-5

%

14

%

34

%

Year/Year adjusting for currency

-2

%

17

%

36

%

In the first quarter, we invested $3.6 billion in acquisitions and capital expenditures, and returned $2.2 billion to shareholders through dividends and gross share repurchases, said Martin Schroeter,IBM senior vice president and chief financial officer. We will continue to invest as we transform our operations, expanding our industry expertise and our cognitive and cloud capabilities.

Strategic Imperatives

First-quarter revenues from the companys strategic imperatives - cloud, analytics and engagement - increased 14 percent year to year (up 17 percent adjusting for currency). Total cloud revenues (public, private and hybrid) for the quarter increased 34 percent (up 36 percent adjusting for currency). Cloud revenue over the trailing 12 months was $10.8 billion. The annual exit run rate for cloud delivered as a service a subset of the total cloud revenue increased to $5.4 billion from

$3.8 billion in the first quarter of 2015. Revenues from analytics increased 7 percent (up 9 percent adjusting for currency). Revenues from mobile increased 88 percent (up 93 percent adjusting for currency) and from security increased 18 percent (up 20 percent adjusting for currency).

Full-Year 2016 Expectations

IBM continues to expect full-year 2016 operating (non-GAAP) diluted earnings per share of at least $13.50. The company expects GAAP diluted earnings per share of at least $12.35. The 2016 operating (non-GAAP) earnings expectation excludes $1.15 per share of charges for amortization of purchased intangible assets, other acquisition-related charges and retirement-related charges.

IBM had previously expected a free cash flow realization of GAAP net income which implied a full-year free cash flow range of $11 billion to $12 billion. The company now expects free cash flow to be at the high end of that range at the same base level of operating (non-GAAP) EPS.

Pre-Tax Income and Tax Rate

The decrease in the companys pre-tax income was primarily the result of increased expenses for workforce transformation, real estate actions, and actions in Latin America, which totaled nearly $1.5 billion.

IBMs tax rate for the first quarter includes a $1.0 billion refund of previously paid non-U.S. taxes, plus interest, for a total benefit of $1.2 billion. This is the result of a long-standing tax matter which was resolved in the companys favor in Februaryand was disclosed in the 2015 IBM Annual Report. The impact of the tax refund on the companys first-quarter net income was largely equivalent on an after-tax basis to the expenses for workforce transformation, real estate actions, and actions in Latin America.

Cash Flow and Balance Sheet

The company generated free cash flow of $2.3 billion in the first quarter, excluding Global Financing receivables, up $1.2 billion year to year. IBM returned $1.2 billion in dividends and $0.9 billion of gross share repurchases to shareholders. At the end of March2016,IBM had $4.7 billion remaining in the current share repurchase authorization.

IBM ended the first-quarter 2016 with $14.9 billion of cash on hand, an increase of $6.7 billion since year-end 2015. Debt, including Global Financing debt of $26.8 billion, totaled $45.6 billion, compared with $39.9 billion at year-end 2015. Core (non-global financing) debt totaled $18.8 billion, an increase of $6.1 billion since year-end 2015. The balance sheet remains strong and is well positioned to support the business over the long term.

Segment Results

As announced in Februaryduring the companys Investor Briefing,IBM has revised its financial reporting structure to reflect the transformation of the business and provide investors with increased visibility into the companys operating model by disclosing additional information on its strategic imperatives revenue by segment. Beginning with the first-quarter 2016,IBMs business segments and results are:

Cognitive Solutions

(includes solutions software and transaction processing software)

revenues of $4.0 billion, down 1.7 percent, up 0.4 percent adjusting for currency.

Solutions software grew, led by security and analytics solutions, including strong growth in the Watson businesses.

Global Business Services (

includes consulting, global process services, application management)

revenues of $4.1 billion, down 4.3 percent, down 2.3 percent adjusting for currency.

Strategic imperatives revenue within the segment was up 19 percent (up 22 percent adjusting for currency) and generated nearly one-half of segment revenue.

Technology Services and Cloud Platforms

(

includes infrastructure services, technical support services, integration software)

revenues of $8.4 billion, down 1.5 percent, up 1.9 percent adjusting for currency.

Growth of 41 percent (45 percent adjusting for currency) in strategic imperatives revenue within the segment was driven by hybrid cloud infrastructure engagements.

Systems (

includes systems hardware and operating systems software)

revenues of $1.7 billion, down 21.8 percent, down 20.6 percent adjusting for currency. Revenue reflects z Systems product cycle dynamics; segment gross profit margins increased.

Global Financing

(includes financing and used equipment sales)

revenues of $410 million, down 11.2 percent, down 6.4 percent adjusting for currency.

Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the companys current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the following: a downturn in economic environment and client spending budgets; the companys failure to meet growth and productivity objectives, a failure of the companys innovation initiatives; risks from investing in growth opportunities; failure of the companys intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; cybersecurity and data privacy considerations; fluctuations in financial results, impact of local legal, economic, political and health conditions; adverse effects from environmental matters, tax matters and the companys pension plans; ineffective internal controls; the companys use of accounting estimates; the companys ability to attract and retain key personnel and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; reliance on third party distribution channels and ecosystems; the companys ability to successfully manage acquisitions, alliances and dispositions; risks from legal proceedings; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the companys

Form10-Qs, Form10-K and in the companys other filings with the U.S. Securities and Exchange Commission (SEC) or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. The company assumes no obligation to update or revise any forward-looking statements.

Presentation of Information in this Press Release

In an effort to provide investors with additional information regarding the companys results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information which management believes provides useful information to investors:

IBM results

presenting operating (non-GAAP) earnings per share amounts and related income statement items;

adjusting for free cash flow;

adjusting for currency (i.e., at constant currency).

The rationale for managements use of non-GAAP measures is included as part of the supplemental materials presented within the first-quarter earnings materials. These materials are available via a link on the IBM investor relations Web site at www.ibm.com/investor and are being included in Attachment II (Non-GAAP Supplemental Materials) to the Form8-K that includes this press release and is being submitted today to the SEC.

Conference Call and Webcast

IBMs regular quarterly earnings conference call is scheduled to begin at 5:00p.m.EDT, today. The Webcast may be accessed via a link at http://www.ibm.com/investor/events/earnings/1q16.html. Presentation charts will be available shortly before the Webcast.

Financial Results Below

(certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).

Contact:

IBM

Ian Colley, 914-434-3043

colley@us.ibm.com

John Bukovinsky, 732- 618-3531

jbuko@us.ibm.com

INTERNATIONAL BUSINESS MACHINES CORPORATION

COMPARATIVE FINANCIAL RESULTS

(Unaudited; Dollars in millions except per share amounts)

ThreeMonthsEnded

March31,

2016

2015*

REVENUE

Cognitive Solutions

$

3,979

$

4,047

Global Business Services

4,131

4,318

Technology Services& Cloud Platforms

8,424

8,554

Systems

1,675

2,142

Global Financing

410

461

Other

66

67

TOTAL REVENUE

18,684

19,590

GROSS PROFIT

8,686

9,452

GROSS PROFIT MARGIN

Cognitive Solutions

82.0

%

84.5

%

Global Business Services

25.8

%

27.4

%

Technology Services& Cloud Platforms

40.9

%

42.1

%

Systems

57.2

%

54.8

%

Global Financing

42.4

%

49.6

%

TOTAL GROSS PROFIT MARGIN

46.5

%

48.2

%

EXPENSE AND OTHER INCOME

S,G&A

6,012

5,362

R,D&E

1,458

1,298

Intellectual property and custom development income

(217

)

(173

)

Other (income) and expense

253

(143

)

Interest expense

147

108

TOTAL EXPENSE AND OTHER INCOME

7,652

6,451

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

1,034

3,001

Pre-tax margin

5.5

%

15.3

%

Provision for / (Benefit) from income taxes

(983

)

585

Effective tax rate

(95.1

)%

19.5

%

INCOME FROM CONTINUING OPERATIONS

$

2,016

$

2,415

DISCONTINUED OPERATIONS

Loss from discontinued operations, net of taxes

(3

)

(88

)

NET INCOME

$

2,014

$

2,328

EARNINGS PER SHARE OF COMMON STOCK:

Assuming Dilution

Continuing Operations

$

2.09

$

2.44

Discontinued Operations

$

0.00

$

(0.09

)

TOTAL

$

2.09

$

2.35

Basic

Continuing Operations

$

2.09

$

2.45

Discontinued Operations

$

0.00

$

(0.09

)

TOTAL

$

2.09

$

2.36

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (Ms):

Assuming Dilution

964.4

992.3

Basic

961.7

988.1

*Reclassified to conform with 2016 presentation.

INTERNATIONAL BUSINESS MACHINES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

At

At

March31,

December31,

(DollarsinMillions)

2016

2015

ASSETS:

Current Assets:

Cash and cash...


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