<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 11-K
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
or
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE RE-
QUIRED)
For the transition period from ___________________
Commission file number 1-2360
IBM TAX DEFERRED SAVINGS PLAN
-----------------------------
(Full title of the plan)
Manager of Benefits - U.S. Operations
IBM
Route 9
Town of Mount Pleasant
Sleepy Hollow, New York 10591
-------------------------------------
(Address of the plan)
INTERNATIONAL BUSINESS MACHINES CORPORATION
-------------------------------------------
(Name of issuer of the securities held pursuant to
the plan)
Old Orchard Road
Armonk, New York 10504
----------------------
(Address of issuer's principal executive office)
1
<PAGE>
REQUIRED INFORMATION
Page
----
Consent of Independent Accountants 3
Report of Independent Accountants 4
Financial Statements:
---------------------
Statements of Net Assets Available for Plan Benefits, with Fund
Information, as of December 31, 1996 and December 31, 1995 5
Statement of Changes in Net Assets Available for Plan
Benefits, with Fund Information, for the year ended
December 31, 1996 8
Notes to Financial Statements 10
Supplementary Schedules:
------------------------
Schedule I - Item 27a - Assets Held for Investment Purposes
at December 31, 1996 30
Schedule II - Item 27d - Schedule of Reportable Transactions 34
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the
plan) have duly caused this annual report to be signed by
the undersigned thereunto duly authorized.
IBM TAX DEFERRED
SAVINGS PLAN
Dated June 27, 1997 By: J. R. Joyce
-------------------------------
(Vice President and Controller)
2
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
the Registration Statement on Form S-8 (333-09055) of the
IBM Tax Deferred Savings Plan of our report dated June 17,
1997 appearing on page 4 of this Annual Report on Form 11-K
for the year end December 31, 1996.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036
June 17, 1997
3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Members of the
IBM Retirement Plans Committee and the
Participants of the International Business Machines Corporation (IBM)
IBM Tax Deferred Savings Plan
In our opinion, the financial statements as referenced in
the Required Information Section on page 2, present fairly,
in all material respects, the net assets available for plan
benefits of the IBM Tax Deferred Savings Plan at December
31, 1996 and 1995, and the changes in net assets available
for plan benefits for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
These financial statements are the responsibility of the
plan's management; our responsibility is to express an opin-
ion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the fi-
nancial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion
expressed above.
Our audits were performed for the purpose of forming an
opinion on the basic financial statements taken as a whole.
The additional information included in schedules I and II is
presented for purposes of additional analysis and is not a
required part of the basic financial statements but is addi-
tional information required by ERISA. The fund information
in the statement of net assets available for benefits and
the statement of changes in net assets available for bene-
fits is presented for purposes of additional analysis rather
than to present the net assets available for plan benefits
and changes in net assets available for benefits of each
fund. Schedules I and II and the fund information have been
subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036
June 17, 1997
4
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL BUSINESS MACHINES CORPORATION
IBM TAX DEFERRED SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 1996
(Dollars in thousands)
Large Small Total Income Conserv.
Money Company Company IBM Fixed Int'l. Bond Plus Life Life
Market Index Stock Stock Income Stock Market Strategy Strategy
Fund Fund Fund Fund Fund Fund Fund Fund Fund
------- --------- --------- ------- --------- -------- ------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments at fair value:
Interest in equity-oriented
General Employee Benefit
Trust pooled funds
(cost: $4,245,253) 3,390,453 1,639,225 487,544 4,374 29,492
Interest in short-term investment-
oriented General Employee Benefit
Trust pooled funds
(cost: $ 426,042) 366,350 12,848 44,065 212 476
Investment contracts
(cost: $3,601,544) 3,387,891 16,286 36,626
Interest in bond market-oriented
General Employee Benefit Trust
pooled funds (cost: $ 159,970) 42,165 1,096 7,397
IBM Common Stock (cost: $ 461,256) 738,140
------- --------- --------- ------- --------- -------- ------- --------- --------
Total investments 366,350 3,390,453 1,639,225 750,988 3,431,956 487,544 42,165 21,968 73,991
Income and sales proceeds receivable 1,707 4 184 1
Contributions receivable (payable) 180 10 3 191 82 4
Loans receivable
Transfers receivable (payable) (1) (1) 6 (56) (211)
Reinstatements receivable 15 53 448 2
------- --------- --------- ------- --------- -------- ------- --------- --------
Total assets 368,251 3,390,519 1,639,234 751,123 3,432,459 487,551 42,165 21,968 73,991
Liabilities:
Expenses payable 155 537 300 152 443 211 21 1 6
Investments purchased 4,648
------- --------- --------- ------- --------- -------- ------- --------- --------
Total liabilities 155 537 300 4,800 443 211 21 1 6
------- --------- --------- ------- --------- -------- ------- --------- --------
Net assets available for plan
benefits 368,096 3,389,982 1,638,934 746,323 3,432,016 487,340 42,144 21,967 73,985
======= ========= ========= ======= ========= ======== ======= ========= ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
5
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL BUSINESS MACHINES CORPORATION
IBM TAX DEFERRED SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION (CONTINUED)
AS OF DECEMBER 31, 1996
(Dollars in thousands)
Moderate Aggressive
Life Life
Strategy Strategy Loan
Fund Fund Fund Total
--------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments at fair value:
Interest in equity-oriented
General Employee Benefit
Trust pooled funds
(cost: $4,245,253) 388,389 73,931 6,013,408
Interest in short-term investment-
oriented General Employee Benefit
Trust pooled funds
(cost: $ 426,042) 2,091 426,042
Investment contracts
(cost: $3,601,544) 160,741 3,601,544
Interest in bond market-oriented
General Employee Benefit Trust
pooled funds (cost: $ 159,970) 97,386 18,535 166,579
IBM Common Stock (cost: $ 461,256) 738,140
--------- ----------- ------- ----------
Total investments 648,607 92,466 10,945,713
Income and sales proceeds receivable 1 1,897
Contributions receivable (payable) 3 473
Loans receivable 270,329 270,329
Transfers receivable (payable) 1 262
Reinstatements receivable 354 872
--------- ----------- ------- ----------
Total assets 648,611 92,467 270,945 11,219,284
Liabilities:
Expenses payable 87 12 1,925
Investments purchased 4,648
--------- ----------- ------- ----------
Total liabilities 87 12 6,573
--------- ----------- ------- ----------
Net assets available for plan
benefits 648,524 92,455 270,945 11,212,711
========= =========== ======= ==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
6
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL BUSINESS MACHINES CORPORATION
IBM TAX DEFERRED SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 1995
(Dollars in thousands)
U.S.
Money Large Co. Small Co. IBM Fixed Govt. Int'l. Balanced
Market Index Stock Stock Income Sec. Stock Asset Loan
Fund Fund Fund Fund Fund Fund Fund Fund Fund Total
------- --------- --------- ------- --------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments at fair value:
Interest in equity-oriented
General Employee Benefit
Trust pooled funds
(cost: $ 3,436,696) 2,600,587 1,238,699 358,819 209,990 4,408,095
Interest in short-term investment-
oriented General Employee Benefit
Trust pooled funds
(cost: $ 327,791) 314,589 13,193 9 327,791
Investment contracts
(cost: $ 3,528,652) 3,424,025 104,627 3,528,652
Interest in U.S. Gov't Securities-
oriented General Employee Benefit
Trust pooled funds
(cost; $ 87,235) 59,964 34,906 94,870
IBM Common Stock (cost: $ 441,245) 524,270 524,270
------- --------- --------- ------- --------- ------- ------- ------- ------- ---------
Total investments 314,589 2,600,587 1,238,699 537,463 3,424,025 59,964 358,819 349,532 8,883,678
Income and sales proceeds receivable 1,597 49 (18) 43 1,671
Contributions receivable (payable) 68 122 34 139 27 2 (17) 17 392
Loans receivable 258,078 258,078
Transfers receivable (payable) (315) (293) 1,002 1,510 (2,733) (176) 282 143 580
Reinstatements receivable 4 3 296 1 426 730
------- --------- --------- ------- --------- ------- ------- ------- ------- ---------
Total assets 315,943 2,600,419 1,239,735 539,161 3,421,597 59,790 359,085 349,735 259,084 9,144,549
Liabilities:
Expenses payable 134 630 422 229 1,136 23 168 101 2,843
Investments purchased 8 9 1,796 4 2 1 1,820
------- --------- --------- ------- --------- ------- ------- ------- ------- ---------
Total liabilities 134 638 431 2,025 1,140 23 170 102 4,663
------- --------- --------- ------- --------- ------- ------- ------- ------- ---------
Net assets available for plan
benefits 315,809 2,599,781 1,239,304 537,136 3,420,457 59,767 358,915 349,633 259,084 9,139,886
======= ========= ========= ======= ========= ======= ======= ======= ======= =========
</TABLE>
The accompanying notes are an integral part of this financial statement.
7
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL BUSINESS MACHINES CORPORATION
IBM TAX DEFERRED SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
(Dollars in thousands)
U.S. Total Income Conserv.
Money Large Co. Small Co. IBM Fixed Govt Int'l Bond Plus Life Life
Market Index Stock Stock Income Sec. Stock Market Strategy Strategy
Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund
------- --------- --------- ------- --------- ------ ------- -------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions:
Participant contributions 36,435 171,510 137,925 43,807 141,512 3,613 49,774 2,448 133 1,055
Employer contributions 14,792 55,570 43,689 14,258 47,204 1,181 15,428 713 34 148
Participant loan repayments 7,384 44,191 30,735 13,356 51,575 672 9,231 493 46 201
Participant directed transfer
of investments, net (4,751) 11,055 (597)(149,384) (233,973) (63,582) 37,417 37,687 21,334 70,180
------- --------- --------- ------- --------- ------ ------- -------- --------- --------
Total contributions
and transfers 53,860 282,326 211,752 (77,963) 6,318 (58,116) 111,850 41,341 21,547 71,584
------- --------- --------- ------- --------- ------- ------- -------- --------- --------
Interest and dividend
income from investments 18,342 11 22 7,435 215,347 7 2 270 620
Unrealized and realized gain
on investments, net 626,136 245,314 309,381 606 33,819 1,704 318 2,130
------- --------- --------- ------- --------- ------- ------- -------- --------- --------
Total additions 72,202 908,473 457,088 238,853 221,665 (57,503) 145,671 43,045 22,135 74,334
------- --------- --------- ------- --------- ------- ------- -------- --------- --------
Reductions:
Distributions to participants 18,778 81,336 38,569 15,476 147,808 1,617 12,424 743 98 286
Transfers (from) to other
benefits plans, net (10,391) (6,113) (5,191) (1,097) (2,199) (148) (2,117) (250) (103)
Loans to participants 11,009 40,484 22,722 14,892 62,123 727 6,171 363 66 152
Administrative expenses 519 2,565 1,358 395 2,374 68 768 45 4 14
------- --------- --------- ------- --------- ------- ------- -------- --------- --------
Total reductions 19,915 118,272 57,458 29,666 210,106 2,264 17,246 901 168 349
------- --------- --------- ------- --------- ------- ------- -------- --------- --------
Increase (decrease) in net
assets during the year 52,287 790,201 399,630 209,187 11,559 (59,767) 128,425 42,144 21,967 73,985
Net assets available for plan
benefits:
Beginning of year 315,809 2,599,781 1,239,304 537,136 3,420,457 59,767 358,915
------- --------- --------- ------- --------- ------- ------- -------- --------- --------
End of year 368,096 3,389,982 1,638,934 746,323 3,432,016 487,340 42,144 21,967 73,985
======= ========= ========= ======= ========= ======= ======= ======== ========= ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
8
<PAGE>
INTERNATIONAL BUSINESS MACHINES CORPORATION
IBM TAX DEFERRED SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Moderate Aggressive
Life Life
Strategy Strategy Loan
Fund Fund Fund Total
--------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Additions:
Participant contributions 41,982 1,888 2,768 634,850
Employer contributions 13,320 570 206,907
Participant loan repayments 8,871 418 (167,173)
Participant directed transfer
of investments, net 189,507 85,107
--------- ----------- ------- ----------
Total contributions
and transfers 253,680 87,983 (164,405) 841,757
--------- ----------- ------- ----------
Interest and dividend
income from investments 12,047 23,051 277,154
Unrealized and realized gain
on investments, net 54,140 4,870 1,278,418
--------- ----------- ------- ----------
Total additions 319,867 92,853 (141,354) 2,397,329
--------- ----------- ------- ----------
Reductions:
Distributions to participants 16,294 168 13,139 346,736
Transfers (from) to other
benefits plans, net (3,118) (289) (231) (31,247)
Loans to participants 7,376 502 (166,587)
Administrative expenses 424 17 464 9,015
--------- ----------- ------- ----------
Total reductions 20,976 398 (153,215) 324,504
--------- ----------- ------- ----------
Increase (decrease) in net
assets during the year 298,891 92,455 11,861 2,072,825
Net assets available for plan
benefits:
Beginning of year 349,633 259,084 9,139,886
--------- ----------- ------- ----------
End of year 648,524 92,455 270,945 11,212,711
========= =========== ======= ==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
9
<PAGE>
INTERNATIONAL BUSINESS MACHINES CORPORATION
IBM TAX DEFERRED SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF THE PLAN:
GENERAL:
The International Business Machines Corporation ("IBM") Tax De-
ferred Savings Plan (the "Plan") offers all qualifying active reg-
ular and part-time employees of IBM and certain of its eligible
domestic related companies and partnerships an opportunity to de-
fer up to twelve percent of their compensation, subject to the le-
gal limit allowed by IRS regulations, which IBM will contribute on
their behalf to any of eleven investment funds (eight funds prior
to August 1, 1996). The investment objectives of these funds are
described in Note 3. The Plan was established by resolution of
IBM's Retirement Plans Committee effective July 1, 1983 and is
held in trust for the benefit of its participants.
The Plan includes the employees of Technology Service Solutions
(TSS) and Micrus, both less than wholly-owned subsidiaries of IBM.
The provisions of the Plan for TSS employees are identical to
those of the other Plan participants except for the matching
deferral, which is one hundred percent of each participant's
deferral up to a maximum of seven percent of eligible compen-
sation. The Plan provisions for Micrus employees are identical to
those of other Plan participants except for an additional profit
sharing component which is set annually by Micrus management as a
percentage of eligible employees' annual compensation. Micrus em-
ployees, not covered by the IBM Retirement Plan, are eligible to
receive this additional profit sharing component on January 1 fol-
lowing the date on which they attain one year of service with
Micrus. Eligible employees must be employed by Micrus on the an-
nual contribution date of December 31st to receive the additional
profit sharing component.
The Plan is intended to qualify as a profit-sharing plan under the
Internal Revenue Code of 1954, as amended, and is subject to the
provisions of the Employees Retirement Income Security Act of 1974
("ERISA"), as amended.
10
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ADMINISTRATION:
The Plan is administered by IBM's Retirement Plans Committee which
has appointed officials of IBM as plan administrators to assist in
administering the Plan. The IBM Retirement Plans Committee has
also appointed Bankers Trust Company as Trustee to safeguard the
assets of the various funds, and outside investment managers to
direct investments in the various funds.
CONTRIBUTIONS AND PARTICIPANTS' EQUITY:
Contributions are made to the Plan by IBM on behalf of each par-
ticipant based upon the participant's elected compensation defer-
ral. Participants may elect to defer up to twelve percent of
their eligible compensation, subject to the legal limit allowed by
IRS regulations.
IBM's matching deferral is fifty percent of each participant's
deferral up to a maximum of six percent of a participant's eligi-
ble compensation. Participants may choose to have their contrib-
utions invested entirely in any one of, or in any combination of,
the following funds in five percent multiples: Money Market Fund,
Large Company Index Fund, Small Company Stock Fund, IBM Stock
Fund, Fixed Income Fund, International Stock Fund, Total Bond Mar-
ket Fund, Income Plus Life Strategy Fund, Conservative Life Strat-
egy Fund, Moderate Life Strategy Fund, and Aggressive Life
Strategy Fund. These funds and their investment objectives are
more fully described in Note 3. Contributions are temporarily in-
vested in short-term investments and are then allocated to the
funds selected by the participant.
Participants may elect to change their investment selection for
future contributions once during any payroll period up to twenty-
four times each calendar year. Employees may change their per-
centage of deferred compensation up to six times in a calendar
year (prior to January 1, 1996 the maximum number of changes per
calendar year was four). Also, the participant may transfer part
or all of existing account balances among funds in the Plan once
daily (prior to May 18, 1995 on a weekly basis), but a service fee
will be incurred for each transfer in excess of eight in any cal-
endar year. However, participant balances in the Fixed Income
Fund may not be transferred directly into the Money Market Fund or
Total Bond Market Fund, and if transferred into another fund may
not subsequently be transferred to the Money Market Fund or Total
Bond Market Fund for three months.
11
<PAGE>
The Trustee maintains an account in the name of each participant
to which the Trustee records each participant's contributions and
share of the net earnings, losses and expenses, if any, of the
various investment funds. The earnings on the assets held in each
of the funds and all proceeds from the sale of such assets are
held and reinvested in the respective funds.
Effective January 22, 1996, the Plan was amended to allow partic-
ipant rollover contributions of pretax dollars from other
qualified savings plans or conduit Individual Retirement Accounts
(IRAs that exclusively hold a previously taxable distribution from
a qualified plan) into their Plan accounts. Rollovers must be
made in cash within the time limits specified by the IRS; stock or
in-kind rollovers cannot be accepted. These rollovers are limited
to active employees on the payroll of IBM (or affiliated compa-
nies) who have existing accounts in the Plan. Retirees or employ-
ees on leave or bridge leave of absence are not eligible for such
rollovers.
The interest of each participant in each of the funds is repres-
ented by units/shares credited to the participant's account.
The initial unit value of each fund on the first valuation date
was equivalent to $1.00. On each succeeding valuation date, the
unit value of each fund is determined by dividing the value of the
fund on that date by the number of outstanding units in the fund.
In determining the unit value, new contributions that are to be
allocated as of the valuation date are excluded from the calcu-
lation. The number of additional units to be credited to a par-
ticipant's account for each fund, due to new contributions, is
equal to the amount of the participant's new contributions to the
fund divided by the unit value for the applicable fund as deter-
mined on the valuation date. Effective May 18, 1995, the IBM
Stock Fund changed from share accounting to unit value accounting
to provide for daily settlement of fund transactions.
At December 31, 1996 and 1995 the number of participants in the
Plan approximated 196,000 and 188,000, respectively. The number
of individuals participating in each of the Plan's funds at Decem-
ber 31, 1996, were approximately:
Money Market 53,000
Large Company Index 136,000
Small Company Stock 110,000
IBM Stock 50,000
Fixed Income 131,000
International Stock 57,000
Total Bond Market 7,000
Income Plus Life Strategy 1,000
Conservative Life Strategy 2,000
Moderate Life Strategy 39,000
Aggressive Life Strategy 5,000
12
<PAGE>
Contributions made to the Plan as well as interest, dividends or
other earnings of the Plan are not includable in gross income of
the participant until withdrawal, at which time all earnings and
contributions withdrawn are generally taxed as ordinary income to
the participant. Additionally, withdrawals by the participant
before attaining age 59 1/2 are generally subject to a penalty tax
of 10%.
Consistent with provisions established by the IRS a 1996 annual
limit of $9,500 was set on employee deferrals under salary defer-
ral plans, such as the IBM Tax Deferred Savings Plan.
VESTING:
Participants in the Plan are at all times fully vested in their
account balance, including deferred compensation, matching con-
tributions and earnings thereon.
DISTRIBUTION:
A participant who has attained age 59 1/2 may request a cash dis-
tribution of all or part of the value of the participant's ac-
count. The minimum amount of any such distribution shall be the
lesser of the participant's account balance or $500. In the event
that the participant retires under the IBM Retirement Plan or be-
comes eligible for benefits under the IBM Long-Term Disability
Plan, the participant may elect to receive the balance of the par-
ticipant's account in a specified number of annual cash install-
ments over a period not to exceed ten years or to defer payment,
whether lump-sum or installment, until age 70 1/2.
Upon the death of a participant, the value of the participant's
account will be distributed to the participant's beneficiary in a
lump-sum cash payment. If the participant is married, the benefi-
ciary must be the participant's spouse, unless the participant's
spouse has previously given written, notarized consent to desig-
nate another person as beneficiary. If the participant becomes
married or remarried, any prior designation is cancelled and the
current spouse automatically becomes the beneficiary. If the par-
ticipant is single, the beneficiary may be anyone previously des-
ignated by the participant under the Plan. If the participant is
single and has not designated a beneficiary under the Plan, the
beneficiary will be deemed to be the same beneficiary designated
under the IBM Group Life Insurance Plan (unless the participant
has assigned ownership of such insurance). Effective March 1,
1997, this beneficiary default provision was amended and no longer
reverts to a single participant's IBM Group Life Insurance Plan
designation (refer to Note 8 - Subsequent Events). In the absence
of an effective designation under the Plan at the time of death,
the proceeds will normally be paid in the following order: the
participant's spouse, the participant's children in equal shares,
13
<PAGE>
or to surviving parents equally. If no spouse, child, or parent is
living, payments will be made to the executors or administrators of
the participant's estate.
Participants may borrow, subject to additional limitations rela-
tive to prior loans, up to one-half of the value of the partic-
ipant's account balance, but not to exceed $50,000. Participants
are limited to two outstanding Plan loans at any one time. The
loan shall bear a fixed rate of interest, set quarterly, for the
term of the loan, determined by the plan administrator to be 1.25
percent above the prime rate. Repayment of a loan shall be made
through monthly payroll deductions over a term of one to four
years. Participants may prepay the entire remaining loan princi-
pal after three regular monthly payments have been made. Employ-
ees on an approved leave of absence may elect to make monthly loan
payments directly to the Trustee. Participants may continue to
contribute to the Plan while having an outstanding loan, provided
that the loan is not in default.
Participants who retire or separate from IBM and have outstanding
Plan loans, may choose automated loan repayments or coupon payment
options to continue monthly loan repayments according to their or-
iginal amortization schedule.
The number of loans outstanding at December 31, 1996 and 1995 was
48,033 and 49,077, respectively. Interest rates on outstanding
loans at December 31, 1996 ranged from 7.25% to 10.25%.
TERMINATION OF SERVICE:
The value of the participant's account will be distributed to the
participant in a lump-sum cash payment as soon as practical fol-
lowing the termination of the participant's employment with IBM
for any reason other than retirement, medical disability or death.
If the account balance is greater than $3,500 at the time of sepa-
ration, the participant may elect to defer distribution of the ac-
count until age 70 1/2.
TERMINATION OF THE PLAN:
IBM reserves the right to terminate this Plan at any time by
action of its Retirement Plans Committee. In such event, each
participant or beneficiary receiving or entitled to receive pay-
ments under the Plan will receive the balance of his or her ac-
count at such time and in such manner as the Retirement Plans
Committee shall determine at its discretion.
In the event of a full or partial termination of the Plan, or upon
complete discontinuance of contributions under the Plan, the
rights of all affected participants in the value of their accounts
will be nonforfeitable.
14
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
VALUATION OF INVESTMENTS:
The fair value of the net assets of the Plan is based on the esti-
mated fair values of the underlying assets and liabilities. In-
vestments in reinverted investment companies and pooled funds are
valued at the net asset values per share as quoted by such compa-
nies or funds as of the valuation date. Interest accrued on in-
vestments is recorded separately as interest receivable until paid
and reinvested.
Investments in fully benefit responsive bank and insurance company
investment contracts are stated at contract value which is equal
to cost plus reinvested interest. Contracts include synthetic in-
vestment contracts, whereby individual assets are placed in a
trust with ownership by the Plan and a third party issues a wrap-
per contract that provides that holders can, and must, execute
transactions at contract value. Individual assets of the syn-
thetic contracts are valued at representative quoted market
prices. The wrapper is valued as the difference between fair
value of the assets and contract value of the investment contract.
USE OF ESTIMATES:
The preparation of financial statements in conformity with gener-
ally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of as-
sets, liabilities and disclosures at the date of the financial
statements. Actual results could differ from the estimates that
were used.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME:
Security transactions are recorded on a trade-date basis. Real-
ized gains and losses on sales of securities are based on average
cost at the time of sale. Dividend income is recorded on the ex-
dividend date and interest income is recorded on the accrual ba-
sis.
15
<PAGE>
ADMINISTRATIVE EXPENSES AND INVESTMENT MANAGEMENT FEES:
All administrative costs of the Plan are paid by the Plan. This
includes: (a) brokerage fees and commissions which are included
in the cost of investments when purchased and in determining net
proceeds on sales of investments (b) investment management fees
which are paid from the respective fund's assets (excluding the
IBM Stock Fund); such fees consist of fixed annual charges and
charges which are based on a percentage of net asset value (c)
operational expenses required for administration of the Plan con-
sisting of trustee, recordkeeping, participant reports and commu-
nications, and service center expenses, which are expenses charged
against the fund's assets on a pro rata basis throughout the year.
16
<PAGE>
NOTE 3 - DESCRIPTION OF INVESTMENT FUNDS:
The investment funds to which employees may contribute monies are
described below:
MONEY MARKET FUND - Preservation of principal, liquidity and a
variable rate of income based on current market interest rates.
Investments in the Money Market Fund are managed by Bankers Trust
Company.
Investments are made in a diversified portfolio of high-quality
money market instruments with average maturity dates not exceeding
91 days from the date of purchase. Twenty percent of the value of
the fund may be invested in instruments with maturities not to ex-
ceed 182 days. At all times not less than twenty percent of the
remaining assets of the fund must be composed of cash, demand ob-
ligations and assets that mature on the next business day.
The fund in which monies are invested is Bankers Trust Company's
Discretionary Short-term Investment Fund.
LARGE COMPANY INDEX FUND - Long term growth of capital with a
market rate of return from a diversified group of large- and
medium-capitalization company common stocks.
This fund invests in a broad range of common stocks through Bank-
ers Trust Company's Large Capitalization Equity Index Fund which
is designed to produce investment results approximating the price
and yield performance of the Standard & Poor's Composite Index of
500 Stocks (S & P 500). The S & P 500 Index is composed of 500
selected common stocks, most of which are listed on the New York
Stock Exchange. Standard and Poor's, a financial services corpo-
ration, chooses the stocks to be included in the index on a sta-
tistical basis, by which it seeks to represent a cross-section of
industry sectors and companies within each sector.
Dividends paid on common stocks in the portfolio are reinvested in
the fund. The value of a participant's assets in this fund will
vary as a result of fluctuations in the applicable common stock
prices and dividends paid on those stocks. The broad diversifica-
tion attained by investing in a large number of stocks generally
results in less risk than an investment in a single stock.
Investments in the Large Company Index Fund are managed by Bankers
Trust Company.
17
<PAGE>
SMALL COMPANY STOCK FUND - Long term growth of capital from a di-
versified group of medium- and small-capitalization company common
stocks
This fund invests in a broad range of common stocks to produce in-
vestment results approximating the price and yield performance of
medium- and small-capitalization company common stocks generally
not represented in the Standard & Poor's 500 Index. Investors can
use this fund as a complement to the Large Company Index Fund to
attain extensive coverage of the total U.S. equity market. Divi-
dends paid on common stocks in the portfolio are reinvested in the
fund.
The value of a participant's assets invested in this fund will
vary as a result of fluctuations in applicable common stock prices
and dividends paid on those stocks. The broad diversification at-
tained by investing in a large number of stocks generally results
in less risk than an investment in a single stock.
Investments in the Small Company Stock Fund are managed by State
Street Global Advisors, the institutional investment management
affiliate of State Street Bank and Trust Company.
IBM STOCK FUND - Direct investment in IBM common stock, with divi-
dends being reinvested in additional shares of IBM common stock.
The IBM Stock Fund permits the participant to have contributions
invested in IBM common stock, or to have existing account balances
transferred into this fund so as to be invested in such IBM common
stock. The return on the participant's investment will be deter-
mined by the market price of IBM common stock, the amount of any
dividends paid thereon, and the cash balance necessary to maintain
liquidity.
Assets invested in the IBM Stock Fund will be expressed in whole
and fractional shares (in units effective May 18, 1995, to allow
for daily settlement of fund transactions). In addition, interest
will be earned on money that is in the participant's account
awaiting investment in IBM common stock.
An investment in a single stock is generally more risky than in-
vesting in a broadly diversified group of stocks.
On January 1, 1995, IBM corporate officers became eligible to par-
ticipate in the IBM Stock Fund.
Investments in the IBM Stock Fund are managed by Bankers Trust
Company.
18
<PAGE>
FIXED INCOME FUND - Preservation of principal with a relatively
stable and predictable rate of interest.
Investments consist of interest-bearing instruments, including
corporate and U.S. government securities, mortgages, bank time de-
posits, and contracts with insurance companies, banks, and other
financial institutions.
The investments in this fund may have fixed rates of interest for
fixed periods of time, or may have rates of interest that vary
during the contract period based upon the contract issuer's in-
vestment experience for the assets or pooled assets supporting the
contract or upon another formula applicable under the contract.
Investment contracts with insurance companies and other financial
institutions require the repayment of principal plus interest as
determined under the contract. Certain of the investment con-
tracts are held in trusts owned by the Plan, and managed by insur-
ance companies or financial institutions. Such investment
contracts provide for return of principal and interest earned,
with interest rates being fixed quarterly. The contract value of
the investments held in trusts at December 31, 1996 and 1995 was
$1,929,759,841 and $2,078,123,243 respectively, fair value being
$1,927,922,000 and $2,063,402,258 respectively.
IBM selects the various contracts and oversees eight external bond
managers who are responsible for the individual portfolios within
the Fixed Income Fund. IBM will take steps to place investments
with highly rated institutions and money managers, but cannot
guarantee the return of either principal or interest.
TOTAL BOND MARKET FUND - Effective May 1, 1996, the Total Bond
Market Fund became available as an investment option. The Total
Bond Market Fund seeks investment results that modestly exceed the
total return of the Lehman Brothers Aggregate Bond Index, a broad
market-weighted index comprised of U.S. Treasury and agency secu-
rities, corporate investment-grade bonds and mortgage-backed secu-
rities, each with maturities exceeding one year.
Investments in the Total Bond Market Fund are managed by State
Street Global Advisors, the institutional investment management
affiliate of State Street Bank and Trust Company.
U. S. GOVERNMENT SECURITIES FUND - Effective June 28, 1996, the
U.S. Government Securities Fund (USGSF) was closed. Contributions
to the USGSF were suspended on May 1, 1996. Participants who had
not instructed the Plan's trustee to transfer their USGSF balances
into alternative investment funds by June 28, 1996, had any bal-
ances remaining in the USGSF automatically transferred on their
behalf to the Fixed Income Fund on that day. With the closing of
USGSF,
19
<PAGE>
the ten percent Balanced Asset Fund allocation previously targeted
for the USGSF was directed to the Total Bond Market Fund.
INTERNATIONAL STOCK FUND - Long-term capital growth with a market
rate of return from a diversified group of equity holdings in the
major stock markets of Europe, Asia/Pacific, South Africa, and
Latin America.
These Equity market investments are based on the Morgan Stanley
Capital International Europe, Australia, and Far East (EAFE) Index
and the Morgan Stanley Capital International Emerging Markets Free
ex Malaysia Index (EMF ex Malaysia). The combination of developed
and developing markets may serve to reduce the overall volatility
within the fund's portfolio and help reduce risk.
The fund is passively managed, that is, the managers do not ac-
tively select investments, but instead follow EAFE and EMF ex
Malaysia Index characteristics. Prior to August 1, 1996, the
International Stock Fund had a modified country weighting that
limited investments in the stocks of any one country to twenty-
five percent of the fund. Effective August 1, 1996, this twenty-
five percent limitation on stocks from any one country was removed
to better diversify the fund for participants. Dividend income is
reinvested in the fund.
The International Stock Fund is designed to broaden and supplement
Plan investment options by offering a way to participate in for-
eign equity markets, while maintaining diversification within and
across different assets classes. Like U.S. equities, foreign eq-
uities are subject to price fluctuations. In addition, they are
impacted by other factors such as foreign currency exchange fluc-
tuations that affect the dollar value of the fund.
Investments in the International Stock Fund are managed by Bankers
Trust Company.
LIFE STRATEGY FUNDS:
On August 1, 1996, the Plan was amended to include the addition of
four Life Strategy Funds, one of which (the Moderate Life Strategy
Fund) was created from the existing Balanced Asset Fund. The Life
Strategy Funds diversify their assets among the following five ex-
isting Plan funds: Large Company Index Fund, Small Company Stock
Fund, International Stock Fund, Fixed Income Fund, and Total Bond
Market Fund. The Life Strategy Funds enable participants to
choose from four different portfolios of stock, bond and fixed in-
come investments, ranging from very conservative to aggressive, to
pursue their personal financial goals. The Funds are rebalanced
monthly by Bankers Trust Company to the target allocations as the
value of the underlying investment funds fluctuate. For example,
if stocks declined in value, more would be purchased to maintain
the desired
20
<PAGE>
stock allocation within the Funds. The Life Strategy Funds are pa-
ssively managed, meaning the fund managers do not actively select
investments, but instead follow investment allocations set by
the staff of the IBM Retirement Fund. The underlying funds
are managed by Bankers Trust Company and State Street Global
Advisors.
The four Life Strategy Funds and their target allocations are as
follows:
INCOME PLUS LIFE STRATEGY FUND - Seeks investment returns which
modestly and fairly consistently outpace inflation, with a target
allocation of twenty percent stocks and eighty percent fixed
income/bonds. The Income Plus Life Strategy Fund is intended for
the more risk-averse investor with a generally short time horizon
desiring more security in their investment.
Investments in this fund are automatically allocated among the
following five Plan investment options, while maintaining the tar-
get allocations as shown: Large Company Index Fund - 11%, Small
Company Stock Fund - 4%, International Stock Fund - 5%, Fixed In-
come Fund - 75%, and Total Bond Market Fund- 5%.
The Income Plus Life Strategy Fund is managed by Bankers Trust
Company.
CONSERVATIVE LIFE STRATEGY FUND - Seeks to moderately outpace in-
flation over the long term with a fair measure of consistency, and
a target allocation of forty percent stocks and sixty percent
fixed income/bonds. The Conservative Life Strategy Fund is de-
signed for risk-averse investors with a short to medium time hori-
zon.
Investments in this fund are automatically allocated among the
following five Plan investment options, while maintaining the tar-
21
<PAGE>
get allocations as shown: Large Company Index Fund - 23%, Small
Company Stock Fund - 7%, International Stock Fund - 10%, Fixed In-
come Fund - 50%, and Total Bond Market Fund - 10%.
The Moderate Life Strategy Fund is managed by Bankers Trust Com-
pany.
AGGRESSIVE LIFE STRATEGY FUND - Seeks to provide high returns over
longer time periods with a target allocation of eighty percent
stocks and twenty percent fixed income/bonds. The Aggressive Life
Strategy Fund is intended for higher-risk tolerant investors with
a long time horizon. Investors in this fund should anticipate oc-
casional annual losses in pursuit of long-term higher returns.
Investments in this fund are automatically allocated among the
following five Plan investment options, while maintaining the tar-
get allocations as shown: Large Company Index Fund - 45%, Small
Company Stock Fund - 15%, International Stock Fund - 20%, Fixed
Income Fund - 0%, and Total Bond Market Fund - 20%.
The Aggressive Life Strategy Fund is managed by Bankers Trust Com-
pany.
22
<PAGE>
NOTE 4 - PLAN TRANSFERS:
The transfers below represent the participants' account balances
attributable to employees transferred to(from) IBM:
On October 3, 1995, IBM acquired all of the outstanding shares of
Early, Cloud and Company. As a result of this transaction, there
were net transfers of cash and securities of $5,328,395 during
1996 between the Plan and a similar savings plan established by
Early, Cloud and Company.
On December 29, 1995, Altium Corporation was merged into IBM. As
a result of this transaction, there were net transfers of cash and
securities of $98,924 during 1996 between the Plan and a similar
savings plan established by Altium Corporation.
On February 1, 1996, approximately 146 employees of Commonwealth
Edison were transferred to IBM's wholly owned subsidiary, Inte-
grated Services Solutions Corporation (ISSC) as a result of an
outsourcing agreement between ISSC and Commonwealth Edison. Ac-
cordingly, there were net transfers of cash and securities of
$904,203 during 1996 between the Plan and a similar savings plan
established by Commonwealth Edison.
On March 1, 1996, IBM acquired all of the outstanding shares of
Tivoli Systems, Inc. As a result of this transaction, there were
net transfers of cash and securities of $4,320,323 during 1996 be-
tween the Plan and a similar savings plan established by Tivoli
Systems, Inc.
On April 3, 1996, approximately 50 employees of Washington Mutual,
Inc. were transferred to IBM's wholly owned subsidiary, Inte-
grated Services Solutions Corporation (ISSC) as a result of an
outsourcing agreement between ISSC and Washington Mutual, Inc.
Accordingly, there were net transfers of cash and securities of
$590,602 during 1996 between the Plan and a similar savings plan
established by Washington Mutual, Inc.
During 1996, approximately 470 employees of Ameritech Corporation
were transferred to IBM's wholly owned subsidiary, Integrated Ser-
vices Solutions Corporation (ISSC) as a result of an outsourcing
agreement between ISSC and Ameritech Corporation. Accordingly,
there were net transfers of cash and securities of $20,211,002
during 1996 between the Plan and a similar savings plan estab-
lished by Ameritech Corporation.
23
<PAGE>
NOTE 5 - INCOME TAXES:
The Trust established under the Plan is qualified under the appro-
priate section of the Internal Revenue Code and intends to con-
tinue as a qualified trust. The Plan received a favorable
determination letter from the IRS on June 14, 1993. The Plan has
been amended since receiving the determination letter. However,
the Plan administrator believes that the Plan is designed and is
currently being operated in compliance with the applicable re-
quirements of the Internal Revenue Code. Accordingly, a provision
for federal income taxes has not been made.
24
<PAGE>
NOTE 6 - TDSP INVESTMENT VALUATIONS:
The following schedules summarize the fair value of investments, and the
related net unrealized and realized gain/loss on investments by type
of investment (dollars in thousands):
Fair value determined by
----------------------------------
December 31, 1996: Quoted
market Estimates
prices of Trustee Total
---------- ---------- ----------
Interest in equity-oriented General $6,013,408 $6,013,408
Employee Benefit Trust pooled funds
Interest in short-term investment-
oriented General Employee Benefit
Trust pooled funds 426,042 426,042
Investment contracts $3,601,544 3,601,544
Interest in bond market-oriented General
Employee Benefit Trust pooled funds 166,579 166,579
IBM common stock 738,140 738,140
---------- ---------- -----------
Total $7,344,169 $3,601,544 $10,945,713
========== ========== ===========
December 31, 1995:
Interest in equity-oriented General
Employee Benefit Trust pooled funds $4,408,095 $4,408,095
Interest in short-term investment-
oriented General Employee Benefit
Trust pooled funds 327,791 327,791
Investment contracts $3,528,652 3,528,652
Interest in U.S. Government Securities-
oriented General Employee Benefit Trust
pooled funds 94,870 94,870
IBM common stock 524,270 524,270
---------- ---------- ----------
Total $5,355,026 $3,528,652 $8,883,678
========== ========== ==========
25
<PAGE>
NOTE 6 - TDSP INVESTMENT VALUATIONS (CONTINUED):
Net Unrealized and Realized Gain (Loss) on investments (dollars in
thousands):
For the year ended
December 31, 1996
__________________
Investments at fair value
determined by quoted market
price:
Interest in General Employee
Benefit Trust pooled funds $ 968,431
U.S. Government Treasury Securities 606
IBM common stock 309,381
----------
Total $1,278,418
==========
NOTE 7 - RELATED PARTY TRANSACTIONS
At December 31, 1996 and 1995, a majority of the Plan's assets
were invested in Bankers Trust Company Funds. Bankers Trust also
acts as the trustee and recordkeeper for the Plan.
At December 31, 1996, the Plan held 4,872,209 shares of IBM common
stock valued at $738,139,664. At December 31, 1995, the Plan held
5,737,561 shares of IBM common stock valued at $524,269,636.
On April 29, 1997, IBM stockholders approved amendments to the
Certificate of Incorporation reducing the par value of common
shares from $1.25 per share to $.50 per share, and granting common
stockholders of record at the close of business on May 9, 1997 one
additional share for each share held. As a result of this amend-
ment, the restated number of shares of IBM common stock held by
the Plan at December 31, 1996 and 1995 was 9,744,418 and
11,475,122, respectively.
26
<PAGE>
NOTE 8 - SUBSEQUENT EVENTS
Effective March 1, 1997, the beneficiary procedures were changed
for single employees who have not designated a beneficiary under
the Plan. Previously, the beneficiary would be deemed to be the
same beneficiary as designated under the IBM Group Life Insurance
Plan. This beneficiary default provision has been amended and no
longer reverts to the participant's IBM Group Life Insurance Plan
designation. As of March 1, 1997, where there is no benefi-
ciary designated, or if the beneficiary is deceased at the time of
the participant's death, payment will be made in the following or-
der as appropriate: to the spouse, if living; to the surviving
children in equal shares; to the surviving parents, equally. If
no spouse, child or parent is living, payment will be made to the
executors or administrators of the estate.
27
<PAGE>
<TABLE>
<CAPTION>
NOTE 9 - SCHEDULE OF UNIT/SHARE VALUES AND PARTICIPANT UNITS/SHARES (FUND UNITS IN THOUSANDS):
The following is a schedule of the TDSP individual fund unit/share values and participant units/shares as calculated by the
Trustee based on each daily valuation date (weekly valuation date prior to May 1995):
Month in 1996: January February March April May June July August September October November December
------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market:
Unit Value $2.64 $2.65 $2.66 $2.67 $2.68 $2.69 $2.71 $2.72 $2.73 $2.74 $2.75 $2.77
Units 120,124 120,751 122,133 120,999 119,745 119,783 124,007 123,588 124,888 130,306 129,666 133,005
Large Company:
Unit Value $8.84 $8.92 $9.01 $9.14 $9.38 $9.41 $9.00 $9.19 $9.70 $9.97 $10.73 $10.51
Units 309,650 314,150 317,118 318,117 320,200 322,687 321,301 320,973 321,724 323,166 324,584 322,490
Small Company:
Unit Value $2.13 $2.20 $2.23 $2.31 $2.37 $2.31 $2.15 $2.27 $2.38 $2.36 $2.48 $2.50
Units 598,638 608,361 620,607 633,474 653,998 664,618 658,066 656,698 660,639 659,099 654,576 654,679
IBM Stock:
Unit Value $1.17 $1.32 $1.19 $1.16 $1.15 $1.07 $1.16 $1.24 $1.34 $1.39 $1.72 $1.63
Units 513,539 470,126 488,838 534,811 523,446 516,551 530,792 505,503 486,583 454,992 463,575 457,102
Fixed Income:
Unit Value $2.41 $2.43 $2.44 $2.45 $2.46 $2.48 $2.49 $2.50 $2.52 $2.53 $2.54 $2.56
Units 1,401,954 1,384,909 1,386,221 1357,435 1,342,046 1,351,613 1,357,960 1,342,752 1,345,238 1,346,021 1,329,688 1,342,498
U.S. Gov't Securities:
Unit Value $1.26 $1.25 $1.25 $1.25 $1.26
Units 48,561 51,616 51,957 49,138 39,722
International Stock:
Unit Value $1.38 $1.39 $1.42 $1.45 $1.44 $1.45 $1.41 $1.41 $1.45 $1.44 $1.49 $1.47
Units 290,669 310,633 319,418 328,688 335,969 341,392 344,349 344,971 345,601 338,509 332,798 330,724
Total Bond Market:
Unit Value $1.00 $1.01 $1.01 $1.01 $1.03 $1.05 $1.07 $1.06
Units 14,489 22,065 26,832 27,951 28,279 31,880 35,899 39,788
Income Plus Life Strategy:
Unit Value $1.00 $1.01 $1.02 $1.03 $1.05 $1.05
Units 964 8,752 11,071 15,961 18,370 20,942
Conservative Life Strategy:
Unit Value $1.00 $1.01 $1.03 $1.04 $1.08 $1.07
Units 3,947 31,534 38,527 52,169 62,531 69,049
Moderate Life Strategy:
Unit Value $1.37 $1.38 $1.39 $1.41 $1.43 $1.43 $1.39 $1.41 $1.46 $1.48 $1.54 $1.53
Units 285,015 307,322 315,723 322,975 330,625 338,452 344,288 376,007 386,389 409,115 423,328 425,043
Aggressive Life Strategy:
Unit Value $1.00 $1.02 $1.06 $1.07 $1.13 $1.12
Units 2,426 30,389 41,124 63,108 77,649 82,729
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
NOTE 9 - SCHEDULE OF UNIT/SHARE VALUES AND PARTICIPANT UNITS/SHARES (continued):
(FUND UNITS IN THOUSANDS):
Month in 1995: January February March April May June July August September October November December
------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market:
Unit Value $2.49 $2.50 $2.51 $2.52 $2.53 $2.55 $2.56 $2.57 $2.58 $2.60 $2.61 $2.62
Units 117,856 118,622 119,962 120,287 121,132 121,227 121,365 121,297 120,439 122,200 120,986 119,966
Large Company:
Unit Value $6.41 $6.60 $6.90 $7.11 $7.03 $7.47 $7.72 $7.74 $8.06 $8.04 $8.39 $8.55
Units 276,726 278,725 281,144 284,767 287,334 288,823 292,279 294,360 296,640 299,649 302,759 303,706
Small Company:
Unit Value $1.62 $1.67 $1.71 $1.74 $1.78 $1.86 $1.97 $2.01 $2.05 $2.00 $2.09 $2.11
Units 496,429 499,477 507,382 509,649 511,873 515,922 529,079 543,027 558,526 570,575 580,171 583,983
IBM Stock: *
Unit Value $79.44 $82.75 $89.85 $100.42 $1.00 $1.03 $1.17 $1.11 $1.02 $1.05 $1.04 $ .99
Units 5,227 5,191 5,365 5,591 519,376 539,093 548,645 537,717 509,260 527,096 533,740 541,417
Fixed Income:
Unit Value $2.26 $2.27 $2.29 $2.30 $2.31 $2.32 $2.34 $2.35 $2.36 $2.37 $2.39 $2.40
Units 1,496,781 1,505,9031,514,466 1,506,456 1,507,751 1,502,008 1,484,360 1,482,601 1,476,160 1,458,025 1,438,589 1,426,435
U.S. Gov't Securities:
Unit Value $1.14 $1.16 $1.17 $1.18 $1.20 $1.20 $1.21 $1.21 $1.22 $1.23 $1.24 $1.25
Units 39,616 40,293 41,552 42,205 43,446 44,594 45,414 46,358 46,222 46,855 46,894 47,702
International Stock:
Unit Value $1.15 $1.17 $1.23 $1.30 $1.28 $1.27 $1.34 $1.29 $1.32 $1.30 $1.32 $1.37
Units 259,799 253,705 253,298 255,244 259,044 258,699 258,609 259,281 256,017 256,658 258,133 260,421
Balanced Asset:
Unit Value $1.12 $1.14 $1.17 $1.19 $1.21 $1.23 $1.26 $1.26 $1.29 $1.29 $1.32 $1.34
Units 173,338 174,897 177,344 180,962 185,214 189,578 197,253 204,496 208,183 232,163 252,869 259,940
* NOTE: Effective May 18, 1995, the IBM Stock Fund changed from share accounting to unit value accounting to provide for daily
settlement of fund transactions.
</TABLE>
29
<PAGE>
SCHEDULE I
INTERNATIONAL BUSINESS MACHINES CORPORATION
IBM TAX DEFERRED SAVINGS PLAN
ITEM 27a - ASSETS HELD FOR INVESTMENT PURPOSES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
Total Current
Shares/Units or Cost Value
Maturity Value (In Thousands) (In Thousands)
--------------- -------------- --------------
<S> <C> <C> <C>
INTEREST IN BANKERS TRUST COMPANY POOLED FUNDS:
Discretionary Cash Fund 426,042,077 $ 426,042 $ 426,042
========== ==========
Equity Index Funds 127,608,848 $4,245,253 $6,013,408
========== ==========
Bond Index Fund 15,709,332 $ 159,970 166,579
========== ==========
COMMON STOCK:
IBM Stock Fund 4,872,209 $ 461,256 $ 738,140
========== ==========
Total Contract
Shares/Units or Value
Maturity Value (In Thousands)
--------------- -------------
INVESTMENT CONTRACTS:
Bankers Trust Company
#90-023 8.24% 5/15/1997 10,392,802 $ 10,393
Bankers Trust Company
#90-060 8.24% 5/15/1997 6,137,647 6,138
Bankers Trust Company
#91-028 8.24% 5/15/1997 5,085,482 5,086
Black Rock
#95235 7.53% 9/30/1999 101,846,755 101,847
Brundage Story & Rose
#93-597 6.45% 1/1/1999 79,192,456 79,192
CDC Bric
BR 130-02 7.42% 10/1/1999 76,259,375 76,259
CIGNA
#25189 6.31% 9/30/1998 51,575,482 51,576
CIGNA
#25193 6.60% 9/30/1999 60,974,408 60,974
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Total Contract
Shares/Units or Value
Investment Contracts (Continued): Maturity Value (In Thousands)
--------------- --------------
<S> <C> <C>
CIGNA
#25181 7.73% 9/30/1999 27,007,073 $ 27,007
Citibank
#178360 6.75% 1/2/1999 176,106,068 176,106
Citibank
#178362 5.17% 12/31/1998 55,701,330 55,701
Citibank
#178364 6.51% 7/1/1999 78,640,516 78,641
Citibank
#178365 7.21% 4/1/1998 26,967,830 26,968
CNA Insurance
GP 13078 8.05% 4/1/1999 32,408,181 32,408
CNA Insurance
GP 13078-016 5.79% 4/1/1999 75,011,535 75,012
Connecticut General Life
#D025146 8.29% 6/1/1999 39,999,272 39,999
John Hancock Life Insurance Co.
GAC #5627 9.07% 7/1/1997 14,272,030 14,272
John Hancock Life Insurance Co.
GAC #8663 6.85% 11/1/2002 131,781,949 131,782
Hartford Life
#10254 8.08% 3/31/1999 27,009,849 27,010
Loomis Sayles
#93-599 5.37% 9/1/1998 53,622,327 53,622
Loomis Sayles
# 96014 6.83% 10/1/1998 104,747,818 104,748
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Total Contract
Shares/Units or Value
Investment Contracts (Continued): Maturity Value (In Thousands)
--------------- --------------
<S> <C> <C>
Metropolitan Life Insurance Co.
MM-70834 6.70% 1/1/1999 7,674,096 $ 7,674
Metropolitan Life Insurance Co.
GAC #24650 6.75% 7/1/2001 73,256,933 73,257
Metropolitan Life Insurance Co.
GAC #13630 5.20% 4/1/1998 79,546,817 79,547
Metropolitan Life Insurance Co.
GAC #13831 6.90% 1/2/1998 60,343,465 60,344
Metropolitan Life Insurance Co.
GAC #13993 8.04% 3/31/1999 20,004,238 20,004
New York Life Insurance Company
GA-06554-001 7.56% 7/1/1997 306,449,347 306,449
New York Life Insurance Company
GA-06554-002 5.35% 1/1/1999 82,497,673 82,498
New York Life Insurance Company
GA-06554-003 7.13% 7/1/1999 63,223,151 63,223
Pacific Investment Management Co.
#242 6.43% Non-Maturing 149,446,119 149,446
Pacific Investment Management Co.
#915 6.17% 10/1/1996 64,304,131 64,304
Pacific Investment Management Co.
#916 4.84% 1/1/1999 42,547,707 42,548
Principal Mutual
#4-23271 6.53% 7/1/2000 62,239,869 62,240
Principal Mutual
#4-23271-Z 7.26% 7/1/2001 61,363,203 61,363
Prudential Asset Management Co.
GA-7406 7.03% 4/1/1998 109,090,327 109,090
Prudential Asset Management Co.
GA-7406-212 6.49% 6/30/1999 80,701,071 80,701
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Total Contract
Shares/Units or Value
Investment Contracts (Continued): Maturity Value (In Thousands)
--------------- --------------
<S> <C> <C>
Prudential Asset Management Co.
GA-7406-213 7.17% 10/1/1998 103,552,408 $ 103,552
Prudential Asset Management Co.
GA-7913 7.34% 3/31/2000 101,801,366 101,801
Putnam Management Group
3.79% 4/1/1998 267,708,664 267,709
Sanford C. Bernstein
#93-598 4.77% 7/1/1998 51,158,754 51,159
State Street Global Advisors
#103177 6.74% 6/30/2000 224,291,561 224,292
Union Bank of Switzerland
#2001 7.81% 1/1/1997 10,198,457 10,199
Union Bank of Switzerland
#2010 7.15% 4/1/1998 145,484,081 145,484
Union Bank of Switzerland
#2071 5.17% 10/1/1998 50,649,781 50,650
Union Bank of Switzerland
#2096 7.98% 12/15/1997 25,336,135 25,336
Union Bank of Switzerland
#2097 8.07% 6/15/1998 25,270,403 25,270
Union Bank of Switzerland
#2187 7.04% 10/25/2018 48,983,419 48,983
Union Bank of Switzerland
#2188 7.02% 12/25/2021 49,680,225 49,680
__________
$3,601,544
==========
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
INTERNATIONAL BUSINESS MACHINES CORPORATION
IBM TAX DEFERRED SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS*
DECEMBER 31, 1996
(Dollars in Thousands)
Cost of Proceeds Cost of Assets Realized
Volume Purchases from Sale Disposed Gain
------ ---------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Bankers Trust Discretionary
Cash Fund
- Acquisition Transactions 366 $ 613,229 - - -
- Disposal Transactions 266 - $ 566,026 $ 566,026 -
Bankers Trust Directed Account
Cash Fund
- Acquisition Transactions 408 $1,597,661 - - -
- Disposal Transactions 472 - $1,562,944 $1,562,944 -
International Business Machines
Corporation Common Stock
- Acquisition Transactions 69 $ 287,019 - - -
- Disposal Transactions 97 - $ 380,850 $ 265,846 $ 115,004
Bankers Trust Large
Capitalization Equity Index Fund
- Acquisition Transactions 610 $ 531,276 - - -
- Disposal Transactions 256 - $ 273,353 $ 195,466 $ 77,887
State Street Russell Small
Company Non Common
- Acquisition Transactions 28 $1,668,569 - - -
- Disposal Transactions 40 - $ 48,781 $ 47,262 $ 1,519
State Street Russell Special
Small Company
- Acquisition Transactions 81 $ 267,152 - - -
- Disposal Transactions 44 - $1,664,464 $1,271,637 $ 392,827
Bankers Trust Daily International
Equity Index Fund
- Acquisition Transactions 432 $ 638,323 - - -
- Disposal Transactions 129 - $ 49,917 $ 48,481 $ 1,436
Bankers Trust Daily Non Japanese
Equity Index Fund
- Acquisition Transactions 156 $ 92,925 - - -
- Disposal Transactions 66 - $ 405,970 $ 341,854 $ 64,116
* NOTE: Cumulative transactions involving an amount in excess of 5 percent of the value of plan assets.
</TABLE>
34
