IBM Announces Expiration of Debt Exchange Offers

IBM Announces Expiration of Debt Exchange Offers

IBM

IBM (NYSE: IBM) announced the expiration and final results of its offers to exchange (the “Exchange Offers”) any and all of its 7.125 percent Debentures due 2096 (the “7.125 Percent Notes”), 7.000 percent Debentures due 2045 (the “7.000 Percent Notes”) and 8.000 percent Notes due 2038 (the “8.000 Percent Notes” and, together with the 7.125 Percent Notes and 7.000 Percent Notes, the “Old Notes”) for a new series of 5.600 percent Senior Notes due 2039 (the “New Notes”) and cash. The Exchange Offers expired at 12:00 midnight, EST, on Monday, December 7, 2009 (the “Expiration Date”). As of the Expiration Date, additional principal amounts of approximately $28 thousand of the 7.125 Percent Notes, $45 thousand of the 7.000 Percent Notes and $2 million of the 8.000 Percent Notes were tendered for exchange, in addition to the principal amounts of approximately $500 million of the 7.125 Percent Notes, $123 million of the 7.000 Percent Notes and $811 million of the 8.000 Percent Notes that were tendered for exchange as of November 20, 2009 (the “Early Exchange Date”). IBM conducted the Exchange Offers to retire high coupon long-dated debt in a favorable interest rate environment.

Holders who validly tendered their Old Notes after the Early Exchange Date but before the Expiration Date and whose Old Notes are accepted in the Exchange Offers will receive New Notes and cash in the amounts described below.

Old Notes	Â	Maturity Date	Â	Exchange Consideration(1)
7.125 Percent Notes		December 1, 2096		$970 principal amount of New Notes and a cash amount of $259.01
7.000 Percent Notes		October 30, 2045		$980 principal amount of New Notes and a cash amount of $224.62
8.000 Percent Notes		October 15, 2038		$1,070 principal amount of New Notes and a cash amount of $268.74

⁽¹⁾ For each $1,000 principal amount of Old Notes.

Holders who validly tendered their Old Notes after the Early Exchange Date but before the Expiration Date and whose Old Notes are accepted in the Exchange Offers will receive their New Notes and cash payments on Thursday, December 10, 2009. IBM will pay accrued and unpaid interest in cash on the Old Notes accepted in the Exchange Offers after the Early Exchange Date but prior to the Expiration Date to, but not including, December 10, 2009, minus accrued and unpaid interest on the New Notes to, but not including, December 10, 2009. Based on the number of Old Notes tendered after the Early Exchange Date but before the Expiration Date, IBM will issue approximately $2 million aggregate principal amount of additional New Notes on December 10, 2009, subject to satisfaction or waiver of the conditions to the Exchange Offers, in addition to approximately $1,515 million aggregate principal amount of New Notes issued on November 30, 2009. Accordingly, the total aggregate principal amount of New Notes outstanding will be approximately $1,517 million.

Global Bondholder Services Corporation is the exchange and information agent for the Exchange Offers. Requests for copies of the Exchange Circular and questions regarding the Exchange Offers may be directed to Global Bondholder Services Corporation at 1-866-389-1500. Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. are the financial advisors for the Exchange Offers.

This is not an offer to exchange or a solicitation of an offer to exchange with respect to any securities and is qualified in its entirety by reference to the Exchange Circular. The Exchange Offers will be made solely pursuant to the terms and conditions of the Exchange Circular.

Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the Exchange Circular. Any representation to the contrary is a criminal offense.

The Exchange Offers are not being made to, nor will IBM accept tenders of Old Notes from, holders in any jurisdiction in which the Exchange Offers or the acceptance thereof would not be in compliance with the securities or blue sky laws of such jurisdiction.

The New Notes have not been and will not be registered under the Securities Act of 1933. IBM is making the Exchange Offers in reliance on the exemption from the registration requirements of the Securities Act of 1933 afforded by Section 3(a)(9) thereof.

Except for the historical information and discussions contained herein and therein, statements contained in this press release and the Exchange Circular may constitute forward-looking statements. 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 the economic environment and corporate IT spending budgets; our failure to meet growth and productivity objectives; a failure of our innovation initiatives; risks from investing in growth opportunities; failure of our intellectual property portfolio to prevent competitive offerings and our failure to obtain necessary licenses; breaches of data protection; fluctuations in revenues and purchases; impact of local legal, economic, political and health conditions; adverse effects from environmental matters, tax matters and our pension plans; ineffective internal controls; our use of accounting estimates; competitive conditions; our ability to attract and retain key personnel and our reliance on critical skills; impact of relationships with critical suppliers; 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; our ability to successfully manage acquisitions and alliances; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in our Form 10-Q, Form 10-K and in our other filings with the Securities and Exchange Commission or in materials incorporated therein by reference. We assume no obligation to update or revise any forward-looking statements.

IBM Media Relations

Doug Shelton, 914/499-6533

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or

Treasury Director

Rick Klutey, 914/499-5425

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