IBM Announces Expiration of Early Exchange Peri...

IBM Announces Expiration of Early Exchange Period for Debt Exchange Offers

IBM

IBM (NYSE: IBM) today announced the expiration yesterday of the early exchange period in connection with its offers to exchange any and all of its 8.000 percent notes due 2038 (the “8.000 percent notes”) and up to $800,000,000 aggregate principal amount of its 5.600 percent notes due 2039 (the “5.600 percent notes”) for a new series of 4.00 percent notes due 2042 (the “new notes”) and cash. As of 5:00 p.m. eastern time, on Monday, June 4, 2012 (the “early exchange date”), approximately $103,698,000 of the 8.000 percent notes and $846,622,000 of the 5.600 percent notes have been tendered for exchange.

The exchange offers also include IBM’s offer to exchange any and all of its 7.125 percent debentures due 2096 (the “7.125 percent notes” and, together with the 8.000 percent notes and 5.600 percent notes, the “old notes”) for new notes and cash (together with its offers to exchange the 8.000 percent notes and the 5.600 percent notes, the “exchange offers”). There was no early exchange period associated with the exchange offer for the 7.125 percent notes. As of the early exchange date, approximately $615,000 of the 7.125 percent notes have been tendered for exchange. Holders of old notes may no longer validly withdraw tenders of old notes.

The exchange offers will expire at 12:00 midnight eastern time, on Monday, June 18, 2012 (the “expiration date”), unless extended by IBM.

Because the aggregate principal amount of the 5.600 percent notes validly tendered before the early exchange date exceeded the maximum aggregate principal amount to be accepted, IBM will accept validly tendered 5.600 percent notes on a pro rata basis. IBM will not be able to determine what the effects of proration may be until after the expiration date has passed.

Holders who validly tendered their 8.000 percent notes and 5.600 percent notes by the early exchange 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	Principal Amount Outstanding	Â	Early Exchange Consideration(1)(2)
8.000 percent notes		October 15, 2038		$186,670,000		$1,694.80 principal amount of new notes
						Â
5.600 percent notes		November 30, 2039		$1,545,095,000		$1,155.07 principal amount of new notes and a cash amount of $150.00

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⁽¹⁾ For each $1,000 principal amount of old notes.
⁽²⁾ Includes early exchange premium of $40 principal amount of new notes.

IBM will also pay accrued and unpaid interest in cash on the old notes accepted in the exchange offers to, but not including, June 20, 2012, the settlement date for the exchange offers.

Following the upgrade of IBM’s corporate credit rating to AA- from A+ by Standard & Poor’s Rating Services, we now expect the new notes to be rated Aa3 by Moody’s and AA- by S&P.

The exchange offers are subject to the satisfaction or waiver of certain conditions, including our ability to issue at least $500 million aggregate principal amount of new notes in exchange for all old notes tendered and accepted for exchange in order to complete any of the exchange offers. As of the early exchange date, the aggregate principal amount of old notes that have been tendered for exchange and not withdrawn provides IBM with the ability to issue at least $500 million aggregate principal amount of new notes, subject to the satisfaction or waiver of other conditions to the exchange offers, as described in the exchange circular dated May 21, 2012.

Global Bondholders 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 [phone] (banks and brokers only) or toll free at [phone].

This announcement 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 within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on our 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 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; cybersecurity and data privacy considerations; fluctuations in financial results 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; our ability to attract and retain key personnel and our reliance on critical skills; impacts of relationships with critical suppliers and 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; 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 U.S. Securities and Exchange Commission (SEC) or in materials incorporated therein by reference. Any forward-looking statement in this press release or the exchange circular speaks only as of the date on which it is made. We assume no obligation to update or revise any forward-looking statements.

IBM Media Relations
Doug Shelton, 914/499-6533
[e-mail]
or
IBM Treasury Department
Easwaran K. Venkatasubramanian, 914/499-6108
[e-mail]