IBM 10-K Annual Report Dec. 31, 2019 | Alphaminr
INTERNATIONAL BUSINESS MACHINES CORP
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IBM 10-K Fiscal year ended Dec. 31, 2019

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INTERNATIONAL BUSINESS MACHINES CORP
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TABLE OF CONTENTS
Part IItem 1. Business:Item 1A. Risk Factors:Item 1B. Unresolved Staff Comments:Item 2. Properties:Item 3. Legal Proceedings:Item 4. Mine Safety Disclosures:Part IIItem 5. Market For The Registrant S Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity Securities:Item 6. Selected Financial Data:Item 7. Management S Discussion and Analysis Of Financial Condition and Results Of Operations:Item 7A. Quantitative and Qualitative Disclosures About Market Risk:Item 8. Financial Statements and Supplementary Data:Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure:Item 9A. Controls and Procedures:Item 9B. Other Information:Part IIIItem 10. Directors, Executive Officers and Corporate Governance:Item 11. Executive Compensation:Item 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder Matters:Item 13. Certain Relationships and Related Transactions, and Director Independence:Item 14. Principal Accounting Fees and Services:Part IVItem 15. Exhibits, Financial Statement Schedules:Item 601 OfItem 16. Form 10-k Summary:

Exhibits

The Certificate of Incorporation of IBM is Exhibit3.2 to Form8-K filed April27, 2007,and is hereby incorporated by reference. The By-Laws of IBM, as amended through October 29, 2019, is Exhibit3.2 to Form10-Qforthe quarter ended September 30, 2019, and is hereby incorporated by reference. The By-Laws of IBM, as amended through April 6, 2020. 3.2 The instruments defining the rights of the holders of the 7.00% Debentures due 2025 and the 7.00% Debentures due 2045 are Exhibits 2 and 3, respectively, to Form8-K, filed on October30, 1995, and are hereby incorporated by reference. The instrument defining the rights of the holders of the 7.125% Debentures due 2096 is Exhibit4.2 to Form8-K/A, filed on December6, 1996, and is hereby incorporated byreference. The instrument defining the rights of the holders of the 6.22% Debentures due 2027 is Exhibit3 to Form8-K, filed on August1, 1997, and is hereby incorporated byreference. The instrument defining the rights of the holders of the 6.50% Debentures due 2028 isExhibit2 to Form8-K, filed on January8, 1998, and is hereby incorporated by reference. The instrument defining the rights of the holders of the 2.900% Notesdue 2021 is Exhibit3.1 to Form8-K, filed October31, 2011, and is hereby incorporated by reference. The instruments defining the rights of the holders of the 1.875% Notesdue 2022 is Exhibit2.1 to Form8-K, filed July27, 2012, and is hereby incorporated by reference. The instrument defining the rights of the holders of the 1.625% Notesdue 2020 is Exhibit 3.1 to Form8-K, filed May6, 2013, and is hereby incorporated by reference. The instrument defining the rights of the holders of the 3.375% Notesdue 2023 is Exhibit2 to Form8-K, filed July31, 2013, and is hereby incorporated by reference. The instruments defining the rights of the holders of the 1.875% Notesdue 2020 and 2.875% Notesdue 2025 are Exhibits2 and 3 to Form8-K, filed November6, 2013,and are hereby incorporated by reference. The instrument defining the rights of the holders of the 2.750% Notesdue 2020 is Exhibit2 to Form8-K, filed November20, 2013, and is hereby incorporated by reference. The instrument defining the rights of the holders of the 3.625% Notesdue 2024 is Exhibit5 to Form8-K, filed February11, 2014, and is hereby incorporated by reference. The instrument defining the rights of the holders of the Floating Rate Notesdue 2021 isExhibit2 to Form8-K, filed November5, 2014, and is hereby incorporated by reference. The instrument defining the rights of the holders of the 1.250% Notesdue 2023 is Exhibit2to Form8-K, filed November25, 2014, and is hereby incorporated by reference. The instrument defining the rights of the holders of the 2.625% Notesdue 2022 is Exhibit2 to Form8-K, filed on August4, 2015, and is hereby incorporated by reference. The instrument defining the rights of the holders of the 2.875% Notesdue 2022 is Exhibit2 to Form8-K, filed on November6,2015, and is hereby incorporated by reference. The instruments defining the rights of the holders of the 2.250% Notesdue 2021, 3.450% Notesdue 2026 and 4.700% Notesdue 2046 are Exhibits 4.3, 4.4 and 4.5 to Form8-K filed February18, 2016, and are hereby incorporated by reference. The instruments defining the rights of the holders of the 0.500% Notesdue 2021, 1.125% Notesdue 2024 and 1.750% Notesdue 2028 are Exhibits 4.1, 4.2 and 4.3 to Form8-K filed March4, 2016, and are hereby incorporated by reference. The instrument defining the rights of the holders of the 0.30% Notesdue 2026 is Exhibit4to Form8-K filed November1, 2016, and is hereby incorporated by reference. The instruments defining the rights of the holders of the 2.500% Notesdue 2022 and 3.300% Notesdue 2027 are Exhibits 4.3 and 4.4 to Form8-K filed January26, 2017, and are herebyincorporated by reference. The instruments defining the rights of the holders of the 0.950% Notesdue 2025, and 1.500% Notesdue 2029 are Exhibits4.1 and 4.2 to Form8-K filed May22, 2017, and are hereby incorporated by reference. The instruments defining the rights of the holders of the 0.375% Notesdue 2023, the 0.875% Notesdue 2025, the 1.250% Notesdue 2027 and the 1.750% Notes due 2031 are Exhibits4.1, 4.2, 4.3 and 4.4 to Form8-K, filed January30, 2019, and arehereby incorporated by reference. The instruments defining the rights of the holders of the Floating Rate Notesdue 2021, 2.800% Notesdue 2021, the 2.850% Notesdue 2022. the 3.000% Notesdue 2024, the 3.300% Notes due 2026, the 3.500% Notes due 2029, the 4.150% Notes due 2039 and the 4.250% Notes due 2049 are Exhibits4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7 and 4.8 to Form8-K, filed May 14, 2019, and arehereby incorporated by reference. The instruments defining the rights of the holders of the 0.300% Notes due 2028, the 0.650% Notes due 2032 and the 1.200% Notes due 2040 are Exhibits 4.1, 4.2 and 4.3 to Form 8-K, filed February 10, 2020, and are hereby incorporated by reference. Indenture dated as of October1, 1993 between IBM and The Bank of New York Mellon,(as successor to The Chase Manhattan Bank (National Association)) as Trustee,isExhibit4.1 to Form10-Q for the quarter ended September30, 2017, and ishereby incorporated by reference. First Supplemental Indenture to Indenture dated as of October1, 1993 between IBM and The Bank of New York Mellon, (as successor to The Chase Manhattan Bank(National Association)) as Trustee, dated as of December15, 1995, is Exhibit4.2toForm10-Q for the quarter ended September30, 2017, and is hereby incorporated byreference. Description of Securities Registered under Section 12 of the Exchange Act 4.1 The IBM 2001 Long-Term Performance Plan, a compensatory plan, contained in Registration Statement No.333-87708 on FormS-8, as such amended plan was filedasExhibit10.1 to Form10-Q for the quarter ended September30, 2007, is herebyincorporated by reference.* The IBM PWCC Acquisition Long-Term Performance Plan, a compensatory plan, contained in Registration Statement No.333-102872 on FormS-8, as such amended planwas filed as Exhibit10.2 to Form10-Q for the quarter ended September30, 2007, ishereby incorporated by reference.* The IBM 1999 Long-Term Performance Plan, a compensatory plan, contained in Registration Statement No.333-30424 on FormS-8, as such amended plan was filed asExhibit10.3 to Form10-Q for the quarter ended September30, 2007, is hereby incorporated by reference.* The IBM 1997 Long-Term Performance Plan, a compensatory plan, contained in Registration Statement No.333-31305 on FormS-8, as such amended plan was filed asExhibit10.4 to Form10-Q for the quarter ended September30, 2007, is hereby incorporated by reference.* Forms of LTPP equity award agreements for (i)stock options, restricted stock, restricted stock units, cash-settled restricted stock units, SARS and (ii)retention restrictedstock unit awards. Such equity award agreement forms and the related termsandconditions document, effective June9, 2014, were filed under Exhibit10.1 as Exhibit10.2 to Form10-Q for the quarter ended March31, 2014, are hereby incorporated by reference.* Formof LTPP equity award agreement for performance share units was filedas Exhibit10.1 to Form10-Q for the quarter ended March31, 2015, and is hereby incorporated by reference.* Terms and Conditions of LTPP equity award agreements was filed as Exhibit10.1 to Form10-Q for the quarter ended June30, 2016, and is hereby incorporated by reference.* Formof LTPP equity award agreement for performance share units and Terms and Conditions of LTPP Equity Awards, effective June1, 2018, in connection with the foregoing award agreements, filed as Exhibit10.1 to Form10-Q for the quarter endedMarch31, 2018, is hereby incorporated by reference.* Forms of LTPP equity award agreements for (i)stock options, restricted stock, restrictedstock units, cash-settled restricted stock units, SARS, (ii)performance shareunits and (iii)retention restricted stock unit awards as well as the Terms and Conditions of LTPP Equity Awards, effective August15, 2018, in connection with the foregoing award agreements, filed as Exhibit10.1 to Form10-Q for the quarterended June30, 2018, are hereby incorporated by reference.* Forms of equity award agreements for (i)stock options, restricted stock, restricted stock units, cash-settled restricted stock units, SARS, (ii)performance share units and (iii)retention restricted stock unit awards as well as the Terms and Conditions ofLTPP Equity Awards, effective October1, 2018, in connection with the foregoingaward agreements, filed as Exhibit10.1 to Form10-Q for the quarter endedSeptember30, 2018 are hereby incorporated by reference.* Terms and Conditions of LTPP equity award agreements was filed as Exhibit10.2 to Form10-Q for the quarter ended March31, 2019, and is hereby incorporated by reference.* Forms of equity award agreements for stock options, restricted stock, restricted stock units, cash-settled restricted stock units and SARS, as well as the Terms and Conditions ofLTPP Equity Awards, effective July 15, 2019, in connection with the foregoingaward agreements, filed as Exhibit10.1 to Form10-Q for the quarter endedJune30, 2019, are hereby incorporated by reference.* Forms of LTPP equity award agreements for (i)stock options, restricted stock, restrictedstock units, cash-settled restricted stock units, SARS, and (ii)performance shareunits, as well as the Terms and Conditions of LTPP Equity Awards, effective October 1, 2019, in connection with the foregoing award agreements, filed as Exhibit10.1 to Form10-Q for the quarterended September30, 2019, are hereby incorporated by reference.* Form of LTPP equity award agreement for performance share units and the terms and conditions of LTPP Equity Awards, effective December 17, 2019, in connection with the foregoing award agreements.* 10.1 The IBM Non-Employee Directors Stock Option Plan, contained in Registration Statement 33-60227 on FormS-8, is hereby incorporated by reference.* The IBM Board of Directors Amended and Restated Deferred Compensation and Equity Award Plan, a compensatory plan, as amended and restated effective January1, 2014, which was filed as Exhibit10.1 to Form10-K for theyear ended December31, 2013, and is herebyincorporated by reference.* Amendment No.1 to the Amended and Restated Deferred Compensation and EquityAward Plan, effective January30, 2018, which was filed as Exhibit10.1 to Form10-K for theyear ended December31, 2017, is hereby incorporatedby reference. The IBM Supplemental Executive Retention Plan, a compensatory plan, as amended and restated through December31, 2008, which was filed as Exhibit10.2 to Form10-K for theyear ended December31, 2008, is hereby incorporatedby reference.* Amendment No.1 to the IBM Supplemental Executive Retention Plan, a compensatory plan, effective December9, 2014, which was filed as Exhibit10.1 to Form10-K for theyear ended December31, 2014, and is hereby incorporated by reference.* The IBM Excess 401(k)Plus Plan, a compensatory plan (formerly the IBM ExecutiveDeferred Compensation Plan), as amended and restated through January1, 2010, which was filed as Exhibit10.1 to Form10-K for theyear endedDecember31, 2009 contained in Registration Statement No.333-171968 on FormS-8, is hereby incorporated by reference.* Amendment No.1 to the IBM Excess 401(k)Plus Plan, a compensatory plan, effectiveJanuary1, 2013 which was filed as Exhibit10.1 to Form10-K for the year ended December31, 2012, and is hereby incorporated by reference.* Amendment No.2 to the IBM Excess 401(k)Plus Plan, a compensatory plan, effective January1, 2013 which was filed as Exhibit10.2 to Form10-K for theyearended December31, 2012, and is hereby incorporated by reference.* Amendment No.3 to the IBM Excess 401(k)Plus Plan, a compensatory plan, effectiveJanuary1, 2013 which was filed as Exhibit10.2 to Form10-K for theyearended December31, 2013, and is hereby incorporated by reference.* Amendment No.4 to the IBM Excess 401(k)Plus Plan, a compensatory plan, dated as of February25, 2014, which was filed as Exhibit10.1 to Form10-Q for the quarterended March31, 2014, and is hereby incorporated by reference.* Amendment No.5 to the IBM Excess 401(k)Plus Plan, a compensatory plan, dated as of December9, 2014, which was filed as Exhibit10.2 to Form10-K for theyearended December31, 2014, and is hereby incorporated by reference.* Amendment No.6 to the IBM Excess 401(k)Plus Plan, a compensatory plan, dated as of December18, 2015, which was filed as Exhibit10.1 to Form10-K for theyear ended December31, 2015, and is hereby incorporated by reference.* Amendment No.7 to the IBM Excess 401(k)Plus Plan, a compensatory plan, dated as of June30, 2016, which was filed as Exhibit10.2 to Form10-Q for the quarter ended June30, 2016, and is hereby incorporated by reference.* Amendment No.8 to the IBM Excess 401(k)Plus Plan, a compensatory plan, dated as of December31, 2017, which was filed as Exhibit10.2 to Form10-K for theyear ended December31, 2017, is hereby incorporated by reference.* Amendment No.9 to the IBM Excess 401(k)Plus Plan, a compensatory plan, dated as of December18, 2018, which was filed as Exhibit10.1 to Form10-K for theyear ended December31, 2018, is hereby incorporated by reference.* The IBM 2003 Employees Stock Purchase Plan, contained in Registration Statement333-104806 on FormS-8, as amended through April1, 2005, which was filed as Exhibit10.3 to Form10-Q for the quarter ended March31, 2005, is hereby incorporated by reference.* Formof Noncompetition Agreement, filed as Exhibit10.2 to Form10-Q for the quarter ended March31, 2009, is hereby incorporated by reference.* Formof Noncompetition Agreement, filed as Exhibit10.1 to Form10-Q for the quarter ended March31, 2012, is hereby incorporated by reference.* Formof Noncompetition Agreement, filed as Exhibit10.2 to Form10-K for theyear ended December31, 2015, is hereby incorporated by reference.* Formof Noncompetition Agreement, filed as Exhibit10.3 to Form10-Q for the quarter ended June30, 2016, is hereby incorporated by reference.* Formof Noncompetition Agreement, filed as Exhibit10.1 to Form10-K for theyear ended December31, 2016, is hereby incorporated by reference.* Formof Noncompetition Agreement, filed as Exhibit10.3 to Form10-K for theyear ended December31, 2017, is hereby incorporated by reference.* Formof Noncompetition Agreement, filed as Exhibit10.2 to Form10-Q for the quarter ended September30, 2018, is hereby incorporated by reference.* Formof Noncompetition Agreement* 10.2 Letter Agreement, signed by Erich Clementi and IBM, effective as of April 30, 2019, filed as Exhibit10.1 to Form10-Q for thequarter ended March31, 2019, is hereby incorporated by reference. $2,500,000,000 364-Day Credit Agreement dated as of July18, 2019, among International Business Machines Corporation and IBM CreditLLC, as Borrowers, the several lenders and other financial institutions from time to time parties to such agreement, JP Morgan Chase Bank, N.A., as Administrative Agent, BNP Paribas, Citibank N.A., Royal Bank of Canada and Mizuho Bank,Ltd., as Syndication Agents, and the Documentation Agents named therein, filed as Exhibit10.1 to Form8-K dated July19, 2019, is hereby incorporated by reference. Amended and Restated $2,500,000,000 Three-Year Credit Agreement dated as of July19, 2018, among International Business Machines Corporation and IBM CreditLLC, as Borrowers, the Several Lenders from time to time parties to such Agreement, JPMorgan Chase Bank, N.A., as Administrative Agent, BNP Paribas, Citibank, N.A., Royal Bank of Canada and Mizuho Bank,Ltd., as Syndication Agents, and the Documentation Agents named therein, filed as Exhibit10.2 to Form8-K dated July20, 2018, is hereby incorporated by reference. Amended and Restated $10,250,000,000 Five-Year Credit Agreement dated as of July19, 2018, among International Business Machines Corporation, as the Borrower, the Several Lenders from time to time parties to such Agreement, JPMorgan Chase Bank, N.A., as Administrative Agent, BNP Paribas, Citibank, N.A., and Royal Bank of Canada and Mizuho Bank,Ltd., as Syndication Agents, and the Documentation Agents named therein, filed as Exhibit10.3 to Form8-K dated July20, 2018, is hereby incorporated by reference. Confirmation of Termination Date Extension to $2,500,000,000 Amended and Restated Three-Year Credit Agreement dated as of July19, 2018, among International Business Machines Corporation and IBM CreditLLC, as Borrowers, the several lenders from time to time parties to such Agreement, JPMorgan Chase Bank, N.A., as Administrative Agent, BNP Paribas, Citibank, N.A., Royal Bank of Canada and Mizuho Bank,Ltd., as Syndication Agents, and the Documentation Agents named therein, filed as Exhibit10.2 to Form8-K dated July19, 2019, is hereby incorporated by reference. Confirmation of Termination Date Extension to $10,250,000,000 Amended and Restated Five-Year Credit Agreement dated as of July19, 2018, among International Business Machines Corporation, as the Borrower, the several lenders from time to time parties to such Agreement, JPMorgan Chase Bank, N.A., as Administrative Agent, BNP Paribas, Citibank, N.A., and Royal Bank of Canada and Mizuho Bank,Ltd., as Syndication Agents, and the Documentation Agents named therein, filed as Exhibit10.3 to Form8-K dated July19, 2019, is hereby incorporated by reference. (13) Annual Report to Security Holders 13 (21) Subsidiaries of the registrant 21 (23) Consent of Independent Registered Public Accounting Firm 23.1 (24) Powers of attorney 24.1 Resolution of the IBM Board of Directors authorizing execution of this Annual Report on Form10-K by Powers of Attorney 24.2 (31) Certification by CEO pursuant to Rule13A-14(a)or 15D-14(a)of the Securities Exchange Act of 1934, as adopted pursuant to Section302 of the Sarbanes-Oxley Act of 2002 31.1 Certification by CFO pursuant to Rule13A-14(a)or 15D-14(a)of the Securities Exchange Act of 1934, as adopted pursuant to Section302 of the Sarbanes-Oxley Act of 2002 31.2 (32) Certification by CEO pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section906 of the Sarbanes-Oxley Act of 2002 32.1 Certification by CFO pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section906 of the Sarbanes-Oxley Act of 2002 32.2