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Management discussion
International Business Machines Corporation and Subsidiary Companies

Road map

The financial section of the International Business Machines Corpor­ation (IBM or the company) 2008 Annual Report consists of this Management Discussion, the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements. This Road Map is designed to provide the reader with some perspective regarding the information contained in the financial section.

Organization of information

  • The Management Discussion is designed to provide readers with a narrative on the company’s financial results and certain factors that may affect future prospects from the perspective of the company’s management. The “Management Discussion Snap­shot” presents an overview of the key performance drivers in 2008.
  • Beginning with the “Year in Review,” the Management Discussion contains the results of operations for each segment of the business, a discussion of the company’s financial position and cash flows, in addition to other key information and data. It is useful to read the Management Discussion in conjunction with note V, “Segment Information.”
  • Global Financing is a reportable segment that is measured as if it were a standalone entity. A separate “Global Financing” section is included here. The information presented in this section is consistent with this separate company view.
  • The Consolidated Financial Statements provide an overview of the company’s income and cash flow performance and its financial position.
  • The notes follow the Consolidated Financial Statements. Among other items, the notes contain the company’s accounting policies, acquisitions and divestitures, detailed information on specific items within the financial statements, certain contingencies and commitments, and retirement-related benefits information.
  • The reference to “adjusted for currency” in the Management Discussion is made so that certain financial results can be viewed without the impacts of fluctuating foreign currency exchange rates and therefore facilitates a comparative view of business performance. See “Currency Rate Fluctuations” for additional information.
  • Within the financial tables in this Annual Report, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages reported in the financial tables throughout this Annual Report are calculated from the underlying whole-dollar numbers.

Discontinued operations

On December 31, 2002, the company sold its hard disk drive (HDD) business to Hitachi, Ltd. (Hitachi). The HDD business was accounted for as a discontinued operation under generally accepted accounting principles (GAAP) and therefore, the HDD results of operations and cash flows have been removed from the company’s results of continuing operations and cash flows for all periods presented in this document except 2008, in which there was no activity. See Discontinued operations for additional information.

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