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Management discussion
International Business Machines Corporation and Subsidiary Companies

Return on equity

($ in millions)
At December 31: 2008 2007

* Calculated based upon an estimated tax rate principally based on Global Financing’s geographic mix of earnings as IBM’s provision for income taxes is determined on a consolidated basis.

** Average of the ending equity for Global Financing for the last five quarters.

Global Financing after-tax income(a)* $1,049 $877
Average Global Financing equity(b)** $3,572 $3,365
Global Financing return on equity(a)/(b) 29.4% 26.1%
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