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Notes to consolidated financial statements (audited)
International Business Machines Corporation and Subsidiary Companies

Q. Research, development and engineering

RD&E expense was $6,337 million in 2008, $6,153 million in 2007 and $6,107 million in 2006.

The company incurred expenses of $6,015 million in 2008, $5,754 million in 2007 and $5,682 million in 2006 for scientific research and the application of scientific advances to the development of new and improved products and their uses, as well as services and their application. Within these amounts, software-related expense was $3,359 million, $3,037 million and $2,842 million in 2008, 2007 and 2006, respectively. In addition, included in the expense was a charge of $24 million in 2008 and $7 million in 2006 for acquired IPR&D.

Expense for product-related engineering was $322 million, $399 million and $425 million in 2008, 2007 and 2006, respectively.

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