IBM Executes $12.5 Billion Accelerated Share Repurchases

IBM (NYSE: IBM) today announced that it repurchased $12.5 billion of its outstanding common stock through accelerated share repurchase agreements.

Under the agreements, IBM repurchased 118.8 million shares, or 8 percent of the outstanding shares of common stock as of May 29, for an initial price of $105.18 per share.
The shares were purchased from three banks under accelerated share repurchase agreements, which provided IBM with immediate delivery of the shares. The banks are expected to purchase an equivalent number of shares in the open market during the next nine months. The initial price of the accelerated share repurchases is subject to an adjustment based on the volume weighted average price of the shares during this period. IBM does not plan to make any additional stock repurchases during this period.

The repurchases were executed through IBM International Group, a wholly-owned subsidiary of IBM, with $1 billion in cash and $11.5 billion borrowed through a loan agreement with a number of financial institutions. Principal and interest on the loan will be paid with cash generated by IBM International Group’s non-U.S. operating subsidiaries.

The repurchases are part of the $15 billion authorization for the company’s stock repurchase program approved by the IBM board of directors on April 24. After executing the $12.5 billion repurchases, the company has approximately $1.8 billion remaining from this authorization. IBM does not anticipate requesting board approval for additional funds for stock repurchases prior to April 2008.

IBM said it expects 2007 earnings per share growth of 13 to 14 percent, compared with the 11 percent estimate the company provided during its first quarter earnings report. These estimates exclude the gain from the previously-announced sale of its printer business. The current estimate reflects the benefit of two to three points of growth, or approximately 14 to 17 cents of earnings per share, from the accelerated share repurchases.

Additional information about these accelerated share repurchases is available on IBM’s investor web site at http://www.ibm.com/investor/viewpoint/ircorner/2007/07-05-29-1.phtml.