# Contents:

1. Financial Highlights
2. Letter to Stockholders
3. Partnerships: "Each party contributes; each benefits."
4. 1985 in Review
5. Financial Report
   - Report of Management
   - Report of Independent Accountants
   - Earnings
   - Management Discussion—Results of Operations
   - Financial Position
   - Management Discussion—Financial Condition
   - Funds Flow
   - Stockholders' Equity
   - Notes to Financial Statements
   - Five-Year Comparison of Financial Data
   - Supplemental Financial Information
6. Directors and Officers
7. IBM Organization
8. Stockholder Information

**Cover:** The IBM 5126 Technician Terminal, pictured here, is a key element of General Motors' Computerized Automotive Maintenance System (GM-CAMS), a joint development effort of the Buick Motor Division, other units of General Motors, including Electronic Data Systems (EDS), and IBM. The terminal, which consists of an IBM Personal Computer, touch-sensitive screen, and GM and IBM-developed software, is designed to quickly and accurately diagnose and isolate electronic problems in GM vehicles. When linked to GM's centralized system, maintained by EDS, the terminal will receive current diagnostic software and repair information and provide GM with valuable feedback on repair activities. Buick will begin marketing GM-CAMS to its dealers this year. The project with GM, a long-standing IBM customer, represents the diversity of IBM's associations with others in activities from research and development to manufacturing and marketing.

**IBM's operations:** IBM's operations are primarily in the field of information-handling systems, equipment, and services to solve the increasingly complex problems of business, government, science, space exploration, defense, education, medicine, and many other areas of human activity. IBM's products include information processing products and systems, program products, telecommunications systems, office systems, typewriters, copiers, educational and testing materials, and related supplies and services. Most products are both leased and sold through IBM's worldwide marketing organizations. Selected products are marketed and distributed through authorized dealers and remarketers.