# International Business Machines Corporation and Subsidiary Companies

## Consolidated Statement of Funds Flow
for the year ended December 31:

| (Dollars in millions) | 1985 | 1984 | 1983 |
|-----------------------|------|------|------|
| **Funds(Cash and Marketable Securities) at January 1** | $ 4,162 | $ 5,536 | $ 3,300 |
| **Provided from (used for) Operations:** |
| **Sources:** |
| Net earnings | $ 6,555 | $ 6,582 | $ 5,485 |
| Items not requiring the current use of funds: |
| Depreciation charged to costs and expenses | 2,894 | 2,987 | 3,362 |
| Net book value of rental machines and other property retired or sold | 867 | 1,483 | 2,108 |
| Amortization of program products | 425 | 486 | 311 |
| Other (principally deferred income taxes) | 1,880 | 1,004 | 749 |
| Depreciation of manufacturing facilities capitalized | 157 | 228 | 265 |
| **Total provided from operations** | 12,778 | 12,770 | 12,280 |
| **Uses:** |
| Investment in rental machines | 313 | 858 | 1,412 |
| Investment in plant and other property | 6,117 | 4,615 | 3,518 |
| Investment in program products | 6,430 | 5,473 | 4,930 |
| Increase in investments and other assets | 785 | 803 | 588 |
| Net change in working capital (excluding cash, marketable securities and loans payable) | 454 | 1,764 | 1,887 |
| Translation effects | 3,101 | 4,943 | 855 |
| **Total used for operations** | 10,770 | 12,083 | 8,260 |
| **Net provided from operations** | 2,685 | 363 | 3,873 |
| **Provided from External Financing:** |
| Net change in long-term debt | 686 | 595 | (177) |
| Net change in loans payable | (459) | (302) | 3 |
| **Net provided from external financing** | 1,145 | 897 | (174) |
| **Provided from Employee and Stockholder Plans** | 133 | 73 | 788 |
| **Total provided from external financing** | 8,325 | 6,869 | 7,787 |
| **Less: Cash Dividends Paid** | 2,793 | 2,507 | 2,251 |
| **Funds(Cash and Marketable Securities) at December 31** | $ 5,622 | $ 4,162 | $ 5,536 |

The notes on pages 34 through 43 are an integral part of this statement.