UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 31, 2003
(Date of earliest event reported)
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Exact name of registrant as specified in its charter)
New York 1-2360 13-0871985
(State of Incorporation) (Commission File Number) employer Identification No.)
ARMONK, NEW YORK 10504
(Address of principal executive offices) (Zip Code)
914-499-1900
(Registrant's telephone number)
Item 5. Other Events
On July 31, 2003, IBM issued a press release announcing that it will
appeal the decision issued on July 31, 2003 in Cooper et al v. The IBM
Personal Pension Plan and IBM Corporation. The press release is Attachment I
of this Form 8-K.
IBM's web site (www.ibm.com) contains a significant amount of information
about IBM, including financial and other information for investors
(www.ibm.com/investor/). IBM encourages investors to visit its various web sites
from time to time, as information is updated and new information is posted.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Date: July 31, 2003
By: /s/ Andrew Bonzani
----------------------------
(Andrew Bonzani)
Assistant Secretary &
Associate General Counsel
Attachment I
IBM TO APPEAL LOWER COURT DECISION IN PENSION CASE
ARMONK, NY, July 31, 2003 -- IBM announced it will appeal the decision in Cooper
et al vs. The IBM Personal Pension Plan and IBM Corporation in which the U.S.
District Court for the Southern District of Illinois held that IBM's pension
plan violated the age discrimination provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
IBM disagrees with the district court's ruling and believes that it will prevail
on appeal. IBM's pension plan does not discriminate on the basis of age.
IBM's plan always provides older employees with benefits of equal value or
greater value than the benefits earned by younger employees. Neither the
plaintiffs nor the judge ever disputed that fact. To call such a plan age
discriminatory makes no sense and ignores the fundamental principle of the time
value of money.
"IBM has a long history of providing pension benefits for its employees. We
defended this lawsuit to preserve the current pension plan," said J. Randall
MacDonald, IBM senior vice president, human resources. "This ruling affects not
just IBM's pension plan, but the pension plans of more than 400 major U.S.
companies. This is a situation where a few have spoiled it for millions of U.S.
workers."
Under the court's interpretation of the law, every cash balance plan in the
country is illegal. Scores of Fortune 500 companies have such plans. According
to economists at the Federal Reserve Board, cash balance plans account for 25
percent of all participants in defined benefit plans and 40 percent of all
assets invested in defined benefit plans.
The court's reasoning also would invalidate pension equity plans, contributory
defined benefit plans, indexed career pay plans, and variable annuity plans.
Some of these plans have been in existence since the 1930s.
If the court's notion of age discrimination were applied to the U.S. Social
Security program, Social Security would be condemned as age
discriminatory. This is because Social Security, like the IBM pension plan, is
indexed to take account of the time value of money.
The court's decision is contrary to the decision of two other district courts
which uphold cash balance plans as lawful.
The district court did not make any determination as to remedies, which will be
the subject of a separate hearing. Any discussion of remedies would be premature
and speculative.