INTERNATIONAL BUSINESS MACHINES CORPORATION CONSOLIDATED STATEMENT OF EARNINGS FOR THE NINE MONTHS ENDED SEPTEMBER 30, (Dollars in millions except Three Months Ended Nine Months Ended per share amounts) September 30, September 30, 1999 1998 1999 1998 Revenue 21,144 20,095 63,366 56,536 Total cost 13,580 12,628 40,320 35,473 Gross profit 7,564 7,467 23,046 21,063 Operating expenses: Selling, general and administrative 3,501 4,057 10,284 11,588 Research, development and engineering 1,383 1,240 3,857 3,639 Total operating expenses 4,884 5,297 14,141 15,227 Operating income 2,680 2,170 8,905 5,836 Other income, principally interest 134 122 423 402 Interest expense 185 160 556 500 Income before income taxes 2,629 2,132 8,772 5,738 Income tax provision 867 638 3,149 1,756 Net income 1,762 1,494 5,623 3,982