Rheinmetall and IBM Extend Scope of Services Agreement

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STUTTGART, GERMANY - 25 Apr 2006: Rheinmetall AG, Düsseldorf, and IBM are extending the scope of their existing IT Services agreement to include Business Transformation Outsourcing Services. The revised contract will take effect immediately and the transition is scheduled for successful conclusion by December 31, 2006.

The new EUR 13 million, seven-year contract covers the outsourcing of payroll accounting for Rheinmetall Defence and services in connection with occupational pensions for Rheinmetall Group.

These services will be provided by IBM Mittelstand Systeme GmbH (IMS), a wholly-owned subsidiary of IBM Central Holding GmbH. In addition to the services themselves, IMS will provide all the data processing and communications systems that are required.

IMS will take over payroll accounting for the executive bodies and employees of nine Rheinmetall Defence companies. Services provided will include personnel master data and personnel timesheet management, payroll accounting, system customizing, evaluation and interface management for occupational pensions and part-time working for older employees. IMS will provide occupational pension services to a total of 28 companies of Rheinmetall Group for all active contributing employees, company pensioners and past employees with pension entitlements.

Rheinmetall hopes that the agreement will lead to significant cost savings now that it can concentrate more on its core business, but is also hopeful of smooth, friction-free services that can be provided flexibly and as required. "IMS is the appropriate IT-service provider for the SMB business. Due to the enlargement of our partnership with IMS we firstly brought together our know-how with the dynamic of a BTO partner. Secondly the enlargement combines our expertise in our core business with the innovation expertise of our IT partner," said Markus Bentele, Chief Information Officer Rheinmetall AG.

Rheinmetall sold its IT subsidiary to IBM Germany in January 2003 and has since bought in its IT services from IMS by the terms of a full-service outsourcing agreement. "This contract extension testifies to the two companies' successful and trusting cooperation," said Dr Frank-Rainer Bolz, managing director IMS. "It is also," he added, "a sign that we are heading in the right direction with our customized solution offerings for small and medium businesses."

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