IBM 1998 Annual Report Download - page 74

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS International Business Machines Corporation and Subsidiary Companies
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CSubsequent Events
Stock Split
On January 26, 1999, the IBM Board of Directors declared a
two-for-one common stock split, subject to the approval of
stockholders of an increase in the number of common shares
authorized from 1,875 million to 4,687.5 million. The record
date for the split will be on May 10, 1999, with distribution of
the split shares expected to follow on May 26, 1999. Earnings
per share calculations included in this report have not been
restated to reflect this proposed stock split.
Debt Offering
On February 1, 1999, the company issued $600 million of 5 3/8%
notes due February 1, 2009. The net proceeds from the issuance
of this debt will be used for general corporate purposes.
DDivestitures
In December 1998, IBM and AT&T announced that AT&T will
acquire IBM’s Global Network business for $5 billion in cash.
In addition, the two companies have agreed to enter into out-
sourcing contracts with each other. This subject is discussed
further on pages 61 and 62 under the section entitled “Divesti-
tures/Acquisitions” in the Management Discussion.
ECommon Stock Split
On April 29, 1997, the stockholders of the company approved
amendments to the Certificate of Incorporation to increase the
number of authorized shares of common stock from 750 mil-
lion to 1,875 million, which was required to effect a two-for-
one stock split approved by the company’s Board of Directors
on January 28, 1997. In addition, the amendments served to
reduce the par value of the common stock from $1.25 to $.50
per share. Stockholders of record at the close of business on
May 9, 1997, received one additional share for each share
held. All share and per share data prior to the second quarter
of 1997 presented in the Consolidated Financial Statements
and footnotes of this Annual Report reflect the two-for-one
stock split.
FInventories
(Dollars in millions)
At December 31: 1998 1997
Finished goods $«1,088 $«1,090
Work in process and
raw materials 4,112 4,049
Total $«5,200 $«5,139
GPlant, Rental Machines and Other Property
(Dollars in millions)
At December 31: 1998 1997
Land and land improvements $«««1,091 $«««1,117
Buildings 11,088 11,208
Plant, laboratory and
office equipment 27,025 25,015
39,204 37,340
Less: Accumulated depreciation 22,463 21,680
16,741 15,660
Rental machines 5,666 4,793
Less: Accumulated depreciation 2,776 2,106
2,890 2,687
Total $«19,631 $«18,347
HInvestments and Sundry Assets
(Dollars in millions)
At December 31: 1998 1997
Net investment in sales-type leases*$«14,384 $«13,733
Less: Current portion— net 6,510 5,720
7,874 8,013
Deferred taxes 2,921 3,163
Prepaid pension assets 4,836 3,828
Customer loan receivables—
not yet due 3,499 2,741
Installment payment receivables 1,087 977
Alliance investments:
Equity method 420 484
Other 138 236
Goodwill, less accumulated
amortization (1998, $2,111;
1997, $1,717) 945 950
Marketable securities— non-current 281 295
Other investments and
sundry assets 1,509 1,228
Total $«23,510 $«21,915
*These leases relate principally to IBM equipment and are generally for
terms ranging from three to five years. Net investment in sales-type leases
includes unguaranteed residual values of approximately $685 million and
$563 million at December 31, 1998 and 1997, respectively, and is reflected
net of unearned income at those dates of approximately $1,600 million for
both years. Scheduled maturities of minimum lease payments outstanding
at December 31, 1998, expressed as a percentage of the total, are approxi-
mately as follows: 1999, 48 percent; 2000, 31 percent; 2001, 15 percent;
2002, 5 percent; and 2003 and beyond, 1 percent.