IBM 1998 Annual Report Download - page 79

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS International Business Machines Corporation and Subsidiary Companies
77
NET CHANGE IN UNREALIZED GAINS (LOSSES) ON
MARKETABLE SECURITIES (NET OF TAX)
(Dollars in millions)
For the year ended December 31: 1998
Unrealized gains
arising during the period, net of tax $««99
Less gains included in net income
for the period, net of tax 156
Net decrease in unrealized gains
on marketable securities, net of tax $«(57)
PContingencies
The company is subject to a variety of claims and suits that
arise from time to time out of the ordinary course of its busi-
ness, including actions with respect to contracts, intellectual
property, product liability and environmental matters.The com-
pany does not believe that any such current action will have a
material impact on the company’s business, financial condi-
tion or results of operations.
On February 25, 1993, a class action complaint was filed
against the company in the United States District Court for the
Southern District of New York alleging, among other matters,
that the company disseminated false and misleading state-
ments concerning its financial condition and dividends during
certain periods of 1992. On February 3, 1997, Judge Rakoff
issued an order granting the company’s motion for summary
judgment in this case in its entirety. Plaintiffs filed an appeal
and on November 17, 1998, the Second Circuit Court of
Appeals upheld Judge Rakoff’s decision for the company.
QTaxes
(Dollars in millions)
For the year ended December 31: 1998 1997 1996
Income before income taxes:
U.S. operations $«2,960 $«3,193 $«3,025
Non-U.S. operations 6,080 5,834 5,562
$«9,040 $«9,027 $«8,587
The provision for income taxes
by geographic operations
is as follows:
U.S. operations $««««991 $««««974 $«1,137
Non-U.S. operations 1,721 1,960 2,021
Total provision for income taxes $«2,712 $«2,934 $«3,158
The components of the provision
for income taxes by taxing
jurisdiction are as follows:
U.S. federal:
Current $«1,117 $««««163 $««««727
Deferred (475) 349 83
642 512 810
U.S. state and local:
Current 139 83 158
Deferred (260) (87) (353)
(121) (4) (195)
Non-U.S.:
Current 2,062 2,330 2,262
Deferred 129 96 281
2,191 2,426 2,543
Total provision for income taxes 2,712 2,934 3,158
Provision for social security,
real estate, personal property
and other taxes 2,859 2,774 2,584
Total provision for taxes $«5,571 $«5,708 $«5,742
Accumulated Gains and Losses Not Affecting Retained Earnings
Foreign Net Unrealized Total Gains and
Currency Gains (Losses) on Losses Not Affecting
Items Marketable Securities Retained Earnings
(Dollars in millions) (Net of Tax) (Net of Tax) (Net of Tax)
Beginning balance, January 1, 1996 $«3,036 $«57 $«3,093
Change for period (635) 111 (524)
Ending balance, December 31, 1996 2,401 168 2,569
Change for period (1,610) (60) (1,670)))
Ending balance, December 31, 1997 791 108 899
Change for period 69 (57) 12
Ending balance, December 31, 1998 $÷÷860 $«51 $««««911