IBM 1999 Annual Report Download - page 80

notes to consolidated financial statements
International Business Machines Corporation
and Subsidiary Companies
N Stockholders’ Equity Activity
Stock Repurchases
From time to time, the Board of Directors authorizes the
company to repurchase IBM common stock. The company
repurchased 71,618,800 common shares at a cost of $7.3 bil-
lion and 114,768,200 common shares at a cost of $6.9 billion in
1999 and 1998, respectively. In 1999, the company did not retire
the shares it repurchased. The 1998 repurchases resulted in a
reduction of $28,498,409 in the stated capital (par value)
associated with common stock. In 1998, the company retired
the repurchased shares and restored them to the status of
authorized but unissued shares. In 1999 and 1998, the company
issued 906,829 and 774,564 shares, respectively, as a result of
exercises of employee stock options. At December 31, 1999,
approximately $2.5 billion of Board authorization for repur-
chases remained. The company plans to purchase shares on the
open market from time to time, depending on market conditions.
In 1995, the Board of Directors authorized the company to pur-
chase all of its outstanding Series A 7-1 ⁄2 percent preferred
stock. The company did not repurchase any shares in 1999.
During 1998, the company repurchased 51,250 shares at a cost
of $5.5 million. This resulted in a $512.50 ($.01 par value per
share) reduction in the stated capital associated with pre-
ferred stock as of December 31, 1998. The company retired the
repurchased shares and restored them to the status of authorized
but unissued shares. The company plans to purchase the
remaining outstanding shares on the open market and in private
transactions from time to time, depending on market conditions.
There were 2,546,011 shares outstanding at December 31,
1999 and 1998.
Employee Benefits Trust
Effective November 1, 1997, the company created an employee
benefits trust to which it contributed 20 million shares of treasury
stock. The company is authorized to instruct the trustee to sell
shares from time to time and to use proceeds from those sales,
and any dividends paid on the contributed stock, toward the
partial satisfaction of the company’s future obligations under
certain of its compensation and benefits plans. The shares held
in trust are not considered outstanding for purposes of calcu-
lating earnings per share until they are committed to be
released. The trustee will vote the shares in accordance with
its fiduciary duties. As of December 31, 1999 and 1998, the
company had not committed any shares to be released.
At December 31, 1998, the company adjusted its valuation of
the employee benefits trust to fair value. This adjustment
affected only line items within stockholders’ equity; it did not
affect total stockholders’ equity or net income.
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Accumulated Gains and Losses Not Affecting Retained Earnings
Foreign Net Unrealized Total Gains and
Currency Gains (Losses) on Losses Not Affecting
(Dollars in millions) Items*Marketable Securities*Retained Earnings*
Beginning balance, January 1, 1997 $«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
Change for period (546) 796 250
Ending balance, December 31, 1999 $÷÷314 $«847 $«1,161
*Net of tax.