IBM 2000 Annual Report Download - page 81

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MSTOCKHOLDERS’ EQUITY ACTIVITY
Stock Repurchases
From time to time, the Board of Directors authorizes the
company to repurchase IBM common stock. The company
repurchased 61,041,820 common shares at a cost of $6.7 bil-
lion and 71,618,800 common shares at a cost of $7.3 billion
in 2000 and 1999, respectively. In 2000 and in 1999, the
company did not retire the shares it repurchased. In 2000
and 1999, the company issued 2,174,594 and 906,829 treas-
ury shares, respectively, as a result of exercises of stock options
by employees of certain recently acquired businesses and by
non-U.S. employees. At December 31, 2000, approximately
$2.9 billion of Board authorized repurchases 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 repurchase all of its outstanding Series A 7-1⁄2 percent
callable preferred stock. The company did not repurchase
any shares in 2000 or in 1999. The company plans to pur-
chase the 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, 2000 and 1999.
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 com-
pany’s future obligations under certain of its compensation
and benefits plans. The shares held in trust are not consid-
ered outstanding for purposes of calculating 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, 2000 and 1999, the company had not
committed any shares to be released.
At December 31, 1998, the company began adjusting its
valuation of the employee benefits trust to fair value. These
adjustments affect only line items within stockholders’
equity; not total stockholders’ equity or net income.
Accumulated Gains and Losses Not Affecting
Retained Earnings*
Net Total
Unrealized Gains/(Losses)
Foreign Gains/(Losses) Not Affecting
Currency on Marketable Retained
(dollars in millions) Items Securities Earnings
January 1, 1998 $««791 $«108 $««««899
Change for period 69 (57) 12
December 31, 1998 860 51 911
Change for period (546) 796 250
December 31, 1999 314 847 1,161
Change for period (531) «(925) «««(1,456)
December 31, 2000 $«(217) $««(78) $«««(295)
*Net of tax.
NET CHANGE IN UNREALIZED GAINS/(LOSSES) ON
MARKETABLE SECURITIES (NET OF TAX)
(dollars in millions)
FOR THE YEAR ENDED DECEMBER 31: 2000 1999
Net unrealized (losses)/gains arising
during the period $«(810) $«943
Less net gains included in net income
for the period 115 147
Net change in net unrealized (losses)/
gains on marketable securities $«(925) $«796
Unrealized losses arising in 2000 relate primarily to previous
unrealized gains from original cost occurring in prior years.
NCONTINGENCIES
The company is subject to a variety of claims and suits that
arise from time to time in the ordinary course of its business,
including actions with respect to contracts, intellectual
property, product liability and environmental matters. The
company is a defendant and/or third-party defendant in a
number of cases in which claims have been filed by current
and former employees, independent contractors, estate rep-
resentatives, offspring and relatives of employees seeking
damages for wrongful death and personal injuries allegedly
caused by exposure to chemicals in various of the company’s
facilities from 1964 to the present. The company believes
that plaintiffs’ claims are legally baseless and without factual
support. The company will defend itself vigorously.
While it is not possible to predict the ultimate outcome
of the matters discussed above, the company believes that
any losses associated with any of such matters will not have
a material effect on the company’s business, financial condi-
tion or results of operations.
notes to consolidated financial statements
international business machines corporation
and Subsidiary Companies
page no.
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