IBM 2001 Annual Report Download - page 91

Notes to Consolidated Financial Statements
INTERNATIONAL BUSINESS MACHINES CORPORATION
and Subsidiary Companies
89
shares for release from the trust during its existence nor were
any shares sold from the trust. The trust would have expired
in 2007. Due to the fact that the company has not used the
trust, nor is it expected to need the trust prior to its expira-
tion, the company dissolved the trust, effective May 31,
2001, and all of the shares (20 million on a split-adjusted
basis) were returned to the company as treasury shares.
ACCUMULATED GAINS AND LOSSES NOT AFFECTING RETAINED EARNINGS*+
Net Net Accumulated
Unrealized Foreign Minimum Unrealized Gains/(Losses)
Gains on Currency Pension Gains/(Losses) Not Affecting
Cash Flow Translation Liability on Marketable Retained
(dollars in millions) Hedge Derivatives Adjustments Adjustments Securities Earnings
January 1, 1999 $«««— $«1,014 $«(154) $««««51 $«««««911
Change for period —(549) 3 796 250
December 31, 1999 —465 (151) 847 1,161
Change for period —(538) 7 «(925) «(1,456)
December 31, 2000 —(73) (144) (78) (295)
Cumulative effect on January 1, 2001 219 — — — 219
Change for period 77 (539) (216) 92 (586)
December 31, 2001 $«296 $«««(612) $«(360) $««««14 $««««(662)
*Net of tax.
+Reclassified to conform with 2001 presentation.
Dissolution of the trust will not affect the company’s obliga-
tions related to any of its compensation and employee
benefit plans or its ability to settle the obligations. In addi-
tion, the dissolution is not expected to have any impact on
net income. At this time, the company plans to fully meet its
obligations for the compensation and benefit plans in the
same manner as it does today, using cash from operations.
Net Change in Unrealized Gains/(Losses) on Marketable
Securities (net of tax)
(dollars in millions)
AT DE CEMBER 31: 2001 2000
Net unrealized losses arising
during the period $«(154) $«(810)
Less net (losses)/gains included
in net income for the period (246) *115
Net change in unrealized gains/
(losses) on marketable securities $««««92 $«(925)
*Includes write-downs of $287 million.
Unrealized losses arising in 2000 relate primarily to previous
unrealized gains from original cost occurring in prior years.
nContingencies and Commitments
CONTINGENCIES
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, employment 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 con-
tractors, estate representatives, 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 without merit
and 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.
COMMITMENTS
The company has guaranteed certain loans and financial
commitments. The approximate amount of these financial
guarantees was $218 million and $388 million at December 31,
2001 and 2000, respectively.
The company extended lines of credit, of which the
unused amounts were $4,088 million and $4,235 million at
December 31, 2001 and 2000, respectively. A portion of
these amounts was available to the company’s dealers to sup-
port their working capital needs. In addition, the company
committed to provide future financing to its customers in
connection with customer purchase agreements for approx-
imately $269 million and $129 million at December 31, 2001
and 2000, respectively.