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NotestoConsolidatedFinancialStatements
INTERNATIONALBUSINESSMACHINESCORPORATION ANDSUBSIDIARYCOMPANIES
_73
Thefollowingtables summarizethenetfairvalueofthecompany’sderivativeandotherriskmanagementinstrumentsatDecember
31,2005and2004(includedintheConsolidatedStatementofFinancialPosition).
RiskManagementProgram
(Dollarsinmillions)
HEDGEDESIGNATION
NET NON-HEDGE/
ATDECEMBER31,2005 FAIRVALUE CASHFLOW INVESTMENT OTHER
Derivatives—netasset/(liability):
Debtriskmanagement $«(116) $««(79) $«««««««— $«(109)
Long-terminvestmentsinforeignsubsidiaries(“netinvestments”) ——120—
Anticipatedroyaltiesandcosttransactions —324 — —
Subsidiarycashandforeigncurrencyasset/liabilitymanagement ——— (4)
Equityriskmanagement ———17
Otherderivatives ——— 4
Totalderivatives (116) (a) 245 (b) 120 (c) (92) (d)
Debt:
Long-terminvestmentsinforeignsubsidiaries(“netinvestments”) — — (2,027) (e) —
Total $«(116) $«245 $«(1,907) $«««(92)
(a) Comprisesassetsof$34 millionandliabilitiesof$150 million.
(b) Comprisesassetsof$363 millionandliabilitiesof$118 million.
(c) Comprises assets of$150 million andliabilitiesof$30million.
(d) Comprisesassetsof$25 millionandliabilitiesof$117 million.
(e) Represents foreign currency denominateddebt formallydesignatedasahedgeofnetinvestment.
(Dollarsinmillions)
HEDGEDESIGNATION
NET NON-HEDGE/
ATDECEMBER31,2004 FAIRVALUE CASHFLOW INVESTMENT OTHER
Derivatives—netasset/(liability):
Debtriskmanagement $«221 $«««(53) $«««««««— $««(14)
Long-terminvestmentsinforeignsubsidiaries(“netinvestments”) — — (58) —
Anticipatedroyaltiesandcosttransactions — (939) — —
Subsidiarycashandforeigncurrencyasset/liabilitymanagement — — — (19)
Equityriskmanagement ——— (7)
Totalderivatives 221 (a) (992) (b) (58) (c) (40) (d)
Debt:
Long-terminvestmentsinforeignsubsidiaries(“netinvestments”) — — (2,490) (e) —
Total $«221 $«(992) $«(2,548) $««(40)
(a) Comprisesassetsof$440millionandliabilitiesof$219million.
(b)Comprisesassetsof$12millionandliabilitiesof$1,004million.
(c) Comprisesliabilitiesof$58million.
(d)Comprisesassetsof$60millionandliabilitiesof$100million.
(e) Represents foreigncurrencydenominateddebt formallydesignatedasahedgeofnetinvestment.