IBM 2007 Annual Report Download - page 88

86
Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
Management Discussion ..................................14
Consolidated Statements ..................................58
Notes ........................................................... 64
A-F ...................................................................64
G-M ............................................................ 84
G. Plant, Rental Machines and
Other Property ...........................................84
H. Investments and Sundry Assets ..................84
I. Intangible Assets Including Goodwill ........84
J. Borrowings ............................................ 85
K. Derivatives and Hedging Transactions ......88
L. Other Liabilities ..........................................91
M. Stockholders’ Equity Activity .....................92
N-S ...................................................................94
T-W ................................................................102
Long-Term Debt
PRE-SWAP BORROWING
($ in millions)
AT DECEMBER 31: MATURITIES 2007 2006*
U.S. Dollar Notes and Debentures (average interest rate at December 31, 2007):**
4.48% 2008 – 2011 $12,295***+ $ 7,137
5.34% 2012 – 2013 3,545+ 2,047
5.69% 2014 – 2018 3,026 26
8.375% 2019 750 750
7.00% 2025 600 600
6.22% 2027 469 469
6.50% 2028 313 313
5.875% 2032 600 600
7.00% 2045 150 150
7.125% 2096 850 850
22,598 12,942
Other Currencies (average interest rate at December 31, 2007, in parentheses):
Euros (3.4%) 2008–2013 2,466 2,234
Japanese yen (2.2%) 2010–2014 767 796
Swiss francs (1.5%) 2008 442 410
Other (2.7%) 2008–2013 89 66
26,362 16,448
Less: Net unamortized discount 65 64
Add: SFAS No. 133 fair value adjustment
++ 432 164
26,729 16,548
Less: Current maturities 3,690 2,768
Total $23,039 $13,780
* Reclassified to conform with 2007 presentation.
** As part of the company’s 2002 acquisition of PricewaterhouseCoopers’ Global Business Consulting and Technology Services Unit, the company issued convertible notes bearing interest
at a stated rate of 3.43 percent with a face value of approximately $328 million to certain of the acquired PricewaterhouseCoopers’ Global Business Consulting and Technology Services
Unit partners. The notes were convertible into 4,764,543 shares of IBM common stock at the option of the holders at any time based on a fixed conversion price of $68.81 per share of the
company’s common stock. As of December 31, 2007, all of the shares have been issued.
*** On January 29, 2008, IBM International Group Capital LLC, which is an indirect, 100 percent-owned finance subsidiary of the company, issued $3.5 billion of 18-month floating
rate notes. These proceeds will be utilized to reduce the 364-day bridge loan associated with the 2007 accelerated share repurchase transaction. (See note M, “Stockholders’ Equity,” on
pages 92 and 93 for additional information.) As such, the 2007 amount includes $3.5 billion of the bridge loan balance which has been reclassified to long-term debt in accordance with
SFAS No. 6, “Classification of Short-Term Obligations Expected to be Refinanced”.
+ $4.1 billion in debt securities issued by IBM International Group Capital LLC, as defined in Rule 3-10(b) of Regulation S-X is included in 2008-2011 ($2.6 billion) and 2012-2013
($1.5 billion). Debt securities issued by IBM International Group Capital LLC are fully and unconditionally guaranteed by the company.
++ In accordance with the requirements of SFAS No. 133, the portion of the company’s fixed rate debt obligations that is hedged is reflected in the Consolidated Statement of Financial
Position as an amount equal to the sum of the debt’s carrying value plus an SFAS No. 133 fair value adjustment representing changes in the fair value of the hedged debt obligations
attributable to movements in benchmark interest rates.