IBM 2007 Annual Report Download - page 94

92
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
The following table provides a roll forward of the current and noncurrent liabilities associated with these special actions. The current lia-
bilities presented in the table are included in Other accrued expenses and liabilities in the Consolidated Statement of Financial Position.
($ in millions)
LIABILITY LIABILITY
AS OF OTHER AS OF
DEC. 31, 2006 PAYMENTS ADJUSTMENTS* DEC. 31, 2007
Current:
Workforce $163 $(154) $121 $130
Space 88 (99) 41 30
Other 6 — 1 7
Total Current $257 $(253) $164 $167
Noncurrent:
Workforce $531 $ — $ 26 $557
Space 109 — (35) 74
Total Noncurrent $640 $ — $ (9) $631
* The Other adjustments column in the table above principally includes the reclassification of noncurrent to current and foreign currency translation adjustments. Also, in 2007, $81 million
was included in Other adjustments to record previously unrecognized actuarially calculated gains/losses related to long-term retirement benefits in Europe.
The workforce accruals primarily relate to the Global Services
business. The remaining liability relates to terminated employees
who are no longer working for the company who were granted
annual payments to supplement their incomes in certain countries.
Depending on the individual country’s legal requirements, these
required payments will continue until the former employee begins
receiving pension benefits or dies. Included in the December 31,
2007 workforce accruals above is $46 million associated with the
HDD divestiture discussed in note A, “Significant Accounting Policies,”
on page 64. The space accruals are for ongoing obligations to pay
rent for vacant space that could not be sublet or space that was sublet
at rates lower than the committed lease arrangement. The length of
these obligations varies by lease with the longest extending through
2020. Other accruals are primarily the remaining liabilities (other
than workforce or space) associated with the HDD divestiture.
The company employs extensive internal environmental protec-
tion programs that primarily are preventive in nature. The company
also participates in environmental assessments and cleanups at a
number of locations, including operating facilities, previously owned
facilities and Superfund sites. The company’s maximum exposure for
all environmental liabilities cannot be estimated and no amounts
have been recorded for non-ARO environmental liabilities that are
not probable or estimable. The total amounts accrued for non-ARO
environmental liabilities, including amounts classified as current in
the Consolidated Statement of Financial Position, that do not reflect
actual or anticipated insurance recoveries, were $261 million and
$252 million at December 31, 2007 and 2006, respectively. Estimated
environmental costs are not expected to materially affect the con-
solidated financial position or consolidated results of the company’s
operations in future periods. However, estimates of future costs are
subject to change due to protracted cleanup periods and changing
environmental remediation regulations.
Note M. Stockholders’ Equity Activity
The authorized capital stock of IBM consists of 4,687,500,000 shares
of common stock, $.20 par value, of which 1,385,234,138 shares were
outstanding at December 31, 2007 and 150,000,000 shares of pre-
ferred stock, $.01 par value, none of which were outstanding at
December 31, 2007.
Stock Repurchases
From time to time, the Board of Directors authorizes the company
to repurchase IBM common stock. The company repurchased
178,385,436 common shares at a cost of $18,783 million, 97,564,462
common shares at a cost of $8,022 million and 90,237,800 common
shares at a cost of $7,671 million in 2007, 2006 and 2005, respectively.
Included in the 2007 repurchases highlighted above, in May, IBM
International Group (IIG), a wholly owned foreign subsidiary of the
company repurchased 118.8 million shares of common stock for
$12.5 billion under accelerated share repurchase (ASR) agreements
with three banks.
Pursuant to the ASR agreements, executed on May 25, 2007, IIG
paid an initial purchase price of $105.18 per share for the repurchase.
The initial purchase price is subject to adjustment based on the vol-
ume weighted-average price of IBM common stock over a settlement
period of three months for each of the banks. The adjustment will also