IBM 2008 Annual Report Download - page 112

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
Notes to Consolidated Financial Statements
INTERNATIONAL BUSINESS MACHINES CORPORATION and Subsidiary Companies
Management Discussion ............................................................................................. 18
Consolidated Statements ............................................................................................ 60
Notes ............................................................................................................................... 66
A – E ........................................................................................................................66
F – J ........................................................................................................................86
K– Q .......................................................................................................................88
R –W ..................................................................................................................... 102
R. EARNINGS PER SHARE OF COMMON STOCK .............................................. 102
S. RENTAL EXPENSE AND LEASE COMMITMENTS ........................................... 103
T. STOCK-BASED COMPENSATION ................................................................... 103
U. RETIREMENT-RELATED BENEFITS ............................................................... 10 6
V. SEGMENT INFORMATION .............................................................................. 116
W. SUBSEQUENT EVENT .................................................................................... 119
The following table presents the changes in benefit obligations and plan assets of the company’s retirement-related benefit plans.
($  )
Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans
U.S. Plans Non-U.S. Plans* U.S. Plan Non-U.S. Plans
2008 2007 2008 2007 2008 2007 2008 2007
Change in benefit obligation:
Benefit obligation at beginning of year
$47,673 $47,839 $ 42,291 $40,861 $ 5,472 $ 5,773 $ 769 $ 680
Service cost — 773 660 688 55 69 10 12
Interest cost 2,756 2,660 2,042 1,825 312 311 53 46
Plan participants’ contributions — — 63 67 216 199 — —
Acquisitions/divestitures, net — 5 (6) 85 — — (1) —
Actuarial losses/(gains) 1,183 (484) (64) (2,388) (191) (203) (12) (44)
Benefits paid from trust (2,999) (3,046) (1,814) (1,638) (656) (650) (31) (6)
Direct benefit payments (81) (75) (486) (492) (24) (38) (21) (16)
Foreign exchange impact — — (3,357) 3,279 — — (146) 98
Medicare subsidy — — — — 37 10 — —
Plan amendments/curtailments/settlements 224 — (157) 3 3 — (13) —
BENEFIT OBLIGATION AT END OF YEAR $48,756 $47,673 $ 39,171 $42,291 $ 5,224 $ 5,472 $ 608 $ 769
Change in plan assets:
Fair value of plan assets at beginning of year $57,191 $52,913 $ 41,696 $38,207 $ 504 $ 47 $ 121 $ 99
Actual return on plan assets (8,274) 7,324 (7,678) 1,483 415 10 11
Employer contributions — — 858 474 45 893 10 3
Acquisitions/divestitures, net — — 16 52 — — — —
Plan participants’ contributions — — 63 67 216 199 — —
Benefits paid from trust (2,999) (3,046) (1,814) (1,638) (656) (650) (31) (6)
Foreign exchange impact —— (3,978) 3,054 —— (30) 14
Plan amendments/curtailments/settlements — — 2 (3) — — — —
FAIR VALUE OF PLAN ASSETS AT END OF YEAR $45,918 $57,191 $ 29,164 $41,696 $ 113 $ 504 $ 79 $ 121
FUNDED STATUS AT END OF YEAR $ (2,838) $ 9,519 $(10,007) $ (595) $(5,111) $(4,968) $(529) $(648)
Accumulated benefit obligation** $48,756 $47,673 $ 37,759 $40,598 N/A N/A N/A N/A
* Excludes a defined benefit pension plan in Brazil due to restrictions on the use of plan assets imposed by governmental regulations.
** Represents the benefit obligation assuming no future participant compensation increases.
N/A—Not applicable
The following table presents the net funded status recognized in the Consolidated Statement of Financial Position.
($  )
Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans
U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans
At December : 2008 2007 2008 2007 2008 2007 2008 2007
Prepaid pension assets $ — $10,868 $ 1,598 $ 6,548 $ — $ — $ 3 $ —
Current liabilities—Compensation and benefits (86) (82) (283) (432) (255) — (9) (12)
Noncurrent liabilities—Retirement and
nonpension postretirement benefit obligations (2,752) (1,268) (11,322) (6,711) (4,856) (4,968) (523) (636)
FUNDED STATUS — NET $(2,838) $ 9,519 $(10,007) $ (595) $(5,111) $(4,968) $(529) $(648)
The table on page  presents the pre-tax net loss and prior service costs/(credits) and transition (assets)/liabilities recognized in gains and
(l
osses) not affecting retained earnings and the changes in pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recog-
nized in accumulated gains and
(l
osses) not affecting retained earnings for the company’s retirement-related benefit plans.