IBM 2009 Annual Report Download - page 100

Notes to Consolidated Financial Statements
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES
repurchase. The initial purchase price was subject to adjustment
based on the volume weighted-average price of IBM common
stock over a settlement period of three months for each of the
banks. The adjustment also reflected certain other amounts
including the banks’ carrying costs, compensation for ordinary
dividends declared by the company during the settlement period
and interest benefits for receiving the $12.5 billion payment in
advance of the anticipated purchases by each bank of shares in
the open market during the respective settlement periods. The
adjustment amount could be settled in cash, registered shares
or unregistered shares at IIG’s option. Under the ASR agreements,
IIG had a separate settlement with each of the three banks. The
first settlement occurred on September 6, 2007, resulting in a
settlement payment to the bank of $151.8 million. The second
settlement occurred on December 5, 2007, resulting in a settle-
ment payment to the bank of $253.1 million. The third settlement
occurred on March 4, 2008, resulting in a settlement payment to
the company of $54.2 million. The adjusted average price paid per
share during the ASR was $108.13, resulting in a total purchase
price of $12,581 million. The $351 million difference was settled
in cash. The settlement amounts were paid in cash at the election
of IIG in accordance with the provisions of the ASR agreements
and were recorded as adjustments to equity in the Consolidated
Statement of Financial Position on the settlement dates.
The company issued 6,408,265 treasury shares in 2009,
5,882,800 treasury shares in 2008 and 9,282,055 treasury shares
in 2007, as a result of exercises of stock options by employees of
certain recently acquired businesses and by non-U.S. employees.
At December 31, 2009, $6,113 million of Board common stock
repurchase authorization was still available. The company plans
to purchase shares on the open market or in private transactions
from time to time, depending on market conditions. In connection
with the issuance of stock as part of the company’s stock-based
compensation plans, 1,550,846 common shares at a cost of
$161 million, 1,505,107 common shares at a cost of $166 million
and 1,282,131 common shares at a cost of $134 million in 2009,
2008 and 2007, respectively, were remitted by employees to the
company in order to satisfy minimum statutory tax withholding
requirements. These amounts are included in the treasury stock
balance in the Consolidated Statement of Financial Position and
the Consolidated Statement of Changes in Equity.
for certain asbestos remediation AROs. These conditional AROs
are primarily related to the encapsulated structural fireproof-
ing that is not subject to abatement unless the buildings are
demolished and non-encapsulated asbestos that the company
would remediate only if it performed major renovations of certain
existing buildings. Because these conditional obligations have
indeterminate settlement dates, the company could not develop a
reasonable estimate of their fair values. The company will continue
to assess its ability to estimate fair values at each future reporting
date. The related liability will be recognized once sufficient addi-
tional information becomes available. The total amounts accrued
for ARO liabilities, including amounts classified as current in the
Consolidated Statement of Financial Position were $126 million
and $127 million at December 31, 2009 and 2008, respectively.
Note N.
Equity Activity
The authorized capital stock of IBM consists of 4,687,500,000
shares of common stock with a $.20 per share par value, of which
1,305,337,423 shares were outstanding at December 31, 2009
and 150,000,000 shares of preferred stock with a $.01 per share
par value, none of which were outstanding at December 31, 2009.
Stock Repurchases
The Board of Directors authorizes the company to repurchase IBM
common stock. The company repurchased 68,650,727 common
shares at a cost of $7,534 million, 89,890,347 common shares at a
cost of $10,563 million and 178,385,436 common shares at a cost
of $18,783 million in 2009, 2008 and 2007, respectively. These
amounts reflect transactions executed through December 31 of
each year. Actual cash disbursements for repurchased shares
may differ due to varying settlement dates for these transactions.
Included in the 2007 repurchases highlighted above, in May
2007, IBM International Group (IIG), a wholly owned foreign
sub sidiary of the company, repurchased 118.8 million shares of
common stock for $12.5 billion under accelerated share repur-
chase (ASR) agreements with three banks.
Pursuant to the ASR agreements, executed on May 25, 2007,
IIG paid an initial purchase price of $105.18 per share for the
Accumulated Other Comprehensive Income/(Loss) (net of tax)
($ in millions)
Net Unrealized Net Change Net Unrealized Accumulated
Gains/(Losses) Foreign Currency Retirement- Gains/(Losses) Other
on Cash Flow Translation related on Marketable Comprehensive
Hedge Derivatives Adjustments* Benefit Plans Securities Income/(Loss)
December 31, 2007 $(227) $ 3,655 $ (7,168) $ 325 $ (3,414)
Change for period 301 (3,552) (14,856) (324) (18,431)
December 31, 2008 74 103 (22,025) 2 (21,845)
Change for period (556) 1,732 1,727 111 3,015
December 31, 2009 $(481) $ 1,836 $(20,297) $ 113 $(18,830)
* Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.
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