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Notes to Consolidated Financial Statements
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES
Note M.
Other Liabilities
($ in millions)
At December 31: 2009 2008*
Income tax reserves $3,627 $3,557
Executive compensation accruals 1,160 860
Disability benefits 795 743
Derivative liabilities 649 702
Restructuring actions 441 476
Workforce reductions 409 415
Deferred taxes 470 270
Environmental accruals 245 246
Noncurrent warranty accruals 126 189
Asset retirement obligations 116 119
Other* 781 615
Total $8,819 $8,192
* Reflects the adoption of the FASB guidance on noncontrolling interests in
consolidated financial statements. See note B, “Accounting Changes”, on pages
79 to 82 for additional information.
In response to changing business needs, the company periodi-
cally takes workforce reduction actions to improve productivity,
cost competitiveness and to rebalance skills. The noncurrent
contractually obligated future payments associated with these
activities are reflected in the workforce reductions caption in the
previous table.
In addition, the company executed certain special actions as
follows: (1) the second quarter of 2005 associated with Global
Services segments, primarily in Europe, (2) the fourth quarter of
2002 associated with the acquisition of the Pricewaterhouse-
Coopers consulting business, (3) the second quarter of 2002
associated with the Microelectronics Division and the rebalancing
of both the company’s workforce and leased space resources, (4)
the 2002 actions associated with the HDD business for reductions
in workforce, manufacturing capacity and space, (5) the actions
taken in 1999, and (6) the actions that were executed prior to 1994.
The table below provides a roll forward of the current and
noncurrent liabilities associated with these special actions. The
current liabilities presented in the table are included in other
accrued expenses and liabilities in the Consolidated Statement
of Financial Position.
($ in millions)
Liability Liability
as of Other as of
Dec. 31, 2008 Payments Adjustments* Dec. 31, 2009
Current:
Workforce $ 95 $ (95) $ 71 $ 71
Space 23 (21) 13 16
Other 7 — (7) —
Total Current $125 $(116) $ 77 $ 87
Noncurrent:
Workforce $453 $ — $(26) $427
Space 23 — (10) 14
Total Noncurrent $476 $ — $(36) $441
* The other adjustments column in the table above principally includes the reclassification of noncurrent to current, foreign currency translation adjustments and
interest accretion.
The workforce accruals primarily relate to terminated employees
who are no longer working for the company who were granted
annual payments to supplement their incomes in certain coun-
tries. Depending on the individual country’s legal requirements,
these required payments will continue until the former employee
begins receiving pension benefits or passes away. 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 obli-
gations varies by lease with the longest extending through 2016.
The company employs extensive internal environmental
protection 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 $258 million and $267
million at December 31, 2009 and 2008, respectively. Estimated
environmental costs are not expected to materially affect the
consolidated 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.
As of December 31, 2009, the company was unable to esti-
mate the range of settlement dates and the related probabilities
97