IBM 2010 Annual Report Download - page 104

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies102
Note M.
Other Liabilities
($ in millions)
At December 31: 2010 2009
Income tax reserves $3,486 $3,627
Executive compensation accruals 1,302 1,160
Disability benefits 739 795
Derivative liabilities 135 649
Special actions 399 441
Workforce reductions 406 409
Deferred taxes 378 470
Environmental accruals 249 245
Noncurrent warranty accruals 130 126
Asset retirement obligations 161 116
Other 841 781
Tot a l $8,226 $8,819
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 countries.
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 obligations
varies by lease with the longest extending through 2014.
In response to changing business needs, the company periodically
takes workforce reduction actions to improve productivity, cost
competitiveness and to rebalance skills. The noncurrent contractu-
ally 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 resources, 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 hard disk drive business
for reductions in resources, manufacturing capacity and space,
(5) the actions taken in 1999, and (6) the actions that were executed
prior to 1994.
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 recov-
eries, were $262 million and $258 million at December 31, 2010
and 2009, respectively. Estimated environmental costs are not
expected to materially affect the consolidated financial position or
consolidated results of the company’s operations in future periods.
However, estimates of future costs are subject to change due
to protracted cleanup periods and changing environmental
remediation regulations.
The table below provides a roll forward of the current and noncurrent liabilities associated with these special actions. The current liabilities
presented in the table are included in other accrued expenses and liabilities in the Consolidated Statement of Financial Position.
($ in millions)
Liability as of Other Liability as of
Dec. 31, 2009 Payments Adjustments* Dec. 31, 2010
Current:
Workforce $ 71 $(64) $ 38 $ 45
Space 16 (18) 11 8
Other — — — —
Total current $ 87 $(82) $ 48 $ 53
Noncurrent:
Workforce $427 $ — $(32) $395
Space 14 — (10) 4
Total noncurrent $441 $ — $(42) $399
* The other adjustments column in the table above principally includes the reclassification of noncurrent to current, foreign currency translation adjustments and interest accretion.