IBM 2010 Annual Report Download - page 105

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies 103
As of December 31, 2010, the company was unable to estimate
the range of settlement dates and the related probabilities for certain
asbestos remediation AROs. These conditional AROs are primarily
related to the encapsulated structural fireproofing 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 settle-
ment 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 additional information
becomes available. The total amounts accrued for ARO liabilities,
including amounts classified as current in the Consolidated
Statement of Financial Position were $176 million and $126 million
at December 31, 2010 and 2009, 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
1,227,993,544 shares were outstanding at December 31, 2010 and
150,000,000 shares of preferred stock with a $.01 per share par
value, none of which were outstanding at December 31, 2010.
Stock Repurchases
The Board of Directors authorizes the company to repurchase IBM
common stock. The company repurchased 117,721,650 common
shares at a cost of $15,419 million, 68,650,727 common shares at
a cost of $7,534 million and 89,890,347 common shares at a cost
of $10,563 million in 2010, 2009 and 2008, 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.
At December 31, 2010, $8,694 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.
Other Stock Transactions
The company issued the following shares of common stock as part
of its stock-based compensation plans and employee stock purchase
plan: 34,783,386 shares in 2010, 30,034,808 shares in 2009 and
39,374,439 shares in 2008.The company issued 7,929,318 treasury
shares in 2010, 6,408,265 treasury shares in 2009 and 5,882,800
treasury shares in 2008, as a result of exercises of stock options by
employees of certain recently acquired businesses and by non-U.S.
employees. Also, as part of the company’s stock-based compensa-
tion plans, 2,334,932 common shares at a cost of $297 million,
1,550,846 common shares at a cost of $161 million and 1,505,107
common shares at a cost of $166 million in 2010, 2009 and 2008,
respectively, were remitted by employees to the company in order
to satisfy minimum statutory tax withholding requirements. These
amounts are included in the treasury stock balance in the
Consolidated Statement of Financial Position and the Consolidated
Statement of Changes in Equity.
Accumulated Other Comprehensive Income/(Loss) (net of tax)
($ in millions)
Net Unrealized Foreign Net Change Net Unrealized Accumulated
Gains/(Losses) Currency Retirement- Gains/(Losses) Other
on Cash Flow Translation Related on Marketable Comprehensive
Hedge Derivatives Adjustments* Benefit Plans Securities Income/(Loss)
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)
Change for period 385 643 (992) 51 87
December 31, 2010 $ (96) $2,478 $(21,289) $164 $(18,743)
* Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.
Note O.
Contingencies and Commitments
Contingencies
As a company with a substantial employee population and with
clients in more than 170 countries, IBM is involved, either as
plaintiff or defendant, in a variety of ongoing claims, demands,
suits, investigations, tax matters and proceedings that arise from
time to time in the ordinary course of its business. The company
is a leader in the information technology industry and, as such,
has been and will continue to be subject to claims challenging its
IP rights and associated products and offerings, including claims
of copyright and patent infringement and violations of trade secrets
and other IP rights. In addition, the company enforces its own IP
against infringement, through license negotiations, lawsuits or
otherwise. Also, as is typical for companies of IBM’s scope and
scale, the company is party to actions and proceedings in various
jurisdictions involving a wide range of labor and employment issues