IBM 2011 Annual Report Download - page 114

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies112
($ in millions)
For the year ended December 31, 2009:
Before Tax
Amount
Tax (Expense)/
Benefit
Net of Tax
Amount
Other comprehensive income:
Foreign currency translation adjustments $1,675 $ 57 $1,732
Net changes related to available-for-sale securities
Unrealized gains/(losses) arising during the period $ 118 $ (47) $ 72
Reclassification of (gains)/losses to net income 64 (24)39
Subsequent changes in previously impaired securities arising during the period ———
Total net changes related to available-for-sale securities $ 182 $ (71) $ 111
Unrealized gains/(losses) on cash flow hedges
Unrealized gains/(losses) arising during the period $ (718) $ 224 $ (493)
Reclassification of (gains)/losses to net income (94) 32 (63)
Total unrealized gains/(losses) on cash flow hedges $ (812) $ 256 $ (556)
Retirement-related benefit plans
Prior service costs/(credits) $ 375 $(146) $ 229
Net (losses)/gains arising during the period 1,433 (439) 994
Curtailments and settlements (125) 33 (93)
Amortization of prior service (credits)/cost (162) 55 (107)
Amortization of net gains/(losses) 1,105 (402) 704
Total retirement-related benefit plans $2,626 $(898) $1,727
Other comprehensive income/(loss) $3,671 $(656) $3,015
Accumulated Other Comprehensive Income/(Loss) (net of tax)
($ in millions)
Net Unrealized
Gains/(Losses)
on Cash Flow
Hedges
Foreign
Currency
Translation
Adjustments*
Net Change
Retirement-
Related
Benefit
Plans
Net Unrealized
Gains/Losses
on Available-
For-Sale
Securities
Accumulated
Other
Comprehensive
Income/(Loss)
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)
Change for period 167 (711) (2,448) (150) (3,142)
December 31, 2011 $ 71 $1,767 $(23,737) $ 13 $(21,885)
* Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.
Note M.
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 (including matters related
to contested employment decisions, country-specific labor and
employment laws, and the company’s pension, retirement and other
benefit plans), as well as actions with respect to contracts, product
liability, securities, foreign operations, competition law and environmental
matters. These actions may be commenced by a number of different
parties, including competitors, clients, current or former employees,
government and regulatory agencies, stockholders and representatives
of the locations in which the company does business. Some of the
actions to which the company is party may involve particularly
complex technical issues, and some actions may raise novel
questions under the laws of the various jurisdictions in which these
matters arise.
The company records a provision with respect to a claim, suit,
investigation or proceeding when it is probable that a liability has
been incurred and the amount of the loss can be reasonably
estimated. Any recorded liabilities, including any changes to such