IBM 2013 Annual Report Download - page 116

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
115
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 restructuring-
related actions prior to 2006. 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
January 1,
2013 Payments
Other
Adjustments*
Liability
as of
December 31,
2013
Current
Workforce $ 28 $(29) $29 $ 27
Space 2 (1) (1) 0
Total current $ 30 $(30) $28 $ 27
Noncurrent
Workforce $430 $ — $10 $440
Total noncurrent $430 $ — $10 $440
* The other adjustments column in the table above principally includes the reclassification of noncurrent to current, remeasurement of actuarial assumptions, 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 pay-
ments to supplement their incomes in certain countries. Depending
on the individual country’s legal requirements, these required pay-
ments will continue until the former employee begins receiving pension
benefits or passes away. The space accruals are for ongoing obliga-
tions to pay rent for vacant space that could not be sublet or space
that was sublet at rates lower than the committed lease arrangement.
These obligations for vacant space were settled through 2013.
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 recoveries, were $245 million and
$229 million at December 31, 2013 and 2012, respectively. Estimated
environmental costs are not expected to materially affect the con-
solidated 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, 2013, 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-encap-
sulated 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 additional information becomes available.
The total amounts accrued for ARO liabilities, including amounts
classified as current in the Consolidated Statement of Financial Posi-
tion, were $160 million and $171 million at December 31, 2013 and
2012, respectively.