IBM 2014 Annual Report Download - page 119

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
118
NOTE K.
OTHER LIABILITIES
($ in millions)
At December 31: 2014 2013
Income tax reserves $3,146 $3,189
Excess 401(k) Plus Plan 1,658 1,673
Disability benefits 675 699
Derivative liabilities 31 126
Special restructuring actions 431 440
Workforce reductions 469 500
Deferred taxes 288 1,741
Other taxes payable 17 186
Environmental accruals 240 231
Warranty accruals 91 171
Asset retirement obligations 136 129
Acquisition related 50 205
Divestiture related* 1,124 40
Other 536 604
Total $8,892 $9,934
* Primarily includes accruals in 2014 related to the expected divestiture of the Micro-
electronics business.
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 restruc-
turing-related actions prior to 2006. The previous table provides
the noncurrent liabilities associated with these special actions.
Current liabilities are included in other accrued expenses and
liabilities in the Consolidated Statement of Financial Position and
were immaterial at December31, 2014.
The noncurrent liabilities are workforce accruals related to ter-
minated 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 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 $254 million and $245 million at December31, 2014
and 2013, 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 remedia-
tion regulations.
As of December31, 2014, the company was unable to esti-
mate 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 State-
ment of Financial Position were $180 million and $160 million at
December31, 2014 and 2013, respectively.
NOTE L.
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
990,523,759 shares were outstanding at December31, 2014 and
150,000,000 shares of preferred stock with a $.01 per share par
value, none of which were outstanding at December31, 2014.
Stock Repurchases
The Board of Directors authorizes the company to repurchase IBM
common stock. The company repurchased 71,504,867 common
shares at a cost of $13,395 million, 73,121,942 common shares
at a cost of $13,993 million and 61,246,371 common shares at a
cost of $12,008 million in 2014, 2013 and 2012, 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, 2014, $6,264 million of Board common stock repur-
chase authorization was available. The company plans to purchase
shares on the open market or in private transactions from time to
time, depending on market conditions.