Equity Activity

12 Months Ended

Dec. 31, 2012

Equity Activity

Equity Activity

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 1,117,367,676 shares were outstanding at December 31, 2012 and 150,000,000 shares of preferred stock with a $.01 per share par value, none of which were outstanding at December 31, 2012.

Stock Repurchases

The Board of Directors authorizes the company to repurchase IBM common stock. The company repurchased 61,246,371 common shares at a cost of $12,008 million, 88,683,716 common shares at a cost of $15,034 million and 117,721,650 common shares at a cost of $15,419 million in 2012, 2011 and 2010, 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, 2012, $8,652 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 employees stock purchase plan: 15,091,320 shares in 2012, 20,669,785 shares in 2011 and 34,783,386 shares in 2010.The company issued 2,746,169 treasury shares in 2012, 4,920,198 treasury shares in 2011 and 7,929,318 treasury shares in 2010, as a result of exercises of stock options by employees of certain acquired businesses and by non-U.S. employees. Also, as part of the company’s stock-based compensation plans, 2,406,007 common shares at a cost of $468 million, 1,717,246 common shares at a cost of $289 million and 2,334,932 common shares at a cost of $297 million in 2012, 2011 and 2010, 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.

Reclassifications and Taxes Related to Items of Other Comprehensive Income

($ in millions)

	Before Tax			Tax (Expense)/			Net of Tax
For the year ended December 31, 2012:	Amount			Benefit			Amount
Other comprehensive income/(loss)
Foreign currency translation adjustments	$	(44	)	$	10		$	(34	)
Net changes related to available-for-sale securities
Unrealized gains/(losses) arising during the period	$	8		$	(4	)	$	4
Reclassification of (gains)/losses to other (income) and expense	(42		)	17			(25		)
Subsequent changes in previously impaired securities arising during the period	20			(8		)	12
Total net changes related to available-for-sale securities	$	(14	)	$	5		$	(9	)
Unrealized gains/(losses) on cash flow hedges
Unrealized gains/(losses) arising during the period	$	32		$	(27	)	$	5
Reclassification of (gains)/losses to:
Cost of sales	(7		)	(6		)	(13		)
SG&A expense	(16		)	4			(12		)
Other (income) and expense	(237		)	91			(146		)
Interest expense	6			(3		)	3
Total unrealized gains/(losses) on cash flow hedges	$	(220	)	$	59		$	(161	)
Retirement-related benefit plans(1)
Net (losses)/gains arising during the period	$	(7,489	)	$	2,327		$	(5,162	)
Curtailments and settlements	(2		)	0			(2		)
Amortization of prior service (credits)/cost	(148		)	59			(89		)
Amortization of net gains/(losses)	2,457			(874		)	1,583
Total retirement-related benefit plans	$	(5,182	)	$	1,513		$	(3,669	)
Other comprehensive income/(loss)	$	(5,460	)	$	1,587		$	(3,874	)

(1) These AOCI components are included in the computation of net periodic pension cost. (See note S, “Retirement-Related Benefits,” on pages 120 to 134 for additional information.)

($ in millions)

	Before Tax			Tax (Expense)/			Net of Tax
For the year ended December 31, 2011:	Amount			Benefit			Amount
Other comprehensive income/(loss)
Foreign currency translation adjustments	$	(693	)	$	(18	)	$	(711	)
Net changes related to available-for-sale securities
Unrealized gains/(losses) arising during the period	$	(14	)	$	5		$	(9	)
Reclassification of (gains)/losses to other (income) and expense	(231		)	88			(143		)
Subsequent changes in previously impaired securities arising during the period	4			(1		)	3
Total net changes related to available-for-sale securities	$	(241	)	$	91		$	(150	)
Unrealized gains/(losses) on cash flow hedges
Unrealized gains/(losses) arising during the period	$	(266	)	$	105		$	(162	)
Reclassification of (gains)/losses to:
Cost of sales	182			(61		)	121
SG&A expense	75			(23		)	52
Other (income) and expense	247			(3		)	244
Interest expense	8			(95		)	(88		)
Total unrealized gains/(losses) on cash flow hedges	$	245		$	(77	)	$	167
Retirement-related benefit plans(1)
Prior service costs/(credits)	$	(28	)	$	7		$	(22	)
Net (losses)/gains arising during the period	(5,463		)	1,897			(3,566		)
Curtailments and settlements	11			(3		)	7
Amortization of prior service (credits)/cost	(157		)	62			(94		)
Amortization of net gains/(losses)	1,847			(619		)	1,227
Total retirement-related benefit plans	$	(3,790	)	$	1,343		$	(2,448	)
Other comprehensive income/(loss)	$	(4,479	)	$	1,339		$	(3,142	)

(1) These AOCI components are included in the computation of net periodic pension cost (See note S, “Retirement-Related Benefits,” on pages 120 to 134 for additional information.)

($ in millions)

	Before Tax			Tax (Expense)/			Net of Tax
For the year ended December 31, 2010:	Amount			Benefit			Amount
Other comprehensive income/(loss)
Foreign currency translation adjustments	$	712		$	(69	)	$	643
Net changes related to available-for-sale securities
Unrealized gains/(losses) arising during the period	$	70		$	(24	)	$	46
Reclassification of (gains)/losses to other (income) and expense	0			(0		)	(0		)
Subsequent changes in previously impaired securities arising during the period	8			(3		)	5
Total net changes related to available-for-sale securities	$	78		$	(27	)	$	51
Unrealized gains/(losses) on cash flow hedges
Unrealized gains/(losses) arising during the period	$	371		$	(120	)	$	251
Reclassification of (gains)/losses to:
Cost of sales	92			(32		)	60
SG&A expense	49			(17		)	33
Other (income) and expense	54			(17		)	37
Interest expense	8			(3		)	5
Total unrealized gains/(losses) on cash flow hedges	$	573		$	(188	)	$	385
Retirement-related benefit plans(1)
Prior service costs/(credits)	$	28		$	(8	)	$	20
Net (losses)/gains arising during the period	(2,728		)	1,016			(1,712		)
Curtailments and settlements	10			(3		)	7
Amortization of prior service (credits)/cost	(183		)	67			(116		)
Amortization of net gains/(losses)	1,249			(441		)	808
Total retirement-related benefit plans	$	(1,624	)	$	632		$	(992	)
Other comprehensive income/(loss)	$	(260	)	$	348		$	87

(1) These AOCI components are included in the computation of net periodic pension cost. (See note S, “Retirement-Related Benefits,” on pages 120 to 134 for additional information.)

Accumulated Other Comprehensive Income/(Loss) (net of tax)

($ in millions)

							Net Change			Net Unrealized
	Net Unrealized			Foreign			Retirement-			Gains/(Losses)			Accumulated
	Gains/(Losses)			Currency			Related			on Available-			Other
	on Cash Flow			Translation			Benefit			For-Sale			Comprehensive
	Hedges			Adjustments*			Plans			Securities			Income/(Loss)
December 31, 2009	$	(481	)	$	1,836		$	(20,297	)	$	113		$	(18,830	)
Other comprehensive income before reclassifications	251			643			(1,684		)	51			(739		)
Amount reclassified from accumulated other comprehensive income	134			0			692			0			826
Total change for the period	385			643			(992		)	51			87
December 31, 2010	(96		)	2,478			(21,289		)	164			(18,743		)
Other comprehensive income before reclassifications	(162		)	(711		)	(3,581		)	(7		)	(4,461		)
Amount reclassified from accumulated other comprehensive income	329			0			1,133			(143		)	1,319
Total change for the period	167			(711		)	(2,448		)	(150		)	(3,142		)
December 31, 2011	71			1,767			(23,737		)	13			(21,885		)
Other comprehensive income before reclassifications	5			(34		)	(5,164		)	16			(5,177		)
Amount reclassified from accumulated other comprehensive income	(167		)	0			1,495			(25		)	1,303
Total change for the period	(161		)	(34		)	(3,669		)	(9		)	(3,874		)
December 31, 2012	$	(90	)	$	1,733		$	(27,406	)	$	4		$	(25,759	)

* Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.