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Equity Activity
 12 Months Ended
Dec. 31, 2018
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 892,479,411 shares were outstanding at December 31, 2018 and 150,000,000 shares of preferred stock with a $.01 per share par value, none of which were outstanding at December 31, 2018.

 

Stock Repurchases

 

The Board of Directors authorizes the company to repurchase IBM common stock. The company repurchased 32,949,233 common shares at a cost of $4,447 million, 27,237,179 common shares at a cost of $4,323 million, and 23,283,400 common shares at a cost of $3,455 million in 2018, 2017 and 2016, 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, 2018, $3,339 million of Board common stock repurchase 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. As a result of the proposed transaction to acquire Red Hat, subject to closing, the company intends to suspend its share repurchase program in 2020 and 2021.

 

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: 3,998,245 shares in 2018, 4,311,998 shares in 2017, and 3,893,366 shares in 2016. The company issued 424,589 treasury shares in 2018, 463,083 treasury shares in 2017 and 383,077 treasury shares in 2016, as a result of restricted stock unit releases and 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, 1,173,416 common shares at a cost of $171 million, 1,226,080 common shares at a cost of $193 million, and 854,365 common shares at a cost of $126 million in 2018, 2017 and 2016, 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, 2018:

 

Amount

 

Benefit

 

Amount

 

Other comprehensive income/(loss)

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

$
(730

)

$
(172

)

$
(902

)

Net changes related to available-for-sale securities

 

 

 

 

 

 

 

Unrealized gains/(losses) arising during the period

 

$
(2

)

$
1

 

$
(1

)

Reclassification of (gains)/losses to other (income) and expense

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

Total net changes related to available-for-sale securities

 

$
(2

)

$
1

 

$
(1

)

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains/(losses) on cash flow hedges

 

 

 

 

 

 

 

Unrealized gains/(losses) arising during the period

 

$
(136

)

$
43

 

$
(93

)

Reclassification of (gains)/losses to:

 

 

 

 

 

 

 

Cost of services

 
(30

)
8

 
(22

)

Cost of sales

 
(8

)
3

 
(5

)

Cost of financing

 
75

 
(19

)
56

 

SG&A expense

 
0

 
0

 
0

 

Other (income) and expense

 
341

 
(86

)
255

 

Interest expense

 
71

 
(18

)
53

 

 

 

 

 

 

 

 

 

Total unrealized gains/(losses) on cash flow hedges

 

$
313

 

$
(69

)

$
244

 

 

 

 

 

 

 

 

 

 

 

 

Retirement-related benefit plans (1)

 

 

 

 

 

 

 

Prior service costs/(credits)

 

$
(182

)

$
31

 

$
(151

)

Net (losses)/gains arising during the period

 
(2,517

)
576

 
(1,941

)

Curtailments and settlements

 
11

 
(2

)
9

 

Amortization of prior service (credits)/costs

 
(73

)
5

 
(68

)

Amortization of net (gains)/losses

 
2,966

 
(632

)
2,334

 

 

 

 

 

 

 

 

 

Total retirement-related benefit plans

 

$
204

 

$
(21

)

$
184

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income/(loss)

 

$
(215

)

$
(262

)

$
(476

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

These AOCI components are included in the computation of net periodic pension cost. (See note T, “Retirement-Related Benefits,” for additional information.)

 

($ in millions)

 

 

 

Before Tax

 

Tax (Expense)/

 

Net of Tax

 

For the year ended December 31, 2017:

 

Amount

 

Benefit

 

Amount

 

Other comprehensive income/(loss)

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

$
152

 

$
617

 

$
769

 

Net changes related to available-for-sale securities

 

 

 

 

 

 

 

Unrealized gains/(losses) arising during the period

 

$
1

 

$
(1

)

$
0

 

Reclassification of (gains)/losses to other (income) and expense

 
1

 
0

 
1

 

 

 

 

 

 

 

 

 

Total net changes related to available-for-sale securities

 

$
2

 

$
(1

)

$
1

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains/(losses) on cash flow hedges

 

 

 

 

 

 

 

Unrealized gains/(losses) arising during the period

 

$
(58

)

$
0

 

$
(58

)

Reclassification of (gains)/losses to:

 

 

 

 

 

 

 

Cost of services

 
(70

)
27

 
(43

)

Cost of sales

 
(3

)
1

 
(3

)

Cost of financing*

 
23

 
(9

)
14

 

SG&A expense

 
(11

)
3

 
(9

)

Other (income) and expense

 
(324

)
124

 
(199

)

Interest expense*

 
22

 
(8

)
13

 

 

 

 

 

 

 

 

 

Total unrealized gains/(losses) on cash flow hedges

 

$
(421

)

$
137

 

$
(284

)

 

 

 

 

 

 

 

 

 

 

 

Retirement-related benefit plans (1)

 

 

 

 

 

 

 

Prior service costs/(credits)

 
0

 
0

 
0

 

Net (losses)/gains arising during the period

 
682

 
(201

)
481

 

Curtailments and settlements

 
19

 
(5

)
14

 

Amortization of prior service (credits)/costs

 
(88

)
29

 
(58

)

Amortization of net (gains)/losses

 
2,889

 
(1,006

)
1,883

 

 

 

 

 

 

 

 

 

Total retirement-related benefit plans

 

$
3,502

 

$
(1,182

)

$
2,320

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income/(loss)

 

$
3,235

 

$
(429

)

$
2,806

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*     Reclassified to conform to 2018 presentation.

(1)

These AOCI components are included in the computation of net periodic pension cost. (See note T, “Retirement-Related Benefits,” for additional information.)

 

($ in millions)

 

 

 

 

Before Tax

 

Tax (Expense)/

 

Net of Tax

 

For the year ended December 31, 2016:

 

Amount

 

Benefit

 

Amount

 

Other comprehensive income/(loss)

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

$
(20

)

$
(120

)

$
(140

)

Net changes related to available-for-sale securities

 

 

 

 

 

 

 

Unrealized gains/(losses) arising during the period

 

$
(38

)

$
14

 

$
(23

)

Reclassification of (gains)/losses to other (income) and expense

 
34

 
(13

)
21

 

 

 

 

 

 

 

 

 

Total net changes related to available-for-sale securities

 

$
(3

)

$
1

 

$
(2

)

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains/(losses) on cash flow hedges

 

 

 

 

 

 

 

Unrealized gains/(losses) arising during the period

 

$
243

 

$
(80

)

$
163

 

Reclassification of (gains)/losses to:

 

 

 

 

 

 

 

Cost of services

 
8

 
(3

)
5

 

Cost of sales

 
5

 
(5

)
1

 

Cost of financing*

 
12

 
(4

)
7

 

SG&A expense

 
(4

)
(2

)
(7

)

Other (income) and expense

 
68

 
(26

)
42

 

Interest expense*

 
13

 
(5

)
8

 

 

 

 

 

 

 

 

 

Total unrealized gains/(losses) on cash flow hedges

 

$
345

 

$
(126

)

$
219

 

 

 

 

 

 

 

 

 

 

 

 

Retirement-related benefit plans (1)

 

 

 

 

 

 

 

Net (losses)/gains arising during the period

 

$
(2,490

)

$
924

 

$
(1,566

)

Curtailments and settlements

 
(16

)
1

 
(15

)

Amortization of prior service (credits)/costs

 
(107

)
34

 
(74

)

Amortization of net (gains)/losses

 
2,764

 
(976

)
1,788

 

 

 

 

 

 

 

 

 

Total retirement-related benefit plans

 

$
150

 

$
(19

)

$
132

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income/(loss)

 

$
472

 

$
(263

)

$
209

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*     Reclassified to conform to 2018 presentation.

(1)

These AOCI components are included in the computation of net periodic pension cost. (See note T, “Retirement-Related Benefits,” for additional information.)

 

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

 

($ in millions)

 

 

 

 

 

 

 

 

 

Net Unrealized

 

 

 

 

 

Net Unrealized

 

Foreign

 

Net Change

 

Gains/(Losses)

 

Accumulated

 

 

 

Gains/(Losses)

 

Currency

 

Retirement-

 

on Available-

 

Other

 

 

 

on Cash Flow

 

Translation

 

Related

 

For-Sale

 

Comprehensive

 

 

 

Hedges

 

Adjustments*

 

Benefit Plans

 

Securities

 

Income/(Loss)

 

December 31, 2015

 

$
100

 

$
(3,463

)

$
(26,248

)

$
5

 

$
(29,607

)

Other comprehensive income before reclassifications

 
163

 
(140

)
(1,581

)
(23

)
(1,581

)

Amount reclassified from accumulated other comprehensive income

 
56

 
0

 
1,714

 
21

 
1,791

 

 

 

 

 

 

 

 

 

 

 

 

 

Total change for the period

 
219

 
(140

)
132

 
(2

)
209

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 
319

 
(3,603

)
(26,116

)
2

 
(29,398

)

Other comprehensive income before reclassifications

 
(58

)
769

 
495

 
0

 
1,206

 

Amount reclassified from accumulated other comprehensive income

 
(226

)
0

 
1,825

 
1

 
1,599

 

 

 

 

 

 

 

 

 

 

 

 

 

Total change for the period

 
(284

)
769

 
2,320

 
1

 
2,806

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 
35

 
(2,834

)
(23,796

)
3

 
(26,592

)

Cumulative effect of a change in accounting principle**

 
5

 
46

 
(2,471

)
(2

)
(2,422

)

Other comprehensive income before reclassifications

 
(93

)
(902

)
(2,092

)
(1

)
(3,089

)

Amount reclassified from accumulated other comprehensive income

 
337

 

—

 
2,276

 

—

 
2,612

 

 

 

 

 

 

 

 

 

 

 

 

 

Total change for the period

 
244

 
(902

)
184

 
(1

)
(476

)

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

$
284

 

$
(3,690

)

$
(26,083

)

$
0

 

$
(29,490

)

 

 

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

**          Reflects the adoption of the FASB guidance on stranded tax effects, hedging and financial instruments. Refer to note B, “Accounting Changes.”