IBM 2005 Annual Report Download - page 65
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NotestoConsolidatedFinancialStatements
INTERNATIONALBUSINESSMACHINESCORPORATION ANDSUBSIDIARYCOMPANIES
64_ NotestoConsolidatedFinancialStatements
(Dollarsinmillions)
ASCENTIAL
ORIGINAL
AMOUNT
DISCLOSEDIN
AMORTIZATION SECOND PURCHASE TOTAL OTHER
LIFE(INYEARS) QTR. 2005 ADJUSTMENTS* ALLOCATION ACQUISITIONS
Currentassets $««««526 $««(1) $««««525 $«««137
Fixedassets/non-current 20 — 20 28
Intangibleassets:
Goodwill NA 639 1 640 791
Completedtechnology 3 56 — 56 35
Clientrelationships 5 46 — 46 22
Otheridentifiableintangibleassets 1–5 — — — 5
In-processR&D ——— 1
Totalassetsacquired 1,287 — 1,287 1,019
Currentliabilities (112) (4) (116) (89)
Non-currentliabilities (35) 4 (31) (48)
Totalliabilitiesassumed (147) — (147) (137)
Totalpurchaseprice $«1,140 $«— $«1,140 $«««882
* Adjustmentsprimarilyrelatetoacquisitioncosts,deferredtaxesandotheraccruals.
NA—NotApplicable
ASCENTIAL – On April 29, 2005, the company acquired100 per-
cent of the outstanding common shares of Ascential for cash
consideration of $1,140 million. Ascential is a provider of enter-
prisedataintegrationsoftwareusedtohelpbuildenterprisedata
warehouses, power business intelligence systems, consolidate
enterpriseapplications,createandmanagemasterrepositories
of critical business information and enable on demand data
access.Ascentialcomplementsandstrengthensthecompany’s
information and integration portfolio and further extends the
company’sabilitytoenableclientstobecomeondemandbusi-
nesses by providing a single, agile infrastructure for delivering
accurate,consistent,timely andcoherentinformation. Ascential
wasintegratedintotheSoftwaresegmentuponacquisitionand
Goodwill, as reflected in the table above, has been entirely
assignedtotheSoftwaresegment. Theoverallweightedaverage
usefullifeoftheintangibleassetspurchased,excludingGoodwill,
is3.9years.
OTHERACQUISITIONS –Thecompanyacquired 15 companies that
areshownasOtherAcquisitionsinthetable above. Fiveofthe
acquisitions were service-related companies that were inte-
grated into the Global Services segment: Network Solutions;
ClassicBlue;Healthlink;Corio;andEquitant. Nineoftheacquisi-
tionsweresoftware-relatedcompaniesthatwereintegratedinto
the Software segment: iPhrase; Data Power Technology, Inc.;
Bowstreet; Collation Inc.; DWL; Isogon Corporation; PureEdge
Solutions, Inc.; SRD; and Gluecode. One acquisition, Meiosys,
was integratedin theSystemsandTechnologyGroupsegment.
ThepurchasepriceallocationsresultedinaggregateGoodwillof
$791 million,ofwhich $456 millionwasassignedtotheSoftware
segment;$301 millionwasassignedtotheGlobalServicesseg-
ment; and $34 million was assigned to the Systems and
TechnologyGroupsegment. Theoverallweightedaverageuse-
fullifeoftheintangibleassetspurchased,excludingGoodwill, is
3.1 years.
Seenote A, “Significant AccountingPolicies,” on page 58
for further description of the company’s accounting policies
relatedtobusinesscombinationsandintangibleassets, includ-
ingGoodwill.
2004
In2004, the company completed14 acquisitionsat an aggre-
gatecostof$2,111 million.Theseacquisitionsarereportedinthe
ConsolidatedStatementofCashFlowsnetofacquiredcashand
cashequivalents.Thetable onpage65 representsthepurchase
priceallocationsfor all 2004acquisitions.The Candle Corpor-
ation (Candle) and Maersk acquisitions are shown separately
giventhesignificantpurchasepriceforeachacquisition.