IBM 2005 Annual Report Download - page 66
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NotestoConsolidatedFinancialStatements
INTERNATIONALBUSINESSMACHINESCORPORATION ANDSUBSIDIARYCOMPANIES
_65
(Dollarsinmillions)
CANDLE
ORIGINAL
AMOUNT
DISCLOSEDIN
AMORTIZATION SECOND PURCHASE TOTAL OTHER
LIFE(INYEARS) QTR. 2004 ADJUSTMENTS* ALLOCATION MAERSK ACQUISITIONS
Currentassets $«202 $««(2) $«200 $«319 $«««191
Fixedassets/non-current 82 (19) 63 123 176
Intangibleassets:
Goodwill NA 256 39 295 426 711
Completedtechnology 2–323—231129
Clientrelationships 3–7 65 — 65 100 50
Otheridentifiable
intangibleassets 56—6213
Totalassetsacquired 634 18 652 981 1,170
Currentliabilities (119) (22) (141) (145) (198)
Non-currentliabilities (80) — (80) (44) (84)
Totalliabilitiesassumed (199) (22) (221) (189) (282)
Totalpurchaseprice $«435 $««(4) $«431 $«792 $«««888
* Adjustmentsprimarilyrelatetoacquisitioncosts,deferredtaxesandotheraccruals.
NA—NotApplicable
CANDLE –OnJune7,2004,thecompanyacquired100percentof
theoutstandingcommonsharesofCandle forcashconsidera-
tionof$431 million.Candleprovidesservicestodevelop,deploy
andmanageenterpriseinfrastructure.Theacquisition allows the
companytoprovideitsclientswithanenhancedsetofsoftware
solutionsformanaginganondemandenvironmentandcomple-
ments the company’s existing middleware solutions. Candle
wasintegratedintotheSoftwaresegmentuponacquisitionand
Goodwill, as reflected in the table above, has been entirely
assignedto the Software segment. The overall weighted-aver-
agelifeoftheidentifiedamortizableintangibleassetsacquired,
excludingGoodwill, is5.9years.
MAERSKDATA/DMDATA – OnDecember1,2004,thecompanypur-
chased100percentoftheoutstandingcommonstockofMaersk
Data and 45 percent of the outstanding common stock of
DMdatafor$792million. MaerskDataownedtheremaining55
percentof DMdata’soutstanding commonstock. Maersk Data
andDMdataarelocatedinDenmark.MaerskDataisaprovider
ofITsolutionsandoffersconsultancy,applicationdevelopment
and operation and support to companies and organizations.
DMdata is a provider of IT operations and its core business
areasincludetheoperationofcentralizedanddecentralizedIT
systems,networkestablishmentandoperation,aswellasprint
andsecuritysolutionsforclientsinanumberofdifferentindus-
tries.Theseacquisitions significantly increased thecompany’s
BusinessPerformanceTransformationServices(BPTS)capabil-
itiesinservingclientsinthetransportationandlogisticsindustry
globally, whilealsoenhancingitscapabilitiesin areassuchas
financial services, public sector, healthcare and the food and
agricultureindustries.BothMaerskDataandDMdatawereinte-
gratedintothe GlobalServicessegmentuponacquisitionand
Goodwill, as reflected in the table above, has been entirely
assignedtotheGlobalServicessegment. Theoverallweighted-
average life of the identified amortizable intangible assets
acquired,excludingGoodwill, is 4.7years.
OTHER ACQUISITIONS –The company acquired 12 other compa-
nies that are shown as Other Acquisitions in the table above.
Sevenoftheacquisitionswereforservices-relatedcompanies,
whichwereintegratedintotheGlobalServicessegmentandfive
were for software companies, which were integrated into the
Software segment. The purchase price allocations resulted in
aggregate Goodwill of $711 million, of which $329 million was
assigned to the Software segment and $382 million was
assignedto the Services segment. The overall weighted-aver-
agelifeoftheintangibleassetspurchased,excludingGoodwill,
is4.8years.
2003
In2003,thecompanycompletednineacquisitionsatanaggre-
gatecostof $2,536 million. Theseacquisitionsarereportedin
theConsolidatedStatementofCashFlowsnetofacquiredcash
andcashequivalents.Thetable onpage66 representsthepur-
chase price allocation for all 2003 acquisitions. The Rational
Software Corporation(Rational)acquisitionisshownseparately
givenitssignificantpurchaseprice.