IBM 2007 Annual Report Download - page 80

78
Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
Management Discussion ..................................14
Consolidated Statements ..................................58
Notes ........................................................... 64
A-F ............................................................. 64
A. Significant Accounting Policies ..................64
B. Accounting Changes ...................................73
C. Acquisitions/Divestitures ...................... 76
D. Financial Instruments
(excluding derivatives).................................82
E. Inventories ...................................................83
F. Financing Receivables .................................83
G-M ..................................................................84
N-S ...................................................................94
T-W ................................................................102
FileNet Corporation — On October 12, 2006, the company acquired
100 percent of the outstanding common shares of FileNet Corporation
for cash consideration of $1,609 million. FileNet is a leading provider
of business process and content management solutions that help
companies simplify critical and everyday decision making processes
and give organizations a competitive advantage. The FileNet acquisi-
tion enhances the company’s ability to meet increasing client demand
for a combination of content- and process-centric business process
management capabilities, which is driven by changing governance
and compliance mandates, as well as the need to integrate content-
centric business processes with enterprise applications. The company
has integrated its business process management and service oriented
architecture (SOA) technologies with the FileNet platform to allow
customers to access content wherever it may reside and use it in the
context of business processes. FileNet was integrated into the
Software segment upon acquisition and Goodwill, as reflected in the
table on page 79, has been entirely assigned to the Software segment.
The overall weighted-average useful life of the intangible assets pur-
chased, excluding Goodwill, is 5.9 years.
Internet Security Systems, Inc.— On October 20, 2006, the
company acquired 100 percent of the outstanding common shares of
Internet Security Systems, Inc. (ISS) for cash consideration of
$1,368 million. ISS provides security solutions to thousands of the
world’s leading companies and governments, helping to proactively
protect against Internet threats across networks, desktops and servers.
ISS software, appliances and services monitor and manage network
vulnerabilities and rapidly respond in advance of potential threats.
The acquisition advances the company’s strategy to utilize IT ser-
vices, software and consulting expertise to automate labor-based
processes into standardized, software-based services that can help
clients optimize and transform their businesses. ISS was integrated
into the Global Technology Services segment upon acquisition and
Goodwill, as reflected in the table on page 79, has been entirely
assigned to the Global Technology Services segment. The overall
weighted-average useful life of the intangible assets purchased,
excluding Goodwill, is 5.6 years.
MRO Software Inc.— On October 5, 2006, the company acquired
100 percent of the outstanding common shares of MRO Software,
Inc. for cash consideration of $739 million. MRO’s asset and service
management software and consulting services are used by many of
the world’s top companies to effectively manage how they buy, main-
tain and retire assets — such as production equipment, facilities,
transportation and information technology hardware and software — in
a wide variety of industries including utilities, manufacturing, energy,
pharmaceutical and telecommunications. The acquisition builds upon
the company’s strategy to leverage business consulting, IT services
and software to develop repeatable tools that help clients optimize
and transform their business. MRO was integrated into the Software,
Global Technology Services and Global Business Services segments
upon acquisition and Goodwill, as reflected in the table on page 79,
has been assigned to the Software segment for $337 million, Global
Technology Services segment for $49 million and Global Business
Services segment for $122 million. The overall weighted-average useful
life of the intangible assets purchased, excluding Goodwill, is 5.6 years.
Other Acquisitions — The company acquired nine additional com-
panies that are presented as Other Acquisitions in the table on page
79. Three of the acquisitions were Global Services-related companies:
two were integrated into the Global Technology Services segment:
Viacore, Inc. and Palisades Technology Partners, LLP; the third,
Valchemy, Inc., was integrated into the Global Business Services seg-
ment. Six of the acquisitions were software-related companies that
were integrated into the Software segment: Cims Lab; Language
Analysis Systems, (LAS) Inc.; Buildforge; Unicorn Solutions, Inc.;
Rembo Technology; and Webify Solutions. The purchase price allo-
cations resulted in aggregate Goodwill of $211 million, of which
$161 million was assigned to the Software segment and $51 million
was assigned to the Global Technology Services segment. The over-
all weighted-average useful life of the intangible assets purchased in
these acquisitions, excluding Goodwill, is 3.4 years.