IBM 2007 Annual Report Download - page 86

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84
Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
Management Discussion ..................................14
Consolidated Statements ..................................58
Notes ........................................................... 64
A-F ...................................................................64
G-M ............................................................ 84
G. Plant, Rental Machines and
Other Property ...................................... 84
H. Investments and Sundry Assets ............ 84
I. Intangible Assets Including Goodwill .. 84
J. Borrowings ............................................ 85
K. Derivatives and Hedging Transactions ......88
L. Other Liabilities ..........................................91
M. Stockholders’ Equity Activity .....................92
N-S ...................................................................94
T-W ................................................................102
Note G. Plant, Rental Machines
and Other Property
($ in millions)
AT DECEMBER 31: 2007 2006
Land and land improvements $ 701 $ 693
Buildings and building improvements 8,498 8,243
Plant, laboratory and office equipment 25,273 23,907
34,471 32,843
Less: Accumulated depreciation 21,625 20,441
Plant and other property — net 12,847 12,401
Rental machines 4,113 3,678
Less: Accumulated depreciation 1,878 1,640
Rental machines — net 2,235 2,038
Total — net $15,081 $14,440
Note H. Investments and Sundry Assets
($ in millions)
AT DECEMBER 31: 2007 2006
Deferred taxes* $1,513 $3,880
Deferred transition and setup costs
and other deferred arrangements**
1,475 1,232
Alliance investments:
Equity method 271 416
Non-equity method 879 628
Long-term deposits 285 228
Derivatives — noncurrent
+ 259 213
Marketable securities 531 361
Prepaid software 221 146
Other assets 1,327 1,277
Total $6,761 $8,381
* The decrease was primarily due to the year-end remeasurement of pension assets.
** Deferred transition and set-up costs and other deferred arrangements are related to
Global Services client arrangements. Also see note A, “Significant Accounting Policies,”
on page 67 for additional information.
+ See note K, “Derivatives and Hedging Transactions,” on pages 88 to 91 for the fair
value of all derivatives reported in the Consolidated Statement of Financial Position.
Note I. Intangible Assets
Including Goodwill
Intangible Assets
The following table details the company’s intangible asset balances
by major asset class:
($ in millions)
AT DECEMBER 31, 2007
GROSS NET
CARRYING ACCUMULATED CARRYING
INTANGIBLE ASSET CLASS AMOUNT AMORTIZATION AMOUNT
Capitalized software $1,926 $ (826) $1,100
Client-related 1,054 (495) 559
Completed technology 536 (194) 342
Strategic alliances 103 (103) —
Patents/trademarks 128 (61) 67
Other* 154 (115) 39
Total $3,901 $(1,794) $2,107
* Other intangibles are primarily acquired proprietary and nonproprietary business
processes, methodologies and systems, and impacts from currency translation.
($ in millions)
AT DECEMBER 31, 2006
GROSS NET
CARRYING ACCUMULATED CARRYING
INTANGIBLE ASSET CLASS AMOUNT AMORTIZATION AMOUNT
Capitalized software $1,871 $ (837) $1,034
Client-related 1,038 (424) 614
Completed technology 500 (128) 372
Strategic alliances 104 (89) 15
Patents/trademarks 112 (29) 83
Other* 264 (179) 84
Total $3,888 $(1,686) $2,202
* Other intangibles are primarily acquired proprietary and nonproprietary business
processes, methodologies and systems, and impacts from currency translation.
The company amortizes intangible assets over their estimated useful
lives unless such lives are deemed indefinite. Amortizable intangible
assets are tested for impairment based on undiscounted cash flows,
and, if impaired, written down to fair value based on either discounted
cash flows or appraised values. Intangible assets with indefinite lives
are tested annually for impairment and written down to fair value as
required. No impairment of intangible assets has been recorded dur-
ing any of the periods presented.