IBM 2008 Annual Report Download - page 81

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Notes to Consolidated Financial Statements
INTERNATIONAL BUSINESS MACHINES CORPORATION and Subsidiary Companies
TELELOGIC, AB (TELELOGIC)—On April , , IBM acquired
 percent of the outstanding common shares of Telelogic for cash
consideration of $ million. Telelogic is a leading global provider
of solutions that enable organizations to align the development of
products, complex systems and software with business objectives and
customer needs. This results in improved quality and predictability,
while reducing time-to-market and overall costs. Clients will benefit
from the combined technologies and services of both companies,
providing them a wider range of software and system development
capabilities used to build complex systems. Telelogic was integrated
into the Software segment upon acquisition, and goodwill, as
reflected in the table below has been entirely assigned to the Software
segment. Substantially all of the goodwill is not deductible for tax
purposes. The overall weighted-average useful life of the intangible
assets acquired, excluding goodwill, is . years.
OTHER ACQUISITIONS—The company acquired  additional com-
panies at an aggregate cost of $ million that are presented in the
table below as “Other Acquisitions.”
The Software segment completed eight other acquisitions, seven
of which were privately held companies: in the first quarter; AptSoft
Corporation, Solid Information Technology, Net Integration Tech-
nologies Inc., and Encentuate, Inc; in the second quarter; Infodyne,
Beijing Super Info and FilesX. In the fourth quarter, ILOG S.A.
(ILOG), a publicly held company, was acquired for $ million.
ILOG adds significant capability across the company’s entire soft-
ware platform and bolsters its existing rules management offerings.
Global Technology Services (GTS) completed one acquisition in
the first quarter: Arsenal Digital Solutions, a privately held company.
Arsenal provides global clients with security rich information protection
services designed to handle increasing data retention requirements.
Global Business Services (GBS) completed one acquisition in the
first quarter: uconsult, a privately held company. uconsult comple-
ments the company’s existing capabilities in value chain consulting.
Systems and Technology completed three acquisitions: in the
second quarter; Diligent Technologies Corporation and Platform
Solutions, Inc (PSI), both privately held companies. Diligent will be
an important component of IBM’s New Enterprise Data Center
model, which helps clients improve IT efficiency and facilitates the
rapid deployment of new IT services for future business growth.
PSI’s technologies and skills, along with its intellectual capital, will be
integrated into the company’s mainframe product engineering cycles
and future product plans. In the second quarter, $ million of the
purchase price of PSI was attributed to the settlement of a preexisting
lawsuit between IBM and PSI and recorded in SG&A expense. See
note O, “Contingencies and Commitments,” on pages  to  for
additional information regarding this litigation. Also, the company
recorded a $ million in-process research and development (IPR&D)
charge related to this acquisition in the second quarter. The acquisition
of Transitive Corporation (Transitive) was completed in the fourth
quarter. Transitive’s cross-platform technology will allow clients to
consolidate their Linux-based applications onto the IBM systems
that make the most sense for their business needs.
Purchase price consideration for the “Other Acquisitions” was
paid all in cash. All acquisitions are reported in the Consolidated
Statement of Cash Flows net of acquired cash and cash equivalents.
2008 ACQUISITIONS
($  )
Amortization Other
Life (in Years) Cognos* Telelogic* Acquisitions
Current assets $ 504 $ 242 $ 185
Fixed assets/noncurrent 126 7 75
Intangible assets:
Goodwill N/A 4,207 690 676
Completed technology 3 to 7 534 108 94
Client relationships 3 to 7 512 127 39
In-process R&D N/A — — 24
Other 3 to 7 78 15 19
Total assets acquired 5,960 1,189 1,112
Current liabilities (798) (141) (233)
Noncurrent liabilities (141) (163) (14)
Total liabilities assumed (939) (304) (247)
Settlement of preexisting litigation — — 24
TOTAL PURCHASE PRICE $5,021 $ 885 $ 889
* Purchase price allocation at December 31, 2008 reflects immaterial adjustments from the September 30, 2008 balances.
N/A—Not applicable