IBM 2008 Annual Report Download - page 82


Notes to Consolidated Financial Statements
INTERNATIONAL BUSINESS MACHINES CORPORATION and Subsidiary Companies
Management Discussion ............................................................................................. 18
Consolidated Statements ............................................................................................ 60
Notes ............................................................................................................................... 66
A – E ........................................................................................................................66
A. SIGNIFICANT ACCOUNTING POLICIES ...........................................................66
B. ACCOUNTING CHANGES .................................................................................76
C. ACQUISITIONS/DIVESTITURES .......................................................................78
D. FAIR VALUE ......................................................................................................84
E. FINANCIAL INSTRUMENTS (EXCLUDING DERIVATIVES) .................................85
F – J ........................................................................................................................86
K– Q .......................................................................................................................88
R –W ..................................................................................................................... 10 2
The table on page  reflects the purchase price related to these
acquisitions and the resulting purchase price allocations as of Decem-
ber , .
The acquisitions were accounted for as purchase transactions, and
accordingly, the assets and liabilities of the acquired entities were
recorded at their estimated fair values at the date of acquisition. The
primary items that generated the goodwill are the value of the syner-
gies between the acquired companies and IBM and the acquired
assembled workforce, neither of which qualify as an amortizable
intangible asset. For the “Other Acquisitions,” the overall weighted-
average life of the identified amortizable intangible assets acquired is
. years. With the exception of goodwill, these identified intangible
assets will be amortized on a straight-line basis over their useful lives.
Goodwill of $ million has been assigned to the Software ($
million), Global Technology Services ($ million) and Systems and
Technology ($ million) segments. Substantially, all of the goodwill
related to “Other Acquisitions” is not deductible for tax purposes.
See note A, “Significant Accounting Policies,” on page  for
further description of the company’s accounting policies related to
business combinations and intangible assets, including goodwill.
2007
In , the company completed  acquisitions at an aggregate cost
of $, million.
The Software segment completed six acquisitions: in the first
quarter, Consul Risk Management International BV and Vallent
Cor por ation, both privately held companies. Four acquisitions were
completed in the third quarter: Watchfire Corporation, WebDialogs
Inc. and Princeton Softech Inc., all privately held companies, and
DataMirror Corporation, a publicly held company. Each acquisition
further complemented and enhanced the software product portfolio.
Global Technology Services completed four acquisitions: in the
first quarter, Softek Storage Solutions Corporation (Softek) and
DM Information Systems, Ltd. (DMIS), both privately held compa-
nies. Two acquisitions were completed in the fourth quarter: Novus
Consulting Group, Inc. and Serbian Business Systems, both privately
held companies. Softek augments the company’s unified data mobility
offerings and worldwide delivery expertise for managing data in stor-
age array, host and virtualized IT environments. DMIS will enhance
and complement the Technology Service offerings. Novus CG, a
storage solution company, will provide improved access to business
information, enable stronger regulatory and corporate compliance
and improve overall information technology performance. Serbian
Business Systems establishes the company’s maintenance and techni-
cal support services business in Serbia.
Global Business Services completed one acquisition in the fourth
quarter: IT Gruppen AS, which will add to the company’s presence
in the retail and media sectors.
Systems and Technology completed one acquisition in the fourth
quarter: XIV, Ltd., a privately held company focused on storage sys-
tems technology.
Purchase price consideration was paid in cash. These acquisitions
are reported in the Consolidated Statement of Cash Flows net of
acquired cash and cash equivalents.
The table on page  reflects the purchase price related to these
acquisitions and the resulting purchase price allocations as of Dec-
ember , .
The acquisitions were accounted for as purchase transactions, and
accordingly, the assets and liabilities of the acquired entities were
recorded at their estimated fair values at the date of acquisition. The
primary items that generated the goodwill are the value of the syner-
gies between the acquired companies and IBM and the acquired
assembled workforce, neither of which qualify as an amortizable
intangible asset. Substantially all of the goodwill is not deductible
for tax purposes. The overall weighted-average life of the identified
amortizable intangible assets acquired is . years. With the excep-
tion of goodwill, these identified intangible assets will be amortized
over their useful lives. Goodwill of $ million was assigned to the
Software ($ million), Global Business Services ($ million),
Global Technology Services ($ million) and Systems and Technology
($ million) segments.