IBM 2008 Annual Report Download - page 84


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 ..................................................................................................................... 102
Software, Global Technology Services and Global Business Services
segments upon acquisition and goodwill, as reflected in the table on
page , has been assigned to the Software segment for $ million,
Global Technology Services segment for $ million and Global
Business Services segment for $ million. The overall weighted-
average useful life of the intangible assets purchased, excluding
goodwill, is . years.
OTHER ACQUISITIONS—The company acquired nine additional
companies that are presented as “Other Acquisitions” in the table on
page . Three of the acquisitions were Global Services-related com-
panies: 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
segment. 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 $ million, of which $
million was assigned to the Software segment and $ million was
assigned to the Global Technology Services segment. The overall
weighted-average useful life of the intangible assets purchased in
these acquisitions, excluding goodwill, is . years.
2006 ACQUISITIONS
($  )
Micromuse, Inc.
Original Amount
Amortization Disclosed in Purchase Total FileNet
Life (in Years) First Qtr. 2006 Adjustments* Allocation Corporation
Current assets $ 201 $ 56 $ 257 $ 681
Fixed assets/noncurrent 8 — 8 69
Intangible assets:
Goodwill N/A 694 137 831 894
Completed technology 3 to 5 46 — 46 73
Client relationships 3 to 7 46 — 46 194
Other 2 to 4 4 — 4 55
In-process R&D N/A 1 — 1 3
Total assets acquired 1,000 193 1,193 1,969
Current liabilities (89) (193) (282) (252)
Noncurrent liabilities (49) — (49) (108)
Total liabilities assumed (138) (193) (331) (360)
TOTAL PURCHASE PRICE $ 862 $ — $ 862 $1,609
* Adjustments primarily relate to acquisition costs, deferred taxes and other accruals.
N/A—Not applicable
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 , has been entirely
assigned to the Global Technology Services segment. The overall
weighted-average useful life of the intangible assets purchased,
excluding goodwill, is . years.
MRO SOFTWARE INC. (MRO)—On October , , the company
acquired  percent of the outstanding common shares of MRO
for cash consideration of $ million. MRO’s asset and service man-
agement software and consulting services are used by many of the
world’s top companies to effectively manage how they buy, maintain
and retire assets — such as production equipment, facilities, transpor-
tation 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