IBM 2009 Annual Report Download - page 87

Notes to Consolidated Financial Statements
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES
enable stronger regulatory and corporate compliance and improve
overall information technology performance. Serbian Business
Systems establishes the company’s maintenance and technical
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 systems 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 below reflects the purchase price related to these
acquisitions and the resulting purchase price allocations as of
Dec ember 31, 2007.
The acquisitions were accounted for as purchase transac-
tions, 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 synergies 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 5.4 years. With the exception of goodwill,
these identified intangible assets will be amortized over their
useful lives. Goodwill of $999 million was assigned to the
Software ($639 million), Global Business Services ($14 million),
Global Technology Services ($76 million) and Systems and
Technology ($269 million) segments.
2007 ACQUISITIONS
($ in millions)
Amortization
Life (in Years) Acquisitions
Current assets $ 184
Fixed assets/noncurrent 31
Intangible assets:
Goodwill N/A 999
Completed technology 3 to 7 93
Client relationships 3 to 7 91
Other 2 to 5 17
Total assets acquired 1,415
Current liabilities (136)
Noncurrent liabilities (135)
Total liabilities assumed (271)
Total purchase price $1,144
N/A—Not applicable
Divestitures
2009
On October 26, 2009, the company announced that it had
signed an agreement with Dassault Systemes (DS) under which
DS would acquire the company’s activities associated with sales
and support of DS’s product lifecycle management (PLM) soft-
ware solutions, including customer contracts and related assets.
This transaction is subject to customary closing conditions and
is expected to close in the first quarter of 2010. The company
expects to record a gain when this transaction is completed.
On October 1, 2009, the company completed the divestiture
of its UniData and UniVerse software products and related tools
to Rocket Software, a privately held global software develop-
ment firm. The company recognized a gain on the transaction in
the fourth quarter.
On March 16, 2009, the company completed the sale of cer-
tain processes, resources, assets and third-party contracts related
to its core logistics operations to Geodis. The company received
proceeds of $365 million and recognized a net gain of $298
million on the transaction in the first quarter of 2009. The gain
was net of the fair value of certain contractual terms, certain
transaction costs and related real estate charges. As part of this
transaction, the company outsourced its logistics operations to
Geodis which enables the company to leverage industry-leading
skills and scale and improve the productivity of the company’s
supply chain.
2007
In January 2007, the company announced an agreement with
Ricoh Company Limited (Ricoh), a publicly traded company,
to form a joint venture company based on the Printing System
Division (a division of the Systems and Technology segment).
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