IBM 2010 Annual Report Download - page 84

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies82
Each acquisition further complemented and enhanced the
company’s portfolio of product and services offerings. Lombardi is
a leading provider of business process management software and
services, and became part of the company’s application integration
software portfolio. Intelliden is a leading provider of intelligent
network automation software and will extend the network manage-
ment offerings. Initiate is a market leader in data integrity software
for information sharing among healthcare and government
organizations. Cast Iron Systems, a leading Software as a Service
(SaaS) and cloud application integration provider, enhances the
WebSphere business integration portfolio. BigFix, Inc. is a leading
provider of high-performance enterprise systems and security
management solutions that revolutionizes the way IT organizations
manage and secure their computing infrastructure. Coremetrics,
a leader in Web analytics software, will expand the company’s
business analytics capabilities by enabling organizations to use
cloud computing services to develop faster, more targeted market-
ing campaigns. Datacap will strengthen the company’s ability to
help organizations digitize, manage and automate their information
assets. Unica, a leading provider of software and services used to
automate marketing processes, will expand the company’s ability
to help organizations analyze and predict customer preferences
and develop more targeted marketing campaigns. PSS Systems
is a leading provider of legal information governance and information
management software. OpenPages is a leading provider of soft-
ware that helps companies more easily identify and manage risk
and compliance activities across the enterprise through a single
management system. Clarity Systems delivers financial governance
software that enables organizations to automate the process of
collecting, preparing, certifying and controlling financial statements
for electronic filing. Wilshire’s mortgage servicing platform will
continue the company’s strategic focus on the mortgage services
industry and strengthens its commitment to deliver mortgage
business process outsourcing solutions. National Interest Security
Company will strengthen the ability to deliver advanced analytics
and IT solutions to the public sector. Storwize, a provider of in-line
data compression appliance solutions, will help the company to
make it more affordable for clients to analyze massive amounts of
data in order to provide new insights and business outcomes.
BLADE provides server and top-of-rack switches as well as software
to virtualize and manage cloud computing and other workloads.
Purchase price consideration for the “Other Acquisitions” as
reflected in the table above, is paid primarily in cash. All acquisitions
are reported in the Consolidated Statement of Cash Flows net of
acquired cash and cash equivalents.
The acquisitions were accounted for as business combinations
using the acquisition method, and accordingly, the identifiable
assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquired entities were recorded at their estimated
fair values at the date of acquisition. The primary items that gen-
erated the goodwill are the value of the synergies between the
acquired companies and IBM and the acquired assembled work-
force, neither of which qualify as an amortizable intangible asset.
For the “Other Acquisitions,” the overall weighted-average life of the
identified intangible assets acquired is 6.4 years. These identified
intangible assets will be amortized on a straight-line basis over
their useful lives. Goodwill of $2,312 million has been assigned to
the Software ($1,653 million), GTS ($32 million), GBS ($252 million)
and STG ($375 million) segments. It is expected that approximately
10 percent of the goodwill will be deductible for tax purposes.
The table below reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of December
31, 2010:
2010 Acquisitions
($ in millions)
Amortization Sterling Other
Life (in Years) Netezza Commerce* Acquisitions
Current assets $ 218 $ 196 $ 377
Fixed assets/noncurrent assets 73 106 209
Intangible assets:
Goodwill N/A 1,410 1,032 2,312
Completed technology 3 to 7 202 218 493
Client relationships 2 to 7 52 244 293
In-process R&D 5 4 — 17
Patents/trademarks 1 to 7 16 14 27
Total assets acquired 1,975 1,810 3,728
Current liabilities (9) (129) (161)
Noncurrent liabilities (120) (266) (291)
Total liabilities assumed (128) (395) (452)
Total purchase price $1,847 $1,415 $3,277
N/A—Not applicable
* Reflects the reclassification of $184 million related to deferred tax liabilities from current to noncurrent liabilities from amounts previously reported in the table on page 31 in the
company’s third quarter 2010 Form 10-Q filed on October 26, 2010.