IBM 2010 Annual Report Download - page 86

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies84
2008
In 2008, the company completed 15 acquisitions at an aggregate
cost of $6,796 million.
Cognos, Inc. (Cognos)—On January 31, 2008, the company
ac quired 100 percent of the outstanding common shares of
Cognos for consideration of $5,021 million consisting of $4,998
million of cash and $24 million of equity instruments. Through this
acquisition, IBM and Cognos has become a leading provider of
technology and services for business intelligence and performance
management, delivering the industry’s most complete, open
standards-based platform with the broadest range of expertise to
help companies expand the value of their information, optimize
their business processes and maximize performance across their
enterprises. The company acquired Cognos to accelerate its
Information on Demand strategy, a cross-company initiative
that combines the company’s strength in information integration,
content and data management and business consulting services
to unlock the business value of information. Cognos was integrated
into the Software segment upon acquisition, and goodwill,
as reflected in the table on page 85, was entirely assigned to the
Software segment. Approximately 25 to 30 percent of the goodwill
was deductible for tax purposes. The overall weighted-average
useful life of the identified intangible assets acquired, excluding
goodwill, is 6.5 years.
Telelogic, AB (Telelogic)—On April 3, 2008, IBM acquired 100
percent of the outstanding common shares of Telelogic for cash
consideration of $885 million. Telelogic was a leading global provider
of solutions that enabled organizations to align the development of
products, complex systems and software with business objectives
and customer needs. This results in improved quality and predict-
ability, while reducing time-to-market and overall costs. Clients are
benefiting 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 on page 85 was 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 identified intangible assets acquired, excluding goodwill,
is 7.0 years.
Other Acquisitions—The company acquired 13 additional com-
panies at an aggregate cost of $889 million that are presented
in the table on page 85 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 $295 million.
ILOG added significant capability across the company’s entire soft-
ware platform and bolsters its existing rules management offerings.
Global Technology Services completed an 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 also completed an acquisition in the
first quarter: u9consult, a privately held company. u9consult 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 is 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, was
integrated into the company’s mainframe product engineering
cycles and future product plans. In the second quarter of 2008,
$24 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 page 104 for additional information regarding
this litigation. Also, the company recorded a $24 million in-process
research and development (IPR&D) charge related to this acquisi-
tion in the same period. The acquisition of Transitive Corporation
(Transitive) was completed in the fourth quarter. Transitive’s cross-
platform technology allows 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 primarily in cash. All acquisitions are reported in the
Consol idated Statement of Cash Flows net of acquired cash and
cash equivalents.