IBM 2013 Annual Report Download - page 97

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
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The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of December 31, 2013.
2013 Acquisitions
($ in millions)
Amortization
Life (in Years) SoftLayer
Other
Acquisitions
Current assets $ 80 $ 97
Fixed assets/noncurrent assets 300 41
Intangible assets
Goodwill N/A 1,285 961
Completed technology 5—7 290 181
Client relationships 6—7 245 97
In-process R&D N/A 2 —
Patents/trademarks 2—7 75 32
Total assets acquired 2,277 1,408
Current liabilities (56) (61)
Noncurrent liabilities (244) (105)
Total liabilities assumed (300) (166)
Total purchase price $1,977 $1,242
N/A—Not applicable
In addition to SoftLayer, each acquisition further complemented and
enhanced the company’s portfolio of product and services offerings.
The acquisition of StoredIQ advances the company’s efforts to help
clients derive value from big data. The combination of the company’s
and Star Analytics’ software will advance the company’s business
analytics initiatives. UrbanCode automates the delivery of software,
helping businesses quickly release and update mobile, social, big
data and cloud applications. CSL deepens the consolidation cloud
capabilities by offering simplified management of the virtualization
environment. Trusteer extends the company’s data security capabili-
ties further into the cloud, mobile and endpoint security space. Daeja
delivers software that helps employees across all industries, espe-
cially data intensive ones such as banking, insurance and healthcare,
get faster access to critical business information, and complements
the company’s big data capabilities. Xtify is a leading provider of
cloud-based mobile messaging tools that help organizations
improve mobile sales, drive in-store traffic and engage customers
with personalized offers. The Now Factory is a provider of analytics
software that helps communications service providers (CSPs)
deliver better customer experiences and drive new revenue oppor-
tunities. Fiberlink is a mobile management and security company,
that supports the company’s expanding vision for enterprise mobility
management, which encompasses secure transactions between
businesses, partners, and customers.
For the “Other Acquisitions,” the overall weighted-average life of
the identified amortizable intangible assets acquired is 6.6 years.
These identified intangible assets will be amortized on a straight-line
basis over their useful lives. Goodwill of $961 million has been
assigned to the Software ($948 million) and Systems and Technology
($13 million) segments. It is expected that approximately 2 percent of
the goodwill will be deductible for tax purposes.
On January 17, 2014, the company completed the acquisition of
Aspera, Inc. (Aspera), a privately held company based in Emeryville,
CA. Aspera’s technology helps companies securely speed the
movement of massive data files around the world. At the date of
issuance of the financial statements, the initial purchase accounting
was not complete for this acquisition.
On February 24, 2014, the company announced that it had signed
a definitive agreement to acquire Boston, MA-based Cloudant, Inc.,
(Cloudant) a privately held database-as-a-service (DBaaS) provider
that enables developers to easily and quickly create next generation
mobile and web apps. Cloudant will extend the company’s big data
and analytics, cloud, and mobile offerings by further helping clients
take advantage of these key growth initiatives. The acquisition is
expected to close in the first quarter of 2014.
2012
In 2012, the company completed 11 acquisitions at an aggregate
cost of $3,964 million.
Kenexa Corporation (Kenexa)—On December 3, 2012, the com-
pany completed the acquisition of 100 percent of Kenexa, a publicly
held company, for cash consideration of $1,351 million. Kenexa, a
leading provider of recruiting and talent management solutions,
brings a unique combination of cloud-based technology and con-
sulting services that integrates both people and processes,
providing solutions to engage a smarter, more effective workforce
across their most critical businesses functions. Goodwill of $1,014
million was assigned to the Software ($771 million) and Global Tech-
nology Services (GTS) ($243 million) segments. As of the acquisition
date, it was expected that approximately 10 percent of the goodwill
would be deductible for tax purposes. The overall weighted-average
useful life of the identified intangible assets acquired was 6.5 years.