IBM 2014 Annual Report Download - page 100

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
99
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 advances the com-
pany’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 capabilities further into the cloud, mobile and end-
point security space. Daeja delivers software that helps employees
across all industries, especially data intensive ones such as bank-
ing, 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 Fac-
tory is a provider of analytics software that helps communications
service providers (CSPs) deliver better customer experiences and
drive new revenue opportunities. 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. At the acquisition dates, it was
expected that approximately 2percent of the goodwill would be
deductible for tax purposes.
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 consulting services that integrates both people and pro-
cesses, providing solutions to engage a smarter, more effective
workforce across their most critical business functions. Goodwill
of $1,014 million was assigned to the Software ($771 million) and
Global Technology Services (GTS) ($243 million) segments. As of
the acquisition date, it was expected that approximately 10percent
of the goodwill would be deductible for tax purposes. The over -
all weighted-average useful life of the identified intangible assets
acquired was 6.5years.
Other Acquisitions—The Software segment also completed eight
other acquisitions: in the first quarter, Green Hat Software Limited
(Green Hat), Emptoris Inc. (Emptoris) and Worklight, Inc. (Worklight),
all privately held companies, and DemandTec, Inc. (DemandTec),
a publicly held company; in the second quarter, Varicent Software
Inc. (Varicent), Vivisimo Inc. (Vivisimo) and Tealeaf Technology Inc.
(Tealeaf), all privately held companies; and in the third quarter,
Butterfly Software, Ltd. (Butterfly), a privately held company. STG
completed two acquisitions: in the first quarter, Platform Comput-
ing Corporation (Platform Computing), a privately held company;
and in the third quarter, Texas Memory Systems (TMS), a privately
held company. All acquisitions in 2012 were for 100percent of the
acquired companies.
The table below reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of Decem-
ber31, 2012.
2012 Acquisitions
($ in millions)
Amortization
Life (in Years) Kenexa
Other
Acquisitions
Current assets $ 133 $ 278
Fixed assets/noncurrent assets 98 217
Intangible assets
Goodwill N/A 1,014 1,880
Completed technology 3–7 169 403
Client relationships 4–7 179 194
In-process R&D N/A — 11
Patents/trademarks 1–7 39 37
Total assets acquired 1,632 3,020
Current liabilities (93) (143)
Noncurrent liabilities (188) (264)
Total liabilities assumed (281) (407)
Total purchase price $1,351 $2,613
N/A—Not applicable