IBM 2014 Annual Report Download - page 99

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
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enterprise storage, sharing virtual images or accessing the cloud
for increased computing capacity. Cloudant will extend the com-
pany’s mobile and cloud platform by enabling developers to easily
and quickly create next generation mobile and Web-based appli-
cations. Silverpop is a provider of cloud-based capabilities that
deliver personalized customer engagements in highly scalable
environments. Cognea offers personalized artificial intelligence
capabilities designed to serve as an intuitive interface between
human users and data-driven information. CrossIdeas delivers
next-generation identity and access governance capabilities to
help mitigate access risks and segregation of duty violations.
Lighthouse is a provider of cloud-enabled managed identity and
access management solutions.
The overall weighted-average life of the identified amortizable
intangible assets acquired is 6.8years. These identified intan-
gible assets will be amortized on a straight-line basis over their
useful lives. Goodwill of $442 million has been assigned to the
Software ($430 million) and Global Technology Services ($11 mil-
lion) segments. It is expected that approximately 1percent of the
goodwill will be deductible for tax purposes. All acquisitions were
for 100percent of the acquired companies.
2013
In 2013, the company completed 10 acquisitions at an aggregate
cost of $3,219 million.
SoftLayer Technologies, Inc. (SoftLayer)—On July3, 2013, the
company completed the acquisition of 100percent of the pri-
vately held company, SoftLayer, a cloud computing infrastructure
provider based in Dallas, Texas, for cash consideration of $1,977
million. SoftLayer joined the company’s new cloud services unit,
which combined SoftLayer with IBM SmartCloud into a global plat-
form. Goodwill of $1,285 million has been assigned to the Global
Technology Services ($1,246 million) and Software ($39 million)
segments. At the acquisition date, it was expected that none of
the goodwill would be deductible for tax purposes. The overall
weighted-average useful life of the identified intangible assets
acquired is 7.0years.
Other Acquisitions—The Software segment completed acqui-
sitions of eight privately held companies: in the first quarter,
StoredIQ Inc. (StoredIQ) and Star Analytics, Inc. (Star Analytics);
in the second quarter, UrbanCode Inc. (UrbanCode); and in the
third quarter, Trusteer, Ltd. (Trusteer) and Daeja Image Systems,
Ltd. (Daeja); and in the fourth quarter, Xtify, Inc. (Xtify), The Now
Factory and Fiberlink Communications (Fiberlink). Systems and
Technology (STG) completed one acquisition: in the third quarter,
CSL International (CSL), a privately held company. All acquisitions
in 2013 were for 100percent of the acquired companies.
The following table reflects the purchase price related to these
acquisitions and the resulting purchase price allocations as of
December31, 2013.
2013 Acquisitions
($ 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