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Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
94
cross-reference medical images against billions of data points
already in the Watson Health Cloud. Goodwill of $695million has
been assigned to the Software segment. 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.
Cleversafe, Inc. (Cleversafe)—On November6, 2015, the company
completed the acquisition of 100percent of Cleversafe, a privately
held company, for cash consideration of $1,309 million. Cleversafe
is a leading developer and manufacturer of object-based storage
software and appliances. Cleversafe will be integrated into the
company’s Cloud business to give clients strategic data flexibility,
simplified management and consistency with on-premise, cloud
and hybrid cloud deployment options. Goodwill of $1,000 million
has been assigned to the Global Technology Services ($590mil-
lion) and Systems Hardware ($410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 6.9years.
Other Acquisitions—The Software segment completed acqui-
sitions of eight privately held businesses: in the first quarter,
AlchemyAPI, Inc. (AlchemyAPI) and Blekko, Inc. (Blekko); in the
second quarter, Explorys, Inc. (Explorys) and Phytel, Inc. (Phytel); in
the third quarter, Compose, Inc. (Compose) and StrongLoop, Inc.
(StrongLoop); and in the fourth quarter, Clearleap, Inc. (Clearleap)
and IRIS Analytics. Global Technology Services (GTS) completed
acquisitions of two privately held businesses: in the second
quarter, Blue Box Group, Inc. (Blue Box); and in the fourth quarter,
Gravitant, Inc. (Gravitant). Global Business Services (GBS) com-
pleted acquisitions of two privately held businesses in the fourth
quarter, Advanced Application Corporation (AAC) and Meteorix,
LLC. (Meteorix).
Each acquisition is expected to enhance the company’s port-
folio of product and services capabilities. AlchemyAPI is a leading
provider of scalable cognitive computing application program
interface services and computing applications. Blekko technology
provides advanced Web-crawling, categorization and intelligent
filtering. Explorys provides secure cloud-based solutions for
clinical integration, at-risk population management, cost of care
measurement and pay-for-performance. Phytel is a leading pro-
vider of SaaS-based population health management offerings that
help providers identify patients at risk for care gaps and engage the
patient to begin appropriate preventative care. Blue Box provides
hosted, managed, OpenStack-based production-grade private
clouds for the enterprise and service provider markets. Compose
offers auto-scaling, production-ready databases to help software
development teams deploy data services efficiently. StrongLoop
is a leading provider of application development software that
enables software developers to build applications using applica-
tion programming interfaces. AAC engages in system integration
application development, software support and services. AAC was
an affiliate of JBCC Holdings Inc. and IBM Japan Ltd. The company
acquired all the shares of AAC which became a wholly owned
subsidiary as of October1, 2015. Gravitant develops cloud-based
software to enable organizations to easily plan, buy and manage,
or “broker” software and computing services from multiple suppli-
ers across hybrid clouds. Meteorix offers consulting, deployment,
integration and on-going post production services for Workday
Financial Management and Human Capital Management applica-
tions. Clearleap is a provider of cloud-based video services. IRIS
Analytics provides technology and consultancy services to the
payments industry to detect electronic payment fraud.
All acquisitions were for 100percent of the acquired companies
with the exception of the AAC acquisition.
The following table reflects the purchase price related to these
acquisitions and the resulting purchase price allocations as of
December31, 2015.
2015 Acquisitions
($ inmillions)
Amortization
Life (in Years) Merge Cleversafe
Other
Acquisitions
Current assets $ 94 $ 23 $ 60
Fixed assets/noncurrent assets 128 63 82
Intangible assets
Goodwill N/A 695 1,000 895
Completed technology 5–7 133 364 163
Client relationships 5–7 145 23 95
Patents/trademarks 2–7 54 11 23
Total assets acquired 1,248 1,484 1,318
Current liabilities (73) (15) (34)
Noncurrent liabilities (139) (160) (73)
Total liabilities assumed (212) (175) (107)
Total purchase price $1,036 $1,309 $1,210
N/A—Not applicable