IBM 2015 Annual Report Download - page 97

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
95
The acquisitions were accounted for as business combinations
using the acquisition method, and accordingly, the identifiable
assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquired entity were recorded at their estimated fair
values at the date of acquisition. The primary items that generated
the goodwill are the value of the synergies between the acquired
businesses and IBM and the acquired assembled workforce, nei-
ther of which qualify as an amortizable intangible asset.
For the “Other Acquisitions,” the overall weighted-average life of
the identified intangible assets acquired is 6.4years. These iden-
tified intangible assets will be amortized on a straight-line basis
over their useful lives. Goodwill of $717million was assigned to the
Software segment, $104million was assigned to the GTS segment,
and $74million was assigned to the GBS segment. It is expected
that 7percent of the goodwill will be deductible for tax purposes.
On December17, 2015, the company announced that it had
entered into a definitive agreement with AT&T to acquire their appli-
cation and hosting services business. The acquisition is expected
to strengthen IBM’s outsourcing portfolio and will align with IBM’s
cloud strategy.
On January21, 2016, the company announced that it had
acquired Ustream, Inc. (Ustream), a privately held company based
in San Francisco, California. Ustream provides cloud-based video
streaming to enterprises and broadcasters.
On January 29, 2016, the company announced that it had
acquired The Weather Company’s B2B, mobile and cloud-based
web-properties, weather.com, Weather Underground, The Weather
Company brand and WSI, its global business-to-business brand
for cash consideration of approximately $2billion. The cable tele-
vision segment was not acquired by IBM, but will license weather
forecast data and analytics from IBM under a long-term contract.
On February 2, 2016, the company announced its intent to
acquire Aperto, a digital agency with headquarters in Berlin,
Germany. Aperto will join the IBM Interactive Experience (IBM iX)
team. IBM iX provides clients a unique fusion of services span-
ning strategy, analytics and systems integration for scalable digital,
commerce, mobile and wearable platforms. The transaction is
expected to close in the first quarter of 2016.
On February 3, 2016, the company announced its intent to
acquire ecx.io, a digital agency headquartered in Dusseldorf,
Germany. The proposed acquisition of ecx.io will enhance IBM iX
with new digital marketing, commerce and platform skills to accel-
erate clients’ digital transformations. The transaction is expected
to close in the first quarter of 2016.
On February 18, 2016, the company announced that it had
acquired Resource/Ammirati, a leading U.S. based digital mar-
keting and creative agency, addressing the rising demand from
businesses seeking to reinvent themselves for the digital economy.
On February 18, 2016, the company announced its intent to
acquire Truven Health Analytics (Truven), a leading provider of
healthcare analytics solutions, for estimated cash consideration
of $2.6 billion. Truven has developed proprietary analytic meth-
ods and assembled analytic content assets, creating extensive
national healthcare utilization, performance, quality, and cost data.
The transaction is expected to close in the first quarter of 2016.
At the date of issuance of the financial statements, the initial
purchase accounting for the Ustream, The Weather Company and
Resource/Ammirati transactions was not complete.
2014
In 2014, the company completed six acquisitions at an aggregate
cost of $608million.
The Software segment completed acquisitions of five privately
held companies: in the first quarter, Aspera, Inc. (Aspera) and Clou-
dant, Inc. (Cloudant); in the second quarter, Silverpop Systems, Inc.
(Silverpop) and Cognea Group Pty LTD (Cognea); and in the third
quarter, CrossIdeas Srl (CrossIdeas). Global Technology Services
completed one acquisition in the third quarter, Lighthouse Security
Group, LLC (Lighthouse), a privately held company.
Aspera’s technology helps make cloud computing faster, more
predictable and more cost effective for big data transfers such
as enterprise storage, sharing virtual images or accessing the
cloud for increased computing capacity. Cloudant extends the
company’s mobile and cloud platform by enabling developers to
easily and quickly create next-generation mobile and web-based
applications. Silverpop is a provider of cloud-based capabilities
that deliver personalized customer engagements in highly scalable
environments. Cognea offers personalized artificial intelligence
capabilities designed to serve as an intuitive interface between
human users and data-driven information. CrossIdeas delivers
next generation identity and access governance capabilities to
help mitigate access risks and segregation of duty violations.
Lighthouse is a provider of cloud-enabled managed identity and
access management solutions.
The following table reflects the purchase price related to these
acquisitions and the resulting purchase price allocations as of
December31, 2014.
2014 Acquisitions
($ inmillions)
Amortization
Life (in Years)
Tota l
Acquisitions
Current assets $ 56
Fixed assets/noncurrent assets 39
Intangible assets
Goodwill N/A 442
Completed technology 5–7 68
Client relationships 777
Patents/trademarks 1–7 18
Total assets acquired 701
Current liabilities (26)
Noncurrent liabilities (67)
Total liabilities assumed (93)
Total purchase price $608
N/A—Not applicable