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Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
96
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 was assigned to the Software
($430million) and GTS ($11million) segments. It was 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 Cloud business unit, which
combined SoftLayer with IBM SmartCloud into a global platform.
Goodwill of $1,285 million was 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-av-
erage 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); in the third
quarter, Trusteer, Ltd. (Trusteer) and Daeja Image Systems, Ltd.
(Daeja); and in the fourth quarter, Xtify, Inc. (Xtify), The Now Fac-
tory and Fiberlink Communications (Fiberlink). Systems Hardware
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 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 company’s
business analytics initiatives. UrbanCode automates the deliv-
ery of software, helping businesses quickly release and update
mobile, social, big data and cloud applications. CSL deepens
the consolidation cloud capabilities by offering simplified man-
agement of the virtualization environment. Trusteer extends the
company’s data security capabilities further into the cloud, mobile
and endpoint security space. Daeja delivers software that helps
employees across all industries, especially 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 personal-
ized offers. The Now Factory is a provider of analytics software that
helps communications service providers (CSPs) deliver better cus-
tomer 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.
The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of Decem-
ber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