Intangible Assets Including Goodwill

12 Months Ended

Dec. 31, 2012

Intangible Assets Including Goodwill

Intangible Assets Including Goodwill

Note I.

Intangible Assets Including Goodwill

Intangible Assets

The following table details the company’s intangible asset balances by major asset class.

($ in millions)

	Gross					Net
	Carrying		Accumulated			Carrying
At December 31, 2012:	Amount		Amortization			Amount
Intangible asset class
Capitalized software	$	1,527	$	(665	)	$	861
Client relationships	2,103		(961		)	1,142
Completed technology	2,709		(1,112		)	1,597
In-process R&D	28		—			28
Patents/trademarks	281		(127		)	154
Other*	31		(27		)	3
Total	$	6,679	$	(2,892	)	$	3,787

($ in millions)

	Gross					Net
	Carrying		Accumulated			Carrying
At December 31, 2011:	Amount		Amortization			Amount
Intangible asset class
Capitalized software	$	1,478	$	(678	)	$	799
Client relationships	1,751		(715		)	1,035
Completed technology	2,160		(746		)	1,414
In-process R&D	18		—			18
Patents/trademarks	207		(88		)	119
Other*	29		(22		)	7
Total	$	5,642	$	(2,250	)	$	3,392

* Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems.

The net carrying amount of intangible assets increased $395 million during the year ended December 31, 2012, primarily due to intangible asset additions resulting from acquisitions, partially offset by amortization. There was no impairment of intangible assets recorded in 2012 and 2011.

Total amortization was $1,284 million and $1,226 million for the years ended December 31, 2012 and 2011, respectively. The aggregate amortization expense for acquired intangibles assets (excluding capitalized software) was $709 million and $634 million for the years ended December 31, 2012 and 2011, respectively. In addition, in 2012 the company retired $641 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount.

The amortization expense for each of the five succeeding years relating to intangible assets currently recorded in the Consolidated Statement of Financial Position is estimated to be the following at December 31, 2012:

($ in millions)

	Capitalized		Acquired
	Software		Intangibles		Total
2013	$	501	$	729	$	1,230
2014	277		626		903
2015	83		498		581
2016	—		458		458
2017	—		340		340

Goodwill

The changes in the goodwill balances by reportable segment, for the years ended December 31, 2012 and 2011, are as follows:

($ in millions)

											Foreign
											Currency
	Balance				Purchase						Translation		Balance
	January 1,		Goodwill		Price						and Other		December 31,
Segment	2012		Additions		Adjustments			Divestitures			Adjustments		2012
Global Business Services	$	4,313	$	5	$	(0	)	$	(2	)	$	42	$	4,357
Global Technology Services	2,646		264		—			(0		)	6		2,916
Software	18,121		2,182		(30		)	(6		)	137		20,405
Systems and Technology	1,133		443		(0		)	(14		)	6		1,568
Total	$	26,213	$	2,894	$	(30	)	$	(22	)	$	192	$	29,247

($ in millions)

											Foreign
											Currency
	Balance				Purchase						Translation			Balance
	January 1,		Goodwill		Price						and Other			December 31,
Segment	2011		Additions		Adjustments			Divestitures			Adjustments			2011
Global Business Services	$	4,329	$	14	$	(0	)	$	(10	)	$	(20	)	$	4,313
Global Technology Services	2,704		—		(1		)	(2		)	(55		)	2,646
Software	16,963		1,277		10			(2		)	(127		)	18,121
Systems and Technology	1,139		—		(6		)	—			(0		)	1,133
Total	$	25,136	$	1,291	$	2		$	(13	)	$	(203	)	$	26,213

Purchase price adjustments recorded in 2012 and 2011 were related to acquisitions that were completed on or prior to December 31, 2011 or December 31, 2010, respectively, and were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. There were no goodwill impairment losses recorded in 2012 or 2011, and the company has no accumulated goodwill impairment losses.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References+ Details