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Intangible Assets Including Goodwill
9 Months Ended
Sep. 30, 2011
Intangible Assets Including Goodwill 
Intangible Assets Including Goodwill

12. Intangible Assets Including Goodwill:  The following table details the company’s intangible asset balances by major asset class:

 

 

 

 At September 30, 2011

 

(Dollars in millions)

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Intangible asset class

 

Amount

 

Amortization

 

Amount

 

Capitalized software

 

$

1,498

 

$

(693

)

$

805

 

Client-related

 

1,612

 

(711

)

901

 

Completed technology

 

2,122

 

(943

)

1,179

 

In-process R&D

 

22

 

(1

)

21

 

Patents/trademarks

 

216

 

(97

)

119

 

Other(a)

 

31

 

(23

)

8

 

Total

 

$

5,500

 

$

(2,467

)

$

3,033

 

 

 

 

At December 31, 2010

 

(Dollars in millions)

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Intangible asset class

 

Amount

 

Amortization

 

Amount

 

Capitalized software

 

$

1,558

 

$

(726

)

$

831

 

Client-related

 

1,709

 

(647

)

1,062

 

Completed technology

 

2,111

 

(688

)

1,422

 

In-process R&D

 

21

 

(0

)

21

 

Patents/trademarks

 

211

 

(71

)

140

 

Other(a)

 

39

 

(28

)

11

 

Total

 

$

5,649

 

$

(2,161

)

$

3,488

 

 

 

(a)   Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems.

 

The net carrying amount of intangible assets decreased $455 million during the first nine months of 2011, primarily due to amortization.  The aggregate intangible amortization expense was $307 million and $926 million for the third quarter and first nine months of 2011 respectively, versus $289 million and $859 million for the third quarter and first nine months ended September 30, 2010, respectively.  In addition, in the first nine months of 2011, the company retired $620 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 September 30, 2011:

 

 

 

Capitalized

 

Acquired

 

 

 

(Dollars in millions)

 

Software

 

Intangibles

 

Total

 

2011 (for Q4)

 

$

145

 

$

143

 

$

288

 

2012

 

424

 

557

 

981

 

2013

 

194

 

515

 

710

 

2014

 

42

 

374

 

415

 

2015

 

 

265

 

265

 

 

The changes in the goodwill balances by reportable segment, for the nine months ended September 30, 2011 and for the year ended December 31, 2010 are as follows:

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency

 

 

 

 

 

 

 

 

 

Purchase

 

 

 

Translation

 

 

 

(Dollars in millions)

 

Balance

 

Goodwill

 

Price

 

 

 

And Other

 

Balance

 

Segment

 

01/01/11

 

Additions

 

Adjustments

 

Divestitures

 

Adjustments

 

9/30/11

 

Global Business Services

 

$

4,329

 

$

13

 

$

0

 

$

(10

)

$

3

 

$

4,336

 

Global Technology Services

 

2,704

 

 

(1

)

(2

)

(58

)

2,643

 

Software

 

16,963

 

64

 

(7

)

 

(221

)

16,800

 

Systems and Technology

 

1,139

 

 

(5

)

 

0

 

1,134

 

Total

 

$

25,136

 

$

77

 

$

(13

)

$

(11

)

$

(276

)

$

24,913

 

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency

 

 

 

 

 

 

 

 

 

Purchase

 

 

 

Translation

 

 

 

(Dollars in millions)

 

Balance

 

Goodwill

 

Price

 

 

 

And Other

 

Balance

 

Segment

 

01/01/10

 

Additions

 

Adjustments

 

Divestitures

 

Adjustments

 

12/31/10

 

Global Business Services

 

$

4,042

 

$

252

 

$

0

 

$

 

$

35

 

$

4,329

 

Global Technology Services

 

2,777

 

32

 

(1

)

 

(104

)

2,704

 

Software

 

12,605

 

4,095

 

(52

)

 

315

 

16,963

 

Systems and Technology

 

766

 

375

 

(1

)

 

(1

)

1,139

 

Total

 

$

20,190

 

$

4,754

 

$

(54

)

$

 

$

245

 

$

25,136

 

 

Purchase price adjustments recorded in the first nine months of 2011 and full year 2010 were related to acquisitions that were completed on or prior to December 31, 2010 or December 31, 2009, 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 during the first nine months of 2011 or the full year of 2010 and the company has no accumulated impairment losses.