Acquisitions/Divestitures:

3 Months Ended

Mar. 31, 2012

Acquisitions/Divestitures:

Acquisitions/Divestitures:

9. Acquisitions/Divestitures:

Acquisitions: During the three months ended March 31, 2012, the company completed five acquisitions at an aggregate cost of $1,441 million.

The Software segment completed acquisitions of the following privately held companies: Green Hat, Emptoris Inc. (Emptoris) and Worklight, and also acquired DemandTec, a publicly held company.  Systems and Technology (STG) completed an acquisition of a privately held company in the first quarter:  Platform Computing.  All acquisitions were for 100 percent of the acquired companies.

The table below reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of March 31, 2012.

	Amortization	Total
(Dollars in millions)	Life (in yrs.)	Acquisitions
Current assets		$	169
Fixed assets/noncurrent assets		100
Intangible assets
Goodwill	N/A	1,067
Completed technology	7	252
Client relationships	7	115
In-process R&D	N/A	9
Patents/trademarks	1-7	22
Total assets acquired		1,734
Current liabilities		(104		)
Noncurrent liabilities		(189		)
Total liabilities assumed		(292		)
Total purchase price		$	1,441

N/A - Not applicable

Each acquisition further complemented and enhanced the company’s portfolio of product and services offerings.  Green Hat helps customers improve the quality of software applications by enabling developers to use cloud computing technologies to conduct testing of a software application prior to its delivery. Emptoris expands the company’s cloud-based analytics offerings that provide supply chain intelligence leading to better inventory management and cost efficiencies. Worklight delivers mobile application management capabilities to clients across a wide range of industries.  The acquisition enhances the company’s comprehensive mobile portfolio, which is designed to help global corporations leverage the proliferation of all mobile devices — from laptops and smartphones to tablets. DemandTec delivers cloud-based analytics software to help organizations improve their price, promotion and product mix within the broad context of enterprise commerce.  Platform Computing’s focused technical and distributed computing management software helps clients create, integrate and manage shared computing environments that are used in compute-and-data intensive applications such as simulations, computer modeling and analytics. Purchase price consideration for all acquisitions as reflected in the table above, is paid primarily in cash.  All acquisitions are reported in the Consolidated Statement of Cash Flows net of acquired cash and cash equivalents.

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 was 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 companies and IBM and the acquired assembled work-force, neither of which qualify as an amortizable intangible asset.  The overall weighted-average life of the identified amortizable intangible assets acquired is 6.9 years. These identified intangible assets will be amortized on a straight-line basis over their useful lives. Goodwill of $1,067 million has been assigned to the Software ($846 million) and Systems and Technology ($221 million) segments. It is expected that none of the goodwill will be deductible for tax purposes.

On April 13, 2012, the company announced that it had entered into a definitive agreement to acquire Varicent Software Incorporated (Varicent), a privately held company based in Toronto, Canada. Varicent is a leading provider of analytics software for compensation and sales performance management. The acquisition is expected to close in the second quarter of 2012.