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Intangible Assets Including Goodwill:
6 Months Ended
Jun. 30, 2012
Intangible Assets Including Goodwill:  
Intangible Assets Including Goodwill:

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

 

 

 

At June 30, 2012

 

(Dollars in millions)

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Intangible asset class

 

Amount

 

Amortization

 

Amount

 

Capitalized software

 

$

1,497

 

$

(663

)

$

834

 

Client relationships

 

 1,922

 

 (823

)

 1,099

 

Completed technology

 

 2,478

 

 (925

)

 1,552

 

In-process R&D

 

 31

 

 (2

)

 29

 

Patents/trademarks

 

 247

 

 (109

)

 138

 

Other(a)

 

 30

 

 (25

)

 5

 

Total

 

$

6,204

 

$

(2,547

)

$

3,657

 

 

 

 

At December 31, 2011

 

(Dollars in millions)

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Intangible asset class

 

Amount

 

Amortization

 

Amount

 

Capitalized software

 

$

1,478

 

$

(678

)

$

799

 

Client relationships

 

1,751

 

(715

)

1,035

 

Completed technology

 

2,156

 

(745

)

1,411

 

In-process R&D

 

22

 

(1

)

21

 

Patents/trademarks

 

207

 

(88

)

119

 

Other(a)

 

29

 

(22

)

7

 

Total

 

$

5,642

 

$

(2,250

)

$

3,392

 

 

 

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

 

The net carrying amount of intangible assets increased $265 million during the first half of 2012, primarily due to intangible asset additions resulting from acquisitions, partially offset by amortization. The aggregate intangible amortization expense was $318 million and $627 million for the second quarter and first six months of 2012 respectively, versus $309 million and $619 million for the second quarter and first six months ended June 30, 2011, respectively.  In addition, in the first half of 2012, the company retired $329 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 June 30, 2012:

 

 

 

Capitalized

 

Acquired

 

 

 

(Dollars in millions)

 

Software

 

Intangibles

 

Total

 

2012 (for Q3-Q4)

 

$

274

 

$

358

 

$

632

 

2013

 

376

 

653

 

1029

 

2014

 

159

 

550

 

709

 

2015

 

25

 

423

 

447

 

2016

 

 

384

 

384

 

 

The change in the goodwill balances by reportable segment, for the six months ended June 30, 2012 and for the year ended December 31, 2011 is as follows:

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency

 

 

 

 

 

 

 

 

 

Purchase

 

 

 

Translation

 

 

 

(Dollars in millions)

 

Balance

 

Goodwill

 

Price

 

 

 

And Other

 

Balance

 

Segment

 

01/01/12

 

Additions

 

Adjustments

 

Divestitures

 

Adjustments

 

6/30/12

 

Global Business Services

 

$

4,313

 

$

5

 

$

(0

)

$

 

$

(31

)

$

4,287

 

Global Technology Services

 

2,646

 

 

 

 

(15

)

2,631

 

Software

 

18,121

 

1,370

 

(5

)

(3

)

(21

)

19,462

 

Systems and Technology

 

1,133

 

222

 

(0

)

 

1

 

1,355

 

Total

 

$

26,213

 

$

1,596

 

$

(5

)

$

(3

)

$

(67

)

$

27,735

 

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency

 

 

 

 

 

 

 

 

 

Purchase

 

 

 

Translation

 

 

 

(Dollars in millions)

 

Balance

 

Goodwill

 

Price

 

 

 

And Other

 

Balance

 

Segment

 

01/01/11

 

Additions

 

Adjustments

 

Divestitures

 

Adjustments

 

12/31/11

 

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 the first six months of 2012 and full year 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 during the first six months of 2012 or the full year of 2011, and the company has no accumulated impairment losses.