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Intangible Assets Including Goodwill:
9 Months Ended
Sep. 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 September 30, 2012

 

(Dollars in millions)

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Intangible asset class

 

Amount

 

Amortization

 

Amount

 

Capitalized software

 

$

1,503

 

$

(658

)

$

845

 

Client relationships

 

1,924

 

(888

)

1,037

 

Completed technology

 

2,530

 

(1,010

)

1,521

 

In-process R&D

 

31

 

(2

)

30

 

Patents/trademarks

 

242

 

(115

)

128

 

Other(a)

 

31

 

(26

)

5

 

Total

 

$

6,262

 

$

(2,697

)

$

3,565

 

 

 

 

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 $172 million during the first nine months of 2012, primarily due to intangible asset additions resulting from acquisitions, partially offset by amortization. The aggregate intangible amortization expense was $324 million and $952 million for the third quarter and first nine months of 2012 respectively, versus $307 million and $926 million for the third quarter and first nine months ended September 30, 2011, respectively.  In addition, in the first nine months of 2012, the company retired $503 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, 2012:

 

 

 

Capitalized

 

Acquired

 

 

 

(Dollars in millions)

 

Software

 

Intangibles

 

Total

 

2012 (for Q4)

 

$

145

 

$

183

 

$

327

 

2013

 

438

 

667

 

1,105

 

2014

 

213

 

564

 

778

 

2015

 

50

 

437

 

487

 

2016

 

 

398

 

398

 

 

The change in the goodwill balances by reportable segment, for the nine months ended September 30, 2012 and for the year ended December 31, 2011 are as follows:

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency

 

 

 

 

 

 

 

 

 

Purchase

 

 

 

Translation

 

 

 

(Dollars in millions)

 

Balance

 

Goodwill

 

Price

 

 

 

And Other

 

Balance

 

Segment

 

01/01/12

 

Additions

 

Adjustments

 

Divestitures

 

Adjustments

 

9/30/12

 

Global Business Services

 

$

4,313

 

$

5

 

$

(0

)

$

(0

)

$

24

 

$

4,341

 

Global Technology Services

 

2,646

 

21

 

 

(0

)

4

 

2,671

 

Software

 

18,121

 

1,413

 

(23

)

(6

)

184

 

19,689

 

Systems and Technology

 

1,133

 

441

 

(0

)

(14

)

9

 

1,569

 

Total

 

$

26,213

 

$

1,879

 

$

(24

)

$

(20

)

$

221

 

$

28,270

 

 

 

 

 

 

 

 

 

 

 

 

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