9. Acquisitions/Divestitures:

Acquisitions: During the three months ended March 31, 2013, the company completed two acquisitions at an aggregate cost of $51 million.

The Software segment completed acquisitions of two privately held companies in the first quarter: StoredIQ Inc. (StoredIQ) and Star Analytics, Inc. (Star Analytics).

The table below reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of March 31, 2013:

	Amortization	Total
(Dollars in millions)	Life (in yrs.)	Acquisitions
Current assets		$	1
Fixed assets/noncurrent assets		14
Intangible assets:
Goodwill	N/A	33
Completed technology	5-7	6
Patents/trademarks	3-7	2
Total assets acquired		56
Current liabilities		(1		)
Noncurrent liabilities		(3		)
Total liabilities assumed		(5		)
Total purchase price		$	51

Each acquisition further complemented and enhanced the company’s portfolio of product and services offerings. The acquisition of StoredIQ advances the company’s efforts to help clients derive value from big data, respond more efficiently to litigation and regulations, and dispose of information in an automated way that has outlived its purpose. The combination of the company’s and Star Analytics’ software will advance the company’s business analytics initiatives. Purchase price consideration for these acquisitions as reflected in the table above, is paid 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 6.5 years. These identified intangible assets will be amortized on a straight-line basis over their useful lives. Goodwill of $33 million has been assigned to the Software segment. It is expected that approximately 17 percent of the goodwill will be deductible for tax purposes.

On April 22, 2013, the company announced that it had acquired UrbanCode Inc. Based in Cleveland, Ohio, UrbanCode automates the delivery of software, helping businesses quickly release and update mobile, social, big data and cloud applications. At the date of issuance of the financial statements, the initial purchase price accounting was not complete for this acquisition.

Divestitures: During the first quarter of 2013, the company completed the divestiture of its Showcase Reporting product set to Help/Systems, LLC. Showcase Reporting, which was acquired by IBM through the SPSS acquisition in 2009, is an enterprise-class business intelligence platform that enables customers to build and manage analytical reporting environments. This transaction was not material to the Consolidated Financial Statements.