INTERNATIONAL BUSINESS MACHINES CORP | 2013 | FY | 3


Note I.

Intangible Assets Including Goodwill

 

Intangible Assets

 

The following table details the company’s intangible asset balances by major asset class.

($ in millions)
Gross CarryingAccumulatedNet Carrying
At December 31, 2013:AmountAmortizationAmount
Intangible asset class
Capitalized software$ 1,494$ (699)$ 794
Client relationships 2,148 (977) 1,171
Completed technology 2,910 (1,224) 1,687
In-process R&D 13 13
Patents/trademarks 358 (154) 204
Other* 7 (5) 2
Total$ 6,930$ (3,059)$ 3,871
($ in millions)
Gross CarryingAccumulatedNet Carrying
At December 31, 2012:AmountAmortizationAmount
Intangible asset class
Capitalized software$ 1,527$ (665)$ 861
Client relationships 2,103 (961) 1,142
Completed technology 2,709 (1,112) 1,597
In-process R&D 28 28
Patents/trademarks 281 (127) 154
Other* 31 (27) 3
Total$ 6,679$ (2,892)$ 3,787

*     Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems.

 

The net carrying amount of intangible assets increased $84 million during the year ended December 31, 2013, primarily due to intangible asset additions resulting from acquisitions, offset by amortization. There was no impairment of intangible assets recorded in 2013 and 2012.

 

Total amortization was $1,351 million and $1,284 million for the years ended December 31, 2013 and 2012, respectively. The aggregate amortization expense for acquired intangible assets (excluding capitalized software) was $767 million and $709 million for the years ended December 31, 2013 and 2012, respectively. In addition, in 2013 the company retired $1,177 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 December 31, 2013:

($ in millions)
CapitalizedAcquired
SoftwareIntangiblesTotal
2014$484$784$ 1,267
2015247637884
201664595660
2017477477
2018322322

 

Goodwill

 

The changes in the goodwill balances by reportable segment, for the years ended December 31, 2013 and 2012, are as follows:

($ in millions)
Foreign
Currency
BalancePurchaseTranslationBalance
January 1,GoodwillPriceAnd OtherDecember 31,
Segment2013AdditionsAdjustmentsDivestituresAdjustments2013
Global Business Services$ 4,357$$(0)$(3)$ (21)$ 4,334
Global Technology Services 2,916 1,246 17 (50) 4,129
Software 20,405 987 11 (4) (279) 21,121
Systems and Technology 1,568 13 33 (14) 1,601
Total$ 29,247$ 2,246$ 61$ (7)$ (363)$ 31,184
($ in millions)
Foreign
Currency
BalancePurchaseTranslationBalance
January 1,GoodwillPriceAnd OtherDecember 31,
Segment2012AdditionsAdjustmentsDivestituresAdjustments2012
Global Business Services$ 4,313$ 5$(0)$ (2)$ 42$ 4,357
Global Technology Services 2,646 264(0) 6 2,916
Software 18,121 2,182 (30) (6) 137 20,405
Systems and Technology 1,133 443(0) (14) 6 1,568
Total$ 26,213$ 2,894$ (30)$ (22)$ 192$ 29,247

Purchase price adjustments recorded in 2013 and 2012 were related to acquisitions that were completed on or prior to December 31, 2012 or December 31, 2011, 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 in 2013 or 2012 and the company has no accumulated goodwill impairment losses.


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