|
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. |