3M 2004 Annual Report Download - page 77

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The business combination activity for the year ended December 31, 2003, is summarized in the following table.
Purchased identifiable intangible assets of $12 million are being amortized on a straight-line basis over lives ranging
from 5 to 15 years (weighted-average life of 11.3 years). There were no in-process research and development charges
associated with these acquisitions. Pro forma information related to these acquisitions is not included because the
impact of these acquisitions, either individually or in the aggregate, on the Company’s consolidated results of
operations is not considered to be material.
2003 ACTIVITY
Asset (Liability)
(Millions)
Sumitomo
3M Limited
Precision Optics, Inc.
(2003 activity)
Aggregation of
Remaining Acquisitions
Total
Activity
Accounts receivable $ – $ – $ 4 $ 4
Inventory 9 – 14 23
Other current assets – – 1 1
Investments – – (15) (15)
Property, plant, and
equipment – net – (3) 29 26
Purchased intangible assets – 4 8 12
Purchased goodwill 289 8 11 308
Deferred tax asset 37 – – 37
Accounts payable and other
current liabilities – 4 (6) (2)
Minority interest liability 139 – 1 140
Other long-term liabilities (97) – 2 (95)
Net assets acquired $377 $ 13 $ 49 $439
Year 2002 acquisitions:
In December 2002, 3M purchased 100% of the outstanding common shares of Corning Precision Lens, Inc., a
wholly owned subsidiary of Corning Incorporated, for $850 million in cash. Corning Precision Lens, Inc. has
become a wholly owned subsidiary of 3M, operating under the name 3M Precision Optics, Inc. The acquired
company is a manufacturer of lens systems for projection televisions, which will broaden 3M’s technology position
in the global display industry. The purchase agreement between 3M and Corning Incorporated contained a
contingency. This contingency was based on the final working capital valuation of the assets purchased and
liabilities assumed as of the acquisition date. This contingency was not booked in 3M’s balance sheet as of
December 31, 2002, because the final amount of the asset or liability was not known. This contingency was
resolved in 2003 and is described previously under “Year 2003 acquisitions”.
In December 2002, 3M purchased the 43% minority ownership of 3M Inter-Unitek GmbH. 3M paid $304 million in
cash to the minority interest shareholders of 3M Inter-Unitek GmbH. 3M Inter-Unitek GmbH is the parent company
of 3M ESPE Dental AG.
During the year ended December 31, 2002, 3M completed seven additional business combinations for a total
purchase price of $139 million, which was paid with $104 million in cash, net of cash acquired, and $35 million of 3M
common stock (555,584 common shares, split-adjusted). A summary of these seven business combinations follows:
1) 3M (Industrial Business) purchased certain assets and specified liabilities of Emtech Emulsion Technologies, Inc.
and Emtech Manufacturing Corporation. These companies are involved in the manufacture and sale of durable film
label materials.
2) 3M (Industrial Business) purchased certain assets and specified liabilities of Polymer Manufacturing, Inc. This
company, based in Oxnard, California, is a manufacturer of two-part polyurethane adhesives, plastic repair
materials, sealants and related accessories.
3) 3M (Safety, Security and Protection Services Business) purchased the shares of AiT Corporation. AiT Corporation,
based in Ottawa, Ontario, Canada, is a manufacturer of travel ID security systems.
4) 3M (Health Care Business) purchased the shares of Ruffing IT. This company, based in Germany, develops quality
assurance software for medical records.
5) 3M (Health Care Business) purchased from GlaxoSmithKline the right to manufacture and distribute the Migril
product line in certain African nations. Migril is an over-the-counter treatment for migraine headaches.
6) 3M (Industrial Business) purchased an 80% interest in certain assets of Shanghai Grinding Wheel Works, a
Chinese company. These assets are being used to manufacture and sell coated abrasive products.
7) 3M (Electro and Communications Business) purchased an additional 6% of Quante AG (a telecommunications
supplier).