3M 2008 Annual Report Download - page 59

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asset diminishes in value. For 3M, EITF 08-6 is effective for transactions occurring after December 31, 2008. The
Company considers this standard in terms of evaluating potential future transactions to which it would apply.
In December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit
Plan Assets”. This FSP requires additional disclosures about plan assets for sponsors of defined benefit pension and
postretirement plans including expanded information regarding investment strategies, major categories of plan
assets, and concentrations of risk within plan assets. Additionally, this FSP requires disclosures similar to those
required under SFAS No. 157 with respect to the fair value of plan assets such as the inputs and valuation
techniques used to measure fair value and information with respect to classification of plan assets in terms of the
hierarchy of the source of information used to determine their value (see Note 13). The disclosures under this FSP
are required for annual periods ending after December 15, 2009. 3M is currently evaluating the requirements of these
additional disclosures.
In January 2009, the FASB issued FSP No. EITF 99-20-1, “Amendments to the Impairment Guidance of EITF Issue
No. 99-20” (FSP No. EITF 99-20-1). This FSP provided additional guidance with respect to how entities determine
whether an “other-than-temporary impairment” (OTTI) exists for certain beneficial interests in a securitized
transaction, such as asset-backed securities and mortgage-backed securities, that (1) do not have a high quality
rating or (2) can be contractually prepaid or otherwise settled such that the holder would not recover substantially all
of its investment. FSP No. EITF 99-20-1 amended EITF Issue No. 99-20 to more closely align its OTTI guidance with
that of SFAS No. 115, “Accounting for Certain Investment in Debt and Equity Securities.” This FSP was effective for
3M prospectively beginning October 1, 2008. The Company considered this FSP’s additional interpretation of EITF
Issue No. 99-20 when classifying respective additional impairments as “temporary” or “other-than-temporary”
beginning with the fourth quarter of 2008. This FSP had no material impact on such classifications.
NOTE 2. Acquisitions and Divestitures
Divestitures:
In June 2008, 3M completed the sale of HighJump Software, a 3M Company, to Battery Ventures, a technology
venture capital and private equity firm. 3M received proceeds of $85 million for this transaction and recognized, net of
assets sold, transaction and other costs, a pre-tax loss of $23 million (recorded in the Safety, Security and Protection
Services segment) in 2008.
In June 2007, 3M completed the sale of its Opticom Priority Control Systems and Canoga Traffic Detection
businesses to TorQuest Partners Inc., a Toronto-based investment firm. 3M received proceeds of $80 million for this
transaction and recognized, net of assets sold, transaction and other costs, a pre-tax gain of $68 million (recorded in
the Display and Graphics segment) in 2007.
In January 2007, 3M completed the sale of its global branded pharmaceuticals business in Europe to Meda AB. 3M
received proceeds of $817 million for this transaction and recognized, net of assets sold, a pre-tax gain of $781
million (recorded in the Health Care segment) in 2007.
In December 2006, 3M completed the sale of its global branded pharmaceuticals business in the United States,
Canada, and Latin America region and the Asia Pacific region, including Australia and South Africa. 3M received
proceeds of $1.209 billion for this transaction and recognized, net of assets sold, a pre-tax gain of $1.074 billion
(recorded in Health Care Business) in 2006.
Buyer and sale price information by region is as follows:
• Meda AB acquired 3M’s pharmaceuticals business in Europe for $817 million in 2007.
• Graceway Pharmaceuticals Inc. acquired 3M’s pharmaceutical operations in the United States, Canada, and
Latin America for $860 million in 2006.
• Ironbridge Capital and Archer Capital acquired 3M’s pharmaceuticals business in the Asia Pacific region,
including Australia and South Africa for $349 million in 2006.
The agreements are the result of a review of strategic options for the branded pharmaceuticals business and its
immune response modifier (IRM) platform that 3M announced in April 2006. Under the agreements, the purchasers
acquired regional marketing and intellectual property rights for 3M’s well-known branded pharmaceuticals, including
Aldara, Difflam, Duromine, Tambocor, Maxair, Metrogel-Vaginal and Minitran. As part of the transaction, Graceway
Pharmaceuticals also acquired the rights to certain IRM molecules.
In connection with these transactions, 3M entered into agreements whereby its Drug Delivery Systems Division
became a source of supply to the acquiring companies. Because of the extent of 3M cash flows from these
agreements in relation to those of the disposed-of businesses, the operations of the branded pharmaceuticals