3M 2009 Annual Report Download - page 71

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65
NOTE 3. Goodwill and Intangible Assets
Purchased goodwill from the four acquisitions that closed in 2009 totaled $15 million, $9 million of which is deductible
for tax purposes. Purchased goodwill from acquisitions totaled $1.392 billion in 2008, $34 million of which is
deductible for tax purposes. The acquisition activity in the following table also includes the impacts of adjustments to
the preliminary allocation of purchase price and certain acquisition costs and contingent consideration for pre-2009
acquisitions, which reduced goodwill by $40 million in 2009. The amounts in the “Translation and other” column in the
following table primarily relate to changes in foreign currency exchange rates, except for the $77 million decrease in
goodwill related to the second-quarter 2008 sale of 3M’s HighJump Software business (included in the Safety,
Security and Protection Services business). The goodwill balance by business segment follows:
Goodwill
(Millions)
Dec. 31,
2007
Balance
2008
acquisition
activity
2008
translation
and other
Dec. 31,
2008
Balance
2009
acquisition
activity
2009
translation
and other
Dec. 31,
2009
Balance
Industrial and
Transportation............ $ 1,524 $ 192 $ (24) $ 1,692 $ (4) $ 50 $ 1,738
Health Care ................... 839 170 (21) 988 5 14 1,007
Consumer and Office .... 94 34 27 155 11 (11) 155
Safety, Security and
Protection Services.... 611 815 (224) 1,202 6 57 1,265
Display and Graphics .... 894 140 8 1,042 (44) (8) 990
Electro and
Communications........ 627 41 6 674 1 2 677
Total Company .............. $ 4,589 $ 1,392 $ (228) $ 5,753 $ (25) $ 104 $ 5,832
Accounting standards require that goodwill be tested for impairment annually and between annual tests in certain
circumstances such as a change in reporting units or the testing of recoverability of a significant asset group within a
reporting unit. At 3M, reporting units generally correspond to a division.
As discussed in Note 17 to the Consolidated Financial Statements, effective in the first quarter of 2009, 3M made
certain product moves between its business segments. Since there were no material changes in goodwill balances
between business segments, amounts presented in the preceding table have not been reclassified. For those
changes that resulted in reporting unit changes, the Company applied the relative fair value method to determine the
impact to reporting units. During the first quarter of 2009, the Company completed its assessment of any potential
goodwill impairment for reporting units impacted by this new structure and determined that no impairment existed.
As discussed in Note 13, in June 2009, 3M tested the long lived assets grouping associated with the U.K. passport
production activity of 3M’s Security Systems Division for recoverability. This circumstance required the Company to
also test goodwill for impairment at the reporting unit (Security Systems Division) level. 3M completed its assessment
of potential goodwill impairment for this reporting unit and determined that no goodwill impairment existed as of
June 30, 2009. The Company also completed its annual goodwill impairment test in the fourth quarter of 2009 for all
reporting units and determined that no impairment existed. In addition, the Company had no impairments of goodwill
in prior years.