3M 2010 Annual Report Download - page 66

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(17) In December 2008, 3M (Industrial and Transportation Business) purchased all of the outstanding shares of
ABRASIVOS S.A., a manufacturer of coated abrasives, headquartered in Lima, Peru.
(18) In December 2008, 3M (Consumer and Office Business) purchased certain assets of the Futuro health supports
and compression hosiery product line business, headquartered in Cincinnati, OH, from Beiersdorf AG.
Purchased identifiable intangible assets totaled $794 million and will be amortized on a straight-line basis over a
weighted-average life of 13 years (lives ranging from one to 19 years). Acquired patents of $40 million will be
amortized over a weighted-average life of 11 years and other acquired intangibles of $696 million, primarily customer
relationships and tradenames, will be amortized over a weighted-average life of 13 years. Indefinite-lived assets of
$58 million were purchased in the Meguiar’s acquisition detailed above, which relate to a well recognized brand
name for a company that has been in existence for more than 100 years.
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.
NOTE 3. Goodwill and Intangible Assets
Purchased goodwill from acquisitions totaled $978 million in 2010, $1 million of which is deductible for tax purposes.
Purchased goodwill from the four acquisitions that closed in 2009 totaled $15 million, $9 million of which is deductible
for tax purposes. The acquisition activity in the following table also includes contingent consideration for pre-2009
acquisitions and the impacts of adjustments to the preliminary allocation of purchase price, which increased goodwill
by $2 million in 2010 and 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. The goodwill balance by
business segment follows:
Goodwill
(Millions)
Dec. 31,
2008
Balance
2009
acquisition
activity
2009
translation
and other
Dec. 31,
2009
Balance
2010
acquisition
activity
2010
translation
and other
Dec. 31,
2010
Balance
Industrial and
Transportation .......
$
1,737
$
(4
)
$
50
$
1,783
$
8
$
18
$
1,809
Health Care ..............
988
5
14
1,007
520
(21
)
1,506
Display and Graphics
1,042
(44
)
(8
)
990
—
4
994
Consumer and Office
155
11
(11
)
155
24
8
187
Safety, Security and
Protection Services
1,157
6
57
1,220
428
22
1,670
Electro and
Communications ...
674
1
2
677
—
(23
)
654
Total Company .........
$
5,753
$
(25
)
$
104
$
5,832
$
980
$
8
$
6,820
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 2010, 3M made
certain product moves between its business segments, with the resulting impact reflected in the goodwill balances by
business segment above for all periods presented. 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
2010, 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