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Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2012

NOTE 3. Goodwill and Intangible Assets

Purchased goodwill from acquisitions totaled $327 million in 2012, $41 million of which is deductible for tax purposes. Purchased goodwill from acquisitions totaled $255 million in 2011, $7 million of which is deductible for tax purposes. The acquisition activity in the following table also includes the net impact of adjustments to the preliminary allocation of purchase price for prior year acquisitions, which increased goodwill by $12 million in 2012 and increased goodwill by $4 million in 2011. 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

		Dec. 31,		2011		2011		Dec. 31,		2012		2012		Dec. 31,
		2010		acquisition		translation		2011		acquisition		translation		2012
(Millions)		Balance		activity		and other		Balance		activity		and other		Balance
Industrial and
	Transportation	$	1,783	$	205	$	(27)	$	1,961	$	204	$	19	$	2,184
Health Care			1,506		3		5		1,514		88		(4)		1,598
Consumer and Office			187		42		(1)		228		6		(1)		233
Safety, Security and
	Protection Services		1,670		(1)		6		1,675		―		6		1,681
Display and Graphics			994		4		(5)		993		41		(18)		1,016
Electro and
	Communications		680		6		(10)		676		―		(3)		673
Total Company		$	6,820	$	259	$	(32)	$	7,047	$	339	$	(1)	$	7,385

Effective in the first quarter of 2012, 3M made certain product moves across divisions within its business segments, but none were across business segments. For any product moves that resulted in reporting unit changes, the Company applied the relative fair value method to determine the impact on goodwill of the associated reporting units. In addition, during the first quarter of 2012, the Company completed its assessment of any potential goodwill impairment for reporting units impacted by this new structure and determined that no impairment existed. The Company also completed its annual goodwill impairment test in the fourth quarter of 2012 for all reporting units and determined that no impairment existed. In addition, the Company had no impairments of goodwill in prior years.

Acquired Intangible Assets

For 2012, intangible assets (excluding goodwill) acquired through business combinations increased the gross carrying amount by $213 million. Balances are also impacted by changes in foreign currency exchange rates. The gross carrying amount and accumulated amortization of acquired intangible assets as of December 31, follow:


(Millions)		2012		2011
Patents		$	596	$	561
Other amortizable intangible assets (primarily tradenames and customer related
	intangibles)		2,456		2,323
Total gross carrying amount		$	3,052	$	2,884

Accumulated amortization — patents			(421)		(374)
Accumulated amortization — other			(833)		(717)
Total accumulated amortization		$	(1,254)	$	(1,091)

	Total finite-lived intangible assets — net	$	1,798	$	1,793

Non-amortizable intangible assets (primarily tradenames)			127		123
	Total intangible assets — net	$	1,925	$	1,916

3M has certain tradenames that are not amortized because of the long-time established name recognition in their respective industries.

Amortization expense for the years ended December 31 follows:

(Millions)		2012		2011		2010
Amortization expense	$	233	$	235	$	176

Expected amortization expense for acquired amortizable intangible assets recorded as of December 31, 2012 follows:

											After
(Millions)	2013		2014		2015		2016		2017		2017
Amortization expense	$	239	$	214	$	200	$	186	$	171	$	788

The preceding expected amortization expense is an estimate. Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, changes in foreign currency exchange rates, impairment of intangible assets, accelerated amortization of intangible assets and other events. 3M expenses the costs incurred to renew or extend the term of intangible assets.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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