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Goodwill and Intangible Assets
6 Months Ended
Jun. 30, 2013
Goodwill and Intangible Assets  
Goodwill and Intangible Assets

NOTE 3. Goodwill and Intangible Assets

 

There were no acquisitions that closed during the first six months of 2013. The acquisition activity in the following table includes the net impacts of adjustments to the preliminary allocation of purchase price for prior year acquisitions, which increased goodwill by $2 million. The amounts in the “Translation and other” column in the following table primarily relate to changes in foreign currency exchange rates. The goodwill balances by business segment as of December 31, 2012 and June 30, 2013, follow:

 

Goodwill

  December 31, 2012 Acquisition Translation June 30, 2013
(Millions)Balanceactivityand otherBalance
Industrial $ 2,174 $ 2 $ (62) $ 2,114
Safety and Graphics   1,751     (38)   1,713
Electronics and Energy   1,622     (21)   1,601
Health Care   1,598     (24)   1,574
Consumer   240     (11)   229
Total Company  $ 7,385 $ 2 $ (156) $ 7,231

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 13, effective in the first quarter of 2013, 3M completed a realignment of its business segments. Concurrent with this business segment realignment, certain products were also moved between business segments, with the resulting impact reflected in the goodwill balances by business segment above for all periods presented. 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. During the first quarter of 2013, the Company completed its assessment of any potential goodwill impairment for reporting units impacted by this new structure and determined that no impairment existed.

 

Acquired Intangible Assets

 

3M did not complete any business combinations during the six months ended June 30, 2013. As a result, balances of acquired intangible assets were primarily impacted by changes in foreign currency exchange rates. The carrying amount and accumulated amortization of acquired finite-lived intangible assets, in addition to the balance of non-amortizable intangible assets, as of June 30, 2013, and December 31, 2012, follow:

   June 30, December 31,
(Millions)20132012
Patents  $ 593 $ 596
Other amortizable intangible assets (primarily tradenames and customer related      
 intangibles)    2,424   2,456
Total gross carrying amount  $ 3,017 $ 3,052
        
Accumulated amortization — patents    (435)   (421)
Accumulated amortization — other    (922)   (833)
Total accumulated amortization  $ (1,357) $ (1,254)
        
 Total finite-lived intangible assets — net  $ 1,660 $ 1,798
        
Non-amortizable intangible assets (primarily tradenames)   126   127
 Total intangible assets — net $ 1,786 $ 1,925

Amortization expense for acquired intangible assets for the three-month and six-month periods ended June 30, 2013 and 2012 follows:
             
  Three months ended Six months ended
  June 30, June 30,
(Millions) 2013 2012 2013 2012
Amortization expense  $ 60 $ 58 $ 120 $ 116

The table below shows expected amortization expense for acquired amortizable intangible assets recorded as of June 30, 2013:
(Millions) Remainder                 
of            After
2013201420152016201720182018
Amortization expense $ 119 $ 212 $ 198 $ 184 $ 169 $ 152 $ 626

The 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.