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Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2014

NOTE 3. Goodwill and Intangible Assets

Purchased goodwill from acquisitions totaled $65 million in 2014, none of which is deductible for tax purposes. There were no acquisitions that closed during 2013. 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 $10 million in 2013. 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,		2013		2013		Dec. 31,		2014		2014		Dec. 31,
	2012		acquisition		translation		2013		acquisition		translation		2014
(Millions)	Balance		activity		and other		Balance		activity		and other		Balance
Industrial	$	2,174	$	10	$	(18)	$	2,166	$	―	$	(129)	$	2,037
Safety and Graphics		1,751		―		(11)		1,740		―		(90)		1,650
Electronics and Energy		1,622		―		(10)		1,612		―		(53)		1,559
Health Care		1,598		―		(2)		1,596		65		(72)		1,589
Consumer		240		―		(9)		231		―		(16)		215
Total Company	$	7,385	$	10	$	(50)	$	7,345	$	65	$	(360)	$	7,050

As discussed in Note 15, effective in the first quarter of 2014, 3M transferred a product line between divisions within different business segments, and in the first, second and fourth quarters of 2014 made other changes within 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. During the first, second and fourth quarters of 2014, 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 2014 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 2014, the gross carrying amount of intangible assets (excluding goodwill) decreased due to changes in foreign currency exchange rates, partially offset by business combinations, which increased the gross carrying amount by $34 million. The gross carrying amount and accumulated amortization of acquired intangible assets as of December 31, follow:


(Millions)		2014		2013
Customer related intangible assets		$	1,348	$	1,411
Patents			581		602
Other technology-based intangible assets			407		406
Definite-lived tradenames			401		411
Other amortizable intangible assets			221		217
Total gross carrying amount		$	2,958	$	3,047

Accumulated amortization — customer related			(597)		(514)
Accumulated amortization — patents			(472)		(458)
Accumulated amortization — other technology based			(215)		(179)
Accumulated amortization — definite-lived tradenames			(195)		(178)
Accumulated amortization — other			(167)		(159)
Total accumulated amortization		$	(1,646)	$	(1,488)

	Total finite-lived intangible assets — net	$	1,312	$	1,559

Non-amortizable intangible assets (primarily tradenames)			123		129
	Total intangible assets — net	$	1,435	$	1,688

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)		2014		2013		2012
Amortization expense	$	228	$	236	$	233

Expected amortization expense for acquired amortizable intangible assets recorded as of December 31, 2014 follows:

											After
(Millions)	2015		2016		2017		2018		2019		2019
Amortization expense	$	204	$	176	$	154	$	139	$	128	$	511

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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