3M 2008 Annual Report Download - page 65

59
Goodwill
2007 2008
Dec. 31, 2007 translation Dec. 31, 2008 translation Dec. 31,
2006 acquisition and 2007 acquisition and 2008
(Millions) Balance activity other Balance activity other Balance
Industrial and Transportation $ 1,302 $ 155 $ 67 $ 1,524 $ 192 $ (24 ) $ 1,692
Health Care .......................... 713 73 53 839 170 (21 ) 988
Safety, Security and Protection
Services ............................ 525 70 16 611 815 (224 ) 1,202
Consumer and Office ........... 89 — 5 94 34 27 155
Display and Graphics ........... 886 — 8 894 140 8 1,042
Electro and Communications 567 28 32 627 41 6 674
Total Company ..................... $ 4,082 $ 326 $ 181 $ 4,589 $ 1,392 $ (228 ) $ 5,753
Acquired Intangible Assets
For 2008, acquired intangible asset activity through business combinations increased balances by $794 million, while
the sale of 3M’s HighJump Software business reduced net intangible asset balances by $23 million. Balances are
also impacted by changes in foreign currency exchange rates. The carrying amount and accumulated amortization of
acquired intangible assets as of December 31 follow:
(Millions) 2008 2007
Patents ............................................................................ $ 475 $ 446
Other amortizable intangible assets (primarily tradenames
and customer-related intangibles) ............................... 1,381 801
Non-amortizable intangible assets (tradenames) ........... 130 75
Total gross carrying amount............................................ $ 1,986 $ 1,322
Accumulated amortization — patents ............................. (318 ) (305 )
Accumulated amortization — other ................................. (270 ) (216 )
Total accumulated amortization................................... (588 ) (521 )
Total intangible assets — net.......................................... $ 1,398 $ 801
Amortization expense for acquired intangible assets increased significantly in 2008 due to the significant amount of
acquired intangibles in 2008 (Note 2). Amortization expense for the years ended December 31 follows:
(Millions) 2008 2007 2006
Amortization expense.......... $ 122 $ 87 $ 89
Expected amortization expense for acquired intangible assets recorded as of December 31, 2008 follows:
After
(Millions) 2009 2010 2011 2012 2013 2013
Amortization expense $ 134 $ 121 $ 114 $ 109 $ 104 $ 686
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.
NOTE 4. Restructuring Actions and Exit Activities
Restructuring actions and exit activities generally include significant actions involving employee-related severance
charges, contract termination costs, and impairment of assets associated with such actions.
Employee-related severance charges are largely based upon distributed employment policies and substantive
severance plans and are reflected in the quarter in which management approves the associated actions. Severance
amounts for which affected employees were required to render service in order to receive benefits at their termination
dates were measured at the date such benefits were communicated to the applicable employees and recognized as
expense over the employees’ remaining service periods.
Contract termination and other charges primarily reflect costs to terminate a contract before the end of its term
(measured at fair value at the time the Company provided notice to the counterparty) or costs that will continue to be