3M 2005 Annual Report Download - page 72

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calculations would be adjusted for interest expense associated with this debt instrument. EITF Issue No. 04-08
would have been effective beginning with the Company’s 2004 fourth quarter. However, due to the FASB’s delay
in issuing SFAS No. 128R and the Company’s intent and ability to settle this debt security in cash versus the
issuance of stock, the impact of the additional diluted shares will not be included in the diluted earnings per share
calculation until the proposed SFAS No. 128R is effective. When SFAS No. 128R is effective, prior periods’ diluted
shares outstanding and diluted earnings per share amounts will be restated to present comparable information.
The estimated annual reduction in the Company’s diluted earnings per share would have been approximately $.02
to $.03 per share for total year 2005, 2004 and 2003. Because the impact of this standard is ongoing, the
Company’s diluted shares outstanding and diluted earnings per share amounts would be impacted until retirement
or modification of certain terms of this debt security.
NOTE 2. Acquisitions and Divestitures
The Company acquired CUNO on August 2, 2005. The operating results of CUNO are included in the Industrial
Business segment. CUNO is engaged in the design, manufacture and marketing of a comprehensive line of
filtration products for the separation, clarification and purification of fluids and gases. 3M and CUNO have
complementary sets of filtration technologies and the opportunity to bring an even wider range of filtration
solutions to customers around the world. 3M acquired CUNO for approximately $1.36 billion, comprised of $1.27
billion of cash paid (net of cash acquired) and the acquisition of $80 million of debt, most of which has been
repaid.
Purchased identifiable intangible assets of $268 million for the CUNO acquisition will be amortized on a straight-
line basis over lives ranging from 5 to 20 years (weighted-average life of 15 years). In-process research and
development charges from the CUNO acquisition were not material. Pro forma information related to this
acquisition is not included because its impact on Company’s consolidated results of operations is not considered
to be material. The preliminary allocation of the purchase price is presented in the table that follows.
2005 CUNO ACQUISITION
Asset (Liability)
(Millions)
Accounts receivable $ 96
Inventory 61
Property, plant, and equipment - net 121
Purchased intangible assets 268
Purchased goodwill 992
Other assets 30
Deferred tax liability (102)
Accounts payable and other current liabilities (104)
Interest bearing debt (80)
Other long-term liabilities (16)
Net assets acquired $1,266
Supplemental information:
Cash paid $1,294
Less: Cash acquired 28
Cash paid, net of cash acquired $1,266
During the year ended December 31, 2005, 3M entered into two immaterial additional business combinations for a
total purchase price of $27 million, net of cash acquired.
1) 3M (Electro and Communications Business) purchased certain assets of Siemens Ultrasound division’s flexible
circuit manufacturing line, a U.S. operation. The acquired operation produces flexible interconnect circuits that
provide electrical connections between components in electronics systems used primarily in the transducers of
ultrasound machines.
2) 3M (Display and Graphics Business) purchased certain assets of Mercury Online Solutions Inc., a U.S.
operation. The acquired operation provides hardware and software technologies and network management
services for digital signage and interactive kiosk networks.