NOTE 3. Goodwill and Intangible Assets
There were no acquisitions that closed during 2013. Purchased goodwill from acquisitions totaled $327 million in 2012, $41 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 $10 million in 2013 and increased goodwill by $12 million in 2012. 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, | 2012 | 2012 | Dec. 31, | 2013 | 2013 | Dec. 31, | ||||||||||||||||
| 2011 | acquisition | translation | 2012 | acquisition | translation | 2013 | ||||||||||||||||
| (Millions) | Balance | activity | and other | Balance | activity | and other | Balance | |||||||||||||||
| Industrial | $ | 1,972 | $ | 204 | $ | (2) | $ | 2,174 | $ | 10 | $ | (18) | $ | 2,166 | ||||||||
| Safety and Graphics | 1,713 | 41 | (3) | 1,751 | ― | (11) | 1,740 | |||||||||||||||
| Electronics and Energy | 1,608 | ― | 14 | 1,622 | ― | (10) | 1,612 | |||||||||||||||
| Health Care | 1,508 | 88 | 2 | 1,598 | ― | (2) | 1,596 | |||||||||||||||
| Consumer | 246 | 6 | (12) | 240 | ― | (9) | 231 | |||||||||||||||
| Total Company | $ | 7,047 | $ | 339 | $ | (1) | $ | 7,385 | $ | 10 | $ | (50) | $ | 7,345 | ||||||||
As discussed in Note 15, 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. The Company also completed its annual goodwill impairment test in the fourth quarter of 2013 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
3M did not complete any business combinations during 2013. As a result, gross balances of acquired intangible assets were primarily 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) | 2013 | 2012 | |||||
| Patents | $ | 602 | $ | 596 | |||
| Other amortizable intangible assets (primarily tradenames and customer related | |||||||
| intangibles) | 2,445 | 2,456 | |||||
| Total gross carrying amount | $ | 3,047 | $ | 3,052 | |||
| Accumulated amortization — patents | (458) | (421) | |||||
| Accumulated amortization — other | (1,030) | (833) | |||||
| Total accumulated amortization | $ | (1,488) | $ | (1,254) | |||
| Total finite-lived intangible assets — net | $ | 1,559 | $ | 1,798 | |||
| Non-amortizable intangible assets (primarily tradenames) | 129 | 127 | |||||
| Total intangible assets — net | $ | 1,688 | $ | 1,925 | |||
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) | 2013 | 2012 | 2011 | ||||||
| Amortization expense | $ | 236 | $ | 233 | $ | 235 | |||
| Expected amortization expense for acquired amortizable intangible assets recorded as of December 31, 2013 follows: | ||||||||||||||||||
| After | ||||||||||||||||||
| (Millions) | 2014 | 2015 | 2016 | 2017 | 2018 | 2018 | ||||||||||||
| Amortization expense | $ | 214 | $ | 200 | $ | 186 | $ | 171 | $ | 154 | $ | 634 | ||||||
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.