REG - 3M Company - Annual Financial Report - Updated by Form 8-K <Origin Href="QuoteRef">MMM.N</Origin> - Part 5
05/05/2017 07:07
- Part 5: For the preceding part double click ID:nRSE2625Ed
purchased (via Sumitomo 3M Limited) Sumitomo Electric Industries, Ltd.'s 25 percent interest in
3M's consolidated Sumitomo 3M Limited subsidiary for 90 billion Japanese Yen. Upon completion of this transaction, 3M owned
100 percent of Sumitomo 3M Limited. This was reflected as a "Purchase of noncontrolling interest" in the financing section
of the consolidated statement of cash flows. In addition, in April 2014, 3M purchased the remaining noncontrolling interest
in a consolidated 3M subsidiary for an immaterial amount, which was also classified as a "Purchase of noncontrolling
interest" in the financing section of the consolidated statement of cash flows.
Other cash flows from financing activities may include various other items, such as changes in cash overdraft balances, and
principal payments for capital leases.
Free Cash Flow (non-GAAP measure):
Free cash flow and free cash flow conversion are not defined under U.S. generally accepted accounting principles (GAAP).
Therefore, they should not be considered a substitute for income or cash flow data prepared in accordance with U.S. GAAP
and may not be comparable to similarly titled measures used by other companies. The Company defines free cash flow as net
cash provided by operating activities less purchases of property, plant and equipment. It should not be inferred that the
entire free cash flow amount is available for discretionary expenditures. The Company defines free cash flow conversion as
free cash flow divided by net income attributable to 3M. The Company believes free cash flow and free cash flow conversion
are meaningful to investors as they are useful measures of performance and the Company uses these measures as an indication
of the strength of the company and its ability to generate cash. Below find a recap of free cash flow and free cash flow
conversion for 2016, 2015 and 2014.
Years ended December 31
(Millions) 2016 2015 2014
Major GAAP Cash Flow Categories
Net cash provided by operating activities $ 6,662 $ 6,420 $ 6,626
Net cash used in investing activities (1,403) (2,817) (596)
Net cash used in financing activities (4,626) (3,648) (6,603)
Free Cash Flow (non-GAAP measure)
Net cash provided by operating activities $ 6,662 $ 6,420 $ 6,626
Purchases of property, plant and equipment (PP&E) (1,420) (1,461) (1,493)
Free cash flow $ 5,242 $ 4,959 $ 5,133
Net income attributable to 3M $ 5,050 $ 4,833 $ 4,956
Free cash flow conversion 104 % 103 % 104 %
Off-Balance Sheet Arrangements and Contractual Obligations:
As of December 31, 2016, the Company has not utilized special purpose entities to facilitate off-balance sheet financing
arrangements. Refer to the section entitled "Warranties/Guarantees" in Note 14 for discussion of accrued product warranty
liabilities and guarantees.
In addition to guarantees, 3M, in the normal course of business, periodically enters into agreements that require the
Company to indemnify either major customers or suppliers for specific risks, such as claims for injury or property damage
arising out of the use of 3M products or the negligence of 3M personnel, or claims alleging that 3M products infringe
third-party patents or other intellectual property. While 3M's maximum exposure under these indemnification provisions
cannot be estimated, these indemnifications are not expected to have a material impact on the Company's consolidated
results of operations or financial condition.
A summary of the Company's significant contractual obligations as of December 31, 2016, follows:
Contractual Obligations
Payments due by year
After
(Millions) Total 2017 2018 2019 2020 2021 2021
Long-term debt, including current portion (Note 10) $ 11,478 $ 800 $ 1,042 $ 623 $ 1,176 $ 1,246 $ 6,591
Interest on long-term debt 2,936 224 221 210 205 195 1,881
Operating leases (Note 14) 825 210 161 119 89 58 188
Capital leases (Note 14) 59 9 7 5 4 4 30
Unconditional purchase obligations and other 1,361 946 189 123 54 24 25
Total contractual cash obligations $ 16,659 $ 2,189 $ 1,620 $ 1,080 $ 1,528 $ 1,527 $ 8,715
Long-term debt payments due in 2017 and 2018 include floating rate notes totaling $150 million (classified as current
portion of long-term debt), and $71 million (included in other borrowings in the long-term debt table), respectively, as a
result of put provisions associated with these debt instruments. Interest projections on both floating and fixed rate
long-term debt, including the effects of interest rate swaps, are based on effective interest rates as of December 31,
2016.
Unconditional purchase obligations are defined as an agreement to purchase goods or services that is enforceable and
legally binding on the Company. Included in the unconditional purchase obligations category above are certain obligations
related to take or pay contracts, capital commitments, service agreements and utilities. These estimates include both
unconditional purchase obligations with terms in excess of one year and normal ongoing purchase obligations with terms of
less than one year. Many of these commitments relate to take or pay contracts, in which 3M guarantees payment to ensure
availability of products or services that are sold to customers. The Company expects to receive consideration (products or
services) for these unconditional purchase obligations. Contractual capital commitments are included in the preceding
table, but these commitments represent a small part of the Company's expected capital spending. The purchase obligation
amounts do not represent the entire anticipated purchases in the future, but represent only those items for which the
Company is contractually obligated. The majority of 3M's products and services are purchased as needed, with no
unconditional commitment. For this reason, these amounts will not provide a reliable indicator of the Company's expected
future cash outflows on a stand-alone basis.
Other obligations, included in the preceding table within the caption entitled "Unconditional purchase obligations and
other," include the current portion of the liability for uncertain tax positions under ASC 740, which is expected to be
paid out in cash in the next 12 months. The Company is not able to reasonably estimate the timing of the long-term payments
or the amount by which the liability will increase or decrease over time; therefore, the long-term portion of the net tax
liability of $284 million is excluded from the preceding table. Refer to Note 8 for further details.
As discussed in Note 11, the Company does not have a required minimum cash pension contribution obligation for its U.S.
plans in 2017 and Company contributions to its U.S. and international pension plans are expected to be largely
discretionary in future years; therefore, amounts related to these plans are not included in the preceding table.
FINANCIAL INSTRUMENTS
The Company enters into foreign exchange forward contracts, options and swaps to hedge against the effect of exchange rate
fluctuations on cash flows denominated in foreign currencies and certain intercompany financing transactions. The Company
manages interest rate risks using a mix of fixed and floating rate debt. To help manage borrowing costs, the Company may
enter into interest rate swaps. Under these arrangements, the Company agrees to exchange, at specified intervals, the
difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount.
The Company manages commodity price risks through negotiated supply contracts, price protection agreements and commodity
price swaps.
Refer to Item 7A, "Quantitative and Qualitative Disclosures About Market Risk", for further discussion of foreign exchange
rates risk, interest rates risk, commodity prices risk and value at risk analysis.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
In the context of Item 7A, 3M is exposed to market risk due to the risk of loss arising from adverse changes in foreign
currency exchange rates, interest rates and commodity prices. Changes in those factors could cause fluctuations in earnings
and cash flows. Senior management provides oversight for risk management and derivative activities, determines certain of
the Company's financial risk policies and objectives, and provides guidelines for derivative instrument utilization. Senior
management also establishes certain associated procedures relative to control and valuation, risk analysis, counterparty
credit approval, and ongoing monitoring and reporting.
The Company is exposed to credit loss in the event of nonperformance by counterparties in interest rate swaps, currency
swaps, commodity price swaps, and forward and option contracts. However, the Company's risk is limited to the fair value of
the instruments. The Company actively monitors its exposure to credit risk through the use of credit approvals and credit
limits, and by selecting major international banks and financial institutions as counterparties. The Company does not
anticipate nonperformance by any of these counterparties.
Foreign Exchange Rates Risk:
Foreign currency exchange rates and fluctuations in those rates may affect the Company's net investment in foreign
subsidiaries and may cause fluctuations in cash flows related to foreign denominated transactions. 3M is also exposed to
the translation of foreign currency earnings to the U.S. dollar. The Company enters into foreign exchange forward and
option contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies.
These transactions are designated as cash flow hedges. 3M may dedesignate these cash flow hedge relationships in advance of
the occurrence of the forecasted transaction. Beginning in the second quarter of 2014, 3M began extending the maximum
length of time over which it hedges its exposure to the variability in future cash flows of the forecasted transactions
from a previous term of 12 months to a longer term of 24 months, with certain currencies being extended further to 36
months starting in the first quarter of 2015. In addition, 3M enters into foreign currency forward contracts that are not
designated in hedging relationships to offset, in part, the impacts of certain intercompany activities (primarily
associated with intercompany licensing arrangements and intercompany financing transactions). As circumstances warrant, the
Company also uses foreign currency forward contracts and foreign currency denominated debt as hedging instruments to hedge
portions of the Company's net investments in foreign operations. The dollar equivalent gross notional amount of the
Company's foreign exchange forward and option contracts designated as cash flow hedges and those not designated as hedging
instruments were $3.2 billion and $5.7 billion, respectively, at December 31, 2016. As of December 31, 2016, the Company
had 150 million Euros and 248 billion South Korean Won in notional amount of foreign currency forward contracts designated
as net investment hedges along with 4.4 billion Euros in principal amount of foreign currency denominated debt designated
as non-derivative hedging instruments in certain net investment hedges as discussed in Note 12 in the "Net Investment
Hedges" section.
Interest Rates Risk:
The Company may be impacted by interest rate volatility with respect to existing debt and future debt issuances. 3M manages
interest rate risk and expense using a mix of fixed and floating rate debt. In addition, the Company may enter into
interest rate swaps that are designated and qualify as fair value hedges. Under these arrangements, the Company agrees to
exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an
agreed-upon notional principal amount. The dollar equivalent (based on inception date foreign currency exchange rates)
gross notional amount of the Company's interest rate swaps at December 31, 2016 was $2.0 billion. Additional details about
3M's long-term debt can be found in Note 10, including references to information regarding derivatives and/or hedging
instruments associated with the Company's long-term debt.
Commodity Prices Risk:
The Company manages commodity price risks through negotiated supply contracts, price protection agreements and commodity
price swaps. 3M used commodity price swaps as cash flow hedges of forecasted commodity transactions to manage price
volatility, but discontinued this practice in the first quarter of 2015. The related mark-to-market gain or loss on
qualifying hedges was included in other comprehensive income to the extent effective, and reclassified into cost of sales
in the period during which the hedged transaction affected earnings. The Company may enter into other commodity price swaps
to offset, in part, fluctuation and costs associated with the use of certain commodities and precious metals. These
instruments are not designated in hedged relationships and the extent to which they were outstanding at December 31, 2016
was not material.
Value At Risk:
The value at risk analysis is performed annually to assess the Company's sensitivity to changes in currency rates, interest
rates, and commodity prices. A Monte Carlo simulation technique was used to test the impact on after-tax earnings related
to financial instruments (primarily debt), derivatives and underlying exposures outstanding at December 31, 2016. The model
(third-party bank dataset) used a 95 percent confidence level over a 12-month time horizon. The exposure to changes in
currency rates model used 18 currencies, interest rates related to three currencies, and commodity prices related to five
commodities. This model does not purport to represent what actually will be experienced by the Company. This model does not
include certain hedge transactions, because the Company believes their inclusion would not materially impact the results.
The following table summarizes the possible adverse and positive impacts to after-tax earnings related to these exposures.
Adverse impact on after-tax Positive impact on after-tax
earnings earnings
(Millions) 2016 2015 2016 2015
Foreign exchange rates $ (245) $ (254) $ 264 $ 273
Interest rates (13) (13) (2) 9
Commodity prices (2) (1) 1 1
In addition to the possible adverse and positive impacts discussed in the preceding table related to foreign exchange
rates, recent historical information is as follows. 3M estimates that year-on-year currency effects, including hedging
impacts, had the following effects on pre-tax income: 2016 ($127 million decrease) and 2015 ($390 million decrease). This
estimate includes the effect of translating profits from local currencies into U.S. dollars; the impact of currency
fluctuations on the transfer of goods between 3M operations in the United States and abroad; and transaction gains and
losses, including derivative instruments designed to reduce foreign currency exchange rate risks. 3M estimates that
year-on-year derivative and other transaction gains and losses had the following effects on pre-tax income: 2016 ($69
million decrease) and 2015 ($180 million increase).
An analysis of the global exposures related to purchased components and materials is performed at each year-end. A one
percent price change would result in a pre-tax cost or savings of approximately $70 million per year. The global energy
exposure is such that a ten percent price change would result in a pre-tax cost or savings of approximately $40 million per
year. Global energy exposure includes energy costs used in 3M production and other facilities, primarily electricity and
natural gas.
Item 8. Financial Statements and Supplementary Data.
Note: The information contained in this Item has been updated for the business segment reporting changes effective in the
first quarter of 2017 (Note 16). Related to these changes, updates have been made to the following Notes to Consolidated
Financial Statements:
· Note 3, Goodwill and Intangible Assets: 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. No goodwill
impairments resulted from any product moves that resulted in reporting unit changes.
· Note 16, Business Segments: Net sales, operating income, assets, depreciation and amortization, and capital
expenditures have been revised to reflect the business segment changes for all periods presented.
In addition, as discussed in Note 1, Significant Accounting Policies, effective in the first quarter of 2017, 3M early
adopted both Accounting Standards Update (ASU) No. 2016-15, Classification of Certain Cash Receipts and Payments, and ASU
No. 2016-18, Restricted Cash. Since the changes were immaterial to all periods presented, no impact was reflected in the
Company's consolidated results of operations and financial condition presented.
For significant developments since the filing of the 2016 Annual Report (e.g. new developments in "Commitments and
Contingencies"), refer to subsequent 2017 Quarterly Reports on Form 10-Q.
Index to Financial Statements
A complete summary of Form 10-K content (updated by this Current Report on Form 8-K), including the index to financial
statements, is found at the beginning of this document.
Management's Responsibility for Financial Reporting
Management is responsible for the integrity and objectivity of the financial information included in this report. The
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America. Where necessary, the financial statements reflect estimates based on management's judgment.
Management has established and maintains a system of internal control over financial reporting for the Company and its
subsidiaries. This system and its established accounting procedures and related controls are designed to provide reasonable
assurance that assets are safeguarded, that the books and records properly reflect all transactions, that policies and
procedures are implemented by qualified personnel, and that published financial statements are properly prepared and fairly
presented. The Company's system of internal control over financial reporting is supported by widely communicated written
policies, including business conduct policies, which are designed to require all employees to maintain high ethical
standards in the conduct of Company affairs. Internal auditors continually review the accounting and control system.
3M Company
Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting.
Management conducted an assessment of the Company's internal control over financial reporting based on the framework
established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated
Framework (2013). Based on the assessment, management concluded that, as of December 31, 2016, the Company's internal
control over financial reporting is effective.
The Company's internal control over financial reporting as of December 31, 2016 has been audited by PricewaterhouseCoopers
LLP, an independent registered public accounting firm, as stated in their report which is included herein, which expresses
an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31,
2016.
3M Company
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of 3M Company
In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income,
comprehensive income, changes in equity and cash flows present fairly, in all material respects, the financial position of
3M Company and its subsidiaries (the "Company") at December 31, 2016 and 2015, and the results of their operations and
their cash flows for each of the three years in the period ended December 31, 2016 in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal
Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Company's management is responsible for these financial statements, for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in
the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express
opinions on these financial statements and on the Company's internal control over financial reporting based on our
integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement and whether effective internal control over financial
reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit
of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as
we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over financial reporting includes those policies
and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
February 9, 2017, except with respect to our opinion on the consolidated financial statements insofar as it relates to the change in the manner in which the Company presents and classifies certain cash receipts, payments and restricted cash in the statement of cash flows discussed in Note 1 and in the composition of reportable segments discussed in Notes 3 and 16, as to which the date is May 4, 2017
3M Company and Subsidiaries
Consolidated Statement of Income
Years ended December 31
(Millions, except per share amounts) 2016 2015 2014
Net sales $ 30,109 $ 30,274 $ 31,821
Operating expenses
Cost of sales 15,040 15,383 16,447
Selling, general and administrative expenses 6,111 6,182 6,469
Research, development and related expenses 1,735 1,763 1,770
Total operating expenses 22,886 23,328 24,686
Operating income 7,223 6,946 7,135
Interest expense and income
Interest expense 199 149 142
Interest income (29) (26) (33)
Total interest expense - net 170 123 109
Income before income taxes 7,053 6,823 7,026
Provision for income taxes 1,995 1,982 2,028
Net income including noncontrolling interest $ 5,058 $ 4,841 $ 4,998
Less: Net income attributable to noncontrolling interest 8 8 42
Net income attributable to 3M $ 5,050 $ 4,833 $ 4,956
Weighted average 3M common shares outstanding - basic 604.7 625.6 649.2
Earnings per share attributable to 3M common shareholders - basic $ 8.35 $ 7.72 $ 7.63
Weighted average 3M common shares outstanding - diluted 618.7 637.2 662.0
Earnings per share attributable to 3M common shareholders - diluted $ 8.16 $ 7.58 $ 7.49
Cash dividends paid per 3M common share $ 4.44 $ 4.10 $ 3.42
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.
3M Company and Subsidiaries
Consolidated Statement of Comprehensive Income
Years ended December 31
(Millions) 2016 2015 2014
Net income including noncontrolling interest $ 5,058 $ 4,841 $ 4,998
Other comprehensive income (loss), net of tax:
Cumulative translation adjustment (331) (586) (942)
Defined benefit pension and postretirement plans adjustment (524) 489 (1,562)
Debt and equity securities, unrealized gain (loss) - - 2
Cash flow hedging instruments, unrealized gain (loss) (33) 25 107
Total other comprehensive income (loss), net of tax (888) (72) (2,395)
Comprehensive income (loss) including noncontrolling interest 4,170 4,769 2,603
Comprehensive (income) loss attributable to noncontrolling interest (6) (6) (48)
Comprehensive income (loss) attributable to 3M $ 4,164 $ 4,763 $ 2,555
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.
3M Company and Subsidiaries
Consolidated Balance Sheet
At December 31
(Dollars in millions, except per share amount) 2016 2015
Assets
Current assets
Cash and cash equivalents $ 2,398 $ 1,798
Marketable securities - current 280 118
Accounts receivable - net of allowances of $88 and $91 4,392 4,154
Inventories
Finished goods 1,629 1,655
Work in process 1,039 1,008
Raw materials and supplies 717 855
Total inventories 3,385 3,518
Other current assets 1,271 1,398
Total current assets 11,726 10,986
Marketable securities - non-current 17 9
Investments 128 117
Property, plant and equipment 23,499 23,098
Less: Accumulated depreciation (14,983) (14,583)
Property, plant and equipment - net 8,516 8,515
Goodwill 9,166 9,249
Intangible assets - net 2,320 2,601
Prepaid pension benefits 52 188
Other assets 981 1,218
Total assets $ 32,906 $ 32,883
Liabilities
Current liabilities
Short-term borrowings and current portion of long-term debt $ 972 $ 2,044
Accounts payable 1,798 1,694
Accrued payroll 678 644
Accrued income taxes 299 332
Other current liabilities 2,472 2,404
Total current liabilities 6,219 7,118
Long-term debt 10,678 8,753
Pension and postretirement benefits 4,018 3,520
Other liabilities 1,648 2,024
Total liabilities $ 22,563 $ 21,415
Commitments and contingencies (Note 14)
Equity
3M Company shareholders' equity:
Common stock par value, $.01 par value $ 9 $ 9
Shares outstanding - 2016: 596,726,278
Shares outstanding - 2015: 609,330,124
Additional paid-in capital 5,061 4,791
Retained earnings 37,907 36,296
Treasury stock (25,434) (23,308)
Accumulated other comprehensive income (loss) (7,245) (6,359)
Total 3M Company shareholders' equity 10,298 11,429
Noncontrolling interest 45 39
Total equity $ 10,343 $ 11,468
Total liabilities and equity $ 32,906 $ 32,883
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.
3M Company and Subsidiaries
Consolidated Statement of Changes in Equity
Years Ended December 31
3M Company Shareholders
Common Accumulated
Stock and Other
Additional Comprehensive Non-
Paid-in Retained Treasury Income controlling
(Dollars in millions, except per share amounts) Total Capital Earnings Stock (Loss) Interest
Balance at December 31, 2013 $ 17,669 $ 4,384 $ 32,137 $ (15,385) $ (3,913) $ 446
Net income 4,998 4,956 42
Other comprehensive income (loss), net of tax:
Cumulative translation adjustment (942) (948) 6
Defined benefit pension and post-retirement plans adjustment (1,562) (1,562) -
Debt and equity securities - unrealized gain (loss) 2 2 -
Cash flow hedging instruments - unrealized gain (loss) 107 107 -
Total other comprehensive income (loss), net of tax (2,395)
Dividends declared ($3.59 per share, Note 6) (2,297) (2,297)
Purchase of subsidiary shares (870) (434) 25 (461)
Stock-based compensation, net of tax impacts 438 438
Reacquired stock (5,643) (5,643)
Issuances pursuant to stock option and benefit plans 963 (758) 1,721
Balance at December 31, 2014 $ 12,863 $ 4,388 $ 34,038 $ (19,307) $ (6,289) $ 33
Net income 4,841 4,833 8
Other comprehensive income (loss), net of tax:
Cumulative translation adjustment (586) (584) (2)
Defined benefit pension and post-retirement plans adjustment 489 489 -
Debt and equity securities - unrealized gain (loss) - - -
Cash flow hedging instruments - unrealized gain (loss) 25 25 -
Total other comprehensive income (loss), net of tax (72)
Dividends declared ($3.075 per share, Note 6) (1,913) (1,913)
Stock-based compensation, net of tax impacts 412 412
Reacquired stock (5,304) (5,304)
Issuances pursuant to stock option and benefit plans 641 (662) 1,303
Balance at December 31, 2015 $ 11,468 $ 4,800 $ 36,296 $ (23,308) $ (6,359) $ 39
Net income 5,058 5,050 8
Other comprehensive income (loss), net of tax:
Cumulative translation adjustment (331) (329) (2)
Defined benefit pension and post-retirement plans adjustment (524) (524) -
Debt and equity securities - unrealized gain (loss) - - -
Cash flow hedging instruments - unrealized gain/(loss) (33) (33) -
Total other comprehensive income (loss), net of tax (888)
Dividends declared ($4.44 per share, Note 6) (2,678) (2,678)
Stock-based compensation 270 270
Reacquired stock (3,699) (3,699)
Issuances pursuant to stock option and benefit plans 812 (761) 1,573
Balance at December 31, 2016 $ 10,343 $ 5,070 $ 37,907 $ (25,434) $ (7,245) $ 45
Supplemental share information 2016 2015 2014
Treasury stock
Beginning balance 334,702,932 308,898,462 280,736,817
Reacquired stock 22,602,748 34,072,584 40,664,061
Issuances pursuant to stock options and benefit plans (9,998,902) (8,268,114) (12,502,416)
Ending balance 347,306,778 334,702,932 308,898,462
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.
3M Company and Subsidiaries
Consolidated Statement of Cash Flows
Years ended December 31
(Millions) 2016 2015 2014
Cash Flows from Operating Activities
Net income including noncontrolling interest $ 5,058 $ 4,841 $ 4,998
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities
Depreciation and amortization 1,474 1,435 1,408
Company pension and postretirement contributions (383) (267) (215)
Company pension and postretirement expense 251 556 391
Stock-based compensation expense 298 276 280
Deferred income taxes 7 395 (146)
Excess tax benefits from stock-based compensation - (154) (167)
Changes in assets and liabilities
Accounts receivable (313) (58) (268)
Inventories 57 3 (113)
Accounts payable 148 9 75
Accrued income taxes (current and long-term) 101 (744) 206
Other - net (36) 128 177
Net cash provided by operating activities 6,662 6,420 6,626
Cash Flows from Investing Activities
Purchases of property, plant and equipment (PP&E) (1,420) (1,461) (1,493)
Proceeds from sale of PP&E and other assets 58 33 135
Acquisitions, net of cash acquired (16) (2,914) (94)
Purchases of marketable securities and investments (1,410) (652) (1,280)
Proceeds from maturities and sale of marketable securities and investments 1,247 1,952 2,034
Proceeds from sale of businesses 142 123 -
Other investing (4) 102 102
Net cash used in investing activities (1,403) (2,817) (596)
Cash Flows from Financing Activities
Change in short-term debt - net (797) 860 27
Repayment of debt (maturities greater than 90 days) (992) (800) (1,625)
Proceeds from debt (maturities greater than 90 days) 2,832 3,422 2,608
Purchases of treasury stock (3,753) (5,238) (5,652)
Proceeds from issuance of treasury stock pursuant to stock option and benefit plans 804 635 968
Dividends paid to shareholders (2,678) (2,561) (2,216)
Excess tax benefits from stock-based compensation - 154 167
Purchase of noncontrolling interest - - (861)
Other - net (42) (120) (19)
Net cash used in financing activities (4,626) (3,648) (6,603)
Effect of exchange rate changes on cash and cash equivalents (33) (54) (111)
Net increase (decrease) in cash and cash equivalents 600 (99) (684)
Cash and cash equivalents at beginning of year 1,798 1,897 2,581
Cash and cash equivalents at end of period $ 2,398 $ 1,798 $ 1,897
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.
Notes to Consolidated Financial Statements
NOTE 1. Significant Accounting Policies
Consolidation: 3M is a diversified global manufacturer, technology innovator and marketer of a wide variety of products.
All subsidiaries are consolidated. All intercompany transactions are eliminated. As used herein, the term "3M" or "Company"
refers to 3M Company and subsidiaries unless the context indicates otherwise.
Basis of presentation: Certain consolidated balance sheet amounts relative to prior periods have been immaterially revised
to correct the Company's application of Accounting Standards Codification (ASC) 450, Contingencies, with respect to its
respirator mask/asbestos liability associated with pending and future claims and related defense costs. This correction
reflects the inclusion of all potentially relevant years rather than a subset of future years when estimating this
- More to follow, for following part double click ID:nRSE2625EfRecent news on 3M Co
See all newsREG - Stock Exch Notice - Admission to ISM - 30/11/2023
AnnouncementRCS - 3M Company - StageZero Announces COC Protocol in Europe
AnnouncementREG - Official List - Removal: 3M Company
AnnouncementREG - Stock Exch Notice - Cancellation - 3M Company
AnnouncementREG - 3M Company - 3rd Quarter Results
Announcement