3M 2009 Annual Report Download - page 104

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98
(Millions)
Fair Value
at Dec, 31
Fair Value Measurements
Using Inputs Considered as
Description 2008 Level 1 Level 2 Level 3
Assets:
Available-for-sale:
Marketable securities:
Agency securities......................................... $ 380 $ — $ 380 $ —
Corporate securities..................................... 207
—
207
—
Asset-backed securities:
Automobile loans related.......................... 49
—
49
—
Credit cards related .................................. 40
—
40
—
Other......................................................... 22
—
22
—
Treasury securities....................................... 12 12 —
—
Auction rate securities.................................. 1
—
— 1
Other securities............................................ 14
—
14
—
Investments ..................................................... 5 5 —
—
Derivative instruments — assets......................... 279 221 58
—
Liabilities:
Derivative instruments — liabilities ..................... 212 99 113
—
The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on
a recurring basis in the table above that used significant unobservable inputs (Level 3).
(Millions) Year ended Dec. 31,
Marketable securities — auction rate securities only 2009 2008
Beginning balance.....................................................................................................
.
$ 1 $16
Total gains or (losses):
Included in earnings ..............................................................................................
.
—
(3)
Included in other comprehensive income..............................................................
.
6
(12)
Application of proceeds from sale .............................................................................
.
(2)
—
Transfers in and/or out of Level 3 .............................................................................
.
—
—
Ending balance (December 31) ................................................................................
.
5
1
Additional losses included in earnings due to reclassifications from other
comprehensive income for:
Securities sold during the period ended December 31 .........................................
.
(2)
—
Securities still held at December 31 ......................................................................
.
—
(6)
In addition, the plan assets of 3M’s pension and postretirement benefit plans are measured at fair value on a
recurring basis (at least annually). Refer to Note 11.
Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis:
Disclosures for nonfinancial assets and liabilities that are measured at fair value, but are recognized and disclosed at
fair value on a nonrecurring basis, are required prospectively beginning January 1, 2009. During 2009, such
measurements of fair value related primarily to the nonfinancial assets and liabilities with respect to the business
combinations that closed in 2009 and long-lived asset impairments in 2009.
The net identifiable tangible and intangible assets and liabilities (excluding goodwill) for business combinations that
closed in 2009 (discussed in Note 2) was $50 million. For business combinations, 3M uses inputs other than quoted
prices that are observable, such as interest rates, cost of capital, and market comparable royalty rates, which are
applied to income and market valuation approaches. 3M considers these level 2 inputs.
Long-lived asset impairments totaled approximately $32 million pre-tax for 2009, which included the portion of 2009
restructuring actions related to long-lived asset impairments as discussed in Note 4, with the complete carrying
amount of such assets written off and included in operating income results. In addition to the restructuring activities,
in June 2009 the Company recorded a $13 million impairment of certain long-lived assets associated with the UK
passport production activity of 3M’s Security Systems Division (within the Safety, Security and Protection Services
business segment). In June 2009, 3M was notified that the UK government decided to award the production of its
passports to a competitor upon the expiration of 3M’s existing UK passport contracts in October 2010. Accordingly,
3M tested the long lived assets associated with the UK passport activity for recoverability which indicated that the