3M 2011 Annual Report Download - page 44

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38
86 percent to 100 percent as of December 31, 2011. These additional purchases are reflected as other financing
activities in the statement of cash flows. In addition, during 2011, 3M sold a noncontrolling interest in a newly formed
subsidiary for an immaterial amount, which was also classified as other financing activity in the consolidated
statement of cash flows.
During the quarter ended March 31, 2010, as discussed in Notes 6 and 10, the Company’s majority owned Sumitomo
3M Limited entity (Sumitomo 3M) purchased a portion of its shares held by its noncontrolling interest, Sumitomo
Electric Industries, Ltd. (SEI), by paying cash of 5.8 billion Japanese Yen and entering into a note payable to SEI of
17.4 billion Japanese Yen (approximately $63 million and $188 million, respectively, based on applicable exchange
rates at that time). The cash paid of approximately $63 million during the quarter ended March 31, 2010 as a result of
the purchase of Sumitomo 3M shares from SEI is classified as “Other financing activities” in the consolidated
statement of cash flows. The remainder of the purchase financed by the note payable to SEI is considered non-cash
financing activity in the first quarter of 2010. As discussed in Note 2, during the second quarter of 2010, 3M recorded
a financed liability of 1.7 billion Japanese yen (approximately $18 million based on applicable exchange rates at that
time) related to the A-One acquisition, which is also considered a non-cash financing activity.
Off-Balance Sheet Arrangements and Contractual Obligations:
As of December 31, 2011, 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, 2011, follows:
Contractual Obligations
Payments due by year
After
(Millions) Total 2012 2013 2014 2015 2016 2016
Long-term debt, including current
portion (Note 10) ................. $ 5,047 $ 563 $ 927 $ 1,463 $ 2 $ 995 $ 1,097
Interest on long-term debt ...... 2,011 182 159 396 78 78 1,118
Operating leases (Note 14) .... 502 155 113 87 55 40 52
Capital leases (Note 14) ......... 100 19 20 18 5 4 34
Unconditional purchase
obligations and other .......... 1,235 781 236 139 36 13 30
Total contractual cash obligations $ 8,895 $ 1,700 $ 1,455 $ 2,103 $ 176 $ 1,130 $ 2,331
Long-term debt payments due in 2012 include $59 million of floating rate notes. The floating rate notes are classified
as current portion of long-term debt as the result of put provisions associated with these debt instruments. As a result
of put provisions, long-term debt payments due in 2013 include floating rate notes totaling $73 million, and in 2014
include floating rate notes totaling $97 million.
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 in 2012 and beyond. 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