3M 2012 Annual Report Download - page 45

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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, 2012, the Company has not utilized special purpose entities to facilitate off-balance sheet financing
arrangements. Refer to the section entitled “Warranties/Guarantees” in Note 13 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, 2012, follows:
Contractual Obligations
Payments due by year
After
(Millions)
Total
2013
2014
2015
2016
2017
2017
Long-term debt, including current
portion (Note 9)
$
5,902
$
986
$
1,481
$
107
$
994
$
648
$
1,686
Interest on long-term debt
1,721
189
152
97
96
79
1,108
Operating leases (Note 13)
735
194
158
119
77
68
119
Capital leases (Note 13)
96
22
21
8
7
4
34
Unconditional purchase
obligations and other
1,489
1,060
209
111
48
33
28
Total contractual cash obligations
$
9,943
$
2,451
$
2,021
$
442
$
1,222
$
832
$
2,975
Long-term debt payments due in 2013 and 2014 include floating rate notes totaling $132 million (classified as current
portion of long-term debt) and $97 million, respectively, as a result of put provisions associated with these debt
instruments.
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 2013 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 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 $170 million is excluded from the preceding table. Refer to Note 7 for further details.