3M 2015 Annual Report Download - page 40

TableofContents
Accountspayabledecreasedby$113millioncomparedwithDecember31,2014,ascurrencytranslationimpactsreducedaccounts
payableby$76million.
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Return on Invested Capital (non-GAAP measure):
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TheCompanyusesnon-GAAPmeasurestofocusonshareholdervaluecreation.3Musesreturnoninvestedcapital(ROIC),defined
asannualizedafter-taxoperatingincome(includinginterestincome)dividedbyaverageoperatingcapital.Operatingcapitalis
definedasnetassets(totalassetslesstotalliabilities)excludingdebt.ThismeasureisnotrecognizedunderU.S.GAAPandmaynot
becomparabletosimilarlytitledmeasuresusedbyothercompanies.ROICwas22.5percentfor2015,and22.0percentfor2014.
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Cash Flows:
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Cashflowsfromoperating,investingandfinancingactivitiesareprovidedinthetablesthatfollow.Individualamountsinthe
ConsolidatedStatementofCashFlowsexcludetheeffectsofacquisitions,divestituresandexchangerateimpactsoncashandcash
equivalents,whicharepresentedseparatelyinthecashflows.Thus,theamountspresentedinthefollowingoperating,investingand
financingactivitiestablesreflectchangesinbalancesfromperiodtoperiodadjustedfortheseeffects.
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Cash Flows from Operating Activities:
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YearsEndedDecember31    
(Millions) 2015 2014 2013 
       
Netincomeincludingnoncontrollinginterest  $ 4,841  $ 4,998  $ 4,721 
Depreciationandamortization  1,435   1,408   1,371 
Companypensioncontributions   (264)  (210)  (476)
Companypostretirementcontributions   (3)  (5)  (6)
Companypensionexpense   442   310   446 
Companypostretirementexpense   114   81   107 
Stock-basedcompensationexpense   276   280   240 
Incometaxes(deferredandaccruedincometaxes)  (349)  60   39 
Excesstaxbenefitsfromstock-basedcompensation   (154)  (167)  (92)
Accountsreceivable   (58)  (268)  (337)
Inventories   3   (113)  (86)
Accountspayable   9   75   16 
Other—net   128   177   (126)
Netcashprovidedbyoperatingactivities  $ 6,420  $ 6,626  $ 5,817 
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Cashflowsfromoperatingactivitiescanfluctuatesignificantlyfromperiodtoperiod,aspensionfundingdecisions,taxtiming
differencesandotheritemscansignificantlyimpactcashflows.
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In2015,cashflowsprovidedbyoperatingactivitiesdecreased$206millioncomparedto2014.Operatingcashflowsdecreaseddue
to$363millioninhighercashincometaxeswhencomparing2015to2014,pluslowernetincome,whichwaspartiallyoffsetby
loweryear-on-yearworkingcapitalrequirements.Thecombinationofaccountsreceivable,inventoriesandaccountspayable
increasedworkingcapitalby$46millionin2015,comparedtoincreasesof$306millionin2014,withtheyear-on-year
improvementrelatedtolowerorganicvolumegrowth.Additionaldiscussiononworkingcapitalchangesisprovidedearlierinthe
“FinancialConditionandLiquidity”section.
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In2014,cashflowsprovidedbyoperatingactivitiesincreased$809millioncomparedto2013.Operatingcashflowsbenefitedyear-
on-yearfromincreasesinnetincomeincludingnoncontrollinginterest,lowerpensionandpostretirementplanscontributions,and
loweryear-on-yearworkingcapitalrequirements.Thecombinationofaccountsreceivable,inventoriesandaccountspayable
increasedworkingcapitalby$306millionin2014,comparedtoincreasesof$407millionin2013,withtheyear-on-year
improvementpartiallyduetohigherreceivableandinventoryturns.Additionaldiscussiononworkingcapitalchangesisprovided
earlierinthe“FinancialConditionandLiquidity”section.
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