3M 2015 Annual Report Download - page 44

TableofContents
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AsummaryoftheCompany’ssignificantcontractualobligationsasofDecember31,2015,follows:
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ContractualObligations
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    Paymentsduebyyear 
       After 
(Millions) Total 2016 2017 2018 2019 2020 2020 
Long-termdebt,includingcurrentportion(Note
10)  $ 9,878  $ 1,125  $ 744  $ 993  $ 622  $ 1,203  $ 5,191 
Interestonlong-termdebt   2,244   174   157   153   149   146   1,465 
Operatingleases(Note14)   943   234   191   134   86   72   226 
Capitalleases(Note14)   59   11   6   4   3   3   32 
Unconditionalpurchaseobligationsandother   1,631   1,228   160   102   54   56   31 
Totalcontractualcashobligations  $ 14,755  $ 2,772  $ 1,258  $ 1,386  $ 914  $ 1,480  $ 6,945 
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Long-termdebtpaymentsduein2016and2017includefloatingratenotestotaling$126million(classifiedascurrentportionof
long-termdebt),and$96million(includedasaseparatefloatingratenote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,2015.
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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2016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.
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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$208millionisexcludedfromthe
precedingtable.RefertoNote8forfurtherdetails.
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AsdiscussedinNote11,theCompanydoesnothavearequiredminimumcashpensioncontributionobligationforitsU.S.plansin
2016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.
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FINANCIALINSTRUMENTS
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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forwardcontracts.
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