3M 2009 Annual Report Download - page 47

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41
Off-Balance Sheet Arrangements and Contractual Obligations:
As of December 31, 2009, 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, 2009, follows:
Contractual Obligations
Payments due by year
After
(Millions) Total 2010 2011 2012 2013 2014 2014
Long-term debt, including current
portion (Note 10)...................... $ 5,619 $ 522 $ 923 $ 724 $ 849 $ 1,521 $ 1,080
Interest on long-term debt ........... 2,071 202 199 176 150 114 1,230
Operating leases (Note 14) ......... 448 125 95 76 38 23 91
Capital leases (Note 14).............. 128 16 18 18 18 18 40
Unconditional purchase
obligations and other ............... 913 596 150 68 49 40 10
Total contractual cash obligations $ 9,179 $ 1,461 $ 1,385 $ 1,062 $ 1,104 $ 1,716 $ 2,451
The Company’s $350 million of Dealer Remarketable Securities (classified as current portion of long-term debt) were
remarketed for one year in December 2009. Long-term debt payments due in 2010 include these $350 million of
Dealer Remarketable Securities, which mature in December 2010, and $146 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. Long-term debt payments due in 2011 include floating rate notes totaling $100 million as a
result of put provisions. Additionally, payments due in 2012 include the $225 million carrying amount of Convertible
Notes, as a result of put provisions that may or may not be exercised by note holders.
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 2010 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. 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 $330 million is excluded from the
preceding table. Refer to Note 8 for further details.
As discussed in Note 11, the Company does not have a required minimum pension contribution obligation for its U.S.
plans in 2010 and Company contributions to its U.S. and international pension plans are expected to be largely
discretionary in 2010 and future years; therefore, amounts related to these plans are not included in the preceding
table.