3M 2015 Annual Report Download - page 37
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Please find page 37 of the 2015 3M annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.TableofContents
includesthePolyporeSeparationsMediaacquisition),AdvancedMaterials,CommunicationMarkets,DisplayMaterialsand
Systems,HealthInformationSystems,IndustrialAdhesivesandTapes,InfectionPrevention,OralCareSolutions,PersonalSafety
(whichincludestheCapitalSafetyacquisition),andTrafficSafetyandSecurity.Theestimatedfairvaluesforthesereportingunits
wereinexcessofcarryingvaluebyapproximately50percentormore,exceptforonereportingunitwithapproximately$300million
ofgoodwill,wherethefairvalueexceededthecarryingvaluebyapproximately30percent.3M’smarketvalueatbothSeptember30,
2015,andDecember31,2015,wassignificantlyinexcessofitsequityofapproximately$12billionatbothDecember31,2015and
September30,2015.
In2015,3Mprimarilyusedanindustryprice-earningsratioapproach,butalsousedadiscountedcashflowsapproachforcertain
reportingunits,todeterminefairvalues.Whereapplicable,3Musedaweighted-averagediscountedcashflowanalysisforcertain
divisions,usingprojectedcashflowsthatwereweightedbasedondifferentsalesgrowthandterminalvalueassumptions,among
otherfactors.Theweightingwasbasedonmanagement’sestimatesofthelikelihoodofeachscenariooccurring.
3Misanintegratedmaterialsenterprise,thusmanyof3M’sbusinessescouldnoteasilybesoldonastand-alonebasis.3M’sfocuson
researchanddevelopmenthasresultedinaportionof3M’svaluebeingcomprisedofinternallydevelopedbusinessesthathaveno
goodwillassociatedwiththem.Basedontheannualtestinthefourthquarterof2015,nogoodwillimpairmentwasindicatedforany
ofthereportingunits.
Factorswhichcouldresultinfutureimpairmentchargesinclude,amongothers,changesinworldwideeconomicconditions,changes
incompetitiveconditionsandcustomerpreferences,andfluctuationsinforeigncurrencyexchangerates.Theseriskfactorsare
discussedinItem1A,“RiskFactors,”ofthisdocument.Inaddition,changesintheweightedaveragecostofcapitalcouldalso
impactimpairmenttestingresults.Asindicatedabove,duringthethirdquarterof2015,theCompanycompleteditsassessmentof
anypotentialgoodwillimpairmentforreportingunitsimpactedbychangesbetweenreportingunitsanddeterminedthatno
impairmentexisted.Long-livedassetswithadefinitelifearereviewedforimpairmentwhenevereventsorchangesincircumstances
indicatethatthecarryingamountofanasset(assetgroup)maynotberecoverable.Iffuturenon-cashassetimpairmentchargesare
taken,3Mwouldexpectthatonlyaportionofthelong-livedassetsorgoodwillwouldbeimpaired.3Mwillcontinuetomonitorits
reportingunitsandassetgroupsin2016foranytriggeringeventsorotherindicatorsofimpairment.
Income Taxes:
Theextentof3M’soperationsinvolvesdealingwithuncertaintiesandjudgmentsintheapplicationofcomplextaxregulationsina
multitudeofjurisdictions.Thefinaltaxespaidaredependentuponmanyfactors,includingnegotiationswithtaxingauthoritiesin
variousjurisdictionsandresolutionofdisputesarisingfromfederal,state,andinternationaltaxaudits.TheCompanyrecognizes
potentialliabilitiesandrecordstaxliabilitiesforanticipatedtaxauditissuesintheUnitedStatesandothertaxjurisdictionsbasedon
itsestimateofwhether,andtheextenttowhich,additionaltaxeswillbedue.TheCompanyfollowsguidanceprovidedbyASC740,
IncomeTaxes,regardinguncertaintyinincometaxes,torecordtheseliabilities(refertoNote8foradditionalinformation).The
Companyadjuststhesereservesinlightofchangingfactsandcircumstances;however,duetothecomplexityofsomeofthese
uncertainties,theultimateresolutionmayresultinapaymentthatismateriallydifferentfromtheCompany’scurrentestimateofthe
taxliabilities.IftheCompany’sestimateoftaxliabilitiesprovestobelessthantheultimateassessment,anadditionalchargeto
expensewouldresult.Ifpaymentoftheseamountsultimatelyprovestobelessthantherecordedamounts,thereversalofthe
liabilitieswouldresultintaxbenefitsbeingrecognizedintheperiodwhentheCompanydeterminestheliabilitiesarenolonger
necessary.
NEWACCOUNTINGPRONOUNCEMENTS
InformationregardingnewaccountingpronouncementsisincludedinNote1totheConsolidatedFinancialStatements.
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