3M 2015 Annual Report Download - page 56

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TableofContents
December31,2015,theCompanyhadabalanceofnetmonetaryliabilitiesdenominatedinVEFoflessthan500millionVEFand
theCENCOEX,SICAD(formerlySICAD1),andSIMADIexchangerateswereapproximately6VEF,13VEF,and200VEFper
U.S.dollar,respectively.
AneedtodeconsolidatetheCompany’sVenezuelansubsidiary’soperationsmayresultfromalackofexchangeabilityofVEF-
denominatedcashcoupledwithanacutedegradationintheabilitytomakekeyoperationaldecisionsduetogovernmentregulations
inVenezuela.3Mmonitorsfactorssuchasitsabilitytoaccessvariousexchangemechanisms;theimpactofgovernmentregulations
ontheCompany’sabilitytomanageitsVenezuelansubsidiary’scapitalstructure,purchasing,productpricing,andlaborrelations;
andthecurrentpoliticalandeconomicsituationwithinVenezuela.BaseduponsuchfactorsasofDecember31,2015,theCompany
continuestoconsolidateitsVenezuelansubsidiary.AsofDecember31,2015,thebalanceofintercompanyreceivablesduefromthis
subsidiaryanditsequitybalancearenotsignificant.
Reclassifications:Certainamountsintheprioryears’consolidatedfinancialstatementshavebeenreclassifiedtoconformtothe
currentyearpresentation.
Useofestimates:ThepreparationoffinancialstatementsinconformitywithU.S.generallyacceptedaccountingprinciplesrequires
managementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesandthedisclosureof
contingentassetsandliabilitiesatthedateofthefinancialstatements,andthereportedamountsofrevenuesandexpensesduringthe
reportingperiod.Actualresultscoulddifferfromtheseestimates.
Cashandcashequivalents:Cashandcashequivalentsconsistofcashandtemporaryinvestmentswithmaturitiesofthreemonthsor
lesswhenacquired.
Marketablesecurities:EffectiveDecember31,2015,theCompanychangedthemethodofclassificationofcertainsecurities
previouslyclassifiedasnon-currenttocurrent.Thisnewmethodclassifiesthesesecuritiesascurrentornon-currentbasedonthe
natureofthesecuritiesandavailabilityforuseincurrentoperationswhilethepriorclassificationwasbasedonmanagement’s
intendedholdingperiod,thesecurity’smaturitydateandliquidityconsiderationsbasedonmarketconditions.TheCompanybelieves
thismethodispreferablebecauseitisconsistentwithhowtheCompanymanagesitscapitalstructureandliquidity.Thepriorperiod
balancehasbeenreclassifiedtoconformtothecurrentyearpresentation:
December31,2014
(Millions)  PreviouslyReported  Impact  AsAdjusted
Marketablesecurities-current $ 626  $ 813  $ 1,439 
Marketablesecurities-non-current 828  (813) 15 
Totalmarketablesecurities $ 1,454  $ —  $ 1,454 
3MreviewsimpairmentsassociatedwithitsmarketablesecuritiesinaccordancewiththemeasurementguidanceprovidedbyASC
320,Investments-DebtandEquitySecurities,whendeterminingtheclassificationoftheimpairmentas“temporary”or“other-than-
temporary”.Atemporaryimpairmentchargeresultsinanunrealizedlossbeingrecordedintheothercomprehensiveincome
componentofshareholders’equity.Suchanunrealizedlossdoesnotreducenetincomefortheapplicableaccountingperiodbecause
thelossisnotviewedasother-than-temporary.Thefactorsevaluatedtodifferentiatebetweentemporaryandother-than-temporary
includetheprojectedfuturecashflows,creditratingsactions,andassessmentofthecreditqualityoftheunderlyingcollateral,as
wellasotherfactors.
Investments:Investmentsprimarilyincludeequitymethod,costmethod,andavailable-for-saleequityinvestments.Available-for-sale
investmentsarerecordedatfairvalue.Unrealizedgainsandlossesrelatingtoinvestmentsclassifiedasavailable-for-saleare
recordedasacomponentofaccumulatedothercomprehensiveincome(loss)inshareholders’equity.
Otherassets:Otherassetsincludedeferredincometaxes,productandotherinsurancereceivables,thecashsurrendervalueoflife
insurancepolicies,andotherlong-termassets.Investmentsinlifeinsurancearereportedattheamountthatcouldberealizedunder
contractatthebalancesheetdate,withanychangesincashsurrendervalueorcontractvalueduringtheperiodaccountedforasan
adjustmentofpremiumspaid.Cashoutflowsandinflowsassociatedwithlife
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