3M 2009 Annual Report Download - page 45

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Cash Flows from Investing Activities:
Years ended December 31
(Millions) 2009 2008 2007
Purchases of property, plant and equipment (PP&E) .................... $ (903) $ (1,471) $ (1,422)
Proceeds from sale of PP&E and other assets.............................. 74 87 103
Acquisitions, net of cash acquired.................................................. (69) (1,394) (539)
Proceeds from sale of businesses ................................................. 5 88 897
Purchases and proceeds from sale or maturities of marketable
securities and investments — net............................................... (839) 291 (406)
Net cash used in investing activities .............................................. $ (1,732) $ (2,399) $ (1,367)
Investments in property, plant and equipment enable growth in diverse markets, helping to meet product demand and
increasing manufacturing efficiency. In response to global economic conditions, the Company reduced its capital
spending significantly in 2009. A substantial amount of the 2009 spending was carryover from 2008 or for tooling
needed for new products and continued operations. The Company expects 2010 capital spending to be
approximately $1 billion as 3M continues to fund growth opportunities around the world.
In 2008, major facility efforts included completion of production lines in the United States for both Consumer and
Office and Health Care, an R&D laboratory in Korea, a tape building in Poland, and numerous tape lines and building
expansions in China. In 2008, 3M also made progress towards completion of investments in a Singapore multi-
purpose manufacturing facility and film production facilities and made progress towards completion of manufacturing
cost reduction investments in two of its U.S. film manufacturing plants.
In 2007, numerous plants were opened or expanded internationally. This included two facilities in Korea (respirator
manufacturing facility and optical plant), industrial adhesives/tapes facilities in both Brazil and the Philippines, a plant
in Russia (corrosion protection, industrial adhesive and tapes, and respirators), a plant in China (optical systems,
industrial adhesives and tapes, and personal care), an expansion in Canada (construction and home improvement
business), in addition to investments in India, Mexico and other countries. In addition, 3M expanded manufacturing
capabilities in the U.S., including investments in industrial adhesives/tapes and optical.
Refer to Note 2 for information on acquisitions. Note 2 also provides information on the proceeds from the sale of
businesses. The Company is actively considering additional acquisitions, investments and strategic alliances, and
from time to time may also divest certain businesses.
Purchases of marketable securities and investments and proceeds from sale (or maturities) of marketable securities
and investments are primarily attributable to asset-backed securities, agency securities, corporate medium-term note
securities and other securities, which are classified as available-for-sale. Interest rate risk and credit risk related to
the underlying collateral may impact the value of investments in asset-backed securities, while factors such as
general conditions in the overall credit market and the nature of the underlying collateral may affect the liquidity of
investments in asset-backed securities. The coupon interest rates for asset-backed securities are either fixed rate or
floating. Floating rate coupons reset monthly or quarterly based upon the corresponding monthly or quarterly LIBOR
rate. Each individual floating rate security has a coupon based upon the respective LIBOR rate +/- an amount
reflective of the credit risk of the issuer and the underlying collateral on the original issue date. Terms of the reset are
unique to individual securities. Fixed rate coupons are established at the time the security is issued and are based
upon a spread to a related maturity treasury bond. The spread against the treasury bond is reflective of the credit risk
of the issuer and the underlying collateral on the original issue date. 3M does not currently expect risk related to its
holdings in asset-backed securities to materially impact its financial condition or liquidity. Refer to Note 9 for more
details about 3M’s diversified marketable securities portfolio, which totaled $1.569 billion as of December 31, 2009.
In 2005, 3M purchased 19 percent of TI&M Beteiligungsgesellschaft mbH for approximately $55 million. In 2008 and
2007, the recovery of approximately $6 million and $25 million, respectively, reduced “Investments” and is shown in
cash flows within “Proceeds from sale of marketable securities and investments.” This investment is discussed in
more detail under the preceding section entitled Industrial and Transportation Business. Additional purchases of
investments include additional survivor benefit insurance and equity investments.