3M 2009 Annual Report Download - page 83

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77
The Company has not provided deferred taxes on unremitted earnings attributable to international companies that
have been considered to be reinvested indefinitely. These earnings relate to ongoing operations and were
approximately $5.6 billion as of December 31, 2009. Because of the availability of U.S. foreign tax credits, it is not
practicable to determine the income tax liability that would be payable if such earnings were not indefinitely
reinvested.
NOTE 9. Marketable Securities
The Company invests in asset-backed securities, agency securities, corporate medium-term note securities and
other securities. The following is a summary of amounts recorded on the Consolidated Balance Sheet for marketable
securities (current and non-current).
(Millions) Dec. 31, 2009 Dec. 31, 2008
Agency securities ......................................................................................................
.
$ 326 $ 180
Corporate securities ..................................................................................................
.
154 145
Asset-backed securities:
Automobile loans related .......................................................................................
.
198 24
Credit cards related ...............................................................................................
.
9
—
Other......................................................................................................................
.
49 11
Asset-backed securities total ....................................................................................
.
256 35
Other securities .........................................................................................................
.
8
13
Current marketable securities ...............................................................................
.
$ 744 $ 373
Agency securities ......................................................................................................
.
$ 165 $ 200
Corporate securities ..................................................................................................
.
112 62
Treasury securities....................................................................................................
.
94 12
Asset-backed securities:
Automobile loans related .......................................................................................
.
317 25
Credit cards related ...............................................................................................
.
98 40
Other......................................................................................................................
.
34 11
Asset-backed securities total ....................................................................................
.
449 76
Auction rate and other securities...............................................................................
.
5
2
Non-current marketable securities........................................................................
.
$ 825 $ 352
Total marketable securities....................................................................................
.
$ 1,569 $ 725
Classification of marketable securities as current or non-current is dependent upon management’s intended holding
period, the security’s maturity date and liquidity considerations based on market conditions. If management intends
to hold the securities for longer than one year as of the balance sheet date, they are classified as non-current. At
December 31, 2009, gross unrealized losses totaled approximately $12 million (pre-tax), while gross unrealized gains
totaled approximately $3 million (pre-tax). At December 31, 2008, gross unrealized losses totaled approximately $30
million (pre-tax), while gross unrealized gains were not material. Gross realized gains on sales or maturities of
marketable securities were not material in 2009, $5 million in 2008 and $7 million in 2007. Gross realized losses on
sales or maturities of marketable securities were $3 million for 2009 and were not material for 2008 and 2007. Cost
of securities sold use the first in, first out (FIFO) method. Since these marketable securities are classified as
available-for-sale securities, changes in fair value will flow through other comprehensive income, with amounts
reclassified out of other comprehensive income into earnings upon sale or “other-than-temporary” impairment.
3M reviews impairments associated with the above 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”. In addition, as discussed in Note 1, beginning in April 2009, the Company considers the new
accounting standard with respect to the determination of “other-than-temporary” impairments associated with
investments in debt securities. 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 attributable to 3M 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