3M 2011 Annual Report Download - page 103

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97
There were no material long-lived asset impairments for 2011 and 2010. Long-lived asset impairments for 2009
included the portion of 2009 restructuring actions related to long-lived asset impairments as discussed in Note 4, with
the complete carrying amount of such assets written off and included in operating income results. In addition to the
restructuring activities, in June 2009 the Company recorded a $13 million impairment of certain long-lived assets
associated with the UK passport production activity of 3M’s Security Systems Division (within the Safety, Security
and Protection Services business segment). In June 2009, 3M was notified that the UK government decided to award
the production of its passports to a competitor upon the expiration of 3M’s existing UK passport contracts in
October 2010. Accordingly, 3M tested the long lived assets associated with the UK passport activity for recoverability
which indicated that the asset grouping’s carrying amount exceeded the remaining expected cash flows. As a result,
associated assets were written down to a fair value of $41 million in June 2009. 3M primarily uses a discounted cash
flow model that uses inputs such as interest rates and cost of capital, to determine the fair value of such assets. 3M
considers these level 3 inputs.
Fair Value Measurements Using
Quoted Prices in Significant
Y
ear ended December 31, 2009
(Millions)
Description Fair value
Active Markets
for Identical
Assets (Level 1)
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total Gains
(Losses)
Long-lived assets held and used $ 41 $ — $ — $ 41 $ (32 )
Fair Value of Financial Instruments:
The Company’s financial instruments include cash and cash equivalents, marketable securities, accounts receivable,
certain investments, accounts payable, borrowings, and derivative contracts. The fair values of cash and cash
equivalents, accounts receivable, accounts payable, and short-term borrowings and current portion of long-term debt
approximated carrying values because of the short-term nature of these instruments. Available-for-sale marketable
securities and investments, in addition to certain derivative instruments, are recorded at fair values as indicated in the
preceding disclosures. The Company utilized third-party quotes to estimate fair values for its long-term debt.
Information with respect to the carrying amounts and estimated fair values of these financial instruments follow:
December 31, 2011 December 31, 2010
(Millions)
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Long-term debt, excluding current portion ... $ 4,484 $ 5,002
$ 4,183 $ 4,466
The fair values reflected above consider the terms of the related debt absent the impacts of derivative/hedging
activity. The carrying amount of long-term debt referenced above is impacted by certain fixed-to-floating interest rate
swaps that are designated as fair value hedges and by the designation of fixed rate Eurobond securities issued by
the Company as hedging instruments of the Company’s net investment in its European subsidiaries. 3M’s fixed-rate
bonds were trading at a premium at December 31, 2011 and 2010 due to the low interest rates and tightening of
3M’s credit spreads.