3M 2012 Annual Report Download - page 80

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NOTE 8. Marketable Securities
The Company invests in agency securities, corporate securities, asset-backed securities, treasury securities and other
securities. The following is a summary of amounts recorded on the Consolidated Balance Sheet for marketable securities
(current and non-current).
December 31,
December 31,
(Millions)
2012
2011
U.S. government agency securities
$
162
$
119
Foreign government agency securities
16
8
Corporate debt securities
471
413
Commercial paper
116
30
Certificates of deposit/time deposits
41
49
U.S. treasury securities
54
―
U.S. municipal securities
13
9
Asset-backed securities:
Automobile loan related
567
530
Credit card related
123
244
Equipment lease related
54
54
Other
31
5
Asset-backed securities total
775
833
Current marketable securities
$
1,648
$
1,461
U.S. government agency securities
$
125
$
361
Foreign government agency securities
51
15
Corporate debt securities
494
255
U.S. treasury securities
18
34
U.S. municipal securities
14
5
Auction rate securities
7
4
Asset-backed securities:
Automobile loan related
375
188
Credit card related
34
24
Equipment lease related
36
10
Other
8
―
Asset-backed securities total
453
222
Non-current marketable securities
$
1,162
$
896
Total marketable securities
$
2,810
$
2,357
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, 2012, gross unrealized losses totaled approximately $6 million (pre-tax), while gross unrealized gains totaled
approximately $3 million (pre-tax). At December 31, 2011, gross unrealized losses totaled approximately $12 million (pre-
tax), while gross unrealized gains totaled approximately $3 million (pre-tax). Gross realized gains and losses on sales or
maturities of marketable securities were not material in 2012, 2011 and 2010. 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 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
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 other factors.