3M 2013 Annual Report Download - page 42

Download and view the complete annual report

Please find page 42 of the 2013 3M annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

36
In 2014, the Company plans to contribute an amount in the range of $100 million to $200 million of cash to its pension and
postretirement plans. The Company does not have a required minimum cash pension contribution obligation for its U.S.
plans in 2014. Therefore, the amount of the anticipated discretionary contribution could vary significantly depending on the
U.S. qualified plans’ funded status as of the 2014 measurement date and the anticipated tax deductibility of the
contribution. Future contributions will also depend on market conditions, interest rates and other factors. 3M believes its
strong cash flow and balance sheet will allow it to fund future pension needs without compromising growth opportunities.
3M’s strong balance sheet and liquidity provide the Company with significant flexibility to take advantage of numerous
opportunities going forward. The Company will continue to invest in its operations to drive growth, including continual
review of acquisition opportunities. 3M paid dividends of $1.730 billion in 2013, and has a long history of dividend
increases. In December 2013, 3M’s Board of Directors declared a dividend of 85.5 cents per share for the first-quarter of
2014, an increase of 34.6 percent. This is equivalent to an annual dividend of $3.42 per share and marked the 56th
consecutive year of dividend increases for 3M. In February 2014, 3M’s Board of Directors also authorized the repurchase
of up to $12 billion of 3M’s outstanding common stock, which replaced the Company’s February 2013 repurchase
program. This authorization has no pre-established end date. As of December 31, 2013, approximately $2.5 billion
remained available under the February 2013 repurchase authorization.
Various assets and liabilities, including cash and short-term debt, can fluctuate significantly from month to month
depending on short-term liquidity needs. Working capital (defined as current assets minus current liabilities) totaled
$5.235 billion at December 31, 2013, compared with $7.430 billion at December 31, 2012, a decrease of approximately
$2.2 billion. Factors which reduced working capital on a combined basis by $2.4 billion included decreases in cash, cash
equivalents, and current marketable securities, along with increases in the current portion of long term debt (which is a
component of short-term borrowings and current portion of long-term debt) and increases in other current liabilities, largely
related to the dividend declared in December 2013 that will not be paid until March 2014 (discussed in Note 5). This was
partially offset by increases in accounts receivable of approximately $0.2 billion.
The Company uses various working capital measures that place emphasis and focus on certain working capital assets
and liabilities. These measures are not defined under U.S. generally accepted accounting principles and may not be
computed the same as similarly titled measures used by other companies. One of the primary working capital measures
3M uses is a combined index, which includes accounts receivable, inventories and accounts payable. This combined
index (defined as quarterly net sales — fourth quarter at year-end — multiplied by four, divided by ending net accounts
receivable plus inventories less accounts payable) was 4.8 at both December 31, 2013 and December 31, 2012.
Receivables increased $192 million, or 4.7 percent, compared with December 31, 2012, driven by a year-on-year increase
in December sales, partially offset by currency translation, which decreased accounts receivable by $135 million.
Inventories increased $27 million, or 1 percent, compared with December 31, 2012, with the increases primarily
attributable to an increase in demand in the fourth-quarter of 2013, partially offset by currency translation, which
decreased inventories by $75 million. Accounts payable increased $37 million compared with December 31, 2012,
primarily related to changes in business activity, which were partially offset by a $29 million decrease due to currency
translation.
Cash flows from operating, investing and financing activities are provided in the tables that follow. Individual amounts in
the Consolidated Statement of Cash Flows exclude the effects of acquisitions, divestitures and exchange rate impacts on
cash and cash equivalents, which are presented separately in the cash flows. Thus, the amounts presented in the
following operating, investing and financing activities tables reflect changes in balances from period to period adjusted for
these effects.