3M 2013 Annual Report Download - page 44

38
Cash Flows from Investing Activities:
Years ended
December 31
(Millions) 2013 2012 2011
Purchases of property, plant and equipment (PP&E)
$
(1,665)
$ (1,484) $
(1,379)
Proceeds from sale of PP&E and other assets
128
41 55
Acquisitions, net of cash acquired
―
(1,046)
(649)
Purchases and proceeds from maturities and sale of
marketable securities and investments, net
627
(211)
(745)
Proceeds from sale of businesses
8
― ―
Other investing activities
46
14 ―
Net cash used in investing activities
$
(856)
$ (2,686) $
(2,718)
Investments in property, plant and equipment enable growth across many diverse markets, helping to meet product
demand and increasing manufacturing efficiency. Capital spending was $1.665 billion in 2013, compared to $1.484 billion
in 2012 and $1.379 billion in 2011. The Company expects 2014 capital spending to be approximately $1.7 billion to $1.8
billion, as 3M continues to invest in its businesses. In 2013, 3M continued its expansion of manufacturing capacity in key
growth markets, including investments in the U.S., China, Germany, and Brazil. This included significant investments
across 3M’s many businesses, such as abrasives, industrial adhesives and tapes, advanced materials, electronics-
related, infection prevention, and other businesses. 3M continued its investments in IT systems and infrastructure,
including ongoing phased implementation of an ERP system on a worldwide basis over the next several years. In addition,
3M is sustaining existing facilities through general maintenance, cost reduction, and compliance efforts. In 2012, 3M
expanded manufacturing capacity in key growth markets, particularly with respect to international and emerging market
countries. This included investments in China, Turkey and Poland, in addition to investments in Singapore and the U.S.
3M also increased investments in IT systems and infrastructure and made strategic investments in research/development
infrastructure and manufacturing sites to lay the foundation for future growth. In 2011, a large portion of the capital
investment was used to address supply constraints in a number of businesses with significant growth potential, such as
renewable energy, traffic signage in developing economies, and optically clear adhesives and glass bubbles. In addition,
certain 2010 capital projects carried forward into 2011.
3M is striving to increase its manufacturing and sourcing capacity, particularly in developing economies, in order to more
closely align its production capability with its sales in major geographic regions. The initiative is expected to help improve
customer service, lower transportation costs, and reduce working capital requirements. 3M will continue to make
investments in critical emerging markets, such as China, Brazil, Poland and India, including plans to establish and begin
production in a new wholly-owned manufacturing entity in India to serve as a source of supply to 3M's business in India
and in other countries.
Proceeds from sale of PP&E and other assets totaled $128 million in 2013 compared to $41 million in 2012. Apart from
the normal periodic sales of PP&E, 2013 included proceeds of $79 million related to non-production equipment, which
resulted in a pre-tax loss of $7 million.
Refer to Note 2 for information on acquisitions and divestitures. 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 maturities and sale 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 8 for more details about 3M’s diversified marketable securities portfolio,
which totaled $2.209 billion as of December 31, 2013. Purchases of investments include additional survivor benefit
insurance, plus cost method and equity investments.