3M 2015 Annual Report Download - page 41

TableofContents
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Free Cash Flow (non-GAAP measure):
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Inaddition,tonetcashprovidedbyoperatingactivities,3Mbelievesfreecashflowandfreecashflowconversionareuseful
measuresofperformanceandusesthesemeasuresasanindicationofthestrengthoftheCompanyanditsabilitytogeneratecash.
FreecashflowandfreecashflowconversionarenotdefinedunderU.S.generallyacceptedaccountingprinciples(GAAP).
Therefore,theyshouldnotbeconsideredasubstituteforincomeorcashflowdatapreparedinaccordancewithU.S.GAAPandmay
notbecomparabletosimilarlytitledmeasuresusedbyothercompanies.3Mdefinesfreecashflowasnetcashprovidedbyoperating
activitieslesspurchasesofproperty,plantandequipment(whichisclassifiedasaninvestingactivity).Itshouldnotbeinferredthat
theentirefreecashflowamountisavailablefordiscretionaryexpenditures.3Mdefinesfreecashflowconversionasfreecashflow
dividedbynetincomeattributableto3M.Belowfindarecapoffreecashflowandfreecashflowconversionfor2015,2014and
2013.
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YearsendedDecember31      
(Millions) 2015 2014 2013 
       
Netcashprovidedbyoperatingactivities  $ 6,420  $ 6,626  $ 5,817 
Purchasesofproperty,plantandequipment(PP&E)   (1,461)  (1,493)  (1,665)
FreeCashFlow  $ 4,959  $ 5,133  $ 4,152 
FreeCashFlowConversion   103 %  104 %  89 %
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Cash Flows from Investing Activities:
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YearsendedDecember31    
(Millions) 2015 2014 2013 
       
Purchasesofproperty,plantandequipment(PP&E)  $ (1,461) $ (1,493) $ (1,665)
ProceedsfromsaleofPP&Eandotherassets   33   135   128 
Acquisitions,netofcashacquired   (2,914)  (94)  — 
Purchasesandproceedsfrommaturitiesandsaleofmarketable
securitiesandinvestments,net   1,300   754   627 
Proceedsfromsaleofbusinesses   123   —   8 
Otherinvestingactivities  102   102   46 
Netcashusedininvestingactivities  $ (2,817) $ (596) $ (856)
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Investmentsinproperty,plantandequipmentenablegrowthacrossmanydiversemarkets,helpingtomeetproductdemandand
increasingmanufacturingefficiency.Capitalspendingwas$1.461billionin2015,comparedto$1.493billionin2014and$1.665
billionin2013.TheCompanyexpects2016capitalspendingtobeapproximately$1.3billionto$1.5billionas3Mcontinuesto
investinitsbusinesses.
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3Minvestsinrenewableandmaintenanceprograms,whichpertainstocostreduction,cycletime,maintainingandrenewingcurrent
capacity,eliminatingpollution,andcompliance.Costsrelatedtomaintenance,ordinaryrepairs,andcertainotheritemsareexpensed.
3Malsoinvestsingrowth,whichaddstocapacity,drivenbynewproducts,boththroughexpansionofcurrentfacilitiesandnew
facilities,plusresearchfacilities.Finally,3Malsoinvestsinotherinitiatives,suchasinformationtechnology(IT)andcorporate
laboratoryfacilities.
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In2015,investmentsincludednewsitesandbuildings,investmentsinIT,continuedexpansionofcurrentfacilitiesandnewfacilities,
plusthesustainmentofexistingfacilities,inadditiontootherinitiatives.Specificinvestmentsin2015includedanewstate-of-the-
art,fourstory,400,000squarefootresearchfacilityat3MCenterinSt.Paul,Minnesota.Inaddition,3Mcontinueditsinvestmentsit
ITsystemsandinfrastructure,particularlytheongoingmulti-yearphasedimplementationofanERPsystem.
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In2014,investmentsingrowthacrossgeographiesincludedproductionequipment,newsitesandbuildings,capacityinvestments,
converting,anddistribution,andothergrowthinitiatives.OtherinvestmentsincludeITsystemsandinfrastructure,includingan
ongoingmulti-yearphasedimplementationofanERPsystemonaworldwidebasis.In
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