3M 2010 Annual Report Download - page 41

Download and view the complete annual report

Please find page 41 of the 2010 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

35
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.
Cash Flows from Operating Activities:
Years ended December 31
(Millions)
2010
2009
2008
Net income including noncontrolling interest ................................
$
4,163
$
3,244
$
3,520
Depreciation and amortization ......................................................
1,120
1,157
1,153
Company pension contributions ....................................................
(556
)
(659
)
(421
)
Company postretirement contributions .........................................
(62
)
(133
)
(53
)
Company pension expense ...........................................................
271
176
89
Company postretirement expense ................................................
51
47
16
Stock-based compensation expense ............................................
274
217
202
Loss/(gain) from sale of businesses ..............................................
—
—
23
Income taxes (deferred and accrued income taxes) .....................
85
554
(44
)
Excess tax benefits from stock-based compensation ...................
(53
)
(14
)
(21
)
Accounts receivable ......................................................................
(189
)
55
197
Inventories .....................................................................................
(404
)
453
(127
)
Accounts payable ..........................................................................
146
109
(224
)
Product and other insurance receivables and claims ...................
49
64
153
Other — net ...................................................................................
279
(329
)
70
Net cash provided by operating activities ......................................
$
5,174
$
4,941
$
4,533
Cash flows from operating activities can fluctuate significantly from period to period, as pension funding decisions,
tax timing differences and other items can significantly impact cash flows. In the third quarter of 2009, the Company
contributed $600 million to its U.S. defined benefit pension plan in shares of the Company’s common stock, which is
considered a non-cash financing activity. This non-cash activity is not reflected in the operating or financing section
of the cash flows.
In 2010, cash flows provided by operating activities increased $233 million compared to 2009. The main positive
contribution to operating cash flows related to year-on-year increases in net income including noncontrolling interest.
Operating cash flows were penalized by working capital increases of $447 million in 2010, compared to working
capital decreases of $617 million in 2009. 3M defines working capital as accounts receivable, inventories and
accounts payable. These working capital increases were partially attributable to the rapid increase in demand in
2010. In addition, operating cash flows in 2009 benefited from changes in deferred and accrued income taxes.
In 2009, cash flows provided by operating activities increased $408 million compared to 2008. The main positive
contribution to operating cash flows related to working capital decreases of $617 million in 2009, compared to
working capital increases of $154 million in 2008. 3M defines working capital as accounts receivable, inventories and
accounts payable. In addition, 3M’s deferred and accrued income tax positions benefited 2009 cash flows. These
positive contributions were partially offset by a decrease of $276 million in net income including noncontrolling
interest. The category, “Other-net,” in the preceding table reflects changes in other asset and liability accounts. This
includes the impact of cash outlays for restructuring payments, net of restructuring expenses, which on a combined
basis reduced liabilities (Note 4). In addition, decreases in banked vacation accruals reduced liabilities.