3M 2010 Annual Report Download - page 44

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38
an annual dividend of $2.20 per share. This marked the 53rd consecutive year of dividend increases. Other cash
flows from financing activities primarily include distributions to noncontrolling interests, excess tax benefits from
stock-based compensation, changes in cash overdraft balances, and principal payments for capital leases.
Off-Balance Sheet Arrangements and Contractual Obligations:
As of December 31, 2010, the Company has not utilized special purpose entities to facilitate off-balance sheet
financing arrangements. Refer to the section entitled “Warranties/Guarantees” in Note 14 for discussion of accrued
product warranty liabilities and guarantees.
In addition to guarantees, 3M, in the normal course of business, periodically enters into agreements that require the
Company to indemnify either major customers or suppliers for specific risks, such as claims for injury or property
damage arising out of the use of 3M products or the negligence of 3M personnel, or claims alleging that 3M products
infringe third-party patents or other intellectual property. While 3M’s maximum exposure under these indemnification
provisions cannot be estimated, these indemnifications are not expected to have a material impact on the Company’s
consolidated results of operations or financial condition.
A summary of the Company’s significant contractual obligations as of December 31, 2010, follows:
Contractual Obligations
Payments due by year
After
(Millions)
Total
2011
2012
2013
2014
2015
2015
Long-term debt, including current
portion (Note 10) ............................
$
5,368
$
1,185
$
752
$
922
$
1,413
$
—
$
1,096
Interest on long-term debt .................
1,909
207
181
156
119
64
1,182
Operating leases (Note 14) ...............
442
139
104
69
41
25
64
Capital leases (Note 14) ....................
111
17
18
18
17
4
37
Unconditional purchase
obligations and other .....................
1,238
890
152
89
44
22
41
Total contractual cash obligations ......
$
9,068
$
2,438
$
1,207
$
1,254
$
1,634
$
115
$
2,420
Long-term debt payments due in 2011 include $160 million of floating rate notes. The floating rate notes are
classified as current portion of long-term debt as the result of put provisions associated with these debt instruments.
Additionally, payments due in 2012 include the $226 million carrying amount of Convertible Notes, and payments due
in 2013 include $73 million of floating rate notes, as a result of put provisions.
Unconditional purchase obligations are defined as an agreement to purchase goods or services that is enforceable
and legally binding on the Company. Included in the unconditional purchase obligations category above are certain
obligations related to take or pay contracts, capital commitments, service agreements and utilities. These estimates
include both unconditional purchase obligations with terms in excess of one year and normal ongoing purchase
obligations with terms of less than one year. Many of these commitments relate to take or pay contracts, in which 3M
guarantees payment to ensure availability of products or services that are sold to customers. The Company expects
to receive consideration (products or services) for these unconditional purchase obligations. Contractual capital
commitments are included in the preceding table, but these commitments represent a small part of the Company’s
expected capital spending in 2011 and beyond. The purchase obligation amounts do not represent the entire
anticipated purchases in the future, but represent only those items for which the Company is contractually obligated.
The majority of 3M’s products and services are purchased as needed, with no unconditional commitment. For this
reason, these amounts will not provide a reliable indicator of the Company’s expected future cash outflows on a
stand-alone basis.
Other obligations, included in the preceding table within the caption entitled “Unconditional purchase obligations and
other,” include the current portion of the liability for uncertain tax positions under ASC 740. The Company is not able
to reasonably estimate the timing of the long-term payments or the amount by which the liability will increase or
decrease over time; therefore, the long-term portion of the net tax liability of $352 million is excluded from the
preceding table. Refer to Note 8 for further details.
As discussed in Note 11, the Company does not have a required minimum pension contribution obligation for its U.S.
plans in 2011 and Company contributions to its U.S. and international pension plans are expected to be largely
discretionary in 2011 and future years; therefore, amounts related to these plans are not included in the preceding
table.