3M 2014 Annual Report Download - page 30

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24
result of changes to the geographic mix of income before taxes, the reinstatement of the U.S. research and development
credit in 2013, an increase in the domestic manufacturer’s deduction benefit, the restoration of tax basis on certain assets
for which depreciation deductions were previously limited, and other items. Combined, these factors decreased the
Company’s effective tax rate by 4.0 percentage points. This benefit was partially offset by factors that increased the
effective tax rate by 3.1 percentage points, which largely related to increases in 3M’s income tax reserves for 2013 when
compared to 2012.
The Company currently expects that its effective tax rate for 2015 will be approximately 28.0 to 29.0 percent, which
assumes that the U.S. research and development credit will be reinstated for 2015. The rate can vary from quarter to
quarter due to discrete items, such as the settlement of income tax audits and changes in tax laws, as well as recurring
factors, such as the geographic mix of income before taxes.
Refer to Note 7 for further discussion of income taxes.
Net Income Attributable to Noncontrolling Interest:
(Millions)
2014
2013
2012
Net income attributable to noncontrolling interest
$
42
$
62
$
67
Net income attributable to noncontrolling interest represents the elimination of the income or loss attributable to non-3M
ownership interests in 3M consolidated entities. The changes in noncontrolling interest amounts have largely related to
Sumitomo 3M Limited (Japan), which was 3M’s most significant consolidated entity with non-3M ownership interests. As
discussed in Note 5, on September 1, 2014, 3M purchased the remaining 25 percent ownership in Sumitomo 3M Limited,
bringing 3M’s ownership to 100 percent. Thus, effective September 1, 2014, net income attributable to noncontrolling
interest was significantly reduced. The primary remaining noncontrolling interest relates to 3M India Limited, of which 3M’s
effective ownership is 75 percent.
Currency Effects:
3M estimates that year-on-year currency effects, including hedging impacts, decreased net income attributable to 3M by
approximately $97 million and $74 million in 2014 and 2013, respectively. These estimates include the effect of translating
profits from local currencies into U.S. dollars; the impact of currency fluctuations on the transfer of goods between 3M
operations in the United States and abroad; and transaction gains and losses, including derivative instruments designed
to reduce foreign currency exchange rate risks and the negative impact of swapping Venezuelan bolivars into U.S. dollars.
3M estimates that year-on-year derivative and other transaction gains and losses increased net income attributable to 3M
by approximately $8 million in 2014 and decreased net income attributable to 3M by approximately $12 million in 2013.
Refer to Note 11 in the Consolidated Financial Statements for additional information concerning 3M’s hedging activities.