3M 2015 Annual Report Download - page 20
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Please find page 20 of the 2015 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.TableofContents
Raw materials:
In2015,theCompanyexperienceddecliningcostsformostrawmaterialcategoriesandtransportationfuel,duelargelytothe
significantpricedecreasesincrudeoil.Thisinturndroveyear-on-yearcostdecreasesinmanyfeedstockcategories,including
petroleumbasedmaterials,minerals,metalsandwoodpulpbasedproducts.TodatetheCompanyisreceivingsufficientquantitiesof
allrawmaterialstomeetitsreasonablyforeseeableproductionrequirements.Itisimpossibletopredictfutureshortagesofraw
materialsortheimpactanysuchshortageswouldhave.3Mhasavoideddisruptiontoitsmanufacturingoperationsthroughcareful
managementofexistingrawmaterialinventoriesanddevelopmentandqualificationofadditionalsupplysources.3Mmanages
commoditypricerisksthroughnegotiatedsupplycontracts,priceprotectionagreementsandforwardcontracts.
Pension and postretirement defined benefit /contribution plans:
Onaworldwidebasis,3M’spensionandpostretirementplanswere86percentfundedatyear-end2015.TheprimaryU.S.qualified
pensionplan,whichisapproximately69percentoftheworldwidepensionobligation,was91percentfundedandtheinternational
pensionplanswere90percentfunded.TheU.S.non-qualifiedpensionplanisnotfundedduetotaxconsiderationsandotherfactors.
Assetreturnsin2015fortheprimaryU.S.qualifiedpensionplanwas0.7%,as3Mstrategicallyinvestsinbothgrowthassetsand
fixedincomematchingassetstomanageitsfundedstatus.FortheprimaryU.S.qualifiedpensionplan,theexpectedlong-termrateof
returnonanannualizedbasisfor2016is7.50%,down0.25%from2015.TheprimaryU.S.qualifiedpensionplanyear-end2015
discountratewas4.47%,up0.37percentagepointsfromtheyear-end2014discountrateof4.10%.TheincreaseinU.S.discount
ratesresultedinadecreasedvaluationoftheprojectedbenefitobligation(PBO),howevertheplan’sfundedstatusdecreasedslightly
in2015asthegrowthinthePBOincreasedatagreaterratethantheplanassetsreturnedin2015.Additionaldetailanddiscussionof
internationalplanassetreturnsanddiscountratesisprovidedinNote11(PensionandPostretirementBenefitPlans).
3Mexpectstocontributeapproximately$100millionto$200millionofcashtoitsglobaldefinedbenefitpensionandpostretirement
plansin2016.TheCompanydoesnothavearequiredminimumcashpensioncontributionobligationforitsU.S.plansin2016.3M
expectsglobaldefinedbenefitpensionandpostretirementexpensein2016(beforesettlements,curtailments,specialtermination
benefitsandother)todecreasebyapproximately$320millionpre-taxwhencomparedto2015.Referto“CriticalAccounting
Estimates”withinMD&AandNote11(PensionandPostretirementBenefitPlans)foradditionalinformationconcerning3M’s
pensionandpost-retirementplans.
BeginningonJanuary1,2016,withrespecttodefinedcontributionplans,theCompanyreduceditsmatchonemployee
401(k)contributionsforU.S.employees.Previously,basedonthedatetheemployeewashired,upto6%ofeligiblecompensation
wasmatchedincashatratesof60%,75%or100%.Beginningin2016,5%ofeligiblecompensationwillbematchedatratesof
45%,60%or100%,respectively.Thereductioninthecompany’smatchisanticipatedtoreduce2016definedcontributionpension
expensebyapproximately$35million.
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