3M Co. (MMM) | Analysis of Debt

Total Debt Disclosure

3M Co., Statement of Financial Position, Debt

USD $ in millions

	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
Short-term borrowings and current portion of long-term debt	1,269	613	1,552	901	2,506
Long-term debt	4,183	5,097	5,166	4,019	1,047
Capital lease obligations	94	107	58	69	65
Total debt	5,546	5,817	6,776	4,989	3,618

Item	Description	The company
Total debt	Sum of the carrying values as of the balance sheet date of all debt plus capital lease obligations.	3M Co.'s total debt declined from 2008 to 2009 and from 2009 to 2010.

3M Co.

USD $ in millions

12 months ended	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
Interest expense	201	219	215	210	122
Capitalized interest	17	27	28	25	16
Interest costs incurred	218	246	243	235	138

Source: Based on data from 3M Co., Annual Reports

Item	Description	The company
Interest expense	Represents the portion of interest incurred in the period on debt arrangements that was charged against earnings.	3M Co.'s interest expense increased from 2008 to 2009 but then declined significantly from 2009 to 2010.
Capitalized interest	The amount of interest that was capitalized during the period.	3M Co.'s capitalized interest declined from 2008 to 2009 and from 2009 to 2010.
Interest costs incurred	Total interest costs incurred during the period and either capitalized or charged against earnings.	3M Co.'s interest costs incurred increased from 2008 to 2009 but then declined significantly from 2009 to 2010.

	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
Selected Financial Data (USD $ in millions)
Net income attributable to 3M	4,085	3,193	3,460	4,096	3,851
Add: Net income attributable to noncontrolling interest	78	51	60	55	51
Add: Interest expense	201	219	215	210	122
Add: Income tax expense (benefit)	1,592	1,388	1,588	1,964	1,723
Earnings before interest and tax (EBIT)	5,956	4,851	5,323	6,325	5,747

Interest costs incurred	218	246	243	235	138
Ratio With and Without Capitalized Interest
Interest coverage ratio (excluding capitalized interest)¹	29.63	22.15	24.76	30.12	47.11
Adjusted interest coverage ratio (including capitalized interest)²	27.32	19.72	21.91	26.91	41.64

2010 Calculations

¹ Interest coverage ratio (excluding capitalized interest) = EBIT ÷ Interest expense
= 5,956 ÷ 201 = 29.63

² Adjusted interest coverage ratio (including capitalized interest) = EBIT ÷ Interest costs incurred
= 5,956 ÷ 218 = 27.32

Ratio	Description	The company
Adjusted interest coverage ratio	A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest).	3M Co.'s adjusted interest coverage ratio deteriorated from 2008 to 2009 but then improved from 2009 to 2010 exceeding 2008 level.