3M Co. (MMM) | Analysis of Investments

Investment Accounting Policy

Marketable securities

Classification of marketable securities as current or non-current is dependent upon management’s intended holding period, the security’s maturity date and liquidity considerations based on market conditions. If management intends to hold the securities for longer than one year as of the balance sheet date, they are classified as non-current. 3M reviews impairments associated with its marketable securities in accordance with the measurement guidance provided by ASC 320, Investments-Debt and Equity Securities, when determining the classification of the impairment as “temporary” or “other-than-temporary”. A temporary impairment charge results in an unrealized loss being recorded in the other comprehensive income component of shareholders’ equity. Such an unrealized loss does not reduce net income for the applicable accounting period because the loss is not viewed as other-than-temporary. The factors evaluated to differentiate between temporary and other-than-temporary include the projected future cash flows, credit ratings actions, and assessment of the credit quality of the underlying collateral, as well as other factors.

Investments

Investments primarily include equity and cost method investments, available-for-sale equity investments and real estate not used in the business. Available-for-sale investments are recorded at fair value. Unrealized gains and losses relating to investments classified as available-for-sale are recorded as a component of accumulated other comprehensive income (loss) in shareholders’ equity.

Source: 3M Co., Annual Report

Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

3M Co., adjustment to Net Income Attributable To 3M

	12 months ended	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
	Net income attributable to 3M (as reported)
	Add: Debt and equity securities, unrealized gain (loss)
	Net income attributable to 3M (adjusted)

Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)

3M Co., adjusted ratios

		Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
	Net Profit Margin
	Reported net profit margin	%	%	%	%	%
	Adjusted net profit margin	%	%	%	%	%
	Return on Equity (ROE)
	Reported ROE	%	%	%	%	%
	Adjusted ROE	%	%	%	%	%
	Return on Assets (ROA)
	Reported ROA	%	%	%	%	%
	Adjusted ROA	%	%	%	%	%

Adjusted Net Profit Margin

		Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
	As Reported
	Net income attributable to 3M (USD $ in millions)
	Net sales (USD $ in millions)
	Net profit margin1	%	%	%	%	%
	Adjusted: Mark to Market Available-for-sale Securities
	Adjusted net income attributable to 3M (USD $ in millions)
	Net sales (USD $ in millions)
	Adjusted net profit margin2	%	%	%	%	%

2010 Calculations

Adjusted Return On Equity (ROE)

		Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
	As Reported
	Net income attributable to 3M (USD $ in millions)
	3M Company shareholders’ equity (USD $ in millions)
	ROE1	%	%	%	%	%
	Adjusted: Mark to Market Available-for-sale Securities
	Adjusted net income attributable to 3M (USD $ in millions)
	3M Company shareholders’ equity (USD $ in millions)
	Adjusted ROE2	%	%	%	%	%

2010 Calculations

Adjusted Return On Assets (ROA)

		Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
	As Reported
	Net income attributable to 3M (USD $ in millions)
	Total assets (USD $ in millions)
	ROA1	%	%	%	%	%
	Adjusted: Mark to Market Available-for-sale Securities
	Adjusted net income attributable to 3M (USD $ in millions)
	Total assets (USD $ in millions)
	Adjusted ROA2	%	%	%	%	%

2010 Calculations