REG - 3M Company - Annual Financial Report <Origin Href="QuoteRef">MMM.N</Origin> - Part 7
10/02/2017 17:45
- Part 7: For the preceding part double click ID:nRSJ6609Wf
2015 2015 Dec. 31, 2016 2016 Dec. 31,
2014 acquisition translation 2015 acquisition translation 2016
(Millions) Balance activity and other Balance activity and other Balance
Industrial $ 2,042 $ 637 $ (106) $ 2,573 $ - $ (37) $ 2,536
Safety and Graphics 1,650 1,764 (72) 3,342 41 (59) 3,324
Health Care 1,589 94 (59) 1,624 12 (27) 1,609
Electronics and Energy 1,554 - (44) 1,510 - (21) 1,489
Consumer 215 - (15) 200 - 8 208
Total Company $ 7,050 $ 2,495 $ (296) $ 9,249 $ 53 $ (136) $ 9,166
Accounting standards require that goodwill be tested for impairment annually and between annual tests in certain
circumstances such as a change in reporting units or the testing of recoverability of a significant asset group within a
reporting unit. At 3M, reporting units correspond to a division.
As described in Note 16, effective in the first quarter of 2016, the Company changed its business segment reporting in its
continuing effort to improve the alignment of its businesses around markets and customers. For any product changes that
resulted in reporting unit changes, the Company applied the relative fair value method to determine the impact on goodwill
of the associated reporting units. During the first quarter of 2016, the Company completed its assessment of any potential
goodwill impairment for reporting units impacted by this new structure and determined that no impairment existed. The
Company also completed its annual goodwill impairment test in the fourth quarter of 2016 for all reporting units and
determined that no impairment existed. In addition, the Company had no impairments of goodwill in prior years.
Acquired Intangible Assets
The carrying amount and accumulated amortization of acquired finite-lived intangible assets, in addition to the balance of
non-amortizable intangible assets, as of December 31, follow:
(Millions) 2016 2015
Customer related intangible assets $ 1,939 $ 1,973
Patents 602 616
Other technology-based intangible assets 524 525
Definite-lived tradenames 420 421
Other amortizable intangible assets 211 216
Total gross carrying amount $ 3,696 $ 3,751
Accumulated amortization - customer related (797) (668)
Accumulated amortization - patents (497) (481)
Accumulated amortization - other technology based (302) (252)
Accumulated amortization - definite-lived tradenames (236) (215)
Accumulated amortization - other (173) (169)
Total accumulated amortization $ (2,005) $ (1,785)
Total finite-lived intangible assets - net $ 1,691 $ 1,966
Non-amortizable intangible assets (primarily tradenames) 629 635
Total intangible assets - net $ 2,320 $ 2,601
Certain tradenames acquired by 3M are not amortized because they have been in existence for over 55 years, have a history
of leading-market share positions, have been and are intended to be continuously renewed, and the associated products of
which are expected to generate cash flows for 3M for an indefinite period of time.
Amortization expense for the years ended December 31 follows:
(Millions) 2016 2015 2014
Amortization expense $ 262 $ 229 $ 228
Expected amortization expense for acquired amortizable intangible assets recorded as of December 31, 2016 follows:
After
(Millions) 2017 2018 2019 2020 2021 2021
Amortization expense $ 223 $ 202 $ 190 $ 180 $ 164 $ 732
The preceding expected amortization expense is an estimate. Actual amounts of amortization expense may differ from
estimated amounts due to additional intangible asset acquisitions, changes in foreign currency exchange rates, impairment
of intangible assets, accelerated amortization of intangible assets and other events. 3M expenses the costs incurred to
renew or extend the term of intangible assets.
NOTE 4. Restructuring Actions
2015 Restructuring Actions:
During the fourth quarter of 2015, management approved and committed to undertake certain restructuring actions primarily
focused on structural overhead, largely in the U.S. and slower-growing markets, with particular emphasis on Europe, Middle
East, and Africa (EMEA) and Latin America. This impacted approximately 1,700 positions worldwide and resulted in a
fourth-quarter 2015 pre-tax charge of $114 million.
Components of these restructuring charges are summarized by business segment as follows:
Year ended December 31, 2015
(Millions) Employee-Related Asset-Related Total
Industrial $ 30 $ 12 $ 42
Safety and Graphics 11 - 11
Health Care 9 - 9
Electronics and Energy 8 4 12
Consumer 3 - 3
Corporate and Unallocated 37 - 37
Total Expense $ 98 $ 16 $ 114
The preceding restructuring charges were recorded in the income statement as follows:
(Millions) 2015
Cost of sales 40
Selling, general and administrative expenses 62
Research, development and related expenses 12
Total $ 114
Components of these restructuring actions, including cash and non-cash impacts, follow:
(Millions) Employee-Related Asset-Related Total
Expense incurred $ 98 $ 16 $ 114
Non-cash changes (8) (16) (24)
Cash payments (27) - (27)
Accrued restructuring action balances as of December 31, 2015 $ 63 $ - $ 63
Cash payments (57) - (57)
Accrued restructuring action balances as of December 31, 2016 $ 6 $ - $ 6
Non-cash changes include certain pension settlements and special termination benefits recorded in accrued defined benefit
pension and postretirement benefits and accelerated deprecation resulting from the cessation of use of certain long-lived
assets.
NOTE 5. Supplemental Balance Sheet Information
Accounts payable (included as a separate line item in the Consolidated Balance Sheet) includes drafts payable on demand of
$88 million at December 31, 2016, and $79 million at December 31, 2015. Accumulated depreciation for capital leases totaled
$89 million and $98 million as of December 31, 2016, and 2015, respectively. Additional supplemental balance sheet
information is provided in the table that follows.
(Millions) 2016 2015
Other current assets
Prepaid expenses and other $ 1,014 $ 1,081
Derivative assets-current 148 211
Insurance related (receivables, prepaid expenses and other) 109 106
Total other current assets $ 1,271 $ 1,398
Investments
Equity method $ 60 $ 56
Cost method 67 59
Other investments 1 2
Total investments $ 128 $ 117
Property, plant and equipment - at cost
Land $ 341 $ 354
Buildings and leasehold improvements 7,252 7,120
Machinery and equipment 14,935 14,743
Construction in progress 809 723
Capital leases 162 158
Gross property, plant and equipment 23,499 23,098
Accumulated depreciation (14,983) (14,583)
Property, plant and equipment - net $ 8,516 $ 8,515
Other assets
Deferred income taxes $ 422 $ 675
Insurance related receivables and other 68 49
Cash surrender value of life insurance policies 236 241
Other 255 253
Total other assets $ 981 $ 1,218
Other current liabilities
Accrued trade payables $ 578 $ 566
Deferred income 551 518
Derivative liabilities 92 65
Employee benefits and withholdings 155 148
Contingent liability claims and other 201 147
Property and other taxes 90 89
Pension and postretirement benefits 66 60
Other 739 811
Total other current liabilities $ 2,472 $ 2,404
Other liabilities
Long term income taxes payable $ 244 $ 154
Employee benefits 256 254
Contingent liability claims and other 719 739
Capital lease obligations 45 46
Deferred income 15 19
Deferred income taxes 145 551
Other 224 261
Total other liabilities $ 1,648 $ 2,024
NOTE 6. Supplemental Equity and Comprehensive Income Information
Common stock ($.01 par value per share) of 3.0 billion shares is authorized, with 944,033,056 shares issued. Treasury stock
is reported at cost, with 347,306,778 shares at December 31, 2016, 334,702,932 shares at December 31, 2015, and 308,898,462
shares at December 31, 2014. Preferred stock, without par value, of 10 million shares is authorized but unissued.
Cash dividends declared and paid totaled $1.11 per share for each quarter in 2016, which resulted in total year declared
dividends of $4.44 per share. In 2015, 3M's Board of Directors declared a second, third, and fourth quarter dividend of
$1.025 per share, which resulted in total year 2015 declared dividends of $3.075 per share. In December 2014, 3M's Board of
Directors declared a first quarter 2015 dividend of $1.025 per share (paid in March 2015), which when added to second,
third and fourth quarter 2014 declared dividends of $0.855 per share, resulted in total year 2014 declared dividends of
$3.59 per share. In December 2013, 3M's Board of Directors declared a first quarter 2014 dividend of $0.855 per share (paid
in March 2014).
Changes in Accumulated Other Comprehensive Income (Loss) Attributable to 3M by Component
Defined Benefit Debt and Cash Flow Accumulated
Pension and Equity Hedging Other
Cumulative Postretirement Securities, Instruments, Comprehensive
Translation Plans Unrealized Unrealized Income
(Millions) Adjustment Adjustment Gain (Loss) Gain (Loss) (Loss)
Balance at December 31, 2013, net of tax: $ (188) $ (3,715) $ (2) $ (8) $ (3,913)
Other comprehensive income (loss), before tax:
Amounts before reclassifications (856) (2,638) 2 171 (3,321)
Amounts reclassified out - 360 1 (4) 357
Total other comprehensive income (loss), before tax (856) (2,278) 3 167 (2,964)
Tax effect (92) 716 (1) (60) 563
Total other comprehensive income (loss), net of tax (948) (1,562) 2 107 (2,401)
Impact from purchase of subsidiary shares 41 (16) - - 25
Balance at December 31, 2014, net of tax: $ (1,095) $ (5,293) $ - $ 99 $ (6,289)
Other comprehensive income (loss), before tax:
Amounts before reclassifications (447) 367 - 212 132
Amounts reclassified out - 537 - (174) 363
Total other comprehensive income (loss), before tax (447) 904 - 38 495
Tax effect (137) (415) - (13) (565)
Total other comprehensive income (loss), net of tax (584) 489 - 25 (70)
Balance at December 31, 2015, net of tax $ (1,679) $ (4,804) $ - $ 124 $ (6,359)
Other comprehensive income (loss), before tax:
Amounts before reclassifications (244) (1,122) - 57 (1,309)
Amounts reclassified out - 421 - (109) 312
Total other comprehensive income (loss), before tax (244) (701) - (52) (997)
Tax effect (85) 177 - 19 111
Total other comprehensive income (loss), net of tax (329) (524) - (33) (886)
Balance at December 31, 2016, net of tax: $ (2,008) $ (5,328) $ - $ 91 $ (7,245)
Income taxes are not provided for foreign translation relating to permanent investments in international subsidiaries, but
tax effects within cumulative translation does include impacts from items such as net investment hedge transactions.
Reclassification adjustments are made to avoid double counting in comprehensive income items that are also recorded as part
of net income.
Reclassifications out of Accumulated Other Comprehensive Income Attributable to 3M
Amounts Reclassified from
Accumulated Other Comprehensive Income
Details about Accumulated Other Year ended Year ended Year ended
Comprehensive Income Components December 31, December 31, December 31, Location on Income
(Millions) 2016 2015 2014 Statement
Gains (losses) associated with, defined benefit pension and postretirement plans amortization
Transition asset $ 1 $ 1 $ 1 See Note 11
Prior service benefit 92 79 59 See Note 11
Net actuarial loss (506) (626) (420) See Note 11
Curtailments/Settlements (8) 9 - See Note 11
Total before tax (421) (537) (360)
Tax effect 148 176 122 Provision for income taxes
Net of tax $ (273) $ (361) $ (238)
Debt and equity security gains (losses)
Sales or impairments of securities $ - $ - $ (1) Selling, general and administrative expenses
Total before tax - - (1)
Tax effect - - - Provision for income taxes
Net of tax $ - $ - $ (1)
Cash flow hedging instruments gains (losses)
Foreign currency forward/option contracts $ 110 $ 178 $ 3 Cost of sales
Commodity price swap contracts - (2) 2 Cost of sales
Interest rate swap contracts (1) (2) (1) Interest expense
Total before tax 109 174 4
Tax effect (39) (63) (1) Provision for income taxes
Net of tax $ 70 $ 111 $ 3
Total reclassifications for the period, net of tax $ (203) $ (250) $ (236)
Purchase of Subsidiary Shares
On September 1, 2014, 3M (via Sumitomo 3M Limited) purchased Sumitomo Electric Industries, Ltd.'s 25 percent interest in
3M's consolidated Sumitomo 3M Limited subsidiary for 90 billion Japanese Yen. Upon completion of the transaction, 3M owned
100 percent of Sumitomo 3M Limited. This transaction was recorded as a financing activity (Purchase of noncontrolling
interest) in the statement of cash flows.
In April 2014, 3M purchased the remaining noncontrolling interest in a consolidated 3M subsidiary for an immaterial amount,
which was classified as a financing activity (Purchase of noncontrolling interest) in the consolidated statement of cash
flows.
The following table summarizes the effects of these 2014 transactions on equity attributable to 3M Company shareholders:
Year ended
(Millions) December 31, 2014
Net income attributable to 3M $ 4,956
Impact of purchase of subsidiary shares (409)
Change in 3M Company shareholders' equity from net income
attributable to 3M and impact of purchase of subsidiary shares $ 4,547
NOTE 7. Supplemental Cash Flow Information
(Millions) 2016 2015 2014
Cash income tax payments, net of refunds $ 1,888 $ 2,331 $ 1,968
Cash interest payments 194 134 178
Capitalized interest 10 13 15
Cash interest payments include interest paid on debt and capital lease balances, including net interest payments/receipts
related to accreted debt discounts/premiums, payment of debt issue costs, as well as net interest payments/receipts
associated with interest rate swap contracts.
Individual amounts in the Consolidated Statement of Cash Flows exclude the impacts of acquisitions, divestitures and
exchange rate impacts, which are presented separately.
Transactions related to investing and financing activities with significant non-cash components are as follows:
· 3M sold and leased-back, under a capital lease, certain recently constructed machinery and equipment in return for
municipal bonds with the City of Nevada, Missouri during 2016 and 2014 valued at approximately $12 million and $15 million,
respectively, as of the transaction date.
In addition, as discussed in Note 6, in the fourth quarter of 2014, 3M's Board of Directors declared a first quarter 2015
dividend of $1.025 per share (paid in March 2015). In the fourth quarter of 2013, 3M's Board of Directors declared a first
quarter 2014 dividend of $0.855 per share (paid in March 2014).
NOTE 8. Income Taxes
Income Before Income Taxes
(Millions) 2016 2015 2014
United States $ 4,366 $ 4,399 $ 3,815
International 2,687 2,424 3,211
Total $ 7,053 $ 6,823 $ 7,026
Provision for Income Taxes
(Millions) 2016 2015 2014
Currently payable
Federal $ 1,192 $ 1,338 $ 1,103
State 75 101 108
International 733 566 1,008
Deferred
Federal (3) (55) (171)
State 9 6 (9)
International (11) 26 (11)
Total $ 1,995 $ 1,982 $ 2,028
Components of Deferred Tax Assets and Liabilities
(Millions) 2016 2015
Deferred tax assets:
Accruals not currently deductible
Employee benefit costs $ 195 $ 175
Product and other claims 326 311
Miscellaneous accruals 92 114
Pension costs 1,217 1,120
Stock-based compensation 302 305
Net operating/capital loss carryforwards 93 109
Foreign tax credits 22 25
Inventory 53 46
Gross deferred tax assets 2,300 2,205
Valuation allowance (47) (31)
Total deferred tax assets $ 2,253 $ 2,174
Deferred tax liabilities:
Product and other insurance receivables $ (27) $ (28)
Accelerated depreciation (730) (736)
Intangible amortization (903) (1,017)
Currency translation (276) (199)
Other (40) (70)
Total deferred tax liabilities $ (1,976) $ (2,050)
Net deferred tax assets $ 277 $ 124
The net deferred tax assets are included as components of Other Assets and Other Liabilities within the Consolidated
Balance Sheet. See Note 5 "Supplemental Balance Sheet Information" for further details.
As of December 31, 2016, the Company had tax effected operating losses, capital losses, and tax credit carryovers for
federal (approximately $21 million), state (approximately $1 million), and international (approximately $71 million), with
all amounts before valuation allowances. The federal tax attribute carryovers will expire after 15 to 20 years, the state
after 5 to 10 years, and the international after one to three years or have an indefinite carryover period. The tax
attributes being carried over arise as certain jurisdictions may have tax losses or may have inabilities to utilize certain
losses without the same type of taxable income. As of December 31, 2016, the Company has provided $47 million of valuation
allowance against certain of these deferred tax assets based on management's determination that it is more-likely-than-not
that the tax benefits related to these assets will not be realized.
Reconciliation of Effective Income Tax Rate
2016 2015 2014
Statutory U.S. tax rate 35.0 % 35.0 % 35.0 %
State income taxes - net of federal benefit 0.9 1.1 0.9
International income taxes - net (2.7) (3.9) (5.8)
U.S. research and development credit (0.5) (0.5) (0.4)
Reserves for tax contingencies 0.2 (1.0) 0.6
Domestic Manufacturer's deduction (1.8) (1.8) (1.3)
Employee share-based payments (2.8) (0.1) (0.1)
All other - net - 0.3 -
Effective worldwide tax rate 28.3 % 29.1 % 28.9 %
The effective tax rate for 2016 was 28.3 percent, compared to 29.1 percent in 2015, a decrease of 0.8 percentage points,
impacted by several factors. Primary factors that decreased the Company's effective tax rate included the recognition of
excess tax benefits beginning in 2016 related to employee share-based payments (resulting from the adoption of ASU No.
2016-09, as discussed in Note 1) and a reduction in state taxes. Combined, these factors decreased the Company's effective
tax rate by 3.2 percentage points. The decrease was partially offset by a 2.4 percentage point increase, which related to
remeasurements of 3M's uncertain tax positions and international taxes that were impacted by changes to both the geographic
mix of income before taxes and additional tax expense related to global cash optimization actions.
The effective tax rate for 2015 was 29.1 percent, compared to 28.9 percent in 2014, an increase of 0.2 percentage points,
impacted by many factors. Primary factors which increased the Company's effective tax rate included international taxes,
which were impacted by both changes in foreign currency rates and changes to the geographic mix of income before taxes, and
an increase in state taxes. Combined, these factors increased the Company's effective tax rate by 2.4 percentage points.
This increase was partially offset by a 2.2 percentage point decrease, which related to the remeasurements of 3M's
uncertain tax positions, including the restoration of tax basis on certain assets for which depreciation deductions were
previously limited, and increases in the domestic manufacturer's deduction and U.S. research and development credit
benefits.
The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With
few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by
tax authorities for years before 2005.
The IRS has completed its field examination of the Company's U.S. federal income tax returns for the years 2005 through
2014. The Company protested certain IRS positions within these tax years and entered into the administrative appeals
process with the IRS. In December 2012, the Company received a statutory notice of deficiency for the 2006 year. The
Company filed a petition in Tax Court in the first quarter of 2013 relating to the 2006 tax year.
Currently, the Company is under examination by the IRS for its U.S. federal income tax returns for the years 2015 and 2016.
It is anticipated that the IRS will complete its examination of the Company for 2015 by the end of the second quarter of
2017 and for 2016 by the end of the first quarter of 2018. As of December 31, 2016, the IRS has not proposed any
significant adjustments to the Company's tax positions for which the Company is not adequately reserved.
Payments relating to other proposed assessments arising from the 2005 through 2016 examinations may not be made until a
final agreement is reached between the Company and the IRS on such assessments or upon a final resolution resulting from
the administrative appeals process or judicial action. In addition to the U.S. federal examination, there is also audit
activity in several U.S. state and foreign jurisdictions.
3M anticipates changes to the Company's uncertain tax positions due to the closing and resolution of audit issues for
various audit years mentioned above and closure of statutes. Currently, the Company is estimating a decrease in
unrecognized tax benefits during the next 12 months as a result of anticipated resolutions of audit issues.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (UTB) is as follows:
Federal, State and Foreign Tax
(Millions) 2016 2015 2014
Gross UTB Balance at January 1 $ 381 $ 583 $ 659
Additions based on tax positions related to the current year 67 77 201
Additions for tax positions of prior years 43 140 30
Reductions for tax positions of prior years (66) (399) (74)
Settlements (95) (4) (154)
Reductions due to lapse of applicable statute of limitations (11) (16) (79)
Gross UTB Balance at December 31 $ 319 $ 381 $ 583
Net UTB impacting the effective tax rate at December 31 $ 333 $ 369 $ 265
The total amount of UTB, if recognized, would affect the effective tax rate by $333 million as of December 31, 2016, $369
million as of December 31, 2015, and $265 million as of December 31, 2014. The ending net UTB results from adjusting the
gross balance for items such as Federal, State, and non-U.S. deferred items, interest and penalties, and deductible taxes.
The net UTB is included as components of Other Assets, Accrued Income Taxes, and Other Liabilities within the Consolidated
Balance Sheet.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense. The Company
recognized in the consolidated statement of income on a gross basis approximately $10 million of expense, $2 million of
expense, and $14 million of benefit in 2016, 2015, and 2014, respectively. The amount of interest and penalties recognized
may be an expense or benefit due to new or remeasured unrecognized tax benefit accruals. At December 31, 2016, and December
31, 2015, accrued interest and penalties in the consolidated balance sheet on a gross basis were $52 million and $45
million, respectively. Included in these interest and penalty amounts are interest and penalties related to tax positions
for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such
deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the
shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the
taxing authority to an earlier period.
As a result of certain employment commitments and capital investments made by 3M, income from certain manufacturing
activities in the following countries is subject to reduced tax rates or, in some cases, is exempt from tax for years
through the following: China (2016), Thailand (2018), Korea (2019), Brazil (2023), Switzerland (2024), and Singapore
(2025). The income tax benefits attributable to the tax status of these subsidiaries are estimated to be $142 million (23
cents per diluted share) in 2016, $114 million (18 cents per diluted share) in 2015, and $99 million (15 cents per diluted
share) in 2014.
The Company has not provided deferred taxes on unremitted earnings attributable to international companies that have been
considered to be reinvested indefinitely. The unremitted earnings relate to ongoing operations and were approximately $14
billion as of December 31, 2016. Because of the availability of U.S. foreign tax credits, the multiple avenues in which to
repatriate the earnings to minimize tax cost, and because a large portion of these earnings are not liquid, it is not
practical to determine the income tax liability that would be payable if such earnings were not reinvested indefinitely.
NOTE 9. Marketable Securities
The Company invests in asset-backed securities, certificates of deposit/time deposits, commercial paper, and other
securities. The following is a summary of amounts recorded on the Consolidated Balance Sheet for marketable securities
(current and non-current).
December 31, December 31,
(Millions) 2016 2015
Corporate debt securities $ 10 $ 10
Foreign government agency securities - 10
Commercial paper 14 12
Certificates of deposit/time deposits 197 26
U.S. municipal securities 3 3
Asset-backed securities:
Automobile loan related 31 26
Credit card related 18 10
Other 7 21
Asset-backed securities total 56 57
Current marketable securities $ 280 $ 118
U.S. municipal securities $ 17 $ 9
Non-current marketable securities $ 17 $ 9
Total marketable securities $ 297 $ 127
Classification of marketable securities as current or non-current is based on the nature of the securities and availability
for use in current operations. At December 31, 2016 and 2015, gross unrealized gains and/or losses (pre-tax) were not
material. Refer to Note 6 for a table that provides the net realized gains (losses) related to sales or impairments of debt
and equity securities, which includes marketable securities. The gross amounts of the realized gains or losses were not
material. Cost of securities sold use the first in, first out (FIFO) method. Since these marketable securities are
classified as available-for-sale securities, changes in fair value will flow through other comprehensive income, with
amounts reclassified out of other comprehensive income into earnings upon sale or "other-than-temporary" impairment.
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 attributable to
3M 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.
The balance at December 31, 2016, for marketable securities by contractual maturity are shown below. Actual maturities may
differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without
prepayment penalties.
(Millions) December 31, 2016
Due in one year or less $ 216
Due after one year through five years 77
Due after five years through ten years 4
Total marketable securities $ 297
3M has a diversified marketable securities portfolio. Within this portfolio, asset-backed securities primarily include
interests in automobile loans, credit cards and other asset-backed securities. 3M's investment policy allows investments in
asset-backed securities with minimum credit ratings of Aa3 by Moody's Investors Service or AA- by Standard & Poor's or
Fitch Ratings or DBRS. Asset-backed securities must be rated by at least two of the aforementioned rating agencies, one of
which must be Moody's Investors Service or Standard & Poor's. At December 31, 2016, all asset-backed security investments
were in compliance with this policy. Approximately 84.8 percent of all asset-backed security investments were rated AAA or
A-1+ by Standard & Poor's and/or Aaa or P-1 by Moody's Investors Service and/or AAA or F1+ by Fitch Ratings. Interest rate
risk and credit risk related to the underlying collateral may impact the value of investments in asset-backed securities,
while factors such as general conditions in the overall credit market and the nature of the underlying collateral may
affect the liquidity of investments in asset-backed securities. 3M does not currently expect risk related to its holding in
asset-backed securities to materially impact its financial condition or liquidity.
NOTE 10. Long-Term Debt and Short-Term Borrowings
The following debt tables reflect effective interest rates, which include the impact of interest rate swaps, as of December
31, 2016. If the debt was issued on a combined basis, the debt has been separated to show the impact of the fixed versus
floating effective interest rates. Carrying value includes the impact of debt issuance costs and fair value hedging
activity. Long-term debt and short-term borrowings as of December 31 consisted of the following:
Long-Term Debt
Currency/ Effective Final
(Millions) Fixed vs. Interest Maturity Carrying Value
Description / 2016 Principal Amount Floating Rate Date 2016 2015
Medium-term note ($1 billion) USD Fixed - % - $ - $ 999
Medium-term note ($650 million) USD Fixed 1.10 % 2017 649 648
Medium-term note (500 million Euros) Euro Floating - % 2018 523 545
Medium-term note ($450 million) USD Floating 0.98 % 2018 448 448
Medium-term note ($600 million) USD Floating 1.00 % 2019 598 597
Medium-term note ($25 million) USD Fixed 1.74 % 2019 25 25
Medium-term note (650 million Euros) Euro Floating - % 2020 680 708
Medium-term note ($300 million) USD Floating 1.06 % 2020 297 297
Medium-term note ($200 million) USD Fixed 2.12 % 2020 199 198
Eurobond (300 million Euros) Euro Floating 0.01 % 2021 336 348
Eurobond (300 million Euros) Euro Fixed 1.97 % 2021 312 326
Medium-term note ($600 million) USD Fixed 1.63 % 2021 598 -
Medium-term note (500 million Euros) Euro Fixed 0.45 % 2022 520 -
Medium-term note ($600 million) USD Fixed 2.17 % 2022 593 592
Medium-term note (600 million Euros) Euro Fixed 1.14 % 2023 619 644
Medium-term note ($550 million) USD Fixed 3.04 % 2025 546 545
Medium-term note (750 million Euros) Euro Fixed 1.71 % 2026 770 801
Medium-term note ($650 million) USD Fixed 2.25 % 2026 640 -
30-year debenture ($330 million) USD Fixed 6.01 % 2028 342 343
Medium-term note (500 million Euros) Euro Fixed 1.90 % 2030 512 533
Medium-term note (500 million Euros) Euro Fixed 1.54 % 2031 518 -
30-year bond ($750 million) USD Fixed 5.73 % 2037 743 743
Floating rate note ($96 million) USD Floating 0.65 % 2041 96 96
Medium-term note ($325 million) USD Fixed 4.05 % 2044 313 313
Floating rate note ($55 million) USD Floating 0.61 % 2044 54 55
Medium-term note ($500 million) USD Fixed 3.13 % 2046 473 -
Other borrowings Various 0.82 % 2017-2040 74 74
Total long-term debt $ 11,478 $ 9,878
Less: current portion of long-term debt 800 1,125
Long-term debt (excluding current portion) $ 10,678 $ 8,753
Post-Swap Borrowing (Long-Term Debt, Including Current Portion)
2016 2015
Carrying Effective Carrying Effective
(Millions) Value Interest Rate Value Interest Rate
Fixed-rate debt $ 8,372 2.42 % $ 6,712 2.54 %
Floating-rate debt 3,106 0.48 % 3,166 0.32 %
Total long-term debt, including current portion $ 11,478 $ 9,878
Short-Term Borrowings and Current Portion of Long-Term Debt
Effective Carrying Value
(Millions) Interest Rate 2016 2015
Current portion of long-term debt 1.01 % $ 800 $ 1,125
U.S. dollar commercial paper - % - -
Other borrowings 0.48 % 172 919
Total short-term borrowings and current portion of long-term debt $ 972 $ 2,044
In both 2016 and 2015, other short-term borrowings primarily consisted of bank borrowings by international subsidiaries,
primarily Japan and Korea.
Maturities of Long-term Debt
Maturities of long-term debt for the five years subsequent of December 31, 2016 are as follows (in millions):
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