3M 2012 Annual Report Download - page 105
Download and view the complete annual report
Please find page 105 of the 2012 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.99
Fair Value of Financial Instruments:
The Company’s financial instruments include cash and cash equivalents, marketable securities, accounts receivable,
certain investments, accounts payable, borrowings, and derivative contracts. The fair values of cash and cash
equivalents, accounts receivable, accounts payable, and short-term borrowings and current portion of long-term debt
approximated carrying values because of the short-term nature of these instruments. Available-for-sale marketable
securities and investments, in addition to certain derivative instruments, are recorded at fair values as indicated in the
preceding disclosures. For its long-term debt the Company utilized third-party quotes to estimate fair values (classified as
level 2). Information with respect to the carrying amounts and estimated fair values of these financial instruments follow:
December 31, 2012
December 31, 2011
Carrying
Fair
Carrying
Fair
(Millions)
Value
Value
Value
Value
Long-term debt, excluding current portion
$
4,916
$
5,363
$
4,484
$
5,002
The fair values reflected above consider the terms of the related debt absent the impacts of derivative/hedging activity.
The carrying amount of long-term debt referenced above is impacted by certain fixed-to-floating interest rate swaps that
are designated as fair value hedges and by the designation of fixed rate Eurobond securities issued by the Company as
hedging instruments of the Company’s net investment in its European subsidiaries. 3M’s fixed-rate bonds were trading at
a premium at December 31, 2012 and 2011 due to the low interest rates and tightening of 3M’s credit spreads.