3M 2014 Annual Report Download - page 42

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36
The Company’s total balance of cash, cash equivalents and marketable securities was $1.4 billion lower at December 31,
2014 when compared to December 31, 2013. 3M was able to manage the business with lower cash levels, particularly in
the U.S., due to significant ongoing cash flow generation and proven access to capital markets funding throughout
business cycles.
Total debt:
The Company’s total debt was $0.8 billion higher at December 31, 2014 when compared to December 31, 2013. The
strength of 3M’s capital structure and significant ongoing cash flows provide 3M proven access to capital markets.
Additionally, the Company’s maturity profile is staggered to help ensure refinancing needs in any given year are
reasonable in proportion to the total portfolio. As of February 2015, the Company has an AA- credit rating, with a stable
outlook, from Standard & Poor's and an Aa3 credit rating, with a negative outlook, from Moody's Investors Service. The
Company’s ongoing transition to a more optimized capital structure, financed with additional low-cost debt, could impact
3M’s credit rating in the future.
Effective May 16, 2014, the Company updated its “well-known seasoned issuer” shelf registration statement, which
registers an indeterminate amount of debt or equity securities for future sales. This replaced 3M’s previous shelf
registration dated August 5, 2011. In June 2014, in connection with the May 16, 2014 shelf registration, 3M re-
commenced its medium-term notes program (Series F) under which 3M may issue, from time to time, up to $9 billion
aggregate principal amount of notes. Included in this $9 billion are $2.25 billion of notes previously issued in 2011 and
2012 as part of Series F.
Significant long-term debt activity during 2013 is summarized below:
• In August 2013, 3M repaid $850 million (principal amount) of medium-term notes.
• In November 2013, 3M issued an eight-year Eurobond for an amount of 600 million Euros.
Significant long-term debt activity in 2014 is summarized below:
• In June 2014, 3M issued $625 million aggregate principal amount of five-year fixed-rate medium-term notes due
2019 with a coupon rate of 1.625%. Upon debt issuance, the Company entered into an interest rate swap to
convert $600 million of this amount to an interest rate based on a floating LIBOR index (Series F).
• In addition, in June 2014, 3M issued $325 million aggregate principal amount of thirty-year fixed-rate medium-
term notes due 2044 with a coupon rate of 3.875% (Series F).
• In July 2014, 3M repaid 1.025 billion Euros (principal amount) of maturing Eurobond notes.
• In November 2014, the Company issued 500 million Euros aggregate principal amount of four-year floating rate
medium-term notes due 2018 with interest based on a floating EURIBOR index (Series F).
• Also, in November 2014, the Company issued a 750 million Euros aggregate principal amount of 12-year fixed
rate medium-term notes due 2026 with a coupon rate of 1.5% (Series F).
In August 2014, 3M amended and extended the existing $1.5 billion five-year multi-currency revolving credit agreement to
a $2.25 billion five-year multi-currency revolving credit agreement, with an expiration date of August 2019. This credit
agreement includes a provision under which 3M may request an increase of up to $2.25 billion, bringing the total facility
up to $4.5 billion (at the lenders’ discretion). This facility was undrawn at December 31, 2014. Under the $2.25 billion
credit agreement, the Company is required to maintain its EBITDA to Interest Ratio as of the end of each fiscal quarter at
not less than 3.0 to 1. This is calculated (as defined in the agreement) as the ratio of consolidated total EBITDA for the
four consecutive quarters then ended to total interest expense on all funded debt for the same period. At December 31,
2014, this ratio was approximately 60 to 1. Debt covenants do not restrict the payment of dividends.
In December 2012, 3M entered into a three-year 66 million British Pound (approximately $106 million based on
agreement date exchange rates) committed credit agreement, which was fully drawn as of December 31, 2012. 3M repaid
36 million British Pounds in the first quarter of 2014, with the remaining balance of 30 million British Pounds repaid in
December 2014. Apart from the committed facilities, an additional $219 million in stand-alone letters of credit and $18
million in bank guarantees were also issued and outstanding at December 31, 2014. These lines of credit are utilized in
connection with normal business activities.
Balance Sheet:
3M’s strong balance sheet and liquidity provide the Company with significant flexibility to take advantage of numerous
opportunities going forward. The Company will continue to invest in its operations to drive growth, including continual
review of acquisition opportunities.