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FINANCIALCONDITIONANDLIQUIDITY
3Mcontinuesitstransitiontoabetter-optimizedcapitalstructureandisaddingleverageatameasuredpace.Thestrengthand
stabilityof3M'sbusinessmodelandstrongfreecashflowcapability,togetherwithprovencapitalmarketsaccess,enablethe
Companytoimplementthisstrategy.Investingin3M’sbusinessestodriveorganicgrowthremainsthefirstpriority,thus3Mwill
continuetodeploycapitaltowardsresearchanddevelopment,capitalexpenditures,andcommercializationcapability.Investmentin
organicgrowthwillbesupplementedbycomplementaryacquisitions.3Mwillalsocontinuetoreturncashtoshareholdersthrough
dividendsandsharerepurchases.SourcesforcashavailabilityintheUnitedStates,suchasongoingcashflowfromoperationsand
accesstocapitalmarkets,havehistoricallybeensufficienttofunddividendpaymentstoshareholdersandsharerepurchases,aswell
asfundingU.S.acquisitionsandotheritemsasneeded.Forthoseinternationalearningsconsideredtobereinvestedindefinitely,the
CompanycurrentlyhasnoplansorintentionstorepatriatethesefundsforU.S.operations.However,iftheseinternationalfundsare
neededforoperationsintheU.S.,3MwouldberequiredtoaccrueandpayU.S.taxestorepatriatethem.SeeNote8forfurther
informationonearningsconsideredtobereinvestedindefinitely.
3M’sprimaryshort-termliquidityneedsaremetthroughcashonhandandU.S.commercialpaperissuances.TheCompanybelieves
itwillhavecontinuousaccesstothecommercialpapermarket.3M’scommercialpaperprogrampermitstheCompanytohavea
maximumof$3billionoutstandingwithamaximummaturityof397daysfromdateofissuance.
Net Debt:
TheCompanydefinesnetdebtastotaldebtlessthetotalofcash,cashequivalentsandmarketablesecurities.3Mconsidersnetdebt
anditscomponentstobeanimportantindicatorofliquidityandaguidingmeasureofcapitalstructurestrategy.Netdebtisnot
definedunderU.S.generallyacceptedaccountingprinciplesandmaynotbecomputedthesameassimilarlytitledmeasuresusedby
othercompanies.ThefollowingtableprovidesnetdebtasofDecember31,2015and2014.
AtDecember31
(Millions) 2015 2014
TotalDebt $ 10,797 $ 6,811
Less:Cashandcashequivalentsandmarketablesecurities 1,925 3,351
NetDebt $ 8,872 $ 3,460
In2015,netdebtroseby$5.4billiontoanetdebtbalanceof$8.9billion(asofDecember31,2015),as3Mprogressedonitscapital
structurestrategy.DebtlevelswerehigherinboththeU.S.andinternationally,whileinternationalcashandmarketablesecurities
balanceswerereduced.Specificactionsrelatedtocash,cashequivalents,andmarketablesecurities,inadditiontodebt,are
discussedfurtherbelow.
Cash, C ash E quivalents and M arketable S ecurities:
AtDecember31,2015,3Mhad$1.9billionofcash,cashequivalentsandmarketablesecurities,ofwhichapproximately$1.7
billionwasheldbytheCompany’sforeignsubsidiariesand$200millionwasheldbytheUnitedStates.Ofthe$1.7billionheld
internationally,U.S.dollar-basedcash,cashequivalentsandmarketablesecuritiestotaled$355million,or21percent,whichwas
investedinmoneymarketfunds,asset-backedsecurities,agencysecurities,corporatemedium-termnotesecuritiesandotherhigh
qualityfixedincomesecurities.AtDecember31,2014,cash,cashequivalentsandmarketablesecuritiesheldbytheCompany’s
foreignsubsidiariesandintheUnitedStatestotaledapproximately$3.3billionandlessthan$100million,respectively.
TheCompany’stotalbalanceofcash,cashequivalentsandmarketablesecuritieswas$1.4billionloweratDecember31,2015when
comparedtoDecember31,2014.3Mwasabletomanagethebusinesswithlowercashlevelsduetosignificantongoingcashflow
generationandprovenaccesstocapitalmarketsfundingthroughoutbusinesscycles.
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