3M 2015 Annual Report Download - page 91
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*InaccordancewithASC820-10,certaininvestmentsthataremeasuredatfairvalueusingthenetassetvaluepershare(orits
equivalent)asapracticalexpedienthavenotbeenclassifiedinthefairvaluehierarchy.TheNAVisbasedonthefairvalueofthe
underlyingassetsownedbythefund,minusitsliabilitiesthendividedbythenumberofunitsoutstandingandisdeterminedbythe
investmentmanagerorcustodianofthefund.Thefairvalueamountspresentedinthistableareintendedtopermitreconciliationof
thefairvaluehierarchytotheamountspresentedinthefairvalueofplanassets.
Equitiesconsistprimarilyofmandatesinpublicequitysecuritiesmanagedtovariouspublicequityindices.Publiclytradedequities
arevaluedattheclosingpricereportedintheactivemarketinwhichtheindividualsecuritiesaretraded.
FixedIncomeinvestmentsincludedomesticandforeigngovernment,andcorporate,(includingmortgagebackedandotherdebt)
securities.Governments,corporatebondsandnotesandmortgagebackedsecuritiesarevaluedattheclosingpricereportediftraded
onanactivemarketoratyieldscurrentlyavailableoncomparablesecuritiesofissuerswithsimilarcreditratingsorvaluedundera
discountedcashflowapproachthatutilizesobservableinputs,suchascurrentyieldsofsimilarinstruments,butincludesadjustments
forcertainrisksthatmaynotbeobservablesuchascreditandliquidityrisks.
Privateequityfundsconsistofpartnershipinterestsinavarietyoffunds.RealestateconsistsofpropertyfundsandREITS(Real
EstateInvestmentTrusts).REITSarevaluedattheclosingpricereportedintheactivemarketinwhichitistraded.
Absolutereturnconsistsofprivatepartnershipinterestsinhedgefunds,insurancecontracts,derivativeinstruments,hedgefundof
funds,andotheralternativeinvestments.Insuranceconsistsofinsurancecontracts,whicharevaluedusingcashsurrendervalues
whichistheamounttheplanwouldreceiveifthecontractwascashedoutatyearend.Derivativeinstrumentsconsistofinterestrate
swapsthatareusedtohelpmanagerisks.
Otheritemstoreconciletofairvalueofplanassetsincludethenetofinterestreceivables,amountsdueforsecuritiessold,amounts
payableforsecuritiespurchasedandinterestpayable.
Thebalancesofandchangesinthefairvaluesoftheinternationalpensionplans’level3assetsconsistprimarilyofinsurance
contractsundertheabsolutereturnassetclass.Theaggregateofnetpurchasesandnetunrealizedgainsincreasedthisbalanceby
$16millionand$46millionin2015and2014,respectively.Foreigncurrencyexchangeimpactsdecreasedthisbalanceby$36
millionand$62millionin2015and2014,respectively.
NOTE12.Derivatives
TheCompanyusesinterestrateswaps,currencyswaps,commoditypriceswaps,andforwardandoptioncontractstomanagerisks
generallyassociatedwithforeignexchangerate,interestrateandcommoditypricefluctuations.Theinformationthatfollows
explainsthevarioustypesofderivativesandfinancialinstrumentsusedby3M,howandwhy3Musessuchinstruments,howsuch
instrumentsareaccountedfor,andhowsuchinstrumentsimpact3M’sfinancialpositionandperformance.
Additionalinformationwithrespecttotheimpactsonothercomprehensiveincomeofnonderivativehedgingandderivative
instrumentsisincludedinNote6.AdditionalinformationwithrespecttothefairvalueofderivativeinstrumentsisincludedinNote
13.Referencestoinformationregardingderivativesand/orhedginginstrumentsassociatedwiththeCompany’slong-termdebtare
alsomadeinNote10.
TypesofDerivatives/HedgingInstrumentsandInclusioninIncome/OtherComprehensiveIncome:
CashFlowHedges:
Forderivativeinstrumentsthataredesignatedandqualifyascashflowhedges,theeffectiveportionofthegainorlossonthe
derivativeisreportedasacomponentofothercomprehensiveincomeandreclassifiedintoearningsinthesame
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