3M 2015 Annual Report Download - page 97
Download and view the complete annual report
Please find page 97 of the 2015 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.TableofContents
CreditRiskandOffsettingofAssetsandLiabilitiesofDerivativeInstruments:
TheCompanyisexposedtocreditlossintheeventofnonperformancebycounterpartiesininterestrateswaps,currencyswaps,
commoditypriceswaps,andforwardandoptioncontracts.However,theCompany’sriskislimitedtothefairvalueofthe
instruments.TheCompanyactivelymonitorsitsexposuretocreditriskthroughtheuseofcreditapprovalsandcreditlimits,andby
selectingmajorinternationalbanksandfinancialinstitutionsascounterparties.3Mentersintomasternettingarrangementswith
counterpartieswhenpossibletomitigatecreditriskinderivativetransactions.Amasternettingarrangementmayalloweach
counterpartytonetsettleamountsowedbetweena3Mentityandthecounterpartyasaresultofmultiple,separatederivative
transactions.AsofDecember31,2015,3MhasInternationalSwapsandDerivativesAssociation(ISDA)agreementswith16
applicablebanksandfinancialinstitutionswhichcontainnettingprovisions.Inadditiontoamasteragreementwith3Msupportedby
aprimarycounterparty’sparentguarantee,3Malsohasassociatedcreditsupportagreementsinplacewith15ofitsprimary
derivativecounterpartieswhich,amongotherthings,providethecircumstancesunderwhicheitherpartyisrequiredtoposteligible
collateral(whenthemarketvalueoftransactionscoveredbytheseagreementsexceedsspecifiedthresholdsorifacounterparty’s
creditratinghasbeendowngradedtoapredeterminedrating).TheCompanydoesnotanticipatenonperformancebyanyofthese
counterparties.
3MhaselectedtopresentthefairvalueofderivativeassetsandliabilitieswithintheCompany’sconsolidatedbalancesheetona
grossbasisevenwhenderivativetransactionsaresubjecttomasternettingarrangementsandmayotherwisequalifyfornet
presentation.However,thefollowingtablesprovideinformationasiftheCompanyhadelectedtooffsettheassetandliability
balancesofderivativeinstruments,nettedinaccordancewithvariouscriteriaintheeventofdefaultorterminationasstipulatedby
thetermsofnettingarrangementswitheachofthecounterparties.Foreachcounterparty,ifnetted,theCompanywouldoffsetthe
assetandliabilitybalancesofallderivativesattheendofthereportingperiodbasedonthe3Mentitythatisapartytothe
transactions.Derivativesnotsubjecttomasternettingagreementsarenoteligiblefornetpresentation.Asoftheapplicabledates
presentedbelow,nocashcollateralhadbeenreceivedorpledgedrelatedtothesederivativeinstruments.
OffsettingofFinancialAssetsunderMasterNettingAgreementswithDerivativeCounterparties
December31,2015 GrossAmountsnotOffsetinthe
ConsolidatedBalanceSheetthatareSubject
GrossAmountof toMasterNettingAgreements
DerivativeAssets GrossAmountof
Presentedinthe EligibleOffsetting
Consolidated Recognized CashCollateral NetAmountof
(Millions) BalanceSheet DerivativeLiabilities Received DerivativeAssets
Derivativessubjecttomasternetting
agreements $ 296 $ 37 $ — $ 259
Derivativesnotsubjecttomasternetting
agreements — —
Total $ 296 $ 259
December31,2014 GrossAmountsnotOffsetinthe
ConsolidatedBalanceSheetthatareSubject
GrossAmountof toMasterNettingAgreements
DerivativeAssets GrossAmountof
Presentedinthe EligibleOffsetting
Consolidated Recognized CashCollateral NetAmountof
(Millions) BalanceSheet DerivativeLiabilities Received DerivativeAssets
Derivativessubjecttomasternetting
agreements $ 256 $ 20 $ — $ 236
Derivativesnotsubjecttomasternetting
agreements — —
Total $ 256 $ 236
97