3M 2011 Annual Report Download - page 82

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76
floating LIBOR index. This $1.5 billion medium term note program was replaced by the $3 billion program established
in June 2007.
In July 2007, 3M issued a seven-year 5.0% fixed rate Eurobond for an amount of 750 million Euros (book value of
approximately $1.006 billion in U.S. Dollars at December 31, 2011). In addition, in December 2007, 3M reopened its
existing seven year 5.0% fixed rate Eurobond for an additional amount of 275 million Euros (book value of
approximately $358 million in U.S. Dollars at December 31, 2011). This security was issued at a premium and was
subsequently consolidated with the original security in January 2008. Upon the initial debt issuance in July 2007, 3M
completed a fixed-to-floating interest rate swap on a notional amount of 400 million Euros as a fair value hedge of a
portion of the fixed interest rate Eurobond obligation. In August 2010, the Company terminated 150 million Euros of
the notional amount of this swap. As a result, the notional amount remaining after the partial termination is 250
million Euros. The termination of a portion of this swap did not impact the terms of the remaining portion. After these
swaps, the fixed rate portion of the Eurobond totaled 775 million Euros and the floating rate portion totaled 250
million Euros.
The Company has an AA- credit rating, with a stable outlook, from Standard & Poor’s and an Aa2 credit rating, with a
stable outlook, from Moody’s Investors Service. In August 2011, 3M entered into a $1.5 billion, five-year multi-
currency revolving credit agreement, which replaced the existing agreement that was due to expire in April 2012.
This credit agreement includes a provision under which 3M may request an increase of up to $500 million, bringing
the total facility up to $2 billion (at the lenders’ discretion). This facility was undrawn at December 31, 2011. Also, in
August 2011, 3M entered into a $200 million, one-year committed line/letter of credit agreement with HSBC Bank
USA. This agreement replaced the sublimit for letters of credit that was previously encompassed in the $1.5 billion
five-year facility. As of December 31, 2011, available committed credit facilities, including the preceding $1.5 billion
five-year credit facility and $200 million facility, totaled approximately $1.785 billion worldwide. The amount utilized
against these credit facilities totaled $147 million as of December 31, 2011. This included $121 million in letters of
credit issued under the $200 million facility, $18 million in international lines of credit and $8 million in U.S. lines of
credit outstanding with other banking partners. An additional approximately $100 million in stand-alone letters of
credit was also issued and outstanding at December 31, 2011. These lines/letters of credit are utilized in connection
with normal business activities. Under both the $1.5 billion and $200 million credit agreements, 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, 2011, this ratio was
approximately 40 to 1. Debt covenants do not restrict the payment of dividends.