3M 2012 Annual Report Download - page 100
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94
Derivatives Not Designated as Hedging Instruments:
Derivatives not designated as hedging instruments include dedesignated foreign currency forward and option contracts
that formerly were designated in cash flow hedging relationships (as referenced in the Cash Flow Hedges section above).
In addition, 3M enters into foreign currency forward contracts and commodity price swaps to offset, in part, the impacts of
certain intercompany activities (primarily associated with intercompany licensing arrangements) and fluctuations in costs
associated with the use of certain precious metals, respectively. These derivative instruments are not designated in
hedging relationships; therefore, fair value gains and losses on these contracts are recorded in earnings. The dollar
equivalent gross notional amount of these forward, option and swap contracts not designated as hedging instruments
totaled $1.0 billion as of December 31, 2012. The Company does not hold or issue derivative financial instruments for
trading purposes.
The location in the consolidated statements of income and amounts of gains and losses related to derivative instruments
not designated as hedging instruments are as follows:
Derivatives Not Designated as Hedging Instruments
Year ended December 31, 2012
Year ended December 31, 2011
Gain (Loss) on Derivative Recognized in
Income
Gain (Loss) on Derivative Recognized in
Income
(Millions)
Location
Amount
Location
Amount
Foreign currency forward/option contracts
Cost of sales
$
(24)
Cost of sales
$
13
Foreign currency forward contracts
Interest expense
22
Interest expense
9
Total
$
(2)
$
22
Derivatives Not Designated as Hedging Instruments
Year ended December 31, 2010
Gain (Loss) on Derivative Recognized in
Income
(Millions)
Location
Amount
Foreign currency forward/option contracts
Cost of sales
$
(24)
Foreign currency forward contracts
Interest expense
(19)
Commodity price swap contracts
Cost of sales
1
Total
$
(42)