3M 2013 Annual Report Download - page 106

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100
Fair Value of Financial Instruments:
The Company’s financial instruments include cash and cash equivalents, marketable securities, accounts receivable,
certain investments, accounts payable, borrowings, and derivative contracts. The fair values of cash and cash
equivalents, accounts receivable, accounts payable, and short-term borrowings and current portion of long-term debt
(except the Eurobond securities due 2014 totaling 1.025 billion Euros, which were moved from long-term debt to current
portion of long-term debt in July 2013 and are shown separately in the table below) approximated carrying values
because of the short-term nature of these instruments. Available-for-sale marketable securities and investments, in
addition to certain derivative instruments, are recorded at fair values as indicated in the preceding disclosures. For its
long-term debt the Company utilized third-party quotes to estimate fair values (classified as level 2). Information with
respect to the carrying amounts and estimated fair values of these financial instruments follow:
December 31, 2013
December 31, 2012
Carrying
Fair
Carrying
Fair
(Millions) Value Value Value
Value
Eurobond securities due 2014 (long-term in 2012 and
short-term in 2013)
$
1,424
$
1,447
$
1,383
$
1,443
Long-term debt, excluding current portion and Eurobond
securities due 2014
4,326
4,463
3,533 3,920
The fair values reflected above consider the terms of the related debt absent the impacts of derivative/hedging activity.
The carrying amount of long-term debt referenced above is impacted by certain fixed-to-floating interest rate swaps that
are designated as fair value hedges and by the designation of fixed rate Eurobond securities issued by the Company as
hedging instruments of the Company’s net investment in its European subsidiaries. Many of 3M’s fixed-rate bonds were
trading at a premium at December 31, 2013 and 2012 due to the low interest rates and tightening of 3M’s credit spreads.