3M 2015 Annual Report Download - page 39
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Please find page 39 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
Total D ebt:
TheCompany’stotaldebtwas$4.0billionhigheratDecember31,2015whencomparedtoDecember31,2014.Thestrengthof
3M’scapitalstructureandsignificantongoingcashflowsprovide3Mprovenaccesstocapitalmarkets.Additionally,theCompany’s
maturityprofileisstaggeredtohelpensurerefinancingneedsinanygivenyeararereasonableinproportiontothetotalportfolio.T
heCompanyhasanAA-creditrating,withastableoutlook,fromStandard&Poor’sandanAa3creditrating,withanegative
outlook,fromMoody’sInvestorsService.TheCompany’songoingtransitiontoabetter-optimizedcapitalstructure,financedwith
additionallow-costdebt,couldimpact3M’screditratinginthefuture.
EffectiveMay16,2014,theCompanyupdatedits“well-knownseasonedissuer”shelfregistrationstatement,whichregistersan
indeterminateamountofdebtorequitysecuritiesforfuturesales.Thisreplaced3M’spreviousshelfregistrationdatedAugust5,
2011.InJune2014,inconnectionwiththeMay16,2014shelfregistration,3Mre-commenceditsmedium-termnotesprogram
(SeriesF)underwhich3Mmayissue,fromtimetotime,upto$9billionaggregateprincipalamountofnotes.Includedinthis$9
billionare$8.17billion(utilizingtheforeignexchangerateapplicableatthetimeofissuancefortheEurodenominateddebt)of
notespreviouslyissuedin2011,2012,2014,and2015aspartofSeriesF.Informationwithrespecttolong-termdebtissuancesand
maturitiesfortheperiodspresentedisincludedinNote10.
InAugust2014,3Mamendedandextendeditsexisting$1.5billionfive-yearmulti-currencyrevolvingcreditagreementtoa$2.25
billionfive-yearmulti-currencyrevolvingcreditagreement,withanexpirationdateofAugust2019.Thiscreditagreementincludes
aprovisionunderwhich3Mmayrequestanincreaseofupto$2.25billion,bringingthetotalfacilityupto$4.5billion(atthe
lenders’discretion).ThisfacilitywasundrawnatDecember31,2015.Underthe$2.25billioncreditagreement,theCompanyis
requiredtomaintainitsEBITDAtoInterestRatioasoftheendofeachfiscalquarteratnotlessthan3.0to1.Thisiscalculated(as
definedintheagreement)astheratioofconsolidatedtotalEBITDAforthefourconsecutivequartersthenendedtototalinterest
expenseonallfundeddebtforthesameperiod.AtDecember31,2015,thisratiowasapproximately56to1.Debtcovenantsdonot
restrictthepaymentofdividends.Apartfromthecommittedfacilities,anadditional$241millioninstand-alonelettersofcredit
and$18millioninbankguaranteeswerealsoissuedandoutstandingatDecember31,2015.Theselinesofcreditareutilizedin
connectionwithnormalbusinessactivities.
Balance Sheet:
3M’sstrongbalancesheetandliquidityprovidetheCompanywithsignificantflexibilitytotakeadvantageofnumerousopportunities
goingforward.TheCompanywillcontinuetoinvestinitsoperationstodrivegrowth,includingcontinualreviewofacquisition
opportunities.
Variousassetsandliabilities,includingcashandshort-termdebt,canfluctuatesignificantlyfrommonthtomonthdependingon
short-termliquidityneeds.Workingcapital(definedascurrentassetsminuscurrentliabilities)totaled$3.868billionatDecember
31,2015,comparedwith$6.339billionatDecember31,2014,adecreaseof$2.471billion.Currentassetbalancechanges
decreasedworkingcapitalby$1.317billion,drivenbydecreasesinmarketablesecurities.Currentliabilitybalancechangesde
creasedworkingcapitalby$1.154billion,drivenbyincreasesinshort-termdebt.
TheCompanyusesvariousworkingcapitalmeasuresthatplaceemphasisandfocusoncertainworkingcapitalassetsandliabilities.
ThesemeasuresarenotdefinedunderU.S.generallyacceptedaccountingprinciplesandmaynotbecomputedthesameassimilarly
titledmeasuresusedbyothercompanies.Oneoftheprimaryworkingcapitalmeasures3Musesisacombinedindex,whichincludes
accountsreceivable,inventoriesandaccountspayable.Thiscombinedindex(definedasquarterlynetsales—fourthquarteratyear-
end—multipliedbyfour,dividedbyendingnetaccountsreceivableplusinventorieslessaccountspayable)was4.9atDecember31,
2015comparedto5.0atDecember31,2014.Receivablesdecreased$84million,or2.0percent,comparedwithDecember31,2014
,ascurrencytranslationimpactsdecreasedaccountsreceivableby$239million,partiallyoffsetby2015acquisitionsthatadded
$103million.Inventoriesdecreased$188million,or5.1percent,comparedwithDecember31,2014.Theinventorydecreasewas
attributabletocurrencytranslation,whichdecreasedinventoriesby$272million,partiallyoffsetby2015acquisitionsthatadded
$102million.
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