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TableofContents
periodduringwhichthehedgedtransactionaffectsearnings.Gainsandlossesonthederivativerepresentingeitherhedge
ineffectivenessorhedgecomponentsexcludedfromtheassessmentofeffectivenessarerecognizedincurrentearnings.
CashFlowHedging-ForeignCurrencyForwardandOptionContracts:TheCompanyentersintoforeignexchangeforwardand
optioncontractstohedgeagainsttheeffectofexchangeratefluctuationsoncashflowsdenominatedinforeigncurrencies.These
transactionsaredesignatedascashflowhedges.Thesettlementorextensionofthesederivativeswillresultinreclassifications(from
accumulatedothercomprehensiveincome)toearningsintheperiodduringwhichthehedgedtransactionsaffectearnings.3Mmay
dedesignatethesecashflowhedgerelationshipsinadvanceoftheoccurrenceoftheforecastedtransaction.Theportionofgainsor
lossesonthederivativeinstrumentpreviouslyaccumulatedinothercomprehensiveincomefordedesignatedhedgesremainsin
accumulatedothercomprehensiveincomeuntiltheforecastedtransactionoccurs.Changesinthevalueofderivativeinstrumentsafter
dedesignationarerecordedinearningsandareincludedintheDerivativesNotDesignatedasHedgingInstrumentssectionbelow.
Beginninginthesecondquarterof2014,3Mbeganextendingthemaximumlengthoftimeoverwhichithedgesitsexposuretothe
variabilityinfuturecashflowsoftheforecastedtransactionsfromaprevioustermof12monthstoalongertermof24months,with
certaincurrenciesbeingextendedfurtherto36monthsstartinginthefirstquarterof2015.
CashFlowHedging-CommodityPriceManagement:TheCompanymanagescommoditypricerisksthroughnegotiatedsupply
contracts,priceprotectionagreementsandforwardcontracts.3Mdiscontinuedtheuseofcommoditypriceswapsascashflow
hedgesofforecastedcommoditytransactionsinthefirstquarterof2015.TheCompanyusedcommoditypriceswapsascashflow
hedgesofforecastedcommoditytransactionstomanagepricevolatility.Therelatedmark-to-marketgainorlossonqualifying
hedgeswasincludedinothercomprehensiveincometotheextenteffective,andreclassifiedintocostofsalesintheperiodduring
whichthehedgedtransactionaffectedearnings.
CashFlowHedging—InterestRateContracts:Inthethirdandfourthquartersof2014,theCompanyenteredintoforwardstarting
interestrateswapswithnotionalamountstotaling500millionEurosasahedgeagainstinterestratevolatilityassociatedwiththe
forecastedissuanceoffixedratedebt.3Mterminatedtheseinterestrateswapsuponissuanceof750millionEurosaggregate
principalamountoftwelve-yearfixedratenotesinconnectionwith3M’s1.250billionEurobondofferinginNovember2014.The
terminationresultedina$8millionpre-tax($5millionafter-tax)losswithinaccumulatedothercomprehensiveincomethatwillbe
amortizedoverthetwelve-yearlifeofthenotes.
Theamortizationofgainsandlossesonforwardstartinginterestrateswapsisincludedinthetablesbelowaspartofthegain/(loss)
recognizedinincomeontheeffectiveportionofderivativesasaresultofreclassificationfromaccumulatedothercomprehensive
income.
AsofDecember31,2015,theCompanyhadabalanceof$124millionassociatedwiththeaftertaxnetunrealizedgainassociated
withcashflowhedginginstrumentsrecordedinaccumulatedothercomprehensiveincome.Thisincludesaremainingbalanceof$5
million(aftertaxloss)relatedtoforwardstartinginterestrateswaps,whichwillbeamortizedovertherespectivelivesofthenotes.
BasedonexchangeratesasofDecember31,2015,3Mexpectstoreclassifyapproximately$98millionoftheafter-taxnetunrealized
foreignexchangecashflowhedginggainstoearningsin2016,approximately$23millionoftheafter-taxnetunrealizedforeign
exchangecashflowhedginggainstoearningsin2017,andapproximately$3millionoftheafter-taxnetunrealizedforeignexchange
cashflowhedginggainstoearningsafter2017(withtheimpactoffsetbyearnings/lossesfromunderlyinghedgeditems).
Thelocationintheconsolidatedstatementsofincomeandcomprehensiveincomeandamountsofgainsandlossesrelatedto
derivativeinstrumentsdesignatedascashflowhedgesareprovidedinthefollowingtable.Reclassificationsofamountsfrom
accumulatedothercomprehensiveincomeintoincomeincludeaccumulatedgains(losses)ondedesignatedhedgesatthetime
earningsareimpactedbytheforecastedtransaction.
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