3M 2014 Annual Report Download - page 107

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101
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 totaling 1.025 billion Euros, which were repaid in July 2014 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, 2014
December 31, 2013
Carrying
Fair
Carrying
Fair
(Millions) Value Value Value
Value
Eurobond securities (repaid July 2014)
$
―
$
―
$
1,424
$
1,447
Long-term debt, excluding current portion
6,731
7,203
4,326 4,463
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, 2014 and 2013 due to the low interest rates and tightening of 3M’s credit spreads.