3M 2014 Annual Report Download - page 79

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73
3M reviews impairments associated with its marketable securities in accordance with the measurement guidance provided
by ASC 320, Investments-Debt and Equity Securities, when determining the classification of the impairment as
“temporary” or “other-than-temporary”. A temporary impairment charge results in an unrealized loss being recorded in the
other comprehensive income component of shareholders’ equity. Such an unrealized loss does not reduce net income
attributable to 3M for the applicable accounting period because the loss is not viewed as other-than-temporary. The
factors evaluated to differentiate between temporary and other-than-temporary include the projected future cash flows,
credit ratings actions, and assessment of the credit quality of the underlying collateral, as well as other factors.
The balance at December 31, 2014, for marketable securities by contractual maturity are shown below. Actual maturities
may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations
without prepayment penalties.
(Millions)
December 31, 2014
Due in one year or less $
367
Due after one year through five years 1,064
Due after five years through ten years 8
Due after ten years 15
Total marketable securities $
1,454
3M has a diversified marketable securities portfolio of $1.454 billion as of December 31, 2014. Within this portfolio, current
and long-term asset-backed securities (estimated fair value of $538 million) primarily include interests in automobile loans,
credit cards and equipment leases. 3M’s investment policy allows investments in asset-backed securities with minimum
credit ratings of Aa2 by Moody’s Investors Service or AA by Standard & Poor’s or Fitch Ratings or DBRS. Asset-backed
securities must be rated by at least two of the aforementioned rating agencies, one of which must be Moody’s Investors
Service or Standard & Poor’s. At December 31, 2014, all asset-backed security investments were in compliance with this
policy. Approximately 96.6 percent of all asset-backed security investments were rated AAA or A-1+ by Standard & Poor’s
and/or Aaa or P-1 by Moody’s Investors Service and/or AAA or F1+ by Fitch Ratings. Interest rate risk and credit risk
related to the underlying collateral may impact the value of investments in asset-backed securities, while factors such as
general conditions in the overall credit market and the nature of the underlying collateral may affect the liquidity of
investments in asset-backed securities. 3M does not currently expect risk related to its holding in asset-backed securities
to materially impact its financial condition or liquidity.