3M 2015 Annual Report Download - page 99
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Please find page 99 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
liabilitiesthatarerecognizedordisclosedatfairvalueintheCompany’sfinancialstatementsonarecurringbasisfor2015and2014.
3Musesvariousvaluationtechniques,whichareprimarilybaseduponthemarketandincomeapproaches,withrespecttofinancial
assetsandliabilities.Followingisadescriptionofthevaluationmethodologiesusedfortherespectivefinancialassetsandliabilities
measuredatfairvalue.
Available-for-salemarketablesecurities—exceptcertainU.S.municipalsecurities:
Marketablesecurities,exceptcertainU.S.municipalsecurities,arevaluedutilizingmultiplesources.Aweightedaveragepriceis
usedforthesesecurities.Marketpricesareobtainedforthesesecuritiesfromavarietyofindustrystandarddataproviders,security
masterfilesfromlargefinancialinstitutions,andotherthird-partysources.Thesemultiplepricesareusedasinputsintoa
distribution-curve-basedalgorithmtodeterminethedailyfairvaluetobeused.3MclassifiesU.S.treasurysecuritiesaslevel1,while
allothermarketablesecurities(excludingcertainU.S.municipalsecurities)areclassifiedaslevel2.Marketablesecuritiesare
discussedfurtherinNote9.
Available-for-salemarketablesecurities—certainU.S.municipalsecuritiesonly:
Inthefourthquarter2014,3MobtainedamunicipalbondwiththeCityofNevada,Missouri,whichrepresent3M’sonlyU.S.
municipalsecuritiesholdingasofDecember31,2015.Duetothenatureofthissecurity,thevaluationmethodutilizedwillinclude
thefinancialhealthoftheCityofNevada,anyrecentmunicipalbondissuancesbyNevada,andmacroeconomicconsiderations
relatedtothedirectionofinterestratesandthehealthoftheoverallmunicipalbondmarket,andassuchwillbeclassifiedasalevel3
security.
Available-for-saleinvestments:
Investmentsincludeequitysecuritiesthataretradedinanactivemarket.Closingstockpricesarereadilyavailablefromactive
marketsandareusedasbeingrepresentativeoffairvalue.3Mclassifiesthesesecuritiesaslevel1.
Derivativeinstruments:
TheCompany’sderivativeassetsandliabilitieswithinthescopeofASC815,DerivativesandHedging,arerequiredtoberecorded
atfairvalue.TheCompany’sderivativesthatarerecordedatfairvalueincludeforeigncurrencyforwardandoptioncontracts,
commoditypriceswaps,interestrateswaps,andnetinvestmenthedgeswherethehedginginstrumentisrecordedatfairvalue.Net
investmenthedgesthatuseforeigncurrencydenominateddebttohedge3M’snetinvestmentarenotimpactedbythefairvalue
measurementstandardunderASC820,asthedebtusedasthehedginginstrumentismarkedtoavaluewithrespecttochangesin
spotforeigncurrencyexchangeratesandnotwithrespecttootherfactorsthatmayimpactfairvalue.
3Mhasdeterminedthatforeigncurrencyforwards,commoditypriceswaps,currencyswaps,foreigncurrencyoptions,interestrate
swapsandcross-currencyswapswillbeconsideredlevel2measurements.3Musesinputsotherthanquotedpricesthatare
observablefortheasset.Theseinputsincludeforeigncurrencyexchangerates,volatilities,andinterestrates.Derivativepositionsare
primarilyvaluedusingstandardcalculations/modelsthatuseastheirbasisreadilyobservablemarketparameters.Industrystandard
dataprovidersare3M’sprimarysourceforforwardandspotrateinformationforbothinterestratesandcurrencyrates,withresulting
valuationsperiodicallyvalidatedthroughthird-partyorcounterpartyquotesandanetpresentvaluestreamofcashflowsmodel.
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