Long-Term Debt and Short-Term Borrowings

12 Months Ended

Dec. 31, 2019

Long-Term Debt and Short-Term Borrowings

Long-Term Debt and Short-Term Borrowings

NOTE 12. Long-Term Debt and Short-Term Borrowings

The following debt tables reflect effective interest rates, which include the impact of interest rate swaps, as of December 31, 2019. If the debt was issued on a combined basis, the debt has been separated to show the impact of the fixed versus floating effective interest rates. Carrying value includes the impact of debt issuance costs and fair value hedging activity. For notes subject to in-substance defeasance, the final maturity reflected below is that associated with the redemption date included in the irrevocable instructions given to the trust. Long-term debt and short-term borrowings as of December 31 consisted of the following:

Long-Term Debt

(Millions)	Currency/	Effective		Final	Carrying Value
Description / 2019 Principal Amount	Fixed vs. Floating	Interest Rate		Maturity Date	2019		2018
Medium-term note (repaid in 2019)	USD Floating	—	%	2019	$	—	$	596
Medium-term note (repaid in 2019)	USD Fixed	—	%	2019		—		25
Third lien senior secured notes subject to in-substance defeasance ($445 million)	USD Fixed	12.50	%	2020		463		—
Medium-term note (650 million Euros)	Euro Floating	—	%	2020		726		743
Medium-term note ($300 million)	USD Floating	2.16	%	2020		299		294
Medium-term note ($200 million)	USD Floating	1.98	%	2020		200		197
Eurobond (300 million Euros)	Euro Floating	—	%	2021		346		357
Eurobond (300 million Euros)	Euro Fixed	1.97	%	2021		334		341
Medium-term note ($600 million)	USD Fixed	1.63	%	2021		599		599
Medium-term note ($200 million)	USD Fixed	3.07	%	2021		199		199
Medium-term note ($200 million)	USD Floating	1.90	%	2021		204		201
Medium-term note (500 million Euros)	Euro Fixed	0.45	%	2022		557		570
Medium-term note ($600 million)	USD Fixed	2.17	%	2022		597		596
Medium-term note ($450 million)	USD Fixed	2.76	%	2022		449		—
Medium-term note (600 million Euros)	Euro Fixed	1.14	%	2023		665		680
Medium-term note ($650 million)	USD Fixed	2.26	%	2023		648		648
Registered note ($500 million)	USD Fixed	1.86	%	2023		497		—
Medium-term note ($300 million)	USD Floating	2.21	%	2024		299		299
Medium-term note ($300 million)	USD Fixed	3.30	%	2024		299		298
Medium-term note ($500 million)	USD Fixed	2.98	%	2024		503		—
Medium-term note ($550 million)	USD Fixed	3.04	%	2025		547		547
Registered note ($750 million)	USD Fixed	2.12	%	2025		743		—
Medium-term note (750 million Euros)	Euro Fixed	1.66	%	2026		826		844
Medium-term note ($650 million)	USD Fixed	2.37	%	2026		643		642
Medium-term note ($850 million)	USD Fixed	2.95	%	2027		842		841
30-year debenture ($220 million)	USD Fixed	6.44	%	2028		226		226
Medium-term note ($600 million)	USD Fixed	3.62	%	2028		597		597
Medium-term note ($800 million)	USD Fixed	3.38	%	2029		796		—
Registered note ($1 billion)	USD Fixed	2.50	%	2029		984		—
Medium-term note (500 million Euros)	Euro Fixed	1.90	%	2030		549		562
Medium-term note (500 million Euros)	Euro Fixed	1.54	%	2031		554		567
30-year bond ($555 million)	USD Fixed	5.73	%	2037		551		551
Floating rate note ($96 million)	USD Floating	1.58	%	2041		96		95
Medium-term note ($325 million)	USD Fixed	4.05	%	2044		314		314
Floating rate note ($55 million)	USD Floating	1.54	%	2044		53		53
Medium-term note ($500 million)	USD Fixed	3.37	%	2046		475		474
Medium-term note ($500 million)	USD Fixed	3.68	%	2047		492		491
Medium-term note ($650 million)	USD Fixed	4.07	%	2048		637		637
Medium-term note ($500 million)	USD Fixed	3.78	%	2048		506		—
Registered note ($1 billion)	USD Fixed	3.37	%	2049		968		—
Other borrowings	Various	1.63	%	2020-2040		76		72
Total long-term debt					$	19,359	$	14,156
Less: current portion of long-term debt						1,841		745
Long-term debt (excluding current portion)					$	17,518	$	13,411

Post-Swap Borrowing (Long-Term Debt, Including Current Portion)

	2019				2018
	Carrying		Effective		Carrying		Effective
(Millions)	Value		Interest Rate		Value		Interest Rate
Fixed-rate debt	$	17,061	3.01	%	$	11,249	2.67	%
Floating-rate debt		2,298	1.06	%		2,907	1.44	%
Total long-term debt, including current portion	$	19,359			$	14,156

Short-Term Borrowings and Current Portion of Long-Term Debt

	Effective		Carrying Value
(Millions)	Interest Rate		2019		2018
Current portion of long-term debt	3.85	%	$	1,841	$	745
U.S. dollar commercial paper	1.61	%		150		435
Japan subsidiary credit facility	0.13	%		632		—
Germany subsidiary credit facility	0.25	%		168		—
Other borrowings	4.85	%		4		31
Total short-term borrowings and current portion of long-term debt			$	2,795	$	1,211

Other short-term borrowings primarily consisted of bank borrowings by international subsidiaries.

Future Maturities of Long-term Debt

Maturities of long-term debt in the table below reflect the impact of put provisions associated with certain debt instruments and are net of the unaccreted debt issue costs such that total maturities equal the carrying value of long-term debt as of December 31, 2019. The maturities of long-term debt for the periods subsequent to December 31, 2019 are as follows (in millions):

										After
2020		2021		2022		2023		2024		2024		Total
$	1,841	$	1,682	$	1,603	$	1,811	$	1,101	$	11,321	$	19,359

As a result of put provisions associated with certain debt instruments, long-term debt payments due in 2020 include floating rate notes totaling $149 million (classified as current portion of long-term debt).

Credit Facilities

In November 2019, 3M amended and restated its existing $3.75 billion five-year revolving credit facility expiring in March 2021 to a $3.0 billion five-year revolving credit facility expiring in November 2024. The revolving credit agreement includes a provision under which 3M may request an increase of up to $1.0 billion (at lender’s discretion), bringing the total facility up to $4.0 billion. In addition, 3M entered into a $1.25 billion 364-day credit facility expiring in November 2020. The 364-day credit agreement includes a provision under which 3M may convert any advances outstanding on the maturity date into term loans having a maturity date one year later. These credit facilities were undrawn at December 31, 2019. Under both the $3.0 billion and $1.25 billion credit agreements, the Company is required to maintain its EBITDA to Interest Ratio as of the end of each fiscal quarter at not less than 3.0 to 1. This is calculated (as defined in the agreement) as the ratio of consolidated total EBITDA for the four consecutive quarters then ended to total interest expense on all funded debt for the same period. At December 31, 2019, this ratio was approximately 17 to 1. Debt covenants do not restrict the payment of dividends.

Other Credit Facilities

Apart from the committed credit facilities described above, in September 2019, 3M entered into a credit facility expiring in July 2020 in the amount of 80 billion Japanese Yen. At December 31, 2019, 69 billion Japanese Yen, or approximately $632 million at December 31, 2019 exchange rates, was drawn and outstanding. In November 2019, 3M entered into a credit facility expiring in November 2020 in the amount of 150 million Euros. At December 31, 2019, 150 million Euros, or $168 million at December 31, 2019 exchange rates, was drawn and outstanding.

The Company also had an additional $268 million in stand-alone letters of credit and bank guarantees issued and outstanding at December 31, 2019. These instruments are utilized in connection with normal business activities.

Long-Term Debt Issuances

The principal amounts, interest rates and maturity dates of individual long-term debt issuances can be found in the long-term debt table found at the beginning of this note.

In February 2019, 3M issued $2.25 billion aggregate principal amount of fixed rate medium-term notes. These were comprised of $450 million of 3-year notes due 2022 with a coupon rate of 2.75%, $500 million of remaining 5-year notes due 2024 with a coupon rate of 3.25%, $800 million of 10-year notes due 2029 with a coupon rate of 3.375%, and $500 million of remaining 29.5-year notes due 2048 with a coupon rate of 4.00%. Issuances of the 5-year and 29.5-year notes were pursuant to a reopening of existing securities issued in September 2018.

In August 2019, 3M issued $3.25 billion aggregate principal amount of fixed rate registered notes. These were comprised of $500 million of 3.5-year notes due 2023 with a coupon rate of 1.75%, $750 million of 5.5-year notes due 2025 with a coupon rate of 2.00%, $1.0 billion of 10-year notes due 2029 with a coupon rate of 2.375%, and $1.0 billion of 30-year notes due 2049 with a coupon rate of 3.25%.

In September 2018, 3M issued $2.25 billion aggregate principal amount of medium-term notes. These were comprised of $400 million of 3-year fixed rate notes due 2021 with a coupon rate of 3.00%, $300 million of 5.5-year fixed rate notes due 2024 with a coupon rate of 3.25%, $300 million of 5.5-year floating rate notes due 2024 with a rate based on a floating three-month LIBOR index, $600 million aggregate principal amount of 10-year fixed rate medium-term notes due 2028 with a coupon rate of 3.625%, and $650 million of 30-year fixed rate notes due 2048 with a coupon rate of 4.00%. Upon debt issuance, the Company entered into a fixed-to-floating interest rate swap on $200 million aggregate principal amount of the 3-year fixed rate notes issued with an interest rate based on a three-month LIBOR index.

In October 2017, 3M issued $2.0 billion aggregate principal amount of fixed rate medium-term notes. These were comprised of $650 million of 5.5-year notes due 2023 with a coupon rate of 2.25%, $850 million of 10-year notes due 2027 with a coupon rate of 2.875%, and $500 million of 30-year notes due 2047 with a coupon rate of 3.625%.

Long-Term Debt Maturities and Extinguishments

In June 2019, 3M repaid $625 million aggregate principal amount of fixed-rate medium-term notes that matured.

In 2019, 3M also assumed approximately $2.6 billion of debt in connection with the acquisitions of Acelity and M*Modal (See Note 3) of which $2.1 billion was immediately redeemed or paid at close.

In November and August 2018, respectively, 3M repaid 500 million Euros and $450 million aggregate principal amount of floating rate medium-term notes that matured.
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In October 2017, 3M, via cash tender offers, repurchased $305 million aggregate principal amount of its outstanding notes. This included $110 million of its $330 million principal amount of 6.375% notes due 2028 and $195 million of its $750 million principal amount of 5.70% notes due 2037. The Company recorded an early debt extinguishment charge of approximately $96 million in the fourth quarter of 2017 within interest expense, the cash outflow for which is recorded within other financing activities on the statement of cash flows. This charge reflected the differential between the carrying value and the amount paid to acquire the tendered notes and related expenses.

In June 2017, 3M repaid $650 million aggregate principal amount of fixed rate medium-term notes that matured.

In-Substance Defeasance

In conjunction with the October 2019 acquisition of Acelity (See Note 3), 3M assumed outstanding debt of the business, of which $445 million in principal amount of third lien senior secured notes (Third Lien Notes) maturing in 2021 with a coupon rate of 12.5% was not immediately redeemed at closing. Instead, at closing, 3M satisfied and discharged the Third Lien Notes via an in-substance defeasance, whereby 3M transferred held-to-maturity debt securities to a trust with irrevocable instructions to redeem the Third Lien Notes on May 1, 2020. The trust assets are restricted from use in 3M’s operations and may only be used for the redemption of the Third Lien Notes. These actions, however, do not represent a legal defeasance. Therefore, as of December 31, 2019, this debt is included in current portion of long-term debt and the related trust assets comprised of a held-to-maturity debt security are included in other current assets on the Company’s consolidated balance sheet.

Floating Rate Notes

At various times, 3M has issued floating rate notes containing put provisions. 3M would be required to repurchase these securities at various prices ranging from 99 percent to 100 percent of par value according to the reduction schedules for each security. In December 2004, 3M issued a forty-year $60 million floating rate note, with a rate based on a floating LIBOR index. Under the terms of this floating rate note due in 2044, holders have an annual put feature at 100 percent of par value from 2014 and every anniversary thereafter until final maturity. Under the terms of the floating rate notes due in 2027, 2040 and 2041, holders have put options that commence ten years from the date of issuance and each third anniversary thereafter until final maturity at prices ranging from 99 percent to 100 percent of par value. For the periods presented, 3M was required to repurchase an immaterial amount of principal on the aforementioned floating rate notes.