PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 12, 2001
[3M Logo]
$56,000,000
MINNESOTA MINING AND MANUFACTURING COMPANY
Floating Rate Notes due 2040
We will pay interest on the Notes on March 21, June 21, September 21
and December 21 of each year, commencing on March 21, 2001. Interest on each
Note will be reset on March 21, June 21, September 21 and December 21 of each
year, commencing on March 21, 2001, based on the 3 Month LIBOR Rate, as defined
in this prospectus supplement, less 0.35% (or 35 basis points).
The Holders of the Notes may require us to repurchase all or a portion
of the Notes on December 21 of every third year, beginning on December 21, 2010,
at the repurchase prices listed in this prospectus supplement, plus accrued
interest on the Notes to the date we repurchase the Notes. If there is a Tax
Event, as defined in this prospectus supplement, we have the right to shorten
the maturity of the Notes to the extent needed so that the interest we pay on
the Notes will be deductible for United States Federal income tax purposes. On
the new maturity date, we will pay 100% of the principal amount of the Notes,
plus accrued interest on the Notes to the new maturity date.
We will issue the Notes only in denominations of $1,000 and integral
multiples of $1,000. The Notes will be represented by one or more global Notes
registered in the name of The Depository Trust Company, which will act as
depositary.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PER NOTE TOTAL
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Initial public offering price..................... 100.00% $56,000,000
Underwriting discount............................. 1.00% $560,000
Proceeds, before expenses, to the Company......... 99.00% $55,440,000
The initial public offering price set forth above does not include
accrued interest, if any. Interest on the Notes will accrue from February 23,
2001.
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The underwriter will offer the Notes on a firm commitment basis,
subject to various conditions. The underwriter expects to deliver the Notes in
book-entry form only through the facilities of The Depository Trust Company
against payment in New York, New York on February 23, 2001.
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UBS WARBURG
Prospectus Supplement dated February 20, 2001.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
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About this Prospectus Supplement......................................... S-1
Description of Notes..................................................... S-1
Underwriting............................................................. S-8
Legal Opinions........................................................... S-9
PROSPECTUS
About this Prospectus.................................................... 2
Where You Can Find Additional Information................................ 2
Risk Factors............................................................. 3
The Company.............................................................. 5
Ratio of Earnings to Fixed Charges....................................... 6
Use of Proceeds.......................................................... 7
Description of Debt Securities........................................... 7
Plan of Distribution..................................................... 18
Legal Opinions........................................................... 20
Experts.................................................................. 20
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NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS. YOU MUST NOT RELY ON ANY UNAUTHORIZED
INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IS AN OFFER TO SELL ONLY THE NOTES OFFERED HEREBY, BUT ONLY UNDER
CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION
CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS
CURRENT ONLY AS OF ITS DATE.
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ABOUT THIS PROSPECTUS SUPPLEMENT
You should read this prospectus supplement along with the prospectus
that follows. Both documents contain information you should consider when making
your investment decision. You should rely only on the information contained or
incorporated by reference in this prospectus supplement and the accompanying
prospectus. Capitalized terms used but not defined in this prospectus supplement
have the meanings specified in the accompanying prospectus.
DESCRIPTION OF NOTES
The following discussion of the terms of the Notes supplements the
description of the general terms and provisions of the "debt securities"
contained in the accompanying prospectus and identifies any general terms and
provisions described in the accompanying prospectus that will not apply to the
Notes.
GENERAL
The Notes will be our general unsecured and senior obligations issued
in an aggregate principal amount of $56,000,000. We will issue the Notes under
an Indenture, dated as of November 17, 2000, as amended or supplemented from
time to time, between us and Citibank, N.A., as trustee. You should read the
accompanying prospectus for a general discussion of the terms and provisions of
the Indenture.
The Notes:
* will be limited to $56,000,000 aggregate principal amount;
* will mature on December 21, 2040;
* will not be entitled to any sinking fund;
* will be subject to defeasance and covenant defeasance as set forth in
the accompanying prospectus;
* will be issued only in registered, book-entry form, in denominations
of $1,000 and any integral multiple thereof; and
* will be repayable at the option of the Holders on the repayment dates
and at the repayment prices specified herein.
The Indenture and the Notes do not limit the amount of indebtedness
that we or our subsidiaries may incur or issue, and do not contain any financial
or similar restriction on us, except as described in the accompanying prospectus
under the heading "Description of Debt Securities."
INTEREST
The Notes will bear interest at the "3 Month LIBOR Rate" (as defined
below) less 0.35% (35 basis points). Interest will accrue from February 23, 2001
or from the most recent interest payment date on which we have paid or provided
for interest on the Notes and is payable quarterly in arrears on March 21, June
21, September 21 and December 21 of each year commencing on March 21, 2001
(these dates are called "interest payment dates"). Except as described below for
the first interest period, on
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each interest payment date, we will pay interest for the period commencing on
and including the immediately preceding interest payment date and ending on and
including the day next preceding that interest payment date. We will refer to
this period as an "interest period." The first interest payment date will be
March 21, 2001 and the first interest period will begin on and include February
23, 2001 and end on and include March 20, 2001. In the event that an interest
payment date is not a business day, we will pay interest on the next day that is
a business day, with the same force and effect as if made on the interest
payment date, and without any interest or other payment with respect to the
delay. For purposes of this prospectus supplement, a business day is a day other
than a Saturday, a Sunday or any other day on which banking institutions in
Minneapolis, Minnesota or New York, New York or the offices of the trustee or
any paying agent for the Notes are authorized or required by law or executive
order to remain closed. We will pay interest to the person in whose name the
Note (or one or more predecessor Notes) is registered at the close of business
fifteen calendar days before the applicable interest payment date. The 3 Month
LIBOR Rate will be reset quarterly on March 21, June 21, September 21 and
December 21 of each year, commencing on March 21, 2001 (each of these is called
an "interest reset date").
"3 Month LIBOR Rate" means the rate for deposits in U.S. dollars for
the 3-month period commencing on the applicable interest reset date that appears
on "Telerate Page 3750" at approximately 11:00 A.M., London time, on the second
London Banking Day prior to the applicable interest reset date; provided that
the interest rate in effect from the date of issue to the first interest reset
date will be based on the 3 Month LIBOR Rate as calculated on the second London
Banking Day prior to the date of issue. If this rate does not appear on the
Telerate Page 3750, the calculation agent will determine the rate on the basis
of the rates at which deposits in U.S. dollars are offered by four major banks
in the London interbank market (selected by the calculation agent) at
approximately 11:00 a.m., London time, on the second London Banking Day prior to
the applicable interest reset date to prime banks in the London interbank market
for a period of three months commencing on that interest reset date and in a
principal amount equal to an amount not less than $1,000,000 that is
representative for a single transaction in such market at such time. In such
case, the calculation agent will request the principal London office of each of
the aforesaid major banks to provide a quotation of such rate. If at least two
such quotations are provided, the rate for that interest reset date will be the
arithmetic mean of the quotations, and, if fewer than two quotations are
provided as requested, the rate for that interest reset date will be the
arithmetic mean of the rates quoted by major banks in the City of New York,
selected by the calculation agent, at approximately 11:00 a.m., New York City
time, on the second London Banking Day prior to the applicable interest reset
date for loans in U.S. dollars to leading European banks for a period of three
months commencing on that interest reset date and in a principal amount equal to
an amount not less than $1,000,000 that is representative for a single
transaction in such market at such time. "Telerate Page 3750" means the display
page so designated on the Dow Jones Telerate Service (or such other page as may
replace such page on that service for the purpose of displaying London interbank
offered rates of major banks). "London Banking Day" is any day in which dealings
in United States dollars are transacted in the London interbank market.
The interest rate on the Notes will in no event be higher than the
maximum rate permitted by New York law as the same may be modified by United
States law of general application.
The calculation agent will, upon the request of the Holder of any Note,
provide the interest rate then in effect. The calculation agent is Citibank,
N.A. until such time as we appoint a successor calculation agent. All
calculations made by the calculation agent in the absence of manifest error
shall be conclusive for all purposes and binding on us and the Holders of the
Notes. We may appoint a successor calculation agent without the consent of the
Holders of the Notes.
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Interest on the Notes will be computed and paid on the basis of a
360-day year and the actual number of days in each quarterly interest period.
REPAYMENT AT OPTION OF HOLDER
The Notes will be repayable at the option of the Holder thereof, in
whole or in part, on the repayment dates and at the repayment prices (in each
case expressed as a percentage of the principal amount) set forth in the
following table:
Date Repayment Price
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December 21, 2010 99.00%
December 21, 2013 99.25%
December 21, 2016 99.50%
December 21, 2019 99.75%
and on December 21 of every third year thereafter at 100% of the principal
amount, through and including December 21, 2037, in each case, together with
accrued and unpaid interest, if any, to the repayment date (subject to the
rights of Holders of record on relevant record dates to receive interest due on
an interest payment date).
In order for a Note to be repaid, the paying agent must receive, at
least 30 but not more than 45 calendar days prior to the optional repayment
date, the Note with the form entitled "Option to Elect Repayment" on the reverse
of the Note duly completed, or a telegram, facsimile transmission or a letter
from a member of a national securities exchange or a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company in
the United States, which must set forth:
* the name of the Holder of the Note;
* the principal amount of the Note;
* the principal amount of the Note to be repaid (which shall be equal
to $1,000 or an integral multiple thereof);
* the certificate number or description of the tenor and terms of the
Note;
* a statement that the option to elect repayment of the Note is being
irrevocably exercised thereby; and
* a guarantee that the Note to be repaid with the form "Option to
Elect Repayment" duly completed will be received by the paying agent
not later than the fifth business day after the date of such
telegram, facsimile transmission or letter (and such Note and form
duly completed are so received).
The repayment option may be exercised by the Holder of a Note for less
than the entire principal amount of the Note, but in that event the principal
amount of the Note remaining outstanding after repayment must be in an
authorized denomination.
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CONDITIONAL RIGHT TO SHORTEN MATURITY
We intend to deduct interest paid on the Notes for United States
Federal income tax purposes. However, there have been proposed tax law changes
over the past several years that, among other things, would prohibit an issuer
from deducting interest payments on debt instruments with long maturities. While
none of these proposals has become law, there can be no assurance that similar
legislation affecting our ability to deduct interest paid on the Notes will not
be enacted in the future or that any such legislation would not have a
retroactive effective date. As a result, there can be no assurance that a Tax
Event (as defined below) will not occur.
Upon the occurrence of a Tax Event, we, without the consent of the
Holders of the Notes, will have the right to shorten the maturity of the Notes
to the minimum extent required, in the opinion of nationally recognized
independent tax counsel, such that, after the shortening of the maturity,
interest paid on the Notes will be deductible for United States Federal income
tax purposes or, if such counsel is unable to opine definitively as to such a
minimum period, the minimum extent so required to maintain our interest
deduction to the extent deductible under current law as determined in good faith
by our board of directors, after receipt of an opinion of such counsel regarding
the applicable legal standards. In such case, the amount payable on such Notes
on such new maturity date will be equal to 100% of the principal amount of such
Notes plus interest accrued on such Notes to the date such Notes mature on such
new maturity date. There can be no assurance that we would not exercise our
right to shorten the maturity of the Notes on the occurrence of such a Tax Event
or as to the period by which such maturity would be shortened. In the event that
we elect to exercise our right to shorten the maturity of the Notes on the
occurrence of a Tax Event, we will mail a notice to each Holder of Notes by
first-class mail not more than 60 days after the occurrence of such Tax Event,
stating the new maturity date of the Notes. Such notice shall be effective
immediately upon mailing.
We believe that the Notes should constitute indebtedness for United
States Federal income tax purposes under current law and, in that case, an
exercise of our right to shorten the maturity of the Notes should not be a
taxable event to Holders for such purposes. Prospective investors should be
aware, however, that our exercise of our right to shorten the maturity of the
Notes will be a taxable event to Holders for United States Federal income tax
purposes if the Notes are treated as equity for United States Federal income tax
purposes before the maturity is shortened, assuming that the Notes of shortened
maturity are treated as debt for such purposes.
"Tax Event" means that we shall have received an opinion of nationally
recognized independent tax counsel to the effect that, as a result of one of the
following events occurring on or after February 23, 2001, there is more than an
insubstantial increase in the risk that interest paid by us on the Notes is not,
or will not be, deductible, in whole or in part, by us for United States Federal
income tax purposes:
* any amendment to, clarification of, or change (including any
announced prospective amendment, clarification or change) in any
law, or any regulation thereunder, of the United States;
* any judicial decision, official administrative pronouncement,
ruling, regulatory procedure, regulation, notice or announcement,
including any notice or announcement of intent to adopt or
promulgate any ruling, regulatory procedure or regulation (any of
the foregoing, an "Administrative or Judicial Action"), or
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* any amendment to, clarification of, or change in any official
position with respect to, or any interpretation of, an
Administrative or Judicial Action or a law or regulation of the
United States that differs from the theretofore generally accepted
position or interpretation.
NOTES USED AS QUALIFIED REPLACEMENT PROPERTY
Prospective investors seeking to treat the Notes as "qualified
replacement property" for purposes of Section 1042 of the Internal Revenue Code
of 1986, as amended, should be aware that Section 1042 requires the issuer to
meet certain requirements in order for the Notes to constitute qualified
replacement property. In general, qualified replacement property is a security
issued by a domestic operating corporation that did not, for the taxable year
preceding the taxable year in which such security was purchased, have "passive
investment income" in excess of 25 percent of the gross receipts of such
corporation for such preceding taxable year. For purposes of this passive income
test, where the issuing corporation is in control of one or more corporations,
all such corporations are treated as one corporation for the purposes of
computing the amount of passive investment income for purposes of Section 1042.
We believe that less than 25 percent of our affiliated group's gross
receipts is passive investment income for the taxable year ended December 31,
2000. In making this determination, we have made certain assumptions and used
procedures which we believe are reasonable.
We cannot give any assurance as to whether we will continue to meet the
passive income test. It is, in addition, possible that the IRS may disagree with
the manner in which we have calculated our affiliated group's gross receipts
(including the characterization thereof) and passive investment income and the
conclusions reached herein. Prospective purchasers of the Notes should consult
with their own tax advisors with respect to these and other tax matters relating
to the Notes.
The Notes are a new issue of securities with no established trading
market. No assurance can be given as to whether a trading market for the Notes
will develop or as to the liquidity of a trading market for the Notes. The
availability and liquidity of a trading market for the Notes will also be
affected by the degree to which purchasers treat the Notes as qualified
replacement property.
SAME-DAY SETTLEMENT
Settlement for the Notes will be made by the underwriter in immediately
available funds. The Notes will trade in the depositary's settlement system
until maturity. As a result, the depositary will require secondary trading
activity in the Notes to be settled in immediately available funds.
BOOK ENTRY SYSTEM
We have obtained the information in this section concerning DTC and its
book-entry system and procedures from sources that we believe to be reliable,
but we take no responsibility for the accuracy of this information.
We will issue the Notes in the form of one or more fully registered
global Notes which will be deposited with, or on behalf of, The Depositary Trust
Company, New York, New York ("DTC"), which will act as depositary. The Notes
will be registered in the name of DTC or its nominee.
Ownership of beneficial interests in a global Note will be limited to
DTC participants and to persons that may hold interests through institutions
that have accounts with DTC ("participants"). Beneficial interests in a global
Note will be shown on, and transfers of those ownership interests will be
S-5
effected only through, records maintained by DTC and its participants for such
global Note. The conveyance of notices and other communications by DTC to its
participants and by its participants to owners of beneficial interests in the
Notes will be governed by arrangements among them, subject to any statutory or
regulatory requirements in effect.
DTC holds the securities of its participants and facilitates the
clearance and settlement of securities transactions among its participants in
such securities through electronic book-entry changes in accounts of its
participants. The electronic book-entry system eliminates the need for physical
certificates. DTC's participants include:
* securities brokers and dealers (including the underwriter);
* banks;
* trust companies;
* clearing corporations; and
* certain other organizations (some of which, and/or their
representatives, own DTC).
Banks, brokers, dealers, trust companies and others that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly, also have access to DTC's book-entry system.
Principal and interest payments on the Notes represented by a global
Note will be made to DTC or its nominee, as the case may be, as the sole
registered owner and the sole Holder of the Notes represented by the global Note
for all purposes under the Indenture. Accordingly, we, the trustee and any
paying agent will have no responsibility or liability for:
* any aspect of DTC's records relating to, or payments made on account
of, beneficial ownership interests in a Note represented by a global
Note;
* any other aspect of the relationship between DTC and its
participants or the relationship between such participants and the
owners of beneficial interests in a global Note held through such
participants; or
* the maintenance, supervision or review of any of DTC's records
relating to such beneficial ownership interests.
DTC has advised us that upon receipt of any payment of principal of or
interest on a global Note, DTC will immediately credit, on its book-entry
registration and transfer system, the accounts of participants with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such global Note as shown on DTC's records. The underwriter will
initially designate the accounts to be credited. Payments by participants to
owners of beneficial interests in a global Note will be governed by standing
instructions and customary practices, as is the case with securities held for
customer accounts registered in "street name", and will be the sole
responsibility of those participants.
A global Note can only be transferred:
* as a whole by DTC to one of its nominees;
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* as a whole by a nominee of DTC to DTC or another nominee of DTC; or
* as a whole by DTC or a nominee of DTC to a successor of DTC or a
nominee of such successor.
Notes represented by a global Note can be exchanged for definitive
Notes in registered form only if:
* DTC notifies us that it is unwilling or unable to continue as
depositary for such global Note and we do not appoint a successor
depositary within 90 days of receiving that notice;
* at any time DTC ceases to be a clearing agency registered under the
Securities Exchange Act of 1934 and we do not appoint a successor
depositary within 90 days of becoming aware that DTC has ceased to
be registered as a clearing agency;
* we in our sole discretion determine that such global Note will be
exchangeable for definitive Notes in registered form and notify the
trustee of our decision; or
* an event of default with respect to the Notes represented by such
global Note has occurred and is continuing.
A global Note that can be exchanged under the preceding sentence will be
exchanged for definitive Notes that are issued in authorized denominations in
registered form for the same aggregate amount. Such definitive Notes will be
registered in the names of the owners of the beneficial interests in such global
Note as directed by DTC.
Except as provided above, (1) owners of beneficial interests in such
global Note will not be entitled to receive physical delivery of Notes in
definitive form and will not be considered the Holders of the Notes for any
purpose under the Indenture, and (2) no Notes represented by a global Note will
be exchangeable. Accordingly, each person owning a beneficial interest in a
global Note must rely on the procedures of DTC (and if such person is not a
participant, on the procedures of the participant through which such person owns
its interest) to exercise any rights of a Holder under the Indenture or such
global Note. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of the securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in a global Note.
We understand that under existing industry practices, if we request
Holders to take any action, or if an owner of a beneficial interest in a global
Note desires to take any action which a Holder is entitled to take under the
Indenture or a global Note, then (1) DTC would authorize the participants
holding the relevant beneficial interests to take such action, and (2) such
participants would authorize the beneficial owners owning through such
participants to take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
DTC is:
* a limited-purpose trust company organized under the laws of the
State of New York;
* a "banking organization" within the meaning of the New York Banking
Law;
* a member of the Federal Reserve System;
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* a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
* a "clearing agency" registered under the Exchange Act.
CONCERNING THE TRUSTEE
In the ordinary course of its business, the trustee and certain of its
affiliates have in the past and may in the future provide banking, credit,
foreign exchange, derivatives, capital market and other services to us,
including serving as trustee for other securities issued by us and certain of
our subsidiaries.
UNDERWRITING
We have entered into an underwriting agreement and pricing agreement
with respect to the Notes with the underwriter listed below. Subject to certain
conditions, the underwriter has agreed to purchase the principal amount of Notes
indicated in the following table:
Principal Amount
Underwriter of Notes
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UBS Warburg LLC $56,000,000
Notes sold by the underwriter to the public will initially be offered
at the initial public offering price set forth on the cover of this prospectus
supplement. If all the Notes are not sold at the initial offering price, the
underwriter may change the offering price and the other selling terms.
The Notes are a new issue of securities with no established trading
market. We have been advised by the underwriter that the underwriter intends to
make a market in the Notes, but it is not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
In connection with the offering, the underwriter may purchase and sell
the Notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriter of a greater aggregate
principal amount of Notes than they are required to purchase in the offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the Notes
while the offering is in process.
These activities by the underwriter may stabilize, maintain or
otherwise affect the market price of the Notes. As a result, the price of the
Notes may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriter at any time. These transactions may be effected in the
over-the-counter market or otherwise.
We estimate that the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $52,000. We have
agreed to indemnify the underwriter against certain liabilities, including
liabilities under the Securities Act of 1933.
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The underwriter and its affiliates have, from time to time, performed
banking, credit, foreign exchange, derivatives, financial advisory and
investment banking services for us and certain of our subsidiaries, for which
they have received customary fees and expenses.
LEGAL OPINIONS
The validity of the Notes will be passed upon for us by Gregg M.
Larson, our Assistant General Counsel, and for the Underwriter by Faegre &
Benson LLP, Minneapolis, Minnesota. Faegre & Benson LLP represents us and
certain of our subsidiaries in other legal matters.
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[3M Logo]
Minnesota Mining and
Manufacturing Company
3M Center
St. Paul, Minnesota 55144
(651) 733-1110
$1,500,000,000
MINNESOTA MINING AND MANUFACTURING COMPANY
Debt Securities
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We may from time to time issue up to $1,500,000,000 aggregate principal
amount of debt securities in supplements to this prospectus. We will provide
specific terms of the debt securities in supplements to this prospectus. These
specific terms will include the offering price and other information of the debt
securities. You should read this prospectus and the applicable supplement
carefully before you invest.
When we issue the debt securities offered by this prospectus, they will be
new securities without an established trading market. We may sell these
securities to or through underwriters, and also to other purchasers or through
agents. The names of the underwriters or agents, as the case may be, will be set
forth in the accompanying prospectus supplement.
INVESTING IN OUR DEBT SECURITIES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION, STATE SECURITIES COMMISSION
NOR ANY OTHER REGULATORY BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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This prospectus is dated January 12, 2001.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement (No. 333-48922)
that we filed with the Securities and Exchange Commission using a "shelf"
registration process. Under this process, we may sell in one or more offerings
up to $1,500,000,000, or the equivalent in foreign or composite currencies, of
debt securities. This prospectus provides you with a general description of the
terms and conditions of the debt securities that we may offer. Each time we
offer debt securities, we will provide a prospectus supplement that will contain
specific information about the terms of that offering. The prospectus supplement
may also add, update or change information contained in this prospectus.
To understand the terms of our debt securities, you should carefully
read this document with the applicable prospectus supplement that together give
the specific terms of the debt securities that we may offer. You should also
read the documents we have referred you to in "Where You Can Find Additional
Information" below for information on our company and our financial statements.
The registration statement that contains this prospectus, including the
exhibits to the registration statement, provides additional information about us
and the debt securities offered under this prospectus. The registration
statement can be read at the Securities and Exchange Commission, or the SEC, web
site or at the SEC offices mentioned under the heading "Where You Can Find
Additional Information".
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file with the SEC at its public reference room located at
450 Fifth Street, N.W., Washington, D.C. 20549. You may also obtain copies of
the documents at prescribed rates by writing to the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for further information on the operation of the public
reference facilities. Our SEC filings are also available at the office of the
New York Stock Exchange. For further information on obtaining copies of our
public filings at the New York Stock Exchange, you should call (212) 656-5060.
Our SEC filings are also available to the public over the Internet at EDGAR
Online, Inc.'s web site at http://www.freeedgar.com.
We "incorporate by reference" into this prospectus the information we
file with the SEC, which means we can disclose important information to you by
referring you to those documents filed separately with the SEC. The information
incorporated by reference is an important part of this prospectus. Some
information contained in this prospectus updates the information incorporated by
reference, and information that we file subsequently with the SEC will
automatically update this prospectus. In other words, in the case of a conflict
or inconsistency between information set forth in this prospectus and
information incorporated by reference into this prospectus, you should rely on
the information contained in the document that was filed later. We incorporate
by reference the documents listed below that we filed with the SEC (File No.
1-3285) and any filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 after the initial filing of the
registration statement that contains this prospectus and before the time that we
sell all the debt securities offered by this prospectus:
* our Annual Report on Form 10-K for the year ended December 31, 1999,
including information specifically incorporated by reference into
our Form 10-K from our definitive Notice and Proxy Statement for our
2000 Annual Meeting of Stockholders, our Quarterly Report on Form
10-Q for the quarter ended June 30, 1987, our Form 8-K
2
dated November 20, 1996, our Form 8-K dated June 30, 1997, and
Registration Nos. 33-48089 and 333-30689;
* Quarterly Reports on Form 10-Q for the quarters ended March 31,
2000, June 30, 2000 and September 30, 2000; and
* Current Reports on Form 8-K filed May 16, 2000, July 27, 2000, July
27, 2000, October 23, 2000, November 20, 2000, December 6, 2000,
December 7, 2000 and January 11, 2001.
You may request a copy of these filings, other than an exhibit to a
filing unless that exhibit is specifically incorporated by reference into that
filing, at no cost, by writing to or telephoning us at the following address:
Office of the Secretary
3M Center Bldg 220-14W-06
St. Paul, MN 55144-1000
Phone: (651) 733-1529
Fax: (651) 733-2782
You should rely only on the information incorporated by reference or presented
in this prospectus or the applicable prospectus supplement. Neither we, nor any
underwriters or agents, have authorized anyone else to provide you with
different information. We may only use this prospectus to sell debt securities
if it is accompanied by a prospectus supplement. We are only offering these debt
securities in states where the offer is permitted. You should not assume that
the information in this prospectus or the applicable prospectus supplement is
accurate as of any date other than the dates on the front of those documents.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN
INVESTMENT DECISION. ADDITIONAL RISKS WE ARE NOT PRESENTLY AWARE OF OR THAT WE
CURRENTLY BELIEVE ARE IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS OPERATIONS.
DEPENDING ON THE TERMS OF A PARTICULAR DEBT SECURITY, WE MAY ALSO POINT OUT
ADDITIONAL RISKS RELATING TO AN INVESTMENT IN THIS SECURITY IN A PROSPECTUS
SUPPLEMENT. IN ASSESSING THESE RISKS, YOU SHOULD ALSO REFER TO THE OTHER
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, INCLUDING
OUR FINANCIAL STATEMENTS AND RELATED NOTES, AND IN THE APPLICABLE PROSPECTUS
SUPPLEMENT.
3M IS THE SUBJECT OF VARIOUS LEGAL PROCEEDINGS, AND DUE TO THE INHERENT
UNCERTAINTY OF LITIGATION, THERE EXISTS THE REMOTE POSSIBILITY THAT A FUTURE
ADVERSE RULING COULD RESULT IN FUTURE CHARGES THAT COULD HAVE A MATERIAL ADVERSE
IMPACT ON 3M.
3M and some of its subsidiaries are named defendants in a number of
actions, governmental proceedings and claims, including environmental
proceedings and products liability claims involving products that 3M now or
formerly manufactured and sold. While 3M believes that a material adverse impact
on its consolidated financial position, results of operations, or cash flows
from any future charges arising from these legal proceedings is remote, due to
the inherent uncertainties of litigation, there exists the remote possibility
that a future adverse ruling could result in future charges that could have a
material adverse impact on 3M.
With respect to the environmental proceedings, 3M may be jointly and
severally liable under various environmental laws, including the United States
Comprehensive Environmental Response,
3
Compensation and Liability Act of 1980 and similar state laws, for the costs of
environmental contamination at current or former facilities and at off-site
locations at which 3M has disposed of hazardous waste. 3M has identified
numerous locations, most of which are in the United States, at which it may have
some liability for remediating contamination. Amounts expensed for environmental
remediation activities are not expected to be material at these locations.
Breast implant products liability claims are reported in 3M's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2000. 3M and various
other companies have been named as defendants in a number of claims and lawsuits
alleging damages for personal injuries of various types resulting from breast
implants formerly manufactured by 3M or a related company. In some actions, the
claimants seek damages and other relief, which, if granted, would require
substantial expenditures.
These lawsuits purport to represent 4,514 individual claimants. 3M has
confirmed that 111 of the 4,514 claimants have opted out of the class action
settlement and have 3M implants. Approximately 93% of the claimants in these
confirmed cases have alleged an unspecified amount of damages above the
jurisdictional limit of the courts in which the cases were filed. As of
September 30, 2000, we had eight claimants that filed lawsuits in the New York
state courts alleging damages of $20 million each. All but one of these eight
lawsuits has since been resolved.
3M believes that most of the remaining 4,403 claimants will be dismissed
either because the claimants did not have 3M implants or the claimants accepted
benefits under the class action settlement. Approximately 88% of these claimants
have filed lawsuits that either do not allege a specific amount of damages or
allege an unspecified amount of damages above the jurisdictional limit of the
court. The rest of these claimants allege damages of approximately $300 million
in their lawsuits. Approximately 390 claimants that have filed lawsuits in New
York state courts have alleged damages in excess of $20 million each. 3M expects
that all of these New York cases will be dismissed without payment for the
reasons stated above.
Based on 3M's experience in resolving thousands of these lawsuits, 3M
believes that the amount of damages alleged in complaints is not a reliable or
meaningful measure of the potential liability that 3M may incur in the breast
implant litigation. Investors should place no reliance on the amount of damages
alleged in breast implant lawsuits against 3M.
3M's best estimate of the remaining probable amount to cover all costs for
resolving the breast implant litigation is $41 million. 3M believes that the
ultimate outcome of these proceedings and claims, individually and in the
aggregate, will not have a material adverse effect on the consolidated financial
position, results of operations, or cash flows of 3M. However, there can be no
absolute certainty that 3M may not ultimately incur charges for breast implant
claims in excess of presently established accruals. While 3M believes that a
material adverse impact on its consolidated financial position, results of
operations, or cash flows from any future charges is remote, when litigation is
involved there exists the remote possibility that a future adverse ruling could
result in future charges that could have a material adverse impact on 3M. The
estimate of the potential impact on 3M's financial position for breast implant
litigation could change in the future.
3M also has recorded receivables for the probable amount of insurance
recoverable with respect to these matters. As of September 30, 2000, 3M had
remaining insurance receivable related to these matters of $527 million, which
represents 3M's best estimate of the remaining probable insurance recoverable.
3M can provide no assurance that 3M will collect all amounts of the insurance
recoverable with respect to these matters.
For a more detailed discussion of legal proceedings involving 3M, see the
discussion of "Legal Proceedings" in Part II, Item 1 of 3M's Quarterly Report on
Form 10-Q for the period ended September 30, 2000, which is incorporated by
reference.
4
THE COMPANY
3M was incorporated in 1929 under the laws of the State of Delaware to
continue operations, begun in 1902, of a Minnesota corporation of the same name.
3M's principal executive offices are located at 3M Center, St. Paul, Minnesota
55144 (telephone: 651-733-1110).
3M is an integrated enterprise characterized by substantial
intercompany cooperation in research, manufacturing and marketing of products.
3M's business has developed from its research and technology in coating and
bonding for coated abrasives, the company's original product. Coating and
bonding is the process of applying one material to another, such as abrasive
granules to paper or cloth (coated abrasives), adhesives to a backing
(pressure-sensitive tapes), ceramic coating to granular mineral (roofing
granules), glass beads to plastic backing (reflective sheeting), and low-tack
adhesives to paper (repositionable notes).
3M is among the leading manufacturers of products for many of the
markets it serves. In all cases, 3M products are subject to direct or indirect
competition. Most 3M products involve expertise in product development,
manufacturing and marketing, and are subject to competition from products
manufactured and sold by other technically oriented companies.
Our strategic business units have been aggregated into six reportable
segments: Industrial Markets, Health Care Markets, Transportation, Graphics and
Safety Markets, Consumer and Office Markets, Electro and Communications Markets
and Specialty Material Markets. These segments bring together common or related
3M technologies, enhancing the development of innovative products and services
and providing for efficient sharing of business resources. These segments have
worldwide responsibility for virtually all 3M product lines. A few miscellaneous
businesses and staff-sponsored products, as well as various corporate assets and
corporate overhead expenses, are not assigned to the segments.
When we refer to "3M", "our company", "we", "our", and "us" in this
prospectus under the headings "The Company" and "Ratio of Earnings to Fixed
Charges", we mean Minnesota Mining and Manufacturing Company and its
consolidated subsidiaries unless the context indicates otherwise. When these
terms are used elsewhere in this prospectus, we refer only to Minnesota Mining
and Manufacturing Company unless the context indicates otherwise.
5
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges
for the periods indicated:
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------------------------- -------------------
1995 1996 1997 1998 1999 2000
------------------------------------------------- -------------------
12.41x(1) 16.59 21.58(2) 10.32(3) 18.22(4) 16.85(5)
----------------------------
(1) The ratio for the year ended December 31, 1995 includes a pre-tax
restructuring charge of $79 million.
(2) The ratio for the year ended December 31, 1997 includes a pre-tax
gain on the sale of National Advertising Company of $803 million.
(3) The ratio for the year ended December 31, 1998 includes a pre-tax
restructuring charge of $493 million.
(4) The ratio for the year ended December 31, 1999 includes a
non-recurring net pre-tax gain of $100 million relating to gains
on divestitures, litigation expense, an investment valuation
adjustment, and a change in estimate that reduced the 1998
restructuring charge.
(5) The ratio for the nine months ended September 30, 2000 includes a
non-recurring net pre-tax gain of $51 million from the
termination of a product marketing and distribution agreement,
gains relating to asset dispositions, and non-recurring costs,
primarily related to our decision to phase out the
perfluorooctanyl chemistry.
* For purposes of calculating the ratio, fixed charges consist of:
* gross interest, including the interest component of ESOP benefit
expense;
* amortization of debt expense and discount or premium relating to
any indebtedness; and
* the portion of rental expense on operating leases considered to
be representative of the interest factor therein.
* The ratio of earnings to fixed charges is calculated as follows:
(income from continuing operations (fixed (amortization of (capitalized
before income taxes and minority interest) + charges) + capitalized interest) - interest)
--------------------------------------------------------------------------------------------
(fixed charges)
6
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, the
net proceeds we receive from the sale of the debt securities offered by this
prospectus and any accompanying prospectus supplement will be used for general
corporate purposes, including:
* the repayment of debt;
* investments in or extensions of credit to our subsidiaries; or
* the financing of possible acquisitions or business expansion.
Until the net proceeds have been used, they may be invested temporarily in
short-term marketable securities.
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt
securities. The applicable prospectus supplement will describe the specific
terms of the debt securities offered through that prospectus supplement and any
general terms outlined in this section that will not apply to those debt
securities. The debt securities will be issued under an indenture between us and
the trustee named in the applicable prospectus supplement. As used in this
prospectus, "debt securities" means the debentures, notes, bonds and other
evidence of indebtedness that we issue and the trustee authenticates and
delivers under the indenture.
We have summarized the general terms and provisions of the indenture in
this section. This summary, however, does not describe every aspect of the
indenture. We have filed the form of the indenture as an exhibit to the
registration statement. You should read the form of indenture for additional
information before you buy any debt securities. The summary that follows
includes references to section numbers of the indenture so that you can more
easily locate these provisions.
GENERAL
The debt securities will be our direct, senior, unsecured obligations.
The indenture does not limit the amount of debt securities that we may issue and
permits us to issue debt securities from time to time. Debt securities issued
under the indenture will be issued as part of a series that has been established
by us under the indenture. (Section 301) Unless a prospectus supplement relating
to debt securities states otherwise, the indenture and the terms of the debt
securities will not contain any covenants designed to afford Holders (as defined
below) of any debt securities protection in a highly leveraged or other
transaction involving us that may adversely affect Holders of the debt
securities. If we ever issue bearer securities we will summarize provisions of
the indenture that relate to bearer securities in the applicable prospectus
supplement.
A prospectus supplement relating to a series of debt securities being
offered will include specific terms relating to the offering. (Section 301)
These terms will include some or all of the following:
* the title and type of the debt securities;
* any limit on the total principal amount of the debt securities;
* the price at which the debt securities will be issued;
7
* the maturity date of the debt securities;
* the date or dates on which the principal of and premium, if any, on
the debt securities will be payable;
* if the debt securities will bear interest:
* the interest rate on the debt securities;
* the date from which interest will accrue;
* the record and interest payment dates for the debt securities;
* the first interest payment date; and
* any circumstances under which we may defer interest payments;
* any optional redemption provisions that would permit us or the
Holders of debt securities to elect redemption of the debt
securities before their final maturity;
* any sinking fund provisions that would obligate us to redeem the
debt securities before their final maturity;
* the currency or currencies in which the debt securities will be
denominated and payable, if other than U.S. dollars;
* any provisions that would permit us or the Holders of the debt
securities to elect the currency or currencies in which the debt
securities are paid;
* whether the provisions described under the heading "Defeasance"
below apply to the debt securities;
* any changes to or additional events of default or covenants;
* whether the debt securities will be issued in whole or in part in
the form of temporary or permanent global securities and, if so, the
depositary for those global securities (a "global security" means a
debt security that we issue in accordance with the indenture to
represent all or part of a series of debt securities);
* any special tax implications of the debt securities; and
* any other terms of the debt securities.
A "Holder," with respect to a registered security, means the person in whose
name the debt security is registered in the security register. (Section 101)
PAYMENT; EXCHANGE; TRANSFER
We will designate a place of payment where you can receive payment of
the principal of and any premium and interest on the debt securities or transfer
the debt securities. Even though we will designate a place of payment, we may
elect to pay any interest on the debt securities by mailing a check to the
person listed as the owner of the debt securities in the security register or by
wire transfer to an account designated by that person in writing not less than
ten days before the date of the interest payment.
8
(Sections 305, 307, 1002) There will be no service charge for any registration
of transfer or exchange of the debt securities, but we may require you to pay
any tax or other governmental charge payable in connection with a transfer or
exchange of the debt securities. (Section 305)
DENOMINATIONS
Unless the prospectus supplement states otherwise, the debt securities
will be issued only in registered form, without coupons, in denominations of
$1,000 each or multiples of $1,000.
ORIGINAL ISSUE DISCOUNT
Debt securities may be issued under the indenture as original issue
discount securities and sold at a substantial discount below their stated
principal amount. If a debt security is an "original issue discount security,"
that means that an amount less than the principal amount of the debt security
will be due and payable upon a declaration of acceleration of the maturity of
the debt security under the indenture. (Section 101) The applicable prospectus
supplement will describe the federal income tax consequences and other special
factors which should be considered before purchasing any original issue discount
securities.
CLASSIFICATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The indenture contains several restrictive covenants that apply to us
and all of our Restricted Subsidiaries. Those covenants do not apply to our
Unrestricted Subsidiaries. For example, the assets and indebtedness of
Unrestricted Subsidiaries and investments by us or our Restricted Subsidiaries
in Unrestricted Subsidiaries are not included in the calculations described
under the heading "-Restrictions on Secured Funded Debt" below. The indenture
does not require us to maintain any Restricted Subsidiaries and, if we do not,
the indenture will not provide any limitations on the amount of secured debt
created or incurred by our Subsidiaries.
A "Subsidiary" is any corporation of which we own more than 50% of the
outstanding shares of Voting Stock, except for directors' qualifying shares,
directly or through one or more of our other Subsidiaries. "Voting Stock" means
stock that is entitled in the ordinary course (I.E., not only as a result of the
happening of a contingency) to vote in an election for directors.
A "Restricted Subsidiary" means any of our Subsidiaries which has
substantially all of its property in the United States, which owns or is a
lessee of any Principal Property and in which our investment and the investment
of our Subsidiaries exceeds 1% of our Consolidated Net Tangible Assets as of the
date of the determination, other than Unrestricted Subsidiaries. Additionally,
this definition includes any other Subsidiary designated by our board of
directors as a Restricted Subsidiary. (Section 101). A "Wholly-owned Restricted
Subsidiary" is a Restricted Subsidiary of which we own all of the outstanding
capital stock directly or through our other Wholly-owned Restricted
Subsidiaries.
Our "Unrestricted Subsidiaries" are:
* 3M Financial Management Company;
* other Subsidiaries (whose primary business is in finance operations)
acquired or formed by us after the date of the indenture; and
* any other Subsidiary if a majority of its Voting Stock is owned
directly or indirectly by an Unrestricted Subsidiary.
9
Our board of directors can at any time change a Subsidiary's designation from an
Unrestricted Subsidiary to a Restricted Subsidiary if:
* the majority of that Subsidiary's Voting Stock is not owned by an
Unrestricted Subsidiary, and
* after the change of designation, we would be in compliance with the
restrictions contained in the Secured Funded Debt covenant described
under the heading "-Restrictions on Secured Funded Debt" below.
(Sections 101, 1010(a))
RESTRICTIONS ON SECURED FUNDED DEBT
The indenture limits the amount of Secured Funded Debt that we and our
Restricted Subsidiaries may incur or otherwise create (including by guarantee).
Neither we nor our Restricted Subsidiaries may incur or otherwise create any new
Secured Funded Debt unless immediately after this incurrence or creation:
* the sum of:
* the aggregate principal amount of all of our outstanding Secured
Funded Debt and that of our Restricted Subsidiaries, other than
the several categories of Secured Funded Debt discussed below on
page 13 of this prospectus, plus
* the aggregate amount of our Attributable Debt and that of our
Restricted Subsidiaries relating to sale and lease-back
transactions,
* does not exceed 15% of our Consolidated Net Tangible Assets.
This limitation does not apply if the outstanding debt securities are secured
equally and ratably with or prior to the new Secured Funded Debt. (Sections
1008(a), 1008(c))
"Secured Funded Debt" means Funded Debt which is secured by a mortgage,
lien or other similar encumbrance upon any of our assets or those of our
Restricted Subsidiaries. (Section 101)
"Funded Debt" means:
* Indebtedness maturing, or which we may extend or renew to mature,
more than 12 months after the time the amount of Funded Debt is
computed, plus
* guarantees of Indebtedness of the type described in the preceding
bullet point, or of dividends, except guarantees in connection with
the sale or discount of accounts receivable, trade acceptances and
other paper arising in the ordinary course of business, plus
* Funded Debt secured by a mortgage, lien or similar encumbrance on
our assets or those of our Restricted Subsidiaries, whether or not
this Funded Debt is assumed by us or one of our Restricted
Subsidiaries, plus
* in the case of a Subsidiary, all preferred stock of that Subsidiary.
10
Funded Debt DOES NOT INCLUDE any amount relating to obligations under leases, or
guarantees of leases, whether or not those obligations would be included as
liabilities on our consolidated balance sheet. (Section 101)
"Indebtedness" means, except as set forth in the next sentence:
* all items of indebtedness or liability, except capital and surplus,
which under accounting principles generally accepted in the United
States of America would be included in total liabilities on the
liability side of a balance sheet as of the date that indebtedness
is being determined;
* indebtedness secured by a mortgage, lien or other similar
encumbrance on property owned subject to that mortgage, lien or
other similar encumbrance, regardless of whether the indebtedness
secured by that mortgage, lien or other similar encumbrance was
assumed; and
* guarantees, endorsements, other than for purposes of collection, and
other contingent obligations relating to, or to purchase or
otherwise acquire, indebtedness of others, unless the amount of the
guarantees, endorsements or other contingent obligations is included
in the preceding two bullet points.
Indebtedness does not include any obligations or guarantees of obligations
relating to lease rentals, even if these obligations or guarantees of
obligations would be included as liabilities on our consolidated balance sheet.
(Section 101)
"Attributable Debt" means:
* the balance sheet liability amount of capital leases as determined
by accounting principles generally accepted in the United States of
America, plus
* the amount of future minimum operating lease payments required to be
disclosed by accounting principles generally accepted in the United
States of America, less any amounts required to be paid on account
of maintenance and repairs, insurance, taxes, assessments, water
rates and similar charges, discounted using the interest rate
implicit in the lease to calculate the present value of operating
lease payments.
The amount of Attributable Debt relating to an operating lease that can be
terminated by the lessee with the payment of a penalty will be calculated based
on the lesser of:
* the aggregate amount of lease payments required to be made until the
first date the lease can be terminated by the lessee plus the amount
of the penalty, or
* the aggregate amount of lease payments required to be made during
the remaining term of the lease. (Section 101)
"Consolidated Net Tangible Assets" means the total consolidated amount
of our assets and those of our Subsidiaries, minus applicable reserves and other
properly deductible items and after excluding any investments made in
Unrestricted Subsidiaries or in corporations while they were Unrestricted
Subsidiaries but which are not Subsidiaries at the time of the calculation,
minus
11
* all liabilities and liability items, including leases, or guarantees
of leases, which under accounting principles generally accepted in
the United States of America would be included in the balance sheet,
except Funded Debt, capital stock and surplus, surplus reserves and
deferred income taxes, and
* goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other similar intangibles. (Section 101)
The following categories of Secured Funded Debt will not be considered
in determining whether we are in compliance with the covenant described in the
first paragraph under the heading "Restrictions on Secured Funded Debt":
* Secured Funded Debt of a Restricted Subsidiary owing to us or to one
of our Wholly-owned Restricted Subsidiaries;
* Secured Funded Debt resulting from a mortgage, lien or other similar
encumbrance in favor of the U.S. Government or any State or any
instrumentality thereof to secure partial, progress, advance or
other payments;
* Secured Funded Debt resulting from a mortgage, lien or other similar
encumbrance on property, shares of stock or Indebtedness of any
company existing at the time that this company becomes one of our
Subsidiaries;
* Secured Funded Debt resulting from a mortgage, lien or other similar
encumbrance on property, shares of stock or Indebtedness which:
* exists at the time that the property, shares of stock or
Indebtedness is acquired by us or one of our Restricted
Subsidiaries, including acquisitions by merger or consolidation,
* secures the payment of any part of the purchase price of or
construction cost for the property, shares of stock or
Indebtedness or
* secures any indebtedness incurred prior to, at the time of, or
within 120 days after, the acquisition of the property, shares of
stock or Indebtedness or the completion of any construction of
the property for the purpose of financing all or a part of the
purchase price or construction cost of the property, shares of
stock or Indebtedness,
provided that, in all cases, we continue to comply with the covenant
relating to mergers and consolidations discussed under the heading
"-Consolidation, Merger or Sale" below;
* Secured Funded Debt secured by a mortgage, lien or other similar
encumbrance in connection with the issuance of revenue bonds on
which the interest is exempt from federal income tax pursuant to the
Internal Revenue Code of 1986; and
* any extension, renewal or refunding of:
* any Secured Funded Debt permitted under the first paragraph under
the heading "Restrictions on Secured Funded Debt,"
* any Secured Funded Debt outstanding at the end of our fiscal year
immediately preceding the execution date of the indenture of any
then Restricted Subsidiary or
12
* any Secured Funded Debt of any company outstanding at the time
this company became a Restricted Subsidiary. (Section 1008(b))
RESTRICTIONS ON SALE AND LEASE-BACK TRANSACTIONS
The indenture provides that neither we nor any of our Restricted
Subsidiaries may enter into any sale and lease-back transaction involving any
Principal Property, as defined below, more than 120 days after its acquisition
or the completion of its construction and commencement of its full operation,
unless either:
* we or any of our Restricted Subsidiaries could (1) create Secured
Funded Debt on the property equal to the Attributable Debt with
respect to the sale and lease-back transaction and (2) still be in
compliance with the restrictions on Secured Funded Debt (see
"-Restrictions on Secured Funded Debt" above); or
* we apply an amount, subject to credits for some voluntary
retirements of debt securities and/or Funded Debt as specified in
the indenture, equal to the greater of (1) the fair value of the
property or (2) the net proceeds of the sale, within 120 days, to
the retirement of Secured Funded Debt.
This restriction will not apply to any sale and lease-back transaction:
* between us and one of our Restricted Subsidiaries,
* between any of our Restricted Subsidiaries, or
* involving a lease for a period, including renewals, of three years
or less. (Section 1009)
"Principal Property" means any building or other facility located in the United
States, together with the land upon which it is erected and its fixtures that is
owned or leased by us or one of our Subsidiaries that is used primarily for
manufacturing or processing and has a gross book value, before deduction of any
depreciation reserves, greater than 1% of our Consolidated Net Tangible Assets,
other than:
* a building or facility that is financed by obligations issued by a
state or local government under several sections of the Internal
Revenue Code of 1986; or
* a building or facility that in the opinion of our board of directors
is not of material importance to the total business conducted by us
and our Subsidiaries considered together. (Section 101)
CONSOLIDATION, MERGER OR SALE
The indenture generally permits a consolidation or merger between us
and another corporation. It also permits the sale or transfer by us of all or
substantially all of our property and assets and the purchase by us of all or
substantially all of the property and assets of another corporation. These
transactions are permitted if:
* the resulting or acquiring corporation, if other than us, assumes
all of our responsibilities and liabilities under the indenture,
including the payment of all amounts due on the debt securities and
performance of the covenants in the indenture;
13
* immediately after the transaction, no event of default or event
which, with notice or lapse of time or both, would become an event
of default exists; and
* except in the case of a consolidation or merger of a Restricted
Subsidiary with and into us, either (1) we have obtained the consent
of the Holders of a majority in aggregate principal amount of the
outstanding debt securities of each series or (2) immediately after
the transaction, the resulting or acquiring corporation could incur
additional Secured Funded Debt and still be in compliance with the
restrictions on Secured Funded Debt (see "-Restrictions on Secured
Funded Debt" above). (Section 801)
Even though the indenture contains the provisions described above, we
are not required by the indenture to comply with those provisions if we sell all
of our property and assets to another corporation if, immediately after the
sale:
* that corporation is one of our Wholly-owned Restricted Subsidiaries;
and
* we could incur additional Secured Funded Debt and still be in
compliance with the restrictions on Secured Funded Debt (see
"-Restrictions on Secured Funded Debt" above). (Section 803)
If we consolidate or merge with or into any other corporation or sell
all or substantially all of our assets according to the terms and conditions of
the indenture, the resulting or acquiring corporation will be substituted for us
in the indenture with the same effect as if it had been an original party to the
indenture. As a result, this successor corporation may exercise our rights and
powers under the indenture, in our name or in its own name and we will be
released from all our liabilities and obligations under the indenture and under
the debt securities. (Section 802)
MODIFICATION AND WAIVER
Under the indenture, we and the trustee can modify or amend the
indenture with the consent of the Holders of a majority in aggregate principal
amount of the outstanding debt securities of each series of debt securities
affected by the modification or amendment. However, we may not, without the
consent of the Holder of each debt security affected:
* change the stated maturity date of any payment of principal or
interest;
* reduce payments due on the original issue discount securities;
* change the place of payment or currency in which any payment on the
debt securities is payable;
* limit a Holder's right to sue us for the enforcement of payments due
on the debt securities;
* reduce the percentage of outstanding debt securities required to
consent to a modification or amendment of the indenture;
* limit a Holder's right, if any, to repayment of debt securities at
the Holder's option; or
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* modify any of the foregoing requirements or reduce the percentage of
outstanding debt securities required to waive compliance with
several provisions of the indenture or to waive defaults under the
indenture. (Section 902)
Under the indenture, the Holders of a majority in aggregate principal
amount of the outstanding debt securities of any series of debt securities may,
on behalf of all Holders of that series:
* waive compliance by us with several restrictive covenants of the
indenture, such as corporate existence and maintenance of
properties; and
* waive any past default under the indenture, except:
* a default in the payment of the principal of or any premium or
interest on any debt securities of that series; or
* a default under any provision of the indenture which itself
cannot be modified or amended without the consent of the Holders
of each outstanding debt security of that series. (Sections 1012,
513)
EVENTS OF DEFAULT
An event of default with respect to any series of debt securities will
occur under the indenture if:
* we fail to pay interest on any debt security of that series for 30
days after the payment is due;
* we fail to pay the principal of or any premium on any debt security
of that series when due;
* we fail to deposit any sinking fund payment when due on debt
securities of that series;
* we fail to perform any other covenant in the indenture that applies
to debt securities of that series for 90 days after we have received
written notice of the failure to perform in the manner specified in
the indenture;
* we default under any Indebtedness for borrowed money, including
other series of debt securities, or under any mortgage, lien or
other similar encumbrance, indenture or instrument, including the
indenture, which secures any Indebtedness for borrowed money, and
which results in acceleration of the maturity of an outstanding
principal amount of Indebtedness greater than $20 million, unless
this acceleration is rescinded (or the Indebtedness is discharged)
within 10 days after we have received written notice of the default
in the manner specified in the indenture;
* commencement of voluntary or involuntary bankruptcy, insolvency or
reorganization; or
* any other event of default that may be specified for the debt
securities of that series when that series is created occurs.
(Section 501)
If an event of default for any series of debt securities occurs and continues,
the trustee or the Holders of at least 25% in aggregate principal amount of the
outstanding debt securities of the series may declare the
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entire principal of all the debt securities of that series to be due and payable
immediately. If such a declaration occurs, the Holders of a majority of the
aggregate principal amount of the outstanding debt securities of that series
can, subject to the specific payment conditions set forth in the indenture,
rescind the declaration. (Sections 502, 513)
The prospectus supplement relating to each series of debt securities
which are original issue discount securities will describe the particular
provisions that relate to the acceleration of maturity of a portion of the
principal amount of that series when an event of default occurs and continues.
An event of default for a particular series of debt securities does not
necessarily constitute an event of default for any other series of debt
securities issued under the indenture. The indenture requires us to file a
certificate with the trustee each year that states the nature of the default if
any default exists under the terms of the indenture. (Section 1011) The trustee
may withhold notice to the Holders of debt securities of any default, except
defaults in the payment of principal, premium, interest or any sinking fund
installment, if it considers the withholding of notice to be in the best
interests of the Holders. (Section 602)
Other than its duties in the case of a default, a trustee is not
obligated to exercise any of its rights or powers under the indenture at the
request, order or direction of any Holders, unless the Holders offer the trustee
reasonable indemnification. (Sections 601, 603) If reasonable indemnification is
provided, then, subject to other rights of the trustee provided in the
indenture, the Holders of a majority in principal amount of the outstanding debt
securities of any series may, with respect to the debt securities of that
series, direct the time, method and place of:
* conducting any proceeding for any remedy available to the trustee;
or
* exercising any trust or power conferred upon the trustee. (Sections
512, 603)
The Holder of a debt security of any series will have the right to
begin any proceeding with respect to the indenture or for any remedy only if:
* the Holder has previously given the trustee written notice of a
continuing event of default with respect to that series;
* the Holders of at least 25% in aggregate principal amount of the
outstanding debt securities of that series have made a written
request of, and offered reasonable indemnification to, the trustee
to begin the proceeding;
* the trustee has not started the proceeding within 60 days after
receiving the request; and
* the trustee has not received directions inconsistent with the
request from the Holders of a majority in aggregate principal amount
of the outstanding debt securities of that series during those 60
days. (Section 507)
However, the Holder of any debt security will have an absolute right to receive
payment of principal of and any premium and interest on the debt security when
due and to institute suit to enforce this payment. (Section 508)
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DEFEASANCE
DEFEASANCE AND DISCHARGE. At the time that we establish a series of debt
securities under the indenture, we can provide that the debt securities of that
series are subject to the defeasance and discharge provisions of the indenture.
If we so provide, we will be discharged from our obligations on the debt
securities of that series if we deposit with the trustee, in trust, sufficient
money or Government Obligations, as defined below, to pay the principal,
interest, any premium and any other sums due on the debt securities of that
series, such as sinking fund payments, on the dates these payments are due under
the indenture and the terms of the debt securities. (Section 403) As used above,
"Government Obligations" mean:
* securities of the same government which issued the currency in which
the series of debt securities are denominated and in which interest
is payable; or
* securities of government agencies backed by the full faith and
credit of the government. (Section 101)
In the event that we deposit funds in trust and discharge our
obligations under a series of debt securities as described above, then:
* the indenture will no longer apply to the debt securities of that
series, except for the obligations to compensate, reimburse and
indemnify the trustee, to register the transfer and exchange of debt
securities, to replace lost, stolen or mutilated debt securities and
to maintain paying agencies and the trust funds; and
* Holders of debt securities of that series can only look to the trust
fund for payment of principal, any premium and interest on the debt
securities of that series. (Section 403)
Under federal income tax law, that deposit and discharge may be treated
as an exchange of the related debt securities for an interest in the trust
mentioned above. Each holder might be required to recognize gain or loss equal
to the difference between:
* the holder's cost or other tax basis for the debt securities, and
* the value of the holder's interest in the trust.
Holders might be required to include in income a share of the income, gain or
loss of the trust, including gain or loss recognized in connection with any
substitution of collateral, as described in this section under the heading
"-Substitution of Collateral" below. You are urged to consult your own tax
advisers as to the specific consequences of such a deposit and discharge,
including the applicability and effect of tax laws other than federal income tax
law.
DEFEASANCE OF COVENANTS AND EVENTS OF DEFAULT. At the time that we establish
a series of debt securities under the indenture, we can provide that the debt
securities of that series are subject to the covenant defeasance provisions of
the indenture. If we so provide and we make the deposit described in this
section under the heading "-Defeasance and Discharge" above:
* we will not have to comply with the following restrictive covenants
contained in the indenture: Consolidation, Merger or Sale (Sections
801, 803); Restrictions on Secured Debt (Section 1008); Restrictions
on Sale and Lease-Back Transactions (Section 1009); Classification
of Restricted and Unrestricted Subsidiaries (Section 1010); and any
other covenant we designate when we establish the series of debt
securities; and
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* we will not have to treat the events described in the fourth bullet
point under the heading "-Events of Default" as they relate to the
covenants listed above that have been defeased and no longer are in
effect and the events described in the fifth, sixth and seventh
bullet points under the heading "-Events of Default" as events of
default under the indenture in connection with that series.
In the event of a defeasance, our obligations under the indenture and the debt
securities, other than with respect to the covenants and the events of default
specifically referred to above, will remain in effect.
(Section 1501)
If we exercise our option not to comply with the covenants listed above
and the debt securities of that series become immediately due and payable
because an event of default has occurred, other than as a result of an event of
default specifically referred to above, the amount of money and/or Government
Obligations on deposit with the trustee will be sufficient to pay the principal,
interest, any premium and any other sums, due on the debt securities of that
series, such as sinking fund payments, on the date the payments are due under
the indenture and the terms of the debt securities, but may not be sufficient to
pay amounts due at the time of acceleration. However, we would remain liable for
the balance of the payments. (Section 1501).
SUBSTITUTION OF COLLATERAL. At the time that we establish a series of debt
securities under the indenture, we can provide for our ability to, at any time,
withdraw any money or Government Obligations deposited pursuant to the
defeasance provisions described above if we simultaneously substitute other
money and/or Government Obligations which would satisfy our payment obligations
on the debt securities of that series pursuant to the defeasance provisions
applicable to those debt securities. (Section 402)
PLAN OF DISTRIBUTION
We may sell the debt securities in four ways:
* through underwriters;
* through dealers;
* through agents; and
* directly to purchasers.
The distribution of the debt securities offered under this prospectus
may occur from time to time in one or more transactions at a fixed price or
prices, which may be changed, at market prices prevailing at the time of sale,
at prices related to the prevailing market prices or at negotiated prices.
If the applicable prospectus supplement indicates, we will authorize
dealers or our agents to solicit offers by institutions to purchase debt
securities from us pursuant to contracts that provide for payment and delivery
on a future date. We must approve all these institutions, but they may include,
among others:
* commercial and savings banks;
* insurance companies;
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* pension funds;
* investment companies; and
* educational and charitable institutions.
The institutional purchaser's obligations under the contract are only subject to
the condition that the purchase of the debt securities at the time of delivery
is allowed by the laws that govern the purchaser. The dealers and our agents
will not be responsible for the validity or performance of the contracts.
If we use underwriters in an offering of securities using this
prospectus, we will execute an underwriting agreement with one or more
underwriters. The names of those underwriters and the terms of the transaction
will be set forth in the applicable prospectus supplement. The underwriting
agreement will provide that the obligations of the underwriters with respect to
a sale of the offered securities are subject to specified conditions precedent
and that the underwriters will be obligated to purchase all of the offered
securities if any are purchased. In connection with the sale of debt securities,
underwriters may receive compensation from us or from purchasers of debt
securities for whom they may act as agents in the form of discounts, concessions
or commissions. Underwriters may sell debt securities to or through dealers, and
these dealers may receive compensation in the form of discounts, concessions, or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents.
If we use a dealer in an offering of securities using this prospectus,
we will sell the offered securities to the dealer as principal. The dealer may
then resell those securities to the public or other deals at a fixed price or
varying prices to be determined at the time of resale. If we designate an agent
or agents in an offering of securities using this prospectus, unless otherwise
indicated in a prospectus supplement, that agent will be acting on a best
efforts basis for the period of its appointment. Underwriters, dealers and
agents that participate in the distribution of debt securities offered under
this prospectus may be deemed to be underwriters as defined in the Securities
Act. Any underwriters or agents will be identified and their compensation,
including underwriting discount, will be described in the applicable prospectus
supplement. The applicable prospectus supplement will also describe the other
terms of the offering, including any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchanges on which the debt
securities may be listed.
We may have agreements with the underwriters, dealers and agents to
indemnify them against some liabilities, including liabilities under the
Securities Act, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make as a result of those
liabilities.
We may also use this prospectus to directly solicit offers to purchase
securities. Except as set forth in the applicable prospectus supplement, none of
our directors, officers or employees, nor those of our subsidiaries, will
solicit or receive a commission in connection with those direct sales. Those
persons may respond to inquiries by potential purchasers and perform ministerial
and clerical work in connection with direct sales.
When we issue the debt securities offered by this prospectus, they will
be new securities without an established trading market. If we sell a debt
security offered by this prospectus to an underwriter for public offering and
sale, the underwriter may make a market for that debt security, but the
underwriter will not be obligated to do so and could discontinue any market
making without notice at any time. Therefore, we cannot give any assurances to
you concerning the liquidity of any debt security offered by this prospectus.
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Underwriters and agents and their affiliates may be customers of,
engage in transactions with, or perform services for us or our subsidiaries in
the ordinary course of their businesses.
LEGAL OPINIONS
Gregg M. Larson, who is our Assistant General Counsel, or another one
of our lawyers, will issue an opinion about the validity of the debt securities
offered in this prospectus, as well as other relevant legal matters. Mr. Larson
beneficially owns, or has options to acquire, a number of shares of our common
stock, which represents less than 1% of the total outstanding common stock. Any
underwriters or dealers will be represented by their own counsel.
EXPERTS
The consolidated financial statements of Minnesota Mining and
Manufacturing Company and Subsidiaries incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent auditors, given on the authority of said
firm as experts in auditing and accounting.
Our consolidated financial statements included in subsequent filings
with the SEC will be incorporated by reference in this prospectus in reliance
upon reports given upon the authority of our independent auditors as experts in
auditing and accounting (to the extent consolidated financial statements
included in these subsequent filings are covered by consents executed by these
independent auditors and filed with the SEC).
INDEPENDENT AUDITORS
With respect to the unaudited consolidated financial information of
Minnesota Mining and Manufacturing Company and Subsidiaries for the three-month
periods ended March 31, 2000 and 1999, the three- and six-month periods ended
June 30, 2000 and 1999 and the three- and nine-month periods ended September 30,
2000 and 1999, incorporated by reference in this prospectus,
PricewaterhouseCoopers LLP reported that they have applied limited procedures in
accordance with professional standards for a review of this information.
However, their separate reports dated April 25, 2000, July 26, 2000 and October
23, 2000, incorporated by reference herein, state that they did not audit and
they do not express an opinion on that unaudited consolidated financial
information. Accordingly, the degree of reliance on their reports on this
information should be restricted in light of the limited nature of the review
procedures applied. PricewaterhouseCoopers LLP is not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their reports on the
unaudited consolidated financial information because these reports are not a
"report" or a "part" of the registration statement prepared or certified by
PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.
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