3M 2005 Annual Report Download

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2005 Annual Report
unique strengths,
ingenious solutions

Table of contents

  • Page 1
    2005 Annual Report unique strengths, ingenious solutions

  • Page 2
    ... the world. Table of Contents Letter to Shareholders Ingenious Solutions Adhesive Technology Advanced Materials Technology Light Management Technology Microreplication Technology Nonwoven Materials Technology 3M in the Community 3M at a Glance Board of Directors/ Corporate Officers/Executives 24...

  • Page 3
    ...fiers 30 Md Mi Pc Po Su Medical Data Management 31 Microbial Detection & Control 32 Precision Coating 33 Porous Materials & Membranes 34 Surface Modification 35 Ce Ep Ceramics 36 Electronic Packaging 37 Fl Fluoromaterials 38 Im Imaging 39 Is Integrated Systems Design 40 Me Mo Pd Metal Matrix...

  • Page 4
    .... I am pleased that our local-currency sales growth was broad based, driven by increases of 9.3 percent in Industrial, 6.9 percent in Safety, Security and Protection Services, 5.0 percent in Transportation, and 4.2 percent in Electro and Communications. I expect these figures to gather upward...

  • Page 5
    ... said that "imagination is more important than knowledge." While we will invest increased energy and resources in commercialization, marketing and new product launches, we will not forget what makes 3M great - imagination. Net Sales (billions) $16.1 $16.3 $18.2 $20.0 $21.2 01 02 03 04 05...

  • Page 6
    .... All of our businesses will benefit from a close examination of the way we go to market and the way we service our customers. The company can, over time, realize significant gains from improvement in these key areas. Ethics and integrity. 3M is a dynamic and changing enterprise in many ways...

  • Page 7
    ...ingenious solutions Virtually anywhere you go, 3M technologies are at work - making life easier and better for people around the world. You'll find our technologies and products in homes, offices, hospitals, dental offices, manufacturing facilities, cars, aircraft, traffic signs, LCD displays...

  • Page 8
    ... - with applications in countless markets. Post-it® Products - another 3M invention and today a universal communication tool - stick practically anywhere, yet can be repositioned time and again. On the other end of the adhesion spectrum, 3M™ Scotch-Weld ™ Structural Adhesives are so strong they...

  • Page 9
    ... cover and protect I.V. sites and wounds. They're the No. 1 choice of health care professionals globally and are sold in more than 60 countries. Pharmaceutical companies use our transdermal drug delivery systems to deliver medications through the skin. And 3Mâ„¢ ESPEâ„¢ Adperâ„¢ Adhesives make it...

  • Page 10
    ..., the inventive minds at 3M work with a remarkable palette of advanced materials, creating new-to-the-world formulations and proprietary products. Our inventions solve age-old problems and create new opportunities for customers across every market that 3M serves. In the energy industry, we are...

  • Page 11
    ... the naked eye. The result: gleaming smiles that last. Our advanced materials research will continue to be a launch pad for countless new products and applications - materializing in ways we can only imagine today. Drawing on 3M expertise in metal matrix composites, ceramics and nanotechnology, the...

  • Page 12
    ...ective material on the job, and designers incorporate it into garments, footwear, backpacks and more to help make adults and children more visible to motorists. Driver's licenses, passports, badges and other identity documents are more secure, thanks to 3Mâ„¢ Confirmâ„¢ Laminate with Floating Image...

  • Page 13
    ... light management technology. Walking or jogging at night? 3Mâ„¢ Scotchliteâ„¢ Reï¬,ective Material - applied to apparel, backpacks, footwear, safety garments and more - helps make people more visible to drivers. Want to increase the energy efficiency of your home? 3Mâ„¢ Scotchtintâ„¢ Window Films...

  • Page 14
    ..., returning nearly twice as much reï¬,ected light from the signs to drivers as the brightest materials previously available. So you won't miss that detour. Combining microreplication, adhesive and other 3M technologies, 3Mâ„¢ Diamond Gradeâ„¢ DG3 Reï¬,ective Sheeting helps improve roadway safety by...

  • Page 15
    ...ï¬,ick of a wrist. A companion product - 3Mâ„¢ Controltacâ„¢ Plus Graphic Film with Complyâ„¢ Adhesive - is transforming the graphics industry by making it faster and easier to apply large, full-color graphics to buildings and commercial vehicles, saving customers time and money. Microreplication is...

  • Page 16
    ... help improve air quality in millions of homes in the United States, Canada and other countries. Filtrete filters are based on 3M nonwoven materials technology - another technology that's applied across our businesses, in hundreds of ingenious products. Elsewhere in homes, Scotch-Briteâ„¢ Cleaning...

  • Page 17
    ...in other important markets, too. Think better-performing diaper elastics, medical tapes, bandages, surgical masks and drapes, ï¬,oor pads, vibration control products, oil sorbents, filtration products and more. In total, nonwoven materials technology is used in 3M products with annual sales of more...

  • Page 18
    ... grants supported teacher development and advanced teaching methods to help raise student achievement and increase the number of college-bound students, especially from low-income families. On the higher-education front, 3M Foundation grants support technical school and college programs that...

  • Page 19
    ... design and manufacturing through customer use and disposal. And at every stage, Life Cycle Management is used to guide decisions. In recognition of our proactive corporate policies and practices in managing the economic, environmental and social aspects of doing business around the world, 3M was...

  • Page 20
    ... the world. We increase speed and efficiency by sharing technologies, manufacturing operations, brands and other resources across our businesses and geographies. Our businesses produce innovative products, hold leading market positions and generate solid returns on investment. Consumer and Office...

  • Page 21
    ... into solutions for customers in electrical, electronics and communications markets around the world. Our products help customers connect, clean, polish, insulate, protect, finish and test electrical, electronics and communications pathways; store energy; and transmit data, information and ideas...

  • Page 22
    ... innovative technical ideas of the year. Who we are 3M industrial products are based on outstanding technologies, and stand for quality, performance and value worldwide. Whether it's tapes, abrasives, adhesives, specialty chemicals, filtration systems or software for supply chain management, our...

  • Page 23
    ... 3M's technology platforms, our businesses do all of this and more. 2005 Highlights • Increased sales 7.9 percent, with solid growth in our occupational health and environmental safety, industrial mineral products, commercial care, and building safety solutions businesses. • Increased operating...

  • Page 24
    ...ce Business Joaquin Delgado Research and Development and New Business Ventures Gregory J. Ehlert Supply Chain Darrell J. Gacom Consumer Key Accounts and Market Development Paul R. Hanson Protective Materials and Consumer Health Care Lynne E. Looney Advertising, Public Relations and Design Services...

  • Page 25
    ... Delkoski Security Systems Michael A. Kelly Occupational Health and Environmental Safety Kevin S. Ries Commercial Care Martyn J. Tiplady Industrial Mineral Products Staff and Shared Services Executives Lemuel D. Amen Corporate Marketing and Sales Janice K. Angell Total Compensation Resource Center...

  • Page 26
    ... plus equity) Additional Information Cash dividends paid Per share Stock price at year-end Total assets Long-term debt (excluding current portion) Capital expenditures Depreciation and amortization Research, development and related expenses Number of employees at year-end Average shares outstanding...

  • Page 27
    ...] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2005 Commission file number 1-3285 3M COMPANY State of Incorporation: Delaware I.R.S. Employer Identification No. 41-0417775 Principal executive offices: 3M Center, St. Paul...

  • Page 28
    ... 5 Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Submission of Matters to a Vote of Security Holders 3-8 9-10 10 10 10 10 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management...

  • Page 29
    ...,033 employed in the United States and 36,282 employed internationally. Business Segments In 2005, 3M managed its operations in seven operating business segments: Health Care; Industrial; Display and Graphics; Consumer and Office; Electro and Communications; Safety, Security and Protection Services...

  • Page 30
    ... products, crowns, impression materials, preventive sealants, professional tooth whiteners, prophylaxis and orthodontic appliances. In health information systems, 3M develops and markets computer software for hospital coding and data classification, as well as providing related consulting services...

  • Page 31
    ... growth. 3M has 188 sales offices worldwide, with 15 in the United States and 173 internationally. Research and Patents Research and product development constitute an important part of 3M's activities. Products resulting from research and development have been a major driver of 3M's growth. Research...

  • Page 32
    ... in tight supply conditions and significant increases in energy costs, fuel surcharges and prices for certain natural gas and petroleum related raw materials. 3M has avoided disruption to its manufacturing operations through careful management of existing raw material inventories and development and...

  • Page 33
    ... Vice President, Human Resources 2006 Jean Lobey 53 Executive Vice President, Safety, Security and Protection Services Business 2005 Robert D. MacDonald 55 Senior Vice President, Marketing and Sales 2004 James T. Mahan 59 Senior Vice President, Corporate Supply Chain Operations 2005...

  • Page 34
    ... Positions Held During 2001-2006 Executive Vice President, Safety, Security and Protection Services Business, 2002-2004 Executive Vice President, Specialty Material Markets and Corporate Services, 2001-2002 Vice President and General Manager 3M ESPE, 2001 Division Vice President, Dental Products...

  • Page 35
    ... products will prove to be commercially successful. * The Company's future results are subject to fluctuations in the costs and availability of purchased components, compounds, raw materials and energy, including oil and natural gas and their derivatives, due to shortages, increased demand, supply...

  • Page 36
    .... 3M's general offices, corporate research laboratories, and certain division laboratories are located in St. Paul, Minnesota. In the United States, 3M has 15 sales offices in 12 states and operates 59 manufacturing facilities in 23 states. Internationally, 3M has 173 sales offices. The Company...

  • Page 37
    Issuer Purchases of Equity Securities Repurchases of common stock are made to support the Company's stock-based employee compensation plans and for other corporate purposes. On November 8, 2004, the Board of Directors authorized the purchase of $2.0 billion of the Company's common stock between ...

  • Page 38
    ... of approximately $1.8 billion of foreign earnings into the United States pursuant to the repatriation provisions of the American Jobs Creation Act of 2004. 2003 results included charges related to an adverse ruling in a lawsuit filed against 3M in 1997 by LePage's Inc. that reduced operating...

  • Page 39
    ... and marketer of a wide variety of products. In 2005, 3M managed its operations in seven operating business segments: Health Care; Industrial; Display and Graphics; Consumer and Office; Electro and Communications; Safety, Security and Protection Services; and Transportation. Refer to the Performance...

  • Page 40
    ...personal protection products and solutions, particularly respiratory protection products, along with strong demand for cleaning and protection products for commercial buildings. Sales growth in the Transportation segment was led by both the automotive OEM and repair markets. Refer to the Performance...

  • Page 41
    ... material price pressure. 3M's pricing strategy resulted in U.S. price growth of 2.5% in 2005. Internationally, selling prices declined 0.7% in 2005. Adjusting for the price decreases in consumer electronics related businesses (LCD films and flex circuits), international pricing would have increased...

  • Page 42
    ..., with all seven businesses posting worldwide local-currency sales growth. Local-currency growth was led by Display and Graphics; Industrial; Consumer and Office; Safety, Security and Protection Services; and the Transportation businesses. Health Care local-currency sales increased 1.7%, as results...

  • Page 43
    ...lower net income in Sumitomo 3M, while the increase in 2004 related primarily to higher net income in Sumitomo 3M. Cumulative Effect of Accounting Change: As of December 31, 2005, the Company adopted FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" (FIN 47). This...

  • Page 44
    .... In 2005, 3M managed its operations in seven operating business segments: Health Care; Industrial; Display and Graphics; Consumer and Office; Electro and Communications; Safety, Security and Protection Services; and Transportation. Information related to 3M's business segments is presented...

  • Page 45
    ... in the United States and Europe. Takeda will hold commercial rights in certain countries in Asia, while 3M will retain the rights in other parts of the world. In October 2003, IVAX Corporation agreed to assume exclusive rights to 3M's branded health care respiratory products, together with related...

  • Page 46
    ... lens solutions for electronic displays; touch screens and touch monitors; reflective sheeting for transportation safety; and commercial graphics systems. The optical film business provides films that serve numerous market segments of the display lighting industry. 3M provides distinct products for...

  • Page 47
    ..., building maintenance and other markets. Products in this segment include office supply products, stationery products, construction and home improvement products, home care products, protective material products (including consumer health care products such as bandages), and visual systems products...

  • Page 48
    ... range of markets that strive to increase the safety, security and productivity of workers, facilities and systems. Major product offerings include personal protection products, safety and security products, energy control products, cleaning and protection products for commercial establishments, and...

  • Page 49
    ... benefit from new products and solutions for customers, along with a strategy of replicating successful 3M solutions across several distinct segments of the transportation industry. Operating income increased 9.8% to $426 million in 2004. PERFORMANCE BY GEOGRAPHIC AREA Financial information related...

  • Page 50
    ...711 $5,609 United States Europe, Middle East and Africa Asia Pacific Latin America and Canada Total Company Employment: Employment increased by 2,244 people since year-end 2004. The CUNO acquisition in August 2005 added approximately 2,300 employees. The Company continues to increase headcount in...

  • Page 51
    .... Pension and Postretirement Obligations: 3M has various company-sponsored retirement plans covering substantially all U.S. employees and many employees outside the United States. The Company accounts for its defined benefit pension and postretirement health care and life insurance benefit plans in...

  • Page 52
    ... expense recognition when an employee is eligible to retire. 3M employees in the U.S. are eligible to retire beginning at age 55 and after having completed five years of service. Approximately 25 to 30% of the number of stock-based compensation awards are made to this population. The Company will...

  • Page 53
    ... The Company has sufficient access to capital markets to meet currently anticipated growth and acquisition investment funding needs. The Company does not utilize derivative instruments linked to the Company's stock. However, the Company does have contingently convertible debt that, if conditions for...

  • Page 54
    ... in 2003, a portion of the tax timing benefit relates to the tax benefit received from Company pension contributions. Cash Flows from Investing Activities: Years ended December 31 (Millions) Purchases of property, plant and equipment (PP&E) Proceeds from sale of PP&E and other assets Acquisitions...

  • Page 55
    ... related to the sale of 3M's 50% ownership in Durel Corporation to Rogers Corporation. Additional purchases of investments totaled $5 million in 2005, $10 million in 2004 and $16 million in 2003. These purchases include additional survivor benefit insurance and equity investments. The Company...

  • Page 56
    ...Effect of Contingently Convertible Debt on Diluted Earnings per Share" and proposed SFAS No. 128R, "Earnings per Share". Repurchases of common stock are made to support the Company's stock-based employee compensation plans and for other corporate purposes. On November 8, 2004, the Board of Directors...

  • Page 57
    ... ongoing purchase obligations with terms of less than one year. Many of these commitments relate to take or pay contracts, in which 3M guarantees payment to ensure availability of products or services that are sold to customers. The Company expects to receive consideration (products or services) for...

  • Page 58
    ... Company's strategy for growth, product development, market position, future performance or results of current or anticipated products, interest rates, foreign exchange rates, financial results, and the outcome of contingencies, such as legal proceedings. The Company assumes no obligation to update...

  • Page 59
    ...-Term Borrowings Derivatives and Other Financial Instruments Pension and Postretirement Benefit Plans Commitments and Contingencies Employee Savings and Stock Ownership Plans General Employees' Stock Purchase Plan Management Stock Ownership Program Business Segments Geographic Areas Quarterly Data...

  • Page 60
    ... communicated written policies, including business conduct policies, which are designed to require all employees to maintain high ethical standards in the conduct of Company affairs. Internal auditors continually review the accounting and control system. 3M Company Management's Report on Internal...

  • Page 61
    ... on management's assessment and on the effectiveness of the Company's internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States...

  • Page 62
    ... our audit of internal control over financial reporting. CUNO is a wholly-owned subsidiary of the Company whose total assets and total net sales represented less than 10% and less than 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31...

  • Page 63
    Consolidated Statement of Income 3M Company and Subsidiaries Years ended December 31 (Millions, except per share amounts) Net sales Operating expenses Cost of sales Selling, general and administrative expenses Research, development and related expenses Other expense Total Operating income Interest ...

  • Page 64
    ... except per share amount) Assets Current assets Cash and cash equivalents Accounts receivable - net of allowances of $73 and $83 Inventories Finished goods Work in process Raw materials and supplies Total inventories Other current assets Total current assets Investments Property, plant and equipment...

  • Page 65
    ... of unearned compensation Reacquired stock (9.7 million shares) Issuances pursuant to stock option and benefit plans (13.4 million shares) Balance at December 31, 2003 Net income Cumulative translation adjustment Minimum pension liability adjustment Debt and equity securities Derivative financial...

  • Page 66
    ... and liabilities Accounts receivable Inventories Accounts payable Accrued income taxes Product and other insurance receivables and claims Other - net Net cash provided by operating activities Cash Flows from Investing Activities Purchases of property, plant and equipment (PP&E) Proceeds from sale of...

  • Page 67
    ... when purchased. Investments: Investments primarily include the cash surrender value of life insurance policies, real estate not used in the business, venture capital and equity-method investments. Unrealized gains and losses relating to investments classified as available-for-sale are recorded as...

  • Page 68
    .... This condition normally is met when the product has been delivered or upon performance of services. The Company records estimated reductions to revenue for customer and distributor incentives, such as rebates, at the time of the initial sale, with these estimated reductions based on sales terms...

  • Page 69
    ...: The Company utilizes the intrinsic value method as prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and generally no compensation cost is recognized for either the General Employees' Stock Purchase Plan (GESPP) or the Management Stock Ownership...

  • Page 70
    ... expense recognition when an employee is eligible to retire. 3M employees in the U.S. are eligible to retire beginning at age 55 and after having completed five years of service. Approximately 25 to 30% of the number of stock-based compensation awards are made to this population. The Company will...

  • Page 71
    ... grant date and the recognition of the related expense over the period in which the share-based compensation vests. The original effective date for SFAS No. 123R for the Company was July 1, 2005. However, on April 14, 2005, the Securities and Exchange Commission (SEC) adopted a new rule that amends...

  • Page 72
    ... in electronics systems used primarily in the transducers of ultrasound machines. 2) 3M (Display and Graphics Business) purchased certain assets of Mercury Online Solutions Inc., a U.S. operation. The acquired operation provides hardware and software technologies and network management services for...

  • Page 73
    ...stock. The 3M common stock had a market value of $43 million at the acquisition measurement date and was previously held as 3M treasury stock. In March 2004, 3M (Safety, Security and Protection Services Business) purchased 91 percent of the outstanding shares of Hornell Holding AB, a Swedish company...

  • Page 74
    .... This business is involved in the distribution of lens systems for projection televisions. 3) 3M (Safety, Security and Protection Services Business) purchased 100% of the outstanding shares of GuardiaNet Systems, Inc., a software company. 4) 3M (Electro and Communications Business) purchased the...

  • Page 75
    ...2005 translation and other $ (66) (24) (14) (5) (51) (21) (3) $(184) (Millions) Health Care Industrial Display and Graphics Consumer and Office Electro and Communications Safety, Security and Protection Services Transportation Total Company Dec. 31, 2004 balance $ 575 345 885 59 566 193 32 $2,655...

  • Page 76
    ... other current assets Investments Available-for-sale (fair value) Equity-method Cash surrender value of life insurance policies, real estate and other (cost, which approximates fair value) Total investments Property, plant and equipment - at cost Land Buildings and leasehold improvements Machinery...

  • Page 77
    Supplemental Balance Sheet Information (continued) (Millions) Other liabilities Non-funded pension and postretirement benefits Employee benefits Product and other claims Deferred income taxes Minority interest in subsidiaries Deferred income Capital lease obligations Other Total other liabilities ...

  • Page 78
    ... non-cash impact of adopting FIN 47 ($35 million cumulative effect of accounting change). Transactions related to investing and financing activities with significant non-cash components are as follows: In 2004, 3M purchased 100 percent of the outstanding common shares of HighJump Software, Inc., for...

  • Page 79
    ..., net of available foreign tax credits, related to the American Jobs Creation Act of 2004 (the "Jobs Act"), which negatively impacted the 2005 effective worldwide tax rate by 1.5%. The Company made discretionary contributions to its U.S. qualified pension plan of $200 million for the quarter...

  • Page 80
    ... tax credits, of related tax liability as a result of its repatriation plan. In 2005, the Company repatriated approximately $1.8 billion of foreign earnings in the United States pursuant to the provisions of the Jobs Act. NOTE 8. Long-Term Debt and Short-Term Borrowings Long-term debt and short...

  • Page 81
    ... filed with the Securities and Exchange Commission. The terms of the Convertible Notes include a yield to maturity of .50% and an initial conversion premium of 40% over the $65.00 (split-adjusted) closing price of 3M common stock on November 14, 2002. If certain conditions for conversion (relating...

  • Page 82
    ... securities can be remarketed annually, at the option of the dealer, for a year each time, with a final maturity date of December 2010. NOTE 9. Derivatives and Other Financial Instruments The Company uses interest rate swaps, currency swaps, and forward and option contracts to manage risks...

  • Page 83
    ...providing pension benefits, the Company provides certain postretirement health care and life insurance benefits for substantially all of its U.S. employees who reach retirement age while employed by the Company. Most international employees and retirees are covered by government health care programs...

  • Page 84
    ... to annual benefit payments with an independent trustee. On December 8, 2003, the Medicare Prescription Drug Improvement and Modernization Act of 2003 (the Medicare Act) was signed into law. The Act expands Medicare to include coverage for prescription drugs. 3M sponsors medical programs, including...

  • Page 85
    ...non-qualified pension benefit payments totaled $494 million, U.S. Company contributions totaled $320 million, postretirement benefit payments totaled $145 million and postretirement Company contributions totaled $168 million. Due to the U.S. plan measurement date change in 2004, the 2004 numbers for...

  • Page 86
    ... $ 67 Components of net periodic benefit cost and other supplemental information for the year ended December 31 follow: Benefit Plan Information Qualified and Non-qualified Pension Benefits United States (Millions) Service cost Interest cost Expected return on plan assets Amortization of transition...

  • Page 87
    ... primarily on broad, publicly traded equity and fixed-income indices and forwardlooking estimates of active investment management. The Company's expected long-term rate of return on U.S. plan assets is based on an asset allocation assumption of 44% U.S. and 15% international equities, with an 61

  • Page 88
    ...-term rate of return of 7.8% for both U.S. and international equities; 13% private equities with an expected long-term rate of return of 12.8%; 28% fixed-income securities with an expected long-term rate of return of 4.5%; and an additional rate of return of 1.3% from active investment management...

  • Page 89
    ... offsets the 2005 net periodic benefit cost. In 2006, the Company expects to contribute an amount in the range of $100 million to $400 million to its U.S. and international pension plans, and approximately $100 million to its post-retirement plans. The Company does not have a required minimum...

  • Page 90
    ...LePage's favor and appellate rulings sustaining that verdict, direct and indirect tape purchasers filed a number of purported class actions and individual actions against the Company in various state and federal courts. These cases allege that the Company competed unfairly and unlawfully monopolized...

  • Page 91
    ... claimants with actions pending at December 31, 2004. The vast majority of the lawsuits and claims resolved by and currently pending against the Company allege use of some of the Company's mask and respirator products and seek damages from the Company and other defendants for alleged personal injury...

  • Page 92
    ... charges against the Company with the U.S. Equal Employment Opportunity Commission and the pertinent state agencies in Texas, Minnesota and California, during 2005. Such filings include allegations that the release of claims signed by certain former employees in the purported class defined in the...

  • Page 93
    ... granted the Company's motion to dismiss the named plaintiff's personal injury-related claims on the basis that such claims are barred by the exclusivity provisions of the state's Workers Compensation Act. Also in 2005, the judge in a second purported class action lawsuit (filed by three residents...

  • Page 94
    ... production facility at Cottage Grove, Minnesota. The lawsuit seeks unspecified damages in excess of $50,000 per plaintiff and class member. After the District Court granted the Company's motion to dismiss the claims for medical monitoring and public nuisance in April 2005, the plaintiffs filed...

  • Page 95
    ... transparent tape antitrust class action settlements. Breast Implant Insurance Receivables: As of December 31, 2005, the Company had receivables for insurance recoveries related to the breast implant matter of $130 million, representing amounts covered by the Minnesota Supreme Court's ruling of...

  • Page 96
    ... Company performance. All Company contributions initially are invested in 3M common stock, with employee contributions invested in a number of investment funds pursuant to their elections. Vested employees may diversify their 3M shares into other investment options. The Company maintains an Employee...

  • Page 97
    ... related to the ESOP include total debt service on the notes, less dividends. The Company contributes treasury shares, accounted for at fair value, to employee savings plans to cover obligations not funded by the ESOP (reported as an employee benefit expense). Employee Savings and Stock Ownership...

  • Page 98
    ...29 59.37 83.86 For annual and progressive (reload) options, the weighted average fair value at date of grant was calculated utilizing the Black-Scholes option-pricing model and the assumptions that follow. The tax benefit charged directly to equity for employee stock options was $93 million in 2005...

  • Page 99
    ... execution software solutions, and filtration products Optical films and lens solutions for electronic displays, touch screens and touch monitors, reflective sheeting for transportation safety, and commercial graphics systems Sponges, scouring pads, high-performance cloths, consumer and office tapes...

  • Page 100
    Business Segment Information (Millions) Health Care Industrial Display and Graphics Consumer and Office Electro and Communications Safety, Security and Protection Services Transportation Corporate and Unallocated Total Company 2005 2004 2003 2005 2004 2003 2005 2004 2003 2005 2004 2003 2005 ...

  • Page 101
    ... is used by the Company as a secondary performance measure to manage its businesses. Export sales and certain income and expense items are reported within the geographic area where the final sales to 3M customers are made. Geographic Area Information Europe, Middle East and Africa $5,219 5,183 4,718...

  • Page 102
    ... Officer concluded that the Company's disclosure controls and procedures are effective. b. The Company's management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as defined in the Exchange Act Rule 13a-15(f). The management conducted...

  • Page 103
    ...a copy of the code of ethics, at no cost, by writing to us at the following address: 3M Company 3M Center, Building 220-11W-02 St. Paul, MN 55144-1000 Attention: Director, Business Conduct and Compliance Item 11. Executive Compensation. The information relating to executive compensation is set forth...

  • Page 104
    ... of such instruments with respect to issuances of long-term debt of 3M. (10) Material contracts and management compensation plans and arrangements: (10.1) 3M 2005 Management Stock Ownership Program is incorporated by reference from our Proxy Statement for the 2005 Annual Meeting of Stockholders. 78

  • Page 105
    ... our Form 8-K dated May 16, 2005. (10.6) Form of award agreement for non-qualified stock options granted under the 2002 Management Stock Ownership Program, is incorporated by reference from our Form 10-K for the year ended December 31, 2004. (10.7) 3M 1997 General Employees' Stock Purchase Plan, as...

  • Page 106
    ...hereby sign this document pursuant to powers of attorney duly executed by the other persons named, filed with the Securities and Exchange Commission on behalf of such other persons, all in the capacities and on the date stated, such persons constituting a majority of the directors of the Company. By...

  • Page 107
    ...Securities analysts, portfolio managers and representatives of financial institutions should contact: Mark G. Colin Phone: (651) 733-8206 Fax: (651) 737-2901 3M Investor Relations 3M Center, Building 225-01-S-15 St. Paul, MN 55144-1000 Corporate News and Reports Corporate news releases, 3M's Annual...

  • Page 108
    visit us at www.3M.com Corporate Headquarters 3M Center St. Paul, MN 55144-1000 (651) 733-1110 C Minimum 10% Post-Consumer Fiber Printed in U.S.A. © 3M 2006 All Rights Reserved