3M 2005 Annual Report Download - page 84

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their beneficiaries. There are no plan assets in the non-qualified plan due to its nature. For its U.S. postretirement
plan, the Company has set aside amounts at least equal 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 prescription drug coverage for U.S. retirees. On May 19, 2004, the FASB issued FSP
No. 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement
and Modernization Act of 2003”, which requires current recognition of the federal subsidy that employers may
receive for providing drug coverage to retirees. FSP No. 106-2 was effective for the Company July 1, 2004. The
Company remeasured its plans’ assets and accumulated postretirement benefit obligation (APBO) as of June 30,
2004 to include the effects of the Medicare Act. The Medicare Act reduced the APBO by $240 million, which was
partially offset by an increase to the APBO of $170 million as a result of the plan remeasurement. The net impact
to the APBO was a reduction of $70 million.
In 2004, the Company’s U.S. plan measurement date was changed from September 30 to December 31.
Information presented in the tables for U.S. plans for 2005 and 2004 reflects a measurement date of December
31, and for 2003 a measurement date of September 30. The primary reasons for this change include consistency
between the U.S. and international measurement dates, the increased clarity that results from having the same
measurement and balance sheet dates, and administrative simplification. This change did not have a material
impact on the determination of periodic pension cost or pension obligations.
The Company completed the acquisition of CUNO during the third quarter of 2005. CUNO has several U.S. plans
and an international pension plan. The U.S. plans had a combined projected benefit obligation of $53 million and
plan assets of $42 million as of August 1, 2005. The international pension plan had a projected benefit obligation
of $13 million and plan assets of $10 million as of August 1, 2005. These plans are included in the balances of the
appropriate U.S. and International categories in the tables that follow.
The following is a summary of the funded status of the plans as of December 31:
Qualified and Non-qualified Pension Benefits
United States International
(Millions) 2005 2004 2005 2004
Projected benefit obligation $10,052 $8,949 $3,884 $3,896
Accumulated benefit obligation 9,410 8,331 3,306 3,375
Plan assets 9,285 8,422 3,340 3,305
Funded status (767) (527) (544) (591)
Certain international pension plans were underfunded as of December 31, 2005 and 2004. The accumulated
benefit obligations of these plans were $807 million in 2005 and $1.378 billion in 2004. The assets of these plans
were $544 million in 2005 and $1.073 billion in 2004. The net underfunded amounts are included in current and
other liabilities on the Consolidated Balance Sheet.