3M 2006 Annual Report Download - page 79

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business segments as follows:
Industrial and Transportation $ 15
Health Care 293
Display and Graphics 39
Consumer and Office -
Safety, Security and Protection Services 10
Electro and Communications 46
Total $403
Actions with respect to the above activities are expected to be substantially completed in 2007 and additional charges are
not expected to be material.
In connection with this targeted restructuring plan, the Company eliminated a total of approximately 1,950 positions, which
represented various functions within the Company. Approximately 480 positions were pharmaceuticals business
employees, approximately 980 positions related to overhead reduction, primarily in worldwide staff overhead, and
approximately 490 positions were business-specific reduction actions. Of the 1,950 employment reductions, about 55% are
in the United States, 21% in Europe, 16% in Latin America and Canada, and 8% in the Asia Pacific area.
Employee-related severance charges are largely based upon distributed employment policies and substantive severance
plans and were reflected in the quarter in which management approved the restructuring actions. Severance amounts for
which affected employees were required to render service in order to receive benefits at their termination dates were
measured at the date such benefits were communicated to the applicable employees and recognized as expense over the
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Non-cash charges in 2006 include employee-related charges of approximately $30 million related to special termination
pension and medical benefits granted to certain U.S. eligible employees. These additional pension and medical benefits
were reflected as a component of the benefLWREOLJDWLRQRIWKH&RPSDQ\¶VSHQVLRQand medical plans as of December 31,
2006. In addition, the Company also recorded $5 million of non-cash stock option expense due to the reclassification of
certain employees age 50 and older to retiree status, resulting in a modification of their original stock option awards for
accounting purposes.
Contract termination and other charges primarily reflect costs to terminate a contract before the end of its term (measured
at fair value at the time the Company provided notice to the counterparty) or costs that will continue to be incurred under
the contract for its remaining term without economic benefit to the Company.
Asset impairment charges in 2006 associated with the pharmaceuticals business and business-specific actions include
$109 million relative to property, plant and equipment; $30 million relative to intangible assets; and $5 million relative to
other assets. Impairment charges relative to intangible assets and property, plant and equipment reflect the excess of the
DVVHWV¶FDUU\LQJYDOXHVRYHUWKHLUIDLUYDOXHVDVGLVFXVVed in Note 1. The pharmaceuticals business asset impairment
charges are for certain assets not transferred to the buyers and primarily relate to the write-down of the assets to salvage
value. The business-specific asset impairment charges primarily relate to decisions the Company made in the fourth
quarter of 2006 to exit certain marginal product lines in the Display and Graphics segment and Electro and
Communications segment.
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