3M 2007 Annual Report Download - page 40

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34
Cash dividends paid to stockholders totaled $1.380 billion ($1.92 per share) in 2007, $1.376 billion ($1.84 per share)
in 2006 and $1.286 billion ($1.68 per share) in 2005. 3M has paid dividends since 1916. In February 2008, the Board
of Directors increased the quarterly dividend on 3M common stock by 4.2% to 50 cents per share, equivalent to an
annual dividend of $2.00 per share. This marked the 50th consecutive year of dividend increases. Other cash flows from
financing activities primarily include distributions to minority interests, excess tax benefits from stock-based
compensation, changes in cash overdraft balances, and principal payments for capital leases.
Off-Balance Sheet Arrangements and Contractual Obligations:
As of December 31, 2007, the Company has not utilized special purpose entities to facilitate off-balance sheet
financing arrangements. 3M’s accrued product warranty liabilities, recorded on the Consolidated Balance Sheet as
part of current and long-term liabilities, are estimated at approximately $21 million. 3M does not consider this amount
to be material. The fair value of 3M guarantees of loans with third parties and other guarantee arrangements are not
material.
In addition to guarantees, 3M, in the normal course of business, periodically enters into agreements that require the
Company to indemnify either major customers or suppliers for specific risks, such as claims for injury or property
damage arising out of the use of 3M products or the negligence of 3M personnel, or claims alleging that 3M products
infringe third-party patents or other intellectual property. While 3M’s maximum exposure under these indemnification
provisions cannot be estimated, these indemnifications are not expected to have a material impact on the Company’s
consolidated results of operations or financial condition.
A summary of the Company’s significant contractual obligations as of December 31, 2007, follows:
Contractual Obligations Payments due by year
After
(Millions) Total 2008 2009 2010 2011 2012 2012
Long-term debt, including current portion (Note 10) $4,559 $ 540 $477 $ 24 $ – $500 $3,018
Interest on long-term debt 2,671 211 185 170 169 169 1,767
Operating leases (Note 13) 441 98 79 58 35 30 141
Capital leases (Note 13) 84 7 6 6 6 5 54
Unconditional purchase obligations and other 787 626 120 33 5 2 1
Total contractual cash obligations $8,542 $1,482 $867 $291 $215 $706 $4,981
Long-term debt payments due in 2008 include $350 million of dealer remarketable securities (final maturity 2010) and
$62 million of floating rate notes (final maturity 2044). These securities are classified as the current portion of long-
term debt as the result of put provisions associated with these debt instruments.
Unconditional purchase obligations are defined as an agreement to purchase goods or services that is enforceable
and legally binding on the Company. Included in the unconditional purchase obligations category above are certain
obligations related to take or pay contracts, capital commitments, service agreements and utilities. These estimates
include both unconditional purchase obligations with terms in excess of one year and normal 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 these unconditional purchase obligations. Contractual capital
commitments are included in the preceding table, but these commitments represent a small part of the Company’s
expected capital spending in 2008 and beyond. The purchase obligation amounts do not represent the entire
anticipated purchases in the future, but represent only those items for which the Company is contractually obligated.
The majority of 3M’s products and services are purchased as needed, with no unconditional commitment. For this
reason, these amounts will not provide a reliable indicator of the Company’s expected future cash outflows on a
stand-alone basis.
Other obligations, included in the preceding table within the caption entitled “Unconditional purchase obligations and
other,” include the current portion of the liability for uncertain tax positions under FIN 48. The Company is not able to
reasonably estimate the timing of the long-term payments or the amount by which the liability will increase or
decrease over time; therefore, the long-term portion of the liability of $304 million is excluded from the preceding table.
Refer to Note 8 for further details.
As discussed in Note 11, the Company does not have a required minimum pension contribution obligation for its U.S.
plans in 2008 and Company contributions to its U.S. and international pension plans are expected to be largely
discretionary in 2008 and future years; therefore, amounts related to these plans are not included in the preceding table.