3M 2007 Annual Report Download - page 68

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62
28, 35, or 90 days. The funds associated with failed auctions will not be
accessible until a successful auction occurs or a buyer is found outside of the auction process. Based on broker-
dealer valuation models and an analysis of other-than-temporary impairment factors, auction rate securities with an
original par value of approximately $34 million were written-down to an estimated fair value of $16 million as of
December 31, 2007. This write-down resulted in an “other-than-temporary” impairment charge of approximately $8
million (pre-tax) included in net income and a temporary impairment charge of $10 million (pre-tax) reflected as an
unrealized loss within other comprehensive income for 2007. As of December 31, 2007, these investments in auction
rate securities have been in a loss position for less than six months. These auction rate securities are classified as
non-current marketable securities as of December 31, 2007 as indicated in the preceding table.
3M reviews impairments associated with the above in accordance with Emerging Issues Task Force (EITF) 03-1 and
FSP SFAS 115-1 and 124-1, “The Meaning of Other-Than-Temporary-Impairment and Its Application to Certain
Investments,” to determine the classification of the impairment as “temporary” or “other-than-temporary.” A temporary
impairment charge results in an unrealized loss being recorded in the other comprehensive income component of
stockholders’ equity. Such an unrealized loss does not reduce net income for the applicable accounting period
because the loss is not viewed as other-than-temporary. The company believes that a portion of the impairment of its
auction rate securities investments is temporary and a portion is other-than-temporary. The factors evaluated to
differentiate between temporary and other-than-temporary include the projected future cash flows, credit ratings
actions, and assessment of the credit quality of the underlying collateral.
The balance at December 31, 2007 for marketable securities and short-term investments by contractual maturity are
shown below. Actual maturities may differ from contractual maturities because the issuers of the securities may have
the right to prepay obligations without prepayment penalties.
Dec. 31,
(Millions) 2007
Due in one year or less $ 231
Due after one year through three years 545
Due after three years through five years 221
Due after five years 62
Total marketable securities $1,059
predetermined intervals, usually every 7,