3M 2005 Annual Report Download - page 55

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growth focused. For example, in December 2005, 3M announced its intention to build an LCD optical film
manufacturing facility in Poland to support the fast-growing LCD-TV market in Europe and to better serve its
customers. The Company expects 2006 capital expenditures to total approximately $1.1 billion, compared with
$943 million in 2005.
In the third quarter of 2005, 3M completed the acquisition of CUNO. 3M acquired CUNO for approximately
$1.36 billion, including assumption of debt. This $1.36 billion included $1.27 billion of cash paid (net of cash
acquired) and the assumption of $80 million of debt, most of which has been repaid. In 2005, the Company also
entered into two additional business combinations for a total purchase price of $27 million. Refer to Note 2 to the
Consolidated Financial Statements for more information on these 2005 business combinations, and for information
concerning 2004 and 2003 business combinations.
Purchases of investments in 2005 include the purchase from TI&M Beteiligungsgesellschaft mbH of 19 percent of
I&T Innovation Technology (discussed previously under the Transportation business segment). The purchase
price of approximately $55 million is reported as “Investments” in the Consolidated Balance Sheet and as
“Purchases of Investments” in the Consolidated Statement of Cash Flows. Other “Purchases of Investments” and
“Proceeds from Sale of Investments” in 2005 are primarily attributable to auction rate securities, which are classified
as available-for-sale. Prior to 2005, purchases of and proceeds from the sale of auction rate securities were classified
as Cash and Cash Equivalents. At December 31, 2004, the amount of such securities taken as a whole was
immaterial to Cash and Cash Equivalents, and accordingly were not reclassified for 2004 and prior. Proceeds from
the sale of investments in 2003 include $26 million of cash received 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 is actively considering additional acquisitions, investments and strategic alliances.
Cash Flows from Financing Activities:
Years ended December 31
(Millions) 2005 2004 2003
Change in short-term debt – net $ (258) $ 399 $ (215)
Repayment of debt (maturities greater than 90 days) (656) (868) (719)
Proceeds from debt (maturities greater than 90 days) 429 358 494
Total change in debt $ (485) $ (111) $ (440)
Purchases of treasury stock (2,377) (1,791) (685)
Reissuances of treasury stock 545 508 555
Dividends paid to stockholders (1,286) (1,125
)
(1,034)
Distributions to minority interests and other – net (76) (15
)
(23)
Net cash used in financing activities $(3,679) $(2,534) $(1,627)
Total debt at December 31, 2005, was $2.381 billion, down from $2.821 billion at year-end 2004, with the
decrease primarily attributable to the retirement of $400 million in medium-term notes. There were no new long-
term debt issuances in 2005. In 2005, the cash flow decrease in net short-term debt of $258 million includes the
portion of short-term debt with original maturities of 90 days or less. The repayment of debt of $656 million
primarily related to the retirement of $400 million in medium-term notes and commercial paper retirements.
Proceeds from debt of $429 million primarily related to commercial paper issuances. Total debt was 19% of total
capital (total capital is defined as debt plus equity), compared with 21% at year-end 2004.
Debt securities, including the Company’s shelf registration, its medium-term notes program, dealer remarketable
securities and Convertible Note, are all discussed in more detail in Note 8 to the Consolidated Financial
Statements. 3M has a shelf registration and medium-term notes program through which $1.5 billion of medium-
term notes may be offered. In 2004, the Company issued approximately $62 million in debt securities under its
medium-term notes program. No debt was issued under this program in 2005. The medium-term notes program
and shelf registration have remaining capacity of approximately $1.438 billion. The Company’s $350 million of dealer
remarketable securities (classified as current portion of long-term debt) were remarketed for one year in
December 2005. In addition, the Company has Convertible Notes with a book value of $539 million at December
31, 2005. The next put option date for these Convertible Notes is November 2007, thus at year-end 2005 this debt