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54
American Jobs Creation Act of 2004:
On October 22, 2004, the President signed the American Jobs Creation Act of 2004 (the “Jobs Act”). The Jobs Act
provides a deduction for income from qualified domestic production activities, which will be phased in from 2005
through 2010. In return, the Act also provides for a two-year phase-out of the existing extra-territorial income
exclusion (ETI) for foreign sales that was viewed to be inconsistent with international trade protocols by the
European Union. Uncertainty remains as to how to interpret numerous provisions in the Jobs Act. At this time, the
Company does not expect the net effect of the phase-out of the ETI and the phase-in of this new deduction to
materially impact the effective tax rate for 2006.
The Jobs Act created a temporary incentive for U.S. corporations to repatriate accumulated income earned abroad by
providing an 85% dividends received deduction for certain dividends from controlled foreign corporations. This provided
3M the opportunity to tax effectively repatriate foreign earnings for U.S. qualifying investments specified by 3M’s
domestic reinvestment plan. During 2005, the Company completed its evaluation of the repatriation provision and,
in the second quarter of 2005, recognized $75 million, net of available foreign tax credits, of related tax liability as
a result of its repatriation plan. In 2005, the Company repatriated approximately $1.8 billion of foreign earnings in
the United States pursuant to the provisions of the Jobs Act.
NOTE 8. Long-Term Debt and Short-Term Borrowings
Long-term debt and short-term borrowings as of December 31 consisted of the following (with interest rates as of
December 31, 2005):
Currency/ Effective
Long-Term Debt Fixed vs. Interest Maturity
(Millions) Floating Rate* Date 2005 2004
Convertible notes USD Fixed 3.25% 2032 $ 539 $ 556
Dealer remarketable securities USD Fixed 5.65% 2010 350 350
6.375% note USD Fixed 6.38% 2028 328 328
ESOP debt guarantee USD Fixed 5.62% 2006-2009 165 202
Floating rate note USD Floating 4.15% 2041 100 100
Floating rate note USD Floating 4.14% 2044 62 62
Other borrowings Various 3.65% 2007-2040 257 134
Medium-term notes USD Floating – 2005 – 400
Total long-term debt $1,801 $2,132
Less: current portion of long-term debt 492 1,405
Long-term debt $1,309 $ 727
Short-Term Borrowings and
Current Portion of Long-Term Debt Effective
(Millions) Interest Rate* 2005 2004
Current portion of long-term debt 5.25% $ 492 $1,405
U.S. dollar commercial paper 4.09% 514 671
Other borrowings 3.32% 66 18
Total short-term borrowings and
current portion of long-term debt $1,072 $2,094
Weighted-Average Effective Interest Rate*
Total Excluding ESOP Debt
At December 31 2005 2004 2005 2004
Short-term 4.57% 2.46% 4.54% 2.40%
Long-term 3.38% 3.82% 3.14% 3.30%
* Debt tables reflect the effects of interest rate swaps at December 31; weighted-average effective interest rate table reflects the
combined effects of interest rate and currency swaps at December 31.