3M 2007 Annual Report Download - page 25

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19
As discussed in Note 1, effective January 1, 2006, 3M adopted Statement of Financial Accounting Standards No. 123
(revised 2004), “Share-Based Payment” (SFAS No. 123R), which required 3M to expense stock-based compensation. The
Company adopted SFAS No. 123R using the modified retrospective method. Effective January 1, 2006, all prior periods
were revised to give effect to the fair-value-based method of accounting for awards granted in fiscal years beginning on or
after January 1, 1995. For additional discussion, refer to Note 15. Stock-based compensation expense for the years
ended December 31, 2007, 2006 and 2005 is summarized by business segment in the table that follows.
Stock-based compensation expense Years ended
December 31
(Millions) 2007 2006 2005
Industrial and Transportation $ 58 $ 50 $ 46
Health Care 40 42 35
Display and Graphics 33 27 19
Consumer and Office 24 24 21
Safety, Security and Protection Services 23 21 16
Electro and Communications 21 21 18
Corporate and Unallocated 29 15 –
Total Company $228 $200 $155
As discussed in the preceding overview section, the combination of the 2007 gain on sale of businesses and real
estate, net of environmental liability charges, restructuring and other exit activities benefited 2007 operating income by
$681 million, or 2.8% of net sales. The 2006 gain on sale of businesses, net of restructuring and other items benefited
2006 operating income by $523 million, or 2.2% of net sales. The following tables summarize these items by business
segment. In 2006, items included in the “Other” category of the table are acquired in-process research and development
expenses ($95 million), settlement costs of a previously disclosed antitrust class action ($40 million), and environmental
obligations related to the pharmaceuticals business ($13 million).
2007 Gain on Sale, Restructuring and Other Summary
Gain on Environ- Restructuring
Gain on
(Millions) sale of mental and other exit sale of
businesses liabilities activities real estate Total
Industrial and Transportation $ – $ – $ 9 $ – $ 9
Health Care:
Gain on sale of pharmaceuticals business (781) – – – (781)
Restructuring actions and other – – (10) – (10)
Display and Graphics (68) – 17 – (51)
Consumer and Office – – – – –
Safety, Security and Protection Services – – 29 – 29
Electro and Communications – – 41 – 41
Corporate and Unallocated – 134
–
(52) 82
Total operating income penalty (benefit) $(849) $134 $ 86 $(52) $(681)