3M 2004 Annual Report Download - page 83

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57
The minimum pension liability adjustment is calculated on an annual basis. If the accumulated benefit obligation
(ABO) exceeds the fair value of pension assets, the employer must recognize a liability that is at least equal to the
unfunded ABO. For the year ended December 31, 2004, the change in the minimum pension liability within
accumulated other comprehensive income increased stockholders’ equity by $1.193 billion (after-tax). This
increase was primarily the result of the assets being above the Accumulated Benefit Obligation for the U.S.
qualified plan, which caused the minimum pension liability recorded for the years ended December 31, 2003 and
2002 to be reversed. In the fourth quarter of 2003, 3M recorded a minimum pension liability adjustment within other
comprehensive income of $173 million (net of tax), compared with $1.056 billion (net of tax) in the fourth quarter of
2002.
Income tax effects for cumulative translation are not significant because no tax provision has been made for the
translation of foreign currency financial statements into U.S. dollars. Reclassification adjustments are made to avoid
double counting in comprehensive income items that are also recorded as part of net income. A summary of these
reclassification adjustments follows:
Reclassification Adjustments to Comprehensive Income
(Millions) 2004 2003 2002
Gains on sale of equity securities,
net of tax provision of $1 million
for 2004 and $2 million for 2002 $ 2 $ – $ 3
Write-down of equity securities,
net of tax benefit of $3 million for 2002 –– (5)
Cash flow hedging instruments, gains (losses) – net
of tax benefit of $32 million for 2004, $44 million for 2003
and $18 million for 2002 (51) (96) (30)
NOTE 7. Supplemental Cash Flow Information
(Millions) 2004 2003 2002
Cash income tax payments $1,109 $ 663 $ 398
Cash interest payments 70 85 80
Capitalized interest 8 9 20
Individual amounts on the Consolidated Statement of Cash Flows exclude the effects of acquisitions, divestitures and
exchange rate impacts, which are presented separately.
In 2004, 3M purchased 100 percent of the outstanding common shares of HighJump Software, Inc., for approximately
$66 million, which included $23 million of cash paid (net of cash acquired) plus 3M common stock that had a fair
market value of $43 million. Dividends declared, but not paid at December 31, 2004, of $34 million were payable to
minority interests in consolidated subsidiaries. In 2003, capital lease obligations of approximately $70 million were
incurred, primarily related to a lease for a building in the United Kingdom (refer to Note 12 to the Consolidated
Financial Statements for more information on capital leases). In 2002, 3M purchased certain assets and specified
liabilities of Emtech Emulsion Technologies, Inc. and Emtech Manufacturing Corporation in exchange for shares of
3M common stock that had a fair market value of $35 million.