3M 2007 Annual Report Download - page 39

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approximately $55 million, which is reported as “Investments” in the Consolidated Balance Sheet and as “Purchases
of marketable securities and investments” in the Consolidated Statement of Cash Flows. The recovery of
approximately $25 million of this investment in 2007 reduced “Investments” and is shown in cash flows within
“Proceeds from sale of marketable securities and investments.” This investment is discussed in more detail under the
preceding section entitled Industrial and Transportation Business. Additional purchases of investments include
additional survivor benefit insurance and equity investments.
Cash Flows from Financing Activities:
Years ended December 31
(Millions) 2007 2006 2005
Change in short-term debt – net $(1,222) $ 882 $ (258)
Repayment of debt (maturities greater than 90 days) (1,580) (440) (656)
Proceeds from debt (maturities greater than 90 days) 4,024 693 429
Total cash change in debt $ 1,222 $ 1,135 $ (485)
Purchases of treasury stock (3,239) (2,351) (2,377)
Reissuances of treasury stock 796 523 545
Dividends paid to stockholders (1,380) (1,376) (1,286)
Excess tax benefits from stock-based compensation 74 60 54
Distributions to minority interests and other – net (20) (52) (76)
Net cash used in financing activities $(2,547) $(2,061) $(3,625)
Total debt at December 31, 2007, was $4.920 billion, up from $3.553 billion at year-end 2006. The net change in
short-term debt is primarily due to commercial paper activity. In 2007, the repayment of debt for maturities greater
than 90 days is primarily comprised of commercial paper repayments of approximately $1.15 billion and the November
2007 redemption of approximately $322 million in Convertible Notes. In 2007, proceeds from debt included long-term
debt and commercial paper issuances totaling approximately $4 billion. This was comprised of Eurobond issuances in
December 2007 and July 2007 totaling approximately $1.5 billion in U.S. dollars, a March 2007 long-term debt
issuance of $750 million and a December 2007 fixed rate note issuance of $500 million, plus commercial paper
issuances (maturities greater than 90 days) of approximately $1.25 billion. Increases in long-term debt have been
used, in part, to fund share repurchase activities. The Company accelerated purchases of treasury stock when
compared to prior years, buying back $3.2 billion in shares in 2007. Total debt was 30% of total capital (total capital is
defined as debt plus equity), compared with 26% at year-end 2006.
Debt securities, including 2007 debt issuances, the Company’s shelf registration, dealer remarketable securities and
Convertible Notes, are all discussed in more detail in Note 10. The Company has a "well-known seasoned issuer"
shelf registration statement, effective February 24, 2006, to register an indeterminate amount of debt or equity
securities for future sales. On June 15, 2007, the Company registered 150,718 shares of the Company's common
stock under this shelf on behalf of and for the sole benefit of the selling stockholders in connection with the
Company's acquisition of assets of Diamond Productions, Inc. The Company intends to use the proceeds from future
securities sales off this shelf for general corporate purposes. In connection with this shelf registration, in June 2007
the Company established a medium-term notes program through which up to $3 billion of medium-term notes may be
offered. In December 2007, 3M issued a five-year, $500 million, fixed rate note with a coupon rate of 4.65% under this
medium-term notes program. This program has a remaining capacity of $2.5 billion as of December 31, 2007.
The Company’s $350 million of dealer remarketable securities (classified as current portion of long-term debt) were
remarketed for one year in December 2007. At December 31, 2007, $350 million of dealer remarketable securities
(final maturity 2010) and $62 million of floating rate notes (final maturity 2044) are classified as current portion of long-
term debt as the result of put provisions associated with these debt instruments. The Company has Convertible Notes
with a book value of $222 million at December 31, 2007. The next put option date for these Convertible Notes is
November 2012. In November 2007, 364,598 outstanding bonds were redeemed resulting in a payout from 3M of
approximately $322 million.
Repurchases of common stock are made to support the Company’s stock-based employee compensation plans and for
other corporate purposes. In February 2007, 3M’s Board of Directors authorized a two-year share repurchase of up to
$7.0 billion for the period from February 12, 2007 to February 28, 2009. As of December 31, 2007, approximately $4.1
billion remained available for repurchase. Refer to the table titled “Issuer Purchases of Equity Securities” in Part II, Item 5,
for more information.