Market Overview

3M Reports Second-Quarter 2018 Results

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Second-Quarter Highlights:

  • Sales of $8.4 billion, up 7.4 percent year-on-year
  • Organic local-currency sales growth of 5.6 percent; growth in all
    business groups and all geographic areas
  • GAAP EPS of $3.07 vs. $2.58 last year, up 19 percent year-on-year
    • Q2 2018 earnings includes a $0.48 per share benefit from
      divestiture gain, net of related restructuring actions
    • Q2 2017 earnings included a $0.33 per share benefit from
      divestiture gain, partially offset by portfolio and footprint
      investments
  • Returned $2.4 billion to shareholders via dividends and gross share
    repurchases
  • Updated 2018 earnings guidance to reflect full-year impact from the
    recently completed divestiture of the communication markets business,
    which was not included in prior guidance

3M (NYSE:MMM) today reported second-quarter 2018 results.

"3M had a strong quarter, including organic growth of 6 percent that was
broad-based across all business groups and geographic areas," said Mike
Roman, 3M chief executive officer. "Our team delivered record sales and
a double-digit increase in earnings per share, while keeping our
commitment to investing in our business and returning cash to
shareholders.

"Going forward we will continue to prioritize 3M's portfolio, strengthen
our innovation capabilities and accelerate our transformation, while
developing our people. The 3M Playbook is working and we're just getting
started. We are well positioned to deliver even greater value for our
customers and shareholders in 2018 and beyond."

Sales were up 7.4 percent to $8.4 billion. Organic local-currency sales
increased 5.6 percent while acquisitions, net of divestitures, increased
sales by 0.8 percent. Foreign currency translation increased sales by
1.0 percent year-on-year.

Total sales grew 15.8 percent in Safety and Graphics, 6.8 percent in
Industrial, 4.9 percent in Health Care, 4.6 percent in Consumer, and 3.6
percent in Electronics and Energy. Organic local-currency sales
increased 8.5 percent in Safety and Graphics, 5.7 percent in Industrial,
5.2 percent in Electronics and Energy, 4.3 percent in Consumer, and 3.8
percent in Health Care.

On a geographic basis, total sales grew 9.5 percent in EMEA (Europe,
Middle East and Africa), 7.9 percent in Asia Pacific, 7.1 percent in the
U.S., and 3.1 percent in Latin America/Canada. Organic local-currency
sales increased 6.0 percent in Latin America/Canada, 5.8 percent in
EMEA, 5.6 percent in the U.S, and 5.5 percent in Asia Pacific.

Second-quarter GAAP earnings were $3.07 per share, an increase of 19
percent versus the second quarter of 2017. During the quarter, the
company recorded a benefit of $0.48 per share related to the divestiture
of the communication markets business, net of related restructuring
actions. Second-quarter 2017 GAAP earnings were $2.58 per share which
included a net benefit of $0.33 per share from the identity management
business divestiture gain, partially offset by portfolio and footprint
investments.

Second-quarter operating income was $2.4 billion with operating margins
of 28.6 percent. Operating income includes a benefit of $389 million
from the communication markets business divestiture, net of related
restructuring actions.

The company paid $802 million in cash dividends to shareholders and
repurchased $1.6 billion of its own shares during the quarter.

3M updated its 2018 GAAP earnings expectations to reflect the full-year
impact from the communication markets business divestiture and related
actions. The company now expects its GAAP earnings to be in the range of
$9.08 to $9.38 per share versus $8.68 to $9.03 previously. Excluding the
full-year impacts from the communication markets business divestiture
gain and related actions, a first-quarter legal settlement, and the Tax
Cuts and Jobs Act-related expense, 3M now expects its adjusted 2018
earnings to be in the range of $10.20 to $10.45 per share versus prior
expectation of $10.20 to $10.55. The update to the range reflects the
impact of the divested income associated with the communication markets
business which was not included in prior guidance.

The company maintained its full-year organic local-currency sales growth
guidance of 3 to 4 percent and free cash flow conversion of 90 to 100
percent, as referenced in the "Supplemental Financial Information
Non-GAAP Measures" section.

Second-Quarter Business Group Discussion

Industrial

  • Sales were $3.1 billion, up 6.8 percent in U.S. dollars. Organic
    local-currency sales increased 5.7 percent, foreign currency
    translation increased sales by 1.2 percent, and divestitures decreased
    sales by 0.1 percent.
  • On an organic local-currency basis:
    • Sales increased in all businesses led by separation and
      purification, advanced materials, abrasives, and industrial
      adhesives and tapes.
    • Sales grew in all geographic areas led by EMEA, the U.S., and
      Latin America/Canada.
  • Operating income was $724 million, an increase of 27.4 percent
    year-on-year; operating margins were 23.0 percent.

Safety and Graphics

  • Sales were $1.8 billion, up 15.8 percent in U.S. dollars. Organic
    local-currency sales increased 8.5 percent, foreign currency
    translation increased sales by 1.0 percent, and acquisitions, net of
    divestitures, increased sales by 6.3 percent.
  • On an organic local-currency basis:
    • Sales increased in all businesses led by personal safety,
      commercial solutions, and transportation safety.
    • Sales grew in all geographic areas led by EMEA, the U.S., and Asia
      Pacific.
  • Operating income was $480 million, down 43.6 percent year-on-year; Q2
    2017 operating income included the identity management divestiture
    gain of $457 million; operating margins were 26.4 percent.

Health Care

  • Sales were $1.5 billion, up 4.9 percent in U.S. dollars. Organic
    local-currency sales increased 3.8 percent, foreign currency
    translation increased sales by 1.0 percent, and acquisitions increased
    sales by 0.1 percent.
  • On an organic local-currency basis:
    • Sales growth was led by food safety, medical solutions, and health
      information systems; drug delivery declined.
    • Sales grew in all geographic areas led by Asia Pacific, Latin
      America/Canada, and EMEA.
  • Operating income was $435 million, an increase of 6.7 percent
    year-on-year; operating margins were 28.6 percent.

Electronics and Energy

  • Sales were $1.3 billion, up 3.6 percent in U.S. dollars. Organic
    local-currency sales increased 5.2 percent, foreign currency
    translation increased sales by 1.1 percent and divestitures decreased
    sales by 2.7 percent.
  • On an organic local-currency basis:
    • Energy-related sales grew by 9 percent; electronics-related sales
      increased 4 percent with growth in both electronics materials
      solutions, and display materials and systems.
    • Sales grew in all geographic areas led by the U.S., EMEA, and Asia
      Pacific.
  • Operating income was $865 million, an increase of 167 percent
    year-on-year, reflecting a benefit of $494 million from the
    communication markets divestiture gain; operating margins were 64.7
    percent.

Consumer

  • Sales were $1.2 billion, up 4.6 percent in U.S. dollars. Organic
    local-currency sales increased 4.3 percent and foreign currency
    translation increased sales by 0.3 percent.
  • On an organic local-currency basis:
    • Sales grew in home improvement, stationery and office, and home
      care; consumer health care declined.
    • Sales grew in the U.S., Latin America/Canada, and Asia Pacific;
      EMEA declined.
  • Operating income was $261 million, up 32.3 percent year-on-year;
    operating margins were 21.4 percent.

3M will conduct an investor teleconference at 9:00 a.m. EDT (8:00 a.m.
CDT) today. Investors can access this conference via the following:

  • Live webcast at http://investors.3M.com.
  • Live telephone:
    Call 800-762-2596 within the U.S. or +1
    212-231-2916 outside the U.S. Please join the call at least 10 minutes
    before the start time.
  • Webcast replay:
    Go to 3M's Investor Relations website at http://investors.3M.com
    and click on "Quarterly Earnings."
  • Telephone replay:
    Call 800-633-8284 within the U.S. or +1
    402-977-9140 outside the U.S. (for both U.S. and outside the U.S., the
    access code is 21863182). The telephone replay will be available until
    11:30 a.m. EDT (10:30 a.m. CDT) on July 31, 2018.

Forward-Looking Statements
This news release contains
forward-looking information about 3M's financial results and estimates
and business prospects that involve substantial risks and uncertainties.
You can identify these statements by the use of words such as
"anticipate," "estimate," "expect," "aim," "project," "intend," "plan,"
"believe," "will," "should," "could," "target," "forecast" and other
words and terms of similar meaning in connection with any discussion of
future operating or financial performance or business plans or
prospects. Among the factors that could cause actual results to differ
materially are the following: (1) worldwide economic, political, and
capital markets conditions and other factors beyond the Company's
control, including natural and other disasters or climate change
affecting the operations of the Company or its customers and suppliers;
(2) the Company's credit ratings and its cost of capital; (3)
competitive conditions and customer preferences; (4) foreign currency
exchange rates and fluctuations in those rates; (5) the timing and
market acceptance of new product offerings; (6) the availability and
cost of purchased components, compounds, raw materials and energy
(including oil and natural gas and their derivatives) due to shortages,
increased demand or supply interruptions (including those caused by
natural and other disasters and other events); (7) the impact of
acquisitions, strategic alliances, divestitures, and other unusual
events resulting from portfolio management actions and other evolving
business strategies, and possible organizational restructuring; (8)
generating fewer productivity improvements than estimated; (9)
unanticipated problems or delays with the phased implementation of a
global enterprise resource planning (ERP) system, or security breaches
and other disruptions to the Company's information technology
infrastructure; (10) financial market risks that may affect the
Company's funding obligations under defined benefit pension and
postretirement plans; and (11) legal proceedings, including significant
developments that could occur in the legal and regulatory proceedings
described in the Company's Annual Report on Form 10-K for the year ended
Dec. 31, 2017, and any subsequent quarterly reports on Form 10-Q (the
"Reports"). Changes in such assumptions or factors could produce
significantly different results. A further description of these factors
is located in the Reports under "Cautionary Note Concerning Factors That
May Affect Future Results" and "Risk Factors" in Part I, Items 1 and 1A
(Annual Report) and in Part I, Item 2 and Part II, Item 1A (Quarterly
Reports). The information contained in this news release is as of the
date indicated. The Company assumes no obligation to update any
forward-looking statements contained in this news release as a result of
new information or future events or developments.

 

3M Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME

(Millions, except per-share amounts)

(Unaudited)

 
    Three months ended     Six months ended
June 30, June 30,
2018     2017 2018     2017
 
Net sales $ 8,390   $ 7,810   $ 16,668   $ 15,495  
 
Operating expenses
Cost of sales 4,227 4,020 8,463 7,902
Selling, general and administrative expenses 1,800 1,620 4,373 3,234
Research, development and related expenses 468 478 954 954
Gain on sale of businesses   (506 )   (461 )   (530 )   (490 )
 
Total operating expenses   5,989     5,657     13,260     11,600  
 
Operating income   2,401     2,153     3,408     3,895  
 
Other expense (income), net   51     11     93     16  
 
Income before income taxes 2,350 2,142 3,315 3,879
 
Provision for income taxes   488     557     847     968  
 
Net income including noncontrolling interest $ 1,862   $ 1,585   $ 2,468   $ 2,911  
 
Less: Net income attributable to noncontrolling interest   5     2     9     5  
 
Net income attributable to 3M $ 1,857   $ 1,583   $ 2,459   $ 2,906  
 
Weighted average 3M common shares outstanding – basic 591.4 598.1 593.8 598.1
Earnings per share attributable to 3M common shareholders – basic $ 3.14   $ 2.65   $ 4.14   $ 4.86  
 
Weighted average 3M common shares outstanding – diluted 604.2 612.8 608.5 612.4
Earnings per share attributable to 3M common shareholders – diluted $ 3.07   $ 2.58   $ 4.04   $ 4.74  
 
Cash dividends paid per 3M common share $ 1.36   $ 1.175   $ 2.72   $ 2.35  
 
As discussed in note (c), results of operations for the first
quarter of 2018 were impacted by an $897 million pre-tax charge
related to settlement of a previously disclosed lawsuit with the
State of Minnesota and a $217 million measurement period adjustment
relative to the accounting for the 2017 enactment of the Tax Cuts
and Jobs Act. Results of operations for the second quarter of 2018
reflected the net $389 million pre-tax impact of the Communication
Markets divestiture gain, net of restructuring actions. In addition,
as discussed in 3M's Form 8-K dated May 8, 2018, (which updated 3M's
2017 Annual Report on Form 10-K) the Company adopted Accounting
Standards Update (ASU) No. 2017-07 relative to the presentation of
pension and postretirement benefit costs in the first quarter of
2018 with retroactive impact to prior periods.
 
 
3M Company and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in millions)
(Unaudited)
       

   June 30,   

December 31,
2018 2017
ASSETS
Current assets
Cash and cash equivalents $ 2,801 $ 3,053
Marketable securities – current 385 1,076
Accounts receivable – net 5,383 4,911
Inventories 4,238 4,034
Prepaids 713 937
Other current assets   370   266
Total current assets   13,890   14,277
Property, plant and equipment – net 8,645 8,866
Goodwill and intangible assets – net 12,894 13,449
Other assets   1,349   1,395
Total assets $ 36,778 $ 37,987
 
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings and
current portion of long-term debt $ 3,225 $ 1,853
Accounts payable 1,871 1,945
Accrued payroll 646 870
Accrued income taxes 293 310
Other current liabilities   2,867   2,709
Total current liabilities   8,902   7,687
Long-term debt 11,294 12,096
Other liabilities   6,154   6,582
Total liabilities $ 26,350 $ 26,365
 
Total equity $ 10,428 $ 11,622
Shares outstanding
June 30, 2018: 586,613,476 shares
December 31, 2017: 594,884,237 shares    
Total liabilities and equity $ 36,778 $ 37,987
 
 
3M Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)
(Unaudited)
       
Six months ended
June 30,
2018 2017
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 2,042   $ 2,630  
 
Cash flows from investing activities:
Purchases of property, plant and equipment (669 ) (589 )
Acquisitions, net of cash acquired 13
Purchases and proceeds from sale or maturities of marketable
securities and investments – net
672 136
Proceeds from sale of businesses, net of cash sold 806 862
Other investing activities   85     18  
 
NET CASH PROVIDED BY INVESTING ACTIVITIES   907     427  
 
Cash flows from financing activities:
Change in debt 774 (763 )
Purchases of treasury stock (2,537 ) (1,184 )
Proceeds from issuances of treasury stock pursuant to stock option
and benefit plans
305 496
Dividends paid to shareholders (1,612 ) (1,403 )
Other financing activities   (26 )   (2 )
 
NET CASH USED IN FINANCING ACTIVITIES   (3,096 )   (2,856 )
 
Effect of exchange rate changes on cash and cash equivalents   (105 )   55  
 
Net increase (decrease) in cash and cash equivalents (252 ) 256
Cash and cash equivalents at beginning of year   3,053     2,398  
 
Cash and cash equivalents at end of period $ 2,801   $ 2,654  
 
 
3M Company and Subsidiaries

SUPPLEMENTAL FINANCIAL INFORMATION

NON-GAAP MEASURES

(Dollars in millions, except full-year 2018 forecast)
(Unaudited)
                   
Three months ended Six months ended
June 30, June 30,
Major GAAP Cash Flow Categories 2018 2017 2018 2017
 
Net cash provided by operating activities $ 1,899 $ 1,642 $ 2,042 $ 2,630
Net cash provided by investing activities 626 517 907 427
Net cash used in financing activities (3,142 ) (1,705 ) (3,096 ) (2,856 )
 
Free Cash Flow (non-GAAP measure)

Full-Year
2018 Forecast
(Billions)

 
Net cash provided by operating activities $ 1,899 $ 1,642 $ 2,042 $ 2,630 $6.7 to $7.2
Purchases of property, plant and equipment   (365 )   (302 )   (669 )   (589 ) ($1.5 to $1.8)
Free cash flow (a)   1,534     1,340     1,373     2,041   $4.9 to $5.7
 
Net income attributable to 3M $ 1,857 $ 1,583 $ 2,459 $ 2,906 $5.5 to $5.7
Free cash flow conversion (a) 83

%

 

85

%

 

56

%

 

70

%

 

90% to 100%
 
(a)   Free cash flow and free cash flow conversion are not defined under
U.S. generally accepted accounting principles (GAAP). Therefore,
they should not be considered a substitute for income or cash flow
data prepared in accordance with U.S. GAAP and may not be comparable
to similarly titled measures used by other companies. The Company
defines free cash flow as net cash provided by operating activities
less purchases of property, plant and equipment. It should not be
inferred that the entire free cash flow amount is available for
discretionary expenditures. The Company defines free cash flow
conversion as free cash flow divided by net income attributable to
3M. The Company believes free cash flow and free cash flow
conversion are meaningful to investors as they function as useful
measures of performance and the Company uses these measures as an
indication of the strength of the company and its ability to
generate cash.
 
                                     

   June 30,   

December 31,
Net Debt (non-GAAP measure)                               2018 2017
 
Total debt $ 14,519 $ 13,949
Less: Cash, cash equivalents and marketable securities   3,212   4,156
 
Net debt (b) $ 11,307 $ 9,793
 
(b)   Net debt is not defined under U.S. GAAP and may not be computed the
same as similarly titled measures used by other companies. The
Company defines net debt as total debt less the total of cash, cash
equivalents and current and long-term marketable securities. 3M
believes net debt is meaningful to investors as 3M considers net
debt and its components to be an important indicator of liquidity
and a guiding measure of capital structure strategy.
 
 
3M Company and Subsidiaries

SUPPLEMENTAL FINANCIAL INFORMATION

NON-GAAP MEASURES – (CONTINUED)

(Dollars in billions, except per share amounts)
(Unaudited)
                   
Estimated Full-Year 2018
Adjusted income, earnings per share, & effective tax rate
(non-GAAP measures)

GAAP
Measure

Adjustment
for
Measurement
Period
Accounting
of

TCJA

Adjustment
for MN
NRD
Resolution

Adjustment for
Communication
Markets
Division
Divestiture,
Net

of Related
Restructuring
Actions

Adjusted Non-
GAAP Measure
(c)

 
Income before taxes

$

7.3 to 7.4

$ $ 0.9 $ (0.4 )

$

7.8 to 7.9

Provision for income taxes

$

1.7 to 1.8

$ (0.2 ) $ 0.2 $ (0.1 )

$

1.6 to 1.7

Effective tax rate

23 to 25

%

20 to 22

%

 
Net income attributable to 3M

$

5.5 to 5.7

$ 0.2 $ 0.7 $ (0.3 )

$

6.1 to 6.3

Earnings per diluted share

$

9.08 to 9.38

$ 0.36 $ 1.16 $ (0.40 - 0.45 )

$

10.20 to 10.45

 
(c)  

In February 2018, 3M reached an agreement with the State of
Minnesota that resolved the previously disclosed Natural Resource
Damages (NRD) lawsuit filed by the State against the Company
related to certain PFCs present in the environment. Under the
terms of the settlement, 3M agreed to provide an $850 million
grant to the State for a special "3M Water Quality and
Sustainability Fund." This Fund will enable projects that support
water sustainability in the Twin Cities East Metro region, such as
continued delivery of water to residents and enhancing groundwater
recharge to support sustainable growth. The projects will also
result in habitat and recreation improvements, such as fishing
piers, trails, and open space preservation. 3M recorded a pre-tax
charge of $897 million, inclusive of legal fees and other related
obligations, in the first quarter of 2018 associated with the
resolution of this matter. Also during the first quarter of 2018,
3M recorded a tax expense of $217 million related to a measurement
period adjustment to the provisional amounts recorded in December
2017, from the enactment of the Tax Cuts and Jobs Act (TCJA). 3M's
provisional accounting continues to be subject to adjustment
during the measurement period of up to one year following the
December 2017 enactment of TCJA. In the second quarter of 2018, 3M
completed the sale of substantially all of its Communication
Markets Division and reflected a pre-tax gain of $494 million as a
result of this divestiture. During the second quarter of 2018,
management approved and committed to undertake certain
restructuring actions related to addressing corporate functional
costs following the Communication Markets Division divestiture.
These actions resulted in a second quarter 2018 pre-tax charge of
$105 million.

 
In addition to providing full-year estimated 2018 financial results
in accordance with U.S. GAAP, the Company also provides non-GAAP
measures that adjust for the impacts of the NRD resolution,
measurement period adjustment to the impact of enactment of the
TCJA, and the impact of the Communication Markets Division
divestiture gain, net of restructuring actions. These items
represent significant charges/benefits that impacted the Company's
financial results. Income before taxes, provision for income taxes,
net income, earnings per share, and the effective tax rate are all
measures for which 3M provides the estimated GAAP measure and an
adjusted measure. The adjusted measures are not in accordance with,
nor are they a substitute for, GAAP measures. The Company considers
these non-GAAP measures in evaluating and managing the Company's
operations. The Company believes that discussion of results adjusted
for this item is meaningful to investors as it provides a useful
analysis of ongoing underlying operating trends. The determination
of these items may not be comparable to similarly titled measures
used by other companies.
 
 
3M Company and Subsidiaries

SALES CHANGE ANALYSIS (d)

(Unaudited)
                   
Three months ended June 30, 2018
Europe,
Middle Latin
Sales Change Analysis United Asia- East and America/ World-
By Geographic Area States Pacific Africa Canada Wide
 
Volume – organic 4.6 %

5.1

%

4.0

%

3.9 % 4.5 %
Price 1.0   0.4   1.8   2.1   1.1  
Organic local-currency sales 5.6 5.5 5.8 6.0 5.6
Acquisitions 2.8 0.8 3.1 0.9 2.1
Divestitures (1.3 ) (0.6 ) (2.0 ) (1.5 ) (1.3 )
Translation   2.2   2.6   (2.3 ) 1.0  
Total sales change 7.1 %

7.9

%

9.5

%

3.1 % 7.4 %
 
 
Three months ended June 30, 2018
Worldwide Sales Change Organic local- Total sales
By Business Segment currency sales Acquisitions Divestitures Translation change
 
Industrial 5.7 % % (0.1 )% 1.2 % 6.8 %
Safety and Graphics 8.5 10.5 (4.2 ) 1.0 15.8
Health Care 3.8 0.1 1.0 4.9
Electronics and Energy 5.2 (2.7 ) 1.1 3.6
Consumer 4.3       0.3   4.6  
Total Company 5.6 % 2.1 % (1.3 )% 1.0 % 7.4 %
 
 
Six months ended June 30, 2018
Europe,
Middle Latin
Sales Change Analysis United Asia- East and America/ World-
By Geographic Area States Pacific Africa Canada Wide
 
Volume – organic 3.1 % 4.9 % 1.4 % 3.3 % 3.4 %
Price 0.9   0.2   1.6   1.5   0.9  
Organic local-currency sales 4.0 5.1 3.0 4.8 4.3
Acquisitions 2.7 0.7 3.1 1.0 2.0
Divestitures (1.4 ) (0.6 ) (2.0 ) (1.4 ) (1.3 )
Translation   3.7   7.5   (0.7 ) 2.6  
Total sales change 5.3 % 8.9 % 11.6 % 3.7 % 7.6 %
 
 
Six months ended June 30, 2018
Worldwide Sales Change Organic local- Total sales
By Business Segment currency sales Acquisitions Divestitures Translation change
 
Industrial 4.0 % % (0.1 )% 3.1 % 7.0 %
Safety and Graphics 7.7 10.2 (5.4 ) 2.9 15.4
Health Care 3.3 0.1 2.6 6.0
Electronics and Energy 3.4 (1.4 ) 2.1 4.1
Consumer 3.3       1.5   4.8  
Total Company 4.3 % 2.0 % (1.3 )% 2.6 % 7.6 %
 
(d)   Total sales change is calculated based on reported sales results.
The components of sales change include organic local-currency sales,
acquisitions, divestitures, and translation. Organic local-currency
sales includes both organic volume impacts (which excludes
acquisition and divestiture impacts), plus selling price changes.
Acquisition and divestiture impacts are measured separately for the
first 12 months post-transaction.
 

3M Company and Subsidiaries
BUSINESS SEGMENTS
(Dollars
in millions)
(Unaudited)

As part of 3M's continuing effort to improve the alignment of its
businesses around markets and customers, the Company made the following
changes, effective in the first quarter of 2018, and other revisions
impacting business segment reporting:

Consolidation of customer account activity within international
countries – expanding dual credit reporting

  • The Company consolidated its customer account activity in each country
    into centralized sales districts for certain countries that make up
    approximately 70 percent of 3M's 2017 international net sales.
    Expansion of these initiatives, which previously had been deployed
    only in the U.S., reduces the complexity for customers when
    interacting with multiple 3M businesses. 3M business segment reporting
    measures include dual credit to business segments for certain sales
    and related operating income. This dual credit is based on which
    business segment provides customer account activity with respect to a
    particular product sold in a specific country. The expansion of
    alignment of customer accounts within additional countries increased
    the attribution of dual credit across 3M's business segments.
    Additionally, certain sales and operating income results for
    electronic bonding product lines that were previously equally divided
    between the Electronics and Energy business segment and the Industrial
    business segment are now reported similarly to dual credit.

Centralization of manufacturing and supply technology platforms

  • Certain shared film manufacturing and supply technology platform
    resources formerly reflected within the Electronics and Energy
    business segment were combined with other shared and centrally managed
    material resource centers of expertise within Corporate and
    Unallocated.

In addition, 3M adopted ASU No. 2017-07, Improving the Presentation
of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
,
effective January 1, 2018, on a retrospective basis. As a result,
operating income for 3M's business segments has been revised to reflect
non-service cost components of pension and postretirement net periodic
benefit costs within other expense (income) net.

The financial information presented herein reflects the impact of the
preceding changes for all periods presented. Refer to 3M's Current
Report on Form 8-K furnished on March 15, 2018, for additional
supplemental unaudited historical business segment net sales and
operating income information. In addition, these business segment
changes were reflected in 3M's Current Report on Form 8-K dated May 8,
2018, (which updated 3M's 2017 Annual Report on Form 10-K) and 3M's
Quarterly Report on Form 10-Q for the period ended March 31, 2018.

               
BUSINESS SEGMENT INFORMATION Three months ended Six months ended
NET SALES June 30, June 30,
(Millions) 2018 2017 2018 2017
 
Industrial $ 3,148 $ 2,946 $ 6,292 $ 5,882
Safety and Graphics 1,815 1,569 3,598 3,119
Health Care 1,520 1,449 3,056 2,884
Electronics and Energy 1,337 1,290 2,687 2,581
Consumer 1,223 1,169 2,350 2,242
Corporate and Unallocated 12 2 12 3
Elimination of Dual Credit   (665 )   (615 )   (1,327 )   (1,216 )
 
Total Company $ 8,390   $ 7,810   $ 16,668   $ 15,495  
 
 
BUSINESS SEGMENT INFORMATION Three months ended Six months ended
OPERATING INCOME June 30, June 30,
(Millions) 2018 2017 2018 2017
 
Industrial $ 724 $ 568 $ 1,443 $ 1,238
Safety and Graphics 480 851 963 1,250
Health Care 435 408 895 837
Electronics and Energy 865 325 1,202 581
Consumer 261 198 479 421
Corporate and Unallocated (e) (206 ) (51 ) (1,252 ) (144 )
Elimination of Dual Credit   (158 )   (146 )   (322 )   (288 )
 
Total Company $ 2,401   $ 2,153   $ 3,408   $ 3,895  
 
(e)   Corporate and Unallocated operating income was impacted of certain
restructuring actions related to addressing corporate functional
costs following the Communication Markets Division divestiture
recorded in the second quarter of 2018. These actions, in addition
to the legal settlement recorded in the first quarter of 2018,
impacted operating income for the first six months of 2018, as
further discussed in note (c).
 

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