Attached files
| file | filename |
|---|---|
| 8-K - 8-K - 3M CO | f8-k.htm |
EXHIBIT 99
This Current Report on Form 8-K includes supplemental unaudited historical consolidated statement of income and business segment information related to (1) the impact of adopting Accounting Standards Update (ASU) No. 2017-07 relative to the presentation of pension and postretirement benefit costs and (2) business segment reporting changes reflecting the expansion of the Company’s dual credit reporting process internationally and centralization of certain manufacturing and supply technology platforms (provided on an annual and quarterly basis for the years ended December 31, 2017, 2016 and 2015). The Company did not operate under this segment structure for any of these prior periods and will begin to report comparative results under the new structure with the filing of its Quarterly Report on Form 10-Q for the quarter ending March 31, 2018.
Adoption of ASU No. 2017-07—Certain pension and postretirement costs reported outside operating income
The Company 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. This ASU changed how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit cost in the income statement. Under the new standard, only the service cost component of net periodic benefit cost is included in operating expenses and only the service cost component is eligible for capitalization into assets such as inventory. All other net periodic benefit costs components (such as interest, expected return on plan assets, prior service cost amortization and actuarial gain/loss amortization) are reported outside of operating income. Guidance under the ASU limiting the capitalization to only the service cost component is applied on prospective basis. The components of 3M’s net periodic defined benefit pension and postretirement benefit costs are presented in Note 12 of 3M’s 2017 Annual Report on Form 10-K filed February 8, 2018. The retrospective application of this ASU had no impact on the Company’s previously reported consolidated income before income taxes and net income attributable to 3M. However, non-service cost components of pension and postretirement benefit costs in prior years representing income of $128 million and $196 million in total year 2017 and 2016, respectively, and an expense of $34 million in total year 2015 have been reclassified from operating expenses and are now reported outside of operating income within other expense (income), net.
The financial information presented herein reflects the impact of the preceding changes, for all periods presented, between operating income and other expense (income), net.
|
Year ended December 31, 2017 |
|
Previously |
|
Reflecting ASU |
|
|
|
|||
|
(Millions) |
|
Reported |
|
Adoption |
|
Change |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
$ |
31,657 |
|
$ |
31,657 |
|
$ |
— |
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
16,001 |
|
|
16,055 |
|
|
54 |
|
|
Selling, general and administrative expenses |
|
|
6,572 |
|
|
6,626 |
|
|
54 |
|
|
Research, development and related expenses |
|
|
1,850 |
|
|
1,870 |
|
|
20 |
|
|
Gain on sale of businesses |
|
|
(586) |
|
|
(586) |
|
|
— |
|
|
Total operating expenses |
|
|
23,837 |
|
|
23,965 |
|
|
128 |
|
|
Operating income |
|
$ |
7,820 |
|
$ |
7,692 |
|
$ |
(128) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense (income), net |
|
$ |
272 |
|
$ |
144 |
|
$ |
(128) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
7,548 |
|
$ |
7,548 |
|
$ |
— |
|
Supplemental Unaudited Select Consolidated Statement of Income Information Effective in the First Quarter of 2018
|
|
|
First |
|
Second |
|
Third |
|
Fourth |
|
Total |
|
|||||
|
(Millions) |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
Year |
|
|||||
|
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
3,882 |
|
$ |
4,020 |
|
$ |
4,059 |
|
$ |
4,094 |
|
$ |
16,055 |
|
|
2016 |
|
|
3,698 |
|
|
3,817 |
|
|
3,867 |
|
|
3,736 |
|
|
15,118 |
|
|
2015 |
|
|
3,813 |
|
|
3,850 |
|
|
3,869 |
|
|
3,819 |
|
|
15,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
1,614 |
|
$ |
1,620 |
|
$ |
1,637 |
|
$ |
1,755 |
|
$ |
6,626 |
|
|
2016 |
|
|
1,555 |
|
|
1,583 |
|
|
1,553 |
|
|
1,620 |
|
|
6,311 |
|
|
2015 |
|
|
1,571 |
|
|
1,551 |
|
|
1,531 |
|
|
1,580 |
|
|
6,233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research, development and related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
476 |
|
$ |
478 |
|
$ |
468 |
|
$ |
448 |
|
$ |
1,870 |
|
|
2016 |
|
|
457 |
|
|
445 |
|
|
434 |
|
|
428 |
|
|
1,764 |
|
|
2015 |
|
|
461 |
|
|
437 |
|
|
427 |
|
|
432 |
|
|
1,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
1,742 |
|
$ |
2,153 |
|
$ |
2,008 |
|
$ |
1,789 |
|
$ |
7,692 |
|
|
2016 |
|
|
1,739 |
|
|
1,817 |
|
|
1,855 |
|
|
1,616 |
|
|
7,027 |
|
|
2015 |
|
|
1,739 |
|
|
1,848 |
|
|
1,885 |
|
|
1,508 |
|
|
6,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense (income), net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
5 |
|
$ |
11 |
|
$ |
11 |
|
$ |
117 |
|
$ |
144 |
|
|
2016 |
|
|
(7) |
|
|
(18) |
|
|
(7) |
|
|
6 |
|
|
(26) |
|
|
2015 |
|
|
36 |
|
|
36 |
|
|
40 |
|
|
45 |
|
|
157 |
|
Business Segment Reporting Changes
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. As a result, previously reported aggregate business segment net sales and operating income for total year 2017 increased $1.568 billion and $402 million, respectively, offset by similar increases in the elimination of dual credit net sales and operating income amounts. |
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. This change resulted in a decrease in previously reported net sales and an increase in operating income for total year 2017 of $1 million and $42 million, respectively, in the Electronics and Energy segment, offset by a corresponding increase in net sales and decrease in operating income within Corporate and Unallocated. |
The financial information presented herein reflects the impact of the preceding changes between business segments, in addition to the impact on operating income related to the adoption of ASU No. 2017-07 (as detailed above), for all periods presented.
|
|
|
Net Sales |
|
Operating Income |
|
||||||||||||||
|
Year ended December 31, 2017 |
|
Previously |
|
|
|
|
|
Previously |
|
|
|
|
|
||||||
|
(Millions) |
|
Reported |
|
Revised |
|
Change |
|
Reported |
|
Revised |
|
Change |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial |
|
$ |
10,911 |
|
$ |
11,866 |
|
$ |
955 |
|
$ |
2,289 |
|
$ |
2,490 |
|
$ |
201 |
|
|
Safety and Graphics |
|
|
6,148 |
|
|
6,235 |
|
|
87 |
|
|
2,067 |
|
|
2,066 |
|
|
(1) |
|
|
Health Care |
|
|
5,813 |
|
|
5,853 |
|
|
40 |
|
|
1,781 |
|
|
1,764 |
|
|
(17) |
|
|
Electronics and Energy |
|
|
5,159 |
|
|
5,501 |
|
|
342 |
|
|
1,254 |
|
|
1,377 |
|
|
123 |
|
|
Consumer |
|
|
4,589 |
|
|
4,731 |
|
|
142 |
|
|
993 |
|
|
1,004 |
|
|
11 |
|
|
Corporate and Unallocated |
|
|
1 |
|
|
3 |
|
|
2 |
|
|
(352) |
|
|
(395) |
|
|
(43) |
|
|
Elimination of Dual Credit |
|
|
(964) |
|
|
(2,532) |
|
|
(1,568) |
|
|
(212) |
|
|
(614) |
|
|
(402) |
|
|
Total Company |
|
$ |
31,657 |
|
$ |
31,657 |
|
$ |
— |
|
$ |
7,820 |
|
$ |
7,692 |
|
$ |
(128) |
|
Corporate and unallocated operating income includes a variety of miscellaneous items, such as corporate investment gains and losses, certain derivative gains and losses, certain insurance-related gains and losses, certain litigation and environmental expenses, corporate restructuring charges and certain under- or over-absorbed costs (e.g. pension, stock-based compensation) that the Company may choose not to allocate directly to its business segments. Because this category includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis.
3M business segment reporting measures include dual credit to business segments for certain sales and related operating income. Management evaluates each of its five business segments based on net sales and operating income performance, including dual credit reporting to further incentivize sales growth. As a result, 3M reflects additional (“dual”) credit to another business segment when the customer account activity (“sales district”) with respect to the particular product sold to the external customer is provided by a different business segment. This additional dual credit is largely reflected at the division level. For example, certain respirators are primarily sold by the Personal Safety Division within the Safety and Graphics business segment; however, a sales district within the Industrial business segment provides the contact for sales of the product to particular customers. In this example, the non-primary selling segment (Industrial) would also receive credit for the associated net sales initiated through its sales district and the related approximate operating income. The assigned operating income related to dual credit activity may differ from operating income that would result from actual costs associated with such sales.
The offset to the dual credit business segment reporting is reflected as a reconciling item entitled “Elimination of Dual Credit,” such that sales and operating income in total are unchanged.
Supplemental Unaudited Business Segment Information
Based on Segment Structure Effective in the First Quarter of 2018
Net Sales
|
Net Sales |
|
First |
|
Second |
|
Third |
|
Fourth |
|
Total |
|
|||||
|
(Millions) |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
Year |
|
|||||
|
Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
2,936 |
|
$ |
2,946 |
|
$ |
3,023 |
|
$ |
2,961 |
|
$ |
11,866 |
|
|
2016 |
|
|
2,799 |
|
|
2,853 |
|
|
2,823 |
|
|
2,742 |
|
|
11,217 |
|
|
2015 |
|
|
2,906 |
|
|
2,870 |
|
|
2,803 |
|
|
2,664 |
|
|
11,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Safety and Graphics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
1,550 |
|
$ |
1,569 |
|
$ |
1,551 |
|
$ |
1,565 |
|
$ |
6,235 |
|
|
2016 |
|
|
1,494 |
|
|
1,580 |
|
|
1,516 |
|
|
1,358 |
|
|
5,948 |
|
|
2015 |
|
|
1,455 |
|
|
1,512 |
|
|
1,491 |
|
|
1,350 |
|
|
5,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
1,435 |
|
$ |
1,449 |
|
$ |
1,485 |
|
$ |
1,484 |
|
$ |
5,853 |
|
|
2016 |
|
|
1,402 |
|
|
1,424 |
|
|
1,380 |
|
|
1,400 |
|
|
5,606 |
|
|
2015 |
|
|
1,348 |
|
|
1,380 |
|
|
1,364 |
|
|
1,398 |
|
|
5,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronics and Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
1,291 |
|
$ |
1,290 |
|
$ |
1,515 |
|
$ |
1,405 |
|
$ |
5,501 |
|
|
2016 |
|
|
1,159 |
|
|
1,187 |
|
|
1,328 |
|
|
1,252 |
|
|
4,926 |
|
|
2015 |
|
|
1,357 |
|
|
1,336 |
|
|
1,440 |
|
|
1,265 |
|
|
5,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
1,073 |
|
$ |
1,169 |
|
$ |
1,279 |
|
$ |
1,210 |
|
$ |
4,731 |
|
|
2016 |
|
|
1,072 |
|
|
1,154 |
|
|
1,235 |
|
|
1,117 |
|
|
4,578 |
|
|
2015 |
|
|
1,073 |
|
|
1,136 |
|
|
1,186 |
|
|
1,123 |
|
|
4,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and Unallocated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
1 |
|
$ |
2 |
|
$ |
3 |
|
$ |
(3) |
|
$ |
3 |
|
|
2016 |
|
|
1 |
|
|
3 |
|
|
— |
|
|
2 |
|
|
6 |
|
|
2015 |
|
|
2 |
|
|
4 |
|
|
(1) |
|
|
(1) |
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination of Dual Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
(601) |
|
$ |
(615) |
|
$ |
(684) |
|
$ |
(632) |
|
$ |
(2,532) |
|
|
2016 |
|
|
(518) |
|
|
(539) |
|
|
(573) |
|
|
(542) |
|
|
(2,172) |
|
|
2015 |
|
|
(563) |
|
|
(552) |
|
|
(571) |
|
|
(501) |
|
|
(2,187) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
7,685 |
|
$ |
7,810 |
|
$ |
8,172 |
|
$ |
7,990 |
|
$ |
31,657 |
|
|
2016 |
|
|
7,409 |
|
|
7,662 |
|
|
7,709 |
|
|
7,329 |
|
|
30,109 |
|
|
2015 |
|
|
7,578 |
|
|
7,686 |
|
|
7,712 |
|
|
7,298 |
|
|
30,274 |
|
Supplemental Unaudited Business Segment Information
Based on Segment Structure Effective in the First Quarter of 2018
Operating Income
|
Operating Income |
|
First |
|
Second |
|
Third |
|
Fourth |
|
Total |
|
|||||
|
(Millions) |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
Year |
|
|||||
|
Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
670 |
|
$ |
568 |
|
$ |
672 |
|
$ |
580 |
|
$ |
2,490 |
|
|
2016 |
|
|
654 |
|
|
652 |
|
|
634 |
|
|
588 |
|
|
2,528 |
|
|
2015 |
|
|
662 |
|
|
671 |
|
|
637 |
|
|
528 |
|
|
2,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Safety and Graphics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
399 |
|
$ |
851 |
|
$ |
411 |
|
$ |
405 |
|
$ |
2,066 |
|
|
2016 |
|
|
354 |
|
|
418 |
|
|
366 |
|
|
265 |
|
|
1,403 |
|
|
2015 |
|
|
356 |
|
|
379 |
|
|
339 |
|
|
285 |
|
|
1,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
429 |
|
$ |
408 |
|
$ |
467 |
|
$ |
460 |
|
$ |
1,764 |
|
|
2016 |
|
|
449 |
|
|
454 |
|
|
423 |
|
|
405 |
|
|
1,731 |
|
|
2015 |
|
|
415 |
|
|
446 |
|
|
439 |
|
|
449 |
|
|
1,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronics and Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
256 |
|
$ |
325 |
|
$ |
430 |
|
$ |
366 |
|
$ |
1,377 |
|
|
2016 |
|
|
222 |
|
|
237 |
|
|
332 |
|
|
354 |
|
|
1,145 |
|
|
2015 |
|
|
295 |
|
|
294 |
|
|
356 |
|
|
226 |
|
|
1,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
223 |
|
$ |
198 |
|
$ |
311 |
|
$ |
272 |
|
$ |
1,004 |
|
|
2016 |
|
|
235 |
|
|
279 |
|
|
314 |
|
|
226 |
|
|
1,054 |
|
|
2015 |
|
|
248 |
|
|
265 |
|
|
300 |
|
|
261 |
|
|
1,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and Unallocated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
(93) |
|
$ |
(51) |
|
$ |
(112) |
|
$ |
(139) |
|
$ |
(395) |
|
|
2016 |
|
|
(53) |
|
|
(99) |
|
|
(76) |
|
|
(93) |
|
|
(321) |
|
|
2015 |
|
|
(99) |
|
|
(76) |
|
|
(61) |
|
|
(125) |
|
|
(361) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination of Dual Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
(142) |
|
$ |
(146) |
|
$ |
(171) |
|
$ |
(155) |
|
$ |
(614) |
|
|
2016 |
|
|
(122) |
|
|
(124) |
|
|
(138) |
|
|
(129) |
|
|
(513) |
|
|
2015 |
|
|
(138) |
|
|
(131) |
|
|
(125) |
|
|
(116) |
|
|
(510) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
$ |
1,742 |
|
$ |
2,153 |
|
$ |
2,008 |
|
$ |
1,789 |
|
$ |
7,692 |
|
|
2016 |
|
|
1,739 |
|
|
1,817 |
|
|
1,855 |
|
|
1,616 |
|
|
7,027 |
|
|
2015 |
|
|
1,739 |
|
|
1,848 |
|
|
1,885 |
|
|
1,508 |
|
|
6,980 |
|