Supplemental Equity and Comprehensive Income Information

6 Months Ended

Jun. 30, 2011

Supplemental Equity and Comprehensive Income Information

Supplemental Equity and Comprehensive Income Information

NOTE 4.  Supplemental Equity and Comprehensive Income Information

Consolidated Statement of Changes in Equity

3M Company and Subsidiaries

Three months ended June 30, 2011

				3M Company Shareholders
(Millions)	Total			Common Stock and Additional Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interest
Balance at March 31, 2011	$	16,887		$	3,608		$	26,521		$	(10,398	)	$	(3,237	)	$	393
Net income	1,177						1,160									17
Cumulative translation adjustment	234												225			9
Defined benefit pension and post-retirement plans adjustment	54												53			1
Debt and equity securities - unrealized gain (loss)	(2		)										(2		)	—
Cash flow hedging instruments - unrealized gain (loss)	—												—			—
Total comprehensive income	1,463
Dividends paid	(391		)				(391		)
Purchase and sale of subsidiary shares - net	(9		)	(1		)										(8		)
Stock-based compensation, net of tax impacts	85			85
Reacquired stock	(669		)							(669		)
Issuances pursuant to stock option and benefit plans	376						(180		)	556
Balance at June 30, 2011	$	17,742		$	3,692		$	27,110		$	(10,511	)	$	(2,961	)	$	412

3M Company and Subsidiaries

Six months ended June 30, 2011

				3M Company Shareholders
(Millions)	Total			Common Stock and Additional Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interest
Balance at Dec. 31, 2010	$	16,017		$	3,477		$	25,995		$	(10,266	)	$	(3,543	)	$	354
Net income	2,280						2,241									39
Cumulative translation adjustment	476												473			3
Defined benefit pension and post- retirement plans adjustment	130												129			1
Debt and equity securities - unrealized gain (loss)	(3		)										(3		)	—
Cash flow hedging instruments - unrealized gain (loss)	(17		)										(17		)	—
Total comprehensive income	2,866
Dividends paid	(783		)				(783		)
Business combination allocation to noncontrolling interest	56															56
Purchase and sale of subsidiary shares - net	(42		)	(1		)										(41		)
Stock-based compensation, net of tax impacts	216			216
Reacquired stock	(1,344		)							(1,344		)
Issuances pursuant to stock option and benefit plans	756						(343		)	1,099
Balance at June 30, 2011	$	17,742		$	3,692		$	27,110		$	(10,511	)	$	(2,961	)	$	412

3M Company and Subsidiaries

Three months ended June 30, 2010

				3M Company Shareholders
(Millions)	Total			Common Stock and Additional Paid-in Capital		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interest
Balance at March 31, 2010	$	13,851		$	3,269	$	24,231		$	(10,187	)	$	(3,747	)	$	285
Net income	1,140					1,121									19
Cumulative translation adjustment	(358		)									(370		)	12
Defined benefit pension and postretirement plans adjustment	48											48			—
Debt and equity securities - unrealized gain (loss)	1											1			—
Cash flow hedging instruments - unrealized gain (loss)	40											40			—
Total comprehensive income	871
Dividends paid	(375		)			(375		)
Transfers from noncontrolling interest	—			12								12			(24		)
Stock-based compensation, net of tax impacts	64			64
Reacquired stock	(384		)						(384		)
Issuances pursuant to stock option and benefit plans	236					(189		)	425
Balance at June 30, 2010	$	14,263		$	3,345	$	24,788		$	(10,146	)	$	(4,016	)	$	292

3M Company and Subsidiaries

Six months ended June 30, 2010

				3M Company Shareholders
(Millions)	Total			Common Stock and Additional Paid-in Capital		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interest
Balance at December 31, 2009	$	13,302		$	3,162	$	23,753		$	(10,397	)	$	(3,754	)	$	538
Net income	2,095					2,051									44
Cumulative translation adjustment	(453		)									(464		)	11
Defined benefit pension and postretirement plans adjustment	99											98			1
Debt and equity securities - unrealized gain (loss)	2											2			—
Cash flow hedging instruments - unrealized gain (loss)	63											63			—
Total comprehensive income	1,806
Dividends paid	(749		)			(749		)
Purchase of subsidiary shares and transfers from noncontrolling interest	(256		)	7								39			(302		)
Stock-based compensation, net of tax impacts	176			176
Reacquired stock	(404		)						(404		)
Issuances pursuant to stock option and benefit plans	388					(267		)	655
Balance at June 30, 2010	$	14,263		$	3,345	$	24,788		$	(10,146	)	$	(4,016	)	$	292

Consolidated Statement of Comprehensive Income (Loss)

	Three months ended June 30,						Six months ended June 30,
(Millions)	2011			2010			2011			2010
Net income including noncontrolling interest	$	1,177		$	1,140		$	2,280		$	2,095
Other comprehensive income, net of tax:
Cumulative translation adjustment	234			(358		)	476			(453		)
Defined benefit pension and postretirement plans adjustment	54			48			130			99
Debt and equity securities, unrealized gain (loss)	(2		)	1			(3		)	2
Cash flow hedging instruments, unrealized gain (loss)	—			40			(17		)	63
Total other comprehensive income (loss), net of tax	286			(269		)	586			(289		)
Comprehensive income (loss) including noncontrolling interest	1,463			871			2,866			1,806
Comprehensive (income) loss attributable to noncontrolling interest	(27		)	(31		)	(43		)	(56		)
Comprehensive income (loss) attributable to 3M	$	1,436		$	840		$	2,823		$	1,750

Accumulated Other Comprehensive Income (Loss) Attributable to 3M

(Millions)	June 30, 2011			Dec. 31, 2010
Cumulative translation adjustment	$	847		$	374
Defined benefit pension and postretirement plans adjustment	(3,750		)	(3,879		)
Debt and equity securities, unrealized gain (loss)	(9		)	(6		)
Cash flow hedging instruments, unrealized gain (loss)	(49		)	(32		)
Total accumulated other comprehensive income (loss)	$	(2,961	)	$	(3,543	)

Components of Comprehensive Income (Loss) Attributable to 3M

	Three months ended June 30,						Six months ended June 30,
(Millions)	2011			2010			2011			2010
Net income attributable to 3M	$	1,160		$	1,121		$	2,241		$	2,051
Cumulative translation	205			(324		)	426			(401		)
Tax effect	20			(46		)	47			(63		)
Cumulative translation - net of tax	225			(370		)	473			(464		)
Defined benefit pension and postretirement plans adjustment	119			80			238			156
Tax effect	(66		)	(32		)	(109		)	(58		)
Defined benefit pension and postretirement plans adjustment - net of tax	53			48			129			98
Debt and equity securities, unrealized gain (loss)	(3		)	1			(5		)	4
Tax effect	1			—			2			(2		)
Debt and equity securities, unrealized gain (loss) - net of tax	(2		)	1			(3		)	2
Cash flow hedging instruments, unrealized gain (loss)	1			64			(26		)	100
Tax effect	(1		)	(24		)	9			(37		)
Cash flow hedging instruments, unrealized gain (loss) - net of tax	—			40			(17		)	63
Total comprehensive income (loss) attributable to 3M	$	1,436		$	840		$	2,823		$	1,750

Reclassification adjustments are made to avoid double counting in comprehensive income items that are also recorded as part of net income. Reclassifications to earnings from accumulated other comprehensive income including noncontrolling interest that related to pension and postretirement expense in the income statement were $119 million pre-tax ($54 million after-tax) for the three months ended June 30, 2011, $238 million pre-tax ($130 million after-tax) for the six months ended June 30, 2011, $78 million pre-tax ($48 million after-tax) for the three months ended June 30, 2010, and $154 million pre-tax ($99 million after-tax) for the six months ended June 30, 2010. These pension and postretirement expense pre-tax amounts (including noncontrolling interest) are shown in the tables in Note 8 as amortization of transition (asset) obligation, amortization of prior service cost (benefit) and amortization of net actuarial (gain) loss. Cash flow hedging instruments reclassifications are provided in Note 9. Reclassifications to earnings from accumulated other comprehensive income for debt and equity securities were not material for the three and six months ended June 30, 2011 and 2010. Other reclassification adjustments were not material. Income taxes are not provided for foreign translation relating to permanent investments in international subsidiaries, but tax effects within cumulative translation does include impacts from items such as net investment hedge transactions.

Purchase and Sale of Subsidiary Shares and Transfers of Ownership Interests Involving Non-Wholly Owned Subsidiaries

As discussed in Note 2, in early March 2011, 3M acquired a controlling interest in Winterthur Technologie AG (Winterthur), making Winterthur a consolidated subsidiary as of that business acquisition date. Subsequent to this business acquisition date, 3M purchased additional outstanding shares of its Winterthur subsidiary increasing 3M’s ownership interest from approximately 86 percent as of the business acquisition date to approximately 98 percent as of June 30, 2011. The $50 million of cash paid in the first six months of 2011 as a result of these additional purchases of Winterthur shares was classified as other financing activity in the consolidated statement of cash flows. These additional purchases did not result in a material transfer from noncontrolling interest to 3M Company shareholders’ equity. In addition, during the first six months of 2011, 3M sold a noncontrolling interest in a newly formed subsidiary for an immaterial amount, which was also classified as other financing activity in the consolidated statement of cash flows.

During the second half of 2009 and the first half of 2010, 3M effected a purchase of subsidiary shares and transfers of ownership interests to align activities in Japan and to simplify the Company’s ownership structure. As a result of these activities, beginning in June 2010 the Company has a wholly owned subsidiary in the region in addition to its majority owned Sumitomo 3M Limited entity (Sumitomo 3M). Because the Company retained its controlling interest in the subsidiaries involved, these activities resulted in changes to 3M Company shareholders’ equity and noncontrolling interest. These activities included the following:

· During the second half of 2009, a wholly owned subsidiary that, in turn, owned a portion of the Company’s majority owned Sumitomo 3M, was transferred to another subsidiary (referred to herein as 3M HC) that was majority, rather than wholly, owned. Sumitomo 3M also owned a portion of 3M HC. As a result of the transaction, 3M’s effective ownership in Sumitomo 3M was reduced from 75 percent to 71.5 percent. The transfer resulted in a decrease in 3M Company shareholders’ equity and an increase in noncontrolling interest of $81 million in the second half of 2009.

· During the first quarter of 2010, majority owned 3M HC which, as a result of the transfer above owned a portion of the Company’s majority owned Sumitomo 3M, transferred this interest to Sumitomo 3M. In addition, Sumitomo 3M purchased a portion of its shares held by its noncontrolling interest, Sumitomo Electric Industries, Ltd. (SEI), by paying cash of 5.8 billion Japanese Yen and entering into a note payable to SEI of 17.4 billion Japanese Yen (approximately $63 million and $188 million, respectively, based on applicable exchange rates at that time). As a result of these transactions, 3M’s effective ownership in Sumitomo 3M was increased from 71.5 percent to 75 percent. The cash paid as a result of the purchase of Sumitomo 3M shares from SEI was classified as other financing activity in the consolidated statement of cash flows. The remainder of the purchase financed by the note payable to SEI was considered non-cash financing activity in the first quarter of 2010. These transactions resulted in an increase in 3M Company shareholders’ equity of $22 million and a decrease in noncontrolling interest of $278 million in the first quarter of 2010.

· During the second quarter of 2010, majority owned Sumitomo 3M transferred its interest in 3M HC to 3M HC. As a result of this transaction, 3M HC became wholly owned by the Company. The transfer resulted in an increase in 3M Company shareholders’ equity and a decrease in noncontrolling interest of $24 million in the second quarter of 2010.

Additionally, 3M acquired the remaining noncontrolling interest of a previously owned majority owned subsidiary for an immaterial amount during the first half of 2010.

The following table summarizes the effects of the 2010 transactions on equity attributable to 3M Company shareholders for the three months and six months ended June 30, 2010.

	Three months ended		Six months ended
(Millions)	June 30, 2010		June 30, 2010
Net income attributable to 3M	$	1,121	$	2,051
Transfers from noncontrolling interest	24		46
Change in 3M Company shareholders’ equity from net income attributable to 3M and transfers from noncontrolling interest	$	1,145	$	2,097