10-Q 1 mmm-20160930x10q.htm 10-Q mmm_Current_Folio_10Q

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2016

 

Commission file number:  1-3285

 

3M COMPANY

(Exact name of registrant as specified in its charter)

 

 

 

 

DELAWARE

 

41-0417775

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

3M Center, St. Paul, Minnesota

 

55144

(Address of principal executive offices)

 

(Zip Code)

 

(651) 733-1110

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

Large accelerated filer ☒

 

Accelerated filer ☐

 

 

 

Non-accelerated filer ☐

(Do not check if a smaller reporting company)

 

Smaller reporting company ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

 

 

 

Class

 

Outstanding at September 30, 2016

Common Stock, $0.01 par value per share

 

601,466,401 shares

 

This document (excluding exhibits) contains 87 pages.

The table of contents is set forth on page 2.

The exhibit index begins on page 83.

 

 

 


 

      3M COMPANY

   Form 10-Q for the Quarterly Period Ended September 30, 2016

 

 

 

 

 

TABLE OF CONTENTS

BEGINNING
PAGE

PART I 

FINANCIAL INFORMATION

 

 

 

 

ITEM 1. 

Financial Statements

 

 

 

 

 

Index to Financial Statements:

 

 

Consolidated Statement of Income

 

Consolidated Statement of Comprehensive Income

 

Consolidated Balance Sheet

 

Consolidated Statement of Cash Flows

 

Notes to Consolidated Financial Statements

 

 

Note 1. Significant Accounting Policies

 

Note 2. Acquisitions and Divestitures

13 

 

Note 3. Goodwill and Intangible Assets

14 

 

Note 4. Restructuring Actions

16 

 

Note 5. Supplemental Equity and Comprehensive Income Information

17 

 

Note 6. Income Taxes

21 

 

Note 7. Marketable Securities

22 

 

Note 8. Long-Term Debt and Short-Term Borrowings

23 

 

Note 9. Pension and Postretirement Benefit Plans

24 

 

Note 10. Derivatives

26 

 

Note 11. Fair Value Measurements

34 

 

Note 12. Commitments and Contingencies

38 

 

Note 13. Stock-Based Compensation

48 

 

Note 14. Business Segments

51 

 

Report of Independent Registered Public Accounting Firm

53 

 

 

 

ITEM 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

Index to Management’s Discussion and Analysis:

 

 

Overview

54 

 

Results of Operations

60 

 

Performance by Business Segment

64 

 

Financial Condition and Liquidity

72 

 

Cautionary Note Concerning Factors That May Affect Future Results

78 

 

 

 

ITEM 3. 

Quantitative and Qualitative Disclosures About Market Risk

78 

 

 

 

ITEM 4. 

Controls and Procedures

79 

 

 

 

PART II 

OTHER INFORMATION

 

 

 

 

ITEM 1. 

Legal Proceedings

80 

 

 

 

ITEM 1A. 

Risk Factors

80 

 

 

 

ITEM 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

83 

 

 

 

ITEM 3. 

Defaults Upon Senior Securities

83 

 

 

 

ITEM 4. 

Mine Safety Disclosures

83 

 

 

 

ITEM 5. 

Other Information

83 

 

 

 

ITEM 6. 

Exhibits

83 

 

2


 

3M COMPANY

FORM 10-Q

For the Quarterly Period Ended September 30, 2016

PART I.  Financial Information

 

Item 1.  Financial Statements.

 

3M Company and Subsidiaries

Consolidated Statement of Income

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

    

Nine months ended 

 

 

 

September 30,

 

September 30,

 

(Millions, except per share amounts)

    

2016

    

2015

    

2016

 

2015

 

Net sales

 

$

7,709

 

$

7,712

 

$

22,780

 

$

22,976

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

3,847

 

 

3,877

 

 

11,324

 

 

11,556

 

Selling, general and administrative expenses

 

 

1,531

 

 

1,530

 

 

4,584

 

 

4,644

 

Research, development and related expenses

 

 

427

 

 

429

 

 

1,314

 

 

1,330

 

Total operating expenses

 

 

5,805

 

 

5,836

 

 

17,222

 

 

17,530

 

Operating income

 

 

1,904

 

 

1,876

 

 

5,558

 

 

5,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense and income

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

50

 

 

38

 

 

135

 

 

104

 

Interest income

 

 

(8)

 

 

(7)

 

 

(20)

 

 

(18)

 

Total interest expense — net

 

 

42

 

 

31

 

 

115

 

 

86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

1,862

 

 

1,845

 

 

5,443

 

 

5,360

 

Provision for income taxes

 

 

531

 

 

547

 

 

1,541

 

 

1,558

 

Net income including noncontrolling interest

 

$

1,331

 

$

1,298

 

$

3,902

 

$

3,802

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interest

 

 

2

 

 

2

 

 

7

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to 3M

 

$

1,329

 

$

1,296

 

$

3,895

 

$

3,795

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average 3M common shares outstanding — basic

 

 

604.4

 

 

620.6

 

 

606.2

 

 

629.4

 

Earnings per share attributable to 3M common shareholders — basic

 

$

2.20

 

$

2.09

 

$

6.43

 

$

6.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average 3M common shares outstanding — diluted

 

 

618.8

 

 

631.2

 

 

620.3

 

 

641.2

 

Earnings per share attributable to 3M common shareholders — diluted

 

$

2.15

 

$

2.05

 

$

6.28

 

$

5.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per 3M common share

 

$

1.11

 

$

1.025

 

$

3.33

 

$

3.075

 

 

The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.

 

3


 

3M Company and Subsidiaries

Consolidated Statement of Comprehensive Income

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

    

Nine months ended 

 

 

 

September 30,

 

September 30,

 

(Millions)

    

2016

    

2015

    

2016

    

2015

 

Net income including noncontrolling interest

 

$

1,331

 

$

1,298

 

$

3,902

 

$

3,802

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative translation adjustment

 

 

17

 

 

(472)

 

 

192

 

 

(642)

 

Defined benefit pension and postretirement plans adjustment

 

 

67

 

 

236

 

 

203

 

 

423

 

Debt and equity securities, unrealized gain (loss)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

Cash flow hedging instruments, unrealized gain (loss)

 

 

(45)

 

 

1

 

 

(182)

 

 

39

 

Total other comprehensive income (loss), net of tax

 

 

39

 

 

(235)

 

 

213

 

 

(180)

 

Comprehensive income (loss) including noncontrolling interest

 

 

1,370

 

 

1,063

 

 

4,115

 

 

3,622

 

Comprehensive (income) loss attributable to noncontrolling interest

 

 

(3)

 

 

(1)

 

 

(7)

 

 

(5)

 

Comprehensive income (loss) attributable to 3M

 

$

1,367

 

$

1,062

 

$

4,108

 

$

3,617

 

 

The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.

 

4


 

3M Company and Subsidiaries

Consolidated Balance Sheet

(Unaudited)

 

 

 

 

 

 

 

 

 

 

    

September 30,

    

December 31,

 

(Dollars in millions, except per share amount)

    

2016

    

2015

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,308

 

$

1,798

 

Marketable securities — current

 

 

358

 

 

118

 

Accounts receivable — net

 

 

4,743

 

 

4,154

 

Inventories

 

 

 

 

 

 

 

Finished goods

 

 

1,672

 

 

1,655

 

Work in process

 

 

1,157

 

 

1,008

 

Raw materials and supplies

 

 

782

 

 

855

 

Total inventories

 

 

3,611

 

 

3,518

 

Other current assets

 

 

1,159

 

 

1,398

 

Total current assets

 

 

12,179

 

 

10,986

 

Marketable securities — non-current

 

 

14

 

 

9

 

Investments

 

 

127

 

 

117

 

Property, plant and equipment

 

 

24,142

 

 

23,098

 

Less: Accumulated depreciation

 

 

(15,471)

 

 

(14,583)

 

Property, plant and equipment — net

 

 

8,671

 

 

8,515

 

Goodwill

 

 

9,430

 

 

9,249

 

Intangible assets — net

 

 

2,422

 

 

2,601

 

Prepaid pension benefits

 

 

256

 

 

188

 

Other assets

 

 

952

 

 

1,053

 

Total assets

 

$

34,051

 

$

32,718

 

Liabilities

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Short-term borrowings and current portion of long-term debt

 

$

1,282

 

$

2,044

 

Accounts payable

 

 

1,621

 

 

1,694

 

Accrued payroll

 

 

729

 

 

644

 

Accrued income taxes

 

 

364

 

 

332

 

Other current liabilities

 

 

2,404

 

 

2,404

 

Total current liabilities

 

 

6,400

 

 

7,118

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

11,079

 

 

8,753

 

Pension and postretirement benefits

 

 

3,179

 

 

3,520

 

Other liabilities

 

 

1,345

 

 

1,580

 

Total liabilities

 

$

22,003

 

$

20,971

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

3M Company shareholders’ equity:

 

 

 

 

 

 

 

Common stock par value, $.01 par value, 944,033,056 shares issued

 

$

9

 

$

9

 

Additional paid-in capital

 

 

5,012

 

 

4,791

 

Retained earnings

 

 

37,745

 

 

36,575

 

Treasury stock, at cost: 342,566,655 shares at September 30, 2016; 334,702,932 shares at December 31, 2015

 

 

(24,618)

 

 

(23,308)

 

Accumulated other comprehensive income (loss)

 

 

(6,146)

 

 

(6,359)

 

Total 3M Company shareholders’ equity

 

 

12,002

 

 

11,708

 

Noncontrolling interest

 

 

46

 

 

39

 

Total equity

 

$

12,048

 

$

11,747

 

Total liabilities and equity

 

$

34,051

 

$

32,718

 

 

The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.

5


 

3M Company and Subsidiaries

Consolidated Statement of Cash Flows

(Unaudited)

 

 

 

 

 

 

 

 

 

 

    

Nine months ended 

 

 

 

September 30,

 

(Millions)

    

2016

    

2015

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

Net income including noncontrolling interest

 

$

3,902

 

$

3,802

 

Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,090

 

 

1,038

 

Company pension and postretirement contributions

 

 

(323)

 

 

(216)

 

Company pension and postretirement expense

 

 

180

 

 

418

 

Stock-based compensation expense

 

 

244

 

 

233

 

Deferred income taxes

 

 

(100)

 

 

393

 

Excess tax benefits from stock-based compensation

 

 

 —

 

 

(137)

 

Changes in assets and liabilities

 

 

 

 

 

 

 

Accounts receivable

 

 

(469)

 

 

(478)

 

Inventories

 

 

(15)

 

 

(139)

 

Accounts payable

 

 

(107)

 

 

(112)

 

Accrued income taxes (current and long-term)

 

 

155

 

 

(588)

 

Other — net

 

 

(104)

 

 

(132)

 

Net cash provided by operating activities

 

 

4,453

 

 

4,082

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

Purchases of property, plant and equipment (PP&E)

 

 

(984)

 

 

(1,015)

 

Proceeds from sale of PP&E and other assets

 

 

18

 

 

17

 

Acquisitions, net of cash acquired

 

 

(17)

 

 

(2,910)

 

Purchases of marketable securities and investments

 

 

(1,036)

 

 

(486)

 

Proceeds from maturities and sale of marketable securities and investments

 

 

794

 

 

1,742

 

Proceeds from sale of businesses

 

 

56

 

 

19

 

Other investing

 

 

(4)

 

 

22

 

Net cash used in investing activities

 

 

(1,173)

 

 

(2,611)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

Change in short-term debt — net

 

 

(498)

 

 

1,160

 

Repayment of debt (maturities greater than 90 days)

 

 

(992)

 

 

(793)

 

Proceeds from debt (maturities greater than 90 days)

 

 

2,832

 

 

3,420

 

Purchases of treasury stock

 

 

(2,829)

 

 

(4,104)

 

Proceeds from issuance of treasury stock pursuant to stock option and benefit plans

 

 

741

 

 

518

 

Dividends paid to shareholders

 

 

(2,014)

 

 

(1,933)

 

Excess tax benefits from stock-based compensation

 

 

 —

 

 

137

 

Other — net

 

 

(20)

 

 

(99)

 

Net cash used in financing activities

 

 

(2,780)

 

 

(1,694)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

10

 

 

(69)

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

510

 

 

(292)

 

Cash and cash equivalents at beginning of year

 

 

1,798

 

 

1,897

 

Cash and cash equivalents at end of period

 

$

2,308

 

$

1,605

 

 

The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.

6


 

3M Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

 

NOTE 1.  Significant Accounting Policies

 

Basis of Presentation

 

The interim consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments necessary for a fair statement of the Company’s consolidated financial position, results of operations and cash flows for the periods presented. These adjustments consist of normal, recurring items. The results of operations for any interim period are not necessarily indicative of results for the full year. The interim consolidated financial statements and notes are presented as permitted by the requirements for Quarterly Reports on Form 10-Q.

 

As described in 3M’s Current Report on Form 8-K dated May 17, 2016 (which updated 3M’s 2015 Annual Report on Form 10-K) and 3M’s Quarterly Report on Form 10-Q for the period ended March 31, 2016, effective in the first quarter of 2016, the Company made a product line reporting change involving two of its business segments. Segment information presented herein reflects the impact of this change for all periods presented. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in its Current Report on Form 8-K dated May 17, 2016.

 

Foreign Currency Translation

 

Local currencies generally are considered the functional currencies outside the United States. Assets and liabilities for operations in local-currency environments are translated at month-end exchange rates of the period reported. Income and expense items are translated at month-end exchange rates of each applicable month. Cumulative translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in shareholders’ equity.

 

Although local currencies are typically considered as the functional currencies outside the United States, under Accounting Standards Codification (ASC) 830, Foreign Currency Matters, the reporting currency of a foreign entity’s parent is assumed to be that entity’s functional currency when the economic environment of a foreign entity is highly inflationary—generally when its cumulative inflation is approximately 100 percent or more for the three years that precede the beginning of a reporting period. 3M has a subsidiary in Venezuela with operating income representing less than 1.0 percent of 3M’s consolidated operating income for 2015. Since January 1, 2010, the financial statements of the Venezuelan subsidiary have been remeasured as if its functional currency were that of its parent.

 

The Venezuelan government sets official rates of exchange and conditions precedent to purchase foreign currency at these rates with local currency. Such rates and conditions have been and continue to be subject to change. In January 2014, the Venezuelan government announced that the National Center for Foreign Commerce (CENCOEX), had assumed the role with respect to the continuation of the existing official exchange rate, significantly expanded the use of a second currency auction exchange mechanism called the Complementary System for Foreign Currency Acquirement (or SICAD1), and issued exchange regulations indicating the SICAD1 rate of exchange would be used for payments related to international investments. In late March 2014, the Venezuelan government launched a third foreign exchange mechanism, SICAD2, which it later replaced with another foreign currency exchange platform in February 2015 called the Marginal System of Foreign Currency (SIMADI). The SIMADI rate was described as being derived from daily private bidders and buyers exchanging offers through authorized agents. This rate was approved and published by the Venezuelan Central Bank. In March 2016, the Venezuelan government effected a replacement of its preferential CENCOEX rate with Tipo de Cambio Protegido (DIPRO), described as available largely for essential imports; eliminated its SICAD exchange mechanism; and replaced its SIMADI rate with Tipo de Cambio Complementario (DICOM), published by the Venezuelan Central Bank and described as fluctuating in rate based on supply and demand.

 

The financial statements of 3M’s Venezuelan subsidiary were remeasured utilizing the official CENCOEX (or its predecessor) rate into March 2014, the SICAD1 rate beginning in late March 2014, the SICAD2 rate beginning in June 2014, and the DICOM rate (or its SIMADI predecessor) beginning in February 2015. 3M’s uses of these rates were

7


 

based upon evaluation of a number of factors including, but not limited to, the exchange rate the Company’s Venezuelan subsidiary may legally use to convert currency, settle transactions or pay dividends; the probability of accessing and obtaining currency by use of a particular rate or mechanism; and the Company’s intent and ability to use a particular exchange mechanism. Other factors notwithstanding, remeasurement impacts of the changes in use of these exchange rates did not have material impacts on 3M’s consolidated results of operations or financial condition.

 

The Company continues to monitor circumstances relative to its Venezuelan subsidiary. Changes in applicable exchange rates or exchange mechanisms may continue in the future. These changes could impact the rate of exchange applicable to remeasure the Company’s net monetary assets (liabilities) denominated in Venezuelan Bolivars (VEF). As of September 30, 2016, the Company had a balance of net monetary assets denominated in VEF of less than 1.5 billion VEF and the DIPRO and DICOM exchange rates were approximately 10 VEF and 650 VEF per U.S. dollar, respectively.

 

A need to deconsolidate the Company’s Venezuelan subsidiary’s operations may result from a lack of exchangeability of VEF-denominated cash coupled with an acute degradation in the ability to make key operational decisions due to government regulations in Venezuela. 3M monitors factors such as its ability to access various exchange mechanisms; the impact of government regulations on the Company’s ability to manage its Venezuelan subsidiary’s capital structure, purchasing, product pricing, and labor relations; and the current political and economic situation within Venezuela. Based upon such factors as of September 30, 2016, the Company continues to consolidate its Venezuelan subsidiary. As of September 30, 2016, the balance of intercompany receivables due from this subsidiary and its equity balance were not significant.

 

Earnings Per Share

 

The difference in the weighted average 3M shares outstanding for calculating basic and diluted earnings per share attributable to 3M common shareholders is a result of the dilution associated with the Company’s stock-based compensation plans. Certain options outstanding under these stock-based compensation plans were not included in the computation of diluted earnings per share attributable to 3M common shareholders because they would not have had a dilutive effect (insignificant for the three months ended September 30, 2016; 4.0 million average options for the nine months ended September 30, 2016; 5.5 million average options for the three months ended September 30, 2015; and 4.8 million average options for the nine months ended September 30, 2015). The computations for basic and diluted earnings per share follow:

 

Earnings Per Share Computations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

    

Nine months ended 

 

 

 

September 30,

 

September 30,

 

(Amounts in millions, except per share amounts)

   

2016

   

2015

    

2016

    

2015

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to 3M

 

$

1,329

 

$

1,296

 

$

3,895

 

$

3,795

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator for weighted average 3M common shares outstanding basic

 

 

604.4

 

 

620.6

 

 

606.2

 

 

629.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dilution associated with the Company’s stock-based compensation plans

 

 

14.4

 

 

10.6

 

 

14.1

 

 

11.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator for weighted average 3M common shares outstanding diluted

 

 

618.8

 

 

631.2

 

 

620.3

 

 

641.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to 3M common shareholders basic

 

$

2.20

 

$

2.09

 

$

6.43

 

$

6.03

 

Earnings per share attributable to 3M common shareholders diluted

 

$

2.15

 

$

2.05

 

$

6.28

 

$

5.92

 

 

8


 

New Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers, and in August 2015 issued ASU No. 2015-14, which amended the standard as to effective date. The ASU provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle the ASU includes provisions within a five step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when (or as) an entity satisfies a performance obligation. The standard also specifies the accounting for some costs to obtain or fulfill a contract with a customer and requires expanded disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In March, April, and May 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net); ASU No. 2016-10, Identifying Performance Obligations and Licensing; and ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients, respectively, which amend ASU No. 2014-09. These amendments include clarification of principal versus agent guidance in situations in which a revenue transaction involves a third party in providing goods or services to a customer. In such circumstances, an entity must determine whether the nature of its promise to the customer is to provide the underlying goods or services (i.e., the entity is the principal in the transaction) or to arrange for the third party to provide the underlying goods or services (i.e., the entity is the agent in the transaction). The amendments clarify, in terms of identifying performance obligations, how entities would determine whether promised goods or services are separately identifiable from other promises in a contract and, therefore, would be accounted for separately. The guidance allows entities to disregard goods or services that are immaterial in the context of a contract and provides an accounting policy election to account for shipping and handling activities as fulfillment costs rather than as additional promised services. With regard to the licensing, the amendments clarify how an entity would evaluate the nature of its promise in granting a license of intellectual property, which determines whether the entity recognizes revenue over time or at a point in time. Finally, the amendments address implementation issues relative to transition (adding a practical expedient for contract modifications and clarifying what constitutes a completed contract when employing full or modified retrospective transition methods), collectability, noncash consideration, and the presentation of sales and other similar-type taxes (allowing entities to exclude sales-type taxes collected from transaction price). Overall, ASU No. 2014-09, as amended, provides for either full retrospective adoption or a modified retrospective adoption by which it is applied only to the most current period presented. For 3M, the ASU is effective January 1, 2018. The Company is continuing to evaluate the standard’s impact on 3M’s consolidated results of operations and financial condition. In addition to expanded disclosures regarding revenue, the ASU could, for example, impact the timing of revenue recognition in some arrangements for which software industry-specific guidance (which the ASU supersedes) is currently utilized.

 

In February 2015, the FASB issued ASU No. 2015-02, Amendments to the Consolidation Analysis, which changes guidance related to both the variable interest entity (VIE) and voting interest entity (VOE) consolidation models. With respect to the VIE model, the standard changes, among other things, the identification of variable interests associated with fees paid to a decision maker or service provider, the VIE characteristics for a limited partner or similar entity, and the primary beneficiary determination. With respect to the VOE model, the ASU eliminates the presumption that a general partner controls a limited partnership or similar entity unless the presumption can otherwise be overcome. Under the new guidance, a general partner would largely not consolidate a partnership or similar entity under the VOE model. The Company adopted this ASU effective January 1, 2016. Because 3M did not have significant involvement with entities subject to consolidation considerations impacted by the VIE model changes or with limited partnerships potentially impacted by the VOE model changes, the adoption did not have a material impact on the Company’s consolidated results of operations and financial condition.

 

In April 2015, the FASB issued ASU No. 2015-05, Customer’s Accounting for Fees Paid in a Cloud Arrangement, which requires a customer to determine whether a cloud computing arrangement contains a software license. If the arrangement contains a software license, the customer would account for fees related to the software license element in a manner consistent with accounting for the acquisition of other acquired software licenses. If the arrangement does not contain a software license, the customer would account for the arrangement as a service contract. An arrangement would

9


 

contain a software license element if both (1) the customer has the contractual right to take possession of the software at any time during the hosting period without significant penalty and (2) it is feasible for the customer to either run the software on its own hardware or contract with another party unrelated to the vendor to host the software. 3M adopted this ASU prospectively to arrangements entered into, or materially modified beginning January 1, 2016. The adoption did not have a material impact on 3M’s consolidated results of operations and financial condition.

 

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which modifies existing requirements regarding measuring inventory at the lower of cost or market. Under existing standards, the market amount requires consideration of replacement cost, net realizable value (NRV), and NRV less an approximately normal profit margin. The new ASU replaces market with NRV, defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This eliminates the need to determine and consider replacement cost or NRV less an approximately normal profit margin when measuring inventory. For 3M, this standard is effective prospectively beginning January 1, 2017, with early adoption permitted. The Company is currently assessing this ASU’s impact on 3M’s consolidated results of operations and financial condition.

 

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which revises the accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. The new guidance requires the fair value measurement of investments in equity securities and other ownership interests in an entity, including investments in partnerships, unincorporated joint ventures and limited liability companies (collectively, equity securities) that do not result in consolidation and are not accounted for under the equity method. Entities will need to measure these investments and recognize changes in fair value in net income. Entities will no longer be able to recognize unrealized holding gains and losses on equity securities they classify under current guidance as available for sale in other comprehensive income (OCI). They also will no longer be able to use the cost method of accounting for equity securities that do not have readily determinable fair values. Instead, for these types of equity investments that do not otherwise qualify for the net asset value practical expedient, entities will be permitted to elect a practicability exception and measure the investment at cost less impairment plus or minus observable price changes (in orderly transactions). The ASU also establishes an incremental recognition and disclosure requirement related to the presentation of fair value changes of financial liabilities for which the fair value option (FVO) has been elected. Under this guidance, an entity would be required to separately present in OCI the portion of the total fair value change attributable to instrument-specific credit risk as opposed to reflecting the entire amount in earnings. For derivative liabilities for which the FVO has been elected, however, any changes in fair value attributable to instrument-specific credit risk would continue to be presented in net income, which is consistent with current guidance. For 3M, this standard is effective beginning January 1, 2018 via a cumulative-effect adjustment to beginning retained earnings, except for guidance relative to equity securities without readily determinable fair values which is applied prospectively. The Company is currently assessing this ASU’s impact on 3M’s consolidated results of operations and financial condition.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases, replacing existing lease accounting guidance. The new standard introduces a lessee model that would require entities to recognize assets and liabilities for most leases, but recognize expenses on their income statements in a manner similar to current accounting. The ASU does not make fundamental changes to existing lessor accounting. However, it modifies what qualifies as a sales-type and direct financing lease and related accounting and aligns a number of the underlying principles with those of the new revenue standard, ASU No. 2014-09, such as evaluating how collectability should be considered and determining when profit can be recognized. The guidance eliminates existing real estate-specific provisions and requires expanded qualitative and quantitative disclosures. The standard requires modified retrospective transition by which it is applied at the beginning of the earliest comparative period presented in the year of adoption. For 3M, the ASU is effective January 1, 2019. The Company is currently assessing this standard’s impact on 3M’s consolidated results of operations and financial condition.

 

In March 2016, the FASB issued ASU No. 2016-06, Contingent Put and Call Options in Debt Instruments. This ASU clarifies guidance used to determine if debt instruments that contain contingent put or call options would require separation of the embedded put or call feature from the debt instrument and trigger accounting for the feature as a derivative with changes in fair value recorded through income. Under the new guidance, fewer put or call options

10


 

embedded in debt instruments would require derivative accounting. For 3M, this ASU is effective January 1, 2017. The Company’s outstanding debt with embedded put provisions does not require separate derivative accounting under existing guidance. As a result, 3M does not expect this ASU to have a material impact on the Company’s consolidated results of operations and financial condition.

 

In March 2016, the FASB issued ASU No. 2016-07, Simplifying the Transition to the Equity Method of Accounting, which eliminates the existing requirement to apply the equity method of accounting retrospectively (revising prior periods as if the equity method had always been applied) when an entity obtains significant influence over a previously held investment. The new guidance would require the investor to apply the equity method prospectively from the date the investment qualifies for the equity method. The investor would add the carrying value of the existing investment to the cost of any additional investment to determine the initial cost basis of the equity method investment. For 3M, this ASU is effective January 1, 2017 on a prospective basis, with early adoption permitted. 3M would apply this guidance to investments that transition to the equity method after the adoption date.

 

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which modifies certain accounting aspects for share-based payments to employees including, among other elements, the accounting for income taxes and forfeitures, as well as classifications in the statement of cash flows. With respect to income taxes, under current guidance, when a share-based payment award such as a stock option or restricted stock unit (RSU) is granted to an employee, the fair value of the award is generally recognized over the vesting period. However, the related deduction from taxes payable is based on the award’s intrinsic value at the time of exercise (for an option) or on the fair value upon vesting of the award (for RSUs), which can be either greater (creating an excess tax benefit) or less (creating a tax deficiency) than the compensation cost recognized in the financial statements. Excess tax benefits are recognized in additional paid-in capital (APIC) within equity, and tax deficiencies are similarly recognized in APIC to the extent there is a sufficient APIC amount (APIC pool) related to previously recognized excess tax benefits. Under the new guidance, all excess tax benefits/deficiencies would be recognized as income tax benefit/expense in the statement of income. The new ASU’s income tax aspects also impact the calculation of diluted earnings per share by excluding excess tax benefits/deficiencies from the calculation of assumed proceeds available to repurchase shares under the treasury stock method. Relative to forfeitures, the new standard allows an entity-wide accounting policy election either to continue to estimate the number of awards that will be forfeited or to account for forfeitures as they occur. The new guidance also impacts classifications within the statement of cash flows by no longer requiring inclusion of excess tax benefits as both a hypothetical cash outflow within cash flows from operating activities and hypothetical cash inflow within cash flows from financing activities. Instead, excess tax benefits would be classified in operating activities in the same manner as other cash flows related to income taxes. Additionally, the new ASU requires cash payments to tax authorities when an employer uses a net-settlement feature to withhold shares to meet statutory tax withholding provisions to be presented as financing activity (eliminating previous diversity in practice). For 3M, this standard is required effective January 1, 2017, with early adoption permitted. The Company early adopted ASU No. 2016-09 as of January 1, 2016. Prospectively beginning January 1, 2016, excess tax benefits/deficiencies have been reflected as income tax benefit/expense in the statement of income resulting in a $35 million and $175 million tax benefit in the three and nine months ended September 30, 2016, respectively. 3M typically experiences the largest volume of stock option exercises and RSU vestings in the first quarter of its fiscal year. The extent of excess tax benefits/deficiencies is subject to variation in 3M stock price and timing/extent of RSU vestings and employee stock option exercises. 3M’s adoption of this ASU also resulted in associated excess tax benefits being classified as operating activity in the same manner as other cash flows related to income taxes in the statement of cash flows prospectively beginning January 1, 2016. Based on the adoption methodology applied, the statement of cash flows classification of prior periods has not been adjusted. In addition, 3M did not change its accounting principles relative to elements of this standard and continued its existing practice of estimating the number of awards that will be forfeited.

 

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which revises guidance for the accounting for credit losses on financial instruments within its scope. The new standard introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures. With respect to available-for-sale (AFS) debt securities, the ASU

11


 

amends the current other-than-temporary impairment model. For such securities with unrealized losses, entities will still consider if a portion of any impairment is related only to credit losses and therefore recognized as a reduction in income. However, rather than also reflecting that credit loss amount as a permanent reduction in cost (amortized cost) basis of that AFS debt security, the ASU requires that credit losses be reflected as an allowance. As a result, under certain circumstances, a recovery in value could result in previous allowances, or portions thereof, reversing back into income. For 3M, this ASU is effective January 1, 2020, with early adoption permitted. Entities are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is currently assessing this ASU’s impact on 3M’s consolidated result of operations and financial condition.

 

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice in how certain cash receipts and payments are presented and classified in the statement of cash flows. The standard provides guidance in a number of situations including, among others, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and distributions received from equity method investees. The ASU also provides guidance for classifying cash receipts and payments that have aspects of more than one class of cash flows. For 3M, this ASU is effective January 1, 2018, with early adoption permitted. The standard requires application using a retrospective transition method. The Company is currently assessing this ASU’s impact on 3M’s consolidated results of operations and financial condition.

 

In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, which modifies existing guidance and is intended to reduce diversity in practice with respect to the accounting for the income tax consequences of intra-entity transfers of assets. The ASU indicates that the current exception to income tax accounting that requires companies to defer the income tax effects of certain intercompany transactions would apply only to intercompany inventory transactions. That is, the exception would no longer apply to intercompany sales and transfers of other assets (e.g., intangible assets). Under the existing exception, income tax expense associated with intra-entity profits in an intercompany sale or transfer of assets is eliminated from earnings. Instead, that cost is deferred and recorded on the balance sheet (e.g., as a prepaid asset) until the assets leave the consolidated group. Similarly, the entity is prohibited from recognizing deferred tax assets for the increases in tax bases due to the intercompany sale or transfer. For 3M, this ASU is effective January 1, 2018, with early adoption permitted as of January 1, 2017. The standard requires modified retrospective transition with a cumulative catch-up adjustment to opening retained earnings in the period of adoption. Upon adoption, a company would write off any income tax effects that had been deferred from past intercompany transactions involving non-inventory assets to opening retained earnings. In addition, an entity would record deferred tax assets with an offset to opening retained earnings for amounts that entity had previously not recognized under existing guidance but would recognize under the new guidance. The Company does not expect this ASU to have a material impact on 3M’s consolidated results of operations and financial condition.

 

In October 2016, the FASB issued ASU No. 2016-17, Interests Held through Related Parties That Are under Common Control, which modifies existing guidance with respect to how a decision maker that holds an indirect interest in a variable interest entity (VIE) through a common control party determines whether it is the primary beneficiary of the VIE as part of the analysis of whether the VIE would need to be consolidated. Under the ASU, a decision maker would need to consider only its proportionate indirect interest in the VIE held through a common control party. Previous guidance had required the decision maker to treat the common control party’s interest in the VIE as if the decision maker held the interest itself. As a result of the ASU, in certain cases, previous consolidation conclusions may change. For 3M, the standard is effective January 1, 2017 with retrospective application to January 1, 2016. 3M does not have significant involvement with entities subject to consolidation considerations impacted by VIE model factors. As a result, 3M does not expect this ASU to have a material impact on the Company’s consolidated results of operations and financial condition.

12


 

NOTE 2.  Acquisitions and Divestitures

 

Acquisitions:

 

3M makes acquisitions of certain businesses from time to time that are aligned with its strategic intent with respect to, among other factors, growth markets and adjacent product lines or technologies.

 

During the nine months ended September 30, 2016, the purchase price paid for business combinations inclusive of those enumerated below and an immaterial acquisition was $17 million (net of cash acquired). Adjustments in the first nine months of 2016 to the preliminary purchase price allocations of other acquisitions within the allocation period primarily related to the identification of contingent liabilities and certain tax-related items aggregating to approximately $35 million along with other balances related to the 2015 acquisition of Capital Safety Group S.A.R.L. The change to provisional amounts resulted in an immaterial impact to the results of operations in the third quarter of 2016, a portion of which relates to earlier quarters in the measurement period.

 

In September 2016, 3M (Health Care Business) acquired all of the outstanding shares of Semfinder AG and Sembrowser AG (collectively, “Semfinder”), headquartered in Kreuzlingen, Switzerland. Semfinder is a leading developer of precision software that enables efficient coding of medical procedures in multiple languages.

 

Divestitures:

 

3M may divest certain businesses from time to time based upon review of the Company’s portfolio considering, among other items, factors relative to the extent of strategic and technological alignment and optimization of capital deployment, in addition to considering if selling the businesses results in the greatest value creation for the Company and for shareholders.

 

In the first quarter of 2016, 3M (Safety and Graphics Business) completed the sale of the remainder of the assets of 3M’s library systems business to One Equity Partners Capital Advisors L.P. (OEP). 3M had previously sold the North American business and the majority of the business outside of North America to OEP in the fourth quarter of 2015. The library systems business delivers circulation management solutions to library customers with on-premise hardware and software, maintenance and service, and an emerging cloud-based digital lending platform.

 

In the first quarter of 2016, 3M (Industrial Business) sold to Innovative Chemical Products Group, a portfolio company of Audax Private Equity, the assets of 3M’s pressurized polyurethane foam adhesives business (formerly known as Polyfoam). This business is a provider of pressurized polyurethane foam adhesive formulations and systems into the residential roofing, commercial roofing and insulation and industrial foam segments in the United States with annual sales of approximately $20 million.

 

The Company recorded a pre-tax gain of $40 million in the first quarter of 2016 as a result of the sales of these businesses (recorded in selling, general and administrative expenses).

 

In October 2016, 3M (Industrial Business) completed the sale of the assets of its temporary protective films business to Pregis LLC. This business, with annual sales of approximately $50 million, is a provider of adhesive-backed temporary protective films used in a broad range of industries. The Company expects a pre-tax gain of approximately $35 million as a result of this transaction.

 

The aggregate operating income of the businesses described above included in the Company’s operating results for the periods presented and the amounts of major assets and liabilities of any associated disposal groups classified as held-for-sale as of the respective balance sheet dates presented were not material.

 

Refer to Note 2 in 3M’s Current Report on Form 8-K dated May 17, 2016 (which updated 3M’s 2015 Annual Report on Form 10-K) for more information on 3M’s acquisitions and divestitures.

 

 

13


 

NOTE 3.  Goodwill and Intangible Assets

 

Purchased goodwill from acquisitions totaled $17 million during the first nine month of 2016, none of which is deductible for tax purposes. The acquisition activity in the following table also includes the net impact of adjustments to the preliminary allocation of purchase price within the one year measurement-period following prior acquisitions, which increased goodwill by $39 million during the nine months ended September 30, 2016. The amounts in the “Translation and other” column in the following table primarily relate to changes in foreign currency exchange rates. The goodwill balances by business segment as of December 31, 2015 and September 30, 2016, follow:

 

Goodwill

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2015

 

Acquisition

 

Translation

 

September 30, 2016

 

(Millions)

    

Balance

    

activity

    

and other

    

Balance

 

Industrial

 

$

2,573

 

$

1

 

$

68

 

$

2,642

 

Safety and Graphics

 

 

3,342

 

 

43

 

 

10

 

 

3,395

 

Health Care

 

 

1,624

 

 

12

 

 

20

 

 

1,656

 

Electronics and Energy

 

 

1,510

 

 

 —

 

 

16

 

 

1,526

 

Consumer

 

 

200

 

 

 —

 

 

11

 

 

211

 

Total Company

 

$

9,249

 

$

56

 

$

125

 

$

9,430

 

 

Accounting standards require that goodwill be tested for impairment annually and between annual tests in certain circumstances such as a change in reporting units or the testing of recoverability of a significant asset group within a reporting unit. At 3M, reporting units generally correspond to a division.

 

As described in Note 14, effective in the first quarter of 2016, the Company changed its business segment reporting in its continuing effort to improve the alignment of its businesses around markets and customers. For any product changes that resulted in reporting unit changes, the Company applied the relative fair value method to determine the impact on goodwill of the associated reporting units. During the first quarter of 2016, the Company completed its assessment of any potential goodwill impairment for reporting units impacted by this new structure and determined that no impairment existed.

 

14


 

Acquired Intangible Assets

 

The carrying amount and accumulated amortization of acquired finite-lived intangible assets, in addition to the balance of non-amortizable intangible assets, as of September 30, 2016, and December 31, 2015, follow:

 

 

 

 

 

 

 

 

 

 

    

September 30,

    

December 31,

 

(Millions)

    

2016

    

2015

 

Customer related intangible assets

 

$

1,977

 

$

1,973

 

Patents

 

 

608

 

 

616

 

Other technology-based intangible assets

 

 

529

 

 

525

 

Definite-lived tradenames

 

 

425

 

 

421

 

Other amortizable intangible assets

 

 

214

 

 

216

 

Total gross carrying amount

 

$

3,753

 

$

3,751

 

 

 

 

 

 

 

 

 

Accumulated amortization — customer related

 

 

(773)

 

 

(668)

 

Accumulated amortization — patents

 

 

(496)

 

 

(481)

 

Accumulated amortization — other technology based

 

 

(293)

 

 

(252)

 

Accumulated amortization — definite-lived tradenames

 

 

(235)

 

 

(215)

 

Accumulated amortization — other

 

 

(172)

 

 

(169)

 

Total accumulated amortization

 

$

(1,969)

 

$

(1,785)

 

 

 

 

 

 

 

 

 

Total finite-lived intangible assets — net

 

$

1,784

 

$

1,966

 

 

 

 

 

 

 

 

 

Non-amortizable intangible assets (primarily tradenames)

 

 

638

 

 

635

 

Total intangible assets — net

 

$

2,422

 

$

2,601

 

 

Certain tradenames acquired by 3M are not amortized because they have been in existence for over 55 years, have a history of leading-market share positions, have been and are intended to be continuously renewed, and the associated products of which are expected to generate cash flows for 3M for an indefinite period of time.

 

Amortization expense for acquired intangible assets for the three and nine months ended September 30, 2016 and 2015 follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

    

Nine months ended 

 

 

 

 

September 30,

 

September 30,

 

 

(Millions)

    

2016

    

2015

    

2016

 

2015

 

 

Amortization expense

 

$

63

 

$

66

 

$

195

 

$

169

 

 

 

Expected amortization expense for acquired amortizable intangible assets recorded as of September 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Remainder

    

    

 

    

    

 

    

    

 

    

    

 

    

    

 

    

    

 

 

 

 

of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

After

 

(Millions)

 

2016

 

2017

 

2018

 

2019

 

2020

 

2021

 

2021

 

Amortization expense

 

$

62

 

$

228

 

$

205

 

$

192

 

$

182

 

$

167

 

$

748

 

 

The preceding expected amortization expense is an estimate. Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, changes in foreign currency exchange rates, impairment of intangible assets, accelerated amortization of intangible assets and other events. 3M expenses the costs incurred to renew or extend the term of intangible assets.

15


 

NOTE 4.  Restructuring Actions

 

During the fourth quarter of 2015, management approved and committed to undertake certain restructuring actions primarily focused on structural overhead, largely in the U.S. and slower-growing markets, with particular emphasis on Europe, Middle East, and Africa (EMEA) and Latin America. This impacted approximately 1,700 positions worldwide and resulted in a fourth quarter 2015 pre-tax charge of $114 million.

 

Components of these restructuring actions, including cash and non-cash impacts, follow:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Millions)

    

Employee-Related

    

Asset-Related

    

Total

 

Expense incurred

 

$

98

 

$

16

 

$

114

 

Non-cash changes

 

 

(8)

 

 

(16)

 

 

(24)

 

Cash payments

 

 

(27)

 

 

 —

 

 

(27)

 

Accrued restructuring action balances as of December 31, 2015

 

$

63

 

$

 —

 

$

63

 

Cash payments

 

 

(48)

 

 

 —

 

 

(48)

 

Accrued restructuring action balances as of September 30, 2016

 

$

15

 

$

 —

 

$

15

 

 

Non-cash changes include certain pension settlements and special termination benefits recorded in accrued pension and postretirement benefits and accelerated depreciation resulting from the cessation of use of certain long-lived assets. Remaining activities related to the restructuring are expected to be substantially completed in 2016.

16


 

NOTE 5.  Supplemental Equity and Comprehensive Income Information

 

Consolidated Statement of Changes in Equity

 

Three months ended September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3M Company Shareholders

 

 

 

 

 

 

 

 

 

Common

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Stock and

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

Comprehensive

 

Non-

 

 

 

 

 

 

Paid-in

 

Retained

 

Treasury

 

Income

 

controlling

 

(Millions)

    

Total

    

Capital

    

Earnings

    

Stock

    

(Loss)

    

Interest

 

Balance at June 30, 2016

 

$

11,937

 

$

4,972

 

$

37,194

 

$

(24,088)

 

$

(6,184)

 

$

43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

1,331

 

 

 

 

 

1,329

 

 

 

 

 

 

 

 

2

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative translation adjustment

 

 

17

 

 

 

 

 

 

 

 

 

 

 

16

 

 

1

 

Defined benefit pension and post-retirement plans adjustment

 

 

67

 

 

 

 

 

 

 

 

 

 

 

67

 

 

 —

 

Debt and equity securities - unrealized gain (loss)

 

 

 —