EXHIBIT 99

 

As more fully described below, this Current Report on Form 8-K includes supplemental unaudited reclassified business segment net sales and operating income information (provided on an annual and quarterly basis for the years ended December 31, 2010, 2009 and 2008). This supplemental unaudited information is being provided to show reclassified historical results due to product moves between business segments. The Company did not operate under the realigned business segment structure for any of these prior periods and will begin to report comparative results under the new structure effective with the filing of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2011.

 

Effective in the first quarter of 2011, 3M made certain product moves between its business segments in its continuing effort to drive growth by aligning businesses around markets and customers. There were no changes impacting business segments related to product moves for the Display and Graphics segment or the Consumer and Office segment. In addition, 3M results in total did not change. The product moves between business segments are summarized as follows:

 

·                  Certain pressure sensitive adhesives products within the Industrial Adhesives and Tapes Division and shock absorption and vibration dampening products used in electronics within the Aerospace and Aircraft Maintenance Department (both within the Industrial and Transportation business segment) were transferred to the Electronic Markets Materials Division (part of the Electro and Communications business segment). In addition, certain medical respirator products within the Infection Prevention Division (part of the Health Care business segment) were transferred to the Occupational Health and Environmental Safety Division (within the Safety, Security and Protection Services business segment). The preceding product moves resulted in decreases in net sales for the total year 2010 of $152 million in the Industrial and Transportation business segment and $8 million in the Health Care business segment. These decreases were offset by increases in net sales for the total year 2010 of $121 million for the Electro and Communications business segment and $8 million for the Safety, Security and Protection Services business segment along with a $31 million change in the elimination of dual credit sales and corporate and unallocated.

 

The financial information presented herein reflects the impact of the preceding business segment structure changes for all products presented. The impact of the preceding changes on previously reported 2010 business segment net sales and operating income is summarized as follows:

 

 

 

NET SALES

 

OPERATING INCOME

 

Year ended Dec. 31, 2010
(Dollars in millions)

 

Previously
Reported

 

Revised

 

Change

 

Previously
Reported

 

Revised

 

Change

 

Industrial and Transportation

 

$

8,581

 

$

8,429

 

$

(152

)

$

1,799

 

$

1,754

 

$

(45

)

Health Care

 

4,521

 

4,513

 

(8

)

1,364

 

1,362

 

(2

)

Display and Graphics

 

3,884

 

3,884

 

 

946

 

946

 

 

Consumer and Office

 

3,853

 

3,853

 

 

840

 

840

 

 

Safety, Security and Protection Services

 

3,308

 

3,316

 

8

 

707

 

709

 

2

 

Electro and Communications

 

2,922

 

3,043

 

121

 

631

 

670

 

39

 

Corporate and Unallocated

 

9

 

10

 

1

 

(277

)

(278

)

(1

)

Elimination of Dual Credit

 

(416

)

(386

)

30

 

(92

)

(85

)

7

 

Total Company

 

$

26,662

 

$

26,662

 

$

 

$

5,918

 

$

5,918

 

$

 

 

3M’s businesses are organized, managed and internally grouped into segments based on differences in products, technologies and services. Effective in the first quarter of 2011, 3M continues to manage its operations in six operating business segments: Industrial and Transportation segment; Health Care segment; Display and Graphics segment; Consumer and Office segment; Safety, Security and Protection Services segment; and the Electro and Communications segment. 3M’s six business segments bring together common or related 3M technologies, enhancing the development of innovative products and services and providing for efficient sharing of business resources. These segments have worldwide responsibility for virtually all 3M product lines. 3M is not dependent on any single product or market. Transactions among reportable segments are recorded at cost. 3M is an integrated enterprise characterized by substantial intersegment cooperation, cost allocations and inventory transfers. Therefore, management does not represent that these segments, if operated independently, would report the financial information shown.

 



 

Supplemental Unaudited Business Segment Information

Based on Segment Structure Effective in the First Quarter of 2011

Net Sales

 

NET SALES
(Millions)

 

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

 

Total
Year

 

Industrial and Transportation

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

2,036

 

$

2,121

 

$

2,171

 

$

2,101

 

$

8,429

 

2009

 

1,583

 

1,724

 

1,901

 

1,912

 

7,120

 

2008

 

2,167

 

2,184

 

2,082

 

1,740

 

8,173

 

 

 

 

 

 

 

 

 

 

 

 

 

Health Care

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

1,114

 

$

1,110

 

$

1,092

 

$

1,197

 

$

4,513

 

2009

 

995

 

1,061

 

1,080

 

1,146

 

4,282

 

2008

 

1,078

 

1,117

 

1,064

 

1,035

 

4,294

 

 

 

 

 

 

 

 

 

 

 

 

 

Display and Graphics

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

869

 

$

1,047

 

$

1,065

 

$

903

 

$

3,884

 

2009

 

611

 

808

 

896

 

817

 

3,132

 

2008

 

875

 

849

 

857

 

687

 

3,268

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer and Office

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

912

 

$

954

 

$

1,026

 

$

961

 

$

3,853

 

2009

 

795

 

866

 

923

 

887

 

3,471

 

2008

 

855

 

939

 

988

 

796

 

3,578

 

 

 

 

 

 

 

 

 

 

 

 

 

Safety, Security and Protection Services

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

813

 

$

844

 

$

811

 

$

848

 

$

3,316

 

2009

 

674

 

773

 

834

 

795

 

3,076

 

2008

 

809

 

942

 

887

 

701

 

3,339

 

 

 

 

 

 

 

 

 

 

 

 

 

Electro and Communications

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

694

 

$

757

 

$

803

 

$

789

 

$

3,043

 

2009

 

500

 

577

 

650

 

660

 

2,387

 

2008

 

764

 

795

 

772

 

625

 

2,956

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and Unallocated

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

4

 

$

4

 

$

4

 

$

(2

)

$

10

 

2009

 

4

 

5

 

4

 

 

13

 

2008

 

6

 

8

 

6

 

2

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

Elimination of Dual Credit

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

(94

)

$

(106

)

$

(98

)

$

(88

)

$

(386

)

2009

 

(73

)

(95

)

(95

)

(95

)

(358

)

2008

 

(91

)

(95

)

(98

)

(77

)

(361

)

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

6,348

 

$

6,731

 

$

6,874

 

$

6,709

 

$

26,662

 

2009

 

5,089

 

5,719

 

6,193

 

6,122

 

23,123

 

2008

 

6,463

 

6,739

 

6,558

 

5,509

 

25,269

 

 



 

Supplemental Unaudited Business Segment Information

Based on Segment Structure Effective in the First Quarter of 2011

Operating Income

 

Refer to Note 4 to the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations in 3M’s 2010 Annual Report on Form 10-K for disclosure of special items (restructuring and other actions) that impacted 2009 and 2008 business segment reported operating income. There were no special items that impacted 2010 operating income. Operating income presented in the table that follows includes the impact of these special items.

 

Corporate and Unallocated operating income includes a variety of miscellaneous items, such as corporate investment gains and losses, certain derivative gains and losses, insurance-related gains and losses, certain litigation and environmental expenses, corporate restructuring program 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 U.S. sales and related operating income. Management evaluates each of its six operating business segments based on net sales and operating income performance, including dual credit U.S. reporting to further incentivize U.S. sales growth. As a result, 3M provides additional (“dual”) credit to those business segments selling products in the U.S. to an external customer when that segment is not the primary seller of the product. For example, certain respirators are primarily sold by the Occupational Health and Environmental Safety Division within the Safety, Security and Protection Services business segment; however, the Industrial and Transportation business segment also sells this product to certain customers in its U.S. markets. In this example, the non-primary selling segment (Industrial and Transportation) would also receive credit for the associated net sales it initiated 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 for the U.S. in total are unchanged.

 



 

Supplemental Unaudited Business Segment Information

Based on Segment Structure Effective in the First Quarter of 2011

Operating Income

 

OPERATING INCOME
(Millions)

 

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

 

Total
Year

 

Industrial and Transportation

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

443

 

$

463

 

$

434

 

$

414

 

$

1,754

 

2009

 

171

 

281

 

382

 

396

 

1,230

 

2008

 

485

 

424

 

414

 

212

 

1,535

 

 

 

 

 

 

 

 

 

 

 

 

 

Health Care

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

346

 

$

344

 

$

325

 

$

347

 

$

1,362

 

2009

 

306

 

328

 

338

 

375

 

1,347

 

2008

 

321

 

310

 

293

 

248

 

1,172

 

 

 

 

 

 

 

 

 

 

 

 

 

Display and Graphics

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

212

 

$

308

 

$

282

 

$

144

 

$

946

 

2009

 

60

 

183

 

206

 

141

 

590

 

2008

 

188

 

185

 

162

 

48

 

583

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer and Office

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

219

 

$

211

 

$

235

 

$

175

 

$

840

 

2009

 

165

 

197

 

227

 

159

 

748

 

2008

 

170

 

187

 

223

 

103

 

683

 

 

 

 

 

 

 

 

 

 

 

 

 

Safety, Security and Protection Services

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

182

 

$

198

 

$

164

 

$

165

 

$

709

 

2009

 

125

 

182

 

228

 

193

 

728

 

2008

 

194

 

179

 

206

 

113

 

692

 

 

 

 

 

 

 

 

 

 

 

 

 

Electro and Communications

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

147

 

$

176

 

$

183

 

$

164

 

$

670

 

2009

 

25

 

73

 

125

 

128

 

351

 

2008

 

159

 

163

 

166

 

86

 

574

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and Unallocated

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

(83

)

$

(81

)

$

(26

)

$

(88

)

$

(278

)

2009

 

(33

)

(32

)

(7

)

(29

)

(101

)

2008

 

4

 

22

 

70

 

(38

)

58

 

 

 

 

 

 

 

 

 

 

 

 

 

Elimination of Dual Credit

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

(21

)

$

(23

)

$

(21

)

$

(20

)

$

(85

)

2009

 

(16

)

(21

)

(21

)

(21

)

(79

)

2008

 

(20

)

(21

)

(21

)

(17

)

(79

)

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

1,445

 

$

1,596

 

$

1,576

 

$

1,301

 

$

5,918

 

2009

 

803

 

1,191

 

1,478

 

1,342

 

4,814

 

2008

 

1,501

 

1,449

 

1,513

 

755

 

5,218

 

 



 

Supplemental Unaudited Business Segment Information

Based on Segment Structure Effective in the First Quarter of 2011

Reconciliation of GAAP to Non-GAAP Operating Income

 

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (GAAP), the Company also discusses non-GAAP measures that exclude special items. Operating income measures that exclude special items are not in accordance with, nor are they a substitute for, GAAP measures. Special items represent significant charges or credits that are important to an understanding of the Company’s ongoing operations. The Company uses these non-GAAP measures to evaluate and manage the Company’s operations. The Company believes that discussion of results excluding special items provides a useful analysis of ongoing operating trends. The determination of special items may not be comparable to similarly titled measures used by other companies.

 

As discussed in 3M’s 2010 Annual Report on Form 10-K, 2009 results included net losses for special items that reduced operating income by $194 million. 2009 included restructuring actions ($209 million), which were partially offset by a gain on sale of real estate ($15 million). These net losses were recorded in the first quarter of 2009 ($67 million), second quarter of 2009 ($101 million) and third quarter of 2009 ($26 million).

 

As also discussed in 3M’s 2010 Annual Report on Form 10-K, 2008 results included net losses for special items that reduced operating income by $269 million. 2008 included restructuring actions ($229 million), exit activities ($58 million) and losses related to the sale of businesses ($23 million), which were partially offset by a gain on sale of real estate ($41 million). These net losses were recorded in the second quarter of 2008 ($42 million), third quarter of 2008 ($8 million) and fourth quarter of 2008 ($219 million).

 

The reconciliation provided below, which has been revised from what was previously reported to reflect the segment realignment effective in the first quarter of 2011, reconciles the non-GAAP operating income measure by business segment with the most directly comparable GAAP financial measure for the years ended December 31, 2009 and 2008. There were no special items for the year ended December 31, 2010 that impacted operating income. There were no changes impacting business segments related to product moves for the Display and Graphics segment or the Consumer and Office segment. There were also no changes in total worldwide consolidated operating income compared to what was previously reported.

 

 

 

Year ended Dec. 31, 2009

 

Year ended Dec. 31, 2008

 

OPERATING INCOME BY
BUSINESS SEGMENT
(Millions)

 

Revised
Operating
Income

 

Special
items

 

Adjusted
Non-GAAP
Oper. Income

 

Revised
Operating
Income

 

Special
Items

 

Adjusted
Non-GAAP
Oper. Income

 

Industrial and Transportation

 

$

1,230

 

$

89

 

$

1,319

 

$

1,535

 

$

66

 

$

1,601

 

Health Care

 

1,347

 

20

 

1,367

 

1,172

 

60

 

1,232

 

Display and Graphics

 

590

 

22

 

612

 

583

 

42

 

625

 

Consumer and Office

 

748

 

13

 

761

 

683

 

18

 

701

 

Safety, Security and Protection Services

 

728

 

1

 

729

 

692

 

38

 

730

 

Electro and Communications

 

351

 

11

 

362

 

574

 

7

 

581

 

Corporate and Unallocated

 

(101

)

38

 

(63

)

58

 

38

 

96

 

Elimination of Dual Credit

 

(79

)

 

(79

)

(79

)

 

(79

)

Total Operating Income

 

$

4,814

 

$

194

 

$

5,008

 

$

5,218

 

$

269

 

$

5,487