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