3M (MMM) 10-Q 31 Jul 09 2009 Q2 Quarterly report Financial data

Consolidated Statement of Incom

Consolidated Statement of Income (USD $)
In Millions, except Per Share data	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Consolidated Statement of Income
Net sales	$5,719	$6,739	$10,808	$13,202
Operating expenses
Cost of sales	2,977	3,510	5,749	6,846
Selling, general and administrative expenses	1,242	1,394	2,433	2,669
Research, development and related expenses	309	363	632	714
(Gain)/loss from sale of businesses		23		23
Total operating expenses	4,528	5,290	8,814	10,252
Operating income	1,191	1,449	1,994	2,950
Interest expense and income
Interest expense	55	51	110	106
Interest income	(7)	(18)	(18)	(48)
Total interest expense (income)	48	33	92	58
Income before income taxes	1,143	1,416	1,902	2,892
Provision for income taxes	351	453	580	923
Net income including noncontrolling interest	792	963	1,322	1,969
Less: Net income attributable to noncontrolling interest	9	18	21	36
Net income attributable to 3M	$783	$945	$1,301	$1,933
Weighted average 3M common shares outstanding - basic (in shares)	696.8	702.1	695.2	704.3
Earnings per share attributable to 3M common shareholders - basic (in dollars per share)	1.12	1.35	1.87	2.74
Weighted average 3M common shares outstanding - diluted (in shares)	700.3	712	698.1	714.6
Earnings per share attributable to 3M common shareholders - diluted (in dollars per share)	1.12	1.33	1.86	2.7
Cash dividends paid per 3M common share (in dollars per share)	0.51	0.5	1.02	$1

Consolidated Balance Sheet

Consolidated Balance Sheet (USD $)
In Millions	Jun. 30, 2009	Dec. 31, 2008
Current assets
Cash and cash equivalents	$2,596	$1,849
Marketable securities - current	378	373
Accounts receivable - net	3,456	3,195
Inventories
Finished goods	1,245	1,505
Work in process	803	851
Raw materials and supplies	553	657
Total inventories	2,601	3,013
Other current assets	867	1,168
Total current assets	9,898	9,598
Marketable securities - non-current	307	352
Investments	106	111
Property, plant and equipment	19,187	18,812
Less: Accumulated depreciation	(12,288)	(11,926)
Property, plant and equipment - net	6,899	6,886
Goodwill	5,734	5,753
Intangible assets - net	1,386	1,398
Prepaid pension benefits	39	36
Other assets	1,726	1,659
Total assets	26,095	25,793
Current liabilities
Short-term borrowings and current portion of long-term debt	908	1,552
Accounts payable	1,243	1,301
Accrued payroll	615	644
Accrued income taxes	501	350
Other current liabilities	2,051	1,992
Total current liabilities	5,318	5,839
Long-term debt	5,172	5,166
Pension and postretirement benefits	2,763	2,847
Other liabilities	1,621	1,637
Total liabilities	14,874	15,489
Commitments and contingencies (Note 11)
Common stock par value, $.01 par value, 944,033,056 shares issued	9	9
Additional paid-in capital	3,133	3,006
Retained earnings	22,707	22,227
Treasury stock, at cost; 245,712,394 shares at June 30, 2009; 250,489,769 shares at Dec. 31, 2008	(11,341)	(11,676)
Unearned compensation	(22)	(40)
Accumulated other comprehensive income (loss)	(3,683)	(3,646)
Total 3M Company shareholders' equity	10,803	9,880
Noncontrolling interest	418	424
Total equity	11,221	10,304
Total liabilities and equity	$26,095	$25,793

Consolidated Balance Sheet (Par

Consolidated Balance Sheet (Parenthetical) (USD $)
	Jun. 30, 2009	Dec. 31, 2008
Consolidated Balance Sheet
Common stock, par value (in dollars per share)	0.01	0.01
Common stock, shares issued	944,033,056	944,033,056
Treasury stock, shares	245,712,394	250,489,769

Consolidated Statement of Cash

Consolidated Statement of Cash Flows (USD $)
In Millions	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Cash Flows from Operating Activities
Net income including noncontrolling interest	$1,322	$1,969
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities
Depreciation and amortization	569	553
Company pension and postretirement contributions	(205)	(95)
Company pension and postretirement expense	109	52
Stock-based compensation expense	132	122
(Gain)/loss from sale of businesses		23
Deferred income taxes	(15)	46
Excess tax benefits from stock-based compensation		(20)
Changes in assets and liabilities
Accounts receivable	(222)	(405)
Inventories	447	(171)
Accounts payable	(76)	30
Accrued income taxes	199	(42)
Product and other insurance receivables and claims	34	129
Other - net	(133)	49
Net cash provided by operating activities	2,161	2,240
Cash Flows from Investing Activities
Purchases of property, plant and equipment (PP&E)	(454)	(632)
Proceeds from sale of PP&E and other assets	57	6
Acquisitions, net of cash acquired	(12)	(549)
Purchases of marketable securities and investments	(485)	(1,479)
Proceeds from sale of marketable securities and investments	330	732
Proceeds from maturities of marketable securities	195	427
Proceeds from sale of businesses		85
Other investing	(6)	(57)
Net cash used in investing activities	(375)	(1,467)
Cash Flows from Financing Activities
Change in short-term debt - net	(552)	1,120
Repayment of debt (maturities greater than 90 days)	(88)	(807)
Purchases of treasury stock	(6)	(1,082)
Reissuances of treasury stock	225	217
Dividends paid to stockholders	(709)	(704)
Distributions to noncontrolling interest		(12)
Excess tax benefits from stock-based compensation		20
Other - net	3	131
Net cash used in financing activities	(1,127)	(1,117)
Effect of exchange rate changes on cash and cash equivalents	88	(5)
Net increase (decrease) in cash and cash equivalents	747	(349)
Cash and cash equivalents at beginning of year	1,849	1,896
Cash and cash equivalents at end of period	$2,596	$1,547

Significant Accounting Policies

Significant Accounting Policies
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
Significant Accounting Policies	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 Companys 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 Form10-Q. Certain amounts presented for prior periods have been reclassified to conform to the current year presentation. As discussed later in Note 1, effective January1, 2009, 3M adopted SFAS No.160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No.51, and FSP No.APB 14-1, Accounting for Convertible Debt Instruments That MayBe Settled in Cash Upon Conversion (Including Partial Cash Settlement). These accounting pronouncements, which related to noncontrolling interest and convertible debt instruments, respectively, both required retrospective application. In addition, 3M reclassified balance sheet amounts related to life insurance policies from investments to other assets; reclassified current and non-current balance sheet amounts related to income taxes between deferred income taxes and accrued income taxes; and reclassified amounts between unearned compensation and additional paid-in capital, both of which are within stockholders equity. As described in 3Ms Current Report on Form8-K dated May13, 2009 (which updated 3Ms 2008 Annual Report on Form10-K) and 3Ms Quarterly Report on Form10-Q for the period ended March31, 2009, during the first quarter of 2009 the Company reorganized its business segments (Note 13) and as discussed above, also reclassified certain amounts presented for prior periods to conform to the current year presentation. This Quarterly Report on Form10-Q should be read in conjunction with the Companys consolidated financial statements and notes included in its Current Report on Form8-K filed May13, 2009. 3M has evaluated subsequent events through the date that the financial statements were issued, which was July31, 2009, the date of 3Ms Quarterly Report on Form10-Q for the period ended June30, 2009. 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 Companys stock-based compensation plans. Certain Management Stock Ownership Program (MSOP) options outstanding 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 (71.5 million average options for the three months ended June30, 2009; 71.7 million average options for the six months ended June30, 2009; 31.6 million average options for the three months ended June30, 2008; 29.9 million average options for the six months ended June30, 2008). The con

Acquisitions

Acquisitions
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
NOTE 2. Acquisitions	NOTE 2. Acquisitions During the six months ended June30, 2009, 3M completed three business combinations. The purchase price paid for these business combinations (net of cash acquired) and certain acquisition costs paid for pre-2009 business combinations during the six months ended June30, 2009 aggregated to $12 million. (1)In January2009, 3M (Safety, Security and Protection Services Business) purchased 100 percent of the outstanding shares of Alltech Solutions, a provider of water pipe rehabilitation services based in Moncton, New Brunswick, Canada. (2)In February2009, 3M (Industrial and Transportation Business) purchased the assets of Compac Corp.s pressure sensitive adhesive tape business, a global leader in providing custom solutions in coating, laminating and converting flexible substrates headquartered in Hackettstown, N.J. (3)In April2009, 3M (Industrial and Transportation Business) purchased 100% of the outstanding shares of Meguiars International, UK, a distributor of Meguiars Inc. products in the United Kingdom based in Daventry, United Kingdom. Purchased identifiable intangible assets related to the three acquisitions which closed in the first six months of 2009 totaled $7 million and will be amortized on a straight-line basis over a weighted-average life of 6 years (lives ranging from 3 to 11 years). Acquired identifiable intangible assets for which significant assumed renewals or extensions of underlying arrangements impacted the determination of their useful lives were not material. Pro forma information related to the above acquisitions is not included because the impact on the Companys consolidated results of operations is not considered to be material. In addition to business combinations, 3M periodically acquires certain tangible and/or intangible assets and purchases interests in certain enterprises that do not otherwise qualify for accounting as business combinations. These transactions are largely reflected as additional asset purchase and investment activity. Subsequent Events On July8, 2009, 3M (Consumer and Office Business) announced that it completed its acquisition of ACE Bandage, a manufacturer and distributor of branded elastic health supports in the U.S. and Canada, headquartered in Franklin Lakes, New Jersey.

Goodwill and Intangible Assets

Goodwill and Intangible Assets
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
NOTE 3. Goodwill and Intangible Assets	NOTE 3. Goodwill and Intangible Assets Purchased goodwill related to the three acquisitions which closed in the first six months of 2009 totaled $6 million, $1 million of which is deductible for tax purposes. The acquisition activity in the following table also includes the impacts of adjustments to the preliminary allocation of purchase price and certain acquisition costs for pre-2009 acquisitions, which reduced goodwill by $52 million. The amounts in the Translation and other column in the following table primarily relate to changes in foreign currency exchange rates. The goodwill balance by business segment as of December31, 2008 and June30, 2009, follow: Goodwill (Millions) Dec.31, 2008 Balance Acquisition activity Translation andother June30, 2009 Balance Industrial and Transportation $ 1,692 $ (4 ) $ 17 $ 1, 705 Health Care 988 1 (1 ) 988 Consumer and Office 155 1 (17 ) 139 Safety, Security and Protection Services 1,202 6 44 1,252 Display and Graphics 1,042 (48 ) (13 ) 981 Electro and Communications 674 (2 ) (3 ) 669 Total Company $ 5,753 $ (46 ) $ 27 $ 5,734 SFAS No.142 requires 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 discussed in Note 13, 3M made certain changes to its business segments effective in the first quarter of 2009, which resulted in no material changes to the goodwill balances by business segment. For those changes that resulted in reporting unit changes, the Company applied the relative fair value method to determine the impact to reporting units. During the first quarter of 2009, the Company completed its assessment of any potential goodwill impairment for reporting units impacted by this new structure and determined that no impairment existed. As discussed in Note 10, in June2009, 3M tested the long lived assets grouping associated with the UK passport production activity of 3Ms Security Systems Division for recoverability. This circumstance required the Company to also test goodwill for impairment at the reporting unit (Security Systems Division) level. 3M completed its assessment of potential goodwill impairment for this reporting unit and determined that no goodwill impairment existed as of June30, 2009. Acquired Intangible Assets For the six months ended June30, 2009, acquired intangible asset activity through business combinations increased balances by $72 million, of which approximately $65 million related to adjustments to preliminary allocations of purchase price on pre-2009 acquisitions. The carrying amount and accumulated amortization of acquired intangible assets as of June30, 2009, and December31, 2008, follow: (Millions) June30 2009 Dec.31 2008 Patents $ 463 $ 475 Other amortizable intangible assets (primarily tradenames and

Restructuring Actions and Exit

Restructuring Actions and Exit Activities
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
NOTE 4. Restructuring Actions and Exit Activities	NOTE 4. Restructuring Actions and Exit Activities Restructuring actions and exit activities generally include significant actions involving employee-related severance charges, contract termination costs, and impairment of assets associated with such actions. Employee-related severance charges are largely based upon distributed employment policies and substantive severance plans and are reflected in the quarter in which management approves the associated actions. Severance amounts for which affected employees were required to render service in order to receive benefits at their termination dates were measured at the date such benefits were communicated to the applicable employees and recognized as expense over the employees remaining service periods. Contract termination and other charges primarily reflect costs to terminate a contract before the end of its term (measured at fair value at the time the Company provided notice to the counterparty) or costs that will continue to be incurred under the contract for its remaining term without economic benefit to the Company. Asset impairment charges related to intangible assets and property, plant and equipment reflect the excess of the assets carrying values over their fair values. The following provides information concerning the Companys first-six months of 2009 restructuring actions and fourth-quarter 2008 restructuring actions. 2008 and 2009 Restructuring Actions: During the fourth quarter of 2008 and the first six months of 2009, management approved and committed to undertake certain restructuring actions. Due to the rapid decline in global business activity in the fourth quarter of 2008 and into the first half of 2009, 3M aggressively reduced its cost structure and rationalized several facilities, including manufacturing, technical and office facilities. These actions included all geographies, with particular attention in the developed areas of the world that have and are experiencing large declines in business activity, and included the following: During the fourth quarter of 2008, 3M announced the elimination of more than 2,400 positions. Of these employment reductions, about 31 percent were in the United States, 29 percent in Europe, 24 percent in Latin America and Canada, and 16 percent in the Asia Pacific area. These restructuring actions resulted in a fourth-quarter 2008 pre-tax charge of $229 million, with $186 million for employee-related items/benefits and other, and $43 million related to fixed asset impairments. The preceding charges were recorded in cost of sales ($84 million), selling, general and administrative expenses ($135 million), and research, development and related expenses ($10 million). Cash payments in 2008 related to this restructuring were not material. Refer to 3Ms Current Report on Form8-K filed May13, 2009, Note 4, for additional information on these 2008 restructuring actions. During the first quarter of 2009, 3M announced the elimination of approximately 1,200 positions. Of these employment reductions, about 43 percent were in the United States, 36 percent in Latin America, 16 percent in Europe and 5 percent in the Asia Pacific a

Supplemental Equity and Compreh

Supplemental Equity and Comprehensive Income Information
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
NOTE 5. Supplemental Equity and Comprehensive Income Information	NOTE 5. Supplemental Equity and Comprehensive Income Information Consolidated Statement of Changes in Equity 3M Company and Subsidiaries Three months ended June30, 2009 3M Company Shareholders Common Accumulated Stock and Other Additional Unearned Comprehensive Non- Paid-in Retained Treasury Comp- Income controlling (Millions) Total Capital Earnings Stock ensation (Loss) Interest Balance at March31, 2009 $ 10,141 $ 3,095 $ 22,369 $ (11,618 ) $ (18 ) $ (4,091 ) $ 404 Net income including noncontrolling interest 792 783 9 Cumulative translation adjustment 460 455 5 Defined benefit pension andpostretirement plans adjustment 21 21 Debt and equity securities - unrealized gain (loss) 4 4 Cash flow hedging instruments - unrealized gain (loss) (72 ) (72 ) Total comprehensive income 1,205 Dividends paid (355 ) (355 ) Amortization of unearned compensation (4 ) (4 ) Stock-based compensation, net of tax impacts 47 47 Reacquired stock (5 ) (5 ) Issuances pursuant to stock option and benefit plans 192 (90 ) 282 Balance at June30, 2009 $ 11,221 $ 3,142 $ 22,707 $ (11,341 ) $ (22 ) $ (3,683 ) $ 418 3M Company and Subsidiaries Six months ended June30, 2009 3M Company Shareholders Common Accumulated Stock and Other Additional Unearned Comprehensive Non- Paid-in Retained Treasury Comp- Income controlling (Millions) Total Capital Earnings Stock ensation (Loss) Interest Balance at December31, 2008 $ 10,304 $ 3,015 $ 22,227 $ (11,676 ) $ (40 ) $ (3,646 ) $ 424 Net income including noncontrolling interest 1,322 1,301 21 Cumulative translation adjustment 8 35 (27 ) Defined benefit pension andpostretirement plans adjustment Debt and equity securities - unrealized gain (loss) 5 5 Cash flow hedging instruments - unrealized gain (loss) (77 ) (77 ) Total comprehensive income 1,258 Dividends paid (709 ) (709 ) Amortization of unearned compensation 18 18 Stock-based compensation, net of tax impacts 127 127 Reacquired stock (5 ) (5 ) Issuances pursuant to stock option and benefit plans 228 (112 ) 340 Balance at June30, 2009 $ 11,221 $ 3,142 $ 22,707 $ (11,341 ) $ (22 ) $ (3,683 ) $ 418 Consolidated Statement of Changes in Equity 3M Company and Subsidiaries Three months ended June30, 2008 3M Company Shareholders Common Accumulated Stock and Other Additional Unearned Comprehensive Non- Paid-in Retained Treasury Comp- Income contro

Income Taxes

Income Taxes
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
NOTE 6. Income Taxes	NOTE 6. Income Taxes The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2002. The Internal Revenue Service (IRS) completed its examination of the Companys U.S. federal income tax returns for the years 2002 through 2004 in the first quarter of 2008. The outcome of the 2002 through 2004 audit cycle impacted the 2001 tax year, which was settled in the second quarter of 2008. Currently, the Company is under examination by the IRS for its U.S. federal income tax returns for the years 2005 through 2008. It is anticipated that the IRS will complete its examination of the Company for these years by the end of the first quarter of 2010. As of June30, 2009, the IRS has not proposed any significant adjustments to the Companys tax positions. Currently, the Company is not able to reasonably estimate the amount by which the liability for unrecognized tax benefits will increase or decrease during the next 12 months as a result of the ongoing IRS audit. However, the Company does not anticipate any adjustments that would result in a material change to its financial position. Payments relating to any proposed assessments arising from the 2005 through 2007 audit may not be made until a final agreement is reached between the Company and the IRS on such assessments or upon a final resolution resulting from the administrative appeals process or judicial action. In addition to the U.S. federal examination, there is also limited audit activity in several U.S. state and foreign jurisdictions. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of June30, 2009 and December31, 2008, respectively, are $349 million and $334 million. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense. The Company recognized in the consolidated statement of income on a gross basis approximately $3 million of expense and a benefit of $1 million for the three months ended June30, 2009 and June30, 2008, respectively, and approximately $6 million of expense and a benefit of $2 million for the six months ended June30, 2009 and June30, 2008, respectively. At June30, 2009 and December31, 2008, accrued interest and penalties in the consolidated balance sheet on a gross basis were $53 million and $47 million, respectively. Included in these interest and penalty amounts are interest and penalties related to tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Marketable Securities

Marketable Securities
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
NOTE 7. Marketable Securities	NOTE 7. Marketable Securities The Company invests in agency securities, corporate securities, asset-backed securities, treasury securities and other securities. The following is a summary of amounts recorded on the Consolidated Balance Sheet for marketable securities (current and non-current). June30, Dec.31, (Millions) 2009 2008 Agency securities $ 150 $ 180 Corporate securities 99 145 Asset-backed securities: Automobile loans related 65 24 Credit cards related 19 Other 20 11 Asset-backed securities total 104 35 Other securities 25 13 Current marketable securities $ 378 $ 373 Agency securities $ 36 $ 200 Corporate securities 53 62 Treasury securities 83 12 Asset-backed securities: Automobile loans related 57 25 Credit cards related 64 40 Other 10 11 Asset-backed securities total 131 76 Auction rate and other securities 4 2 Non-current marketable securities $ 307 $ 352 Total marketable securities $ 685 $ 725 Classification of marketable securities as current or non-current is dependent upon managements intended holding period, the securitys maturity date and liquidity considerations based on market conditions. If management intends to hold the securities for longer than one year as of the balance sheet date, they are classified as non-current. At June30, 2009, gross unrealized losses totaled approximately $20 million (pre-tax), while gross unrealized gains totaled approximately $3 million (pre-tax). At December31, 2008, gross unrealized losses totaled approximately $30 million (pre-tax), while gross unrealized gains were not material. Gross unrealized losses related to auction rate securities totaled $13 million and $16 million (pre-tax) as of June30, 2009 and December31, 2008, respectively. Gross realized gains and losses on sales or maturities of marketable securities for the first six months of 2009 and 2008 were not material. Cost of securities sold or reclassified use the first in, first out (FIFO) method. Since these marketable securities are classified as available-for-sale securities, changes in fair value will flow through other comprehensive income, with amounts reclassified out of other comprehensive income into earnings upon sale or other-than-temporary impairment. 3M has a diversified marketable securities portfolio of $685 million as of June30, 2009. Within this portfolio, current and long-term asset-backed securities (estimated fair value of $235 million) are primarily comprised of interests in automobile loans and credit cards. At June30, 2009, the asset-backed securities credit ratings were AAA or A-1+, with the exception of one security rated BBB with a fair market value of less than $1 million. Historically, 3Ms marketable securities portfolio included auction rate securities that represented interests in investment grade credit default swaps, however, these have been written down to $4 million as of June30, 2009. Since the second half of 2007, these

Pension and Postretirement Bene

Pension and Postretirement Benefit Plans
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
NOTE 8. Pension and Postretirement Benefit Plans	NOTE 8. Pension and Postretirement Benefit Plans Components of net periodic benefit cost and other supplemental information for the three and six months ended June30 follow: Benefit Plan Information ThreemonthsendedJune30, QualifiedandNon-qualified PensionBenefits Postretirement UnitedStates International Benefits (Millions) 2009 2008 2009 2008 2009 2008 Service cost $ 46 $ 48 $ 24 $ 31 $ 13 $ 13 Interest cost 155 149 55 66 24 25 Expected return on plan assets (226 ) (222 ) (61 ) (80 ) (23 ) (26 ) Amortization of transition (asset) obligation 1 Amortization of prior service cost (benefit) 4 4 (1 ) (1 ) (20 ) (25 ) Amortization of net actuarial (gain) loss 24 14 11 10 16 16 Net periodic benefit cost (benefit) $ 3 $ (7 ) $ 28 $ 27 $ 10 $ 3 Settlements, curtailments and special termination benefits 25 1 1 Net periodic benefit cost (benefit) after settlements, curtailments and special termination benefits $ 28 $ (6 ) $ 29 $ 27 $ 10 $ 3 SixmonthsendedJune30, QualifiedandNon-qualified PensionBenefits Postretirement UnitedStates International Benefits (Millions) 2009 2008 2009 2008 2009 2008 Service cost $ 92 $ 96 $ 48 $ 62 $ 26 $ 26 Interest cost 310 298 111 132 48 51 Expected return on plan assets (453 ) (444 ) (123 ) (160 ) (46 ) (52 ) Amortization of transition (asset) obligation 1 2 Amortization of prior service cost (benefit) 8 8 (2 ) (2 ) (40 ) (46 ) Amortization of net actuarial (gain) loss 49 28 21 20 33 32 Net periodic benefit cost (benefit) $ 6 $ (14 ) $ 56 $ 54 $ 21 $ 11 Settlements, curtailments and special termination benefits 25 1 1 Net periodic benefit cost (benefit) after settlements, curtailments and special termination benefits $ 31 $ (13 ) $ 57 $ 54 $ 21 $ 11 For the six months ended June30, 2009, contributions totaling $171 million were made to the Companys U.S. and international pension plans and $34 million to its postretirement plans. For the last six months of 2009, the Company expects to contribute approximately $700 million to its U.S. and international pension plans and approximately $100 million to its postretirement plans. Of this remaining $800 million, the Company intends to make pension contributions in shares of its common stock for approximately $600 million related to its U.S. plans. The Company does not have a required minimum pension contribution obligation for its U.S. plans in 2009. Therefore, the amount of the anticipated discretionary pension contribution could vary significantly depending on the U.S. plans fu

Derivatives

Derivatives
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
NOTE 9. Derivatives	NOTE 9. Derivatives The Company uses interest rate swaps, currency swaps, commodity price swaps, and forward and option contracts to manage risks generally associated with foreign exchange rate, interest rate and commodity price fluctuations. The information that follows explains the various types of derivatives and financial instruments used by 3M, how and why 3M uses such instruments, how such instruments are accounted for, and how such instruments impact 3Ms financial position and performance. Additional information with respect to the impacts on other comprehensive income of nonderivative hedging and derivative instruments is included in Note 5. Additional information with respect to the fair value of derivative instruments is included in Note 10. References to information regarding derivatives and/or hedging instruments associated with the Companys long-term debt are also made in Note 10 to the Consolidated Financial Statements in 3Ms Current Report on Form8-K filed May13, 2009. Types of Derivatives/Hedging Instruments and Inclusion in Income/Other Comprehensive Income Cash Flow Hedges: For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. Cash Flow Hedging - Foreign Currency Forward and Option Contracts: The Company enters into foreign exchange forward and option contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies and certain intercompany financing transactions. These transactions are designated as cash flow hedges. The settlement or extension of these derivatives will result in reclassifications (from accumulated other comprehensive income) to earnings in the period during which the hedged transactions affect earnings. Generally, 3M dedesignates these cash flow hedge relationships in advance of the occurrence of the forecasted transaction. The portion of gains or losses on the derivative instrument previously accumulated in other comprehensive income for dedesignated hedges remains in accumulated other comprehensive income until the forecasted transaction occurs. Changes in the value of derivative instruments after dedesignation are recorded in earnings and are included in the Derivatives Not Designated as Hedging Instruments section below. Hedge ineffectiveness and the amount excluded from effectiveness testing recognized in income on cash flow hedges were not material for the three and six month periods ended June30, 2009 and 2008. The maximum length of time over which 3M hedges its exposure to the variability in future cash flows for a majority of the forecasted transactions is 12 months and, accordingly, at June30, 2009, the majority of the Companys open foreign exchange forward and option contracts had maturities of one year o

Fair Value Measurements

Fair Value Measurements
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
NOTE 10. Fair Value Measurements	NOTE 10. Fair Value Measurements As discussed in Note 1, 3M adopted SFAS No.157, Fair Value Measurements (as amended by associated FSPs), prospectively effective January1, 2008, with respect to fair value measurements of (a)nonfinancial assets and liabilities that are recognized or disclosed at fair value in the Companys financial statements on a recurring basis (at least annually) and (b)all financial assets and liabilities. 3M adopted the remaining aspects of SFAS No.157 relative to nonfinancial assets and liabilities that are measured at fair value, but are recognized and disclosed at fair value on a nonrecurring basis, prospectively effective January1, 2009. Under SFAS No.157, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. SFAS No.157 also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Companys assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Assets and Liabilities that are Measured at Fair Value on a Recurring Basis: At 3M, effective January1, 2008, fair value under SFAS No.157 (as impacted by FSP Nos. FAS 157-1 and 157-2) principally applied to financial asset and liabilities such as available-for-sale marketable securities, available-for-sale investments (included as part of investments in the Consolidated Balance Sheet) and certain derivative instruments. Derivatives include cash flow hedges, interest rate swaps and most net investment hedges. These items were previously and will continue to be marked-to-market at each reporting period; however, the definition of fair value used for these mark-to-markets is now applied using SFAS No.157. The information in the following paragraphs and tables primarily addresses matters relative to these financial assets and liabilities. The information incorporates the guidance of FSP No.FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is

Commitments and Contingencies

Commitments and Contingencies
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
NOTE 11. Commitments and Contingencies	NOTE 11. Commitments and Contingencies Legal Proceedings: The Company and some of its subsidiaries are involved in numerous claims and lawsuits, principally in the United States, and regulatory proceedings worldwide. These include various products liability (involving products that the Company now or formerly manufactured and sold), intellectual property, and commercial claims and lawsuits, including those brought under the antitrust laws, and environmental proceedings. The following sections first describe the significant legal proceedings in which the Company is involved, and then describe the liabilities and associated insurance receivables the Company has accrued relating to its significant legal proceedings. Unless otherwise stated, the Company is vigorously defending all such litigation. Additional information can be found in Note 14 Commitments and Contingencies in the Companys Current Report on Form8-K filed May13, 2009, including information about the Companys process for establishing and disclosing accruals and insurance receivables. Shareholder Derivative Litigation As previously reported, in July2007, a shareholder derivative lawsuit was filed in the U.S. District Court for the District of Delaware against the Company as nominal defendant and against each then current member of the Board of Directors and the officers named in the Summary Compensation Table of the 2007 Proxy Statement. The suit alleges that the Companys 2007 Proxy Statement contained false and misleading statements concerning the tax deductibility of compensation payable under the Executive Annual Incentive Plan (Plan) and the standards for determining the amounts payable under the Plan. The lawsuit seeks a declaration voiding shareholder approval of the Plan, termination of the Plan, voiding the elections of directors, equitable accounting, and awarding costs, including attorneys fees. In May2008, the Company and the individual defendants agreed to settle the litigation without admitting any liability or wrongdoing of any kind. The settlement agreement, which is subject to court approval, calls for the Compensation Committee of the Companys Board of Directors to adopt a resolution formally stating its interpretation of certain aspects of the Plan, and the Company to file a Current Report on Form8-K to the same effect, and to pay up to $600,000 in attorneys fees to the plaintiffs counsel. On December30, 2008, the Court issued an order preliminarily approving the settlement agreement. As a result, the Company notified all stockholders of the proposed settlement and its terms and their right to object to the terms of the settlement. On June5, 2009, the Court issued an order approving the settlement. French Competition Council Investigation On December4, 2008, the Companys subsidiary in France received a Statement of Objections from the French Competition Council alleging an abuse of a dominant position regarding the supply of retro-reflective films for vertical signing applications in France and of participation in a concerted practice with the major French manufacturers of vertical signs. The Statement of Objections is an intermediate stage

Stock-Based Compensation

Stock-Based Compensation
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
NOTE 12. Stock-Based Compensation	NOTE 12. Stock-Based Compensation In 2009, 3M changed its annual stock option and restricted stock unit grant date to more closely align the award with the timing of the Companys performance review process. In 2009 and forward, under the annual grant, 3M will grant shares in Februaryinstead of Mayas in previous years. Accounting rulesrequire recognition of expense under a non-substantive vesting period approach, requiring compensation expense recognition when an employee is eligible to retire. 3M employees in the United States are eligible to retire at age 55 and after having completed five years of service. Approximately 25 percent of the stock-based compensation award expense dollars are for this retiree-eligible population. Therefore, in 2009 the retiree-eligible impact shifted stock-based compensation expense to the first quarter, whereas in 2008 and prior this impact was recognized in the second quarter (because of the Maygrant date). The income tax benefits shown in the following table can fluctuate by period due to the amount of Incentive Stock Options (ISO) exercised since the Company receives the ISO tax benefit upon exercise. The Company last granted ISO in 2002. Amounts recognized in the financial statements with respect to stock-based compensation programs, which include stock options, restricted stock, restricted stock units and the General Employees Stock Purchase Plan (GESPP), are as follows: Threemonthsended Six months ended June30, June30, (Millions,exceptpershareamounts) 2009 2008 2009 2008 Cost of sales $ 9 $ 17 $ 24 $ 26 Selling, general and administrative expenses 33 47 86 73 Research, development and related expenses 7 15 22 23 Operating Income (Loss) $ (49 ) $ (79 ) $ (132 ) $ (122 ) Income tax benefits $ 15 $ 34 $ 43 $ 51 Net Income (Loss) attributable to 3M $ (34 ) $ (45 ) $ (89 ) $ (71 ) Earnings per share impact attributable to 3M common shareholders- diluted $ (0.05 ) $ (0.06 ) $ (0.13 ) $ (0.10 ) In May2008, shareholders approved 35 million shares for issuance under the 3M 2008 Long-Term Incentive Plan, which replaced and succeeded the 2005 Management Stock Ownership Program (MSOP), the 3M Performance Unit Plan, and the 1992 Directors Stock Ownership Program. Shares under this plan may be issued in the form of Incentive Stock Options, Nonqualified Stock Options, Progressive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Stock Awards, and Performance Units and Performance Shares. Awards denominated in shares of common stock other than options and Stock Appreciation Rights, per the 2008 Plan, will be counted against the 35 million share limit as 3.38 shares for every one share covered by such award. The remaining total shares available for grant under the 2008 Long Term Incentive Plan Program are 15,502,663 as of June30, 2009 The following table summarizes stock option activity during the six months e

Business Segments

Business Segments
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financials
NOTE 13. Business Segments	NOTE 13. Business Segments Effective in the first quarter of 2009, 3M made certain changes to its business segments in its continuing effort to drive growth by aligning businesses around markets and customers. The most significant of these changes are summarized as follows: Certain 3M window films, such as 3M Scotchtint Window Film for buildings and 3M Ultra Safety and Security Window Film for property and personal protection during destructive weather conditions, were previously part of the Building and Commercial Services Division within the Safety, Security and Protection Services business segment. These window films were transferred to the newly created Renewable Energy Division, which is part of the Industrial and Transportation business segment. The Renewable Energy Division consists of current 3M solar energy creation and management products and solutions, as well as products focused on the renewable energy markets. Renewable Energys portfolio includes various 3M products for solar energy production and solar energy management (such as window films) and also includes responsibility for wind, geothermal and biofuel oriented products. The preceding product moves resulted in an increase in net sales for total year 2008 of $152 million for Industrial and Transportation, which was offset by a corresponding decrease in net sales for Safety, Security and Protection Services. 3M acquired Aearo Holding Corp., the parent company of Aearo Technologies Inc. (hereafter referred to as Aearo), in April2008. Aearo manufactures and sells personal protection and energy absorbing products through the Industrial retail channels and certain safety products through the Consumer retail channels. The consumer retail portion of Aearos business manufactures and markets personal safety products (including head, eye, face and hearing products, reflective vests, protective coveralls, and first aid kits) to the do-it-yourself consumer retail markets. The do-it-yourself retail market portion of 3Ms Aearo business (previously in the Occupational Health and Environmental Safety Division within the Safety, Security and Protection Services business segment) was transferred to the Construction and Home Improvement Division within the Consumer and Office business segment. The preceding product moves resulted in an increase in net sales for total year 2008 of $49 million for Consumer and Office, which was offset by a corresponding decrease in net sales for Safety, Security and Protection Services. Also, during the first quarter of 2009, 3M changed its segment reporting measures to include dual credit to business segments for certain U.S. sales and related operating income. Management now evaluates each of its six operating business segments based on net sales and operating income performance, including dual credit U.S. reporting. This change was made to further incentivize U.S. sales growth. As a result, 3M now 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

Document and Entity Information

Document and Entity Information (USD $)
In Millions, except Share data	6 Months Ended Jun. 30, 2009	Jun. 30, 2008
Document and Entity Information
Document Type	10-Q
Document Period End Date	2009-06-30
Amendment Flag	false
Entity Registrant Name	3M Company
Entity Central Index Key	0000066740
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding	698,320,662
Entity Public Float		$48,600