Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2020shares | |
Document Information | |
Entity Registrant Name | 3M COMPANY |
Entity Central Index Key | 0000066740 |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Jun. 30, 2020 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity File Number | 1-3285 |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 41-0417775 |
Entity Address, Address Line One | 3M Center |
Entity Address, City or Town | St. Paul |
Entity Address, State or Province | MN |
Entity Address, Postal Zip Code | 55144-1000 |
City Area Code | 651 |
Local Phone Number | 733-1110 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 576,019,442 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q2 |
Common Stock | New York Stock Exchange, Inc. | |
Document Information | |
Title of 12(b) Security | Common Stock, Par Value $.01 Per Share |
Trading Symbol | MMM |
Security Exchange Name | NYSE |
Common Stock | Chicago Stock Exchange, Inc. | |
Document Information | |
Title of 12(b) Security | Common Stock, Par Value $.01 Per Share |
Trading Symbol | MMM |
Security Exchange Name | CHX |
0.375% Notes due 2022 | New York Stock Exchange, Inc. | |
Document Information | |
Title of 12(b) Security | 0.375% Notes due 2022 |
Trading Symbol | MMM22A |
Security Exchange Name | NYSE |
0.950% Notes due 2023 | New York Stock Exchange, Inc. | |
Document Information | |
Title of 12(b) Security | 0.950% Notes due 2023 |
Trading Symbol | MMM23 |
Security Exchange Name | NYSE |
1.500% Notes due 2026 | New York Stock Exchange, Inc. | |
Document Information | |
Title of 12(b) Security | 1.500% Notes due 2026 |
Trading Symbol | MMM26 |
Security Exchange Name | NYSE |
1.750% Notes due 2030 | New York Stock Exchange, Inc. | |
Document Information | |
Title of 12(b) Security | 1.750% Notes due 2030 |
Trading Symbol | MMM30 |
Security Exchange Name | NYSE |
1.500% Notes due 2031 | New York Stock Exchange, Inc. | |
Document Information | |
Title of 12(b) Security | 1.500% Notes due 2031 |
Trading Symbol | MMM31 |
Security Exchange Name | NYSE |
Consolidated Statement of Incom
Consolidated Statement of Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Consolidated Statement of Income | ||||
Net sales | $ 7,176 | $ 8,171 | $ 15,251 | $ 16,034 |
Operating expenses | ||||
Cost of sales | 3,805 | 4,313 | 7,914 | 8,623 |
Selling, general and administrative expenses | 1,594 | 1,686 | 3,362 | 3,634 |
Research, development and related expenses | 424 | 470 | 961 | 947 |
Gain on sale of businesses | (387) | (389) | (8) | |
Total operating expenses | 5,436 | 6,469 | 11,848 | 13,196 |
Operating income | 1,740 | 1,702 | 3,403 | 2,838 |
Interest expense and income | ||||
Other expense (income), net | 111 | 256 | 207 | 304 |
Income before income taxes | 1,629 | 1,446 | 3,196 | 2,534 |
Provision for income taxes | 342 | 315 | 615 | 510 |
Net income including noncontrolling interest | 1,287 | 1,131 | 2,581 | 2,024 |
Less: Net income (loss) attributable to noncontrolling interest | (3) | 4 | (1) | 6 |
Net income attributable to 3M | $ 1,290 | $ 1,127 | $ 2,582 | $ 2,018 |
Weighted average 3M common shares outstanding - basic (in shares) | 577 | 577.7 | 576.9 | 577.6 |
Earnings per share attributable to 3M common shareholders - basic (in dollars per share) | $ 2.24 | $ 1.95 | $ 4.48 | $ 3.49 |
Weighted average 3M common shares outstanding - diluted (in shares) | 580.8 | 586.1 | 581.2 | 587.3 |
Earnings per share attributable to 3M common shareholders - diluted (in dollars per share) | $ 2.22 | $ 1.92 | $ 4.44 | $ 3.44 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Consolidated Statement of Comprehensive Income | ||||
Net income including noncontrolling interest | $ 1,287 | $ 1,131 | $ 2,581 | $ 2,024 |
Other comprehensive income (loss), net of tax: | ||||
Cumulative translation adjustment | 106 | 123 | (338) | 200 |
Defined benefit pension and postretirement plans adjustment | 58 | 196 | 177 | 280 |
Cash flow hedging instruments | (36) | (38) | 11 | (32) |
Total other comprehensive income (loss), net of tax | 128 | 281 | (150) | 448 |
Comprehensive income (loss) including noncontrolling interest | 1,415 | 1,412 | 2,431 | 2,472 |
Comprehensive (income) loss attributable to noncontrolling interest | 3 | (5) | 4 | (7) |
Comprehensive income (loss) attributable to 3M | $ 1,418 | $ 1,407 | $ 2,435 | $ 2,465 |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 4,219 | $ 2,353 |
Marketable securities - current | 247 | 98 |
Accounts receivable - net of allowances of $216 and $161 | 4,459 | 4,791 |
Inventories | ||
Finished goods | 1,932 | 2,003 |
Work in process | 1,246 | 1,194 |
Raw materials and supplies | 990 | 937 |
Total inventories | 4,168 | 4,134 |
Prepaids | 567 | 704 |
Other current assets | 446 | 891 |
Total current assets | 14,106 | 12,971 |
Property, plant and equipment | 25,943 | 26,124 |
Less: Accumulated depreciation | (16,854) | (16,791) |
Property, plant and equipment - net | 9,089 | 9,333 |
Operating lease right of use assets | 840 | 858 |
Goodwill | 13,360 | 13,444 |
Intangible assets - net | 6,033 | 6,379 |
Other assets | 1,651 | 1,674 |
Total assets | 45,079 | 44,659 |
Current liabilities | ||
Short-term borrowings and current portion of long-term debt | 1,486 | 2,795 |
Accounts payable | 1,975 | 2,228 |
Accrued payroll | 500 | 702 |
Accrued income taxes | 371 | 194 |
Operating lease liabilities - current | 248 | 247 |
Other current liabilities | 2,702 | 3,056 |
Total current liabilities | 7,282 | 9,222 |
Long-term debt | 19,276 | 17,518 |
Pension and postretirement benefits | 3,724 | 3,911 |
Operating lease liabilities | 607 | 607 |
Other liabilities | 3,275 | 3,275 |
Total liabilities | 34,164 | 34,533 |
Commitments and contingencies (Note 14) | ||
3M Company shareholders' equity: | ||
Common stock par value, $.01 par value; 944,033,056 shares issued; Shares outstanding - June 30, 2020: 576,019,442; Shares outstanding - December 31, 2019: 575,184,835 | 9 | 9 |
Additional paid-in capital | 6,074 | 5,907 |
Retained earnings | 42,759 | 42,135 |
Treasury stock at cost: Shares at June 30, 2020: 368,013,614; Shares at December 31, 2019: 368,848,221 | (29,699) | (29,849) |
Accumulated other comprehensive income (loss) | (8,286) | (8,139) |
Total 3M Company shareholders' equity | 10,857 | 10,063 |
Noncontrolling interest | 58 | 63 |
Total equity | 10,915 | 10,126 |
Total liabilities and equity | $ 45,079 | $ 44,659 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Consolidated Balance Sheet | ||
Allowances for doubtful accounts receivable | $ 216 | $ 161 |
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 944,033,056 | 944,033,056 |
Common stock, Shares outstanding (in shares) | 576,019,442 | 575,184,835 |
Treasury stock (in shares) | 368,013,614 | 368,848,221 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Flows from Operating Activities | ||
Net income including noncontrolling interest | $ 2,581 | $ 2,024 |
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities | ||
Depreciation and amortization | 932 | 751 |
Company pension and postretirement contributions | (77) | (88) |
Company pension and postretirement expense | 197 | 176 |
Stock-based compensation expense | 172 | 182 |
Gain on sale of businesses | (389) | (5) |
Deferred income taxes | 41 | (74) |
Loss on deconsolidation of Venezuelan subsidiary | 162 | |
Changes in assets and liabilities | ||
Accounts receivable | 241 | (258) |
Inventories | (198) | 75 |
Accounts payable | (269) | (173) |
Accrued income taxes (current and long-term) | 273 | (163) |
Other - net | (386) | 101 |
Net cash provided by (used in) operating activities | 3,118 | 2,710 |
Cash Flows from Investing Activities | ||
Purchases of property, plant and equipment (PP&E) | (711) | (812) |
Proceeds from sale of PP&E and other assets | 16 | 3 |
Acquisitions, net of cash acquired | (25) | (704) |
Purchases of marketable securities and investments | (634) | (751) |
Proceeds from maturities and sale of marketable securities and investments | 976 | 1,005 |
Proceeds from sale of businesses, net of cash sold | 573 | 6 |
Other - net | 7 | 18 |
Net cash provided by (used in) investing activities | 202 | (1,235) |
Cash Flows from Financing Activities | ||
Change in short-term debt - net | (132) | (441) |
Repayment of debt (maturities greater than 90 days) | (1,146) | (871) |
Proceeds from debt (maturities greater than 90 days) | 1,745 | 2,265 |
Purchases of treasury stock | (366) | (1,101) |
Proceeds from issuance of treasury stock pursuant to stock option and benefit plans | 236 | 365 |
Dividends paid to shareholders | (1,693) | (1,660) |
Other - net | (45) | (34) |
Net cash provided by (used in) financing activities | (1,401) | (1,477) |
Effect of exchange rate changes on cash and cash equivalents | (53) | (2) |
Net increase (decrease) in cash and cash equivalents | 1,866 | (4) |
Cash and cash equivalents at beginning of year | 2,353 | 2,853 |
Cash and cash equivalents at end of period | $ 4,219 | $ 2,849 |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Significant Accounting Policies | |
Significant Accounting Policies | 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. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in its Annual Report on Form 10-K. As described in Note 16, effective in the second quarter of 2020, the measure of segment operating performance used by 3M’s chief operating decision maker changed and, as a result, the Company’s disclosed measure of segment profit/loss has been updated. Also, effective in the first quarter of 2020, the Company changed its business segment reporting in its continuing effort to improve the alignment of businesses around markets and customers. Additionally, the Company consolidated the way it presents geographic area net sales by providing an aggregate Americas geographic region (combining former United States and Latin America and Canada areas). Information provided herein reflects the impact of these changes for all periods presented. Use of estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company considered the coronavirus (COVID-19) related impacts on its estimates, as appropriate, within its consolidated financial statements and there may be changes to those estimates in future periods. 3M believes that the accounting estimates are appropriate after giving consideration to the increased uncertainties surrounding the severity and duration of the COVID-19 pandemic. Such estimates and assumptions are subject to inherent uncertainties which may result in actual amounts differing from these estimates. Changes to Significant Accounting Policies The following significant accounting policies have been added or changed as applicable since the Company’s 2019 Annual Report on Form 10-K as a result of adoption of new accounting pronouncements as described in the “New Accounting Pronouncements” section. Accounts receivable and allowances The allowances for bad debts as well as the provision for credit losses, write-off activity and recoveries for the periods presented are not material. The Company has long-term customer receivables that do not have significant credit risk, and the origination dates of which are typically not older than five years . These long-term receivables are subject to an allowance methodology similar to other receivables. Marketable securities: Investments-Debt Securities Available-for-Sale Debt Securities change. Any impairment that has not been recorded through an allowance for credit losses is recorded through accumulated other comprehensive income as a component of shareholders’ equity. The factors considered in determining whether a credit loss exists can include the extent to which fair value is less than the amortized cost basis, changes in the credit quality of the underlying loan obligors, credit ratings actions, as well as other factors. When a credit loss exists, the Company compares the present value of cash flows expected to be collected from the debt security with the amortized cost basis of the security to determine what allowance amount, if any, should be recorded. Amounts are reclassified out of accumulated other comprehensive income and into earnings upon sale or a change in the portions of impairment related to credit losses and not related to credit losses. Property, plant and equipment: Foreign Currency Translation Local currencies generally are considered the functional currencies outside the United States with the exception of 3M’s subsidiaries in Argentina, the economy of which was considered highly inflationary beginning in 2018, and accordingly the financial statements of these subsidiaries are remeasured as if their functional currency is that of their parent. 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 average monthly currency exchange rates in effect during the period. Cumulative translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in shareholders’ equity. 3M had a consolidated subsidiary in Venezuela, the financial statements of which were remeasured as if its functional currency were that of its parent because Venezuela’s economic environment is considered highly inflationary. The operating income of this subsidiary was immaterial as a percent of 3M’s consolidated operating income for the periods presented. In light of circumstances, including the country’s unstable environment and heightened unrest leading to sustained lack of demand, and expectation that these circumstances will continue for the foreseeable future, during May 2019, 3M concluded it no longer met the criteria of control in order to continue consolidating its Venezuelan operations. As a result, as of 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 have had an anti-dilutive effect (20.9 million average options for the three months ended June 30, 2020; 20.0 million average options for the six months ended June 30, 2020; 6.7 million average options for the three months ended June 30, 2019; 6.0 million average options for the six months ended June 30, 2019). The computations for basic and diluted earnings per share follow: Earnings Per Share Computations Three months ended Six months ended June 30, June 30, (Amounts in millions, except per share amounts) 2020 2019 2020 2019 Numerator: Net income attributable to 3M $ 1,290 $ 1,127 $ 2,582 $ 2,018 Denominator: Denominator for weighted average 3M common shares outstanding – 577.0 577.7 576.9 577.6 Dilution associated with the Company’s stock-based compensation plans 3.8 8.4 4.3 9.7 Denominator for weighted average 3M common shares outstanding – 580.8 586.1 581.2 587.3 Earnings per share attributable to 3M common shareholders – $ 2.24 $ 1.95 $ 4.48 $ 3.49 Earnings per share attributable to 3M common shareholders – $ 2.22 $ 1.92 $ 4.44 $ 3.44 New Accounting Pronouncements See the Company’s 2019 Annual Report on Form 10-K for a more detailed discussion of the standards in the tables that follow, except for those pronouncements issued subsequent to the most recent Form 10-K filing date for which separate, more detailed discussion is provided below as applicable. Standards Adopted During the Current Fiscal Year Standard Relevant Description Effective Date for 3M Impact and Other Matters ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (in conjunction with ASU Nos. 2018-19, 2019-04, 2019-05, 2019-11, and 2020-03) 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. Amends the current other-than-temporary impairment model for available-for-sale debt securities. 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. January 1, 2020 Adopted using the modified retrospective approach. Adoption of this ASU did not have a material impact due to the nature and extent of 3M’s financial instruments in scope for this ASU (primarily accounts receivable) and the historical, current and expected credit quality of its customers as of the date of adoption. See Note 1 Significant Accounting Policies for updated applicable accounting policies. ASU No. 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement Eliminates, amends, and adds disclosure requirements for fair value measurements, primarily related to Level 3 fair value measurements. January 1, 2020 This ASU relates to disclosure only. The nature and extent of 3M’s financial instruments in scope for this ASU (primarily Level 3 fair value measurements) are immaterial to 3M’s consolidated results of operations and financial condition. ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract Aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service arrangement (i.e. hosting arrangement) with the guidance on capitalizing costs in ASC 350-40, Internal-Use Software January 1, 2020 Adopted on a prospective basis. Relevant capitalizable costs are included in prepaid expenses or other non-current asset, as applicable, prospectively beginning in 2020. Standards Issued and Not Yet Adopted Standard Relevant Description Effective Date for 3M Impact and Other Matters ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) Eliminates certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws, and clarifying the accounting for transactions outside of business combination that result in a step-up in the tax basis of goodwill. January 1, 2021 3M previously disclosed it does not expect this ASU to have a material impact on its consolidated results of operations and financial condition. ASU No. 2020-01, Clarifying the Interactions between Topic 321, Investments—Equity Securities, Topic 323, Investments—Equity Method and Joint Ventures, and Topic 815, Derivatives and Hedging Clarifies when accounting for certain equity securities, a Company should consider observable transactions before applying or upon discontinuing the equity method of accounting for the purposes of applying the measurement alternative. Indicates when determining the accounting for certain derivatives, a Company should not consider if the underlying securities would be accounted for under the equity method or fair value option. January 1, 2021 3M previously disclosed it does not expect this ASU to have a material impact on its consolidated results of operations and financial condition, but will apply such guidance, where applicable, to future circumstances. Relevant New Standards Issued Subsequent to Most Recent Annual Report In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2020 | |
Revenue | |
Revenue | NOTE 2. Revenue Contract Balances: Deferred revenue primarily relates to revenue that is recognized over time for one-year software license contracts. Deferred revenue (current portion) as of June 30, 2020 and December 31, 2019 was $412 million and $430 million, respectively. Approximately $110 million and $270 million of the December 31, 2019 balance was recognized as revenue during the three and six months ended June 30, 2020, respectively, while approximately $110 million and $480 million of the December 31, 2018 balance was recognized as revenue during the three and six months ended June 30, 2019, respectively. Operating Lease Revenue: Net sales includes rental revenue from durable medical devices as part of operating lease arrangements, which was $133 million and $275 million during the three and six months ended June 30, 2020. Applicable rental revenue for the three and six months ended June 30, 2019 was not material. Disaggregated revenue information: The Company views the following disaggregated disclosures as useful to understanding the composition of revenue recognized during the respective reporting periods: Three months ended Six months ended June 30, June 30, Net Sales (Millions) 2020 2019 2020 2019 Abrasives $ 243 $ 358 $ 573 $ 721 Automotive Aftermarket 203 304 487 610 Closure and Masking Systems 235 275 503 553 Electrical Markets 253 302 544 613 Industrial Adhesives and Tapes 552 674 1,226 1,357 Personal Safety 1,095 917 2,085 1,841 Roofing Granules 86 100 181 192 Other Safety and Industrial 1 7 4 13 Total Safety and Industrial Business Segment $ 2,668 $ 2,937 $ 5,603 $ 5,900 Advanced Materials $ 236 $ 331 $ 524 $ 642 Automotive and Aerospace 268 478 715 986 Commercial Solutions 328 477 757 939 Electronics 884 898 1,747 1,759 Transportation Safety 222 265 433 481 Other Transportation and Electronics (1) 1 (1) (2) Total Transportation and Electronics Business Segment $ 1,937 $ 2,450 $ 4,175 $ 4,805 Drug Delivery $ 41 $ 101 $ 146 $ 184 Food Safety 79 85 170 168 Health Information Systems 276 297 553 557 Medical Solutions 1,068 801 2,221 1,574 Oral Care 144 338 421 679 Separation and Purification Sciences 216 208 418 411 Other Health Care 1 1 (1) (4) Total Health Care Business Group $ 1,825 $ 1,831 $ 3,928 $ 3,569 Consumer Health Care $ 83 $ 101 $ 182 $ 198 Home Care 258 247 528 504 Home Improvement 601 589 1,177 1,117 Stationery and Office 263 351 536 646 Other Consumer 33 32 71 55 Total Consumer Business Group $ 1,238 $ 1,320 $ 2,494 $ 2,520 Corporate and Unallocated $ (2) $ 48 $ (1) $ 70 Elimination of Dual Credit (490) (415) (948) (830) Total Company $ 7,176 $ 8,171 $ 15,251 $ 16,034 Three months ended June 30, 2020 Net Sales (Millions) Americas Asia Pacific Europe, Middle East and Africa Other Unallocated Worldwide Safety and Industrial $ 1,367 $ 655 $ 645 $ 1 $ 2,668 Transportation and Electronics 532 1,151 254 — 1,937 Health Care 1,074 358 392 1 1,825 Consumer 895 218 125 — 1,238 Corporate and Unallocated (1) — — (1) (2) Elimination of Dual Credit (234) (172) (84) — (490) Total Company $ 3,633 $ 2,210 $ 1,332 $ 1 $ 7,176 Six months ended June 30, 2020 Net Sales (Millions) Americas Asia Pacific Europe, Middle East and Africa Other Unallocated Worldwide Safety and Industrial $ 2,886 $ 1,374 $ 1,343 $ — $ 5,603 Transportation and Electronics 1,207 2,352 616 — 4,175 Health Care 2,355 714 859 — 3,928 Consumer 1,769 468 257 — 2,494 Corporate and Unallocated — — — (1) (1) Elimination of Dual Credit (442) (353) (153) — (948) Total Company $ 7,775 $ 4,555 $ 2,922 $ (1) $ 15,251 Three months ended June 30, 2019 Net Sales (Millions) Americas Asia Pacific Europe, Middle East and Africa Other Unallocated Worldwide Safety and Industrial $ 1,549 $ 700 $ 688 $ — $ 2,937 Transportation and Electronics 794 1,267 389 — 2,450 Health Care 1,021 383 427 — 1,831 Consumer 945 233 141 1 1,320 Corporate and Unallocated 49 (2) (1) 2 48 Elimination of Dual Credit (195) (166) (51) (3) (415) Total Company $ 4,163 $ 2,415 $ 1,593 $ — $ 8,171 Six months ended June 30, 2019 Net Sales (Millions) Americas Asia Pacific Europe, Middle East and Africa Other Unallocated Worldwide Safety and Industrial $ 3,035 $ 1,459 $ 1,407 $ (1) $ 5,900 Transportation and Electronics 1,507 2,524 775 (1) 4,805 Health Care 1,943 761 865 — 3,569 Consumer 1,748 490 282 — 2,520 Corporate and Unallocated 70 — — — 70 Elimination of Dual Credit (377) (341) (112) — (830) Total Company $ 7,926 $ 4,893 $ 3,217 $ (2) $ 16,034 Americas included United States net sales to customers of $3.1 billion and $3.4 billion for the three months ended June 30, 2020 and 2019, respectively, and $6.6 billion and $6.5 billion for the six months ended June 30, 2020 and 2019, respectively. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 6 Months Ended |
Jun. 30, 2020 | |
Acquisitions and Divestitures | |
Acquisitions and Divestitures | NOTE 3. Acquisitions and Divestitures Refer to Note 3 in 3M’s 2019 Annual Report on Form 10-K for more information on relevant pre-2020 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. Goodwill resulting from business combinations is largely attributable to the existing workforce of the acquired businesses and synergies expected to arise after 3M’s acquisition of these businesses. 2020 acquisitions: There were no acquisitions that closed during the six months ended June 30, 2020. 2019 acquisitions: In February 2019, 3M completed the acquisition of the technology business of M*Modal for $0.7 billion of cash, net of cash acquired, and assumption of $0.3 billion of M*Modal’s debt. The allocation of purchase consideration related to M*Modal was completed in the fourth quarter of 2019. Net sales and operating loss (inclusive of transaction and integration costs) of this business included in 3M’s consolidated results of operations for the second quarter of 2019 were approximately $75 million and $15 million, respectively. Net sales and operating loss (inclusive of transaction and integration costs) of this business included in 3M’s consolidated results of operations for the first six months of 2019 were approximately $125 million and $35 million, respectively. M*Modal is reported within the Company’s Health Care business. In October 2019, the Company completed the acquisition of all of the ownership interests of Acelity Inc. and its KCI subsidiaries and in the first quarter of 2020 paid certain consideration previously accrued under the terms of related agreements. Adjustments in 2020 to the purchase price allocation were approximately $5 million and related to ongoing identification and valuation of certain acquired assets and liabilities. The change to provisional amounts did not result in material impacts to results of operations in 2020 or any portion related to earlier quarters in the measurement period. The allocation of purchase consideration related to Acelity is considered preliminary with provisional amounts primarily related to intangible assets, and certain tax-related and contingent liability amounts. 3M expects to finalize the allocation of purchase price within the one-year measurement-period following the acquisition. Net sales and operating loss (inclusive of transaction and integration costs) of this business included in 3M’s consolidated results of operations in the fourth quarter of 2019 were approximately $350 million and $45 million, respectively. Acelity is reported within the Company’s Health Care business. 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. As discussed in Note 16 (Business Segments), gains/losses on sale of businesses are reflected in Corporate and Unallocated. 2020 divestitures: In January 2020, 3M completed the sale of its advanced ballistic-protection business, formerly part of the Transportation and Electronics business, to Avon Rubber p.l.c for $86 million in cash and recognized certain contingent consideration from the outcome of pending tenders. Further contingent consideration of less than $25 million may be recognized depending on outcomes in the future. The business, with annual sales of approximately $85 million, consists of ballistic helmets, body armor, flat armor and related helmet-attachment products serving government and law enforcement. 3M reflected immaterial impacts in the third quarter of 2019 as a result of measuring this disposal group at the lower of its carrying amount or fair value less cost to sell and in the first quarter 2020 related to completion of the divestiture and recognition of contingent consideration. In May 2020, 3M completed the sale of substantially all of its drug delivery business, formerly part of the Health Care business, to an affiliate of Altaris Capital Partners, LLC for $617 million in consideration including $487 million of cash, approximately $70 million in the form of an interest-bearing security, and approximately $60 million in the form of a 17 percent noncontrolling interest in the new company, Kindeva Drug Delivery (Kindeva). Non-cash consideration was valued at time of initial recognition on an income-based approach using relevant estimated future cash flows and applicable market interest rates while considering impacts of restrictions related to transferability. The divested business had annual sales of approximately $380 million. 3M retained its transdermal drug delivery components business. 3M reflected a pre-tax gain of $387 million as a result of the divestiture. The Company reflects its ownership interest in Kindeva using the equity method of accounting incorporating the recording of 3M’s share of earnings/losses on a lag-basis based on availability of Kindeva financial statements. As a result, income/loss from this unconsolidated subsidiary will begin to be reflected in 3M’s financial statements in the third quarter of 2020. Kindeva and 3M entered into certain limited-term agreements related to post-divestiture transition and supply services. 2019 divestitures: During 2019, as described in Note 3 in 3M’s 2019 Annual Report on Form 10-K, the Company divested a number of businesses including: certain oral care technology comprising a business and the gas and flame detection business. 3M also reflected an earnout on a previous divestiture. Operating income and held for sale amounts: The aggregate operating income of these businesses was approximately $38 million and immaterial in the first six months of 2020 and 2019, respectively. The approximate amounts of major assets and liabilities associated with disposal groups classified as held-for-sale as of December 31, 2019 included the following: December 31, (Millions) 2019 Inventory 70 Property, plant and equipment 150 Intangible assets 35 In addition, approximately $30 million of goodwill was estimated to be attributable to disposal groups classified as held-for-sale as of December 31, 2019, based upon relative fair value. The amounts above have not been segregated and are classified within the existing corresponding line items on the Company’s consolidated balance sheet. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | NOTE 4. Goodwill and Intangible Assets There was no goodwill recorded from acquisitions during the first six months of 2020. The acquisition activity in the following table relates to the net impact of adjustments to the preliminary allocation of purchase price within the one year measurement period following prior acquisitions, which decreased goodwill by $5 million during the six months ended June 30, 2020. The amounts in the “Translation and other” row in the following table primarily relate to changes in foreign currency exchange rates. The goodwill balance by business segment as of December 31, 2019 and June 30, 2020, follow: Goodwill (Millions) Safety and Industrial Transportation and Electronics Health Care Consumer Total Company Balance as of December 31, 2019 $ 4,621 $ 1,830 $ 6,739 $ 254 $ 13,444 Acquisition activity — — (5) — (5) Divestiture activity — (10) (19) — (29) Translation and other (38) (8) (5) 1 (50) Balance as of June 30, 2020 $ 4,583 $ 1,812 $ 6,710 $ 255 $ 13,360 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 correspond to a division. As described in Note 16, effective in the first quarter of 2020, the Company changed its business segment reporting. 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, the results of which were immaterial. In conjunction with the change in segment reporting, 3M completed an assessment indicating no goodwill impairment existed as a result of this new segment structure. 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 June 30, 2020, and December 31, 2019, follow: June 30, December 31, (Millions) 2020 2019 Customer related intangible assets $ 4,201 $ 4,316 Patents 525 538 Other technology-based intangible assets 2,093 2,124 Definite-lived tradenames 1,175 1,158 Other amortizable intangible assets 120 125 Total gross carrying amount $ 8,114 $ 8,261 Accumulated amortization — customer related (1,261) (1,180) Accumulated amortization — patents (494) (499) Accumulated amortization — other technology-based (522) (435) Accumulated amortization — definite-lived tradenames (349) (316) Accumulated amortization — other (87) (90) Total accumulated amortization $ (2,713) $ (2,520) Total finite-lived intangible assets — net $ 5,401 $ 5,741 Non-amortizable intangible assets (primarily tradenames) 632 638 Total intangible assets — net $ 6,033 $ 6,379 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. As discussed in Note 13, 3M reflected an immaterial charge related to impairment of certain indefinite-lived assets in the first quarter of 2020. Amortization expense for the three and six months ended June 30, 2020 and 2019 follows: Three months ended Six months ended June 30, June 30, (Millions) 2020 2019 2020 2019 Amortization expense $ 134 $ 70 $ 268 $ 139 Expected amortization expense for acquired amortizable intangible assets recorded as of June 30, 2020: Remainder of After (Millions) 2020 2021 2022 2023 2024 2025 2025 Amortization expense $ 265 $ 524 $ 511 $ 481 $ 455 $ 425 $ 2,740 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. |
Restructuring Actions
Restructuring Actions | 6 Months Ended |
Jun. 30, 2020 | |
Restructuring Actions | |
Restructuring Actions | NOTE 5. Restructuring Actions 2020 Restructuring Actions: Divestiture-Related Restructuring During the second quarter of 2020, following the divestiture of substantially all of the drug delivery business (see Note 3) management approved and committed to undertake certain restructuring actions addressing corporate functional costs and manufacturing footprint across 3M in relation to the magnitude of amounts previously allocated/burdened to the divested business. These actions affected approximately 1,300 positions worldwide and resulted in a second quarter 2020 pre-tax charge of $55 million, within Corporate and Unallocated. The divestiture-related restructuring actions were recorded in the income statement as follows: (Millions) Second Quarter 2020 Cost of sales $ 42 Selling, general and administrative expenses 12 Research, development and related expenses 1 Total operating income impact $ 55 Divestiture-related restructuring actions, including cash and non-cash impacts, follow: (Millions) Employee-Related Asset-Related and Other Total Expense incurred in the second quarter of 2020 $ 32 $ 23 $ 55 Non-cash changes — (11) (11) Accrued divestiture-related restructuring action balances as of June 30, 2020 $ 32 $ 12 $ 44 Remaining activities related to this divestiture-related restructuring are expected to be largely completed through the second quarter of 2021. Other Restructuring Additionally, in the second quarter of 2020, management approved and committed to undertake certain restructuring actions addressing structural enterprise costs and operations in certain end markets as a result of the COVID-19 pandemic and related economic impacts. These actions affected approximately 400 positions worldwide and resulted in a second quarter 2020 pre-tax charge of $58 million. The restructuring charges were recorded in the income statement as follows: (Millions) Second Quarter 2020 Cost of sales $ 13 Selling, general and administrative expenses 37 Research, development and related expenses 8 Total operating income impact $ 58 The business segment operating income impact of these restructuring charges are summarized by business segment as follows: Second Quarter 2020 (Millions) Employee-Related Asset-Related Total Safety and Industrial $ 7 $ — $ 7 Transportation and Electronics 11 — 11 Health Care 12 — 12 Consumer 5 — 5 Corporate and Unallocated — 23 23 Total Operating Expense $ 35 $ 23 $ 58 Restructuring actions, including cash and non-cash impacts, follow: (Millions) Employee-Related Asset-Related Total Expense incurred in the second quarter of 2020 $ 35 $ 23 $ 58 Non-cash changes — (23) (23) Accrued restructuring action balances as of June 30, 2020 $ 35 $ — $ 35 Remaining activities related to this restructuring are expected to be largely completed through the second quarter of 2021. 2019 Restructuring Actions: As described in Note 5 in 3M’s 2019 Annual Report on Form 10-K, during the second quarter of 2019, in light of slower than expected 2019 sales, management approved and committed to undertake certain restructuring actions. These actions impacted approximately 2,000 positions worldwide, including attrition. The Company recorded second quarter 2019 pre-tax charges of $148 million. The restructuring charges were recorded in the income statement as follows: (Millions) Second Quarter 2019 Cost of sales $ 18 Selling, general and administrative expenses 89 Research, development and related expenses 5 Total operating income impact 112 Other expense (income), net 36 Total income before taxes impact $ 148 The operating income impact of these restructuring charges are summarized by business segment as follows: Second Quarter 2019 (Millions) Employee-Related Asset-Related Total Safety and Industrial $ 11 $ — $ 11 Transportation and Electronics 8 — 8 Health Care 6 — 6 Consumer 5 — 5 Corporate and Unallocated 42 40 82 Total Operating Expense $ 72 $ 40 $ 112 The second quarter 2019 actions included a voluntary early retirement incentive (further discussed in Note 11), the charge for which is included in other expense (income), net above. Restructuring action activity from 2019, which includes both second and fourth quarter actions, including cash and non-cash impacts, follow: (Millions) Employee-Related Accrued restructuring action balances as of December 31, 2019 $ 140 Cash payments (14) Adjustments (23) Accrued restructuring action balances as of June 30, 2020 $ 103 Remaining activities related to this restructuring are expected to be completed largely through early 2021. |
Supplemental Income Statement I
Supplemental Income Statement Information | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Income Statement Information | |
Supplemental Income Statement Information | NOTE 6. Supplemental Income Statement Information Other expense (income), net consists of the following: Three months ended Six months ended June 30, June 30, (Millions) 2020 2019 2020 2019 Interest expense $ 137 $ 111 $ 260 $ 215 Interest income (9) (18) (19) (38) Pension and postretirement net periodic benefit cost (benefit) (17) 1 (34) (35) Loss on deconsolidation of Venezuelan subsidiary — 162 — 162 Total $ 111 $ 256 $ 207 $ 304 Pension and postretirement net periodic benefit costs described in the table above include all components of defined benefit plan net periodic benefit costs except service cost, which is reported in various operating expense lines. Pension and postretirement net periodic benefit costs include a second quarter 2019 charge related to the voluntary early retirement incentive program announced in May 2019. Refer to Note 11 for additional details on the voluntary early retirement incentive program in addition to the components of pension and postretirement net periodic benefit costs. In the second quarter of 2019, the Company incurred a charge of $162 million related to the deconsolidation of its Venezuelan subsidiary. Refer to Note 1 for additional details. |
Supplemental Equity and Compreh
Supplemental Equity and Comprehensive Income Information | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Equity and Comprehensive Income Information | |
Supplemental Equity and Comprehensive Income Information | NOTE 7. Supplemental Equity and Comprehensive Income Information Cash dividends declared and paid totaled $1.47 and $1.44 per share for the first and second quarters 2020 and 2019, respectively, or $2.94 and $2.88 per share for the first six months of 2020 and 2019, respectively. Consolidated Changes in Equity Three months ended June 30, 2020 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 March 31, 2020 $ 10,209 $ 6,033 $ 42,345 $ (29,817) $ (8,414) $ 62 Net income 1,287 1,290 (3) Other comprehensive income (loss), net of tax: Cumulative translation adjustment 106 106 — Defined benefit pension and post-retirement plans adjustment 58 58 — Cash flow hedging instruments (36) (36) — Total other comprehensive income (loss), net of tax 128 Dividends declared (846) (846) Purchase of subsidiary shares (1) (1) Stock-based compensation 50 50 Reacquired stock — — Issuances pursuant to stock option and benefit plans 88 (30) 118 Balance at June 30, 2020 $ 10,915 $ 6,083 $ 42,759 $ (29,699) $ (8,286) $ 58 Six months ended June 30, 2020 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 December 31, 2019 $ 10,126 $ 5,916 $ 42,135 $ (29,849) $ (8,139) $ 63 Net income 2,581 2,582 (1) Other comprehensive income (loss), net of tax: Cumulative translation adjustment (338) (335) (3) Defined benefit pension and post-retirement plans adjustment 177 177 — Cash flow hedging instruments 11 11 — Total other comprehensive income (loss), net of tax (150) Dividends declared (1,693) (1,693) Purchase of subsidiary shares (1) (1) Stock-based compensation 167 167 Reacquired stock (356) (356) Issuances pursuant to stock option and benefit plans 241 (265) 506 Balance at June 30, 2020 $ 10,915 $ 6,083 $ 42,759 $ (29,699) $ (8,286) $ 58 Three months ended June 30, 2019 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 March 31, 2019 $ 9,757 $ 5,764 $ 41,159 $ (29,668) $ (7,552) $ 54 Net income 1,131 1,127 4 Other comprehensive income (loss), net of tax: Cumulative translation adjustment 123 122 1 Defined benefit pension and post-retirement plans adjustment 196 196 — Cash flow hedging instruments (38) (38) — Total other comprehensive income (loss), net of tax 281 Dividends declared (830) (830) Stock-based compensation 57 57 Reacquired stock (404) (404) Issuances pursuant to stock option and benefit plans 150 (94) 244 Balance at June 30, 2019 $ 10,142 $ 5,821 $ 41,362 $ (29,828) $ (7,272) $ 59 Six months ended June 30, 2019 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 December 31, 2018 $ 9,848 $ 5,652 $ 40,636 $ (29,626) $ (6,866) $ 52 Impact of adoption of ASU No. 2018-02* — 853 (853) Impact of adoption of ASU No. 2016-02* 14 14 Net income 2,024 2,018 6 Other comprehensive income (loss), net of tax: Cumulative translation adjustment 200 199 1 Defined benefit pension and post-retirement plans adjustment 280 280 — Cash flow hedging instruments (32) (32) — Total other comprehensive income (loss), net of tax 448 Dividends declared (1,660) (1,660) Stock-based compensation 169 169 Reacquired stock (1,070) (1,070) Issuances pursuant to stock option and benefit plans 369 (499) 868 Balance at June 30, 2019 $ 10,142 $ 5,821 $ 41,362 $ (29,828) $ (7,272) $ 59 *See Note 1 in 3M’s 2019 Annual Report on Form 10-K. Changes in Accumulated Other Comprehensive Income (Loss) Attributable to 3M by Component Three months ended June 30, 2020 Total Defined Benefit Cash Flow Accumulated Pension and Hedging Other Cumulative Postretirement Instruments, Comprehensive Translation Plans Unrealized Income (Millions) Adjustment Adjustment Gain (Loss) (Loss) Balance at March 31, 2020, net of tax: $ (2,340) $ (6,090) $ 16 $ (8,414) Other comprehensive income (loss), before tax: Amounts before reclassifications 104 (80) (15) 9 Amounts reclassified out — 162 (31) 131 Total other comprehensive income (loss), before tax 104 82 (46) 140 Tax effect 2 (24) 10 (12) Total other comprehensive income (loss), net of tax 106 58 (36) 128 Balance at June 30, 2020, net of tax: $ (2,234) $ (6,032) $ (20) $ (8,286) Six months ended June 30, 2020 Total Defined Benefit Cash Flow Accumulated Pension and Hedging Other Cumulative Postretirement Instruments, Comprehensive Translation Plans Unrealized Income (Millions) Adjustment Adjustment Gain (Loss) (Loss) Balance at December 31, 2019, net of tax: $ (1,899) $ (6,209) $ (31) $ (8,139) Other comprehensive income (loss), before tax: Amounts before reclassifications (335) (80) 62 (353) Amounts reclassified out — 326 (47) 279 Total other comprehensive income (loss), before tax (335) 246 15 (74) Tax effect — (69) (4) (73) Total other comprehensive income (loss), net of tax (335) 177 11 (147) Balance at June 30, 2020, net of tax: $ (2,234) $ (6,032) $ (20) $ (8,286) Three months ended June 30, 2019 Total Defined Benefit Cash Flow Accumulated Pension and Hedging Other Cumulative Postretirement Instruments, Comprehensive Translation Plans Unrealized Income (Millions) Adjustment Adjustment Gain (Loss) (Loss) Balance at March 31, 2019, net of tax: $ (2,034) $ (5,565) $ 47 $ (7,552) Other comprehensive income (loss), before tax: Amounts before reclassifications (40) 153 (30) 83 Amounts reclassified out 142 105 (20) 227 Total other comprehensive income (loss), before tax 102 258 (50) 310 Tax effect 20 (62) 12 (30) Total other comprehensive income (loss), net of tax 122 196 (38) 280 Balance at June 30, 2019, net of tax: $ (1,912) $ (5,369) $ 9 $ (7,272) Six months ended June 30, 2019 Total Defined Benefit Cash Flow Accumulated Pension and Hedging Other Cumulative Postretirement Instruments, Comprehensive Translation Plans Unrealized Income (Millions) Adjustment Adjustment Gain (Loss) (Loss) Balance at December 31, 2018, net of tax: $ (2,098) $ (4,832) $ 64 $ (6,866) Impact of adoption of ASU No. 2018-02* (13) (817) (23) (853) Other comprehensive income (loss), before tax: Amounts before reclassifications 63 153 (17) 199 Amounts reclassified out 142 209 (27) 324 Total other comprehensive income (loss), before tax 205 362 (44) 523 Tax effect (6) (82) 12 (76) Total other comprehensive income (loss), net of tax 199 280 (32) 447 Balance at June 30, 2019, net of tax $ (1,912) $ (5,369) $ 9 $ (7,272) *See Note 1 in 3M’s 2019 Annual Report on Form 10-K. Income taxes are not provided for foreign translation relating to permanent investments in international subsidiaries, but tax effects within cumulative translation does include impacts from items such as net investment hedge transactions. Reclassification adjustments are made to avoid double counting in comprehensive income items that are subsequently recorded as part of net income. Reclassifications out of Accumulated Other Comprehensive Income Attributable to 3M Amount Reclassified from Details about Accumulated Other Accumulated Other Comprehensive Income Comprehensive Income Components Three months ended June 30, Six months ended June 30, Location on Income (Millions) 2020 2019 2020 2019 Statement Cumulative translation adjustment Deconsolidation of Venezuelan subsidiary $ — $ (142) $ — $ (142) Other income (expense), net Total before tax — (142) — (142) Tax effect — — — — Provision for income taxes Net of tax $ — $ (142) $ — $ (142) Defined benefit pension and postretirement plans adjustments Gains (losses) associated with defined benefit pension and postretirement plans amortization Transition asset $ — $ — $ (1) $ — See Note 11 Prior service benefit 16 16 $ 31 $ 32 See Note 11 Net actuarial loss (177) (119) (354) (239) See Note 11 Curtailments/Settlements (1) — (2) — See Note 11 Deconsolidation of Venezuelan subsidiary — (2) — (2) Other income (expense), net Total before tax (162) (105) (326) (209) Tax effect 37 25 82 45 Provision for income taxes Net of tax $ (125) $ (80) $ (244) $ (164) Cash flow hedging instruments gains (losses) Foreign currency forward/option contracts $ 33 $ 21 $ 51 $ 28 Cost of sales Interest rate contracts (2) (1) (4) (1) Interest expense Total before tax 31 20 47 27 Tax effect (7) (4) (11) (5) Provision for income taxes Net of tax $ 24 $ 16 $ 36 $ 22 Total reclassifications for the period, net of tax $ (101) $ (206) $ (208) $ (284) |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Taxes. | |
Income Taxes | NOTE 8. Income Taxes The Company is under IRS examination or appeals for the tax years 2015 through 2018. The IRS has completed its field examination of the U.S. federal income tax returns for all years through 2016, but the years have not closed as the Company is in the process of resolving issues identified during those examinations. In addition to the U.S. federal examination, there is also audit activity in several U.S. state and foreign jurisdictions. As of June 30, 2020, no taxing authority has proposed significant adjustments to the Company’s tax positions for which the Company is not adequately reserved. It is reasonably possible that the amount of unrecognized tax benefits could significantly change within the next 12 months. At this time, the Company is not able to estimate the range by which these potential events could impact 3M’s unrecognized tax benefits in the next 12 months. The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of June 30, 2020 and December 31, 2019 are $1,140 million and $1,178 million, respectively. The decrease in unrecognized tax benefits includes a $52 million decrease associated with the tax treatment of the 2018 agreement reached with the State of Minnesota that resolved the Natural Resources Damages (NRD) lawsuit. As of June 30, 2020 and December 31, 2019, the Company had valuation allowances of $150 million and $158 million on its deferred tax assets, respectively. The effective tax rate for the second quarter of 2020 was 21.0 percent, compared to 21.8 percent in the second quarter of 2019, a decrease of 0.8 percentage points. Primary factors contributing to the 0.8 percentage point decrease were the 2019 non-deductible charge related to the deconsolidation of the Venezuelan subsidiary, adjustments to uncertain tax positions not repeating in 2020 and increased year-over-year benefit from US international tax provisions. These decreases were partially offset by the 2019 tax benefit that did not repeat related to the “held for sale” status of legal entities associated with the then pending divestiture of the gas and flame detection business and decreased year-over-year benefit from stock options. The effective tax rate for the first six months of 2020 was 19.2 percent, compared to 20.1 percent in the first six months of 2019, a decrease of 0.9 percentage points. Primary factors that decreased the effective rate for the first six months of 2020 include the 2019 non-deductible charge related to the deconsolidation of the Venezuelan subsidiary, adjustments to uncertain tax positions not repeating in 2020, 2020 resolution of the tax treatment of the 2018 NRD lawsuit, and increased year-over-year benefit from US international tax provisions. These decreases were partially offset by the 2019 tax benefit that did not repeat related to the “held for sale” status of legal entities associated with the then-pending divestiture of the gas and flame detection business and decreased year-over-year benefit from stock options. In March 2020, in response to the impact of the COVID-19 pandemic in the US and across the globe, the United States Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act. The enactment period impacts to 3M were immaterial to income tax expense. |
Marketable Securities and Held-
Marketable Securities and Held-to-Maturity Debt Securities | 6 Months Ended |
Jun. 30, 2020 | |
Marketable Securities and Held-to-Maturity Debt Securities | |
Marketable Securities and Held-to-Maturity Debt Securities | NOTE 9. Marketable Securities and Held-to-Maturity Debt Securities The Company invests in asset-backed securities, certificates of deposit/time deposits, commercial paper, and other securities. The following is a summary of amounts recorded on the Consolidated Balance Sheet for marketable securities (current and non-current). (Millions) June 30, 2020 December 31, 2019 Commercial paper $ 195 $ 85 Certificates of deposit/time deposits 27 10 U.S. municipal securities 25 3 Current marketable securities $ 247 $ 98 U.S. municipal securities $ 34 $ 43 Non-current marketable securities $ 34 $ 43 Total marketable securities $ 281 $ 141 At June 30, 2020 and December 31, 2019, gross unrealized, gross realized, and net realized gains and/or losses (pre-tax) were not material. The balances at June 30, 2020 for marketable securities by contractual maturity are shown below. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties. (Millions) June 30, 2020 Due in one year or less $ 247 Due after one year through five years 14 Due after five years through ten years 20 Total marketable securities $ 281 Held-to-Maturity Debt Securities In connection with the in-substance debt defeasance of the Third Lien Notes described in Note 10, the Company purchased a $0.5 billion U.S. Treasury security in the fourth quarter of 2019 and transferred it to a trust with irrevocable instructions to use the proceeds from its maturity to satisfy the redemption of the Third Lien Notes that occurred in May 2020. This debt security was considered held-to-maturity due to the restrictions in satisfying and discharging the Third Lien Notes, was carried at amortized cost, and was reflected in other current assets on the Company’s consolidated balance sheet. Upon the maturity of the debt security in May 2020, the Company has no held-to-maturity debt securities as of June 30, 2020. |
Long-Term Debt and Short-Term B
Long-Term Debt and Short-Term Borrowings | 6 Months Ended |
Jun. 30, 2020 | |
Long-Term Debt and Short-Term Borrowings | |
Long-Term Debt and Short-Term Borrowings | NOTE 10. Long-Term Debt and Short-Term Borrowings In March 2020, 3M issued $1.75 billion aggregate principal amount of fixed rate registered notes. These were comprised of $500 million of 5-year 10-year 30-year As of June 30, 2020, the Company had no commercial paper outstanding, compared to $150 million in commercial paper outstanding as of December 31, 2019. 3M has a credit facility expiring in July 2020 in the amount of 80 billion Japanese yen that in July 2020 was further extended until August 2021. At June 30, 2020, 69 billion Japanese yen, or approximately $646 million at June 30, 2020 exchange rates, was drawn and outstanding. In November 2019, 3M entered into a credit facility expiring in November 2020 in the amount of 150 million euros. At June 30, 2020, 150 million euros, or $168 million at June 30, 2020 exchange rates, was drawn and outstanding. In conjunction with the October 2019 acquisition of Acelity (see Note 3), 3M assumed outstanding debt of the business, of which $445 million in principal amount of third lien senior secured notes (Third Lien Notes) maturing in 2021 with a coupon rate of 12.5% was not immediately redeemed at closing. Instead, at closing, 3M satisfied and discharged the Third Lien Notes via an in-substance defeasance, whereby 3M transferred cash equivalents and marketable securities to a trust with irrevocable instructions to redeem the Third Lien Notes on May 1, 2020. The trust assets were restricted from use in 3M’s operations and were only used for the redemption of the Third Lien Notes that occurred in May 2020. These actions, however, did not represent a legal defeasance. Therefore, this debt was included in current portion of long-term debt and the related trust assets were included in current assets on the Company’s consolidated balance sheet as of December 31, 2019. In May 2020, 3M repaid the aggregate $445 million principal amount of Third Lien Notes subject to the in-substance defeasance above and repaid 650 million euros aggregate principal amount of floating-rate medium-term notes that matured. Future Maturities of Long-term Debt Maturities of long-term debt in the table below reflect the impact of put provisions associated with certain debt instruments and are net of the unaccreted debt issue costs such that total maturities equal the carrying value of long-term debt as of June 30, 2020. The maturities of long-term debt for the periods subsequent to June 30, 2020 are as follows (in millions): Remainder of After 2020 2021 2022 2023 2024 2025 2025 Total $ 650 $ 1,685 $ 1,606 $ 1,815 $ 1,101 $ 1,789 $ 11,280 $ 19,926 |
Pension and Postretirement Bene
Pension and Postretirement Benefit Plans | 6 Months Ended |
Jun. 30, 2020 | |
Pension and Postretirement Benefit Plans | |
Pension and Postretirement Benefit Plans | NOTE 11. Pension and Postretirement Benefit Plans The service cost component of defined benefit net periodic benefit cost is recorded in cost of sales; selling, general and administrative expenses; and research, development and related expenses. The other components of net periodic benefit cost are reflected in other expense (income), net. Components of net periodic benefit cost and other supplemental information for the three and six months ended June 30, 2020 and 2019 follow: Benefit Plan Information Three months ended June 30, Qualified and Non-qualified Pension Benefits Postretirement United States International Benefits (Millions) 2020 2019 2020 2019 2020 2019 Net periodic benefit cost (benefit) Operating expense Service cost $ 65 $ 63 $ 38 $ 33 $ 11 $ 11 Non-operating expense Interest cost $ 126 $ 156 $ 33 $ 39 $ 16 $ 21 Expected return on plan assets (255) (260) (77) (75) (20) (21) Amortization of prior service benefit (6) (6) (2) (3) (8) (7) Amortization of net actuarial loss 134 92 31 19 12 8 Settlements, curtailments, special termination benefits and other — 35 — 1 1 — Total non-operating expense (benefit) (1) 17 (15) (19) 1 1 Total net periodic benefit cost (benefit) $ 64 $ 80 $ 23 $ 14 $ 12 $ 12 Six months ended June 30, Qualified and Non-qualified Pension Benefits Postretirement United States International Benefits (Millions) 2020 2019 2020 2019 2020 2019 Net periodic benefit cost (benefit) Operating expense Service cost $ 131 $ 125 $ 76 $ 66 $ 22 $ 22 Non-operating expense Interest cost $ 250 $ 311 $ 64 $ 78 $ 32 $ 42 Expected return on plan assets (510) (520) (154) (150) (40) (41) Amortization of transition asset — — 1 — — — Amortization of prior service benefit (12) (12) (3) (6) (16) (14) Amortization of net actuarial loss 268 183 62 39 24 17 Settlements, curtailments, special termination benefits and other — 35 — 1 2 — Total non-operating expense (benefit) (4) (3) (30) (38) 2 4 Total net periodic benefit cost (benefit) $ 127 $ 122 $ 46 $ 28 $ 24 $ 26 For the six months ended June 30, 2020 contributions totaling $75 million were made to the Company’s U.S. and international pension plans and $2 million to its postretirement plans. For total year 2020, the Company expects to contribute approximately $200 million of cash to its global defined benefit pension and postretirement plans. The Company does not have a required minimum cash pension contribution obligation for its U.S. plans in 2020. Future contributions will depend on market conditions, interest rates and other factors. 3M’s annual measurement date for pension and postretirement assets and liabilities is December 31 each year, which is also the date used for the related annual measurement assumptions. In May 2019 (as part of the 2019 restructuring actions discussed in Note 5), the Company began offering a voluntary early retirement incentive program to certain eligible participants of its U.S. pension plans who meet age and years of pension service requirements. The eligible participants who accepted the offer and retired by July 1, 2019 received an enhanced pension benefit. Pension benefits were enhanced by adding one additional year of pension service and one additional year of age for certain benefit calculations. Approximately 800 participants accepted the offer and retired before July 1, 2019. As a result, the Company incurred a $35 million charge related to these special termination benefits in the second quarter of 2019. In May 2019, 3M modified the 3M Retiree Life Insurance Plan postretirement benefit to close it to new participants effective August 1, 2019 (which results in employees who retire on or after August 1, 2019 not being eligible to participate in the plan) and reducing the maximum life insurance and death benefit to $8,000 for deaths on or after August 1, 2019. Due to these changes, the plan was re-measured in the second quarter of 2019, resulting in a decrease to the accumulated projected benefit obligation liability of approximately $150 million and a related increase to shareholders’ equity, specifically accumulated other comprehensive income in addition to an immaterial income statement benefit prospectively. In the second quarter of 2020, as a result of the divestiture of the drug delivery business, the Company recognized a curtailment in its United Kingdom Pension Plan. The resulting re-measurement of the pension plan funded status reduced long-term prepaid pension and post retirement assets (located within “other assets” of the Company’s balance sheet) by approximately $80 million, which was offset within accumulated other comprehensive income (located within the equity section of the Company’s balance sheet). The expense impact of this re-measurement was immaterial for the second quarter of 2020 and subsequent periods. |
Derivatives
Derivatives | 6 Months Ended |
Jun. 30, 2020 | |
Derivatives | |
Derivatives | NOTE 12. 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 3M’s financial position and performance. Additional information with respect to derivatives is included elsewhere as follows: ● Impact on other comprehensive income of nonderivative hedging and derivative instruments is included in Note 7. ● Fair value of derivative instruments is included in Note 13. ● Derivatives and/or hedging instruments associated with the Company’s long-term debt are described in Note 12 in 3M’s 2019 Annual Report on Form 10-K. 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 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 hedge components excluded from the assessment of effectiveness are recognized in current earnings. Cash Flow Hedging - Foreign Currency Forward and Option Contracts: Hedging Instruments section below. The maximum length of time over which 3M hedges its exposure to the variability in future cash flows of the forecasted transactions is 36 months. Cash Flow Hedging - Interest Rate Contracts: In March 2020, the Company entered into treasury rate lock contracts with a notional amount of $500 million that were terminated concurrently with the March 2020 issuance of registered notes as discussed in Note 10. The termination resulted in an immaterial net loss within accumulated other comprehensive income that will be amortized over the respective lives of the debt The amortization of gains and losses on forward starting interest rate swap and treasury rate lock contracts is included in the tables below as part of the gain/(loss) reclassified from accumulated other comprehensive income into income. As of June 30, 2020, the Company had a balance of $20 million after-tax net unrealized loss associated with cash flow hedging instruments recorded in accumulated other comprehensive income. This includes a remaining balance of $111 million (after-tax loss) related to the forward starting interest rate swap and treasury rate lock contracts, which will be amortized over the respective lives of the notes. Based on exchange rates as of June 30, 2020, 3M expects to reclassify approximately $56 million, $31 million, and $37 million of the after-tax net unrealized cash flow hedging gains to earnings over the next 12 months, over the remainder of 2020, and in 2021, respectively, in addition to reclassifying approximately $88 million of the after-tax net unrealized cash flow hedging losses to earnings after 2021 (with the impact offset by earnings/losses from underlying hedged items). The location in the consolidated statements of income and comprehensive income and amounts of gains and losses related to derivative instruments designated as cash flow hedges are provided in the following table. Reclassifications of amounts from accumulated other comprehensive income into income include accumulated gains (losses) on dedesignated hedges at the time earnings are impacted by the forecasted transactions. Pretax Gain (Loss) Recognized in Other Pretax Gain (Loss) Reclassified Comprehensive from Accumulated Other Income on Derivative Comprehensive Income into Income Three months ended June 30, 2020 (Millions) Amount Location Amount Foreign currency forward/option contracts $ (15) Cost of sales $ 33 Interest rate contracts — Interest expense (2) Total $ (15) $ 31 Six months ended June 30, 2020 (Millions) Amount Location Amount Foreign currency forward/option contracts $ 64 Cost of sales $ 51 Interest rate contracts (2) Interest expense (4) Total $ 62 $ 47 Three months ended June 30, 2019 (Millions) Amount Location Amount Foreign currency forward/option contracts $ 2 Cost of sales $ 21 Interest rate contracts (32) Interest expense (1) Total $ (30) $ 20 Six months ended June 30, 2019 (Millions) Amount Location Amount Foreign currency forward/option contracts $ 32 Cost of sales $ 28 Interest rate contracts (49) Interest expense (1) Total $ (17) $ 27 Fair Value Hedges: For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivatives as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. Fair Value Hedging - Interest Rate Swaps: Refer to the section below titled Statement of Income Location and Impact of Cash Flow and Fair Value Derivative Instruments The following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges: Cumulative Amount of Fair Value Hedging Carrying Value of the Adjustment Included in the Carrying Value Hedged Liabilities (in millions) of the Hedged Liabilities (in millions) Location on the Consolidated Balance Sheet June 30, 2020 December 31, 2019 June 30, 2020 December 31, 2019 Short-term borrowings and current portion of long-term debt $ 500 $ 499 $ 1 $ — Long-term debt 776 775 21 22 Total $ 1,276 $ 1,274 $ 22 $ 22 Net Investment Hedges: The Company may use non-derivative (foreign currency denominated debt) and derivative (foreign exchange forward contracts) instruments to hedge portions of the Company’s investment in foreign subsidiaries and manage foreign exchange risk. For instruments that are designated and qualify as hedges of net investments in foreign operations and that meet the effectiveness requirements, the net gains or losses attributable to changes in spot exchange rates are recorded in cumulative translation within other comprehensive income. Amounts excluded from the assessment of hedge effectiveness, including the time value of the forward contract at the inception of the hedge, are recognized in earnings using an amortization approach over the life of the hedging instrument on a straight-line basis. Any difference between the change in the fair value of the excluded component and the amount amortized into earnings during the period is recorded in cumulative translation within other comprehensive income. Recognition in earnings of amounts previously recorded in cumulative translation is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation. To the extent foreign currency denominated debt is not designated in or is dedesignated from a net investment hedge relationship, changes in value of that portion of foreign currency denominated debt due to exchange rate changes are recorded in earnings through their maturity date. 3M’s use of foreign exchange forward contracts designated in hedges of the Company’s net investment in foreign subsidiaries can vary by time period depending on when foreign currency denominated debt balances designated in such relationships are dedesignated, matured, or are newly issued and designated. Additionally, variation can occur in connection with the extent of the Company’s desired foreign exchange risk coverage. At June 30, 2020, the total notional amount of foreign exchange forward contracts designated in net investment hedges was approximately 50 million euros, along with a principal amount of long-term debt instruments designated in net investment hedges totaling 3.5 billion euros. The maturity dates of these derivative and nonderivative instruments designated in net investment hedges range from 2020 to 2031. The location in the consolidated statements of income and comprehensive income and amounts of gains and losses related to derivative and nonderivative instruments designated as net investment hedges are as follows. There were no reclassifications of the effective portion of net investment hedges out of accumulated other comprehensive income into income for the periods presented in the table below. Pretax Gain (Loss) Recognized as Cumulative Translation Amount of Gain (Loss) Excluded within Other from Effectiveness Testing Comprehensive Income Recognized in Income Three months ended June 30, 2020 (Millions) Amount Location Amount Foreign currency denominated debt $ (11) Cost of sales $ — Foreign currency forward contracts 4 Cost of sales — Total $ (7) $ — Six months ended June 30, 2020 (Millions) Amount Location Amount Foreign currency denominated debt $ 4 Cost of sales $ — Foreign currency forward contracts 5 Cost of sales 5 Total $ 9 $ 5 Three months ended June 30, 2019 (Millions) Amount Location Amount Foreign currency denominated debt $ (64) Cost of sales $ — Foreign currency forward contracts (10) Cost of sales 7 Total $ (74) $ 7 Six months ended June 30, 2019 (Millions) Amount Location Amount Foreign currency denominated debt $ 28 Cost of sales $ — Foreign currency forward contracts 5 Cost of sales 12 Total $ 33 $ 12 Derivatives Not Designated as Hedging Instruments: Derivatives not designated as hedging instruments include dedesignated foreign currency forward and option contracts that formerly were designated in cash flow hedging relationships (as referenced in the Cash Flow Hedges section above). In addition, 3M enters into foreign currency forward contracts to offset, in part, the impacts of certain intercompany activities and enters into commodity price swaps to offset, in part, fluctuations in costs associated with the use of certain commodities and precious metals. These derivative instruments are not designated in hedging relationships; therefore, fair value gains and losses on these contracts are recorded in earnings. The Company does not hold or issue derivative financial instruments for trading purposes. The location in the consolidated statement of income and amounts of gains and losses related to derivative instruments not designated as hedging instruments are as follows: Three months ended June 30, 2020 Six months ended June 30, 2020 Gain (Loss) on Derivative Recognized in Gain (Loss) on Derivative Recognized in Income Income (Millions) Location Amount Location Amount Foreign currency forward/option contracts Cost of sales $ (2) Cost of sales $ 2 Foreign currency forward contracts Interest expense (11) Interest expense (27) Total $ (13) $ (25) Three months ended June 30, 2019 Six months ended June 30, 2019 Gain (Loss) on Derivative Recognized in Gain (Loss) on Derivative Recognized in Income Income (Millions) Location Amount Location Amount Foreign currency forward/option contracts Cost of sales $ — Cost of sales $ (2) Foreign currency forward contracts Interest expense (10) Interest expense (18) Total $ (10) $ (20) Statement of Income Location and Impact of Cash Flow and Fair Value Derivative Instruments The location in the consolidated statement of income and pre-tax amounts recognized in income related to derivative instruments designated in a cash flow or fair value hedging relationship are as follows: Location and Amount of Gain (Loss) Recognized in Income Location and Amount of Gain (Loss) Recognized in Income Three months ended June 30, 2020 Six months ended June 30, 2020 (Millions) Cost of sales Other expense Cost of sales Other expense Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded $ 3,805 $ 111 $ 7,914 $ 207 The effects of cash flow and fair value hedging: Gain or (loss) on cash flow hedging relationships: Foreign currency forward/option contracts: Amount of gain or (loss) reclassified from accumulated other comprehensive income into income $ 33 $ — $ 51 $ — Interest rate contracts: Amount of gain or (loss) reclassified from accumulated other comprehensive income into income — (2) — (4) Gain or (loss) on fair value hedging relationships: Interest rate contracts: Hedged items $ — $ 2 $ — $ — Derivatives designated as hedging instruments — (2) — — Location and Amount of Gain (Loss) Recognized in Income Location and Amount of Gain (Loss) Recognized in Income Three months ended June 30, 2019 Six months ended June 30, 2019 (Millions) Cost of sales Other expense Cost of sales Other expense Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded $ 4,313 $ 256 $ 8,623 $ 304 The effects of cash flow and fair value hedging: Gain or (loss) on cash flow hedging relationships: Foreign currency forward/option contracts: Amount of gain or (loss) reclassified from accumulated other comprehensive income into income $ 21 $ — $ 28 $ — Interest rate contracts: Amount of gain or (loss) reclassified from accumulated other comprehensive income into income — (1) — (1) Gain or (loss) on fair value hedging relationships: Interest rate contracts: Hedged items $ — $ (7) $ — $ (12) Derivatives designated as hedging instruments — 7 — 12 Location and Fair Value Amount of Derivative Instruments The following tables summarize the fair value of 3M’s derivative instruments, excluding nonderivative instruments used as hedging instruments, and their location in the consolidated balance sheet. Notional amounts below are presented at period end foreign exchange rates, except for certain interest rate swaps, which are presented using the inception date’s foreign exchange rate. Additional information with respect to the fair value of derivative instruments is included in Note 13. Gross Assets Liabilities Notional Fair Fair June 30, 2020 (Millions) Amount Location Value Amount Location Value Amount Derivatives designated as hedging instruments Foreign currency forward/option contracts $ 1,715 Other current assets $ 73 Other current liabilities $ 5 Foreign currency forward/option contracts 828 Other assets 46 Other liabilities 2 Interest rate contracts 500 Other current assets — Other current liabilities — Interest rate contracts 603 Other assets 16 Other liabilities — Total derivatives designated as hedging instruments $ 135 $ 7 Derivatives not designated as hedging instruments Foreign currency forward/option contracts $ 3,530 Other current assets $ 14 Other current liabilities $ 25 Total derivatives not designated as hedging instruments $ 14 $ 25 Total derivative instruments $ 149 $ 32 Gross Assets Liabilities Notional Fair Fair December 31, 2019 (Millions) Amount Location Value Amount Location Value Amount Derivatives designated as hedging instruments Foreign currency forward/option contracts $ 1,995 Other current assets $ 64 Other current liabilities $ 9 Foreign currency forward/option contracts 1,041 Other assets 50 Other liabilities 3 Interest rate contracts 500 Other current assets — Other current liabilities — Interest rate contracts 603 Other assets 17 Other liabilities — Total derivatives designated as hedging instruments $ 131 $ 12 Derivatives not designated as hedging instruments Foreign currency forward/option contracts $ 2,684 Other current assets $ 11 Other current liabilities $ 8 Total derivatives not designated as hedging instruments $ 11 $ 8 Total derivative instruments $ 142 $ 20 Credit Risk and Offsetting of Assets and Liabilities of Derivative Instruments The Company is exposed to credit loss in the event of nonperformance by counterparties in interest rate swaps, currency swaps, commodity price swaps, and forward and option contracts. However, the Company’s risk is limited to the fair value of the instruments. The Company actively monitors its exposure to credit risk through the use of credit approvals and credit limits, and by selecting major international banks and financial institutions as counterparties. 3M enters into master netting arrangements with counterparties when possible to mitigate credit risk in derivative transactions. A master netting arrangement may allow each counterparty to net settle amounts owed between a 3M entity and the counterparty as a result of multiple, separate derivative transactions. As of June 30, 2020, 3M has International Swaps and Derivatives Association (ISDA) agreements with 17 applicable banks and financial institutions which contain netting provisions. In addition to a master agreement with 3M supported by a primary counterparty’s parent guarantee, 3M also has associated credit support agreements in place with 16 of its primary derivative counterparties which, among other things, provide the circumstances under which either party is required to post eligible collateral (when the market value of transactions covered by these agreements exceeds specified thresholds or if a counterparty’s credit rating has been downgraded to a predetermined rating). The Company does not anticipate nonperformance by any of these counterparties. 3M has elected to present the fair value of derivative assets and liabilities within the Company’s consolidated balance sheet on a gross basis even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation. However, the following tables provide information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties. For each counterparty, if netted, the Company would offset the asset and liability balances of all derivatives at the end of the reporting period based on the 3M entity that is a party to the transactions. Derivatives not subject to master netting agreements are not eligible for net presentation. As of the applicable dates presented below, no cash collateral had been received or pledged related to these derivative instruments. Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject Gross Amount of to Master Netting Agreements Derivative Assets Gross Amount of Presented in the Eligible Offsetting Cash Consolidated Recognized Collateral Net Amount of June 30, 2020 (Millions) Balance Sheet Derivative Liabilities Received Derivative Assets Derivatives subject to master netting agreements $ 149 $ 13 $ — $ 136 Derivatives not subject to master netting agreements — — Total $ 149 $ 136 December 31, 2019 (Millions) Derivatives subject to master netting agreements $ 142 $ 14 $ — $ 128 Derivatives not subject to master netting agreements — — Total $ 142 $ 128 Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject Gross Amount of to Master Netting Agreements Derivative Liabilities Gross Amount of Presented in the Eligible Offsetting Cash Net Amount of Consolidated Recognized Collateral Derivative June 30, 2020 (Millions) Balance Sheet Derivative Assets Pledged Liabilities Derivatives subject to master netting agreements $ 32 $ 13 $ — $ 19 Derivatives not subject to master netting agreements — — Total $ 32 $ 19 December 31, 2019 (Millions) Derivatives subject to master netting agreements $ 20 $ 14 $ — $ 6 Derivatives not subject to master netting agreements — — Total $ 20 $ 6 Currency Effects 3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, increased pre-tax income by approximately $12 million and $11 million for the three and six months ended June 30, 2020. These estimates include transaction gains and losses, including derivative instruments designed to reduce foreign currency exchange rate risks. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | NOTE 13. Fair Value Measurements 3M follows ASC 820, Fair Value Measurements and Disclosures Changes to the Disclosure Requirements for Fair Value Measurement In addition to the information above, refer to Note 15 in 3M’s 2019 Annual Report on Form 10-K for a qualitative discussion of the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis, a description of the valuation methodologies used by 3M, and categorization within the valuation framework of ASC 820. The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis. Fair Value Measurements Description Fair Value at Using Inputs Considered as (Millions) June 30, 2020 Level 1 Level 2 Level 3 Assets: Available-for-sale: Marketable securities: Commercial paper $ 195 $ — $ 195 $ — Certificates of deposit/time deposits 27 — 27 — U.S. municipal securities 59 — 22 37 Investments 21 21 — — Derivative instruments — assets: Foreign currency forward/option contracts 133 — 133 — Interest rate contracts 16 — 16 — Liabilities: Derivative instruments — liabilities: Foreign currency forward/option contracts 32 — 32 — Fair Value Measurements Description Fair Value at Using Inputs Considered as (Millions) December 31, 2019 Level 1 Level 2 Level 3 Assets: Available-for-sale: Marketable securities: Commercial paper $ 85 $ — $ 85 $ — Certificates of deposit/time deposits 10 — 10 — U.S. municipal securities 46 — — 46 Investments 25 25 — — Derivative instruments — assets: Foreign currency forward/option contracts 125 — 125 — Interest rate contracts 17 — 17 — Liabilities: Derivative instruments — liabilities: Foreign currency forward/option contracts 20 — 20 — The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis in the table above that used significant unobservable inputs (level 3). Three months ended Six months ended Marketable securities — certain U.S. municipal securities only June 30, June 30, (Millions) 2020 2019 2020 2019 Beginning balance $ 37 $ 49 $ 46 $ 40 Total gains or losses: Included in earnings — — — — Included in other comprehensive income — — — — Purchases and issuances — — 10 9 Sales and settlements — — (19) — Transfers in and/or out of level 3 — — — — Ending balance $ 37 $ 49 $ 37 $ 49 Change in unrealized gains or losses for the period included in earnings for securities held at the end of the reporting period — — — — In addition, the plan assets of 3M’s pension and postretirement benefit plans are measured at fair value on a recurring basis (at least annually). Refer to Note 13 in 3M’s 2019 Annual Report on Form 10-K. Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis: Disclosures are required for certain assets and liabilities that are measured at fair value, but are recognized and disclosed at fair value on a nonrecurring basis in periods subsequent to initial recognition. For 3M, such measurements of fair value relate primarily to indefinite-lived and long-lived asset impairments, goodwill impairments, and adjustment in carrying value of equity securities for which the measurement alternative of cost less impairment plus or minus observable price changes is used. 3M reflected an immaterial charge related to impairment of certain indefinite-lived assets and a net charge of $22 million related to adjustment to the carrying value of equity securities using the measurement alternative during the first quarter of 2020. There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the three months ended June 30, 2020 in addition to the three and six months ended June 30, 2019. Fair Value of Financial Instruments: The Company’s financial instruments include cash and cash equivalents, marketable securities, held-to-maturity debt securities, accounts receivable, certain investments, accounts payable, borrowings, and derivative contracts. The fair values of cash equivalents, accounts receivable, held-to-maturity debt securities, accounts payable, and short-term borrowings and current portion of long-term debt approximated carrying values because of the short-term nature of these instruments. Available-for-sale marketable securities, in addition to certain derivative instruments, are recorded at fair values as indicated in the preceding disclosures. To estimate fair values (classified as level 2) for its long-term debt, the Company utilized third-party quotes, which are derived all or in part from model prices, external sources, market prices, or the third-party’s internal records. Information with respect to the carrying amounts and estimated fair values of these financial instruments follow: June 30, 2020 December 31, 2019 Carrying Fair Carrying Fair (Millions) Value Value Value Value Long-term debt, excluding current portion $ 19,276 $ 21,479 $ 17,518 $ 18,475 The fair values reflected above consider the terms of the related debt absent the impacts of derivative/hedging activity. The carrying amount of long-term debt referenced above is impacted by certain fixed-to-floating interest rate swaps that are designated as fair value hedges and by the designation of certain fixed rate Eurobond securities issued by the Company as hedging instruments of the Company’s net investment in its European subsidiaries. A number of 3M’s fixed-rate bonds were trading at a premium at June 30, 2020 and December 31, 2019 due to lower interest rates compared to issuance levels. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | NOTE 14. 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 claims, lawsuits and proceedings include, but are not limited to, products liability (involving products that the Company now or formerly manufactured and sold), intellectual property, commercial, antitrust, federal False Claims Act, securities, and state and federal environmental laws. Unless otherwise stated, the Company is vigorously defending all such litigation and proceedings. From time to time, the Company also receives subpoenas or requests for information from various government agencies. The Company generally responds to such subpoenas and requests in a cooperative, thorough and timely manner. These responses sometimes require time and effort and can result in considerable costs being incurred by the Company. Such subpoenas and requests can also lead to the assertion of claims or the commencement of administrative, civil or criminal legal proceedings against the Company and others, as well as to settlements. The outcomes of legal proceedings and regulatory matters are often difficult to predict. Any determination that the Company’s operations or activities are not, or were not, in compliance with applicable laws or regulations could result in the imposition of fines, civil or criminal penalties, and equitable remedies, including disgorgement, suspension or debarment or injunctive relief. Additional information about the Company’s process for disclosure and recording of liabilities and insurance receivables related to legal proceedings can be found in Note 16 “Commitments and Contingencies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. 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. Respirator Mask/Asbestos Litigation As of June 30, 2020, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 1,688 individual claimants, compared to approximately 1,727 individual claimants with actions pending on December 31, 2019. The vast majority of the lawsuits and claims resolved by and currently pending against the Company allege use of some of the Company’s mask and respirator products and seek damages from the Company and other defendants for alleged personal injury from workplace exposures to asbestos, silica, coal mine dust or other occupational dusts found in products manufactured by other defendants or generally in the workplace. A minority of the lawsuits and claims resolved by and currently pending against the Company generally allege personal injury from occupational exposure to asbestos from products previously manufactured by the Company, which are often unspecified, as well as products manufactured by other defendants, or occasionally at Company premises. The Company’s current volume of new and pending matters is substantially lower than it experienced at the peak of filings in 2003. The Company expects that filing of claims by unimpaired claimants in the future will continue to be at much lower levels than in the past. Accordingly, the number of claims alleging more serious injuries, including mesothelioma, other malignancies, and black lung disease, will represent a greater percentage of total claims than in the past. Over the past twenty The Company has demonstrated in these past trial proceedings that its respiratory protection products are effective as claimed when used in the intended manner and in the intended circumstances. Consequently, the Company believes that claimants are unable to establish that their medical conditions, even if significant, are attributable to the Company’s respiratory protection products. Nonetheless, the Company’s litigation experience indicates that claims of persons alleging more serious injuries, including mesothelioma, other malignancies, and black lung disease, are costlier to resolve than the claims of unimpaired persons, and it therefore believes the average cost of resolving pending and future claims on a per-claim basis will continue to be higher than it experienced in prior periods when the vast majority of claims were asserted by medically unimpaired claimants. As previously reported, the State of West Virginia, through its Attorney General, filed a complaint in 2003 against the Company and two other manufacturers of respiratory protection products in the Circuit Court of Lincoln County, West Virginia, and amended its complaint in 2005. The amended complaint seeks substantial, but unspecified, compensatory damages primarily for reimbursement of the costs allegedly incurred by the State for worker’s compensation and healthcare benefits provided to all workers with occupational pneumoconiosis and unspecified punitive damages. In October 2019, the court granted the State’s motion to sever its unfair trade practices claim. In January 2020, the manufacturers filed a petition with the West Virginia Supreme Court, challenging the trial court’s rulings; that petition is scheduled to be heard in September 2020. No liability has been recorded for this matter because the Company believes that liability is not probable and estimable at this time. In addition, the Company is not able to estimate a possible loss or range of loss given the lack of any meaningful discovery responses by the State of West Virginia, the otherwise minimal activity in this case, and the assertions of claims against two other manufacturers where a defendant’s share of liability may turn on the law of joint and several liability and by the amount of fault, if any, a jury may allocate to each defendant if the case were ultimately tried. Respirator Mask/Asbestos Liabilities and Insurance Receivables The Company regularly conducts a comprehensive legal review of its respirator mask/asbestos liabilities. The Company reviews recent and historical claims data, including without limitation, (i) the number of pending claims filed against the Company, (ii) the nature and mix of those claims (i.e., the proportion of claims asserting usage of the Company’s mask or respirator products and alleging exposure to each of asbestos, silica, coal or other occupational dusts, and claims pleading use of asbestos-containing products allegedly manufactured by the Company), (iii) the costs to defend and resolve pending claims, and (iv) trends in filing rates and in costs to defend and resolve claims, (collectively, the “Claims Data”). As part of its comprehensive legal review, the Company regularly provides the Claims Data to a third party with expertise in determining the impact of Claims Data on future filing trends and costs. The third party assists the Company in estimating the costs to defend and resolve pending and future claims. The Company uses these estimates to develop its best estimate of probable liability. Developments may occur that could affect the Company’s estimate of its liabilities. These developments include, but are not limited to, significant changes in (i) the key assumptions underlying the Company’s accrual, including, the number of future claims, the nature and mix of those claims, the average cost of defending and resolving claims, and in maintaining trial readiness (ii) trial and appellate outcomes, (iii) the law and procedure applicable to these claims, and (iv) the financial viability of other co-defendants and insurers. As a result of its review of its respirator mask/asbestos liabilities, of pending and expected lawsuits and of the cost of resolving claims of persons who claim more serious injuries, including mesothelioma, other malignancies, and black lung disease, the Company increased its accruals in the first six months of 2020 for respirator mask/asbestos liabilities by $8 million. In the first six months of 2020, the Company made payments for legal defense costs and settlements of $35 million related to the respirator mask/asbestos litigation. During the first quarter of 2019, the Company recorded a pre-tax charge of $313 million in conjunction with an increase in the accrual as a result of the March and April 2019 settlements-in-principle of the coal mine dust lawsuits mentioned above and the Company’s assessment of other current and expected coal mine dust lawsuits (including the costs to resolve all current and expected coal mine dust lawsuits in Kentucky and West Virginia). As of June 30, 2020, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $581 million. This accrual represents the Company’s best estimate of probable loss and reflects an estimation period for future claims that may be filed against the Company approaching the year 2050. The Company cannot estimate the amount or upper end of the range of amounts by which the liability may exceed the accrual the Company has established because of the (i) inherent difficulty in projecting the number of claims that have not yet been asserted or the time period in which future claims may be asserted, (ii) the complaints nearly always assert claims against multiple defendants where the damages alleged are typically not attributed to individual defendants so that a defendant’s share of liability may turn on the law of joint and several liability, which can vary by state, (iii) the multiple factors described above that the Company considers in estimating its liabilities, and (iv) the several possible developments described above that may occur that could affect the Company’s estimate of liabilities. As of June 30, 2020, the Company’s receivable for insurance recoveries related to the respirator mask/asbestos litigation was $4 million. The Company continues to seek coverage under the policies of certain insolvent and other insurers. Once those claims for coverage are resolved, the Company will have collected substantially all of its remaining insurance coverage for respirator mask/asbestos claims. Respirator Mask/Asbestos Litigation — Aearo Technologies On April 1, 2008, a subsidiary of the Company acquired the stock of Aearo Holding Corp., the parent of Aearo Technologies (“Aearo”). Aearo manufactured and sold various products, including personal protection equipment, such as eye, ear, head, face, fall and certain respiratory protection products. As of June 30, 2020, Aearo and/or other companies that previously owned and operated Aearo’s respirator business (American Optical Corporation, Warner-Lambert LLC, AO Corp. and Cabot Corporation (“Cabot”)) are named defendants, with multiple co-defendants, including the Company, in numerous lawsuits in various courts in which plaintiffs allege use of mask and respirator products and seek damages from Aearo and other defendants for alleged personal injury from workplace exposures to asbestos, silica-related, coal mine dust, or other occupational dusts found in products manufactured by other defendants or generally in the workplace. As of June 30, 2020, the Company, through its Aearo subsidiary, had accruals of $21 million for product liabilities and defense costs related to current and future Aearo-related asbestos and silica-related claims. This accrual represents the Company’s best estimate of Aearo’s probable loss and reflects an estimation period for future claims that may be filed against Aearo approaching the year 2050. The accrual was reduced by $37 million during the second quarter of 2020 after paying Aearo’s share of certain settlements under the informal arrangement described below. The accrual reflects the Company’s assessment of pending and expected lawsuits, its review of its respirator mask/asbestos liabilities, and the cost of resolving claims of persons who claim more serious injuries. Responsibility for legal costs, as well as for settlements and judgments, is currently shared in an informal arrangement among Aearo, Cabot, American Optical Corporation and a subsidiary of Warner Lambert and their respective insurers (the “Payor Group”). Liability is allocated among the parties based on the number of years each company sold respiratory products under the “AO Safety” brand and/or owned the AO Safety Division of American Optical Corporation and the alleged years of exposure of the individual plaintiff. Aearo’s share of the contingent liability is further limited by an agreement entered into between Aearo and Cabot on July 11, 1995. This agreement provides that, so long as Aearo pays to Cabot a quarterly fee of $100,000, Cabot will retain responsibility and liability for, and indemnify Aearo against, any product liability claims involving exposure to asbestos, silica, or silica products for respirators sold prior to July 11, 1995. Because of the difficulty in determining how long a particular respirator remains in the stream of commerce after being sold, Aearo and Cabot have applied the agreement to claims arising out of the alleged use of respirators involving exposure to asbestos, silica or silica products prior to January 1, 1997. With these arrangements in place, Aearo’s potential liability is limited to exposures alleged to have arisen from the use of respirators involving exposure to asbestos, silica, or silica products on or after January 1, 1997. To date, Aearo has elected to pay the quarterly fee. Aearo could potentially be exposed to additional claims for some part of the pre-July 11, 1995 period covered by its agreement with Cabot if Aearo elects to discontinue its participation in this arrangement, or if Cabot is no longer able to meet its obligations in these matters. Developments may occur that could affect the estimate of Aearo’s liabilities. These developments include, but are not limited to: (i) significant changes in the number of future claims, (ii) significant changes in the average cost of resolving claims, (iii) significant changes in the legal costs of defending these claims, (iv) significant changes in the mix and nature of claims received, (v) trial and appellate outcomes, (vi) significant changes in the law and procedure applicable to these claims, (vii) significant changes in the liability allocation among the co-defendants, (viii) the financial viability of members of the Payor Group including exhaustion of available insurance coverage limits, and/or (ix) a determination that the interpretation of the contractual obligations on which Aearo has estimated its share of liability is inaccurate. The Company cannot determine the impact of these potential developments on its current estimate of Aearo’s share of liability for these existing and future claims. If any of the developments described above were to occur, the actual amount of these liabilities for existing and future claims could be significantly larger than the amount accrued. Because of the inherent difficulty in projecting the number of claims that have not yet been asserted, the complexity of allocating responsibility for future claims among the Payor Group, and the several possible developments that may occur that could affect the estimate of Aearo’s liabilities, the Company cannot estimate the amount or range of amounts by which Aearo’s liability may exceed the accrual the Company has established. Environmental Matters and Litigation The Company’s operations are subject to environmental laws and regulations including those pertaining to air emissions, wastewater discharges, toxic substances, and the handling and disposal of solid and hazardous wastes enforceable by national, state, and local authorities around the world, and private parties in the United States and abroad. These laws and regulations provide, under certain circumstances, a basis for the remediation of contamination, for capital investment in pollution control equipment, for restoration of or compensation for damages to natural resources, and for personal injury and property damage claims. The Company has incurred, and will continue to incur, costs and capital expenditures in complying with these laws and regulations, defending personal injury and property damage claims, and modifying its business operations in light of its environmental responsibilities. In its effort to satisfy its environmental responsibilities and comply with environmental laws and regulations, the Company has established, and periodically updates, policies relating to environmental standards of performance for its operations worldwide. Under certain environmental laws, including the United States Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and similar state laws, the Company may be jointly and severally liable, typically with other companies, for the costs of remediation of environmental contamination at current or former facilities and at off-site locations. The Company has identified numerous locations, most of which are in the United States, at which it may have some liability. Please refer to the section entitled “ Environmental Liabilities and Insurance Receivables” Environmental Matters As previously reported, the Company has been voluntarily cooperating with ongoing reviews by local, state, federal (primarily the U.S. Environmental Protection Agency (EPA)), and international agencies of possible environmental and health effects of various perfluorinated compounds, including perfluorooctanoate (PFOA), perfluorooctane sulfonate (PFOS), perfluorohexane sulfonate (PFHxS), or other per- and polyfluoroalkyl substances (collectively PFAS). As a result of its phase-out decision in May 2000, the Company no longer manufactures certain PFAS compounds including PFOA, PFOS, PFHxS, and their pre-cursor compounds. The Company ceased manufacturing and using the vast majority of these compounds within approximately two years of the phase-out announcement and ceased all manufacturing and the last significant use of this chemistry by the end of 2008. The Company continues to manufacture a variety of shorter chain length PFAS compounds, including, but not limited to, pre-cursor compounds to perfluorobutane sulfonate (PFBS). These compounds are used as input materials to a variety of products, including engineered fluorinated fluids, fluoropolymers and fluorelastomers, as well as surfactants, additives, and coatings. Through its ongoing life cycle management and its raw material composition identification processes associated with the Company’s policies covering the use of all persistent and bio-accumulative materials, the Company continues to review, control or eliminate the presence of certain PFAS in purchased materials or as byproducts in some of 3M’s current fluorochemical manufacturing processes, products, and waste streams. Regulatory activities concerning PFAS continue in the United States, Europe and elsewhere, and before certain international bodies. These activities include gathering of exposure and use information, risk assessment, and consideration of regulatory approaches. As the database of studies of both PFOA and PFOS has expanded, the EPA has developed human health effects documents summarizing the available data from these studies. In February 2014, the EPA initiated external peer review of its draft human health effects documents for PFOA and PFOS. The peer review panel met in August 2014. In May 2016, the EPA announced lifetime health advisory levels for PFOA and PFOS at 70 parts per trillion (ppt) (superseding the provisional levels established by the EPA in 2009 of 400 ppt for PFOA and 200 ppt for PFOS). Where PFOA and PFOS are found together, EPA recommends that the concentrations be added together, and the lifetime health advisory for PFOA and PFOS combined is also 70 ppt. Lifetime health advisories, which are non-enforceable and non-regulatory, provide information about concentrations of drinking water contaminants at which adverse health effects are not expected to occur over the specified exposure duration. To collect exposure information under the Safe Drinking Water Act, the EPA published on May 2, 2012 a list of unregulated substances, including six PFAS chemicals, required to be monitored during the period 2013-2015 by public water system suppliers to determine the extent of their occurrence. Through January 2017, the EPA reported results for 4,920 public water supplies nationwide. Based on the 2016 lifetime health advisory, 13 public water supplies exceed the level for PFOA and 46 exceed the level for PFOS (unchanged from the July 2016 EPA summary). A technical advisory issued by EPA in September 2016 on laboratory analysis of drinking water samples stated that 65 public water supplies had exceeded the combined level for PFOA and PFOS. These results are based on one or more samples collected during the period 2012-2015 and do not necessarily reflect current conditions of these public water supplies. EPA reporting does not identify the sources of the PFOA and PFOS in the public water supplies. The Company is continuing to make progress in its work, under the supervision of state regulators, to remediate historic disposal of PFAS-containing waste associated with manufacturing operations at its Decatur, Alabama; Cottage Grove, Minnesota; and Cordova, Illinois plants. As previously reported, the Company entered into a voluntary remedial action agreement with the Alabama Department of Environmental Management (ADEM) to remediate the presence of PFAS in the soil and groundwater at the Company’s manufacturing facility in Decatur, Alabama associated with the historic (1978-1998) incorporation of wastewater treatment plant sludge. With ADEM’s agreement, 3M is installing a multilayer cap on the former sludge incorporation areas and implementing groundwater migration controls and treatment. The Company continues to work with the Minnesota Pollution Control Agency (MPCA) pursuant to the terms of the previously disclosed May 2007 Settlement Agreement and Consent Order to address the presence of certain PFAS in the soil and groundwater at former disposal sites in Washington County, Minnesota (Oakdale and Woodbury) and at the Company’s manufacturing facility at Cottage Grove, Minnesota. Under this agreement, the Company’s principal obligations include (i) evaluating releases of certain PFAS from these sites and proposing response actions; (ii) providing treatment or alternative drinking water upon identifying any level exceeding a Health Based Value (HBV) or Health Risk Limit (HRL) (i.e., the amount of a chemical in drinking water determined by the Minnesota Department of Health (MDH) to be safe for human consumption over a lifetime) for certain PFAS for which a HBV and/or HRL exists as a result of contamination from these sites; (iii) remediating identified sources of other PFAS at these sites that are not controlled by actions to remediate PFOA and PFOS; and (iv) sharing information with the MPCA about certain perfluorinated compounds. During 2008, the MPCA issued formal decisions adopting remedial options for the former disposal sites in Washington County, Minnesota (Oakdale and Woodbury). In August 2009, the MPCA issued a formal decision adopting remedial options for the Company’s Cottage Grove manufacturing facility. During the spring and summer of 2010, 3M began implementing the agreed upon remedial options at the Cottage Grove and Woodbury sites. 3M commenced the remedial option at the Oakdale site in late 2010. At each location the remedial options were recommended by the Company and approved by the MPCA. Remediation work has been completed at the Oakdale and Woodbury sites, and they are in an operational maintenance mode. Remediation work has been substantially completed at the Cottage Grove site, with operational and maintenance activities ongoing. In August 2014, the Illinois EPA approved a request by the Company to establish a groundwater management zone at its manufacturing facility in Cordova, Illinois, which includes ongoing pumping of impacted site groundwater, groundwater monitoring and routine reporting of results. In May 2017, the MDH issued new HBVs for PFOA and PFOS. The new HBVs are 35 ppt for PFOA and 27 ppt for PFOS. In connection with its announcement the MDH stated that “Drinking water with PFOA and PFOS, even at the levels above the updated values, does not represent an immediate health risk. These values are designed to reduce long-term health risks across the population and are based on multiple safety factors to protect the most vulnerable citizens, which makes them overprotective for most of the residents in our state.” In December 2017, the MDH issued a new HBV for perfluorobutane sulfonate (PFBS) of 2 parts per billion (ppb). In February 2018, the MDH published reports finding no unusual rates of certain cancers or adverse birth outcomes (low birth rates or premature births) among residents of Washington and Dakota Counties in Minnesota. In April 2019, the MDH issued a new HBV for PFOS of 15 ppt and a new HBV for PFHxS of 47 ppt. In May 2018, the EPA announced a four-step PFAS action plan, which includes evaluating the need to set Safe Drinking Water Act maximum contaminant levels (MCLs) for PFOA and PFOS and beginning the steps necessary to designate PFOA and PFOS as “hazardous substances” under CERCLA. In November 2018, the EPA asked for public comment on draft toxicity assessments for two PFAS compounds, including PFBS. In February 2019, the EPA issued a PFAS Action Plan that outlines short- and long-term actions the EPA is taking to address PFAS – actions that include developing a national drinking water determination for PFOA and PFOS, strengthening enforcement authorities and evaluating cleanup approaches, nationwide drinking water monitoring for PFAS, expanding scientific knowledge for understanding and managing risk from PFAS, and developing consistent risk communication tools for communicating with other agencies and the public. With respect to groundwater contaminated with PFOA and PFOS, the EPA issued interim recommendations in December 2019, providing guidance for screening levels and preliminary remediation goals for groundwater that is a current or potential drinking water source, to inform final clean-up levels of contaminated sites. In February 2020, the EPA provided notice and requested public comment on certain preliminary determinations to regulate PFOA and PFOS under the Safe Drinking Water Act (SDWA). In June 2020, 3M submitted comments on EPA’s preliminary determinations to regulate PFOA and PFOS under the SDWA. EPA announced in its Spring 2020 Regulatory Agenda, released in June 2020, that it intends to publish a notice of proposed rulemaking to designate PFOA and PFOS as hazardous substances under CERCLA in August 2020. The U.S. hazardous substance that is likely to be without appreciable risk of adverse non-cancer health effects over a specified duration of exposure. MRLs are not intended to define cleanup or action levels for ATSDR or other agencies. In August 2018, 3M submitted comments on the ATSDR proposal, noting that there are major shortcomings with the current draft, especially with the MRLs, and that the ATSDR’s profile must reflect the best science and full weight of evidence known about these chemicals. Several state legislatures and state agencies have been evaluating or have taken actions related to cleanup standards, groundwater values or drinking water values for PFOS, PFOA, and other PFAS, and 3M has submitted various responsive comments. In September 2019, 3M and several other parties filed a lawsuit in New Hampshire state court to enjoin new PFAS regulations in New Hampshire. In November 2019, the court issued a preliminary injunction preventing the regulations from being enforced. In April 2020, the New Hampshire Supreme Court agreed to review several issues related to the preliminary injunctive order. In July 2020, the governor signed a bill passed by the New Hampshire legislature setting the same drinking water standards that had been enjoined by the court. Vermont finalized drinking water standards for a combination of PFOA, PFOS and three other PFAS in March 2020. New Jersey finalized drinking water standards and designated PFOA and PFOS as hazardous substances in June 2020. Some other states have also been evaluating or have taken actions relating to PFOA, PFOS and other PFAS in products such as food packaging, carpets and other products. The Company cannot predict what additional regulatory actions arising from the foregoing or other proceedings and activities, if any, may be taken regarding such compounds or the consequences of any such actions. Litigation Related to Historical PFAS Manufacturing Operations in Alabama As previously reported, a former employee filed a putative class action lawsuit against 3M, BFI Waste Management Systems of Alabama, and others in the Circuit Court of Morgan County, Alabama (the “St. John” case), seeking property damage from exposure to certain perfluorochemicals at or near the Company’s Decatur, Alabama, manufacturing facility. The parties have agreed to continue to stay the St. John case through September 2020, pending ongoing mediation between the parties involved in this case and another case discussed below. Two additional putative class actions filed in the same court by certain residents in the vicinity of the Decatur plant seeking relief on similar grounds (the Chandler case and the Stover case, respectively) are stayed pending the resolution of class certification issues in the St. John case. In October 2015, West Morgan-East Lawrence Water & Sewer Authority (Water Authority) filed an individual complaint against 3M Company, Dyneon, L.L.C, and Daikin America, Inc., in the U.S. District Court for the Northern District of Alabama. The complaint also includes representative plaintiffs who brought the complaint on behalf of themselves, and a class of all owners and possessors of property who use water provided by the Water Authority and five local water works to which the Water Authority supplies water (collectively, the “Water Utilities”). The complaint seeks compensatory and punitive damages and injunctive relief based on allegations that the defendants’ chemicals, including PFOA and PFOS from their manufacturing processes in Decatur, have contaminated the water in the Tennessee River at the water intake, and that the chemicals cannot be removed by the water treatment processes utilized by the Water Authority. In April 2019, 3M and the Water Authority settled the lawsuit for $35 million, which will fund a new water filtration system, with 3M indemnifying the Water Authority from liability resulting from the resolution of the currently pending and future lawsuits against the Water Authority alleging liability or damages related to 3M PFAS. The putative class claims brought by the representative plaintiffs who were supplied drinking water by the Water Authority (the “Lindsey” case) remain, with a trial set for October 2020. 3M has filed its opposition to class certification and a motion for summary judgment. Discovery is ongoing. The parties are in active discussions regarding a negotiated resolution, and the case has been stayed through September 2020. In June 2016, the Tennessee Riverkeeper, Inc. (Riverkeeper), a non-profit corporation, filed a lawsuit in the U.S. District Court for the Northern District of Alabama against 3M; BFI Waste Systems of Alabama; the City of Decatur, Alabama; and the Municipal Utilities Board of Decatur, Morgan County, Alabama. The complaint alleges that the defendants violated the Resource Conservation and Recovery Act in connection with the disposal of certain PFAS through their ownership and operation of their respective sites. The complaint further alleges such practices may present an imminent and substantial endangerment to health and/or the environment and that Riverkeeper has suffered and will continue to suffer irreparable harm caused by defendants’ failure to abate the endangerment unless the court grants the requested relief, including declaratory and injunctive relief. This case has been stayed through August 2020, pending ongoing mediation between the parties in conjunction with the St. John case. In August 2016, a group of over 200 plaintiffs filed a putative class action against West Morgan-East Lawrence Water and Sewer Authority (Water Authority), 3M, Dyneon, Daikin, BFI, and the City of Decatur in state |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Stock-Based Compensation | |
Stock-Based Compensation | NOTE 15. Stock-Based Compensation The 3M 2016 Long-Term Incentive Plan provides for the issuance or delivery of up to 123,965,000 shares of 3M common stock pursuant to awards granted under the plan. Awards 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. As of June 30, 2020, the remaining shares available for grant under the LTIP Program are 15.7 million. The Company’s annual stock option and restricted stock unit grant is made in February to provide a strong and immediate link between the performance of individuals during the preceding year and the size of their annual stock compensation grants. The grant to eligible employees uses the closing stock price on the grant date. Accounting rules require recognition of expense under a non-substantive vesting period approach, requiring compensation expense recognition when an employee is eligible to retire. Employees are considered eligible to retire at age 55 and after having completed ten years of service. This retiree-eligible population represents 35 percent of the annual grant stock-based compensation expense; therefore, higher stock-based compensation expense is recognized in the first quarter. In addition to the annual grants, the Company makes other minor grants of stock options, restricted stock units and other stock-based grants. The Company issues cash settled restricted stock units and stock appreciation rights in certain countries. These grants do not result in the issuance of common stock and are considered immaterial by the Company. Amounts recognized in the financial statements with respect to stock-based compensation programs, which include stock options, restricted stock, restricted stock units, performance shares and the General Employees’ Stock Purchase Plan (GESPP), are provided in the following table. Capitalized stock-based compensation amounts were not material for the three and six months ended June 30, 2020 and 2019. Stock-Based Compensation Expense Three months ended Six months ended June 30, June 30, (Millions) 2020 2019 2020 2019 Cost of sales $ 10 $ 9 $ 32 $ 31 Selling, general and administrative expenses 35 36 108 118 Research, development and related expenses 7 7 32 33 Stock-based compensation expenses $ 52 $ 52 $ 172 $ 182 Income tax benefits (15) (28) (54) (108) Stock-based compensation expenses (benefits), net of tax $ 37 $ 24 $ 118 $ 74 Stock Option Program The following table summarizes stock option activity during the six months ended June 30, 2020: Weighted Average Weighted Remaining Aggregate Number of Average Contractual Intrinsic Value (Options in thousands) Options Exercise Price Life (months) (millions) Under option — January 1 33,675 $ 151.15 Granted: Annual 4,741 157.26 Exercised (1,639) 89.34 Forfeited (106) 185.82 June 30 36,671 $ 154.60 68 $ 593 Options exercisable June 30 28,682 $ 147.72 56 $ 593 Stock options vest over a period from one year to three years with the expiration date at 10 years from date of grant. As of June 30, 2020, there was $89 million of compensation expense that has yet to be recognized related to non-vested stock option based awards. This expense is expected to be recognized over the remaining weighted-average vesting period of 23 months. The total intrinsic values of stock options exercised were $127 million and $341 million during the six months ended June 30, 2020 and 2019, respectively. Cash received from options exercised was $145 million and $270 million for the six months ended June 30, 2020 and 2019, respectively. The Company’s actual tax benefits realized for the tax deductions related to the exercise of employee stock options were $27 million and $72 million for the six months ended June 30, 2020 and 2019, respectively. For the primary 2020 annual stock option grant, the weighted average fair value at the date of grant was calculated using the Black-Scholes option-pricing model and the assumptions that follow. Stock Option Assumptions Annual 2020 Exercise price $ 157.24 Risk-free interest rate 1.5 % Dividend yield 2.7 % Expected volatility 19.7 % Expected life (months) 78 Black-Scholes fair value $ 21.58 Expected volatility is a statistical measure of the amount by which a stock price is expected to fluctuate during a period. For the 2020 annual grant date, the Company estimated the expected volatility based upon the following three volatilities of 3M stock: the median of the term of the expected life rolling volatility; the median of the most recent term of the expected life volatility; and the implied volatility on the grant date. The expected term assumption is based on the weighted average of historical grants. Restricted Stock and Restricted Stock Units The following table summarizes restricted stock and restricted stock unit activity during the six months ended June 30, 2020: Weighted Average Number of Grant Date (Shares in thousands) Shares Fair Value Nonvested balance — As of January 1 1,573 $ 201.11 Granted Annual 733 157.29 Other 11 174.03 Vested (559) 176.17 Forfeited (34) 189.07 As of June 30 1,724 $ 190.63 As of June 30, 2020, there was $111 million of compensation expense that has yet to be recognized related to non-vested restricted stock and restricted stock units. This expense is expected to be recognized over the remaining weighted-average vesting period of 25 months. The total fair value of restricted stock and restricted stock units that vested during the six months ended June 30, 2020 and 2019 was $89 million and $135 million, respectively. The Company’s actual tax benefits realized for the tax deductions related to the vesting of restricted stock and restricted stock units was $17 million and $26 million for the six months ended June 30, 2020 and 2019, respectively. Restricted stock units granted generally vest three years following the grant date assuming continued employment. Dividend equivalents equal to the dividends payable on the same number of shares of 3M common stock accrue on these restricted stock units during the vesting period, although no dividend equivalents are paid on any of these restricted stock units that are forfeited prior to the vesting date. Dividends are paid out in cash at the vest date on restricted stock units. Since the rights to dividends are forfeitable, there is no impact on basic earnings per share calculations. Weighted average restricted stock unit shares outstanding are included in the computation of diluted earnings per share. Performance Shares Instead of restricted stock units, the Company makes annual grants of performance shares to members of its executive management. The 2020 performance criteria for these performance shares (organic volume growth, return on invested capital, free cash flow conversion, and earnings per share growth) were selected because the Company believes that they are important drivers of long-term stockholder value. The number of shares of 3M common stock that could actually be delivered at the end of the three-year three-year one The following table summarizes performance share activity during the six months ended June 30, 2020: Weighted Average Number of Grant Date (Shares in thousands) Shares Fair Value Undistributed balance — As of January 1 444 $ 205.58 Granted 191 153.02 Distributed (206) 190.84 Performance change 23 161.93 Forfeited (11) 164.61 As of June 30 441 $ 188.39 As of June 30, 2020, there was $33 million of compensation expense that has yet to be recognized related to performance shares. This expense is expected to be recognized over the remaining weighted-average earnings period of 22 months. The total fair value of performance shares that were distributed were $35 million and $45 million for the six months ended June 30, 2020 and 2019, respectively. The Company’s actual tax benefits realized for the tax deductions related to the distribution of performance shares were $7 million and $9 million for the six months ended June 30, 2020 and 2019, respectively. |
Business Segments
Business Segments | 6 Months Ended |
Jun. 30, 2020 | |
Business Segments | |
Business Segments | NOTE 16. Business Segments 3M’s businesses are organized, managed and internally grouped into segments based on differences in markets, products, technologies and services. 3M manages its operations in four business segments: Safety and Industrial; Transportation and Electronics; Health Care; and Consumer. 3M’s four 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. 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 business segment operating income information shown. Effective in the second quarter of 2020, the measure of segment operating performance used by 3M’s chief operating decision maker (CODM) changed and, as a result, 3M’s disclosed measure of segment profit/loss (business segment operating income) has been updated for all periods presented. The change to business segment operating income aligns with the update to how the CODM assesses performance and allocates resources for the Company’s business segments. 3M discloses business segment operating income as its measure of segment profit/loss, reconciled to both total 3M operating income and income before taxes. Business segment operating income includes dual credit for certain related operating income (as described below in “Elimination of Dual Credit”). Business segment operating income excludes certain expenses and income that are not allocated to business segments (as described below in “Corporate and Unallocated”). Additionally, the following special items are excluded from business segment operating income and, instead, are included within Corporate and Unallocated: significant litigation-related charges/benefits, gain/loss on sale of businesses (see Note 3), and divestiture-related restructuring actions (see Note 5). In addition, effective in the first quarter of 2020, in a continuing effort to improve the alignment of its businesses around customers and markets, the Company made the following changes: Continued alignment of customer account activity ● As part of 3M’s regular customer-focus initiatives, the Company realigned certain customer account activity (“sales district”) to correlate with the primary divisional product offerings in various countries and reduce complexity for customers when interacting with multiple 3M businesses. This largely impacted the amount of dual credit certain business segments receive as a result of sales district attribution. 3M business segment reporting measures include dual credit to business segments for certain sales and 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. As a result of this change, previously reported aggregate business segment net sales and operating income for the total year 2019 decreased $42 million and $10 million, respectively, offset by corresponding decreases in the “Elimination of Dual Credit” net sales and operating income amounts. Additional actions impacting product line alignments ● The remaining retail auto care product lines formerly in the Automotive Aftermarket Division (within the Safety and Industrial business segment), were realigned to the Construction and Home Improvement Division (within the Consumer business segment). This change resulted in a decrease of previously reported net sales and operating income for total year 2019 of $35 million and $11 million, respectively, in the Safety and Industrial business segment, offset by a corresponding increase in net sales and operating income within the Consumer business segment. ● In addition, certain product lines were realigned within business segments. The transdermal drug delivery components business, formerly included in the Drug Delivery Systems Division, was realigned to the Medical Solutions Division (both of which are within the Health Care business segment) and the paint protection film business, formerly included in the Automotive and Aerospace Division, was realigned to the Commercial Solutions Division (both of which are within the Transportation and Electronics business segment). The financial information presented herein reflects the impact of the preceding changes for all periods presented. Business Segment Information Three months ended Six months ended June 30, June 30, Net Sales (Millions) 2020 2019 2020 2019 Safety and Industrial $ 2,668 $ 2,937 $ 5,603 $ 5,900 Transportation and Electronics 1,937 2,450 4,175 4,805 Health Care 1,825 1,831 3,928 3,569 Consumer 1,238 1,320 2,494 2,520 Corporate and Unallocated (2) 48 (1) 70 Elimination of Dual Credit (490) (415) (948) (830) Total Company $ 7,176 $ 8,171 $ 15,251 $ 16,034 Operating Performance (Millions) Safety and Industrial $ 636 $ 647 $ 1,362 $ 1,284 Transportation and Electronics 382 591 864 1,110 Health Care 306 483 762 942 Consumer 287 273 556 508 Elimination of Dual Credit (123) (100) (239) (197) Total business segment operating income $ 1,488 $ 1,894 $ 3,305 $ 3,647 Corporate and Unallocated Special items: Significant litigation-related (charges)/benefits $ — $ — $ (17) $ (548) Gain/(loss) on sale of businesses 387 — 389 8 Divestiture-related restructuring actions (55) — (55) — Other corporate expense - net (80) (192) (219) (269) Total Corporate and Unallocated 252 (192) 98 (809) Total Company operating income $ 1,740 $ 1,702 $ 3,403 $ 2,838 Other expense/(income), net $ 111 $ 256 $ 207 $ 304 Income before income taxes $ 1,629 $ 1,446 $ 3,196 $ 2,534 Corporate and Unallocated 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 and is disclosed as “other corporate expense-net”. Additionally, Corporate and Unallocated includes special items such as significant litigation-related charges/benefits, gain/loss on sale of businesses (see Note 3), and divestiture-related restructuring costs (see Note 5). Corporate and Unallocated also includes sales, costs, and income from contract manufacturing, transition services and other arrangements with the acquirer of the Communication Markets Division following its 2018 divestiture through 2019. Because this category includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis. Elimination of Dual Credit 3M business segment reporting measures include dual credit to business segments for certain sales and related operating income. Management evaluates each of its four 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, privacy screen protection products are primarily sold by the Display Materials and Systems Division within the Transportation and Electronics business segment; however, certain sales districts within the Consumer business segment provide the customer account activity for sales of the product to particular customers. In this example, the non-primary selling segment (Consumer) 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. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Significant Accounting Policies | |
Basis of Presentation | 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. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in its Annual Report on Form 10-K. As described in Note 16, effective in the second quarter of 2020, the measure of segment operating performance used by 3M’s chief operating decision maker changed and, as a result, the Company’s disclosed measure of segment profit/loss has been updated. Also, effective in the first quarter of 2020, the Company changed its business segment reporting in its continuing effort to improve the alignment of businesses around markets and customers. Additionally, the Company consolidated the way it presents geographic area net sales by providing an aggregate Americas geographic region (combining former United States and Latin America and Canada areas). Information provided herein reflects the impact of these changes for all periods presented. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company considered the coronavirus (COVID-19) related impacts on its estimates, as appropriate, within its consolidated financial statements and there may be changes to those estimates in future periods. 3M believes that the accounting estimates are appropriate after giving consideration to the increased uncertainties surrounding the severity and duration of the COVID-19 pandemic. Such estimates and assumptions are subject to inherent uncertainties which may result in actual amounts differing from these estimates. |
Changes to Significant Accounting Policies | Changes to Significant Accounting Policies The following significant accounting policies have been added or changed as applicable since the Company’s 2019 Annual Report on Form 10-K as a result of adoption of new accounting pronouncements as described in the “New Accounting Pronouncements” section. Accounts receivable and allowances The allowances for bad debts as well as the provision for credit losses, write-off activity and recoveries for the periods presented are not material. The Company has long-term customer receivables that do not have significant credit risk, and the origination dates of which are typically not older than five years . These long-term receivables are subject to an allowance methodology similar to other receivables. Marketable securities: Investments-Debt Securities Available-for-Sale Debt Securities change. Any impairment that has not been recorded through an allowance for credit losses is recorded through accumulated other comprehensive income as a component of shareholders’ equity. The factors considered in determining whether a credit loss exists can include the extent to which fair value is less than the amortized cost basis, changes in the credit quality of the underlying loan obligors, credit ratings actions, as well as other factors. When a credit loss exists, the Company compares the present value of cash flows expected to be collected from the debt security with the amortized cost basis of the security to determine what allowance amount, if any, should be recorded. Amounts are reclassified out of accumulated other comprehensive income and into earnings upon sale or a change in the portions of impairment related to credit losses and not related to credit losses. Property, plant and equipment: |
Foreign Currency Translation | Foreign Currency Translation Local currencies generally are considered the functional currencies outside the United States with the exception of 3M’s subsidiaries in Argentina, the economy of which was considered highly inflationary beginning in 2018, and accordingly the financial statements of these subsidiaries are remeasured as if their functional currency is that of their parent. 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 average monthly currency exchange rates in effect during the period. Cumulative translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in shareholders’ equity. 3M had a consolidated subsidiary in Venezuela, the financial statements of which were remeasured as if its functional currency were that of its parent because Venezuela’s economic environment is considered highly inflationary. The operating income of this subsidiary was immaterial as a percent of 3M’s consolidated operating income for the periods presented. In light of circumstances, including the country’s unstable environment and heightened unrest leading to sustained lack of demand, and expectation that these circumstances will continue for the foreseeable future, during May 2019, 3M concluded it no longer met the criteria of control in order to continue consolidating its Venezuelan operations. As a result, as of |
Earnings Per Share | 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 have had an anti-dilutive effect (20.9 million average options for the three months ended June 30, 2020; 20.0 million average options for the six months ended June 30, 2020; 6.7 million average options for the three months ended June 30, 2019; 6.0 million average options for the six months ended June 30, 2019). The computations for basic and diluted earnings per share follow: Earnings Per Share Computations Three months ended Six months ended June 30, June 30, (Amounts in millions, except per share amounts) 2020 2019 2020 2019 Numerator: Net income attributable to 3M $ 1,290 $ 1,127 $ 2,582 $ 2,018 Denominator: Denominator for weighted average 3M common shares outstanding – 577.0 577.7 576.9 577.6 Dilution associated with the Company’s stock-based compensation plans 3.8 8.4 4.3 9.7 Denominator for weighted average 3M common shares outstanding – 580.8 586.1 581.2 587.3 Earnings per share attributable to 3M common shareholders – $ 2.24 $ 1.95 $ 4.48 $ 3.49 Earnings per share attributable to 3M common shareholders – $ 2.22 $ 1.92 $ 4.44 $ 3.44 |
New Accounting Pronouncements | New Accounting Pronouncements See the Company’s 2019 Annual Report on Form 10-K for a more detailed discussion of the standards in the tables that follow, except for those pronouncements issued subsequent to the most recent Form 10-K filing date for which separate, more detailed discussion is provided below as applicable. Standards Adopted During the Current Fiscal Year Standard Relevant Description Effective Date for 3M Impact and Other Matters ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (in conjunction with ASU Nos. 2018-19, 2019-04, 2019-05, 2019-11, and 2020-03) 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. Amends the current other-than-temporary impairment model for available-for-sale debt securities. 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. January 1, 2020 Adopted using the modified retrospective approach. Adoption of this ASU did not have a material impact due to the nature and extent of 3M’s financial instruments in scope for this ASU (primarily accounts receivable) and the historical, current and expected credit quality of its customers as of the date of adoption. See Note 1 Significant Accounting Policies for updated applicable accounting policies. ASU No. 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement Eliminates, amends, and adds disclosure requirements for fair value measurements, primarily related to Level 3 fair value measurements. January 1, 2020 This ASU relates to disclosure only. The nature and extent of 3M’s financial instruments in scope for this ASU (primarily Level 3 fair value measurements) are immaterial to 3M’s consolidated results of operations and financial condition. ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract Aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service arrangement (i.e. hosting arrangement) with the guidance on capitalizing costs in ASC 350-40, Internal-Use Software January 1, 2020 Adopted on a prospective basis. Relevant capitalizable costs are included in prepaid expenses or other non-current asset, as applicable, prospectively beginning in 2020. Standards Issued and Not Yet Adopted Standard Relevant Description Effective Date for 3M Impact and Other Matters ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) Eliminates certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws, and clarifying the accounting for transactions outside of business combination that result in a step-up in the tax basis of goodwill. January 1, 2021 3M previously disclosed it does not expect this ASU to have a material impact on its consolidated results of operations and financial condition. ASU No. 2020-01, Clarifying the Interactions between Topic 321, Investments—Equity Securities, Topic 323, Investments—Equity Method and Joint Ventures, and Topic 815, Derivatives and Hedging Clarifies when accounting for certain equity securities, a Company should consider observable transactions before applying or upon discontinuing the equity method of accounting for the purposes of applying the measurement alternative. Indicates when determining the accounting for certain derivatives, a Company should not consider if the underlying securities would be accounted for under the equity method or fair value option. January 1, 2021 3M previously disclosed it does not expect this ASU to have a material impact on its consolidated results of operations and financial condition, but will apply such guidance, where applicable, to future circumstances. Relevant New Standards Issued Subsequent to Most Recent Annual Report In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Significant Accounting Policies | |
Earnings per share | Three months ended Six months ended June 30, June 30, (Amounts in millions, except per share amounts) 2020 2019 2020 2019 Numerator: Net income attributable to 3M $ 1,290 $ 1,127 $ 2,582 $ 2,018 Denominator: Denominator for weighted average 3M common shares outstanding – 577.0 577.7 576.9 577.6 Dilution associated with the Company’s stock-based compensation plans 3.8 8.4 4.3 9.7 Denominator for weighted average 3M common shares outstanding – 580.8 586.1 581.2 587.3 Earnings per share attributable to 3M common shareholders – $ 2.24 $ 1.95 $ 4.48 $ 3.49 Earnings per share attributable to 3M common shareholders – $ 2.22 $ 1.92 $ 4.44 $ 3.44 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue | |
Schedule of disaggregated revenue recognized during the period | Three months ended Six months ended June 30, June 30, Net Sales (Millions) 2020 2019 2020 2019 Abrasives $ 243 $ 358 $ 573 $ 721 Automotive Aftermarket 203 304 487 610 Closure and Masking Systems 235 275 503 553 Electrical Markets 253 302 544 613 Industrial Adhesives and Tapes 552 674 1,226 1,357 Personal Safety 1,095 917 2,085 1,841 Roofing Granules 86 100 181 192 Other Safety and Industrial 1 7 4 13 Total Safety and Industrial Business Segment $ 2,668 $ 2,937 $ 5,603 $ 5,900 Advanced Materials $ 236 $ 331 $ 524 $ 642 Automotive and Aerospace 268 478 715 986 Commercial Solutions 328 477 757 939 Electronics 884 898 1,747 1,759 Transportation Safety 222 265 433 481 Other Transportation and Electronics (1) 1 (1) (2) Total Transportation and Electronics Business Segment $ 1,937 $ 2,450 $ 4,175 $ 4,805 Drug Delivery $ 41 $ 101 $ 146 $ 184 Food Safety 79 85 170 168 Health Information Systems 276 297 553 557 Medical Solutions 1,068 801 2,221 1,574 Oral Care 144 338 421 679 Separation and Purification Sciences 216 208 418 411 Other Health Care 1 1 (1) (4) Total Health Care Business Group $ 1,825 $ 1,831 $ 3,928 $ 3,569 Consumer Health Care $ 83 $ 101 $ 182 $ 198 Home Care 258 247 528 504 Home Improvement 601 589 1,177 1,117 Stationery and Office 263 351 536 646 Other Consumer 33 32 71 55 Total Consumer Business Group $ 1,238 $ 1,320 $ 2,494 $ 2,520 Corporate and Unallocated $ (2) $ 48 $ (1) $ 70 Elimination of Dual Credit (490) (415) (948) (830) Total Company $ 7,176 $ 8,171 $ 15,251 $ 16,034 Three months ended June 30, 2020 Net Sales (Millions) Americas Asia Pacific Europe, Middle East and Africa Other Unallocated Worldwide Safety and Industrial $ 1,367 $ 655 $ 645 $ 1 $ 2,668 Transportation and Electronics 532 1,151 254 — 1,937 Health Care 1,074 358 392 1 1,825 Consumer 895 218 125 — 1,238 Corporate and Unallocated (1) — — (1) (2) Elimination of Dual Credit (234) (172) (84) — (490) Total Company $ 3,633 $ 2,210 $ 1,332 $ 1 $ 7,176 Six months ended June 30, 2020 Net Sales (Millions) Americas Asia Pacific Europe, Middle East and Africa Other Unallocated Worldwide Safety and Industrial $ 2,886 $ 1,374 $ 1,343 $ — $ 5,603 Transportation and Electronics 1,207 2,352 616 — 4,175 Health Care 2,355 714 859 — 3,928 Consumer 1,769 468 257 — 2,494 Corporate and Unallocated — — — (1) (1) Elimination of Dual Credit (442) (353) (153) — (948) Total Company $ 7,775 $ 4,555 $ 2,922 $ (1) $ 15,251 Three months ended June 30, 2019 Net Sales (Millions) Americas Asia Pacific Europe, Middle East and Africa Other Unallocated Worldwide Safety and Industrial $ 1,549 $ 700 $ 688 $ — $ 2,937 Transportation and Electronics 794 1,267 389 — 2,450 Health Care 1,021 383 427 — 1,831 Consumer 945 233 141 1 1,320 Corporate and Unallocated 49 (2) (1) 2 48 Elimination of Dual Credit (195) (166) (51) (3) (415) Total Company $ 4,163 $ 2,415 $ 1,593 $ — $ 8,171 Six months ended June 30, 2019 Net Sales (Millions) Americas Asia Pacific Europe, Middle East and Africa Other Unallocated Worldwide Safety and Industrial $ 3,035 $ 1,459 $ 1,407 $ (1) $ 5,900 Transportation and Electronics 1,507 2,524 775 (1) 4,805 Health Care 1,943 761 865 — 3,569 Consumer 1,748 490 282 — 2,520 Corporate and Unallocated 70 — — — 70 Elimination of Dual Credit (377) (341) (112) — (830) Total Company $ 7,926 $ 4,893 $ 3,217 $ (2) $ 16,034 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Acquisitions and Divestitures | |
Approximate amounts of major assets and liabilities associated with disposal groups classified as held-for-sale | December 31, (Millions) 2019 Inventory 70 Property, plant and equipment 150 Intangible assets 35 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets | |
Goodwill | (Millions) Safety and Industrial Transportation and Electronics Health Care Consumer Total Company Balance as of December 31, 2019 $ 4,621 $ 1,830 $ 6,739 $ 254 $ 13,444 Acquisition activity — — (5) — (5) Divestiture activity — (10) (19) — (29) Translation and other (38) (8) (5) 1 (50) Balance as of June 30, 2020 $ 4,583 $ 1,812 $ 6,710 $ 255 $ 13,360 |
Acquired Intangible Assets | June 30, December 31, (Millions) 2020 2019 Customer related intangible assets $ 4,201 $ 4,316 Patents 525 538 Other technology-based intangible assets 2,093 2,124 Definite-lived tradenames 1,175 1,158 Other amortizable intangible assets 120 125 Total gross carrying amount $ 8,114 $ 8,261 Accumulated amortization — customer related (1,261) (1,180) Accumulated amortization — patents (494) (499) Accumulated amortization — other technology-based (522) (435) Accumulated amortization — definite-lived tradenames (349) (316) Accumulated amortization — other (87) (90) Total accumulated amortization $ (2,713) $ (2,520) Total finite-lived intangible assets — net $ 5,401 $ 5,741 Non-amortizable intangible assets (primarily tradenames) 632 638 Total intangible assets — net $ 6,033 $ 6,379 |
Schedule of amortization expense for acquired intangible assets | Amortization expense for the three and six months ended June 30, 2020 and 2019 follows: Three months ended Six months ended June 30, June 30, (Millions) 2020 2019 2020 2019 Amortization expense $ 134 $ 70 $ 268 $ 139 |
Schedule of expected amortization expense for acquired amortizable intangible assets | Expected amortization expense for acquired amortizable intangible assets recorded as of June 30, 2020: Remainder of After (Millions) 2020 2021 2022 2023 2024 2025 2025 Amortization expense $ 265 $ 524 $ 511 $ 481 $ 455 $ 425 $ 2,740 |
Restructuring Actions (Tables)
Restructuring Actions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
2019 Restructuring Actions | |
Schedule of restructuring charges by income statement line | (Millions) Second Quarter 2019 Cost of sales $ 18 Selling, general and administrative expenses 89 Research, development and related expenses 5 Total operating income impact 112 Other expense (income), net 36 Total income before taxes impact $ 148 |
Components of restructuring by business segment | Second Quarter 2019 (Millions) Employee-Related Asset-Related Total Safety and Industrial $ 11 $ — $ 11 Transportation and Electronics 8 — 8 Health Care 6 — 6 Consumer 5 — 5 Corporate and Unallocated 42 40 82 Total Operating Expense $ 72 $ 40 $ 112 |
Accrued restructuring action balances | (Millions) Employee-Related Accrued restructuring action balances as of December 31, 2019 $ 140 Cash payments (14) Adjustments (23) Accrued restructuring action balances as of June 30, 2020 $ 103 |
Drug delivery business | 2020 Restructuring Actions | |
Schedule of restructuring charges by income statement line | (Millions) Second Quarter 2020 Cost of sales $ 42 Selling, general and administrative expenses 12 Research, development and related expenses 1 Total operating income impact $ 55 |
Accrued restructuring action balances | (Millions) Employee-Related Asset-Related and Other Total Expense incurred in the second quarter of 2020 $ 32 $ 23 $ 55 Non-cash changes — (11) (11) Accrued divestiture-related restructuring action balances as of June 30, 2020 $ 32 $ 12 $ 44 |
COVID-19 Pandemic | 2020 Restructuring Actions | |
Schedule of restructuring charges by income statement line | (Millions) Second Quarter 2020 Cost of sales $ 13 Selling, general and administrative expenses 37 Research, development and related expenses 8 Total operating income impact $ 58 |
Components of restructuring by business segment | Second Quarter 2020 (Millions) Employee-Related Asset-Related Total Safety and Industrial $ 7 $ — $ 7 Transportation and Electronics 11 — 11 Health Care 12 — 12 Consumer 5 — 5 Corporate and Unallocated — 23 23 Total Operating Expense $ 35 $ 23 $ 58 |
Accrued restructuring action balances | (Millions) Employee-Related Asset-Related Total Expense incurred in the second quarter of 2020 $ 35 $ 23 $ 58 Non-cash changes — (23) (23) Accrued restructuring action balances as of June 30, 2020 $ 35 $ — $ 35 |
Supplemental Income Statement_2
Supplemental Income Statement Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Income Statement Information | |
Schedule of other expense (income) | Three months ended Six months ended June 30, June 30, (Millions) 2020 2019 2020 2019 Interest expense $ 137 $ 111 $ 260 $ 215 Interest income (9) (18) (19) (38) Pension and postretirement net periodic benefit cost (benefit) (17) 1 (34) (35) Loss on deconsolidation of Venezuelan subsidiary — 162 — 162 Total $ 111 $ 256 $ 207 $ 304 |
Supplemental Equity and Compr_2
Supplemental Equity and Comprehensive Income Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Equity and Comprehensive Income Information | |
Consolidated Statement of Changes in Equity | Three months ended June 30, 2020 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 March 31, 2020 $ 10,209 $ 6,033 $ 42,345 $ (29,817) $ (8,414) $ 62 Net income 1,287 1,290 (3) Other comprehensive income (loss), net of tax: Cumulative translation adjustment 106 106 — Defined benefit pension and post-retirement plans adjustment 58 58 — Cash flow hedging instruments (36) (36) — Total other comprehensive income (loss), net of tax 128 Dividends declared (846) (846) Purchase of subsidiary shares (1) (1) Stock-based compensation 50 50 Reacquired stock — — Issuances pursuant to stock option and benefit plans 88 (30) 118 Balance at June 30, 2020 $ 10,915 $ 6,083 $ 42,759 $ (29,699) $ (8,286) $ 58 Six months ended June 30, 2020 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 December 31, 2019 $ 10,126 $ 5,916 $ 42,135 $ (29,849) $ (8,139) $ 63 Net income 2,581 2,582 (1) Other comprehensive income (loss), net of tax: Cumulative translation adjustment (338) (335) (3) Defined benefit pension and post-retirement plans adjustment 177 177 — Cash flow hedging instruments 11 11 — Total other comprehensive income (loss), net of tax (150) Dividends declared (1,693) (1,693) Purchase of subsidiary shares (1) (1) Stock-based compensation 167 167 Reacquired stock (356) (356) Issuances pursuant to stock option and benefit plans 241 (265) 506 Balance at June 30, 2020 $ 10,915 $ 6,083 $ 42,759 $ (29,699) $ (8,286) $ 58 Three months ended June 30, 2019 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 March 31, 2019 $ 9,757 $ 5,764 $ 41,159 $ (29,668) $ (7,552) $ 54 Net income 1,131 1,127 4 Other comprehensive income (loss), net of tax: Cumulative translation adjustment 123 122 1 Defined benefit pension and post-retirement plans adjustment 196 196 — Cash flow hedging instruments (38) (38) — Total other comprehensive income (loss), net of tax 281 Dividends declared (830) (830) Stock-based compensation 57 57 Reacquired stock (404) (404) Issuances pursuant to stock option and benefit plans 150 (94) 244 Balance at June 30, 2019 $ 10,142 $ 5,821 $ 41,362 $ (29,828) $ (7,272) $ 59 Six months ended June 30, 2019 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 December 31, 2018 $ 9,848 $ 5,652 $ 40,636 $ (29,626) $ (6,866) $ 52 Impact of adoption of ASU No. 2018-02* — 853 (853) Impact of adoption of ASU No. 2016-02* 14 14 Net income 2,024 2,018 6 Other comprehensive income (loss), net of tax: Cumulative translation adjustment 200 199 1 Defined benefit pension and post-retirement plans adjustment 280 280 — Cash flow hedging instruments (32) (32) — Total other comprehensive income (loss), net of tax 448 Dividends declared (1,660) (1,660) Stock-based compensation 169 169 Reacquired stock (1,070) (1,070) Issuances pursuant to stock option and benefit plans 369 (499) 868 Balance at June 30, 2019 $ 10,142 $ 5,821 $ 41,362 $ (29,828) $ (7,272) $ 59 *See Note 1 in 3M’s 2019 Annual Report on Form 10-K. |
Changes in Accumulated Other Comprehensive Income (Loss) Attributable to 3M | Three months ended June 30, 2020 Total Defined Benefit Cash Flow Accumulated Pension and Hedging Other Cumulative Postretirement Instruments, Comprehensive Translation Plans Unrealized Income (Millions) Adjustment Adjustment Gain (Loss) (Loss) Balance at March 31, 2020, net of tax: $ (2,340) $ (6,090) $ 16 $ (8,414) Other comprehensive income (loss), before tax: Amounts before reclassifications 104 (80) (15) 9 Amounts reclassified out — 162 (31) 131 Total other comprehensive income (loss), before tax 104 82 (46) 140 Tax effect 2 (24) 10 (12) Total other comprehensive income (loss), net of tax 106 58 (36) 128 Balance at June 30, 2020, net of tax: $ (2,234) $ (6,032) $ (20) $ (8,286) Six months ended June 30, 2020 Total Defined Benefit Cash Flow Accumulated Pension and Hedging Other Cumulative Postretirement Instruments, Comprehensive Translation Plans Unrealized Income (Millions) Adjustment Adjustment Gain (Loss) (Loss) Balance at December 31, 2019, net of tax: $ (1,899) $ (6,209) $ (31) $ (8,139) Other comprehensive income (loss), before tax: Amounts before reclassifications (335) (80) 62 (353) Amounts reclassified out — 326 (47) 279 Total other comprehensive income (loss), before tax (335) 246 15 (74) Tax effect — (69) (4) (73) Total other comprehensive income (loss), net of tax (335) 177 11 (147) Balance at June 30, 2020, net of tax: $ (2,234) $ (6,032) $ (20) $ (8,286) Three months ended June 30, 2019 Total Defined Benefit Cash Flow Accumulated Pension and Hedging Other Cumulative Postretirement Instruments, Comprehensive Translation Plans Unrealized Income (Millions) Adjustment Adjustment Gain (Loss) (Loss) Balance at March 31, 2019, net of tax: $ (2,034) $ (5,565) $ 47 $ (7,552) Other comprehensive income (loss), before tax: Amounts before reclassifications (40) 153 (30) 83 Amounts reclassified out 142 105 (20) 227 Total other comprehensive income (loss), before tax 102 258 (50) 310 Tax effect 20 (62) 12 (30) Total other comprehensive income (loss), net of tax 122 196 (38) 280 Balance at June 30, 2019, net of tax: $ (1,912) $ (5,369) $ 9 $ (7,272) Six months ended June 30, 2019 Total Defined Benefit Cash Flow Accumulated Pension and Hedging Other Cumulative Postretirement Instruments, Comprehensive Translation Plans Unrealized Income (Millions) Adjustment Adjustment Gain (Loss) (Loss) Balance at December 31, 2018, net of tax: $ (2,098) $ (4,832) $ 64 $ (6,866) Impact of adoption of ASU No. 2018-02* (13) (817) (23) (853) Other comprehensive income (loss), before tax: Amounts before reclassifications 63 153 (17) 199 Amounts reclassified out 142 209 (27) 324 Total other comprehensive income (loss), before tax 205 362 (44) 523 Tax effect (6) (82) 12 (76) Total other comprehensive income (loss), net of tax 199 280 (32) 447 Balance at June 30, 2019, net of tax $ (1,912) $ (5,369) $ 9 $ (7,272) *See Note 1 in 3M’s 2019 Annual Report on Form 10-K. |
Reclassifications Out of Accumulated Other Comprehensive Income | Amount Reclassified from Details about Accumulated Other Accumulated Other Comprehensive Income Comprehensive Income Components Three months ended June 30, Six months ended June 30, Location on Income (Millions) 2020 2019 2020 2019 Statement Cumulative translation adjustment Deconsolidation of Venezuelan subsidiary $ — $ (142) $ — $ (142) Other income (expense), net Total before tax — (142) — (142) Tax effect — — — — Provision for income taxes Net of tax $ — $ (142) $ — $ (142) Defined benefit pension and postretirement plans adjustments Gains (losses) associated with defined benefit pension and postretirement plans amortization Transition asset $ — $ — $ (1) $ — See Note 11 Prior service benefit 16 16 $ 31 $ 32 See Note 11 Net actuarial loss (177) (119) (354) (239) See Note 11 Curtailments/Settlements (1) — (2) — See Note 11 Deconsolidation of Venezuelan subsidiary — (2) — (2) Other income (expense), net Total before tax (162) (105) (326) (209) Tax effect 37 25 82 45 Provision for income taxes Net of tax $ (125) $ (80) $ (244) $ (164) Cash flow hedging instruments gains (losses) Foreign currency forward/option contracts $ 33 $ 21 $ 51 $ 28 Cost of sales Interest rate contracts (2) (1) (4) (1) Interest expense Total before tax 31 20 47 27 Tax effect (7) (4) (11) (5) Provision for income taxes Net of tax $ 24 $ 16 $ 36 $ 22 Total reclassifications for the period, net of tax $ (101) $ (206) $ (208) $ (284) |
Marketable Securities and Hel_2
Marketable Securities and Held-to-Maturity Debt Securities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Marketable Securities and Held-to-Maturity Debt Securities | |
Schedule of marketable securities | (Millions) June 30, 2020 December 31, 2019 Commercial paper $ 195 $ 85 Certificates of deposit/time deposits 27 10 U.S. municipal securities 25 3 Current marketable securities $ 247 $ 98 U.S. municipal securities $ 34 $ 43 Non-current marketable securities $ 34 $ 43 Total marketable securities $ 281 $ 141 |
Marketable securities by contractual maturity | (Millions) June 30, 2020 Due in one year or less $ 247 Due after one year through five years 14 Due after five years through ten years 20 Total marketable securities $ 281 |
Long-Term Debt and Short-Term_2
Long-Term Debt and Short-Term Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Long-Term Debt and Short-Term Borrowings | |
Schedule of Maturities of Long-Term Debt | Remainder of After 2020 2021 2022 2023 2024 2025 2025 Total $ 650 $ 1,685 $ 1,606 $ 1,815 $ 1,101 $ 1,789 $ 11,280 $ 19,926 |
Pension and Postretirement Be_2
Pension and Postretirement Benefit Plans (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Pension and Postretirement Benefit Plans | |
Components of net periodic benefit cost (benefit) | Three months ended June 30, Qualified and Non-qualified Pension Benefits Postretirement United States International Benefits (Millions) 2020 2019 2020 2019 2020 2019 Net periodic benefit cost (benefit) Operating expense Service cost $ 65 $ 63 $ 38 $ 33 $ 11 $ 11 Non-operating expense Interest cost $ 126 $ 156 $ 33 $ 39 $ 16 $ 21 Expected return on plan assets (255) (260) (77) (75) (20) (21) Amortization of prior service benefit (6) (6) (2) (3) (8) (7) Amortization of net actuarial loss 134 92 31 19 12 8 Settlements, curtailments, special termination benefits and other — 35 — 1 1 — Total non-operating expense (benefit) (1) 17 (15) (19) 1 1 Total net periodic benefit cost (benefit) $ 64 $ 80 $ 23 $ 14 $ 12 $ 12 Six months ended June 30, Qualified and Non-qualified Pension Benefits Postretirement United States International Benefits (Millions) 2020 2019 2020 2019 2020 2019 Net periodic benefit cost (benefit) Operating expense Service cost $ 131 $ 125 $ 76 $ 66 $ 22 $ 22 Non-operating expense Interest cost $ 250 $ 311 $ 64 $ 78 $ 32 $ 42 Expected return on plan assets (510) (520) (154) (150) (40) (41) Amortization of transition asset — — 1 — — — Amortization of prior service benefit (12) (12) (3) (6) (16) (14) Amortization of net actuarial loss 268 183 62 39 24 17 Settlements, curtailments, special termination benefits and other — 35 — 1 2 — Total non-operating expense (benefit) (4) (3) (30) (38) 2 4 Total net periodic benefit cost (benefit) $ 127 $ 122 $ 46 $ 28 $ 24 $ 26 |
Derivatives (Tables)
Derivatives (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivatives | |
Gain (loss) on derivative instruments designated as cash flow hedges | Pretax Gain (Loss) Recognized in Other Pretax Gain (Loss) Reclassified Comprehensive from Accumulated Other Income on Derivative Comprehensive Income into Income Three months ended June 30, 2020 (Millions) Amount Location Amount Foreign currency forward/option contracts $ (15) Cost of sales $ 33 Interest rate contracts — Interest expense (2) Total $ (15) $ 31 Six months ended June 30, 2020 (Millions) Amount Location Amount Foreign currency forward/option contracts $ 64 Cost of sales $ 51 Interest rate contracts (2) Interest expense (4) Total $ 62 $ 47 Three months ended June 30, 2019 (Millions) Amount Location Amount Foreign currency forward/option contracts $ 2 Cost of sales $ 21 Interest rate contracts (32) Interest expense (1) Total $ (30) $ 20 Six months ended June 30, 2019 (Millions) Amount Location Amount Foreign currency forward/option contracts $ 32 Cost of sales $ 28 Interest rate contracts (49) Interest expense (1) Total $ (17) $ 27 |
Gain (loss) on derivative instruments designated as fair value hedges | The following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges: Cumulative Amount of Fair Value Hedging Carrying Value of the Adjustment Included in the Carrying Value Hedged Liabilities (in millions) of the Hedged Liabilities (in millions) Location on the Consolidated Balance Sheet June 30, 2020 December 31, 2019 June 30, 2020 December 31, 2019 Short-term borrowings and current portion of long-term debt $ 500 $ 499 $ 1 $ — Long-term debt 776 775 21 22 Total $ 1,276 $ 1,274 $ 22 $ 22 |
Gain (loss) on derivative and non-derivative instruments designated as net investment hedges | Pretax Gain (Loss) Recognized as Cumulative Translation Amount of Gain (Loss) Excluded within Other from Effectiveness Testing Comprehensive Income Recognized in Income Three months ended June 30, 2020 (Millions) Amount Location Amount Foreign currency denominated debt $ (11) Cost of sales $ — Foreign currency forward contracts 4 Cost of sales — Total $ (7) $ — Six months ended June 30, 2020 (Millions) Amount Location Amount Foreign currency denominated debt $ 4 Cost of sales $ — Foreign currency forward contracts 5 Cost of sales 5 Total $ 9 $ 5 Three months ended June 30, 2019 (Millions) Amount Location Amount Foreign currency denominated debt $ (64) Cost of sales $ — Foreign currency forward contracts (10) Cost of sales 7 Total $ (74) $ 7 Six months ended June 30, 2019 (Millions) Amount Location Amount Foreign currency denominated debt $ 28 Cost of sales $ — Foreign currency forward contracts 5 Cost of sales 12 Total $ 33 $ 12 |
Gain (loss) on derivative instruments not designated as hedging instruments | Three months ended June 30, 2020 Six months ended June 30, 2020 Gain (Loss) on Derivative Recognized in Gain (Loss) on Derivative Recognized in Income Income (Millions) Location Amount Location Amount Foreign currency forward/option contracts Cost of sales $ (2) Cost of sales $ 2 Foreign currency forward contracts Interest expense (11) Interest expense (27) Total $ (13) $ (25) Three months ended June 30, 2019 Six months ended June 30, 2019 Gain (Loss) on Derivative Recognized in Gain (Loss) on Derivative Recognized in Income Income (Millions) Location Amount Location Amount Foreign currency forward/option contracts Cost of sales $ — Cost of sales $ (2) Foreign currency forward contracts Interest expense (10) Interest expense (18) Total $ (10) $ (20) |
Location in consolidated statement of income and pre-tax amounts recognized in income related to derivative instruments designated in cash flow or fair value hedging relationship | Location and Amount of Gain (Loss) Recognized in Income Location and Amount of Gain (Loss) Recognized in Income Three months ended June 30, 2020 Six months ended June 30, 2020 (Millions) Cost of sales Other expense Cost of sales Other expense Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded $ 3,805 $ 111 $ 7,914 $ 207 The effects of cash flow and fair value hedging: Gain or (loss) on cash flow hedging relationships: Foreign currency forward/option contracts: Amount of gain or (loss) reclassified from accumulated other comprehensive income into income $ 33 $ — $ 51 $ — Interest rate contracts: Amount of gain or (loss) reclassified from accumulated other comprehensive income into income — (2) — (4) Gain or (loss) on fair value hedging relationships: Interest rate contracts: Hedged items $ — $ 2 $ — $ — Derivatives designated as hedging instruments — (2) — — Location and Amount of Gain (Loss) Recognized in Income Location and Amount of Gain (Loss) Recognized in Income Three months ended June 30, 2019 Six months ended June 30, 2019 (Millions) Cost of sales Other expense Cost of sales Other expense Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded $ 4,313 $ 256 $ 8,623 $ 304 The effects of cash flow and fair value hedging: Gain or (loss) on cash flow hedging relationships: Foreign currency forward/option contracts: Amount of gain or (loss) reclassified from accumulated other comprehensive income into income $ 21 $ — $ 28 $ — Interest rate contracts: Amount of gain or (loss) reclassified from accumulated other comprehensive income into income — (1) — (1) Gain or (loss) on fair value hedging relationships: Interest rate contracts: Hedged items $ — $ (7) $ — $ (12) Derivatives designated as hedging instruments — 7 — 12 |
Location and Fair Value of Derivative Instruments | Gross Assets Liabilities Notional Fair Fair June 30, 2020 (Millions) Amount Location Value Amount Location Value Amount Derivatives designated as hedging instruments Foreign currency forward/option contracts $ 1,715 Other current assets $ 73 Other current liabilities $ 5 Foreign currency forward/option contracts 828 Other assets 46 Other liabilities 2 Interest rate contracts 500 Other current assets — Other current liabilities — Interest rate contracts 603 Other assets 16 Other liabilities — Total derivatives designated as hedging instruments $ 135 $ 7 Derivatives not designated as hedging instruments Foreign currency forward/option contracts $ 3,530 Other current assets $ 14 Other current liabilities $ 25 Total derivatives not designated as hedging instruments $ 14 $ 25 Total derivative instruments $ 149 $ 32 Gross Assets Liabilities Notional Fair Fair December 31, 2019 (Millions) Amount Location Value Amount Location Value Amount Derivatives designated as hedging instruments Foreign currency forward/option contracts $ 1,995 Other current assets $ 64 Other current liabilities $ 9 Foreign currency forward/option contracts 1,041 Other assets 50 Other liabilities 3 Interest rate contracts 500 Other current assets — Other current liabilities — Interest rate contracts 603 Other assets 17 Other liabilities — Total derivatives designated as hedging instruments $ 131 $ 12 Derivatives not designated as hedging instruments Foreign currency forward/option contracts $ 2,684 Other current assets $ 11 Other current liabilities $ 8 Total derivatives not designated as hedging instruments $ 11 $ 8 Total derivative instruments $ 142 $ 20 |
Offsetting Assets | Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject Gross Amount of to Master Netting Agreements Derivative Assets Gross Amount of Presented in the Eligible Offsetting Cash Consolidated Recognized Collateral Net Amount of June 30, 2020 (Millions) Balance Sheet Derivative Liabilities Received Derivative Assets Derivatives subject to master netting agreements $ 149 $ 13 $ — $ 136 Derivatives not subject to master netting agreements — — Total $ 149 $ 136 December 31, 2019 (Millions) Derivatives subject to master netting agreements $ 142 $ 14 $ — $ 128 Derivatives not subject to master netting agreements — — Total $ 142 $ 128 |
Offsetting Liabilities | Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject Gross Amount of to Master Netting Agreements Derivative Liabilities Gross Amount of Presented in the Eligible Offsetting Cash Net Amount of Consolidated Recognized Collateral Derivative June 30, 2020 (Millions) Balance Sheet Derivative Assets Pledged Liabilities Derivatives subject to master netting agreements $ 32 $ 13 $ — $ 19 Derivatives not subject to master netting agreements — — Total $ 32 $ 19 December 31, 2019 (Millions) Derivatives subject to master netting agreements $ 20 $ 14 $ — $ 6 Derivatives not subject to master netting agreements — — Total $ 20 $ 6 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Measurements | |
Fair Value, Assets and Liabilities Measured on Recurring Basis | Fair Value Measurements Description Fair Value at Using Inputs Considered as (Millions) June 30, 2020 Level 1 Level 2 Level 3 Assets: Available-for-sale: Marketable securities: Commercial paper $ 195 $ — $ 195 $ — Certificates of deposit/time deposits 27 — 27 — U.S. municipal securities 59 — 22 37 Investments 21 21 — — Derivative instruments — assets: Foreign currency forward/option contracts 133 — 133 — Interest rate contracts 16 — 16 — Liabilities: Derivative instruments — liabilities: Foreign currency forward/option contracts 32 — 32 — Fair Value Measurements Description Fair Value at Using Inputs Considered as (Millions) December 31, 2019 Level 1 Level 2 Level 3 Assets: Available-for-sale: Marketable securities: Commercial paper $ 85 $ — $ 85 $ — Certificates of deposit/time deposits 10 — 10 — U.S. municipal securities 46 — — 46 Investments 25 25 — — Derivative instruments — assets: Foreign currency forward/option contracts 125 — 125 — Interest rate contracts 17 — 17 — Liabilities: Derivative instruments — liabilities: Foreign currency forward/option contracts 20 — 20 — |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | Three months ended Six months ended Marketable securities — certain U.S. municipal securities only June 30, June 30, (Millions) 2020 2019 2020 2019 Beginning balance $ 37 $ 49 $ 46 $ 40 Total gains or losses: Included in earnings — — — — Included in other comprehensive income — — — — Purchases and issuances — — 10 9 Sales and settlements — — (19) — Transfers in and/or out of level 3 — — — — Ending balance $ 37 $ 49 $ 37 $ 49 Change in unrealized gains or losses for the period included in earnings for securities held at the end of the reporting period — — — — |
Fair Value of Financial Instruments by Balance Sheet Grouping | June 30, 2020 December 31, 2019 Carrying Fair Carrying Fair (Millions) Value Value Value Value Long-term debt, excluding current portion $ 19,276 $ 21,479 $ 17,518 $ 18,475 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Stock-Based Compensation | |
Stock-Based Compensation Expense | Stock-Based Compensation Expense Three months ended Six months ended June 30, June 30, (Millions) 2020 2019 2020 2019 Cost of sales $ 10 $ 9 $ 32 $ 31 Selling, general and administrative expenses 35 36 108 118 Research, development and related expenses 7 7 32 33 Stock-based compensation expenses $ 52 $ 52 $ 172 $ 182 Income tax benefits (15) (28) (54) (108) Stock-based compensation expenses (benefits), net of tax $ 37 $ 24 $ 118 $ 74 |
Stock Option Activity | Stock Option Program The following table summarizes stock option activity during the six months ended June 30, 2020: Weighted Average Weighted Remaining Aggregate Number of Average Contractual Intrinsic Value (Options in thousands) Options Exercise Price Life (months) (millions) Under option — January 1 33,675 $ 151.15 Granted: Annual 4,741 157.26 Exercised (1,639) 89.34 Forfeited (106) 185.82 June 30 36,671 $ 154.60 68 $ 593 Options exercisable June 30 28,682 $ 147.72 56 $ 593 |
Stock Option Assumptions | Stock Option Assumptions Annual 2020 Exercise price $ 157.24 Risk-free interest rate 1.5 % Dividend yield 2.7 % Expected volatility 19.7 % Expected life (months) 78 Black-Scholes fair value $ 21.58 |
Restricted Stock and Restricted Stock Units Activity | Restricted Stock and Restricted Stock Units The following table summarizes restricted stock and restricted stock unit activity during the six months ended June 30, 2020: Weighted Average Number of Grant Date (Shares in thousands) Shares Fair Value Nonvested balance — As of January 1 1,573 $ 201.11 Granted Annual 733 157.29 Other 11 174.03 Vested (559) 176.17 Forfeited (34) 189.07 As of June 30 1,724 $ 190.63 |
Performance Shares Activity | The following table summarizes performance share activity during the six months ended June 30, 2020: Weighted Average Number of Grant Date (Shares in thousands) Shares Fair Value Undistributed balance — As of January 1 444 $ 205.58 Granted 191 153.02 Distributed (206) 190.84 Performance change 23 161.93 Forfeited (11) 164.61 As of June 30 441 $ 188.39 |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Segments | |
Business Segment Information | Three months ended Six months ended June 30, June 30, Net Sales (Millions) 2020 2019 2020 2019 Safety and Industrial $ 2,668 $ 2,937 $ 5,603 $ 5,900 Transportation and Electronics 1,937 2,450 4,175 4,805 Health Care 1,825 1,831 3,928 3,569 Consumer 1,238 1,320 2,494 2,520 Corporate and Unallocated (2) 48 (1) 70 Elimination of Dual Credit (490) (415) (948) (830) Total Company $ 7,176 $ 8,171 $ 15,251 $ 16,034 Operating Performance (Millions) Safety and Industrial $ 636 $ 647 $ 1,362 $ 1,284 Transportation and Electronics 382 591 864 1,110 Health Care 306 483 762 942 Consumer 287 273 556 508 Elimination of Dual Credit (123) (100) (239) (197) Total business segment operating income $ 1,488 $ 1,894 $ 3,305 $ 3,647 Corporate and Unallocated Special items: Significant litigation-related (charges)/benefits $ — $ — $ (17) $ (548) Gain/(loss) on sale of businesses 387 — 389 8 Divestiture-related restructuring actions (55) — (55) — Other corporate expense - net (80) (192) (219) (269) Total Corporate and Unallocated 252 (192) 98 (809) Total Company operating income $ 1,740 $ 1,702 $ 3,403 $ 2,838 Other expense/(income), net $ 111 $ 256 $ 207 $ 304 Income before income taxes $ 1,629 $ 1,446 $ 3,196 $ 2,534 |
Significant Accounting Polici_4
Significant Accounting Policies - Accounts Receivable (Details) | 6 Months Ended |
Jun. 30, 2020 | |
Maximum | |
Accounts receivable and allowances | |
Number of years of origination of receivables | 5 years |
Significant Accounting Polici_5
Significant Accounting Policies - Foreign Currency Translation (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Foreign Currency Translation | ||||
Foreign currency transaction loss | $ (12) | $ (11) | ||
Venezuela | ||||
Foreign Currency Translation | ||||
Loss on deconsolidation of Venezuelan subsidiary | $ 162 | $ 162 | ||
Foreign currency transaction loss | $ 144 |
Significant Accounting Polici_6
Significant Accounting Policies - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings per share | ||||
Options outstanding not included in computation of diluted earnings per share (in shares) | 20.9 | 6.7 | 20 | 6 |
Numerator: | ||||
Net income attributable to 3M | $ 1,290 | $ 1,127 | $ 2,582 | $ 2,018 |
Denominator: | ||||
Denominator for weighted average 3M common shares outstanding - basic (in shares) | 577 | 577.7 | 576.9 | 577.6 |
Dilution associated with the Company's stock-based compensation plans (in shares) | 3.8 | 8.4 | 4.3 | 9.7 |
Denominator for weighted average 3M common shares outstanding - diluted (in shares) | 580.8 | 586.1 | 581.2 | 587.3 |
Earnings per share attributable to 3M common shareholders - basic (in dollars per share) | $ 2.24 | $ 1.95 | $ 4.48 | $ 3.49 |
Earnings per share attributable to 3M common shareholders - diluted (in dollars per share) | $ 2.22 | $ 1.92 | $ 4.44 | $ 3.44 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Contract Balance | |||||
Software license contracts term | 1 year | ||||
Deferred revenue | $ 412 | $ 412 | $ 430 | ||
Deferred income recognized as revenue | 110 | $ 110 | 270 | $ 480 | |
Operating Lease Revenue | $ 133 | $ 275 |
Revenue - Disaggregated Revenue
Revenue - Disaggregated Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue | ||||
Net Sales | $ 7,176 | $ 8,171 | $ 15,251 | $ 16,034 |
Corporate and Unallocated | ||||
Disaggregation of Revenue | ||||
Net Sales | (2) | 48 | (1) | 70 |
Elimination of Dual Credit | ||||
Disaggregation of Revenue | ||||
Net Sales | (490) | (415) | (948) | (830) |
Americas | ||||
Disaggregation of Revenue | ||||
Net Sales | 3,633 | 4,163 | 7,775 | 7,926 |
Americas | Corporate and Unallocated | ||||
Disaggregation of Revenue | ||||
Net Sales | (1) | 49 | 70 | |
Americas | Elimination of Dual Credit | ||||
Disaggregation of Revenue | ||||
Net Sales | (234) | (195) | (442) | (377) |
United States | ||||
Disaggregation of Revenue | ||||
Net Sales | 3,100 | 3,400 | 6,600 | 6,500 |
Asia Pacific | ||||
Disaggregation of Revenue | ||||
Net Sales | 2,210 | 2,415 | 4,555 | 4,893 |
Asia Pacific | Corporate and Unallocated | ||||
Disaggregation of Revenue | ||||
Net Sales | (2) | |||
Asia Pacific | Elimination of Dual Credit | ||||
Disaggregation of Revenue | ||||
Net Sales | (172) | (166) | (353) | (341) |
Europe, Middle East and Africa | ||||
Disaggregation of Revenue | ||||
Net Sales | 1,332 | 1,593 | 2,922 | 3,217 |
Europe, Middle East and Africa | Corporate and Unallocated | ||||
Disaggregation of Revenue | ||||
Net Sales | (1) | |||
Europe, Middle East and Africa | Elimination of Dual Credit | ||||
Disaggregation of Revenue | ||||
Net Sales | (84) | (51) | (153) | (112) |
Other Unallocated | ||||
Disaggregation of Revenue | ||||
Net Sales | 1 | (1) | (2) | |
Other Unallocated | Corporate and Unallocated | ||||
Disaggregation of Revenue | ||||
Net Sales | (1) | 2 | (1) | |
Other Unallocated | Elimination of Dual Credit | ||||
Disaggregation of Revenue | ||||
Net Sales | (3) | |||
Safety and Industrial | ||||
Disaggregation of Revenue | ||||
Net Sales | 2,668 | 2,937 | 5,603 | 5,900 |
Safety and Industrial | Americas | ||||
Disaggregation of Revenue | ||||
Net Sales | 1,367 | 1,549 | 2,886 | 3,035 |
Safety and Industrial | Asia Pacific | ||||
Disaggregation of Revenue | ||||
Net Sales | 655 | 700 | 1,374 | 1,459 |
Safety and Industrial | Europe, Middle East and Africa | ||||
Disaggregation of Revenue | ||||
Net Sales | 645 | 688 | 1,343 | 1,407 |
Safety and Industrial | Other Unallocated | ||||
Disaggregation of Revenue | ||||
Net Sales | 1 | (1) | ||
Safety and Industrial | Abrasives | ||||
Disaggregation of Revenue | ||||
Net Sales | 243 | 358 | 573 | 721 |
Safety and Industrial | Automotive Aftermarket | ||||
Disaggregation of Revenue | ||||
Net Sales | 203 | 304 | 487 | 610 |
Safety and Industrial | Closure and Masking Systems | ||||
Disaggregation of Revenue | ||||
Net Sales | 235 | 275 | 503 | 553 |
Safety and Industrial | Electrical Markets | ||||
Disaggregation of Revenue | ||||
Net Sales | 253 | 302 | 544 | 613 |
Safety and Industrial | Industrial Adhesives and Tapes | ||||
Disaggregation of Revenue | ||||
Net Sales | 552 | 674 | 1,226 | 1,357 |
Safety and Industrial | Personal Safety | ||||
Disaggregation of Revenue | ||||
Net Sales | 1,095 | 917 | 2,085 | 1,841 |
Safety and Industrial | Roofing Granules | ||||
Disaggregation of Revenue | ||||
Net Sales | 86 | 100 | 181 | 192 |
Safety and Industrial | Other Safety and Industrial | ||||
Disaggregation of Revenue | ||||
Net Sales | 1 | 7 | 4 | 13 |
Transportation and Electronics | ||||
Disaggregation of Revenue | ||||
Net Sales | 1,937 | 2,450 | 4,175 | 4,805 |
Transportation and Electronics | Americas | ||||
Disaggregation of Revenue | ||||
Net Sales | 532 | 794 | 1,207 | 1,507 |
Transportation and Electronics | Asia Pacific | ||||
Disaggregation of Revenue | ||||
Net Sales | 1,151 | 1,267 | 2,352 | 2,524 |
Transportation and Electronics | Europe, Middle East and Africa | ||||
Disaggregation of Revenue | ||||
Net Sales | 254 | 389 | 616 | 775 |
Transportation and Electronics | Other Unallocated | ||||
Disaggregation of Revenue | ||||
Net Sales | (1) | |||
Transportation and Electronics | Advanced Materials | ||||
Disaggregation of Revenue | ||||
Net Sales | 236 | 331 | 524 | 642 |
Transportation and Electronics | Automotive and Aerospace | ||||
Disaggregation of Revenue | ||||
Net Sales | 268 | 478 | 715 | 986 |
Transportation and Electronics | Commercial Solutions | ||||
Disaggregation of Revenue | ||||
Net Sales | 328 | 477 | 757 | 939 |
Transportation and Electronics | Electronics | ||||
Disaggregation of Revenue | ||||
Net Sales | 884 | 898 | 1,747 | 1,759 |
Transportation and Electronics | Transportation Safety | ||||
Disaggregation of Revenue | ||||
Net Sales | 222 | 265 | 433 | 481 |
Transportation and Electronics | Other Transportation and Electronics | ||||
Disaggregation of Revenue | ||||
Net Sales | (1) | 1 | (1) | (2) |
Health Care | ||||
Disaggregation of Revenue | ||||
Net Sales | 1,825 | 1,831 | 3,928 | 3,569 |
Health Care | Americas | ||||
Disaggregation of Revenue | ||||
Net Sales | 1,074 | 1,021 | 2,355 | 1,943 |
Health Care | Asia Pacific | ||||
Disaggregation of Revenue | ||||
Net Sales | 358 | 383 | 714 | 761 |
Health Care | Europe, Middle East and Africa | ||||
Disaggregation of Revenue | ||||
Net Sales | 392 | 427 | 859 | 865 |
Health Care | Other Unallocated | ||||
Disaggregation of Revenue | ||||
Net Sales | 1 | |||
Health Care | Drug Delivery | ||||
Disaggregation of Revenue | ||||
Net Sales | 41 | 101 | 146 | 184 |
Health Care | Food Safety | ||||
Disaggregation of Revenue | ||||
Net Sales | 79 | 85 | 170 | 168 |
Health Care | Health Information Systems | ||||
Disaggregation of Revenue | ||||
Net Sales | 276 | 297 | 553 | 557 |
Health Care | Medical Solutions | ||||
Disaggregation of Revenue | ||||
Net Sales | 1,068 | 801 | 2,221 | 1,574 |
Health Care | Oral Care | ||||
Disaggregation of Revenue | ||||
Net Sales | 144 | 338 | 421 | 679 |
Health Care | Separation and Purification Sciences | ||||
Disaggregation of Revenue | ||||
Net Sales | 216 | 208 | 418 | 411 |
Health Care | Other Health Care | ||||
Disaggregation of Revenue | ||||
Net Sales | 1 | 1 | (1) | (4) |
Consumer | ||||
Disaggregation of Revenue | ||||
Net Sales | 1,238 | 1,320 | 2,494 | 2,520 |
Consumer | Americas | ||||
Disaggregation of Revenue | ||||
Net Sales | 895 | 945 | 1,769 | 1,748 |
Consumer | Asia Pacific | ||||
Disaggregation of Revenue | ||||
Net Sales | 218 | 233 | 468 | 490 |
Consumer | Europe, Middle East and Africa | ||||
Disaggregation of Revenue | ||||
Net Sales | 125 | 141 | 257 | 282 |
Consumer | Other Unallocated | ||||
Disaggregation of Revenue | ||||
Net Sales | 1 | |||
Consumer | Consumer Health Care | ||||
Disaggregation of Revenue | ||||
Net Sales | 83 | 101 | 182 | 198 |
Consumer | Home Care | ||||
Disaggregation of Revenue | ||||
Net Sales | 258 | 247 | 528 | 504 |
Consumer | Home Improvement | ||||
Disaggregation of Revenue | ||||
Net Sales | 601 | 589 | 1,177 | 1,117 |
Consumer | Stationery and Office | ||||
Disaggregation of Revenue | ||||
Net Sales | 263 | 351 | 536 | 646 |
Consumer | Other Consumer | ||||
Disaggregation of Revenue | ||||
Net Sales | $ 33 | $ 32 | $ 71 | $ 55 |
Acquisitions and Divestitures -
Acquisitions and Divestitures - Acquisitions (Details) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Feb. 28, 2019USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)item | Jun. 30, 2019USD ($) | |
Supplemental information: | ||||||
Cash paid, net of cash acquired | $ 25 | $ 704 | ||||
Net sales | $ 7,176 | $ 8,171 | 15,251 | 16,034 | ||
Operating loss | $ (1,740) | (1,702) | $ (3,403) | (2,838) | ||
Number of business combinations completed | item | 0 | |||||
M*Modal | ||||||
Supplemental information: | ||||||
Cash paid | $ 700 | |||||
Assumed debt | $ 300 | |||||
Net sales | 75 | 125 | ||||
Operating loss | $ 15 | $ 35 | ||||
Acelity Inc. and its KCI subsidiaries | ||||||
Supplemental information: | ||||||
Adjustments to purchase price allocation | $ 5 | |||||
Net sales | $ 350 | |||||
Operating loss | $ 45 |
Acquisitions and Divestitures_2
Acquisitions and Divestitures - Divestitures (Details) - USD ($) $ in Millions | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||
May 31, 2020 | Jan. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Divestiture Information | |||||
Proceeds from sale of businesses | $ 573 | $ 6 | |||
Noncontrolling interest in the new company | 58 | $ 63 | |||
Disposal Group, Held-for-sale, Not Discontinued Operations | |||||
Divestiture Information | |||||
Disposal - Inventory | 70 | ||||
Disposal - Property, plant and equipment | 150 | ||||
Disposal - Intangible assets | 35 | ||||
Disposal - Goodwill | 30 | ||||
Aggregate operating income of divested businesses | $ 38 | ||||
Drug delivery business | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||
Divestiture Information | |||||
Annual sales of divested business | 380 | ||||
Aggregate selling price relative to the divestiture transaction | $ 617 | ||||
Proceeds from sale of businesses | 487 | ||||
Pre-tax gain on sale | 387 | ||||
Noncontrolling interest in the new company | $ 60 | ||||
Noncontrolling interest in new company (as a percent) | 17.00% | ||||
Disposal - Notes and Loans | $ 70 | ||||
Advanced ballistic protection business | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||
Divestiture Information | |||||
Annual sales of divested business | $ 85 | ||||
Proceeds from sale of businesses | $ 86 | ||||
Maximum contingent considerations depending on outcome of pending tenders | $ 25 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill balance by business segment (Details) | 6 Months Ended |
Jun. 30, 2020USD ($)item | |
Goodwill Information | |
Number of business combinations completed | item | 0 |
Goodwill | |
Balance at the beginning of the period | $ 13,444,000,000 |
Acquisition activity | (5,000,000) |
Divestiture activity | (29,000,000) |
Translation and other | (50,000,000) |
Balance at the end of the period | 13,360,000,000 |
Amount of Goodwill impairment | 0 |
Safety and Industrial | |
Goodwill | |
Balance at the beginning of the period | 4,621,000,000 |
Translation and other | (38,000,000) |
Balance at the end of the period | 4,583,000,000 |
Transportation and Electronics | |
Goodwill | |
Balance at the beginning of the period | 1,830,000,000 |
Divestiture activity | (10,000,000) |
Translation and other | (8,000,000) |
Balance at the end of the period | 1,812,000,000 |
Health Care | |
Goodwill | |
Balance at the beginning of the period | 6,739,000,000 |
Acquisition activity | (5,000,000) |
Divestiture activity | (19,000,000) |
Translation and other | (5,000,000) |
Balance at the end of the period | 6,710,000,000 |
Consumer | |
Goodwill | |
Balance at the beginning of the period | 254,000,000 |
Translation and other | 1,000,000 |
Balance at the end of the period | $ 255,000,000 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Acquired Intangible Assets (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Acquired intangible assets disclosures | ||
Total gross carrying amount | $ 8,114 | $ 8,261 |
Total accumulated amortization | (2,713) | (2,520) |
Total finite-lived intangible assets - net | 5,401 | 5,741 |
Non-amortizable intangible assets (primarily tradenames) | 632 | 638 |
Total intangible assets - net | $ 6,033 | 6,379 |
Minimum | ||
Acquired intangible assets disclosures | ||
Indefinite lived tradenames years in existence | 55 years | |
Customer related intangible assets | ||
Acquired intangible assets disclosures | ||
Total gross carrying amount | $ 4,201 | 4,316 |
Total accumulated amortization | (1,261) | (1,180) |
Patents | ||
Acquired intangible assets disclosures | ||
Total gross carrying amount | 525 | 538 |
Total accumulated amortization | (494) | (499) |
Other technology-based intangible assets | ||
Acquired intangible assets disclosures | ||
Total gross carrying amount | 2,093 | 2,124 |
Total accumulated amortization | (522) | (435) |
Definite-lived tradenames | ||
Acquired intangible assets disclosures | ||
Total gross carrying amount | 1,175 | 1,158 |
Total accumulated amortization | (349) | (316) |
Other amortizable intangible assets | ||
Acquired intangible assets disclosures | ||
Total gross carrying amount | 120 | 125 |
Total accumulated amortization | $ (87) | $ (90) |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedules for Amortization Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Finite Lived Intangible Asset | ||||
Amortization expense for acquired intangible assets | $ 134 | $ 70 | $ 268 | $ 139 |
Expected amortization expense for acquired intangible assets recorded as of balance sheet date | ||||
Remainder of 2020 | 265 | 265 | ||
2021 | 524 | 524 | ||
2022 | 511 | 511 | ||
2023 | 481 | 481 | ||
2024 | 455 | 455 | ||
2025 | 425 | 425 | ||
After 2025 | $ 2,740 | $ 2,740 |
Restructuring Actions (Details)
Restructuring Actions (Details) $ in Millions | 3 Months Ended | |
Jun. 30, 2020USD ($)person | Jun. 30, 2019USD ($)person | |
2020 Restructuring Actions | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring and related cost, number of positions affected | person | 400 | |
Restructuring charges | $ 58 | |
2020 Restructuring Actions | Drug delivery business | ||
Restructuring Cost and Reserve | ||
Restructuring and related cost, number of positions affected | person | 1,300 | |
Restructuring charges | $ 55 | |
2020 Restructuring Actions | Employee-Related | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 35 | |
2020 Restructuring Actions | Asset-Related | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 23 | |
2020 Restructuring Actions | Cost of sales | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 13 | |
2020 Restructuring Actions | Cost of sales | Drug delivery business | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 42 | |
2020 Restructuring Actions | Selling, general and administrative expenses | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 37 | |
2020 Restructuring Actions | Selling, general and administrative expenses | Drug delivery business | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 12 | |
2020 Restructuring Actions | Research, development and related expenses | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 8 | |
2020 Restructuring Actions | Research, development and related expenses | Drug delivery business | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 1 | |
2019 Restructuring Actions | ||
Restructuring Cost and Reserve | ||
Restructuring and related cost, number of positions affected | person | 2,000 | |
Restructuring charges | $ 112 | |
Total income before income taxes impact | 148 | |
2019 Restructuring Actions | Employee-Related | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 72 | |
2019 Restructuring Actions | Asset-Related | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 40 | |
2019 Restructuring Actions | Cost of sales | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 18 | |
2019 Restructuring Actions | Selling, general and administrative expenses | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 89 | |
2019 Restructuring Actions | Research, development and related expenses | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 5 | |
2019 Restructuring Actions | Other expense (income), net | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 36 | |
Corporate and Unallocated | 2020 Restructuring Actions | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 23 | |
Corporate and Unallocated | 2020 Restructuring Actions | Asset-Related | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 23 | |
Corporate and Unallocated | 2019 Restructuring Actions | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 82 | |
Corporate and Unallocated | 2019 Restructuring Actions | Employee-Related | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 42 | |
Corporate and Unallocated | 2019 Restructuring Actions | Asset-Related | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 40 | |
Safety and Industrial | 2020 Restructuring Actions | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 7 | |
Safety and Industrial | 2020 Restructuring Actions | Employee-Related | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 7 | |
Safety and Industrial | 2019 Restructuring Actions | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 11 | |
Safety and Industrial | 2019 Restructuring Actions | Employee-Related | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 11 | |
Transportation and Electronics | 2020 Restructuring Actions | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 11 | |
Transportation and Electronics | 2020 Restructuring Actions | Employee-Related | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 11 | |
Transportation and Electronics | 2019 Restructuring Actions | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 8 | |
Transportation and Electronics | 2019 Restructuring Actions | Employee-Related | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 8 | |
Health Care | 2020 Restructuring Actions | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 12 | |
Health Care | 2020 Restructuring Actions | Employee-Related | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 12 | |
Health Care | 2019 Restructuring Actions | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 6 | |
Health Care | 2019 Restructuring Actions | Employee-Related | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 6 | |
Consumer | 2020 Restructuring Actions | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 5 | |
Consumer | 2020 Restructuring Actions | Employee-Related | COVID-19 Pandemic | ||
Restructuring Cost and Reserve | ||
Restructuring charges | $ 5 | |
Consumer | 2019 Restructuring Actions | ||
Restructuring Cost and Reserve | ||
Restructuring charges | 5 | |
Consumer | 2019 Restructuring Actions | Employee-Related | ||
Restructuring Cost and Reserve | ||
Restructuring charges | $ 5 |
Restructuring Actions - Roll Fo
Restructuring Actions - Roll Forward (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
2020 Restructuring Actions | COVID-19 Pandemic | ||
Restructuring Reserve Roll Forward | ||
Expenses incurred | $ 58 | |
Non-cash changes | (23) | |
Restructuring actions balances, Ending Balance | 35 | $ 35 |
Employee-Related | 2020 Restructuring Actions | COVID-19 Pandemic | ||
Restructuring Reserve Roll Forward | ||
Expenses incurred | 35 | |
Restructuring actions balances, Ending Balance | 35 | 35 |
Employee-Related | 2019 Restructuring Actions | ||
Restructuring Reserve Roll Forward | ||
Restructuring actions balances, Beginning Balance | 140 | |
Cash payments | (14) | |
Adjustments | (23) | |
Restructuring actions balances, Ending Balance | 103 | 103 |
Asset-Related | 2020 Restructuring Actions | COVID-19 Pandemic | ||
Restructuring Reserve Roll Forward | ||
Expenses incurred | 23 | |
Non-cash changes | (23) | |
Drug delivery business | 2020 Restructuring Actions | ||
Restructuring Reserve Roll Forward | ||
Expenses incurred | 55 | |
Non-cash changes | (11) | |
Restructuring actions balances, Ending Balance | 44 | 44 |
Drug delivery business | Employee-Related | 2020 Restructuring Actions | ||
Restructuring Reserve Roll Forward | ||
Expenses incurred | 32 | |
Restructuring actions balances, Ending Balance | 32 | 32 |
Drug delivery business | Asset-Related and Other | 2020 Restructuring Actions | ||
Restructuring Reserve Roll Forward | ||
Expenses incurred | 23 | |
Non-cash changes | (11) | |
Restructuring actions balances, Ending Balance | $ 12 | $ 12 |
Supplemental Income Statement_3
Supplemental Income Statement Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Interest expense | $ 137 | $ 111 | $ 260 | $ 215 |
Interest income | (9) | (18) | (19) | (38) |
Pension and postretirement net periodic benefit cost (benefit) | (17) | 1 | (34) | (35) |
Total | $ 111 | 256 | $ 207 | 304 |
Venezuela | ||||
Loss on deconsolidation of Venezuelan subsidiary | $ 162 | $ 162 |
Supplemental Equity and Compr_3
Supplemental Equity and Comprehensive Income Information - Dividends (Details) - $ / shares | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Supplemental Equity and Comprehensive Income Information | ||||||
Dividends declared in current period (in dollars per share) | $ 1.47 | $ 1.47 | $ 1.44 | $ 1.44 | $ 2.94 | $ 2.88 |
Supplemental Equity and Compr_4
Supplemental Equity and Comprehensive Income Information - SE Rf (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Increase (decrease) in equity | ||||
Balance at the beginning of the period | $ 10,209 | $ 9,757 | $ 10,126 | $ 9,848 |
Net income | 1,287 | 1,131 | 2,581 | 2,024 |
Other comprehensive income (loss), net of tax: | ||||
Cumulative translation adjustment | 106 | 123 | (338) | 200 |
Defined benefit pension and postretirement plans adjustment | 58 | 196 | 177 | 280 |
Cash flow hedging instruments | (36) | (38) | 11 | (32) |
Total other comprehensive income (loss), net of tax | 128 | 281 | (150) | 448 |
Dividends declared | (846) | (830) | (1,693) | (1,660) |
Purchase of subsidiary shares | (1) | (1) | ||
Stock-based compensation | 50 | 57 | 167 | 169 |
Reacquired stock | (404) | (356) | (1,070) | |
Issuances pursuant to stock option and benefit plans | 88 | 150 | 241 | 369 |
Balance at the end of the period | 10,915 | 10,142 | 10,915 | 10,142 |
ASU 2016-02 Leases | ||||
Increase (decrease) in equity | ||||
Impact of ASUs | 14 | 14 | ||
Common Stock and Additional Paid-in Capital | ||||
Increase (decrease) in equity | ||||
Balance at the beginning of the period | 6,033 | 5,764 | 5,916 | 5,652 |
Other comprehensive income (loss), net of tax: | ||||
Stock-based compensation | 50 | 57 | 167 | 169 |
Balance at the end of the period | 6,083 | 5,821 | 6,083 | 5,821 |
Retained Earnings | ||||
Increase (decrease) in equity | ||||
Balance at the beginning of the period | 42,345 | 41,159 | 42,135 | 40,636 |
Net income | 1,290 | 1,127 | 2,582 | 2,018 |
Other comprehensive income (loss), net of tax: | ||||
Dividends declared | (846) | (830) | (1,693) | (1,660) |
Issuances pursuant to stock option and benefit plans | (30) | (94) | (265) | (499) |
Balance at the end of the period | 42,759 | 41,362 | 42,759 | 41,362 |
Retained Earnings | ASU 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | ||||
Increase (decrease) in equity | ||||
Impact of ASUs | 853 | 853 | ||
Retained Earnings | ASU 2016-02 Leases | ||||
Increase (decrease) in equity | ||||
Impact of ASUs | 14 | 14 | ||
Treasury Stock | ||||
Increase (decrease) in equity | ||||
Balance at the beginning of the period | (29,817) | (29,668) | (29,849) | (29,626) |
Other comprehensive income (loss), net of tax: | ||||
Reacquired stock | (404) | (356) | (1,070) | |
Issuances pursuant to stock option and benefit plans | 118 | 244 | 506 | 868 |
Balance at the end of the period | (29,699) | (29,828) | (29,699) | (29,828) |
Total Accumulated Other Comprehensive Income (Loss) | ||||
Increase (decrease) in equity | ||||
Balance at the beginning of the period | (8,414) | (7,552) | (8,139) | (6,866) |
Other comprehensive income (loss), net of tax: | ||||
Cumulative translation adjustment | 106 | 122 | (335) | 199 |
Defined benefit pension and postretirement plans adjustment | 58 | 196 | 177 | 280 |
Cash flow hedging instruments | (36) | (38) | 11 | (32) |
Balance at the end of the period | (8,286) | (7,272) | (8,286) | (7,272) |
Total Accumulated Other Comprehensive Income (Loss) | ASU 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | ||||
Increase (decrease) in equity | ||||
Impact of ASUs | (853) | (853) | ||
Noncontrolling Interest | ||||
Increase (decrease) in equity | ||||
Balance at the beginning of the period | 62 | 54 | 63 | 52 |
Net income | (3) | 4 | (1) | 6 |
Other comprehensive income (loss), net of tax: | ||||
Cumulative translation adjustment | 1 | (3) | 1 | |
Purchase of subsidiary shares | (1) | (1) | ||
Balance at the end of the period | $ 58 | $ 59 | $ 58 | $ 59 |
Supplemental Equity and Compr_5
Supplemental Equity and Comprehensive Income Information - AOCI rf (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
AOCI Attributable to 3M, Net of Tax Roll Forward | ||||
Stockholders' Equity Attributable to 3M, Beginning Balance | $ 10,063 | |||
Other comprehensive income (loss), before tax: | ||||
Stockholders' Equity Attributable to 3M, Ending Balance | $ 10,857 | 10,857 | ||
Cumulative Translation Adjustment | ||||
AOCI Attributable to 3M, Net of Tax Roll Forward | ||||
Stockholders' Equity Attributable to 3M, Beginning Balance | (2,340) | $ (2,034) | (1,899) | $ (2,098) |
Other comprehensive income (loss), before tax: | ||||
Amounts before reclassifications | 104 | (40) | (335) | 63 |
Amounts reclassified out | 142 | 142 | ||
Total other comprehensive income (loss), before tax | 104 | 102 | (335) | 205 |
Tax effect | 2 | 20 | (6) | |
Total other comprehensive income (loss), net of tax | 106 | 122 | (335) | 199 |
Stockholders' Equity Attributable to 3M, Ending Balance | (2,234) | (1,912) | (2,234) | (1,912) |
Cumulative Translation Adjustment | ASU 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | ||||
AOCI Attributable to 3M, Net of Tax Roll Forward | ||||
Impact of ASUs | (13) | (13) | ||
Defined Pension and Postretirement Plans Adjustment | ||||
AOCI Attributable to 3M, Net of Tax Roll Forward | ||||
Stockholders' Equity Attributable to 3M, Beginning Balance | (6,090) | (5,565) | (6,209) | (4,832) |
Other comprehensive income (loss), before tax: | ||||
Amounts before reclassifications | (80) | 153 | (80) | 153 |
Amounts reclassified out | 162 | 105 | 326 | 209 |
Total other comprehensive income (loss), before tax | 82 | 258 | 246 | 362 |
Tax effect | (24) | (62) | (69) | (82) |
Total other comprehensive income (loss), net of tax | 58 | 196 | 177 | 280 |
Stockholders' Equity Attributable to 3M, Ending Balance | (6,032) | (5,369) | (6,032) | (5,369) |
Defined Pension and Postretirement Plans Adjustment | ASU 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | ||||
AOCI Attributable to 3M, Net of Tax Roll Forward | ||||
Impact of ASUs | (817) | (817) | ||
Cash Flow Hedging Instruments, Unrealized Gain (Loss) | ||||
AOCI Attributable to 3M, Net of Tax Roll Forward | ||||
Stockholders' Equity Attributable to 3M, Beginning Balance | 16 | 47 | (31) | 64 |
Other comprehensive income (loss), before tax: | ||||
Amounts before reclassifications | (15) | (30) | 62 | (17) |
Amounts reclassified out | (31) | (20) | (47) | (27) |
Total other comprehensive income (loss), before tax | (46) | (50) | 15 | (44) |
Tax effect | 10 | 12 | (4) | 12 |
Total other comprehensive income (loss), net of tax | (36) | (38) | 11 | (32) |
Stockholders' Equity Attributable to 3M, Ending Balance | (20) | 9 | (20) | 9 |
Cash Flow Hedging Instruments, Unrealized Gain (Loss) | ASU 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | ||||
AOCI Attributable to 3M, Net of Tax Roll Forward | ||||
Impact of ASUs | (23) | (23) | ||
Total Accumulated Other Comprehensive Income (Loss) | ||||
AOCI Attributable to 3M, Net of Tax Roll Forward | ||||
Stockholders' Equity Attributable to 3M, Beginning Balance | (8,414) | (7,552) | (8,139) | (6,866) |
Other comprehensive income (loss), before tax: | ||||
Amounts before reclassifications | 9 | 83 | (353) | 199 |
Amounts reclassified out | 131 | 227 | 279 | 324 |
Total other comprehensive income (loss), before tax | 140 | 310 | (74) | 523 |
Tax effect | (12) | (30) | (73) | (76) |
Total other comprehensive income (loss), net of tax | 128 | 280 | (147) | 447 |
Stockholders' Equity Attributable to 3M, Ending Balance | $ (8,286) | (7,272) | $ (8,286) | (7,272) |
Total Accumulated Other Comprehensive Income (Loss) | ASU 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | ||||
AOCI Attributable to 3M, Net of Tax Roll Forward | ||||
Impact of ASUs | $ (853) | $ (853) |
Supplemental Equity and Compr_6
Supplemental Equity and Comprehensive Income Information - Reclass AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Net of tax | $ (101) | $ (206) | $ (208) | $ (284) |
Venezuela | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Deconsolidation of Venezuelan subsidiary | 162 | 162 | ||
Cumulative Translation Adjustment | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Total before tax | (142) | (142) | ||
Net of tax | (142) | (142) | ||
Cumulative Translation Adjustment | Venezuela | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Deconsolidation of Venezuelan subsidiary | (142) | (142) | ||
Defined Pension and Postretirement Plans Adjustment | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Transition asset | (1) | |||
Prior service benefit | 16 | 16 | 31 | 32 |
Net actuarial loss | (177) | (119) | (354) | (239) |
Curtailments/Settlements | (1) | (2) | ||
Total before tax | (162) | (105) | (326) | (209) |
Tax effect | 37 | 25 | 82 | 45 |
Net of tax | (125) | (80) | (244) | (164) |
Defined Pension and Postretirement Plans Adjustment | Venezuela | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Deconsolidation of Venezuelan subsidiary | (2) | (2) | ||
Cash Flow Hedging Instruments, Unrealized Gain (Loss) | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Total before tax | 31 | 20 | 47 | 27 |
Tax effect | (7) | (4) | (11) | (5) |
Net of tax | 24 | 16 | 36 | 22 |
Cash Flow Hedging Instruments, Unrealized Gain (Loss) | Foreign currency forward/option contracts | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Cost of sales | 33 | 21 | 51 | 28 |
Cash Flow Hedging Instruments, Unrealized Gain (Loss) | Interest rate contracts | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Interest expense | $ (2) | $ (1) | $ (4) | $ (1) |
Income Taxes - Tax Effected Ope
Income Taxes - Tax Effected Operating Loss, Capital Loss, and Tax Credit Carryovers (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Income tax | |||||
Net UTB impacting the effective tax rate | $ 1,140 | $ 1,140 | $ 1,178 | ||
Deferred tax assets valuation allowance | $ 150 | $ 150 | $ 158 | ||
Effective tax rate (as a percent) | 21.00% | 21.80% | 19.20% | 20.10% | |
Increase (decrease) in effective income tax rate from prior reporting period to current reporting period (as a percent) | (0.80%) | (0.90%) | |||
Decrease in unrecognized tax benefits due to resolution of a lawsuit | $ 52 |
Marketable Securities and Hel_3
Marketable Securities and Held-to-Maturity Debt Securities - Current and non-current (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Marketable Securities | ||
Current marketable securities | $ 247 | $ 98 |
Non-current marketable securities | 34 | 43 |
Total marketable securities | 281 | 141 |
Commercial paper | ||
Marketable Securities | ||
Current marketable securities | 195 | 85 |
Certificates of deposit/time deposits | ||
Marketable Securities | ||
Current marketable securities | 27 | 10 |
U.S. municipal securities | ||
Marketable Securities | ||
Current marketable securities | 25 | 3 |
Non-current marketable securities | $ 34 | $ 43 |
Marketable Securities and Hel_4
Marketable Securities and Held-to-Maturity Debt Securities - Contractual maturity (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Marketable securities by contractual maturity | ||
Due in one year or less | $ 247 | |
Due after one year through five years | 14 | |
Due after five years through ten years | 20 | |
Total marketable securities | $ 281 | $ 141 |
Marketable Securities and Hel_5
Marketable Securities and Held-to-Maturity Debt Securities - Held-to-Maturity Debt Securities (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Held-to-Maturity Debt Securities | ||
Held-to-maturity debt security | $ 0 | |
Third lien senior secured notes subject to in-substance | ||
Held-to-Maturity Debt Securities | ||
Held-to-maturity debt security | $ 500,000,000 |
Long-Term Debt and Short-Term_3
Long-Term Debt and Short-Term Borrowings - Long-Term Debt Issuances (Details) € in Millions, $ in Millions | 1 Months Ended | ||||
May 31, 2020USD ($) | May 31, 2020EUR (€) | Mar. 31, 2020USD ($) | Jun. 30, 2020USD ($) | Oct. 31, 2019USD ($) | |
Debt instrument | |||||
Long-term debt | $ 19,926 | ||||
Aggregate fixed rate registered notes | |||||
Debt instrument | |||||
Principal amount | $ 1,750 | ||||
Fixed rate registered note due 2025 | |||||
Debt instrument | |||||
Principal amount | $ 500 | ||||
Term of debt instrument | 5 years | ||||
Coupon rate | 2.65% | ||||
Fixed rate registered note due 2030 | |||||
Debt instrument | |||||
Principal amount | $ 600 | ||||
Term of debt instrument | 10 years | ||||
Coupon rate | 3.05% | ||||
Fixed rate registered note due 2050 | |||||
Debt instrument | |||||
Principal amount | $ 650 | ||||
Term of debt instrument | 30 years | ||||
Coupon rate | 3.70% | ||||
Acelity Inc. and its KCI subsidiaries | Third lien senior secured notes (Third Lien Notes) maturing 2021 | |||||
Debt instrument | |||||
Principal amount | $ 445 | ||||
Interest rate - effective | 12.50% | ||||
Debt repayment | $ 445 | ||||
Acelity Inc. and its KCI subsidiaries | Floating rate Euro medium term note due 2020 | |||||
Debt instrument | |||||
Debt repayment | € | € 650 |
Long-Term Debt and Short-Term_4
Long-Term Debt and Short-Term Borrowings - Short-Term Borrowings and Current Portion of Long-Term Debt (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Commercial paper | ||
Short-Term Borrowings and Current Portion of Long-Term Debt | ||
Commercial paper outstanding | $ 0 | $ 150,000,000 |
Long-Term Debt and Short-Term_5
Long-Term Debt and Short-Term Borrowings - Credit Facilities (Details) € in Millions, $ in Millions, ¥ in Billions | 6 Months Ended | ||||
Jun. 30, 2020USD ($) | Jun. 30, 2020EUR (€) | Jun. 30, 2020JPY (¥) | Nov. 30, 2019EUR (€) | Sep. 30, 2019JPY (¥) | |
Credit Facility expiring July 2020 | |||||
Debt instrument | |||||
Current borrowing capacity | ¥ | ¥ 80 | ||||
Other Short-term Borrowings | $ 646 | ¥ 69 | |||
Germany subsidiary credit facility | Credit Facility expiring November 2020 | |||||
Debt instrument | |||||
Principal amount | € | € 150 | ||||
Maximum credit facility outstanding during period | $ 168 | € 150 |
Long-Term Debt and Short-Term_6
Long-Term Debt and Short-Term Borrowings - Future Maturities of Long-term Debt (Details) $ in Millions | Jun. 30, 2020USD ($) |
Maturities of long-term debt | |
Remainder of 2020 | $ 650 |
2021 | 1,685 |
2022 | 1,606 |
2023 | 1,815 |
2024 | 1,101 |
2025 | 1,789 |
After 2025 | 11,280 |
Total long-term debt | $ 19,926 |
Pension and Postretirement Be_3
Pension and Postretirement Benefit Plans - Components of net periodic benefit cost and other information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Net periodic benefit cost (benefit) | ||||
Net periodic benefit cost (benefit) | $ (17) | $ 1 | $ (34) | $ (35) |
Funded | Postretirement Benefits | ||||
Net periodic benefit cost (benefit) | ||||
Service cost | 11 | 11 | 22 | 22 |
Interest cost | 16 | 21 | 32 | 42 |
Expected return on plan assets | (20) | (21) | (40) | (41) |
Amortization of prior service benefit | (8) | (7) | (16) | (14) |
Amortization of net actuarial loss | 12 | 8 | 24 | 17 |
Settlements, curtailments, special terminations and other | 1 | 2 | ||
Total non-operating expense (benefit) | 1 | 1 | 2 | 4 |
Net periodic benefit cost (benefit) | 12 | 12 | 24 | 26 |
Funded | United States | Qualified and Non-qualified Pension Benefits | ||||
Net periodic benefit cost (benefit) | ||||
Service cost | 65 | 63 | 131 | 125 |
Interest cost | 126 | 156 | 250 | 311 |
Expected return on plan assets | (255) | (260) | (510) | (520) |
Amortization of prior service benefit | (6) | (6) | (12) | (12) |
Amortization of net actuarial loss | 134 | 92 | 268 | 183 |
Settlements, curtailments, special terminations and other | 35 | 35 | ||
Total non-operating expense (benefit) | (1) | 17 | (4) | (3) |
Net periodic benefit cost (benefit) | 64 | 80 | 127 | 122 |
Funded | International | Qualified and Non-qualified Pension Benefits | ||||
Net periodic benefit cost (benefit) | ||||
Service cost | 38 | 33 | 76 | 66 |
Interest cost | 33 | 39 | 64 | 78 |
Expected return on plan assets | (77) | (75) | (154) | (150) |
Amortization of transition asset | 1 | |||
Amortization of prior service benefit | (2) | (3) | (3) | (6) |
Amortization of net actuarial loss | 31 | 19 | 62 | 39 |
Settlements, curtailments, special terminations and other | 1 | 1 | ||
Total non-operating expense (benefit) | (15) | (19) | (30) | (38) |
Net periodic benefit cost (benefit) | $ 23 | $ 14 | $ 46 | $ 28 |
Pension and Postretirement Be_4
Pension and Postretirement Benefit Plans - Narrative (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
May 31, 2019USD ($)person | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2020USD ($) | |
Benefit Plan Information | ||||||
Defined benefit pension and postretirement plans adjustment | $ (58,000,000) | $ (196,000,000) | $ (177,000,000) | $ (280,000,000) | ||
International | Funded | United Kingdom Pension Plan | ||||||
Benefit Plan Information | ||||||
Defined benefit pension and postretirement plans adjustment | 80,000,000 | |||||
Qualified and Non-qualified Pension Benefits | Funded | ||||||
Benefit Plan Information | ||||||
Company contributions year to date | 75,000,000 | |||||
Qualified and Non-qualified Pension Benefits | United States | Funded | ||||||
Benefit Plan Information | ||||||
Special termination benefits - number of additional years of pension service | 1 | |||||
Special termination benefits - number of additional years of age for certain benefit calculations | 1 | |||||
Special termination benefits - number of participants | person | 800 | |||||
Special termination benefits charge | 35,000,000 | |||||
Postretirement Benefits | Funded | ||||||
Benefit Plan Information | ||||||
Company contributions year to date | 2,000,000 | |||||
Maximum life insurance and death benefit to be paid under the modified 3M Retiree Life Insurance Plan postretirement benefit | $ 8,000 | |||||
Defined benefit pension and postretirement plans adjustment | 150,000,000 | |||||
Total Accumulated Other Comprehensive Income (Loss) | ||||||
Benefit Plan Information | ||||||
Defined benefit pension and postretirement plans adjustment | (58,000,000) | (196,000,000) | $ (177,000,000) | $ (280,000,000) | ||
Total Accumulated Other Comprehensive Income (Loss) | International | Funded | United Kingdom Pension Plan | ||||||
Benefit Plan Information | ||||||
Defined benefit pension and postretirement plans adjustment | $ 80,000,000 | |||||
Total Accumulated Other Comprehensive Income (Loss) | Postretirement Benefits | Funded | ||||||
Benefit Plan Information | ||||||
Defined benefit pension and postretirement plans adjustment | $ 150,000,000 | |||||
Forecast | Pension and Postretirement Benefit Plans | Funded | Maximum | ||||||
Benefit Plan Information | ||||||
Estimated pension and postretirement employer contributions in current fiscal year | $ 200,000,000 |
Derivatives - Cash Flow Hedges
Derivatives - Cash Flow Hedges (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Mar. 31, 2020 | |
Treasury rate lock contracts | ||
Derivatives in Cash Flow Hedging Relationships | ||
Derivative notional amount | $ 500 | |
Cash flow hedge | ||
Derivatives in Cash Flow Hedging Relationships | ||
Accumulated other comprehensive income (loss), unrealized gain (loss) on cash flow hedges | $ (20) | |
After-tax net unrealized gain (loss) anticipated to be reclassified from AOCI to the income statement within next twelve months | 56 | |
After-tax net unrealized gain (loss) anticipated to be reclassified from AOCI to the Income Statement over remaining fiscal year | 31 | |
After-tax net unrealized gain (loss) anticipated to be reclassifed from AOCI to the Income Statement over next fiscal year | 37 | |
After-tax unrealized gain (loss) anticipated to be reclassified from AOCI to the Income Statement after the next fiscal year | $ (88) | |
Cash flow hedge | Foreign currency forward/option contracts | ||
Derivatives in Cash Flow Hedging Relationships | ||
Maximum length of time hedged in interest rate cash flow hedge | 36 months | |
Cash flow hedge | Interest rate contracts | ||
Derivatives in Cash Flow Hedging Relationships | ||
Accumulated other comprehensive income (loss), unrealized gain (loss) on cash flow hedges | $ (111) |
Derivatives - Cash Flow Hedge_2
Derivatives - Cash Flow Hedges - Gain (Loss) in OCI or Reclassified from AOCI (Details) - Cash flow hedge - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Derivatives in Cash Flow Hedging Relationships | ||||
Pretax Gain (Loss) Recognized in Other Comprehensive Income on Derivative | $ (15) | $ (30) | $ 62 | $ (17) |
Pretax Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income | 31 | 20 | 47 | 27 |
Foreign currency forward/option contracts | ||||
Derivatives in Cash Flow Hedging Relationships | ||||
Pretax Gain (Loss) Recognized in Other Comprehensive Income on Derivative | (15) | 2 | 64 | 32 |
Foreign currency forward/option contracts | Cost of sales | ||||
Derivatives in Cash Flow Hedging Relationships | ||||
Pretax Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income | 33 | 21 | 51 | 28 |
Interest rate contracts | ||||
Derivatives in Cash Flow Hedging Relationships | ||||
Pretax Gain (Loss) Recognized in Other Comprehensive Income on Derivative | (32) | (2) | (49) | |
Interest rate contracts | Interest expense | ||||
Derivatives in Cash Flow Hedging Relationships | ||||
Pretax Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income | $ (2) | $ (1) | $ (4) | $ (1) |
Derivatives - Cumulative Basis
Derivatives - Cumulative Basis Adjustment for Fair Value Hedges (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Derivatives | ||
Hedged Liability, Fair Value Hedge | $ 1,276 | $ 1,274 |
Hedged Liability, Fair Value Hedge, Cumulative Increase (Decrease) | 22 | 22 |
Short-term borrowings and current portion of long-term debt | ||
Derivatives | ||
Hedged Liability, Fair Value Hedge | 500 | 499 |
Hedged Liability, Fair Value Hedge, Cumulative Increase (Decrease) | 1 | |
Long-term debt | ||
Derivatives | ||
Hedged Liability, Fair Value Hedge | 776 | 775 |
Hedged Liability, Fair Value Hedge, Cumulative Increase (Decrease) | $ 21 | $ 22 |
Derivatives - Net Investment He
Derivatives - Net Investment Hedges (Details) - Net Investment Hedges € in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020EUR (€) | |
Net investment hedges | |||||
Effective portion of net investment hedge reclassified out of other comprehensive income into income | $ 0 | $ 0 | $ 0 | $ 0 | |
Pretax Gain (Loss) Recognized as Cumulative Translation within Other Comprehensive Income on Effective Portion of Instrument | (7) | (74) | 9 | 33 | |
Amount of Gain (Loss) Excluded from Effectiveness Testing Recognized in Income | 7 | 5 | 12 | ||
Foreign currency forward contracts | |||||
Net investment hedges | |||||
Derivative notional amount | € | € 50 | ||||
Pretax Gain (Loss) Recognized as Cumulative Translation within Other Comprehensive Income on Effective Portion of Instrument | 4 | (10) | 5 | 5 | |
Foreign currency forward contracts | Cost of sales | |||||
Net investment hedges | |||||
Amount of Gain (Loss) Excluded from Effectiveness Testing Recognized in Income | 7 | 5 | 12 | ||
Foreign Currency Denominated Debt | |||||
Net investment hedges | |||||
Face amount of debt designated as a net investment hedge | € | € 3,500 | ||||
Pretax Gain (Loss) Recognized as Cumulative Translation within Other Comprehensive Income on Effective Portion of Instrument | $ (11) | $ (64) | $ 4 | $ 28 |
Derivatives - Not Designated (D
Derivatives - Not Designated (Details) - Derivatives not designated as hedging instruments - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Derivatives not designated as hedging instruments | ||||
Gain (Loss) on Derivative Recognized in Income | $ (13) | $ (10) | $ (25) | $ (20) |
Foreign currency forward/option contracts | Cost of sales | ||||
Derivatives not designated as hedging instruments | ||||
Gain (Loss) on Derivative Recognized in Income | (2) | 2 | (2) | |
Foreign currency forward contracts | Interest expense | ||||
Derivatives not designated as hedging instruments | ||||
Gain (Loss) on Derivative Recognized in Income | $ (11) | $ (10) | $ (27) | $ (18) |
Derivatives - Statement of Inco
Derivatives - Statement of Income Location and Impact of Cash Flow (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Cost of sales | ||||
Derivatives in Fair Value Hedging Relationships | ||||
Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded | $ 3,805 | $ 4,313 | $ 7,914 | $ 8,623 |
Other expense (income), net | ||||
Derivatives in Fair Value Hedging Relationships | ||||
Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded | 111 | 256 | 207 | 304 |
Cash flow hedge | ||||
Gain or (loss) on cash flow hedging relationships: | ||||
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income | 31 | 20 | 47 | 27 |
Cash flow hedge | Foreign currency forward/option contracts | Cost of sales | ||||
Gain or (loss) on cash flow hedging relationships: | ||||
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income | 33 | 21 | 51 | 28 |
Gain or (loss) on fair value hedging relationships: | ||||
Hedged items | 21 | 28 | ||
Cash flow hedge | Interest rate contracts | Other expense (income), net | ||||
Gain or (loss) on cash flow hedging relationships: | ||||
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income | (2) | (1) | $ (4) | (1) |
Fair value hedges | Interest rate contracts | Other expense (income), net | ||||
Gain or (loss) on fair value hedging relationships: | ||||
Hedged items | 2 | (7) | (12) | |
Fair value hedges | Derivatives designated as hedging instruments | Interest rate contracts | Other expense (income), net | ||||
Gain or (loss) on fair value hedging relationships: | ||||
Derivatives designated as hedging instruments | $ (2) | $ 7 | $ 12 |
Derivatives - BS Location (Deta
Derivatives - BS Location (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Location and Fair Value Amount of Derivative Instruments | ||
Fair Value of Derivative Instruments, Assets | $ 149 | $ 142 |
Fair Value of Derivative Instruments, Liabilities | 32 | 20 |
Derivatives designated as hedging instruments | ||
Location and Fair Value Amount of Derivative Instruments | ||
Fair Value of Derivative Instruments, Assets | 135 | 131 |
Fair Value of Derivative Instruments, Liabilities | 7 | 12 |
Derivatives designated as hedging instruments | Foreign currency forward/option contracts | Other current assets | ||
Location and Fair Value Amount of Derivative Instruments | ||
Fair Value of Derivative Instruments, Assets | 73 | 64 |
Derivatives designated as hedging instruments | Foreign currency forward/option contracts | Other assets | ||
Location and Fair Value Amount of Derivative Instruments | ||
Fair Value of Derivative Instruments, Assets | 46 | 50 |
Derivatives designated as hedging instruments | Foreign currency forward/option contracts | Other current liabilities | ||
Location and Fair Value Amount of Derivative Instruments | ||
Fair Value of Derivative Instruments, Liabilities | 5 | 9 |
Derivatives designated as hedging instruments | Foreign currency forward/option contracts | Other liabilities | ||
Location and Fair Value Amount of Derivative Instruments | ||
Fair Value of Derivative Instruments, Liabilities | 2 | 3 |
Derivatives designated as hedging instruments | Foreign currency forward/option contracts | Current balance sheet location | ||
Location and Fair Value Amount of Derivative Instruments | ||
Derivative Notional Amount | 1,715 | 1,995 |
Derivatives designated as hedging instruments | Foreign currency forward/option contracts | Noncurrent balance sheet location | ||
Location and Fair Value Amount of Derivative Instruments | ||
Derivative Notional Amount | 828 | 1,041 |
Derivatives designated as hedging instruments | Interest rate contracts | Other assets | ||
Location and Fair Value Amount of Derivative Instruments | ||
Fair Value of Derivative Instruments, Assets | 16 | 17 |
Derivatives designated as hedging instruments | Interest rate contracts | Current balance sheet location | ||
Location and Fair Value Amount of Derivative Instruments | ||
Derivative Notional Amount | 500 | 500 |
Derivatives designated as hedging instruments | Interest rate contracts | Noncurrent balance sheet location | ||
Location and Fair Value Amount of Derivative Instruments | ||
Derivative Notional Amount | 603 | 603 |
Derivatives not designated as hedging instruments | ||
Location and Fair Value Amount of Derivative Instruments | ||
Fair Value of Derivative Instruments, Assets | 14 | 11 |
Fair Value of Derivative Instruments, Liabilities | 25 | 8 |
Derivatives not designated as hedging instruments | Foreign currency forward/option contracts | Other current assets | ||
Location and Fair Value Amount of Derivative Instruments | ||
Fair Value of Derivative Instruments, Assets | 14 | 11 |
Derivatives not designated as hedging instruments | Foreign currency forward/option contracts | Other current liabilities | ||
Location and Fair Value Amount of Derivative Instruments | ||
Fair Value of Derivative Instruments, Liabilities | 25 | 8 |
Derivatives not designated as hedging instruments | Foreign currency forward/option contracts | Current balance sheet location | ||
Location and Fair Value Amount of Derivative Instruments | ||
Derivative Notional Amount | $ 3,530 | $ 2,684 |
Derivatives - Offsetting Assets
Derivatives - Offsetting Assets (Details) | 6 Months Ended | |
Jun. 30, 2020USD ($)Counterparty | Dec. 31, 2019USD ($) | |
Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties | ||
Number of master netting agreements supported by primary counterparty's parent guarantee | Counterparty | 17 | |
Number of credit support agreements by primary counterparty | Counterparty | 16 | |
Gross Amounts of Derivative Assets Presented in the Consolidated Balance Sheet | $ 149,000,000 | $ 142,000,000 |
Cash Collateral Received | 0 | 0 |
Net Amount of Derivative Assets | 136,000,000 | 128,000,000 |
Derivatives subject to master netting agreements | ||
Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties | ||
Gross Amounts of Derivative Assets Presented in the Consolidated Balance Sheet | 149,000,000 | 142,000,000 |
Gross Amount of Eligible Offsetting Recognized Derivative Liabilities | 13,000,000 | 14,000,000 |
Net Amount of Derivative Assets | $ 136,000,000 | $ 128,000,000 |
Derivatives - Offsetting Liabil
Derivatives - Offsetting Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties | ||
Gross Amounts of Derivative Liabilities Presented in the Consolidated Balance Sheet | $ 32 | $ 20 |
Net Amount of Derivative Liabilities | 19 | 6 |
Derivatives subject to master netting agreements | ||
Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties | ||
Gross Amounts of Derivative Liabilities Presented in the Consolidated Balance Sheet | 32 | 20 |
Gross Amount of Eligible Offsetting Recognized Derivative Assets | 13 | 14 |
Net Amount of Derivative Liabilities | $ 19 | $ 6 |
Derivatives - Currency Effects
Derivatives - Currency Effects (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Foreign Currency | ||
Year-on-year foreign currency transaction effects, including hedging impact, gain (loss) impact on pre-tax income | $ 12 | $ 11 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring Basis (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Assets and Liabilities Measured on Recurring Basis | ||
Available-for-sale marketable securities | $ 281 | $ 141 |
Gross Amounts of Derivative Assets Presented in the Consolidated Balance Sheet | 149 | 142 |
Gross Amounts of Derivative Liabilities Presented in the Consolidated Balance Sheet | 32 | 20 |
Fair value on a recurring basis | Foreign currency forward/option contracts | ||
Assets and Liabilities Measured on Recurring Basis | ||
Gross Amounts of Derivative Assets Presented in the Consolidated Balance Sheet | 133 | 125 |
Gross Amounts of Derivative Liabilities Presented in the Consolidated Balance Sheet | 32 | 20 |
Fair value on a recurring basis | Interest rate contracts | ||
Assets and Liabilities Measured on Recurring Basis | ||
Gross Amounts of Derivative Assets Presented in the Consolidated Balance Sheet | 16 | 17 |
Fair value on a recurring basis | Commercial paper | ||
Assets and Liabilities Measured on Recurring Basis | ||
Available-for-sale marketable securities | 195 | 85 |
Fair value on a recurring basis | Certificates of deposit/time deposits | ||
Assets and Liabilities Measured on Recurring Basis | ||
Available-for-sale marketable securities | 27 | 10 |
Fair value on a recurring basis | U.S. municipal securities | ||
Assets and Liabilities Measured on Recurring Basis | ||
Available-for-sale marketable securities | 59 | 46 |
Fair value on a recurring basis | Investments | ||
Assets and Liabilities Measured on Recurring Basis | ||
Investments | 21 | 25 |
Fair value on a recurring basis | Level 1 | Investments | ||
Assets and Liabilities Measured on Recurring Basis | ||
Investments | 21 | 25 |
Fair value on a recurring basis | Level 2 | Foreign currency forward/option contracts | ||
Assets and Liabilities Measured on Recurring Basis | ||
Gross Amounts of Derivative Assets Presented in the Consolidated Balance Sheet | 133 | 125 |
Gross Amounts of Derivative Liabilities Presented in the Consolidated Balance Sheet | 32 | 20 |
Fair value on a recurring basis | Level 2 | Interest rate contracts | ||
Assets and Liabilities Measured on Recurring Basis | ||
Gross Amounts of Derivative Assets Presented in the Consolidated Balance Sheet | 16 | 17 |
Fair value on a recurring basis | Level 2 | Commercial paper | ||
Assets and Liabilities Measured on Recurring Basis | ||
Available-for-sale marketable securities | 195 | 85 |
Fair value on a recurring basis | Level 2 | Certificates of deposit/time deposits | ||
Assets and Liabilities Measured on Recurring Basis | ||
Available-for-sale marketable securities | 27 | 10 |
Fair value on a recurring basis | Level 2 | U.S. municipal securities | ||
Assets and Liabilities Measured on Recurring Basis | ||
Available-for-sale marketable securities | 22 | |
Fair value on a recurring basis | Level 3 | U.S. municipal securities | ||
Assets and Liabilities Measured on Recurring Basis | ||
Available-for-sale marketable securities | $ 37 | $ 46 |
Fair Value Measurements - Rec_2
Fair Value Measurements - Recurring Reconciliation (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Reconciliation of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) | ||||
Balance at the beginning of the period | $ 37 | $ 49 | $ 46 | $ 40 |
Total gains or losses included in earnings | 0 | 0 | 0 | 0 |
Total gains or losses included in other comprehensive income | 0 | 0 | 0 | 0 |
Purchases and issuances | 0 | 0 | 10 | 9 |
Sales and settlements | 0 | 0 | (19) | 0 |
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 0 |
Balance at the end of the period | 37 | 49 | 37 | 49 |
Total gains or losses included in other comprehensive income | $ 0 | $ 0 | $ 0 | $ 0 |
Fair Value Measurements - Nonre
Fair Value Measurements - Nonrecurring Basis (Details) - Fair value on a nonrecurring basis - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2019 | |
Assets and Liabilities Measured on Recurring or Nonrecurring Basis | ||||
Long-lived asset impairment charges | $ 0 | $ 0 | $ 0 | |
Adjustment to the carrying value of equity securities using the measurement alternative | $ (22,000,000) |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Carrying Value | ||
Financial Instruments | ||
Long-term debt, excluding current portion - Fair Value | $ 19,276 | $ 17,518 |
Fair Value | ||
Financial Instruments | ||
Long-term debt, excluding current portion - Fair Value | $ 21,479 | $ 18,475 |
Commitments and Contingencies -
Commitments and Contingencies - Respirator (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Apr. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($)person | Jun. 30, 2020USD ($)case | Jun. 30, 2020USD ($)lawsuit | Jun. 30, 2020USD ($) | Dec. 31, 2019person | |
Respirator Mask/Asbestos Litigation | |||||||||
Loss contingencies | |||||||||
Total number of named claimants | person | 1,688 | 1,727 | |||||||
Number of years company has been the defendant in Respirator Mask/Asbestos Litigation | 20 years | ||||||||
Number of total claims the Company prevailed after being taken to trial | 14 | 2 | |||||||
Number of total claims taken to trial | case | 15 | ||||||||
Increase in liabilities, gross | $ 313,000,000 | ||||||||
Payments for fees and settlements related to litigation | $ 35,000,000 | ||||||||
Insurance receivables | $ 4,000,000 | $ 4,000,000 | $ 4,000,000 | $ 4,000,000 | $ 4,000,000 | 4,000,000 | |||
Accrued loss contingency reserve | 581,000,000 | $ 581,000,000 | $ 581,000,000 | 581,000,000 | $ 581,000,000 | 581,000,000 | |||
Increase (decrease) accrued loss contingency reserve | 8,000,000 | ||||||||
Respirator Mask/Asbestos Litigation | State court of California | |||||||||
Loss contingencies | |||||||||
Number of total claims the Company prevailed after being taken to trial | lawsuit | 1 | ||||||||
Respirator Mask/Asbestos Litigation | State court of Kentucky | |||||||||
Loss contingencies | |||||||||
Number of unnamed defendant | person | 2 | ||||||||
Respirator Mask/Asbestos Litigation | Kentucky and West Virginia | |||||||||
Loss contingencies | |||||||||
Settlement amount paid | $ 340,000,000 | ||||||||
Respirator Mask/Asbestos Litigation - State of West Virginia | |||||||||
Loss contingencies | |||||||||
Number of additional defendants | two | ||||||||
Accrued loss contingency reserve | 0 | $ 0 | $ 0 | 0 | $ 0 | 0 | |||
Respirator Mask/Asbestos Litigation - Aearo Technologies | |||||||||
Loss contingencies | |||||||||
Accrued loss contingency reserve | 21,000,000 | $ 21,000,000 | $ 21,000,000 | $ 21,000,000 | $ 21,000,000 | 21,000,000 | |||
Increase (decrease) accrued loss contingency reserve | $ (37,000,000) | ||||||||
Quarterly fee paid to Cabot to retain responsibility and liability for products manufactured before July 11, 1995 | $ 100,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Environmental (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Apr. 30, 2019USD ($) | Jul. 31, 2018USD ($) | Feb. 28, 2018USD ($) | Dec. 31, 2019USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2020USD ($)lawsuititempersonfacilitydefendantsubsidiarycompany | |
Environmental Matters - Remediation | |||||||||
Loss contingencies | |||||||||
Accrued loss contingency reserve | $ | $ 20,000,000 | ||||||||
Number of years remediation payments expected to be paid for applicable sites | 20 years | ||||||||
Environmental Matters - Other | |||||||||
Loss contingencies | |||||||||
Accrued loss contingency reserve | $ | $ 0 | ||||||||
Insurance receivables | $ | $ 8,000,000 | ||||||||
Environmental Matters - Regulatory Activities | |||||||||
Loss contingencies | |||||||||
Number of years after phase-out decision in May 2000 that the Company stopped manufacturing and using vast majority of perfluorooctanyl compounds | 2 years | ||||||||
Amount of PFOA and PFOS found in drinking water, either individually or combined, that are allowed per the EPA's announced lifetime health advisory levels in parts per trillion | item | 70 | ||||||||
Amount of PFOA in drinking water allowed per provisional health advisories in parts per trillion (superseded) | item | 400 | ||||||||
Amount of PFOS in drinking water allowed per provisional health advisories in parts per trillion (superseded) | item | 200 | ||||||||
Number of PFCs the EPA has required to have public water system suppliers monitor | item | 6 | ||||||||
Number of PFAS the EPA has required to have public water system suppliers monitor | item | 6 | ||||||||
Number compounds EPA asked for public comment on draft toxicity assessments for PFAS compounds, including PFBS | item | 2 | ||||||||
Number of public water supplies the EPA reported results | item | 4,920 | ||||||||
Number of water supplies that reported above advisory level with PFOA | item | 13 | ||||||||
Number of water supplies that reported above advisory level with PFOS | item | 46 | ||||||||
Number of water supplies that reported above advisory level with both PFOA and PFOS under technical advisory issued by EPA in September 2016 | item | 65 | ||||||||
Environmental Matters - Regulatory Activities | Minimum | |||||||||
Loss contingencies | |||||||||
Number of water supply samples used to test for PFOA and PFOS under the EPA lifetime health advisory program | item | 1 | ||||||||
Environmental Matters - Regulatory Activities | Minnesota Department of Health | |||||||||
Loss contingencies | |||||||||
Amount of PFOA in drinking water allowed per Minnesota Department of Health in parts per trillion | item | 35 | ||||||||
Amount of PFOS in drinking water allowed per Minnesota Department of Health in parts per trillion | item | 27 | ||||||||
Additional amounts of PFOS in drinking water allowed per Minnesota Department of Health in parts per trillion | item | 15 | ||||||||
Amount of PFHxS in drinking water allowed per Minnesota Department of Health in parts per trillion | item | 47 | ||||||||
Amount of PFBS in drinking water allowed per Minnesota Department of Health in parts per billion | item | 2 | ||||||||
Environmental Matters - Litigation | U.S. District Court for the Northern District of Alabama | |||||||||
Loss contingencies | |||||||||
Number of plaintiffs | person | 59 | ||||||||
Number of additional defendants | person | 24 | ||||||||
Environmental Matters - Litigation | Alabama | |||||||||
Loss contingencies | |||||||||
Litigation settlement awarded | $ | $ 35,000,000 | ||||||||
Number of local water works for whom the water authority supplies water | item | 5 | ||||||||
Environmental Matters - Litigation | Decatur, Alabama | |||||||||
Loss contingencies | |||||||||
Number of closed municipal landfills | item | 3 | ||||||||
Number of putative class action and other lawsuits | 2 | ||||||||
Environmental Matters - Litigation | Minnesota | |||||||||
Loss contingencies | |||||||||
Litigation settlement awarded | $ | $ 897,000,000 | ||||||||
Settlement amount paid | $ | $ 850,000,000 | ||||||||
Environmental Matters - Litigation | Lake Elmo, Minnesota | Maximum | |||||||||
Loss contingencies | |||||||||
Settlement amount paid | $ | $ 5,000,000 | ||||||||
Environmental Matters - Litigation | New Jersey | |||||||||
Loss contingencies | |||||||||
Number of lawsuits filed | 2 | ||||||||
Number of additional new claims filed | 2 | ||||||||
Loss Contingency Parties Jointly and Severally Liable in Litigation | six | ||||||||
Environmental Matters - Litigation | Salem County, New Jersey | |||||||||
Loss contingencies | |||||||||
Number of facilities related to the manufacture and disposal of PFAS | facility | 2 | ||||||||
Environmental Matters - Litigation | State court in New York | |||||||||
Loss contingencies | |||||||||
Number of lawsuits filed | 4 | ||||||||
Environmental Matters - Litigation | State Court of Lawrence County, Alabama | |||||||||
Loss contingencies | |||||||||
Number of plaintiffs | person | 200 | ||||||||
Environmental Matters - Litigation | New Hampshire | |||||||||
Loss contingencies | |||||||||
Number of lawsuits filed | 2 | ||||||||
Loss Contingency Parties Jointly and Severally Liable in Litigation | seven | ||||||||
Environmental Matters - Litigation | Vermont | |||||||||
Loss contingencies | |||||||||
Number of lawsuits filed | 2 | ||||||||
Loss Contingency Parties Jointly and Severally Liable in Litigation | ten | ||||||||
Environmental Matters - Other Environmental Litigation | New Jersey | |||||||||
Loss contingencies | |||||||||
Number of unnamed defendant | defendant | 120 | ||||||||
Approximate number of miles of a river seeking to be cleaned | item | 8 | ||||||||
The value the award the plaintiff seeks | $ | $ 165,000,000 | ||||||||
Number of chemicals of concern in the sediment | item | 8 | ||||||||
Number of commercial drum conditioning facilities | item | 2 | ||||||||
Environmental Matters - Aqueous Film Forming Foam Litigation | |||||||||
Loss contingencies | |||||||||
Number of lawsuits filed | 8 | ||||||||
Number of putative class action and other lawsuits | item | 730 | ||||||||
Number of class action lawsuits | 25 | ||||||||
Number of cases filed by current or former firefighters | 249 | ||||||||
Environmental Matters - Aqueous Film Forming Foam Litigation | U.S. Judicial Panel on Multidistrict Litigation (MDL) | |||||||||
Loss contingencies | |||||||||
Number of lawsuits filed | 715 | ||||||||
Number of putative class action and other lawsuits | 725 | ||||||||
Environmental Matters - Aqueous Film Forming Foam Litigation | Various state courts | |||||||||
Loss contingencies | |||||||||
Number of lawsuits filed | 9 | ||||||||
Number of lawsuits pending | 5 | ||||||||
Number of cases stayed | 5 | ||||||||
Environmental Matters - Aqueous Film Forming Foam Litigation | State court in Wisconsin | |||||||||
Loss contingencies | |||||||||
Number of subsidiaries of plaintiff | subsidiary | 2 | ||||||||
Environmental Matters - Aqueous Film Forming Foam Litigation | Federal court | |||||||||
Loss contingencies | |||||||||
Number of lawsuits pending | 2 | ||||||||
Environmental Matters - Other PFAS-related Environmental Litigation | |||||||||
Loss contingencies | |||||||||
Accrued loss contingency reserve | $ | $ 382,000,000 | ||||||||
Increase (decrease) accrued loss contingency reserve | $ | $ 235,000,000 | 43,000,000 | |||||||
Litigation payments | $ | $ 106,000,000 | ||||||||
Number of landfills tested by the entity for environmental matters and litigation related to historical PFAS manufacturing operations | item | 4 | ||||||||
Charge for environmental resolutions | $ | $ 214,000,000 | ||||||||
Environmental Matters - Other PFAS-related Environmental Litigation | U.S. District Court of New York State | |||||||||
Loss contingencies | |||||||||
Number of lawsuits filed | 40 | ||||||||
Number of additional new claims filed | 4 | ||||||||
Number of putative class action and other lawsuits | 1 | ||||||||
Environmental Matters - Other PFAS-related Environmental Litigation | U.S. District Court of Eastern District of New York | |||||||||
Loss contingencies | |||||||||
Number of lawsuits pending | 8 | ||||||||
Environmental Matters - Other PFAS-related Environmental Litigation | Alabama | |||||||||
Loss contingencies | |||||||||
Number of perfluorinated materials (FBSA and FBSEE) the company cannot release into "the waters of the United States." | item | 2 | ||||||||
Number of putative class action and other lawsuits | 4 | ||||||||
Environmental Matters - Other PFAS-related Environmental Litigation | Georgia | |||||||||
Loss contingencies | |||||||||
Number of putative class action and other lawsuits | 1 | ||||||||
Environmental Matters - Other PFAS-related Environmental Litigation | Cities located downstream along the Coosa River | |||||||||
Loss contingencies | |||||||||
Number of putative class action and other lawsuits | 3 | ||||||||
Environmental Matters - Other PFAS-related Environmental Litigation | Michigan | |||||||||
Loss contingencies | |||||||||
Number of plaintiffs | person | 1 | ||||||||
Settlement amount paid | $ | $ 55,000,000 | $ 70,000,000 | |||||||
Number of lawsuits filed | 267 | ||||||||
Number of federal bellwether cases with trial-ready dates set | 4 | ||||||||
Number of federal bellwether cases the court issued the first round of dispositive motion rulings | 2 | ||||||||
Total number of federal bellwether cases | 3 | ||||||||
Number of putative class action and other lawsuits | 1 | ||||||||
Number of companies involved in agreement | company | 2 | ||||||||
Environmental Matters - Other PFAS-related Environmental Litigation | Delaware. | |||||||||
Loss contingencies | |||||||||
Number of putative class action and other lawsuits | 1 |
Commitments and Contingencies_3
Commitments and Contingencies - Product Liability (Details) | 6 Months Ended |
Jun. 30, 2020USD ($)lawsuitperson | |
Product Liability - Bair Hugger | |
Product Liability Litigation | |
Number of lawsuits filed | 19 |
Number of plaintiffs | person | 23 |
Accrued loss contingency reserve | $ | $ 0 |
Product Liability - Bair Hugger | United States | |
Product Liability Litigation | |
Number of lawsuits filed | 19 |
Product Liability - Bair Hugger | Canada | |
Product Liability Litigation | |
Number of putative class action and other lawsuits | 1 |
Product Liability - Bair Hugger | Various federal courts | |
Product Liability Litigation | |
Number of plaintiffs | person | 5,000 |
Product Liability - Bair Hugger | Multi-district litigation (MDL) | |
Product Liability Litigation | |
Number of lawsuits pending | 16 |
Number of cases stayed | 16 |
Product Liability - Bair Hugger | State court | |
Product Liability Litigation | |
Number of lawsuits pending | 3 |
Product Liability - Bair Hugger | U.S. District Court for Oklahoma | |
Product Liability Litigation | |
Number of total claims dismissed | 1 |
Product Liability - Bair Hugger | U.S. District Court for the District of Minnesota | |
Product Liability Litigation | |
Number of lawsuits filed | 61 |
Product Liability - Bair Hugger and medical malpractice claims | Hidalgo County Texas | |
Product Liability Litigation | |
Number of lawsuits pending | 1 |
Product Liability - Bair Hugger and medical malpractice claims | Jackson County Missouri | |
Product Liability Litigation | |
Number of lawsuits pending | 2 |
Product Liability - Dual-Ended Combat Arms Earplugs | |
Product Liability Litigation | |
Number of lawsuits filed | 2,853 |
Number of putative class action and other lawsuits | 14 |
Number of plaintiffs | person | 11,650 |
Accrued loss contingency reserve | $ | $ 0 |
Commitments and Contingencies_4
Commitments and Contingencies - Securities Litigation (Details) | 6 Months Ended |
Jun. 30, 2020lawsuit | |
U.S. District Court for the District of Minnesota | Securities Litigation | |
Loss contingencies | |
Number of derivative lawsuits filed | 2 |
Commitments and Contingencies_5
Commitments and Contingencies - Federal False Claims Act / Qui Tam Litigation (Details) - Federal False Claims Act / Qui Tam Litigation | 6 Months Ended |
Jun. 30, 2020USD ($)lawsuitperson | |
Loss contingencies | |
Number of actions declined to intervene | 2 |
Number of lawsuits pending | 2 |
Number of former employees | person | 2 |
Accrued loss contingency reserve | $ | $ 0 |
Godecke case | |
Loss contingencies | |
Number of lawsuits pending | 1 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 6 Months Ended |
Jun. 30, 2020ageshares | |
Share-based Compensation Arrangement by Share-based Payment Award Activity | |
Retirement age eligibility for employees | age | 55 |
Retirement eligibility for employees, minimum years of service required | 10 years |
Percent of stock-based compensation related to retiree-eligible population (as a percent) | 35.00% |
Long Term Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award Activity | |
Number of shares authorized | 123,965,000 |
Number of shares available for grant | 15,700,000 |
Stock-Based Compensation - Comp
Stock-Based Compensation - Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Amounts recognized in the financial statements | ||||
Stock-based compensation programs expense | $ 52 | $ 52 | $ 172 | $ 182 |
Income tax benefits | (15) | (28) | (54) | (108) |
Stock-based compensation expenses (benefits), net of tax | 37 | 24 | 118 | 74 |
Cost of sales | ||||
Amounts recognized in the financial statements | ||||
Stock-based compensation programs expense | 10 | 9 | 32 | 31 |
Selling, general and administrative expenses | ||||
Amounts recognized in the financial statements | ||||
Stock-based compensation programs expense | 35 | 36 | 108 | 118 |
Research, development and related expenses | ||||
Amounts recognized in the financial statements | ||||
Stock-based compensation programs expense | $ 7 | $ 7 | $ 32 | $ 33 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options (Details) - Stock Options - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Stock Option Program | ||
Balance at the beginning of the period | 33,675 | |
Granted - Annual | 4,741 | |
Exercised | (1,639) | |
Forfeited | (106) | |
Balance at the end of the period | 36,671 | |
Options exercisable | 28,682 | |
Options exercisable, exercise price | $ 147.72 | |
Weighted average exercise price - Beginning balance | 151.15 | |
Weighted average exercise price - Granted - Annual | 157.26 | |
Weighted average exercise price - Exercised | 89.34 | |
Weighted average exercise price - Forfeited | 185.82 | |
Weighted average exercise price - Ending balance | $ 154.60 | |
Weighted average remaining contractual life for options outstanding | 68 months | |
Weighted average remaining contractual life for options exercisable | 56 months | |
Aggregate intrinsic value for options outstanding | $ 593 | |
Aggregate intrinsic value for options exercisable | $ 593 | |
Expiration of annual grants | 10 years | |
Compensation expense yet to be recognized | $ 89 | |
Expense recognition period | 23 months | |
Total intrinsic value of stock options exercised | $ 127 | $ 341 |
Cash received from options exercised | 145 | 270 |
Tax benefit realized from exercise of stock options | $ 27 | $ 72 |
Share- based compensation assumptions | ||
Weighted average exercise price | $ 157.24 | |
Risk-free interest rate (as a percent) | 1.50% | |
Dividend yield (as a percent) | 2.70% | |
Expected volatility (as a percent) | 19.70% | |
Expected life | 78 months | |
Black-Scholes fair value | $ 21.58 | |
Maximum | ||
Stock Option Program | ||
Vesting period | 3 years | |
Minimum | ||
Stock Option Program | ||
Vesting period | 1 year |
Stock-Based Compensation - RSU,
Stock-Based Compensation - RSU, RS, Performance Shares (Details) - USD ($) $ / shares in Units, shares in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Restricted Stock and Restricted Stock Units | ||
Unit and Shares Activity: | ||
Number of Shares - Nonvested - Beginning balance | 1,573 | |
Number of Shares - Granted - Annual | 733 | |
Number of Shares - Granted - Other | 11 | |
Number of Shares - Vested | (559) | |
Number of Shares - Forfeited | (34) | |
Number of Shares - Nonvested - Ending balance | 1,724 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures | ||
Weighted Average Grant Date Fair Value - Nonvested - Beginning balance | $ 201.11 | |
Weighted Average Grant Date Fair Value - Granted - Annual | 157.29 | |
Weighted Average Grant Date Fair Value - Granted - Other | 174.03 | |
Weighted Average Grant Date Fair Value - Vested | 176.17 | |
Weighted Average Grant Date Fair Value - Forfeited | 189.07 | |
Weighted Average Grant Date Fair Value - Nonvested - Ending balance | $ 190.63 | |
Compensation expense yet to be recognized | $ 111,000,000 | |
Expense recognition period | 25 months | |
Fair value that vested | $ 89,000,000 | $ 135,000,000 |
Tax benefit realized from vesting | $ 17,000,000 | 26,000,000 |
Vesting or performance period | 3 years | |
Value of dividend equivalents for restricted stock units that are forfeited | $ 0 | |
Impact on basic earnings per share due to restricted stock units dividends | $ 0 | |
Performance Shares | ||
Unit and Shares Activity: | ||
Number of Shares - Nonvested - Beginning balance | 444 | |
Number of Shares - Granted - Annual | 191 | |
Number of Shares - Vested | (206) | |
Number of Shares - Performance Change | 23 | |
Number of Shares - Forfeited | (11) | |
Number of Shares - Nonvested - Ending balance | 441 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures | ||
Weighted Average Grant Date Fair Value - Nonvested - Beginning balance | $ 205.58 | |
Weighted Average Grant Date Fair Value - Granted - Annual | 153.02 | |
Weighted Average Grant Date Fair Value - Vested | 190.84 | |
Weighted Average Grant Date Fair Value - Performance Change | 161.93 | |
Weighted Average Grant Date Fair Value - Forfeited | 164.61 | |
Weighted Average Grant Date Fair Value - Nonvested - Ending balance | $ 188.39 | |
Compensation expense yet to be recognized | $ 33,000,000 | |
Expense recognition period | 22 months | |
Fair value that vested | $ 35,000,000 | 45,000,000 |
Tax benefit realized from vesting | $ 7,000,000 | $ 9,000,000 |
Vesting or performance period | 3 years | |
Performance shares awarded at estimated number of shares at the end of the performance period | 100.00% | |
Performance Shares | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures | ||
Expense recognition period | 3 years | |
Number of shares to be delivered based on percent of each performance share granted upon satisfaction of performance conditions | 200.00% | |
Performance Shares | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures | ||
Expense recognition period | 1 year | |
Number of shares to be delivered based on percent of each performance share granted upon satisfaction of performance conditions | 0.00% |
Business Segments (Details)
Business Segments (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Mar. 31, 2020USD ($) | Jun. 30, 2020segment | |
Business Segment Information | ||
Number of business segments | segment | 4 | |
Business Segments in Aggregate | ||
Business Segment Information | ||
Increase (decrease) in net sales due to continued alignment of customer account activity | $ (42) | |
Increase (decrease) in operating income due to continued alignment of customer account activity | (10) | |
Safety and Industrial | ||
Business Segment Information | ||
Increase (decrease) in net sales due to additional actions impacting business segment reporting | (35) | |
Increase (decrease) in operating income due to additional actions impacting business segment reporting | (11) | |
Consumer | ||
Business Segment Information | ||
Increase (decrease) in net sales due to additional actions impacting business segment reporting | 35 | |
Increase (decrease) in operating income due to additional actions impacting business segment reporting | 11 | |
Elimination of Dual Credit | ||
Business Segment Information | ||
Increase (decrease) in net sales due to continued alignment of customer account activity | (42) | |
Increase (decrease) in operating income due to continued alignment of customer account activity | $ (10) |
Business Segments - Business Se
Business Segments - Business Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Business Segment Information | |||||
Net sales | $ 7,176 | $ 8,171 | $ 15,251 | $ 16,034 | |
Operating Income | 1,740 | 1,702 | 3,403 | 2,838 | |
Assets | 45,079 | 45,079 | $ 44,659 | ||
Depreciation and amortization | 932 | 751 | |||
Capital expenditures | 711 | 812 | |||
Property, Plant and Equipment - net | 9,089 | 9,089 | $ 9,333 | ||
Gain/(loss) on sale of businesses | 387 | 389 | 8 | ||
Total operating expenses | 5,436 | 6,469 | 11,848 | 13,196 | |
Other expense (income), net | 111 | 256 | 207 | 304 | |
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | 1,629 | 1,446 | 3,196 | 2,534 | |
Business Segments. | |||||
Business Segment Information | |||||
Operating Income | 1,488 | 1,894 | 3,305 | 3,647 | |
Business Segments. | Safety and Industrial | |||||
Business Segment Information | |||||
Net sales | 2,668 | 2,937 | 5,603 | 5,900 | |
Operating Income | 636 | 647 | 1,362 | 1,284 | |
Business Segments. | Transportation and Electronics | |||||
Business Segment Information | |||||
Net sales | 1,937 | 2,450 | 4,175 | 4,805 | |
Operating Income | 382 | 591 | 864 | 1,110 | |
Business Segments. | Health Care | |||||
Business Segment Information | |||||
Net sales | 1,825 | 1,831 | 3,928 | 3,569 | |
Operating Income | 306 | 483 | 762 | 942 | |
Business Segments. | Consumer | |||||
Business Segment Information | |||||
Net sales | 1,238 | 1,320 | 2,494 | 2,520 | |
Operating Income | 287 | 273 | 556 | 508 | |
Corporate and Unallocated | |||||
Business Segment Information | |||||
Net sales | (2) | 48 | (1) | 70 | |
Significant litigation-related (charges)/benefits | (17) | (548) | |||
Gain/(loss) on sale of businesses | 387 | 389 | 8 | ||
Divestiture-related restructuring actions | (55) | (55) | |||
Other corporate expense - net | (80) | (192) | (219) | (269) | |
Total operating expenses | 252 | (192) | 98 | (809) | |
Elimination of Dual Credit | |||||
Business Segment Information | |||||
Net sales | (490) | (415) | (948) | (830) | |
Operating Income | $ (123) | $ (100) | $ (239) | $ (197) |