3M CO, 10-Q filed on 5/8/2018
Quarterly Report
v3.8.0.1
Document and Entity Information
3 Months Ended
Mar. 31, 2018
shares
Document and Entity Information  
Entity Registrant Name 3M Company
Trading Symbol mmm
Entity Central Index Key 0000066740
Document Type 10-Q
Document Period End Date Mar. 31, 2018
Amendment Flag false
Current Fiscal Year End Date --12-31
Entity Current Reporting Status Yes
Entity Filer Category Large Accelerated Filer
Entity Common Stock, Shares Outstanding 593,692,282
Document Fiscal Year Focus 2018
Document Fiscal Period Focus Q1
v3.8.0.1
Consolidated Statement of Income - USD ($)
shares in Millions, $ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Consolidated Statement of Income    
Net sales $ 8,278 $ 7,685
Operating expenses    
Cost of sales 4,236 3,882
Selling, general and administrative expenses 2,573 1,614
Research, development and related expenses 486 476
Gain on sale of businesses (24) (29)
Total operating expenses 7,271 5,943
Operating income 1,007 1,742
Interest expense and income    
Other expense (income), net 42 5
Income before income taxes 965 1,737
Provision for income taxes 359 411
Net income including noncontrolling interest 606 1,326
Less: Net income attributable to noncontrolling interest 4 3
Net income attributable to 3M $ 602 $ 1,323
Weighted average 3M common shares outstanding - basic (in shares) 596.2 598.1
Earnings per share attributable to 3M common shareholders - basic (in dollars per share) $ 1.01 $ 2.21
Weighted average 3M common shares outstanding - diluted (in shares) 612.7 612.0
Earnings per share attributable to 3M common shareholders - diluted (in dollars per share) $ 0.98 $ 2.16
Cash dividends paid per 3M common share (in dollars per share) $ 1.36 $ 1.175
v3.8.0.1
Consolidated Statement of Comprehensive Income - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Consolidated Statement of Comprehensive Income    
Net income including noncontrolling interest $ 606 $ 1,326
Other comprehensive income (loss), net of tax:    
Cumulative translation adjustment 167 292
Defined benefit pension and postretirement plans adjustment 116 83
Cash flow hedging instruments unrealized gain (loss) (61) (76)
Total other comprehensive income (loss), net of tax 222 299
Comprehensive income (loss) including noncontrolling interest 828 1,625
Comprehensive (income) loss attributable to noncontrolling interest (3) (6)
Comprehensive income (loss) attributable to 3M $ 825 $ 1,619
v3.8.0.1
Consolidated Balance Sheet - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Current assets    
Cash and cash equivalents $ 3,491 $ 3,053
Marketable securities - current 604 1,076
Accounts receivable — net 5,252 4,911
Inventories    
Finished goods 2,025 1,915
Work in process 1,313 1,218
Raw materials and supplies 957 901
Total inventories 4,295 4,034
Prepaids 832 937
Other current assets 344 266
Total current assets 14,818 14,277
Property, plant and equipment 25,174 24,914
Less: Accumulated depreciation (16,310) (16,048)
Property, plant and equipment - net 8,864 8,866
Goodwill 10,570 10,513
Intangible assets - net 2,885 2,936
Other assets 1,438 1,395
Total assets 38,575 37,987
Current liabilities    
Short-term borrowings and current portion of long-term debt 3,449 1,853
Accounts payable 1,874 1,945
Accrued payroll 563 870
Accrued income taxes 282 310
Other current liabilities 2,791 2,709
Total current liabilities 8,959 7,687
Long-term debt 12,211 12,096
Pension and postretirement benefits 3,381 3,620
Other liabilities 2,985 2,962
Total liabilities 27,536 26,365
Commitments and contingencies (Note 14)
3M Company shareholders' equity:    
Common stock par value, $.01 par value; 944,033,056 shares issued 9 9
Additional paid-in capital 5,496 5,352
Retained earnings 38,453 39,115
Treasury stock, at cost: 350,340,774 shares at March 31, 2018; 349,148,819 shares at December 31, 2017 (26,178) (25,887)
Accumulated other comprehensive income (loss) (6,803) (7,026)
Total 3M Company shareholders' equity 10,977 11,563
Noncontrolling interest 62 59
Total equity 11,039 11,622
Total liabilities and equity $ 38,575 $ 37,987
v3.8.0.1
Consolidated Balance Sheet (Parenthetical) - $ / shares
Mar. 31, 2018
Dec. 31, 2017
Consolidated Balance Sheet    
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
Treasury stock (in shares) 350,340,774 349,148,819
v3.8.0.1
Consolidated Statement of Cash Flows - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash Flows from Operating Activities    
Net income including noncontrolling interest $ 606 $ 1,326
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities    
Depreciation and amortization 382 438
Company pension and postretirement contributions (232) (248)
Company pension and postretirement expense 102 81
Stock-based compensation expense 159 147
Gain on sale of businesses (24) (29)
Deferred income taxes (103) (84)
Changes in assets and liabilities    
Accounts receivable (260) (237)
Inventories (209) (149)
Accounts payable (88) (124)
Accrued income taxes (current and long-term) 212 225
Other - net (402) (358)
Net cash provided by operating activities 143 988
Cash Flows from Investing Activities    
Purchases of property, plant and equipment (PP&E) (304) (287)
Proceeds from sale of PP&E and other assets 83 1
Purchases of marketable securities and investments (517) (213)
Proceeds from maturities and sale of marketable securities and investments 990 351
Proceeds from sale of businesses, net of cash sold 40 53
Other - net (11) 5
Net cash provided by (used in) investing activities 281 (90)
Cash Flows from Financing Activities    
Change in short-term debt - net 1,581 (68)
Repayment of debt (maturities greater than 90 days) (6)  
Proceeds from debt (maturities greater than 90 days) 6  
Purchases of treasury stock (937) (690)
Proceeds from issuance of treasury stock pursuant to stock option and benefit plans 219 315
Dividends paid to shareholders (810) (702)
Other - net (7) (6)
Net cash provided by (used in) financing activities 46 (1,151)
Effect of exchange rate changes on cash and cash equivalents (32) 28
Net increase (decrease) in cash and cash equivalents 438 (225)
Cash and cash equivalents at beginning of year 3,053 2,398
Cash and cash equivalents at end of period $ 3,491 $ 2,173
v3.8.0.1
Significant Accounting Policies
3 Months Ended
Mar. 31, 2018
Significant Accounting Policies  
Significant Accounting Policies

NOTE 1.  Significant Accounting Policies

 

Basis of Presentation

 

The interim consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments necessary for a fair statement of the 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 2017 Annual Report on Form 10-K.

 

As described in the “New Accounting Pronouncements” section, the Company adopted Accounting Standards Update (ASU) No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, effective January 1, 2018 on a retrospective basis. This ASU changed how 3M presents net periodic benefit cost within its consolidated statement of income, as reflected in the table that follows. The financial information presented herein reflects these impacts for all periods presented.

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

Previously

 

 

 

 

 

(Millions)

    

Reported

    

Revised

    

Change

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

7,685

 

$

7,685

 

$

 —

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

3,869

 

 

3,882

 

 

13

 

Selling, general and administrative expenses

 

 

1,600

 

 

1,614

 

 

14

 

Research, development and related expenses

 

 

471

 

 

476

 

 

 5

 

Gain on sale of businesses

 

 

(29)

 

 

(29)

 

 

 —

 

Total operating expenses

 

 

5,911

 

 

5,943

 

 

32

 

Operating income

 

$

1,774

 

$

1,742

 

$

(32)

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income), net

 

$

37

 

$

 5

 

$

(32)

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

1,737

 

$

1,737

 

$

 —

 

 

In addition, as described in Note 16, effective in the first quarter of 2018, the Company changed its business segment reporting in its continuing effort to improve the alignment of businesses around markets and customers. These changes included the consolidation of customer account activity within international countries (expanding dual credit reporting) and the centralization of manufacturing and supply chain technology platforms. The Company began reporting comparative results under this new structure with the filing of this Quarterly Report on Form 10-Q.

 

In the second quarter of 2018, the Company plans to update its financial information and disclosure in its 2017 Annual Report on Form 10-K via a Current Report on Form 8-K to reflect the retrospective application of ASU No. 2017-07 and the preceding business segment reporting changes.

 

Changes to Significant Accounting Policies

 

The following accounting policies have been updated since the Company’s 2017 Annual Report on Form 10-K.

 

Revenue (sales) recognition: As described in the “New Accounting Pronouncements” section,  3M adopted ASU No. 2014-09, Revenue from Contracts with Customers, and other related ASUs on January 1, 2018 using the modified retrospective transition approach. The Company’s accounting policy with respect to revenue recognition and additional disclosure relative to this ASU are included in Note 2.

 

Investments: As described in the “New Accounting Pronouncements” section, 3M adopted ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities,  effective January 1, 2018. As a result, all equity securities that do not result in consolidation and are not accounted for under the equity method are measured at fair value with changes therein reflected in net income. 3M utilizes the measurement alternative for equity investments that do not have readily determinable fair values and measures these investments at cost less impairment plus or minus observable price changes in orderly transactions. Further, the change in balance of these securities for the three months ended March 31, 2018 was not considered material for additional disclosure.

 

Foreign Currency Translation

 

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

 

3M has a subsidiary in Venezuela, the financial statements of which are 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 is immaterial as a percent of 3M’s consolidated operating income for 2018. The Venezuelan government sets official rates of exchange and conditions precedent to purchase foreign currency at these rates with local currency. The government has also operated various expanded secondary currency exchange mechanisms that have been eliminated and replaced from time to time. Such rates and conditions have been and continue to be subject to change. For the periods presented, the financial statements of 3M’s Venezuelan subsidiary were remeasured utilizing the rate associated with the secondary auction mechanism, Tipo de Cambio Complementario (DICOM), or its predecessor. During the same periods, the Venezuelan government’s official exchange was Tipo de Cambio Protegido (DIPRO), or its predecessor, until its discontinuance in the first quarter of 2018.

 

Note 1 in 3M’s 2017 Annual Report on Form 10-K provides additional information the Company considers in determining the exchange rate used relative to its Venezuelan subsidiary as well as factors which could lead to its deconsolidation. The Company continues to monitor these circumstances. Changes in applicable exchange rates or exchange mechanisms may continue in the future. These changes could impact the rate of exchange applicable to remeasure the Company’s net monetary assets (liabilities) denominated in Venezuelan Bolivars (VEF). As of March 31, 2018, the Company had a balance of net monetary assets denominated in VEF of less than 20 billion VEF and the DIPRO exchange rate was approximately 49,000 VEF per U.S. dollar. A need to deconsolidate the Company’s Venezuelan subsidiary’s operations may result from a lack of exchangeability of VEF-denominated cash coupled with an acute degradation in the ability to make key operational decisions due to government regulations in Venezuela. Based upon a review of factors as of March 31, 2018, the Company continues to consolidate its Venezuelan subsidiary. As of March 31, 2018, the balance of accumulated other comprehensive loss associated with this subsidiary was approximately $145 million, and the amount of intercompany receivables due from this subsidiary and its equity balance were not significant.

 

Earnings Per Share

 

The difference in the weighted average 3M shares outstanding for calculating basic and diluted earnings per share attributable to 3M common shareholders is a result of the dilution associated with the Company’s stock-based compensation plans. Certain options outstanding under these stock-based compensation plans were not included in the computation of diluted earnings per share attributable to 3M common shareholders because they would not have had a dilutive effect (1.9 million average options for the three months ended March 31, 2018; 3.2 million average options for the three months ended March 31, 2017). The computations for basic and diluted earnings per share follow:

 

Earnings Per Share Computations

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

 

 

 

March 31,

 

(Amounts in millions, except per share amounts)

    

2018

    

2017

 

Numerator:

 

 

 

 

 

 

 

Net income attributable to 3M

 

$

602

 

$

1,323

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Denominator for weighted average 3M common shares outstanding basic

 

 

596.2

 

 

598.1

 

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

 

 

16.5

 

 

13.9

 

Denominator for weighted average 3M common shares outstanding diluted

 

 

612.7

 

 

612.0

 

 

 

 

 

 

 

 

 

Earnings per share attributable to 3M common shareholders basic

 

$

1.01

 

$

2.21

 

Earnings per share attributable to 3M common shareholders diluted

 

$

0.98

 

$

2.16

 

 

New Accounting Pronouncements

 

See the Company’s 2017 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.

 

 

 

 

 

Standards Adopted During the Current Fiscal Year

Standard

Relevant Description

Effective Date for 3M

Impact and Other Matters

ASU No. 2014-09, Revenue from Contracts with Customers (as amended by ASU Nos. 2015-14, 2016-08, 2016-10, 2016-12, and 2016-20) and related ASU No. 2017-10, Determining the Customer of the Operation Services

Provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes most previous revenue recognition guidance, including industry-specific guidance.

Core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Requires disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

Specifies the accounting for some costs to obtain or fulfill a contract with a customer.

January 1, 2018

See Note 2 for detailed discussion and disclosures.

Adopted using a modified retrospective approach. January 1, 2018 balance of retained earnings was increased by less than $2 million.

ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities

Requires investments in equity securities in an entity that do not result in consolidation and are not accounted for under the equity method to be measured at fair value with changes therein reflected in net income.

Simplifies the impairment assessment and allows for a fair value measurement alternative for equity investments without a readily determinable fair value.

Eliminates the previous cost method of accounting for certain equity securities that did not have readily determinable fair values.

January 1, 2018

Measurement alternative adopted prospectively.

See the preceding “Changes to Significant Accounting Policies” section for impact.

 

ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory

Exempts income tax accounting that requires companies to defer the income tax effects of certain intercompany transactions only for intercompany inventory transactions.

The exception no longer applies to intercompany sales and transfers of other assets (e.g., intangible assets).

January 1, 2018

Adopted using a modified retrospective approach. January 1, 2018 balance of retained earnings was decreased by less than $2 million.

ASU No. 2017-01, Clarifying the Definition of a Business

Narrows the previous definition of a business and provides a framework for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business.

January 1, 2018

Adopted prospectively with no immediate impact.

Fewer sets of transferred assets and activities are expected to be considered businesses.

 

 

 

 

 

 

 

 

 

 

 

 

 

Standards Adopted During the Current Fiscal Year (continued)

Standard

Relevant Description

Effective Date for 3M

Impact and Other Matters

ASU No. 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets

Largely impacts the sale of nonfinancial assets (such as real estate and intellectual property) that do not constitute a business, when the purchaser is not a customer.

Seller applies certain recognition and measurement principles of ASU No. 2014-09, Revenue from Contracts with Customers, even though the purchaser is not a customer.

January 1, 2018

Adopted coincident with the adoption of ASU No. 2014-09 with no material impact.

ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

Changes previous classification of net periodic defined benefit pension and postretirement benefit costs within operating expenses.

Requires that only the service cost component of net periodic benefit cost be included in operating expenses and that only the service cost component is eligible for capitalization into assets such as inventory.

Specifies that other net periodic benefit costs components (such as interest, expected return on plan assets, prior service cost amortization and actuarial gain/loss amortization) would be reported outside of operating income.

January 1, 2018

Adopted on a retrospective basis.

No impact on previously reported income before income taxes and net income attributable to 3M. However, non-service cost components of net periodic benefit costs in prior periods have been reclassified from operating expenses and are now reported outside of operating income within other expense (income), net.

See the “Basis of Presentation” section above for impact of this ASU’s adoption on prior period income statement amounts. 

Prospective impact on costs capitalized into assets was not material.

ASU No. 2017-09, Scope of Modification Accounting

Provides that fewer changes to the terms of share-based payment awards will require accounting under the modification model (which generally would have required additional compensation cost).

January 1, 2018

Adopted prospectively with no immediate impact.

3M does not typically make changes to the terms or conditions of its issued share-based payments.

 

 

 

 

 

Standards Issued and Not Yet Adopted

Standard

Relevant Description

Effective Date for 3M

Impact and Other Matters

ASU No. 2016-02, Leases

Introduces a lessee model that requires entities to recognize assets and liabilities for most leases, but recognize expenses on their income statements in a manner similar to current accounting. This ASU does not make fundamental changes to existing lessor accounting.

January 1, 2019

Requires modified retrospective transition applied to earliest period presented

3M is currently assessing this ASU’s impact.

ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments

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

Required to make a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted.

3M is currently assessing this ASU’s impact.

ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities

Shortens the amortization period to the earliest call date for the premium related to certain callable debt securities that have explicit, noncontingent call features and are callable at a fixed price and preset date.

January 1, 2019

3M’s marketable security portfolio includes limited instances of callable debt securities held at a premium.

3M does not expect this ASU to have a material impact.

Standards Issued and Not Yet Adopted (continued)

Standard

Relevant Description

Effective Date for 3M

Impact and Other Matters

ASU No. 2017-11, (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception

Amends (1) the classification of financial instruments with down-round features as liabilities or equity by revising certain guidance relative to evaluating if they must be accounted for as derivative instruments and (2) the guidance on recognition and measurement of freestanding equity-classified instruments.

January 1, 2019

No financial instruments with down-round features have been issued.

3M does not expect this ASU to have a material impact.

ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities

Amends existing guidance to simplify application of hedge accounting in certain situations and allow companies to better align their hedge accounting with risk management activities.

Simplifies related accounting by eliminating requirement to separately measure and report hedge ineffectiveness.

Expands an entity’s ability to hedge nonfinancial and financial risk components.

January 1, 2019

Required to make a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted.  

3M is currently assessing this ASU’s impact.

 

Relevant New Standards Issued Subsequent to Most Recent Annual Report

 

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits entities to reclassify, to retained earnings, the one-time income tax effects stranded in accumulated other comprehensive income (AOCI) arising from the change in the U.S. federal corporate tax rate as a result of the Tax Cuts and Jobs Act of 2017. An entity that elects to make this reclassification must consider all items in AOCI that have tax effects stranded as a result of the tax rate change, and must disclose the reclassification of these tax effects as well as the entity’s policy for releasing income tax effects from AOCI. The ASU may be applied either retrospectively or as of the beginning of the period of adoption. For 3M, the ASU is effective January 1, 2019. While this ASU will have no impact on 3M’s results of operations, the Company is currently assessing this standard’s impact on its consolidated financial condition.

v3.8.0.1
Revenue
3 Months Ended
Mar. 31, 2018
Revenue  
Revenue

NOTE 2.  Revenue

 

The Company adopted ASU No. 2014-09 and related standards (collectively, Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers), as described in Note 1, on January 1, 2018 using the modified retrospective method of adoption. Prior periods have not been restated. Due to the cumulative net impact of adopting ASC 606, the January 1, 2018 balance of retained earnings was increased by less than $2 million, primarily relating to the accelerated recognition for software installation service and training revenue. This cumulative impact reflects retrospective application of ASC 606 only to contracts that were not completed as of January 1, 2018. Further, the Company applied the practical expedient permitting the effect of all contract modifications that occurred before January 1, 2018 to be aggregated in the transition accounting. The impact of applying ASC 606 as compared with previous guidance applied to revenues and costs was not material for the three months ended March 31, 2018.

 

Performance Obligations:

The Company sells a wide range of products to a diversified base of customers around the world and has no material concentration of credit risk or significant payment terms extended to customers. The vast majority of 3M’s customer arrangements contain a single performance obligation to transfer manufactured goods as the promise to transfer the individual goods is not separately identifiable from other promises in the contracts and, therefore, not distinct. However, to a limited extent 3M also enters into customer arrangements that involve intellectual property out-licensing, multiple performance obligations (such as equipment, installation and service), software with coterminous post-contract support, services and non-standard terms and conditions.

 

Revenue is recognized when control of goods has transferred to customers. For the majority of the Company’s customer arrangements, control transfers to customers at a point-in-time when goods/services have been delivered as that is generally when legal title, physical possession and risks and rewards of goods/services transfers to the customer. In limited arrangements, control transfers over time as the customer simultaneously receives and consumes the benefits as 3M completes the performance obligation(s).

 

Revenue is recognized at the transaction price which the Company expects to be entitled. When determining the transaction price, 3M estimates variable consideration applying the portfolio approach practical expedient under ASC 606. The main sources of variable consideration for 3M are customer rebates, trade promotion funds, and cash discounts. These sales incentives are recorded as a reduction to revenue at the time of the initial sale using the most-likely amount estimation method. The most-likely amount method is based on the single most likely outcome from a range of possible consideration outcomes. The range of possible consideration outcomes are primarily derived from the following inputs: sales terms, historical experience, trend analysis, and projected market conditions in the various markets served. Because 3M serves numerous markets, the sales incentive programs offered vary across businesses, but the most common incentive relates to amounts paid or credited to customers for achieving defined volume levels or growth objectives. There are no material instances where variable consideration is constrained and not recorded at the initial time of sale. Free goods are accounted for as an expense and recorded in cost of sales. Product returns are recorded as a reduction to revenue based on anticipated sales returns that occur in the normal course of business. 3M primarily has assurance-type warranties that do not result in separate performance obligations. Sales, use, value-added, and other excise taxes are not recognized in revenue. The Company has elected to present revenue net of sales taxes and other similar taxes.

 

For substantially all arrangements recognized over time, the Company applies the “right to invoice” practical expedient. As a result, 3M recognizes revenue at the invoice amount when the entity has a right to invoice a customer at an amount that corresponds directly with the value to the customer of the Company’s performance completed to date.

 

For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using 3M’s best estimate of the standalone selling price of each distinct good or service in the contract.

 

The Company did not recognize any material revenue in the current reporting period for performance obligations that were fully satisfied in previous periods.

 

Contract Balances:

Deferred income (current portion) as of March 31, 2018 and December 31, 2017 was $519 million and $513 million, respectively, and primarily relates to revenue that is recognized over time for one-year software license contracts, the changes in balance of which are related to the satisfaction or partial satisfaction of these contracts. The balance also contains a deferral of income for goods that are in-transit at period end for which control transfers to the customer upon delivery. Approximately $280 million of the December 31, 2017 balance was recognized as revenue during the first quarter of 2018. The amount of noncurrent deferred income is not considered significant.

 

Exemptions and Practical Expedients Applied or Elected:

3M applies ASC 606 utilizing the following allowable exemptions or practical expedients:

·

Exemption to not disclose the unfulfilled performance obligation balance for contracts with an original length of one year or less.

·

Practical expedient relative to costs of obtaining a contract by expensing sales commissions when incurred because the amortization period would have been one year or less.

·

Portfolio approach practical expedient relative to estimation of variable consideration.

·

“Right to invoice” practical expedient based on 3M’s right to invoice the customer at an amount that reasonably represents the value to the customer of 3M’s performance completed to date.

·

Election to present revenue net of sales taxes and other similar taxes.

·

Sales-based royalty exemption permitting future intellectual property out-licensing royalty payments to be excluded from the otherwise required remaining performance obligations disclosure.

 

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 

 

 

 

March 31,

 

Net Sales (Millions)

 

2018

    

2017

 

Abrasives

 

$

475

 

$

430

 

Adhesives and Tapes

 

 

1,153

 

 

1,075

 

Advanced Materials

 

 

304

 

 

287

 

Automotive and Aerospace

 

 

559

 

 

508

 

Automotive Aftermarket

 

 

418

 

 

417

 

Separation and Purification

 

 

236

 

 

220

 

Other Industrial

 

 

(1)

 

 

(1)

 

Total Industrial Business Group

 

$

3,144

 

$

2,936

 

 

 

 

 

 

 

 

 

Commercial Solutions

 

$

485

 

$

443

 

Personal Safety

 

 

962

 

 

707

 

Roofing Granules

 

 

101

 

 

97

 

Transportation Safety

 

 

236

 

 

303

 

Other Safety and Graphics

 

 

(1)

 

 

 —

 

Total Safety and Graphics Business Group

 

$

1,783

 

$

1,550

 

 

 

 

 

 

 

 

 

Drug Delivery

 

$

119

 

$

121

 

Food Safety

 

 

82

 

 

73

 

Health Information Systems

 

 

205

 

 

191

 

Medical Consumables

 

 

776

 

 

714

 

Oral Care

 

 

354

 

 

336

 

Other Health Care

 

 

 —

 

 

 —

 

Total Health Care Business Group

 

$

1,536

 

$

1,435

 

 

 

 

 

 

 

 

 

Electronics

 

$

931

 

$

878

 

Energy

 

 

420

 

 

413

 

Other Electronics and Energy

 

 

(1)

 

 

 —

 

Total Electronics and Energy Business Group

 

$

1,350

 

$

1,291

 

 

 

 

 

 

 

 

 

Consumer Health Care

 

$

102

 

$

102

 

Home Care

 

 

269

 

 

261

 

Home Improvement

 

 

447

 

 

408

 

Stationery and Office

 

 

299

 

 

292

 

Other Consumer

 

 

10

 

 

10

 

Total Consumer Business Group

 

$

1,127

 

$

1,073

 

 

 

 

 

 

 

 

 

Corporate and Unallocated

 

$

 —

 

$

 1

 

Elimination of Dual Credit

 

 

(662)

 

 

(601)

 

Total Company

 

$

8,278

 

$

7,685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2018

 

Net Sales (Millions)

    

United States

 

Asia Pacific

    

Europe, Middle East and Africa

    

Latin America and Canada

    

Other Unallocated

    

Worldwide

 

Industrial

 

$

1,100

 

$

944

 

$

785

 

$

316

 

$

(1)

 

$

3,144

 

Safety and Graphics

 

 

652

 

 

497

 

 

436

 

 

198

 

 

 —

 

 

1,783

 

Health Care

 

 

702

 

 

299

 

 

394

 

 

141

 

 

 —

 

 

1,536

 

Electronics and Energy

 

 

229

 

 

911

 

 

145

 

 

66

 

 

(1)

 

 

1,350

 

Consumer

 

 

610

 

 

272

 

 

141

 

 

106

 

 

(2)

 

 

1,127

 

Corporate and Unallocated

 

 

 —

 

 

(1)

 

 

 —

 

 

(1)

 

 

 2

 

 

 —

 

Elimination of Dual Credit

 

 

(249)

 

 

(246)

 

 

(109)

 

 

(59)

 

 

 1

 

 

(662)

 

Total Company

 

$

3,044

 

$

2,676

 

$

1,792

 

$

767

 

$

(1)

 

$

8,278

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

Net Sales (Millions)

    

United States

 

Asia Pacific

    

Europe, Middle East and Africa

    

Latin America and Canada

    

Other Unallocated

    

Worldwide

 

Industrial

 

$

1,082

 

$

853

 

$

696

 

$

305

 

$

 —

 

$

2,936

 

Safety and Graphics

 

 

581

 

 

431

 

 

351

 

 

188

 

 

(1)

 

 

1,550

 

Health Care

 

 

690

 

 

260

 

 

353

 

 

133

 

 

(1)

 

 

1,435

 

Electronics and Energy

 

 

231

 

 

851

 

 

143

 

 

65

 

 

 1

 

 

1,291

 

Consumer

 

 

587

 

 

259

 

 

126

 

 

102

 

 

(1)

 

 

1,073

 

Corporate and Unallocated

 

 

 1

 

 

(1)

 

 

 —

 

 

 1

 

 

 —

 

 

 1

 

Elimination of Dual Credit

 

 

(231)

 

 

(220)

 

 

(92)

 

 

(58)

 

 

 —

 

 

(601)

 

Total Company

 

$

2,941

 

$

2,433

 

$

1,577

 

$

736

 

$

(2)

 

$

7,685

 

 

v3.8.0.1
Acquisitions and Divestitures
3 Months Ended
Mar. 31, 2018
Acquisitions and Divestitures  
Acquisitions and Divestitures

NOTE 3.  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.

 

There were no business combinations that closed during the three-month periods ended March 31, 2018 and 2017.

 

As discussed in the Company’s 2017 Annual Report on Form 10-K, in October 2017, 3M completed the acquisition of Scott Safety for $2.0 billion of cash, net of cash acquired. Adjustments in 2018 to the purchase price allocation were approximately $20 million and related to identification of certain immaterial acquired assets. The change to provisional amounts did not result in material impacts to results of operations in 2018 or any portion related to earlier quarters in the measurement period. The allocation of purchase consideration related to Scott Safety is considered preliminary with provisional amounts primarily related to intangible assets and certain tax-related, contingent liability and working capital items. 3M expects to finalize the allocation of purchase price within the one year measurement-period following the acquisition.

 

Divestitures:

 

3M may divest certain businesses from time to time based upon reviews 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.

 

2018 divestitures:

In February 2018, 3M closed on the sale of certain personal safety product offerings primarily focused on noise, environmental, and heat stress monitoring to TSI, Inc. This business has annual sales of approximately $15 million. The transaction resulted in a pre-tax gain of less than $20 million that was reported within the Company’s Safety and Graphics business.

 

In addition, during the first quarter of 2018, 3M divested a polymer additives compounding business, formerly part of the Company’s Industrial business, and reflected a gain on final closing adjustments from a prior divestiture which, in aggregate, were not material.

 

In May 2018, 3M divested an abrasives glass products business, formerly part of the Company’s Industrial business, with annual sales of approximately $10 million. The transaction resulted in a pre-tax gain of less than $15 million.

 

2017 divestitures:

During the first quarter of 2017 (January 2017), 3M sold the assets of its safety prescription eyewear business, with annual sales of approximately $45 million, to HOYA Vision Care. The Company recorded a pre-tax gain of $29 million in the first quarter of 2017 as a result of this sale, which was reported within the Company’s Safety and Graphics business.

 

During the remainder of 2017, as further described in Note 2 in 3M’s 2017 Annual Report on Form 10-K, the Company closed on the divestiture of a number of business including its: identity management; tolling and automated license/number plate recognition; electronic monitoring; and electrical marking/labeling businesses.

 

Other:

In December 2017, 3M agreed to sell substantially all of its Communication Markets Division to Corning Incorporated, for $900 million, subject to closing and other adjustments. This business, with annual sales of approximately $400 million consists of optical fiber and copper passive connectivity solutions for the telecommunications industry including 3M’s xDSL, FTTx, and structured cabling solutions and, in certain countries, telecommunications system integration services. This sale is expected to close in 2018, subject to consultation or information requirements with relevant works councils and to customary closing conditions and regulatory approvals. 3M expects a pre-tax gain of approximately $500 million as a result of this divestiture that will be reported within the Company’s Electronics and Energy business.  

 

The aggregate operating income of these businesses was approximately $15 million and $10 million in the first quarters of 2018 and 2017, respectively. The approximate amounts of major assets and liabilities associated with disposal groups classified as held-for-sale as of March 31, 2018 and December 31, 2017 included the following:

 

 

 

 

 

 

 

 

 

 

    

March 31,

    

December 31,

 

(Millions)

    

2018

    

2017

 

Accounts receivable

 

$

20

 

$

25

 

Property, plant and equipment (net)

 

 

 —

 

 

20

 

 

In addition, approximately $275 million of goodwill was estimated to be attributable to disposal groups classified as held-for-sale as of March 31, 2018 and December 31, 2017 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.

 

Refer to Note 2 in 3M’s 2017 Annual Report on Form 10-K for more information on 3M’s acquisitions and divestitures.

v3.8.0.1
Goodwill and Intangible Assets
3 Months Ended
Mar. 31, 2018
Goodwill and Intangible Assets  
Goodwill and Intangible Assets

NOTE 4.  Goodwill and Intangible Assets

 

There were no acquisitions that closed during the first three months of 2018. 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 $20 million during the three months ended March 31, 2018. The amounts in the “Translation and other” column in the following table primarily relate to changes in foreign currency exchange rates. The goodwill balances by business segment as of December 31, 2017 and March 31, 2018, follow:

 

Goodwill

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

Acquisition

 

Divestiture

 

Translation

 

March 31, 2018

 

(Millions)

    

Balance

    

activity

    

activity

    

and other

    

Balance

 

Industrial

 

$

2,678

 

$

 —

 

$

(4)

 

$

38

 

$

2,712

 

Safety and Graphics

 

 

4,419

 

 

(20)

 

 

(8)

 

 

18

 

 

4,409

 

Health Care

 

 

1,682

 

 

 —

 

 

 —

 

 

17

 

 

1,699

 

Electronics and Energy

 

 

1,524

 

 

 —

 

 

 —

 

 

12

 

 

1,536

 

Consumer

 

 

210

 

 

 —

 

 

 —

 

 

 4

 

 

214

 

Total Company

 

$

10,513

 

$

(20)

 

$

(12)

 

$

89

 

$

10,570

 

 

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

 

As described in Note 16, effective in the first quarter of 2018, the Company changed its business segment reporting in its continuing effort to improve the alignment of its businesses around markets and customers. In addition, certain shared film manufacturing and supply technology platform resources formerly reflected within the Electronics and Energy business segment were combined with other shared and centrally managed material resource centers of expertise within Corporate and Unallocated. For any product changes that resulted in reporting unit changes, the Company applied the relative fair value method to determine the impact on goodwill of the associated reporting units. During the first quarter of 2018, the Company completed its assessment of any potential goodwill impairment for reporting units impacted by this new structure and determined that no impairment existed.

 

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 March 31, 2018, and December 31, 2017, follow:

 

 

 

 

 

 

 

 

 

 

    

March 31,

    

December 31,

 

(Millions)

    

2018

    

2017

 

Customer related intangible assets

 

$

2,341

 

$

2,332

 

Patents

 

 

564

 

 

561

 

Other technology-based intangible assets

 

 

584

 

 

583

 

Definite-lived tradenames

 

 

679

 

 

678

 

Other amortizable intangible assets

 

 

208

 

 

207

 

Total gross carrying amount

 

$

4,376

 

$

4,361

 

 

 

 

 

 

 

 

 

Accumulated amortization — customer related

 

 

(912)

 

 

(874)

 

Accumulated amortization — patents

 

 

(496)

 

 

(489)

 

Accumulated amortization — other technology based

 

 

(304)

 

 

(292)

 

Accumulated amortization — definite-lived tradenames

 

 

(265)

 

 

(256)

 

Accumulated amortization — other

 

 

(166)

 

 

(162)

 

Total accumulated amortization

 

$

(2,143)

 

$

(2,073)

 

 

 

 

 

 

 

 

 

Total finite-lived intangible assets — net

 

$

2,233

 

$

2,288

 

 

 

 

 

 

 

 

 

Non-amortizable intangible assets (primarily tradenames)

 

 

652

 

 

648

 

Total intangible assets — net

 

$

2,885

 

$

2,936

 

 

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

 

Amortization expense for acquired intangible assets for the three-month periods ended March 31, 2018 and 2017 follows:

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

 

 

 

 

March 31,

 

 

(Millions)

    

2018

    

2017

 

 

Amortization expense

 

$

64

 

$

64

 

 

 

Expected amortization expense for acquired amortizable intangible assets recorded as of March 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Remainder of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

After

 

(Millions)

 

2018

 

2019

 

2020

 

2021

 

2022

 

2023

 

2023

 

Amortization expense

 

$

190

 

$

243

 

$

232

 

$

222

 

$

208

 

$

176

 

$

962

 

 

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.

v3.8.0.1
Restructuring Actions and Exit Activities
3 Months Ended
Mar. 31, 2018
Restructuring Actions and Exit Activities  
Restructuring Actions and Exit Activities

NOTE 5.  Restructuring Actions and Exit Activities

2017 Restructuring Actions:

 

During the second quarter of 2017, management approved and committed to undertake certain restructuring actions primarily focused on portfolio and footprint optimization. These actions affected approximately 1,300 positions worldwide and resulted in a second quarter 2017 pre-tax charge of $99 million.

 

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

 

 

 

 

 

 

(Millions)

    

Employee-Related

 

Expense incurred in the second quarter of 2017

 

$

99

 

Cash payments

 

 

(8)

 

Adjustments

 

 

(3)

 

Accrued restructuring actions balance as of December 31, 2017

 

$

88

 

Cash payments

 

 

(5)

 

Adjustments

 

 

(4)

 

Accrued restructuring actions balance as of March 31, 2018

 

$

79

 

 

Remaining activities related to restructuring are expected to be completed by the end of 2018.

 

2017 Exit Activities: 

   

During the first quarter of 2017, the Company recorded net pre-tax charges of $24 million related to exit activities. These charges related to employee reductions, primarily in Western Europe.

v3.8.0.1
Supplemental Income Statement Information
3 Months Ended
Mar. 31, 2018
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 

    

 

 

March 31,

 

(Millions)

 

2018

    

2017

    

Interest expense

 

$

82

 

$

45

 

Interest income

 

 

(21)

 

 

(8)

 

Pension and postretirement net periodic benefit cost (benefit)

 

 

(19)

 

 

(32)

 

Total

 

$

42

 

$

 5

 

 

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. Refer to Note 11 for additional details on the components of pension and postretirement net periodic benefit costs.

v3.8.0.1
Supplemental Equity and Comprehensive Income Information
3 Months Ended
Mar. 31, 2018
Supplemental Equity and Comprehensive Income Information  
Supplemental Equity and Comprehensive Income Information

NOTE 7.  Supplemental Equity and Comprehensive Income Information

 

Consolidated Statement of Changes in Equity

 

Three months ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2017

 

$

11,622

 

$

5,361

 

$

39,115

 

$

(25,887)

 

$

(7,026)

 

$

59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

606

 

 

 

 

 

602

 

 

 

 

 

 

 

 

 4

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative translation adjustment

 

 

167

 

 

 

 

 

 

 

 

 

 

 

168

 

 

(1)

 

Defined benefit pension and post-retirement plans adjustment

 

 

116

 

 

 

 

 

 

 

 

 

 

 

116

 

 

 —

 

Cash flow hedging instruments - unrealized gain (loss)

 

 

(61)

 

 

 

 

 

 

 

 

 

 

 

(61)

 

 

 —

 

Total other comprehensive income (loss), net of tax

 

 

222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared

 

 

(810)

 

 

 

 

 

(810)

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

144

 

 

144

 

 

 

 

 

 

 

 

 

 

 

 

 

Reacquired stock

 

 

(972)

 

 

 

 

 

 

 

 

(972)

 

 

 

 

 

 

 

Issuances pursuant to stock option and benefit plans

 

 

227

 

 

 

 

 

(454)

 

 

681

 

 

 

 

 

 

 

Balance at March 31, 2018

 

$

11,039

 

$

5,505

 

$

38,453

 

$

(26,178)

 

$

(6,803)

 

$

62

 

 

Three months ended March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2016

 

$

10,343

 

$

5,070

 

$

37,907

 

$

(25,434)

 

$

(7,245)

 

$

45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

1,326

 

 

 

 

 

1,323

 

 

 

 

 

 

 

 

 3

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative translation adjustment

 

 

292

 

 

 

 

 

 

 

 

 

 

 

289

 

 

 3

 

Defined benefit pension and post-retirement plans adjustment

 

 

83

 

 

 

 

 

 

 

 

 

 

 

83

 

 

 —

 

Cash flow hedging instruments - unrealized gain (loss)

 

 

(76)

 

 

 

 

 

 

 

 

 

 

 

(76)

 

 

 —

 

Total other comprehensive income (loss), net of tax

 

 

299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared

 

 

(702)

 

 

 

 

 

(702)

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

128

 

 

128

 

 

 

 

 

 

 

 

 

 

 

 

 

Reacquired stock

 

 

(678)

 

 

 

 

 

 

 

 

(678)

 

 

 

 

 

 

 

Issuances pursuant to stock option and benefit plans

 

 

324

 

 

 

 

 

(434)

 

 

758

 

 

 

 

 

 

 

Balance at March 31, 2017

 

$

11,040

 

$

5,198

 

$

38,094

 

$

(25,354)

 

$

(6,949)

 

$

51

 

 

Changes in Accumulated Other Comprehensive Income (Loss) Attributable to 3M by Component

 

Three months ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

 

    

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, 2017, net of tax:

 

$

(1,638)

 

$

(5,276)

 

$

(112)

 

$

(7,026)

 

Other comprehensive income (loss), before tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts before reclassifications

 

 

129

 

 

 —

 

 

(82)

 

 

47

 

Amounts reclassified out

 

 

 —

 

 

151

 

 

34

 

 

185

 

Total other comprehensive income (loss), before tax

 

 

129

 

 

151

 

 

(48)

 

 

232

 

Tax effect

 

 

39

 

 

(35)

 

 

(13)

 

 

(9)

 

Total other comprehensive income (loss), net of tax

 

 

168

 

 

116

 

 

(61)

 

 

223

 

Balance at March 31, 2018, net of tax:

 

$

(1,470)

 

$

(5,160)

 

$

(173)

 

$

(6,803)

 

 

 

Three months ended March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

 

    

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, 2016, net of tax:

 

$

(2,008)

 

$

(5,328)

 

$

91

 

$

(7,245)

 

Other comprehensive income (loss), before tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts before reclassifications

 

 

226

 

 

 —

 

 

(101)

 

 

125

 

Amounts reclassified out

 

 

 —

 

 

119

 

 

(18)

 

 

101

 

Total other comprehensive income (loss), before tax

 

 

226

 

 

119

 

 

(119)

 

 

226

 

Tax effect

 

 

63

 

 

(36)

 

 

43

 

 

70

 

Total other comprehensive income (loss), net of tax

 

 

289

 

 

83

 

 

(76)

 

 

296

 

Balance at March 31, 2017, net of tax:

 

$

(1,719)

 

$

(5,245)

 

$

15

 

$

(6,949)

 

 

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 also 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 March 31,

 

Location on Income

 

(Millions)

 

2018

    

2017

 

Statement

 

Gains (losses) associated with defined benefit pension and postretirement plans amortization

 

 

 

 

 

 

 

 

 

Prior service benefit

 

 

19

 

 

22

 

See Note 11

 

Net actuarial loss

 

 

(170)

 

 

(141)

 

See Note 11

 

Total before tax

 

 

(151)

 

 

(119)

 

 

 

Tax effect

 

 

35

 

 

36

 

Provision for income taxes

 

Net of tax

 

$

(116)

 

$

(83)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedging instruments gains (losses)

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

$

(34)

 

$

18

 

Cost of sales

 

Total before tax

 

 

(34)

 

 

18

 

 

 

Tax effect

 

 

 8

 

 

(6)

 

Provision for income taxes

 

Net of tax

 

$

(26)

 

$

12

 

 

 

Total reclassifications for the period, net of tax

 

$

(142)

 

$

(71)

 

 

 

 

v3.8.0.1
Income Taxes
3 Months Ended
Mar. 31, 2018
Income Taxes.  
Income Taxes

NOTE 8.  Income Taxes

 

The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2005.

 

The IRS has completed its field examination of the Company’s U.S. federal income tax returns for the years 2005 through 2014, and 2016. The Company protested certain IRS positions within these tax years and entered into the administrative appeals process with the IRS. In December 2012, the Company received a statutory notice of deficiency for the 2006 year. The Company filed a petition in Tax Court in the first quarter of 2013 relating to the 2006 tax year.

 

Currently, the Company is under examination by the IRS for its U.S. federal income tax returns for the years 2015 and 2017. It is anticipated that the IRS will complete its examination of the Company for 2015 by the end of the third quarter of 2018 and for 2017 by the end of the first quarter of 2019. As of March 31, 2018, the IRS has not proposed any significant adjustments to the Company’s tax positions for which the Company is not adequately reserved.

 

Payments relating to other proposed assessments arising from the 2005 through 2017 examinations may not be made until a final agreement is reached between the Company and the IRS on such assessments or upon a final resolution resulting from the administrative appeals process or judicial action. In addition to the U.S. federal examination, there is also audit activity in several U.S. state and foreign jurisdictions.

 

3M anticipates changes to the Company’s uncertain tax positions due to the closing and resolution of audit issues for various audit years mentioned above and closure of statutes. Currently, the Company is estimating a decrease in unrecognized tax benefits during the next 12 months as a result of anticipated resolutions of audit issues. The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of March 31, 2018 and December 31, 2017 are $518 million and $526 million, respectively.

 

The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense. The Company recognized in the consolidated statement of income on a gross basis approximately $9 million and $3 million of expense for the three months ended March 31, 2018 and March 31, 2017, respectively. At March 31, 2018 and December 31, 2017, accrued interest and penalties in the consolidated balance sheet on a gross basis were $69 million and $68 million, respectively. Included in these interest and penalty amounts are interest and penalties related to tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

 

The provision for income taxes is determined using the asset and liability approach. Under this approach, deferred income taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. The Company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their realizability exits. As of March 31, 2018 and December 31, 2017, the Company had valuation allowances of $85 million and $81 million on its deferred tax assets, respectively.

 

The effective tax rate for the first quarter of 2018 was 37.2 percent, compared to 23.7 percent in the first quarter of 2017, an increase of 13.5 percentage points. Multiple factors increased the Company’s effective tax rate on a combined basis by 27.8 percentage points. They included impacts of the 2017 Tax Cuts and Jobs Act (TCJA) such as the measurement period adjustment to the provisional accounting of the TCJA’s enactment (discussed further below) as well as the TCJA’s global intangible low-taxed income (GILTI) provision and the elimination of the domestic manufacturing deduction. Lower excess tax benefits year-over-year related to employer share-based payments also increased the Company’s effective tax rate. This increase was partially offset by a 14.3 percentage point decrease in the effective rate, primarily related to favorable aspects of the TCJA such as the decrease in the U.S. income tax rate and provisions incentivizing foreign-derived intangible income (FDII), in addition to impacts associated with composition of income before taxes from both a geographic and discrete item (such as the resolution of the NRD Lawsuit, as defined and described in Note 14) perspective.

 

The TCJA was enacted in December 2017. Among other things, the TCJA reduces the U.S. federal corporate tax rate from 35 percent to 21 percent beginning in 2018, requires companies to pay a one-time transition tax on previously unremitted earnings of non-U.S. subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. The SEC staff issued Staff Accounting Bulletin (SAB) 118, which provides guidance on accounting for enactment effects of the TCJA. SAB 118 provides a measurement period of up to one year from the TCJA’s enactment date for companies to complete their accounting under ASC 740. In accordance with SAB 118, to the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements. If a company cannot determine a provisional estimate to be included in its financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA. In connection with 3M’s initial analysis of the impact of the enactment of the TCJA, the Company recorded a net tax expense of $762 million in the fourth quarter of 2017. As further discussed below, during the first quarter of 2018, 3M recognized a measurement period adjustment resulting in an additional tax expense of $217 million to this provisional accounting.

 

Transition tax: The transition tax is a tax on previously untaxed accumulated and current earnings and profits (E&P) of certain of the Company’s non-U.S. subsidiaries. To determine the amount of the transition tax, 3M must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. 3M was able to make a reasonable estimate of the transition tax and recorded a provisional obligation and additional income tax expense of $745 million in the fourth quarter of 2017. The U.S. Internal Revenue Service issued subsequent guidance in the form of IRS Notices 2018-13 and  2018-26 relative to the currency translation rate used and entity classification for purposes of calculating the transition tax. The Company reflected the impact of this guidance and recorded a measurement period adjustment to its 2017 provisional accounting resulting in an additional income tax expense $132 million in the first quarter of 2018. The Company continues to gather additional information and will consider further guidance to more precisely compute the transition tax. The provisional amount may change when 3M finalizes the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalizes the amounts held in cash or other specified assets. The TCJA’s transition tax is payable over eight years beginning in 2018. As of March 31, 2018, 3M reflected $144 million and $733 million in current accrued income taxes and long-term income taxes payable, respectively, associated with the transition tax.

 

Remeasurement of deferred tax assets/liabilities and other impacts: 3M remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21 percent under the TCJA. 3M is still analyzing certain aspects of the TCJA, considering additional technical guidance, and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. This includes the potential impacts of the global intangible low-taxed income (GILTI) provision within the TCJA on deferred tax assets/liabilities. 3M also is considering other impacts of the 2017 enactment of the TCJA including, but not limited to effects on the Company’s indefinite reinvestment assertion. 3M previously has not provided deferred taxes on unremitted earnings attributable to international companies that have been considered to be reinvested indefinitely. The full effects of underlying tax rates of the TCJA causes some reassessment of previous indefinite reinvestment assertions with respect to certain jurisdictions. While 3M was able to make a reasonable estimate of these impacts, it may be affected by other analyses related to the TCJA, including, but not limited to, the calculation of the transition tax on deferred foreign income. The provisional amount recorded in the fourth quarter of 2017 related to deferred tax assets/liabilities and other impacts was a net additional income tax expense of $17 million. The Company reflected an additional income tax expense of $85 million in the first quarter of 2018 as a measurement period adjustment to its 2017 provisional accounting as a result of subsequent IRS technical guidance relative to changes in annual accounting periods for certain foreign corporations and other impacts of enactment of the TCJA.

 

3M has not completed its full analysis with respect to the GILTI provision within the TCJA. While 3M has recorded current tax on GILTI relative to 2018 operations, the Company has not yet elected a policy as to whether it will recognize deferred taxes for basis differences expected to reverse as GILTI or whether 3M will account for GILTI as period costs if and when incurred. 3M is not aware of other elements of the TCJA for which the Company was not yet able to make reasonable estimates of the enactment impact and for which it would continue accounting for them in accordance with ASC 740 on the basis of the tax laws in effect before the TCJA.

 

v3.8.0.1
Marketable Securities
3 Months Ended
Mar. 31, 2018
Marketable Securities.  
Marketable Securities

NOTE 9.  Marketable Securities

 

The following is a summary of amounts recorded on the Consolidated Balance Sheet for marketable securities (current and non-current).

 

 

 

 

 

 

 

 

 

(Millions)

 

March 31, 2018

 

December 31, 2017

 

Corporate debt securities

 

$

20

 

$

14

 

Commercial paper

 

 

495

 

 

899

 

Certificates of deposit/time deposits

 

 

59

 

 

76

 

U.S. municipal securities

 

 

 3

 

 

 3

 

Asset-backed securities:

 

 

 

 

 

 

 

Automobile loan related

 

 

 8

 

 

16

 

Credit card related

 

 

19

 

 

68

 

Asset-backed securities total

 

 

27

 

 

84

 

Current marketable securities

 

$

604

 

$

1,076

 

 

 

 

 

 

 

 

 

U.S. municipal securities

 

$

27

 

$

27

 

Non-current marketable securities

 

$

27

 

$

27

 

 

 

 

 

 

 

 

 

Total marketable securities

 

$

631

 

$

1,103

 

 

At March 31, 2018 and December 31, 2017, gross unrealized, gross realized, and net realized gains and/or losses (pre-tax) were not material.

 

The balances at March 31, 2018 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)

    

March 31, 2018

 

Due in one year or less

 

$

604

 

Due after one year through five years

 

 

13

 

Due after five years through ten years

 

 

14

 

Total marketable securities

 

$

631

 

 

3M does not currently expect risk related to its holding in asset-backed securities to materially impact its financial condition or liquidity.

v3.8.0.1
Long-Term Debt and Short-Term Borrowings
3 Months Ended
Mar. 31, 2018
Long-Term Debt and Short-Term Borrowings  
Long-Term Debt and Short-Term Borrowings

NOTE 10.  Long-Term Debt and Short-Term Borrowings

 

As of March 31, 2018 and December 31, 2017, the Company had approximately $2.3 billion and $745 million, respectively, in commercial paper outstanding.

v3.8.0.1
Pension and Postretirement Benefit Plans
3 Months Ended
Mar. 31, 2018
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 months ended March 31, 2018 and 2017 follow:

 

Benefit Plan Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31,

 

 

Qualified and Non-qualified

 

 

 

 

 

 

 

 

Pension Benefits

 

Postretirement

 

 

United States

International

 

Benefits

 

(Millions)

2018

    

2017

    

2018

    

2017

    

2018

    

2017

 

Net periodic benefit cost (benefit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

$

72

 

$

67

 

$

36

 

$

33

 

$

13

 

$

13

 

Non-operating expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest cost

$

141

 

$

142

 

$

40

 

$

37

 

$

20

 

$

19

 

Expected return on plan assets

 

(272)

 

 

(259)

 

 

(78)

 

 

(69)

 

 

(21)

 

 

(21)

 

Amortization of prior service benefit

 

(6)

 

 

(6)

 

 

(3)

 

 

(3)

 

 

(10)

 

 

(13)

 

Amortization of net actuarial loss

 

126

 

 

97

 

 

29

 

 

30

 

 

15

 

 

14

 

Total non-operating expense (benefit)

 

(11)

 

 

(26)

 

 

(12)

 

 

(5)

 

 

 4

 

 

(1)

 

Total net periodic benefit cost (benefit)

$

61

 

$

41

 

$

24

 

$

28

 

$

17

 

$

12

 

 

 

For the three months ended March 31, 2018, contributions totaling $231 million were made to the Company’s U.S. and international pension plans and $1 million to its postretirement plans. For total year 2018, the Company expects to contribute approximately $300 million to $500 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 2018. 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.

 

The Company adopted ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, effective January 1, 2018 on a retrospective basis. This ASU changed how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit cost in the income statement. Under the new standard, only the service cost component of net periodic benefit cost is included in operating expenses and only the service cost component is eligible for capitalization into assets such as inventory. All other net periodic benefit costs components (such as interest, expected return on plan assets, prior service cost amortization and actuarial gain/loss amortization) are reported outside of operating income. See Note 1 for additional details.

v3.8.0.1
Derivatives
3 Months Ended
Mar. 31, 2018
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 11 in 3M’s 2017 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 effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

 

Cash Flow Hedging - Foreign Currency Forward and Option Contracts: The Company enters into foreign exchange forward and option contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies. These transactions are designated as cash flow hedges. The settlement or extension of these derivatives will result in reclassifications (from accumulated other comprehensive income) to earnings in the period during which the hedged transactions affect earnings. 3M may dedesignate these cash flow hedge relationships in advance of the occurrence of the forecasted transaction. The portion of gains or losses on the derivative instrument previously accumulated in other comprehensive income for dedesignated hedges remains in accumulated other comprehensive income until the forecasted transaction occurs or becomes probable of not occurring. Changes in the value of derivative instruments after dedesignation are recorded in earnings and are included in the Derivatives Not Designated as Hedging Instruments section below. 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: The Company may use forward starting interest rate contracts to hedge exposure to variability in cash flows from interest payments on forecasted debt issuances. The amortization of gains and losses on forward starting interest rate swaps is included in the tables below as part of the gain/(loss) recognized in income on the effective portion of derivatives as a result of reclassification from accumulated other comprehensive income. Additional information regarding previously issued but terminated interest rate contracts, which have related balances within accumulated other comprehensive income being amortized over the underlying life of related debt, can be found in Note 13 in 3M’s 2017 Annual Report on Form 10-K.

 

In the first quarter of 2018, the Company entered into additional forward starting interest rate swaps with a notional amount of $200 million as hedges against interest rate volatility associated with a forecasted issuance of fixed rate debt.

 

The amortization of gains and losses on forward starting interest rate swaps is included in the tables below as part of the gain/(loss) recognized in income on the effective portion of derivatives as a result of reclassification from accumulated other comprehensive income.

 

As of March 31, 2018, the Company had a balance of $173 million associated with the after-tax net unrealized loss associated with cash flow hedging instruments recorded in accumulated other comprehensive income. This includes a remaining balance of $9 million (after tax loss)  related to the forward starting interest rate swaps, which will be amortized over the respective lives of the debt.  Based on exchange rates as of March 31, 2018, 3M expects to reclassify approximately $107 million, $82 million, $57 million, and $34 million of the after-tax net unrealized foreign exchange cash flow hedging losses to earnings over the next 12 months, over the remainder of 2018, in 2019, and after 2019, respectively (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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax Gain (Loss) Recognized in

 

 

 

 

 

Pretax Gain (Loss)

 

Income on Effective Portion of

 

Ineffective Portion of Gain

 

 

 

Recognized in Other

 

Derivative as a Result of

 

(Loss) on Derivative and

 

 

 

Comprehensive

 

Reclassification from

 

Amount Excluded from

 

 

 

Income on Effective

 

Accumulated Other

 

Effectiveness Testing

 

Three months ended March 31, 2018

 

Portion of Derivative

 

Comprehensive Income

 

Recognized in Income

 

(Millions)

    

Amount

    

Location

    

Amount

    

Location

    

Amount

 

Foreign currency forward/option contracts

 

$

(79)

 

Cost of sales

 

$

(34)

 

Cost of sales

 

$

 

Interest rate swap contracts

 

 

(3)

 

Interest expense

 

 

 —

 

Interest expense

 

 

 

Total

 

$

(82)

 

 

 

$

(34)

 

 

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

Portion of Derivative

 

Comprehensive Income

 

Recognized in Income

 

(Millions)

    

Amount

    

Location

    

Amount

    

Location

    

Amount

 

Foreign currency forward/option contracts

 

$

(100)

 

Cost of sales

 

$

18

 

Cost of sales

 

$

 

Interest rate swap contracts

 

 

(1)

 

Interest expense

 

 

 —

 

Interest expense

 

 

 

Total

 

$

(101)

 

 

 

$

18

 

 

 

$

 —

 

 

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: The Company manages interest expense using a mix of fixed and floating rate debt. To help manage borrowing costs, the Company may enter into interest rate swaps. Under these arrangements, the Company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. The mark-to-market of these fair value hedges is recorded as gains or losses in interest expense and is offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense. These fair value hedges are highly effective and, thus, there is no impact on earnings due to hedge ineffectiveness. Additional information regarding designated interest rate swaps can be found in Note 13 in 3M’s 2017 Annual Report on Form 10-K.

 

The location in the consolidated statements of income and amounts of gains and losses related to derivative instruments designated as fair value hedges and similar information relative to the hedged items are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (Loss) on Derivative

 

Gain (Loss) on Hedged Item

 

Three months ended March 31, 2018

 

Recognized in Income

 

Recognized in Income

 

(Millions)

    

Location

    

Amount

    

Location

    

Amount

 

Interest rate swap contracts

 

Interest expense

 

$

(11)

 

Interest expense

 

$

11

 

Total

 

 

 

$

(11)

 

 

 

$

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

 

 

 

 

(Millions)

    

Location

    

Amount

    

Location

    

Amount

 

Interest rate swap contracts

 

Interest expense

 

$

(5)

 

Interest expense

 

$

 5

 

Total

 

 

 

$

(5)

 

 

 

$

 5

 

 

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. The remainder of the change in value of such instruments is recorded in earnings. 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.

 

During the first quarter of 2018, the Company dedesignated 300 million Euros of foreign currency denominated debt from a former net investment hedge relationship.

 

At March 31, 2018, the total notional amount of foreign exchange forward contracts designated in net investment hedges was approximately 150 million Euros and approximately 248 billion South Korean Won, along with a principal amount of long-term debt instruments designated in net investment hedges totaling 4.1 billion Euros. The maturity dates of these derivative and nonderivative instruments designated in net investment hedges range from 2018 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

 

 

 

 

 

within Other

 

Ineffective Portion of Gain (Loss) on

 

 

 

Comprehensive Income

 

Instrument and Amount Excluded

 

 

 

on Effective Portion of

 

from Effectiveness Testing

 

Three months ended March 31, 2018

 

Instrument

 

Recognized in Income

 

(Millions)

    

Amount

    

Location

    

Amount

 

Foreign currency denominated debt

 

$

(128)

 

Cost of sales

 

$

(2)

 

Foreign currency forward contracts

 

 

(6)

 

Cost of sales

 

 

(1)

 

Total

 

$

(134)

 

 

 

$

(3)

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

Comprehensive Income

 

Instrument and Amount Excluded

 

(Millions)

    

Amount

    

Location

    

Amount

 

Foreign currency denominated debt

 

$

(121)

 

N/A

 

$

 —

 

Foreign currency forward contracts

 

 

(20)

 

Cost of sales

 

 

 2

 

Total

 

$

(141)

 

 

 

$

 2

 

 

Derivatives Not Designated as Hedging Instruments:

 

Derivatives not designated as hedging instruments include dedesignated foreign currency forward and options 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 exchange forward contracts to offset, in part, the impacts of certain intercompany transactions, foreign currency denominated debt (not otherwise in net investment hedge relationships), and to further mitigate short term currency impacts. In addition, the Company 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 statements of income and amounts of gains and losses related to derivative instruments not designated as hedging instruments are as follows:

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2018

 

 

 

Gain (Loss) on Derivative Recognized in

 

 

 

Income

 

(Millions)

    

Location

    

Amount

 

Foreign currency forward/option contracts

 

Cost of sales

 

$

(3)

 

Foreign currency forward contracts

 

Interest expense

 

 

23

 

Total

 

 

 

$

20

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

 

 

Gain (Loss) on Derivative Recognized in

 

 

 

Income

 

(Millions)

    

Location

    

Amount

 

Foreign currency forward/option contracts

 

Cost of sales

 

$

(1)

 

Foreign currency forward contracts

 

Interest expense

 

 

42

 

Total

 

 

 

$

41

 

 

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 interest rate swaps, which are presented using the contract 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

 

March 31, 2018

 

Notional

 

 

 

Fair

 

 

 

Fair

 

(Millions)

 

Amount

 

Location

 

Value Amount

 

Location

 

Value Amount

 

Derivatives designated as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

$

2,225

 

Other current assets

 

$

 5

 

Other current liabilities

 

$

122

 

Foreign currency forward/option contracts

 

 

1,313

 

Other assets

 

 

11

 

Other liabilities

 

 

63

 

Interest rate swap contracts

 

 

450

 

Other current assets

 

 

 —

 

Other current liabilities

 

 

 2

 

Interest rate swap contracts

 

 

1,703

 

Other assets

 

 

20

 

Other liabilities

 

 

18

 

Total derivatives designated as hedging instruments

 

 

 

 

 

 

$

36

 

 

 

$

205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

$

6,070

 

Other current assets

 

$

16

 

Other current liabilities

 

$

33

 

Total derivatives not designated as hedging instruments

 

 

 

 

 

 

$

16

 

 

 

$

33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total derivative instruments

 

 

 

 

 

 

$

52

 

 

 

$

238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

    

Assets

    

Liabilities

 

December 31, 2017

 

Notional

 

 

 

Fair

 

 

 

Fair

 

(Millions)

 

Amount

 

Location

 

Value Amount

 

Location

 

Value Amount

 

Derivatives designated as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

$

2,204

 

Other current assets

 

$

 7

 

Other current liabilities

 

$

109

 

Foreign currency forward/option contracts

 

 

1,392

 

Other assets

 

 

20

 

Other liabilities

 

 

56

 

Interest rate swap contracts

 

 

450

 

Other current assets

 

 

 —

 

Other current liabilities

 

 

 1

 

Interest rate swap contracts

 

 

1,503

 

Other assets

 

 

21

 

Other liabilities

 

 

 6

 

Total derivatives designated as hedging instruments

 

 

 

 

 

 

$

48

 

 

 

$

172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

$

4,974

 

Other current assets

 

$

30

 

Other current liabilities

 

$

25

 

Total derivatives not designated as hedging instruments

 

 

 

 

 

 

$

30

 

 

 

$

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total derivative instruments

 

 

 

 

 

 

$

78

 

 

 

$

197

 

 

 

 

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 March 31, 2018, 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 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

 

 

 

 

 

March 31, 2018

 

Consolidated

 

Recognized

 

Cash Collateral

 

Net Amount of

 

(Millions)

 

Balance Sheet

 

Derivative Liabilities

 

Received

 

Derivative Assets

 

Derivatives subject to master netting agreements

 

$

52

 

$

26

 

$

 —

 

$

26

 

Derivatives not subject to master netting agreements

 

 

 —

 

 

 

 

 

 

 

 

 —

 

Total

 

$

52

 

 

 

 

 

 

 

$

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

(Millions)

 

 

 

 

 

 

 

 

 

Derivatives subject to master netting agreements

 

$

78

 

$

27

 

$

 —

 

$

51

 

Derivatives not subject to master netting agreements

 

 

 —

 

 

 

 

 

 

 

 

 —

 

Total

 

$

78

 

 

 

 

 

 

 

$

51

 

 

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

 

 

 

 

 

March 31, 2018

 

Consolidated

 

Recognized

 

Cash Collateral

 

Net Amount of

 

(Millions)

 

Balance Sheet

 

Derivative Assets

 

Pledged

 

Derivative Liabilities

 

Derivatives subject to master netting agreements

 

$

238

 

$

26

 

$

 —

 

$

212

 

Derivatives not subject to master netting agreements

 

 

 —

 

 

 

 

 

 

 

 

 —

 

Total

 

$

238

 

 

 

 

 

 

 

$

212

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

(Millions)

 

 

 

 

 

 

 

 

 

Derivatives subject to master netting agreements

 

$

197

 

$

27

 

$

 —

 

$

170

 

Derivatives not subject to master netting agreements

 

 

 —

 

 

 

 

 

 

 

 

 —

 

Total

 

$

197

 

 

 

 

 

 

 

$

170

 

 

Currency Effects

 

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, decreased pre-tax income by approximately $64 million for the three months ended March 31, 2018. These estimates include transaction gains and losses, including derivative instruments designed to reduce foreign currency exchange rate risks and any impacts from swapping Venezuelan bolivars into U.S. dollars.

v3.8.0.1
Fair Value Measurements
3 Months Ended
Mar. 31, 2018
Fair Value Measurements  
Fair Value Measurements

NOTE 13.  Fair Value Measurements

 

3M follows ASC 820, Fair Value Measurements and Disclosures, with respect to assets and liabilities that are measured at fair value on a recurring basis and nonrecurring basis. Under the standard, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The standard also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

 

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis:

 

Refer to Note 14 in the 2017 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 280.

 

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)

    

March 31, 2018

    

Level 1

    

Level 2

    

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

$

20

 

$

 —

 

$

20

 

$

 —

 

Commercial paper

 

 

495

 

 

 —

 

 

495

 

 

 —

 

Certificates of deposit/time deposits

 

 

59

 

 

 —

 

 

59

 

 

 —

 

Asset-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Automobile loan related

 

 

 8

 

 

 —

 

 

 8

 

 

 —

 

Credit card related

 

 

19

 

 

 —

 

 

19

 

 

 —

 

U.S. municipal securities

 

 

30

 

 

 —

 

 

 —

 

 

30

 

Derivative instruments — assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

 

32

 

 

 —

 

 

32

 

 

 —

 

Interest rate swap contracts

 

 

20

 

 

 —

 

 

20

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative instruments — liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

 

218

 

 

 —

 

 

218

 

 

 —

 

Interest rate swap contracts

 

 

20

 

 

 —

 

 

20

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements

 

Description

 

Fair Value at

 

Using Inputs Considered as

 

(Millions)

    

December 31, 2017

    

Level 1

    

Level 2

    

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

$

14

 

$

 —

 

$

14

 

$

 —

 

Commercial paper

 

 

899

 

 

 —

 

 

899

 

 

 —

 

Certificates of deposit/time deposits

 

 

76

 

 

 —

 

 

76

 

 

 —

 

Asset-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Automobile loan related

 

 

16

 

 

 —

 

 

16

 

 

 —

 

Credit card related

 

 

68

 

 

 —

 

 

68

 

 

 —

 

U.S. municipal securities

 

 

30

 

 

 —

 

 

 —

 

 

30

 

Derivative instruments — assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

 

57

 

 

 —

 

 

57

 

 

 —

 

Interest rate swap contracts

 

 

21

 

 

 —

 

 

21

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative instruments — liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

 

190

 

 

 —

 

 

190

 

 

 —

 

Interest rate swap contracts

 

 

 7

 

 

 —

 

 

 7

 

 

 —

 

 

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).

 

 

 

 

 

 

 

 

 

Marketable securities — certain U.S. municipal securities only

 

March 31,

 

(Millions)

 

2018

    

2017

 

Beginning balance

 

$

30

 

$

20

 

Total gains or losses:

 

 

 

 

 

 

 

Included in earnings

 

 

 —

 

 

 —

 

Included in other comprehensive income

 

 

 —

 

 

 —

 

Purchases and issuances

 

 

 —

 

 

 —

 

Sales and settlements

 

 

 —

 

 

 —

 

Transfers in and/or out of level 3

 

 

 —

 

 

 —

 

Ending balance

 

$

30

 

$

20

 

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 12 in 3M’s 2017 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 long-lived asset 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. There were no material long-lived asset impairments or adjustments to equity securities using the measurement alternative for the three months ended March 31, 2018. During the three months ended March 31, 2017, the Company recognized approximately $40 million in long-lived asset impairments related to its Electronics and Energy business segment, with the complete carrying amount of such assets written off and included in operating income results.

 

Fair Value of Financial Instruments:

 

The Company’s financial instruments include cash and cash equivalents, marketable securities, accounts receivable, certain investments, accounts payable, borrowings, and derivative contracts. The fair values of cash equivalents, accounts receivable, 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. For its long-term debt, the Company utilized third-party quotes to estimate fair values (classified as level 2). Information with respect to the carrying amounts and estimated fair values of these financial instruments follow:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018

 

December 31, 2017

 

 

    

Carrying

    

Fair

    

Carrying

    

Fair

 

(Millions)

 

Value

 

Value

 

Value

 

Value

 

Long-term debt, excluding current portion

 

$

12,211

 

$

12,659

 

$

12,096

 

$

12,535

 

 

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. Many of 3M’s fixed-rate bonds were trading at a premium at March 31, 2018 and December 31, 2017, due to the low interest rates and tightening of 3M’s credit spreads.

v3.8.0.1
Commitments and Contingencies
3 Months Ended
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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 include various products liability (involving products that the Company now or formerly manufactured and sold), intellectual property, and commercial claims and lawsuits, including those brought under the antitrust laws, and environmental proceedings. Unless otherwise stated, the Company is vigorously defending all such litigation. 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 15 “Commitments and Contingencies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

 

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 March 31, 2018, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 2,250 individual claimants, compared to approximately 2,230 individual claimants with actions pending at December 31, 2017.

 

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 and other malignancies, will represent a greater percentage of total claims than in the past. The Company has prevailed in thirteen of the fourteen cases taken to trial, including eleven of the twelve cases tried to verdict (such trials occurred in 1999, 2000, 2001, 2003, 2004, 2007, 2015, and the cases tried in 2016, 2017, and 2018-described below), and an appellate reversal in 2005 of the 2001 jury verdict adverse to the Company. The remaining case, tried in 2009, was dismissed by the court at the close of plaintiff’s evidence, based on the court’s legal finding that the plaintiff had not presented sufficient evidence to support a jury verdict. In August 2016, 3M received a unanimous verdict in its favor from a jury in state court in Kentucky, in 3M’s first respirator trial involving coal mine dust. The estate of the plaintiff alleged that the 3M 8710 respirator is defective and caused his death because it did not protect him from harmful coal mine dust. The jury rejected plaintiff’s claim and returned a verdict finding no liability against 3M. The verdict is final as the plaintiff did not file an appeal. In September 2017, 3M received a unanimous verdict in its favor from a jury in state court in Kentucky in 3M’s second respirator trial involving coal mine dust. The jury ultimately determined that the plaintiff’s claims were barred by the statute of limitations. In November 2017, the court denied the plaintiff’s motion for a new trial. The plaintiff did not file an appeal, thereby ending the litigation. In February 2018, 3M received a verdict in its favor from a jury in state court in California. The plaintiff alleged that the 3M 8710 respirator was defective and caused his mesothelioma because it did not protect him from asbestos fibers. The jury rejected plaintiff’s claim and returned a verdict finding no liability against 3M. In April 2018, a jury in state court in Kentucky found 3M’s 8710 respirators failed to protect two coal miners from coal mine dust and awarded aggregate compensatory damages of approximately $2 million and punitive damages totaling $63 million. Once a judgment has been entered by the trial court, the Company plans to appeal the judgment. The Company believes liability in this case is not probable and estimable.

 

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 with malignant conditions 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. The case was inactive from the fourth quarter of 2007 until late 2013, other than a case management conference in March 2011. In November 2013, the State filed a motion to bifurcate the lawsuit into separate liability and damages proceedings. At the hearing on the motion, the court declined to bifurcate the lawsuit. 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 fact that the complaint asserts 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 might allocate to each defendant if the case is 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.

 

In the first quarter of 2018, the Company made payments for legal fees and settlements of $12 million related to the respirator mask/asbestos litigation. As of March 31, 2018, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $598 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 March 31, 2018, the Company’s receivable for insurance recoveries related to the respirator mask/asbestos litigation was $4 million. The Company is seeking 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 purchased 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 March 31, 2018, 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, or other occupational dusts found in products manufactured by other defendants or generally in the workplace.

 

As of March 31, 2018, the Company, through its Aearo subsidiary, had accruals of $29 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 the Aearo approaching the year 2050. 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 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 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” that follows for information on the amount of the accrual.

 

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 perfluorooctanyl compounds such as perfluorooctanoate (“PFOA”), perfluorooctane sulfonate (“PFOS”), or similar compounds (“PFCs”). As a result of its phase-out decision in May 2000, the Company no longer manufactures perfluorooctanyl 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. 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 control or eliminate the presence of certain PFCs in purchased materials or as byproducts in some of 3M’s fluorochemical manufacturing processes, products, and waste streams.

 

Regulatory activities concerning PFOA and/or PFOS 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, while not enforceable, serve as guidance and are benchmarks for determining if concentrations of chemicals in tap water from public utilities are safe for public consumption. In an effort to collect exposure information under the Safe Drinking Water Act, the EPA published on May 2, 2012 a list of unregulated substances, including six PFCs, 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 address its historic disposal of PFC-containing waste associated with manufacturing operations at the 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 address the presence of PFCs in the soil at the Company’s manufacturing facility in Decatur, Alabama. Pursuant to a permit issued by ADEM, for approximately twenty years, the Company incorporated its wastewater treatment plant sludge containing PFCs in fields at its Decatur facility. After a review of the available options to address the presence of PFCs in the soil, ADEM agreed that the preferred remediation option is to use a multilayer cap over the former sludge incorporation areas on the manufacturing site with subsequent groundwater migration controls and treatment. Implementation of that plan continues and is expected to be completed in 2018.

 

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 PFCs 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 PFCs 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 PFCs for which a HBV and/or HRL exists as a result of contamination from these sites; (iii) remediating identified sources of other PFCs 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 will continue at the Cottage Grove site during 2018.

 

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 PFOS and PFOA. 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 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.

 

The Company cannot predict what additional regulatory actions arising from the foregoing proceedings and activities, if any, may be taken regarding such compounds or the consequences of any such actions.

 

Alabama Environmental Litigation

 

As previously reported, a former employee filed a purported class action lawsuit in 2002 in the Circuit Court of Morgan County, Alabama (the “St. John case”), seeking unstated damages and alleging that the plaintiffs suffered fear, increased risk, subclinical injuries, and property damage from exposure to certain perfluorochemicals at or near the Company’s Decatur, Alabama, manufacturing facility. The court in 2005 granted the Company’s motion to dismiss the named plaintiff’s personal injury-related claims on the basis that such claims are barred by the exclusivity provisions of the state’s Workers Compensation Act. The plaintiffs’ counsel filed an amended complaint in November 2006, limiting the case to property damage claims on behalf of a purported class of residents and property owners in the vicinity of the Decatur plant. In June 2015, the plaintiffs filed an amended complaint adding additional defendants, including BFI Waste Management Systems of Alabama, LLC; BFI Waste Management of North America, LLC; the City of Decatur, Alabama; Morgan County, Alabama; Municipal Utilities Board of Decatur; and Morgan County, Alabama, d/b/a Decatur Utilities.

 

In 2005, the judge – in a second purported class action lawsuit filed by three residents of Morgan County, Alabama, seeking unstated compensatory and punitive damages involving alleged damage to their property from emissions of certain perfluorochemical compounds from the Company’s Decatur, Alabama, manufacturing facility that formerly manufactured those compounds (the “Chandler case”) – granted the Company’s motion to abate the case, effectively putting the case on hold pending the resolution of class certification issues in the St. John case. Despite the stay, plaintiffs filed an amended complaint seeking damages for alleged personal injuries and property damage on behalf of the named plaintiffs and the members of a purported class. No further action in the case is expected unless and until the stay is lifted.

 

In February 2009, a resident of Franklin County, Alabama, filed a purported class action lawsuit in the Circuit Court of Franklin County (the “Stover case”) seeking compensatory damages and injunctive relief based on the application by the Decatur utility’s wastewater treatment plant of wastewater treatment sludge to farmland and grasslands in the state that allegedly contain PFOA, PFOS and other perfluorochemicals. The named plaintiff seeks to represent a class of all persons within the State of Alabama who have had PFOA, PFOS, and other perfluorochemicals released or deposited on their property. In March 2010, the Alabama Supreme Court ordered the case transferred from Franklin County to Morgan County. In May 2010, consistent with its handling of the other matters, the Morgan County Circuit Court abated this case, putting it on hold pending the resolution of the 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 September 2016, the court granted 3M’s motion to dismiss plaintiffs’ trespass claims with prejudice, negligence claims for personal injuries, and private nuisance claims, and denied the motion to dismiss the plaintiffs’ negligence claims for property damage, public nuisance, abatement of nuisance, battery and wantonness.

 

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 PFCs 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.

 

In August 2016, a group of over 200 plaintiffs filed a class action against West Morgan-East Lawrence Water and Sewer Authority (Water Authority), 3M, Dyneon, Daikin, BFI, and the City of Decatur in state court in Lawrence County, Alabama. Plaintiffs are residents of Lawrence, Morgan and other counties who are or have been customers of the Water Authority. They contend defendants have released PFCs that contaminate the Tennessee River and, in turn, their drinking water, causing damage to their health and properties. In January 2017, the court in the St. John case, discussed above, stayed this litigation pending resolution of the St. John case.

 

In September 2016, the Water Works and Sewer Board of the City of Gadsden, Alabama filed a lawsuit in the Circuit Court of Etowah County Alabama against 3M and various carpet manufacturers. The complaint alleges that PFCs from the defendants’ facilities contaminated the Coosa River as its raw water source for drinking water and seeks unstated damages for the installation and operation of a filtration system, expenses to monitor PFC levels, and lost profits and sales.

 

In January 2017, several hundred plaintiffs sued 3M, its subsidiary Dyneon, and Daikin America in Lawrence and Morgan Counties, Alabama. The plaintiffs are owners of property, residents, and holders of property interests who receive their water from the West Morgan-East Lawrence Water and Sewer Authority (Water Authority). They assert common law claims for negligence, nuisance, trespass, wantonness, and battery, and they seek injunctive relief and punitive damages. The plaintiffs contend that the defendants own and operate manufacturing and disposal facilities in Decatur that have released and continue to release PFOA, PFOS and related chemicals into the groundwater and surface water of their sites, resulting in discharge into the Tennessee River. The plaintiffs also contend that the defendants have discharged into Bakers Creek and the Decatur Utilities Dry Creek Wastewater Treatment Plant, which, in turn, discharges wastewater containing these chemicals into the Tennessee River. The plaintiffs contend that, as a result the alleged discharges, the water supplied by the Water Authority to the plaintiffs was, and is, contaminated with PFOA, PFOS, and related chemicals at a level dangerous to humans.

 

In May 2017, the Water Works and Sewer Board of the Town of Centre, Alabama filed a lawsuit in the Circuit Court of Cherokee County Alabama against 3M, DuPont, and various carpet and textile manufacturers. The complaint alleges that PFCs from the defendants’ facilities contaminated the town’s raw water source for drinking water and seeks unstated damages for the installation and operation of a filtration system, expenses to monitor PFC levels, lost profits and sales, and injunctive relief.

 

In November 2017, a purported class action was filed against 3M, its subsidiary Dyneon, Daikin America, and the West Morgan-East Lawrence Water and Sewer Authority (Water Authority) in the U.S. District Court for the Northern District of Alabama. The plaintiffs are residents of Lawrence and Morgan County, Alabama who receive their water from the Water Authority. They assert various common law claims, including negligence, nuisance, wantonness, and fraudulent concealment, and they seek injunctive relief, attorneys’ fees, compensatory and punitive damages for their alleged personal injuries. The plaintiffs contend that the defendants own and operate manufacturing and disposal facilities in Decatur that have released and continue to release PFOA, PFOS and related chemicals into the groundwater and surface water of their sites, resulting in discharge into the Tennessee River. The plaintiffs also contend that the defendants have discharged chemicals into the Decatur Utilities Dry Creek Wastewater Treatment Plant, which, in turn, discharged wastewater containing these chemicals into the Tennessee River. The plaintiffs contend that, as a result of the alleged discharges, the water supplied by the Water Authority to the plaintiffs was, and is, contaminated with PFOA, PFOS, and related chemicals at a level dangerous to humans.

 

In January 2018, certain property owners in Trinity, Alabama filed a lawsuit against 3M, Dyneon, and three unnamed defendants in the U.S. District Court for the Northern District of Alabama. The plaintiffs assert claims for negligence, strict liability, trespass, nuisance, wanton and reckless conduct, and citizen suit claims for violation of the Resource Conservation and Recovery Act. They allege these claims arise from the defendants’ contamination of their property by disposal of PFCs in a landfill located on their property. The plaintiffs seek compensatory and punitive damages and a court order directing the defendants to remediate all PFC contamination on their property.

 

Minnesota Environmental Litigation

 

In December 2010, the State of Minnesota, by its Attorney General Lori Swanson, acting in its capacity as trustee of the natural resources of the State of Minnesota, filed a lawsuit in Hennepin County District Court against 3M to recover damages (including unspecified assessment costs and reasonable attorney’s fees) for alleged injury to, destruction of, and loss of use of certain of the State’s natural resources under the Minnesota Environmental Response and Liability Act (MERLA) and the Minnesota Water Pollution Control Act (MWPCA), as well as statutory nuisance and common law claims of trespass, nuisance, and negligence with respect to the presence of PFCs in the groundwater, surface water, fish or other aquatic life, and sediments (the “NRD Lawsuit”). The State also sought declarations under MERLA that 3M is responsible for all damages the State may suffer in the future for injuries to natural resources from releases of PFCs into the environment, and that 3M is responsible for compensation for future loss or destruction of fish, aquatic life, and other damages under the MWPCA. In September 2017, the State’s damages expert submitted a report that contended the State incurred $5 billion in damages. In November 2017, the State of Minnesota filed a motion for leave to amend its complaint to seek punitive damages from 3M, and 3M filed a motion for summary judgment contending, among other things, that the State’s claims were barred by the applicable statute of limitations. In December 2017, the court urged the parties to attempt to resolve the litigation before trial, and in January 2018, the court appointed a mediator to facilitate that process. In February 2018, 3M and the State of Minnesota reached a resolution of the NRD Lawsuit. Under the terms of the settlement, 3M agreed to provide an $850 million grant to the State for a special “3M Water Quality and Sustainability Fund.” This Fund will enable projects that support water sustainability in the Twin Cities East Metro region, such as continued delivery of water to residents and enhancing groundwater recharge to support sustainable growth. The projects will also result in habitat and recreation improvements, such as fishing piers, trails, and open space preservation. 3M recorded a pre-tax charge of $897 million, inclusive of legal fees and other related obligations, in the first quarter of 2018 associated with the resolution of this matter.

 

In July 2016, the City of Lake Elmo filed a lawsuit in the U.S. District Court for the District of Minnesota against 3M alleging that the City suffered damages from drinking water supplies contaminated with PFCs, including costs to construct alternative sources of drinking water. Trial is scheduled to begin in September 2019.

Aqueous Film Forming Foam (AFFF) Environmental Litigation

 

3M manufactured and marketed Aqueous Film Forming Foam (AFFF) for use in firefighting at airports and military bases from approximately 1963 to 2000. As of March 31, 2018, 17 putative class action and other lawsuits have been filed against 3M and other defendants in various state and federal courts in Colorado, Massachusetts, New York, and Pennsylvania where current or former airports or military bases are or were located. In these cases, plaintiffs typically allege that certain PFCs used in AFFF contaminated the soil and groundwater where AFFF was used and seek damages for loss of use and enjoyment of properties, diminished property values, investigation costs, remediation costs, and in some cases, funds for medical monitoring. Several companies have been sued along with 3M, including Ansul Co. (acquired by Tyco, Inc.), Angus Fire, Buckeye Fire Protection Co., Chemguard, National Foam, Inc., United Technologies Corp.

 

Other PFC-related Environmental Litigation

 

3M manufactured and marketed certain products containing PFCs for use by customers in their manufacturing process. As of March 31, 2018, the following four cases have been filed against 3M, another manufacturer, and their customers in connection with the use and disposal of these products.

 

In September 2017, three complaints were filed in the U.S. District Court for the Northern District of New York against 3M, Saint-Gobain Performance Plastics Corp. (“Saint-Gobain”), Honeywell International Inc. (“Honeywell”) and E.I. DuPont De Nemours and Company. Plaintiffs allege that 3M manufactured and sold PFOA that was used for manufacturing purposes at Saint-Gobain’s and Honeywell’s facilities located in the Village of Hoosick Falls and the Town of Hoosick. Plaintiffs claim that the drinking water around Hoosick Falls became contaminated with unsafe levels of PFOA due to the activities of the defendants, and allege that they suffered bodily injury due to the ingestion and inhalation of PFOA. Plaintiffs seek unstated compensatory, consequential, and punitive damages, as well as attorneys’ fees and costs.

 

In December 2017, eight plaintiffs filed a 12-count class action against 3M, Wolverine World Wide and Waste Management, Inc., alleging negligence, trespass, intentional and negligent infliction of emotional distress, battery, products liability, public and private nuisance, fraudulent concealment, and unjust enrichment. Each count was filed against each defendant. The action arises from Wolverine’s allegedly improper disposal of materials and wastes related to their shoe manufacturing operations. Plaintiffs allege Wolverine used 3M Scotchgard in its manufacturing process and that chemicals from 3M’s product have contaminated the environment after being disposed of near drinking water sources.

 

For environmental litigation matters described above for which a liability, if any, has been recorded, the Company believes the amount recorded, as well as the possible loss or range of loss in excess of the established accrual is not material to the Company’s consolidated results of operations or financial condition. For those matters for which a liability has not been recorded, the Company believes any such liability is not probable and estimable and the Company is not able to estimate a possible loss or range of loss at this time.

 

Environmental Liabilities and Insurance Receivables

 

As of March 31, 2018, the Company had recorded liabilities of $31 million for estimated “environmental remediation” costs based upon an evaluation of currently available facts with respect to each individual site and also recorded related insurance receivables of $8 million. The Company records liabilities for remediation costs on an undiscounted basis when they are probable and reasonably estimable, generally no later than the completion of feasibility studies or the Company’s commitment to a plan of action. Liabilities for estimated costs of environmental remediation, depending on the site, are based primarily upon internal or third-party environmental studies, and estimates as to the number, participation level and financial viability of any other potentially responsible parties, the extent of the contamination and the nature of required remedial actions. The Company adjusts recorded liabilities as further information develops or circumstances change. The Company expects that it will pay the amounts recorded over the periods of remediation for the applicable sites, currently ranging up to 20 years.

 

As of March 31, 2018, the Company had recorded liabilities of $54 million for “other environmental liabilities” based upon an evaluation of currently available facts to implement the Settlement Agreement and Consent Order with the MPCA (including the best estimate of the probable liability under the settlement of the NRD Lawsuit for interim treatment of municipal and private wells), the remedial action agreement with ADEM, and to address trace amounts of perfluorinated compounds in drinking water sources in the City of Oakdale, Minnesota, as well as presence in the soil and groundwater at the Company’s manufacturing facilities in Decatur, Alabama, and Cottage Grove, Minnesota, and at two former disposal sites in Washington County, Minnesota (Oakdale and Woodbury). The Company expects that most of the spending will occur over the next four years.

 

It is difficult to estimate the cost of environmental compliance and remediation given the uncertainties regarding the interpretation and enforcement of applicable environmental laws and regulations, the extent of environmental contamination and the existence of alternative cleanup methods. Developments may occur that could affect the Company’s current assessment, including, but not limited to: (i) changes in the information available regarding the environmental impact of the Company’s operations and products; (ii) changes in environmental regulations, changes in permissible levels of specific compounds in drinking water sources, or changes in enforcement theories and policies, including efforts to recover natural resource damages; (iii) new and evolving analytical and remediation techniques; (iv) success in allocating liability to other potentially responsible parties; and (v) the financial viability of other potentially responsible parties and third-party indemnitors. For sites included in both “environmental remediation liabilities” and “other environmental liabilities,” at which remediation activity is largely complete and remaining activity relates primarily to operation and maintenance of the remedy, including required post-remediation monitoring, the Company believes the exposure to loss in excess of the amount accrued would not be material to the Company’s consolidated results of operations or financial condition. However, for locations at which remediation activity is largely ongoing, the Company cannot estimate a possible loss or range of loss in excess of the associated established accruals for the reasons described above.

 

Other Matters

 

Department of Labor Investigation

 

The U.S. Department of Labor (DOL) notified 3M in April 2015 that it had commenced an investigation of 3M’s pension plan pursuant to the federal Employee Retirement Income Security Act of 1974, as amended (ERISA). The DOL has stated its investigation relates to certain private equity investments, plan expenses, securities lending, and distributions of plan benefits. In response to certain DOL requests, 3M produced documents and made employees available for interviews. In December 2016, the DOL issued certain subpoenas to 3M and 3M Investment Management Corp. relating to this investigation. 3M has produced additional responsive documents and is cooperating with the DOL in its investigation. 3M anticipates that the DOL will conclude its investigation in the first half of 2018.

 

Product Liability Litigation

 

As of March 31, 2018, the Company is a named defendant in lawsuits involving approximately 4,370 plaintiffs (compared to approximately 4,270 plaintiffs at December 31, 2017), most of which are pending in federal or state court in Minnesota, in which the plaintiffs claim they underwent various joint arthroplasty, cardiovascular, and other surgeries and later developed surgical site infections due to the use of the Bair Hugger™ patient warming system (the Bair Hugger™ product line was acquired by 3M as part of the 2010 acquisition of Arizant, Inc., a leading manufacturer of patient warming solutions designed to prevent hypothermia and maintain normal body temperature in surgical settings). The complaints seek damages and other relief based on theories of strict liability, negligence, breach of express and implied warranties, failure to warn, design and manufacturing defect, fraudulent and/or negligent misrepresentation/concealment, unjust enrichment, and violations of various state consumer fraud, deceptive or unlawful trade practices and/or false advertising acts. One case, from the U.S. District Court for the Western District of Tennessee is a putative nationwide class action. The U.S. Judicial Panel on Multidistrict Litigation (MDL) granted the plaintiffs’ motion to transfer and consolidate all cases pending in federal courts to the U.S. District Court for the District of Minnesota to be managed in a multi-district proceeding during the pre-trial phase of the litigation. In 2017, the U.S. District Court and the Minnesota state courts denied the plaintiffs’ motions to amend their complaints to add claims for punitive damages. At a joint hearing before the U.S. District Court and the Minnesota State court, on the parties’ motion to exclude each other’s experts, and 3M’s motion for summary judgment with respect to general causation, the federal court did not exclude the plaintiffs’ experts and denied 3M’s motion for summary judgment on general causation. In January 2018, the state court, in hearing the same arguments, excluded plaintiffs’ experts and granted 3M’s motion for summary judgment on general causation, dismissing all 61 cases pending before the state court in Minnesota. Plaintiffs have appealed that ruling and the state court’s punitive damages ruling. In April 2018, the federal court partially granted 3M’s motion for summary judgment in the first bellwether case, leaving for trial a claim for strict liability based upon design defect. The court dismissed the plaintiff’s claims for negligence, failure to warn, and common law and statutory fraud. The trial in the first bellwether case is scheduled to begin in May 2018.

 

In June 2016, the Company was served with a putative class action filed in the Ontario Superior Court of Justice for all Canadian residents who underwent various joint arthroplasty, cardiovascular, and other surgeries and later developed surgical site infections due to the use of the Bair Hugger™ patient warming system. The representative plaintiff seeks relief (including punitive damages) under Canadian law based on theories similar to those asserted in the MDL. No liability has been recorded for the Bair Hugger™ litigation because the Company believes that any such liability is not probable and estimable at this time.

 

In September 2011, 3M Oral Care launched Lava Ultimate CAD/CAM dental restorative material. The product was originally indicated for inlay, onlay, veneer, and crown applications. In June 2015, 3M Oral Care voluntarily removed crown applications from the product’s instructions for use, following reports from dentists of patients’ crowns debonding, requiring additional treatment. The product remains on the market for other applications. 3M communicated with the U.S. Food and Drug Administration, as well as regulators outside the United States. 3M also informed customers and distributors of its action, offered to accept return of unused materials and provide refunds. As of March 31, 2018, there is one lawsuit pending in the U.S. District Court for the District of Minnesota that names 29 plaintiffs and seeks certification of a class of dentists in the United States and its territories, and alternatively seeks subclasses in 13 states. The complaint alleges 3M marketed and sold defective Lava Ultimate material used for dental crowns to dentists and, under various theories, seek monetary damages (replacement costs and business reputation loss), punitive damages, disgorgement of profits, injunction from marketing and selling Lava Ultimate for use in dental crowns, statutory penalties, and attorneys’ fees and costs.

 

For product liability litigation matters described in this section for which a liability has been recorded, the Company believes the amount recorded is not material to the Company’s consolidated results of operations or financial condition. In addition, the Company is not able to estimate a possible loss or range of loss in excess of the established accruals at this time.

v3.8.0.1
Stock-Based Compensation
3 Months Ended
Mar. 31, 2018
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. The remaining shares available for grant under the LTIP Program are 25.9 million as of March 31, 2018.

 

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 38 percent of the annual grant stock-based compensation award expense dollars; 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 months ended March 31, 2018 and 2017.

 

Stock-Based Compensation Expense

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

March 31,

 

(Millions)

2018

    

2017

 

Cost of sales

$

23

 

$

23

 

Selling, general and administrative expenses

 

109

 

 

98

 

Research, development and related expenses

 

27

 

 

26

 

Stock-based compensation expenses

$

159

 

$

147

 

Income tax benefits

$

(98)

 

$

(148)

 

Stock-based compensation expenses (benefits), net of tax

$

61

 

$

(1)

 

 

Stock Option Program

 

The following table summarizes stock option activity during the three months ended March 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

    

 

    

Weighted

    

Remaining

    

Aggregate

 

 

 

Number of

 

Average

 

Contractual

 

Intrinsic Value

 

(Shares in thousands)

 

Options

 

Exercise Price

 

Life (months)

 

(millions)

 

Under option —

 

 

 

 

 

 

 

 

 

 

 

January 1

 

34,965

 

$

125.73

 

 

 

 

 

 

Granted:

 

 

 

 

 

 

 

 

 

 

 

Annual

 

3,174

 

 

233.62

 

 

 

 

 

 

Exercised

 

(1,844)

 

 

90.20

 

 

 

 

 

 

Forfeited

 

(22)

 

 

180.69

 

 

 

 

 

 

March 31

 

36,273

 

$

136.94

 

73

 

$

3,040

 

Options exercisable

 

 

 

 

 

 

 

 

 

 

 

March 31

 

27,757

 

$

120.20

 

63

 

$

2,757

 

 

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 March 31, 2018, there was $123 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 25 months. The total intrinsic values of stock options exercised were $283 million and $286 million during the three months ended March 31, 2018 and 2017, respectively. Cash received from options exercised was $166 million and $271 million for the three months ended March 31, 2018 and 2017, respectively. The Company’s actual tax benefits realized for the tax deductions related to the exercise of employee stock options were $61 million and $106 million for the three months ended March 31, 2018 and 2017, respectively.

 

For the primary 2018 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

 

 

    

2018

 

Exercise price

 

$

233.63

 

Risk-free interest rate

 

 

2.7

%

Dividend yield

 

 

2.4

%

Expected volatility

 

 

21.0

%

Expected life (months)

 

 

78

 

Black-Scholes fair value

 

$

41.59

 

 

Expected volatility is a statistical measure of the amount by which a stock price is expected to fluctuate during a period. For the 2018 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 three months ended March 31, 2018:

 

 

 

 

 

 

 

 

 

    

    

    

Weighted

 

 

 

 

 

Average

 

 

 

Number of

 

Grant Date

 

(Shares in thousands)

 

Awards

 

Fair Value

 

Nonvested balance —

 

 

 

 

 

 

As of January 1

 

1,994

 

$

162.60

 

Granted

 

 

 

 

 

 

Annual

 

467

 

 

233.61

 

Vested

 

(611)

 

 

165.67

 

Forfeited

 

(6)

 

 

171.27

 

As of March 31

 

1,844

 

$

179.55

 

 

As of March 31, 2018, there was $131 million of compensation expense that has yet to be recognized related to non-vested restricted stock units and restricted stock. This expense is expected to be recognized over the remaining weighted-average vesting period of 26 months. The intrinsic value of restricted stock units and restricted stock that vested during the three months ended March 31, 2018 and 2017 was $150 million and $127 million, respectively. The Company’s actual tax benefits realized for the tax deductions related to the vesting of restricted stock units and restricted stock was $28 million and $47 million for the three months ended March 31, 2018 and 2017, 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 2018 performance criteria for these performance shares (organic volume growth, return on invested capital, free cash flow conversion, and earning 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 performance period may be anywhere from 0% to 200% of each performance share granted, depending on the performance of the Company during such performance period. Non-substantive vesting requires that expense for the performance shares be recognized over one or three years depending on when each individual became a 3M executive. The 2018 performance share grant accrues dividends, therefore the grant date fair value is equal to the closing stock price on the date of grant. Since the rights to dividends are forfeitable, there is no impact on basic earnings per share calculations. Weighted average performance shares whose performance period is complete are included in computation of diluted earnings per share.

 

The following table summarizes performance share activity during the three months ended March 31, 2018:

 

 

 

 

 

 

 

 

 

    

    

    

Weighted

 

 

 

 

 

Average

 

 

 

Number of

 

Grant Date

 

(Shares in thousands)

 

Awards

 

Fair Value

 

Undistributed balance —

 

 

 

 

 

 

As of January 1

 

686

 

$

171.90

 

Granted

 

156

 

 

231.34

 

Distributed

 

(206)

 

 

159.82

 

Performance change

 

28

 

 

205.82

 

Forfeited

 

(2)

 

 

181.11

 

As of March 31

 

662

 

$

191.02

 

 

As of March 31, 2018, there was $60 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 11 months. The total fair values of performance shares that were distributed were $48 million and $55 million for the three months ended 2017, respectively. The Company’s actual tax benefits realized for the tax deductions related to the distribution of performance shares were $11 million and $15 million for the three months ended March 31, 2018 and 2017, respectively.

v3.8.0.1
Business Segments
3 Months Ended
Mar. 31, 2018
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 five business segments: Industrial; Safety and Graphics; Health Care; Electronics and Energy; and Consumer. 3M’s five 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 operating income information shown. The difference between operating income and pre-tax income relates to interest income and interest expense, which are not allocated to business segments, along with non-service cost related pension and postretirement net periodic benefit costs.

 

As part of 3M’s continuing effort to improve the alignment of its businesses around markets and customers, the Company made the following changes, effective in the first quarter of 2018, and other revisions impacting business segment reporting:

 

Consolidation of customer account activity within international countries – expanding dual credit reporting

·

The Company consolidated its customer account activity in each country into centralized sales districts for certain countries that make up approximately 70 percent of 3M’s 2017 international net sales. Expansion of these initiatives, which previously had been deployed only in the U.S., reduces the complexity for customers when interacting with multiple 3M businesses. 3M business segment reporting measures include dual credit to business segments for certain sales and related operating income. This dual credit is based on which business segment provides customer account activity with respect to a particular product sold in a specific country. The expansion of alignment of customer accounts within additional countries increased the attribution of dual credit across 3M’s business segments. Additionally, certain sales and operating income results for electronic bonding product lines that were previously equally divided between the Electronics and Energy business segment and the Industrial business segment are now reported similarly to dual credit.

 

Centralization of manufacturing and supply technology platforms

·

Certain shared film manufacturing and supply technology platform resources formerly reflected within the Electronics and Energy business segment were combined with other shared and centrally managed material resource centers of expertise within Corporate and Unallocated.

 

In addition, as discussed in Note 1, 3M adopted ASU N0. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, effective January 1, 2018 on a retrospective basis. As a result, operating income for 3M’s business segments has been revised to reflect non-service cost related pension and postretirement net periodic benefit costs within other expense (income), net.

 

The financial information presented herein reflects the impact of the preceding changes for all periods presented.

 

Business Segment Information

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

March 31,

 

(Millions)

    

2018

    

2017

 

Net Sales

 

 

 

 

 

 

 

Industrial

 

$

3,144

 

$

2,936

 

Safety and Graphics

 

 

1,783

 

 

1,550

 

Health Care

 

 

1,536

 

 

1,435

 

Electronics and Energy

 

 

1,350

 

 

1,291

 

Consumer

 

 

1,127

 

 

1,073

 

Corporate and Unallocated

 

 

 —

 

 

 1

 

Elimination of Dual Credit

 

 

(662)

 

 

(601)

 

Total Company

 

$

8,278

 

$

7,685

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

Industrial

 

$

719

 

$

670

 

Safety and Graphics

 

 

483

 

 

399

 

Health Care

 

 

460

 

 

429

 

Electronics and Energy

 

 

337

 

 

256

 

Consumer

 

 

218

 

 

223

 

Corporate and Unallocated

 

 

(1,046)

 

 

(93)

 

Elimination of Dual Credit

 

 

(164)

 

 

(142)

 

Total Company

 

$

1,007

 

$

1,742

 

 

Corporate and unallocated operating income includes a variety of miscellaneous items, such as corporate investment gains and losses, certain derivative gains and losses, certain insurance-related gains and losses, certain litigation and environmental expenses, corporate restructuring charges and certain under- or over-absorbed costs (e.g. pension, stock-based compensation) that the Company may choose not to allocate directly to its business segments. Because this category includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis.

 

3M business segment reporting measures include dual credit to business segments for certain sales and related operating income. Management evaluates each of its five business segments based on net sales and operating income performance, including dual credit reporting to further incentivize sales growth. As a result, 3M reflects additional (“dual”) credit to another business segment when the customer account activity (“sales district”) with respect to the particular product sold to the external customer is provided by a different business segment. This additional dual credit is largely reflected at the division level. For example, certain respirators are primarily sold by the Personal Safety Division within the Safety and Graphics business segment; however, a sales district within the Industrial business segment provides the contact for sales of the product to particular customers. In this example, the non-primary selling segment (Industrial) would also receive credit for the associated net sales initiated through its sales district and the related approximate operating income. The assigned operating income related to dual credit activity may differ from operating income that would result from actual costs associated with such sales. The offset to the dual credit business segment reporting is reflected as a reconciling item entitled “Elimination of Dual Credit,” such that sales and operating income in total are unchanged.

v3.8.0.1
Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2018
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 2017 Annual Report on Form 10-K.

 

As described in the “New Accounting Pronouncements” section, the Company adopted Accounting Standards Update (ASU) No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, effective January 1, 2018 on a retrospective basis. This ASU changed how 3M presents net periodic benefit cost within its consolidated statement of income, as reflected in the table that follows. The financial information presented herein reflects these impacts for all periods presented.

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

Previously

 

 

 

 

 

(Millions)

    

Reported

    

Revised

    

Change

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

7,685

 

$

7,685

 

$

 —

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

3,869

 

 

3,882

 

 

13

 

Selling, general and administrative expenses

 

 

1,600

 

 

1,614

 

 

14

 

Research, development and related expenses

 

 

471

 

 

476

 

 

 5

 

Gain on sale of businesses

 

 

(29)

 

 

(29)

 

 

 —

 

Total operating expenses

 

 

5,911

 

 

5,943

 

 

32

 

Operating income

 

$

1,774

 

$

1,742

 

$

(32)

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income), net

 

$

37

 

$

 5

 

$

(32)

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

1,737

 

$

1,737

 

$

 —

 

 

In addition, as described in Note 16, effective in the first quarter of 2018, the Company changed its business segment reporting in its continuing effort to improve the alignment of businesses around markets and customers. These changes included the consolidation of customer account activity within international countries (expanding dual credit reporting) and the centralization of manufacturing and supply chain technology platforms. The Company began reporting comparative results under this new structure with the filing of this Quarterly Report on Form 10-Q.

 

In the second quarter of 2018, the Company plans to update its financial information and disclosure in its 2017 Annual Report on Form 10-K via a Current Report on Form 8-K to reflect the retrospective application of ASU No. 2017-07 and the preceding business segment reporting changes.

Changes to Significant Accounting Policies

Changes to Significant Accounting Policies

 

The following accounting policies have been updated since the Company’s 2017 Annual Report on Form 10-K.

 

Revenue (sales) recognition: As described in the “New Accounting Pronouncements” section,  3M adopted ASU No. 2014-09, Revenue from Contracts with Customers, and other related ASUs on January 1, 2018 using the modified retrospective transition approach. The Company’s accounting policy with respect to revenue recognition and additional disclosure relative to this ASU are included in Note 2.

 

Investments: As described in the “New Accounting Pronouncements” section, 3M adopted ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities,  effective January 1, 2018. As a result, all equity securities that do not result in consolidation and are not accounted for under the equity method are measured at fair value with changes therein reflected in net income. 3M utilizes the measurement alternative for equity investments that do not have readily determinable fair values and measures these investments at cost less impairment plus or minus observable price changes in orderly transactions. Further, the change in balance of these securities for the three months ended March 31, 2018 was not considered material for additional disclosure.

Foreign Currency Translation

Foreign Currency Translation

 

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

 

3M has a subsidiary in Venezuela, the financial statements of which are 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 is immaterial as a percent of 3M’s consolidated operating income for 2018. The Venezuelan government sets official rates of exchange and conditions precedent to purchase foreign currency at these rates with local currency. The government has also operated various expanded secondary currency exchange mechanisms that have been eliminated and replaced from time to time. Such rates and conditions have been and continue to be subject to change. For the periods presented, the financial statements of 3M’s Venezuelan subsidiary were remeasured utilizing the rate associated with the secondary auction mechanism, Tipo de Cambio Complementario (DICOM), or its predecessor. During the same periods, the Venezuelan government’s official exchange was Tipo de Cambio Protegido (DIPRO), or its predecessor, until its discontinuance in the first quarter of 2018.

 

Note 1 in 3M’s 2017 Annual Report on Form 10-K provides additional information the Company considers in determining the exchange rate used relative to its Venezuelan subsidiary as well as factors which could lead to its deconsolidation. The Company continues to monitor these circumstances. Changes in applicable exchange rates or exchange mechanisms may continue in the future. These changes could impact the rate of exchange applicable to remeasure the Company’s net monetary assets (liabilities) denominated in Venezuelan Bolivars (VEF). As of March 31, 2018, the Company had a balance of net monetary assets denominated in VEF of less than 20 billion VEF and the DIPRO exchange rate was approximately 49,000 VEF per U.S. dollar. A need to deconsolidate the Company’s Venezuelan subsidiary’s operations may result from a lack of exchangeability of VEF-denominated cash coupled with an acute degradation in the ability to make key operational decisions due to government regulations in Venezuela. Based upon a review of factors as of March 31, 2018, the Company continues to consolidate its Venezuelan subsidiary. As of March 31, 2018, the balance of accumulated other comprehensive loss associated with this subsidiary was approximately $145 million, and the amount of intercompany receivables due from this subsidiary and its equity balance were not significant.

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 not have had a dilutive effect (1.9 million average options for the three months ended March 31, 2018; 3.2 million average options for the three months ended March 31, 2017). The computations for basic and diluted earnings per share follow:

 

Earnings Per Share Computations

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

 

 

 

March 31,

 

(Amounts in millions, except per share amounts)

    

2018

    

2017

 

Numerator:

 

 

 

 

 

 

 

Net income attributable to 3M

 

$

602

 

$

1,323

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Denominator for weighted average 3M common shares outstanding basic

 

 

596.2

 

 

598.1

 

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

 

 

16.5

 

 

13.9

 

Denominator for weighted average 3M common shares outstanding diluted

 

 

612.7

 

 

612.0

 

 

 

 

 

 

 

 

 

Earnings per share attributable to 3M common shareholders basic

 

$

1.01

 

$

2.21

 

Earnings per share attributable to 3M common shareholders diluted

 

$

0.98

 

$

2.16

 

 

New Accounting Pronouncements

New Accounting Pronouncements

 

See the Company’s 2017 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.

 

 

 

 

 

Standards Adopted During the Current Fiscal Year

Standard

Relevant Description

Effective Date for 3M

Impact and Other Matters

ASU No. 2014-09, Revenue from Contracts with Customers (as amended by ASU Nos. 2015-14, 2016-08, 2016-10, 2016-12, and 2016-20) and related ASU No. 2017-10, Determining the Customer of the Operation Services

Provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes most previous revenue recognition guidance, including industry-specific guidance.

Core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Requires disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

Specifies the accounting for some costs to obtain or fulfill a contract with a customer.

January 1, 2018

See Note 2 for detailed discussion and disclosures.

Adopted using a modified retrospective approach. January 1, 2018 balance of retained earnings was increased by less than $2 million.

ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities

Requires investments in equity securities in an entity that do not result in consolidation and are not accounted for under the equity method to be measured at fair value with changes therein reflected in net income.

Simplifies the impairment assessment and allows for a fair value measurement alternative for equity investments without a readily determinable fair value.

Eliminates the previous cost method of accounting for certain equity securities that did not have readily determinable fair values.

January 1, 2018

Measurement alternative adopted prospectively.

See the preceding “Changes to Significant Accounting Policies” section for impact.

 

ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory

Exempts income tax accounting that requires companies to defer the income tax effects of certain intercompany transactions only for intercompany inventory transactions.

The exception no longer applies to intercompany sales and transfers of other assets (e.g., intangible assets).

January 1, 2018

Adopted using a modified retrospective approach. January 1, 2018 balance of retained earnings was decreased by less than $2 million.

ASU No. 2017-01, Clarifying the Definition of a Business

Narrows the previous definition of a business and provides a framework for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business.

January 1, 2018

Adopted prospectively with no immediate impact.

Fewer sets of transferred assets and activities are expected to be considered businesses.

 

 

 

 

 

 

 

 

 

 

 

 

 

Standards Adopted During the Current Fiscal Year (continued)

Standard

Relevant Description

Effective Date for 3M

Impact and Other Matters

ASU No. 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets

Largely impacts the sale of nonfinancial assets (such as real estate and intellectual property) that do not constitute a business, when the purchaser is not a customer.

Seller applies certain recognition and measurement principles of ASU No. 2014-09, Revenue from Contracts with Customers, even though the purchaser is not a customer.

January 1, 2018

Adopted coincident with the adoption of ASU No. 2014-09 with no material impact.

ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

Changes previous classification of net periodic defined benefit pension and postretirement benefit costs within operating expenses.

Requires that only the service cost component of net periodic benefit cost be included in operating expenses and that only the service cost component is eligible for capitalization into assets such as inventory.

Specifies that other net periodic benefit costs components (such as interest, expected return on plan assets, prior service cost amortization and actuarial gain/loss amortization) would be reported outside of operating income.

January 1, 2018

Adopted on a retrospective basis.

No impact on previously reported income before income taxes and net income attributable to 3M. However, non-service cost components of net periodic benefit costs in prior periods have been reclassified from operating expenses and are now reported outside of operating income within other expense (income), net.

See the “Basis of Presentation” section above for impact of this ASU’s adoption on prior period income statement amounts. 

Prospective impact on costs capitalized into assets was not material.

ASU No. 2017-09, Scope of Modification Accounting

Provides that fewer changes to the terms of share-based payment awards will require accounting under the modification model (which generally would have required additional compensation cost).

January 1, 2018

Adopted prospectively with no immediate impact.

3M does not typically make changes to the terms or conditions of its issued share-based payments.

 

 

 

 

 

Standards Issued and Not Yet Adopted

Standard

Relevant Description

Effective Date for 3M

Impact and Other Matters

ASU No. 2016-02, Leases

Introduces a lessee model that requires entities to recognize assets and liabilities for most leases, but recognize expenses on their income statements in a manner similar to current accounting. This ASU does not make fundamental changes to existing lessor accounting.

January 1, 2019

Requires modified retrospective transition applied to earliest period presented

3M is currently assessing this ASU’s impact.

ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments

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

Required to make a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted.

3M is currently assessing this ASU’s impact.

ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities

Shortens the amortization period to the earliest call date for the premium related to certain callable debt securities that have explicit, noncontingent call features and are callable at a fixed price and preset date.

January 1, 2019

3M’s marketable security portfolio includes limited instances of callable debt securities held at a premium.

3M does not expect this ASU to have a material impact.

Standards Issued and Not Yet Adopted (continued)

Standard

Relevant Description

Effective Date for 3M

Impact and Other Matters

ASU No. 2017-11, (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception

Amends (1) the classification of financial instruments with down-round features as liabilities or equity by revising certain guidance relative to evaluating if they must be accounted for as derivative instruments and (2) the guidance on recognition and measurement of freestanding equity-classified instruments.

January 1, 2019

No financial instruments with down-round features have been issued.

3M does not expect this ASU to have a material impact.

ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities

Amends existing guidance to simplify application of hedge accounting in certain situations and allow companies to better align their hedge accounting with risk management activities.

Simplifies related accounting by eliminating requirement to separately measure and report hedge ineffectiveness.

Expands an entity’s ability to hedge nonfinancial and financial risk components.

January 1, 2019

Required to make a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted.  

3M is currently assessing this ASU’s impact.

 

Relevant New Standards Issued Subsequent to Most Recent Annual Report

 

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits entities to reclassify, to retained earnings, the one-time income tax effects stranded in accumulated other comprehensive income (AOCI) arising from the change in the U.S. federal corporate tax rate as a result of the Tax Cuts and Jobs Act of 2017. An entity that elects to make this reclassification must consider all items in AOCI that have tax effects stranded as a result of the tax rate change, and must disclose the reclassification of these tax effects as well as the entity’s policy for releasing income tax effects from AOCI. The ASU may be applied either retrospectively or as of the beginning of the period of adoption. For 3M, the ASU is effective January 1, 2019. While this ASU will have no impact on 3M’s results of operations, the Company is currently assessing this standard’s impact on its consolidated financial condition.

v3.8.0.1
Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2018
Significant Accounting Policies  
Impact on previously reported values after correction

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

Previously

 

 

 

 

 

(Millions)

    

Reported

    

Revised

    

Change

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

7,685

 

$

7,685

 

$

 —

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

3,869

 

 

3,882

 

 

13

 

Selling, general and administrative expenses

 

 

1,600

 

 

1,614

 

 

14

 

Research, development and related expenses

 

 

471

 

 

476

 

 

 5

 

Gain on sale of businesses

 

 

(29)

 

 

(29)

 

 

 —

 

Total operating expenses

 

 

5,911

 

 

5,943

 

 

32

 

Operating income

 

$

1,774

 

$

1,742

 

$

(32)

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income), net

 

$

37

 

$

 5

 

$

(32)

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

1,737

 

$

1,737

 

$

 —

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

    

Three months ended 

 

 

 

March 31,

 

(Amounts in millions, except per share amounts)

    

2018

    

2017

 

Numerator:

 

 

 

 

 

 

 

Net income attributable to 3M

 

$

602

 

$

1,323

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Denominator for weighted average 3M common shares outstanding basic

 

 

596.2

 

 

598.1

 

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

 

 

16.5

 

 

13.9

 

Denominator for weighted average 3M common shares outstanding diluted

 

 

612.7

 

 

612.0

 

 

 

 

 

 

 

 

 

Earnings per share attributable to 3M common shareholders basic

 

$

1.01

 

$

2.21

 

Earnings per share attributable to 3M common shareholders diluted

 

$

0.98

 

$

2.16

 

 

v3.8.0.1
Revenue (Tables)
3 Months Ended
Mar. 31, 2018
Revenue  
Schedule of disaggregated revenue recognized during the period

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

March 31,

 

Net Sales (Millions)

 

2018

    

2017

 

Abrasives

 

$

475

 

$

430

 

Adhesives and Tapes

 

 

1,153

 

 

1,075

 

Advanced Materials

 

 

304

 

 

287

 

Automotive and Aerospace

 

 

559

 

 

508

 

Automotive Aftermarket

 

 

418

 

 

417

 

Separation and Purification

 

 

236

 

 

220

 

Other Industrial

 

 

(1)

 

 

(1)

 

Total Industrial Business Group

 

$

3,144

 

$

2,936

 

 

 

 

 

 

 

 

 

Commercial Solutions

 

$

485

 

$

443

 

Personal Safety

 

 

962

 

 

707

 

Roofing Granules

 

 

101

 

 

97

 

Transportation Safety

 

 

236

 

 

303

 

Other Safety and Graphics

 

 

(1)

 

 

 —

 

Total Safety and Graphics Business Group

 

$

1,783

 

$

1,550

 

 

 

 

 

 

 

 

 

Drug Delivery

 

$

119

 

$

121

 

Food Safety

 

 

82

 

 

73

 

Health Information Systems

 

 

205

 

 

191

 

Medical Consumables

 

 

776

 

 

714

 

Oral Care

 

 

354

 

 

336

 

Other Health Care

 

 

 —

 

 

 —

 

Total Health Care Business Group

 

$

1,536

 

$

1,435

 

 

 

 

 

 

 

 

 

Electronics

 

$

931

 

$

878

 

Energy

 

 

420

 

 

413

 

Other Electronics and Energy

 

 

(1)

 

 

 —

 

Total Electronics and Energy Business Group

 

$

1,350

 

$

1,291

 

 

 

 

 

 

 

 

 

Consumer Health Care

 

$

102

 

$

102

 

Home Care

 

 

269

 

 

261

 

Home Improvement

 

 

447

 

 

408

 

Stationery and Office

 

 

299

 

 

292

 

Other Consumer

 

 

10

 

 

10

 

Total Consumer Business Group

 

$

1,127

 

$

1,073

 

 

 

 

 

 

 

 

 

Corporate and Unallocated

 

$

 —

 

$

 1

 

Elimination of Dual Credit

 

 

(662)

 

 

(601)

 

Total Company

 

$

8,278

 

$

7,685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2018

 

Net Sales (Millions)

    

United States

 

Asia Pacific

    

Europe, Middle East and Africa

    

Latin America and Canada

    

Other Unallocated

    

Worldwide

 

Industrial

 

$

1,100

 

$

944

 

$

785

 

$

316

 

$

(1)

 

$

3,144

 

Safety and Graphics

 

 

652

 

 

497

 

 

436

 

 

198

 

 

 —

 

 

1,783

 

Health Care

 

 

702

 

 

299

 

 

394

 

 

141

 

 

 —

 

 

1,536

 

Electronics and Energy

 

 

229

 

 

911

 

 

145

 

 

66

 

 

(1)

 

 

1,350

 

Consumer

 

 

610

 

 

272

 

 

141

 

 

106

 

 

(2)

 

 

1,127

 

Corporate and Unallocated

 

 

 —

 

 

(1)

 

 

 —

 

 

(1)

 

 

 2

 

 

 —

 

Elimination of Dual Credit

 

 

(249)

 

 

(246)

 

 

(109)

 

 

(59)

 

 

 1

 

 

(662)

 

Total Company

 

$

3,044

 

$

2,676

 

$

1,792

 

$

767

 

$

(1)

 

$

8,278

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

Net Sales (Millions)

    

United States

 

Asia Pacific

    

Europe, Middle East and Africa

    

Latin America and Canada

    

Other Unallocated

    

Worldwide

 

Industrial

 

$

1,082

 

$

853

 

$

696

 

$

305

 

$

 —

 

$

2,936

 

Safety and Graphics

 

 

581

 

 

431

 

 

351

 

 

188

 

 

(1)

 

 

1,550

 

Health Care

 

 

690

 

 

260

 

 

353

 

 

133

 

 

(1)

 

 

1,435

 

Electronics and Energy

 

 

231

 

 

851

 

 

143

 

 

65

 

 

 1

 

 

1,291

 

Consumer

 

 

587

 

 

259

 

 

126

 

 

102

 

 

(1)

 

 

1,073

 

Corporate and Unallocated

 

 

 1

 

 

(1)

 

 

 —

 

 

 1

 

 

 —

 

 

 1

 

Elimination of Dual Credit

 

 

(231)

 

 

(220)

 

 

(92)

 

 

(58)

 

 

 —

 

 

(601)

 

Total Company

 

$

2,941

 

$

2,433

 

$

1,577

 

$

736

 

$

(2)

 

$

7,685

 

 

v3.8.0.1
Acquisitions and Divestitures (Tables)
3 Months Ended
Mar. 31, 2018
Acquisitions  
Approximate amounts of major assets and liabilities associated with disposal groups classified as held-for-sale

 

 

 

 

 

 

 

 

 

    

March 31,

    

December 31,

 

(Millions)

    

2018

    

2017

 

Accounts receivable

 

$

20

 

$

25

 

Property, plant and equipment (net)

 

 

 —

 

 

20

 

 

v3.8.0.1
Goodwill and Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2018
Goodwill and Intangible Assets  
Goodwill

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

Acquisition

 

Divestiture

 

Translation

 

March 31, 2018

 

(Millions)

    

Balance

    

activity

    

activity

    

and other

    

Balance

 

Industrial

 

$

2,678

 

$

 —

 

$

(4)

 

$

38

 

$

2,712

 

Safety and Graphics

 

 

4,419

 

 

(20)

 

 

(8)

 

 

18

 

 

4,409

 

Health Care

 

 

1,682

 

 

 —

 

 

 —

 

 

17

 

 

1,699

 

Electronics and Energy

 

 

1,524

 

 

 —

 

 

 —

 

 

12

 

 

1,536

 

Consumer

 

 

210

 

 

 —

 

 

 —

 

 

 4

 

 

214

 

Total Company

 

$

10,513

 

$

(20)

 

$

(12)

 

$

89

 

$

10,570

 

 

Acquired Intangible Assets

 

 

 

 

 

 

 

 

 

    

March 31,

    

December 31,

 

(Millions)

    

2018

    

2017

 

Customer related intangible assets

 

$

2,341

 

$

2,332

 

Patents

 

 

564

 

 

561

 

Other technology-based intangible assets

 

 

584

 

 

583

 

Definite-lived tradenames

 

 

679

 

 

678

 

Other amortizable intangible assets

 

 

208

 

 

207

 

Total gross carrying amount

 

$

4,376

 

$

4,361

 

 

 

 

 

 

 

 

 

Accumulated amortization — customer related

 

 

(912)

 

 

(874)

 

Accumulated amortization — patents

 

 

(496)

 

 

(489)

 

Accumulated amortization — other technology based

 

 

(304)

 

 

(292)

 

Accumulated amortization — definite-lived tradenames

 

 

(265)

 

 

(256)

 

Accumulated amortization — other

 

 

(166)

 

 

(162)

 

Total accumulated amortization

 

$

(2,143)

 

$

(2,073)

 

 

 

 

 

 

 

 

 

Total finite-lived intangible assets — net

 

$

2,233

 

$

2,288

 

 

 

 

 

 

 

 

 

Non-amortizable intangible assets (primarily tradenames)

 

 

652

 

 

648

 

Total intangible assets — net

 

$

2,885

 

$

2,936

 

 

Schedule of amortization expense for acquired intangible assets

Amortization expense for acquired intangible assets for the three-month periods ended March 31, 2018 and 2017 follows:

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

 

 

 

 

March 31,

 

 

(Millions)

    

2018

    

2017

 

 

Amortization expense

 

$

64

 

$

64

 

 

 

Schedule of expected amortization expense for acquired amortizable intangible assets

Expected amortization expense for acquired amortizable intangible assets recorded as of March 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Remainder of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

After

 

(Millions)

 

2018

 

2019

 

2020

 

2021

 

2022

 

2023

 

2023

 

Amortization expense

 

$

190

 

$

243

 

$

232

 

$

222

 

$

208

 

$

176

 

$

962

 

 

v3.8.0.1
Restructuring Actions and Exit Activities (Tables)
3 Months Ended
Mar. 31, 2018
Restructuring Actions and Exit Activities  
Components of restructuring by business segment

 

 

 

 

 

(Millions)

    

Employee-Related

 

Expense incurred in the second quarter of 2017

 

$

99

 

Cash payments

 

 

(8)

 

Adjustments

 

 

(3)

 

Accrued restructuring actions balance as of December 31, 2017

 

$

88

 

Cash payments

 

 

(5)

 

Adjustments

 

 

(4)

 

Accrued restructuring actions balance as of March 31, 2018

 

$

79

 

 

v3.8.0.1
Supplemental Income Statement Information (Tables)
3 Months Ended
Mar. 31, 2018
Supplemental Income Statement Information  
Schedule of other expense (income)

 

 

 

 

 

 

 

 

 

    

Three months ended 

    

 

 

March 31,

 

(Millions)

 

2018

    

2017

    

Interest expense

 

$

82

 

$

45

 

Interest income

 

 

(21)

 

 

(8)

 

Pension and postretirement net periodic benefit cost (benefit)

 

 

(19)

 

 

(32)

 

Total

 

$

42

 

$

 5

 

 

v3.8.0.1
Supplemental Equity and Comprehensive Income Information (Tables)
3 Months Ended
Mar. 31, 2018
Supplemental Equity and Comprehensive Income Information  
Consolidated Statement of Changes in Equity

Three months ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2017

 

$

11,622

 

$

5,361

 

$

39,115

 

$

(25,887)

 

$

(7,026)

 

$

59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

606

 

 

 

 

 

602

 

 

 

 

 

 

 

 

 4

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative translation adjustment

 

 

167

 

 

 

 

 

 

 

 

 

 

 

168

 

 

(1)

 

Defined benefit pension and post-retirement plans adjustment

 

 

116

 

 

 

 

 

 

 

 

 

 

 

116

 

 

 —

 

Cash flow hedging instruments - unrealized gain (loss)

 

 

(61)

 

 

 

 

 

 

 

 

 

 

 

(61)

 

 

 —

 

Total other comprehensive income (loss), net of tax

 

 

222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared

 

 

(810)

 

 

 

 

 

(810)

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

144

 

 

144

 

 

 

 

 

 

 

 

 

 

 

 

 

Reacquired stock

 

 

(972)

 

 

 

 

 

 

 

 

(972)

 

 

 

 

 

 

 

Issuances pursuant to stock option and benefit plans

 

 

227

 

 

 

 

 

(454)

 

 

681

 

 

 

 

 

 

 

Balance at March 31, 2018

 

$

11,039

 

$

5,505

 

$

38,453

 

$

(26,178)

 

$

(6,803)

 

$

62

 

 

Three months ended March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2016

 

$

10,343

 

$

5,070

 

$

37,907

 

$

(25,434)

 

$

(7,245)

 

$

45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

1,326

 

 

 

 

 

1,323

 

 

 

 

 

 

 

 

 3

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative translation adjustment

 

 

292

 

 

 

 

 

 

 

 

 

 

 

289

 

 

 3

 

Defined benefit pension and post-retirement plans adjustment

 

 

83

 

 

 

 

 

 

 

 

 

 

 

83

 

 

 —

 

Cash flow hedging instruments - unrealized gain (loss)

 

 

(76)

 

 

 

 

 

 

 

 

 

 

 

(76)

 

 

 —

 

Total other comprehensive income (loss), net of tax

 

 

299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared

 

 

(702)

 

 

 

 

 

(702)

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

128

 

 

128

 

 

 

 

 

 

 

 

 

 

 

 

 

Reacquired stock

 

 

(678)

 

 

 

 

 

 

 

 

(678)

 

 

 

 

 

 

 

Issuances pursuant to stock option and benefit plans

 

 

324

 

 

 

 

 

(434)

 

 

758

 

 

 

 

 

 

 

Balance at March 31, 2017

 

$

11,040

 

$

5,198

 

$

38,094

 

$

(25,354)

 

$

(6,949)

 

$

51

 

 

Changes in Accumulated Other Comprehensive Income (Loss) Attributable to 3M

Three months ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

 

    

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, 2017, net of tax:

 

$

(1,638)

 

$

(5,276)

 

$

(112)

 

$

(7,026)

 

Other comprehensive income (loss), before tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts before reclassifications

 

 

129

 

 

 —

 

 

(82)

 

 

47

 

Amounts reclassified out

 

 

 —

 

 

151

 

 

34

 

 

185

 

Total other comprehensive income (loss), before tax

 

 

129

 

 

151

 

 

(48)

 

 

232

 

Tax effect

 

 

39

 

 

(35)

 

 

(13)

 

 

(9)

 

Total other comprehensive income (loss), net of tax

 

 

168

 

 

116

 

 

(61)

 

 

223

 

Balance at March 31, 2018, net of tax:

 

$

(1,470)

 

$

(5,160)

 

$

(173)

 

$

(6,803)

 

 

 

Three months ended March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

 

    

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, 2016, net of tax:

 

$

(2,008)

 

$

(5,328)

 

$

91

 

$

(7,245)

 

Other comprehensive income (loss), before tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts before reclassifications

 

 

226

 

 

 —

 

 

(101)

 

 

125

 

Amounts reclassified out

 

 

 —

 

 

119

 

 

(18)

 

 

101

 

Total other comprehensive income (loss), before tax

 

 

226

 

 

119

 

 

(119)

 

 

226

 

Tax effect

 

 

63

 

 

(36)

 

 

43

 

 

70

 

Total other comprehensive income (loss), net of tax

 

 

289

 

 

83

 

 

(76)

 

 

296

 

Balance at March 31, 2017, net of tax:

 

$

(1,719)

 

$

(5,245)

 

$

15

 

$

(6,949)

 

 

Reclassifications Out of Accumulated Other Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

Amount Reclassified from

 

 

 

Details about Accumulated Other

 

Accumulated Other Comprehensive Income

 

 

 

Comprehensive Income Components

 

Three months ended March 31,

 

Location on Income

 

(Millions)

 

2018

    

2017

 

Statement

 

Gains (losses) associated with defined benefit pension and postretirement plans amortization

 

 

 

 

 

 

 

 

 

Prior service benefit

 

 

19

 

 

22

 

See Note 11

 

Net actuarial loss

 

 

(170)

 

 

(141)

 

See Note 11

 

Total before tax

 

 

(151)

 

 

(119)

 

 

 

Tax effect

 

 

35

 

 

36

 

Provision for income taxes

 

Net of tax

 

$

(116)

 

$

(83)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedging instruments gains (losses)

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

$

(34)

 

$

18

 

Cost of sales

 

Total before tax

 

 

(34)

 

 

18

 

 

 

Tax effect

 

 

 8

 

 

(6)

 

Provision for income taxes

 

Net of tax

 

$

(26)

 

$

12

 

 

 

Total reclassifications for the period, net of tax

 

$

(142)

 

$

(71)

 

 

 

 

v3.8.0.1
Marketable Securities (Tables)
3 Months Ended
Mar. 31, 2018
Marketable Securities.  
Schedule of marketable securities

 

 

 

 

 

 

 

 

 

(Millions)

 

March 31, 2018

 

December 31, 2017

 

Corporate debt securities

 

$

20

 

$

14

 

Commercial paper

 

 

495

 

 

899

 

Certificates of deposit/time deposits

 

 

59

 

 

76

 

U.S. municipal securities

 

 

 3

 

 

 3

 

Asset-backed securities:

 

 

 

 

 

 

 

Automobile loan related

 

 

 8

 

 

16

 

Credit card related

 

 

19

 

 

68

 

Asset-backed securities total

 

 

27

 

 

84

 

Current marketable securities

 

$

604

 

$

1,076

 

 

 

 

 

 

 

 

 

U.S. municipal securities

 

$

27

 

$

27

 

Non-current marketable securities

 

$

27

 

$

27

 

 

 

 

 

 

 

 

 

Total marketable securities

 

$

631

 

$

1,103

 

 

Marketable securities by contractual maturity

 

 

 

 

 

 

(Millions)

    

March 31, 2018

 

Due in one year or less

 

$

604

 

Due after one year through five years

 

 

13

 

Due after five years through ten years

 

 

14

 

Total marketable securities

 

$

631

 

 

v3.8.0.1
Pension and Postretirement Benefit Plans (Tables)
3 Months Ended
Mar. 31, 2018
Pension and Postretirement Benefit Plans  
Components of net periodic benefit cost (benefit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31,

 

 

Qualified and Non-qualified

 

 

 

 

 

 

 

 

Pension Benefits

 

Postretirement

 

 

United States

International

 

Benefits

 

(Millions)

2018

    

2017

    

2018

    

2017

    

2018

    

2017

 

Net periodic benefit cost (benefit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

$

72

 

$

67

 

$

36

 

$

33

 

$

13

 

$

13

 

Non-operating expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest cost

$

141

 

$

142

 

$

40

 

$

37

 

$

20

 

$

19

 

Expected return on plan assets

 

(272)

 

 

(259)

 

 

(78)

 

 

(69)

 

 

(21)

 

 

(21)

 

Amortization of prior service benefit

 

(6)

 

 

(6)

 

 

(3)

 

 

(3)

 

 

(10)

 

 

(13)

 

Amortization of net actuarial loss

 

126

 

 

97

 

 

29

 

 

30

 

 

15

 

 

14

 

Total non-operating expense (benefit)

 

(11)

 

 

(26)

 

 

(12)

 

 

(5)

 

 

 4

 

 

(1)

 

Total net periodic benefit cost (benefit)

$

61

 

$

41

 

$

24

 

$

28

 

$

17

 

$

12

 

 

 

v3.8.0.1
Derivatives (Tables)
3 Months Ended
Mar. 31, 2018
Derivatives  
Gain (loss) on derivative instruments designated as cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax Gain (Loss) Recognized in

 

 

 

 

 

Pretax Gain (Loss)

 

Income on Effective Portion of

 

Ineffective Portion of Gain

 

 

 

Recognized in Other

 

Derivative as a Result of

 

(Loss) on Derivative and

 

 

 

Comprehensive

 

Reclassification from

 

Amount Excluded from

 

 

 

Income on Effective

 

Accumulated Other

 

Effectiveness Testing

 

Three months ended March 31, 2018

 

Portion of Derivative

 

Comprehensive Income

 

Recognized in Income

 

(Millions)

    

Amount

    

Location

    

Amount

    

Location

    

Amount

 

Foreign currency forward/option contracts

 

$

(79)

 

Cost of sales

 

$

(34)

 

Cost of sales

 

$

 

Interest rate swap contracts

 

 

(3)

 

Interest expense

 

 

 —

 

Interest expense

 

 

 

Total

 

$

(82)

 

 

 

$

(34)

 

 

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

Portion of Derivative

 

Comprehensive Income

 

Recognized in Income

 

(Millions)

    

Amount

    

Location

    

Amount

    

Location

    

Amount

 

Foreign currency forward/option contracts

 

$

(100)

 

Cost of sales

 

$

18

 

Cost of sales

 

$

 

Interest rate swap contracts

 

 

(1)

 

Interest expense

 

 

 —

 

Interest expense

 

 

 

Total

 

$

(101)

 

 

 

$

18

 

 

 

$

 —

 

 

Gain (loss) on derivative instruments designated as fair value hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (Loss) on Derivative

 

Gain (Loss) on Hedged Item

 

Three months ended March 31, 2018

 

Recognized in Income

 

Recognized in Income

 

(Millions)

    

Location

    

Amount

    

Location

    

Amount

 

Interest rate swap contracts

 

Interest expense

 

$

(11)

 

Interest expense

 

$

11

 

Total

 

 

 

$

(11)

 

 

 

$

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

 

 

 

 

(Millions)

    

Location

    

Amount

    

Location

    

Amount

 

Interest rate swap contracts

 

Interest expense

 

$

(5)

 

Interest expense

 

$

 5

 

Total

 

 

 

$

(5)

 

 

 

$

 5

 

 

Gain (loss) on derivative and non-derivative instruments designated as net investment hedges

 

 

 

 

 

 

 

 

 

 

 

 

Pretax Gain (Loss)

 

 

 

 

 

 

 

 

Recognized as

 

 

 

 

 

 

 

 

Cumulative Translation

 

 

 

 

 

within Other

 

Ineffective Portion of Gain (Loss) on

 

 

 

Comprehensive Income

 

Instrument and Amount Excluded

 

 

 

on Effective Portion of

 

from Effectiveness Testing

 

Three months ended March 31, 2018

 

Instrument

 

Recognized in Income

 

(Millions)

    

Amount

    

Location

    

Amount

 

Foreign currency denominated debt

 

$

(128)

 

Cost of sales

 

$

(2)

 

Foreign currency forward contracts

 

 

(6)

 

Cost of sales

 

 

(1)

 

Total

 

$

(134)

 

 

 

$

(3)

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

Comprehensive Income

 

Instrument and Amount Excluded

 

(Millions)

    

Amount

    

Location

    

Amount

 

Foreign currency denominated debt

 

$

(121)

 

N/A

 

$

 —

 

Foreign currency forward contracts

 

 

(20)

 

Cost of sales

 

 

 2

 

Total

 

$

(141)

 

 

 

$

 2

 

 

Gain (loss) on derivative instruments not designated as hedging instruments

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2018

 

 

 

Gain (Loss) on Derivative Recognized in

 

 

 

Income

 

(Millions)

    

Location

    

Amount

 

Foreign currency forward/option contracts

 

Cost of sales

 

$

(3)

 

Foreign currency forward contracts

 

Interest expense

 

 

23

 

Total

 

 

 

$

20

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2017

 

 

 

Gain (Loss) on Derivative Recognized in

 

 

 

Income

 

(Millions)

    

Location

    

Amount

 

Foreign currency forward/option contracts

 

Cost of sales

 

$

(1)

 

Foreign currency forward contracts

 

Interest expense

 

 

42

 

Total

 

 

 

$

41

 

 

Location and Fair Value of Derivative Instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

    

Assets

    

Liabilities

 

March 31, 2018

 

Notional

 

 

 

Fair

 

 

 

Fair

 

(Millions)

 

Amount

 

Location

 

Value Amount

 

Location

 

Value Amount

 

Derivatives designated as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

$

2,225

 

Other current assets

 

$

 5

 

Other current liabilities

 

$

122

 

Foreign currency forward/option contracts

 

 

1,313

 

Other assets

 

 

11

 

Other liabilities

 

 

63

 

Interest rate swap contracts

 

 

450

 

Other current assets

 

 

 —

 

Other current liabilities

 

 

 2

 

Interest rate swap contracts

 

 

1,703

 

Other assets

 

 

20

 

Other liabilities

 

 

18

 

Total derivatives designated as hedging instruments

 

 

 

 

 

 

$

36

 

 

 

$

205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

$

6,070

 

Other current assets

 

$

16

 

Other current liabilities

 

$

33

 

Total derivatives not designated as hedging instruments

 

 

 

 

 

 

$

16

 

 

 

$

33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total derivative instruments

 

 

 

 

 

 

$

52

 

 

 

$

238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

    

Assets

    

Liabilities

 

December 31, 2017

 

Notional

 

 

 

Fair

 

 

 

Fair

 

(Millions)

 

Amount

 

Location

 

Value Amount

 

Location

 

Value Amount

 

Derivatives designated as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

$

2,204

 

Other current assets

 

$

 7

 

Other current liabilities

 

$

109

 

Foreign currency forward/option contracts

 

 

1,392

 

Other assets

 

 

20

 

Other liabilities

 

 

56

 

Interest rate swap contracts

 

 

450

 

Other current assets

 

 

 —

 

Other current liabilities

 

 

 1

 

Interest rate swap contracts

 

 

1,503

 

Other assets

 

 

21

 

Other liabilities

 

 

 6

 

Total derivatives designated as hedging instruments

 

 

 

 

 

 

$

48

 

 

 

$

172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

$

4,974

 

Other current assets

 

$

30

 

Other current liabilities

 

$

25

 

Total derivatives not designated as hedging instruments

 

 

 

 

 

 

$

30

 

 

 

$

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total derivative instruments

 

 

 

 

 

 

$

78

 

 

 

$

197

 

 

 

 

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

 

 

 

 

 

March 31, 2018

 

Consolidated

 

Recognized

 

Cash Collateral

 

Net Amount of

 

(Millions)

 

Balance Sheet

 

Derivative Liabilities

 

Received

 

Derivative Assets

 

Derivatives subject to master netting agreements

 

$

52

 

$

26

 

$

 —

 

$

26

 

Derivatives not subject to master netting agreements

 

 

 —

 

 

 

 

 

 

 

 

 —

 

Total

 

$

52

 

 

 

 

 

 

 

$

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

(Millions)

 

 

 

 

 

 

 

 

 

Derivatives subject to master netting agreements

 

$

78

 

$

27

 

$

 —

 

$

51

 

Derivatives not subject to master netting agreements

 

 

 —

 

 

 

 

 

 

 

 

 —

 

Total

 

$

78

 

 

 

 

 

 

 

$

51

 

 

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

 

 

 

 

 

March 31, 2018

 

Consolidated

 

Recognized

 

Cash Collateral

 

Net Amount of

 

(Millions)

 

Balance Sheet

 

Derivative Assets

 

Pledged

 

Derivative Liabilities

 

Derivatives subject to master netting agreements

 

$

238

 

$

26

 

$

 —

 

$

212

 

Derivatives not subject to master netting agreements

 

 

 —

 

 

 

 

 

 

 

 

 —

 

Total

 

$

238

 

 

 

 

 

 

 

$

212

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

(Millions)

 

 

 

 

 

 

 

 

 

Derivatives subject to master netting agreements

 

$

197

 

$

27

 

$

 —

 

$

170

 

Derivatives not subject to master netting agreements

 

 

 —

 

 

 

 

 

 

 

 

 —

 

Total

 

$

197

 

 

 

 

 

 

 

$

170

 

 

v3.8.0.1
Fair Value Measurements (Tables)
3 Months Ended
Mar. 31, 2018
Fair Value Measurements  
Fair Value, Assets and Liabilities Measured on Recurring Basis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements

 

Description

 

Fair Value at

 

Using Inputs Considered as

 

(Millions)

    

March 31, 2018

    

Level 1

    

Level 2

    

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

$

20

 

$

 —

 

$

20

 

$

 —

 

Commercial paper

 

 

495

 

 

 —

 

 

495

 

 

 —

 

Certificates of deposit/time deposits

 

 

59

 

 

 —

 

 

59

 

 

 —

 

Asset-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Automobile loan related

 

 

 8

 

 

 —

 

 

 8

 

 

 —

 

Credit card related

 

 

19

 

 

 —

 

 

19

 

 

 —

 

U.S. municipal securities

 

 

30

 

 

 —

 

 

 —

 

 

30

 

Derivative instruments — assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

 

32

 

 

 —

 

 

32

 

 

 —

 

Interest rate swap contracts

 

 

20

 

 

 —

 

 

20

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative instruments — liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

 

218

 

 

 —

 

 

218

 

 

 —

 

Interest rate swap contracts

 

 

20

 

 

 —

 

 

20

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements

 

Description

 

Fair Value at

 

Using Inputs Considered as

 

(Millions)

    

December 31, 2017

    

Level 1

    

Level 2

    

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

$

14

 

$

 —

 

$

14

 

$

 —

 

Commercial paper

 

 

899

 

 

 —

 

 

899

 

 

 —

 

Certificates of deposit/time deposits

 

 

76

 

 

 —

 

 

76

 

 

 —

 

Asset-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Automobile loan related

 

 

16

 

 

 —

 

 

16

 

 

 —

 

Credit card related

 

 

68

 

 

 —

 

 

68

 

 

 —

 

U.S. municipal securities

 

 

30

 

 

 —

 

 

 —

 

 

30

 

Derivative instruments — assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

 

57

 

 

 —

 

 

57

 

 

 —

 

Interest rate swap contracts

 

 

21

 

 

 —

 

 

21

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative instruments — liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward/option contracts

 

 

190

 

 

 —

 

 

190

 

 

 —

 

Interest rate swap contracts

 

 

 7

 

 

 —

 

 

 7

 

 

 —

 

 

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

 

 

 

 

 

 

 

 

Marketable securities — certain U.S. municipal securities only

 

March 31,

 

(Millions)

 

2018

    

2017

 

Beginning balance

 

$

30

 

$

20

 

Total gains or losses:

 

 

 

 

 

 

 

Included in earnings

 

 

 —

 

 

 —

 

Included in other comprehensive income

 

 

 —

 

 

 —

 

Purchases and issuances

 

 

 —

 

 

 —

 

Sales and settlements

 

 

 —

 

 

 —

 

Transfers in and/or out of level 3

 

 

 —

 

 

 —

 

Ending balance

 

$

30

 

$

20

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018

 

December 31, 2017

 

 

    

Carrying

    

Fair

    

Carrying

    

Fair

 

(Millions)

 

Value

 

Value

 

Value

 

Value

 

Long-term debt, excluding current portion

 

$

12,211

 

$

12,659

 

$

12,096

 

$

12,535

 

 

v3.8.0.1
Stock-Based Compensation (Tables)
3 Months Ended
Mar. 31, 2018
Stock-Based Compensation  
Stock-Based Compensation Expense

 

Stock-Based Compensation Expense

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

March 31,

 

(Millions)

2018

    

2017

 

Cost of sales

$

23

 

$

23

 

Selling, general and administrative expenses

 

109

 

 

98

 

Research, development and related expenses

 

27

 

 

26

 

Stock-based compensation expenses

$

159

 

$

147

 

Income tax benefits

$

(98)

 

$

(148)

 

Stock-based compensation expenses (benefits), net of tax

$

61

 

$

(1)

 

 

Stock Option Activity

Stock Option Program

 

The following table summarizes stock option activity during the three months ended March 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

    

 

    

Weighted

    

Remaining

    

Aggregate

 

 

 

Number of

 

Average

 

Contractual

 

Intrinsic Value

 

(Shares in thousands)

 

Options

 

Exercise Price

 

Life (months)

 

(millions)

 

Under option —

 

 

 

 

 

 

 

 

 

 

 

January 1

 

34,965

 

$

125.73

 

 

 

 

 

 

Granted:

 

 

 

 

 

 

 

 

 

 

 

Annual

 

3,174

 

 

233.62

 

 

 

 

 

 

Exercised

 

(1,844)

 

 

90.20

 

 

 

 

 

 

Forfeited

 

(22)

 

 

180.69

 

 

 

 

 

 

March 31

 

36,273

 

$

136.94

 

73

 

$

3,040

 

Options exercisable

 

 

 

 

 

 

 

 

 

 

 

March 31

 

27,757

 

$

120.20

 

63

 

$

2,757

 

 

Stock Option Assumptions

Stock Option Assumptions

 

 

 

 

 

 

 

 

Annual

 

 

    

2018

 

Exercise price

 

$

233.63

 

Risk-free interest rate

 

 

2.7

%

Dividend yield

 

 

2.4

%

Expected volatility

 

 

21.0

%

Expected life (months)

 

 

78

 

Black-Scholes fair value

 

$

41.59

 

 

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 three months ended March 31, 2018:

 

 

 

 

 

 

 

 

 

    

    

    

Weighted

 

 

 

 

 

Average

 

 

 

Number of

 

Grant Date

 

(Shares in thousands)

 

Awards

 

Fair Value

 

Nonvested balance —

 

 

 

 

 

 

As of January 1

 

1,994

 

$

162.60

 

Granted

 

 

 

 

 

 

Annual

 

467

 

 

233.61

 

Vested

 

(611)

 

 

165.67

 

Forfeited

 

(6)

 

 

171.27

 

As of March 31

 

1,844

 

$

179.55

 

 

Performance Shares Activity

The following table summarizes performance share activity during the three months ended March 31, 2018:

 

 

 

 

 

 

 

 

 

    

    

    

Weighted

 

 

 

 

 

Average

 

 

 

Number of

 

Grant Date

 

(Shares in thousands)

 

Awards

 

Fair Value

 

Undistributed balance —

 

 

 

 

 

 

As of January 1

 

686

 

$

171.90

 

Granted

 

156

 

 

231.34

 

Distributed

 

(206)

 

 

159.82

 

Performance change

 

28

 

 

205.82

 

Forfeited

 

(2)

 

 

181.11

 

As of March 31

 

662

 

$

191.02

 

 

v3.8.0.1
Business Segments (Tables)
3 Months Ended
Mar. 31, 2018
Business Segments  
Business Segments

Business Segment Information

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

March 31,

 

(Millions)

    

2018

    

2017

 

Net Sales

 

 

 

 

 

 

 

Industrial

 

$

3,144

 

$

2,936

 

Safety and Graphics

 

 

1,783

 

 

1,550

 

Health Care

 

 

1,536

 

 

1,435

 

Electronics and Energy

 

 

1,350

 

 

1,291

 

Consumer

 

 

1,127

 

 

1,073

 

Corporate and Unallocated

 

 

 —

 

 

 1

 

Elimination of Dual Credit

 

 

(662)

 

 

(601)

 

Total Company

 

$

8,278

 

$

7,685

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

Industrial

 

$

719

 

$

670

 

Safety and Graphics

 

 

483

 

 

399

 

Health Care

 

 

460

 

 

429

 

Electronics and Energy

 

 

337

 

 

256

 

Consumer

 

 

218

 

 

223

 

Corporate and Unallocated

 

 

(1,046)

 

 

(93)

 

Elimination of Dual Credit

 

 

(164)

 

 

(142)

 

Total Company

 

$

1,007

 

$

1,742

 

 

v3.8.0.1
Significant Accounting Policies - Basis of Presentation (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle    
Net sales $ 8,278 $ 7,685
Operating expenses    
Cost of sales 4,236 3,882
Selling, general and administrative expenses 2,573 1,614
Research, development and related expenses 486 476
Gain on sale of businesses (24) (29)
Total operating expenses 7,271 5,943
Operating income 1,007 1,742
Other expense (income), net 42 5
Income before income taxes $ 965 1,737
Previously Reported | ASU 2017-07 Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost    
New Accounting Pronouncements or Change in Accounting Principle    
Net sales   7,685
Operating expenses    
Cost of sales   3,869
Selling, general and administrative expenses   1,600
Research, development and related expenses   471
Gain on sale of businesses   (29)
Total operating expenses   5,911
Operating income   1,774
Other expense (income), net   37
Income before income taxes   1,737
Change | ASU 2017-07 Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost    
Operating expenses    
Cost of sales   13
Selling, general and administrative expenses   14
Research, development and related expenses   5
Total operating expenses   32
Operating income   (32)
Other expense (income), net   $ (32)
v3.8.0.1
Significant Accounting Policies - Foreign Currency Translation (Details)
$ in Millions, in Billions
Mar. 31, 2018
VEF ( )
Mar. 31, 2018
USD ($)
Foreign Currency Translation    
Maximum balance of company's net monetary assets in Venezuelan bolivars | 20  
Exchange rate established by Venezuelan government from bolivars to dollars - DICOM2 49,000 49,000
Accumulated other comprehensive loss that 3M Company has recorded from its Venezuelan subsidiary | $   $ 145
v3.8.0.1
Significant Accounting Policies - Earnings Per Share (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Earnings per share    
Options outstanding not included in computation of diluted earnings per share (in shares) 1.9 3.2
Numerator:    
Net income attributable to 3M $ 602 $ 1,323
Denominator:    
Denominator for weighted average 3M common shares outstanding - basic (in shares) 596.2 598.1
Dilution associated with the Company's stock-based compensation plans (in shares) 16.5 13.9
Denominator for weighted average 3M common shares outstanding - diluted (in shares) 612.7 612.0
Earnings per share attributable to 3M common shareholders - basic (in dollars per share) $ 1.01 $ 2.21
Earnings per share attributable to 3M common shareholders - diluted (in dollars per share) $ 0.98 $ 2.16
v3.8.0.1
Significant Accounting Policies - New Accounting Pronouncements (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Jan. 01, 2018
Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle      
Retained earnings $ 38,453   $ 39,115
ASU 2016-16 Intra-Entity Transfers of Assets Other Than Inventory | Maximum      
New Accounting Pronouncements or Change in Accounting Principle      
Retained earnings   $ (2)  
Difference between Revenue Guidance in Effect before and after Topic 606 | Maximum      
New Accounting Pronouncements or Change in Accounting Principle      
Retained earnings   $ 2  
v3.8.0.1
Revenue (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Jan. 01, 2018
Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition      
Retained earnings $ 38,453   $ 39,115
Contract Balance      
Current deferred income balances 519   $ 513
Net Sales $ 8,278    
Exemptions and Practical Expedients Applied or Elected      
Practical Expedient, unfulfilled performance obligation true    
Practical Expedient, relative to costs of obtaining a contract true    
Difference between Revenue Guidance in Effect before and after Topic 606 | Maximum      
Revenue, Initial Application Period Cumulative Effect Transition      
Retained earnings   $ 2  
ASU 2014-09 Revenue from Contracts with Customers | Difference between Revenue Guidance in Effect before and after Topic 606      
Contract Balance      
Net Sales $ 280    
v3.8.0.1
Revenue - Disaggregated Revenue (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Disaggregation of Revenue    
Net Sales $ 8,278  
Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   $ 7,685
Abrasives    
Disaggregation of Revenue    
Net Sales 475  
Abrasives | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   430
Adhesives and Tapes    
Disaggregation of Revenue    
Net Sales 1,153  
Adhesives and Tapes | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1,075
Advanced Materials    
Disaggregation of Revenue    
Net Sales 304  
Advanced Materials | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   287
Automotive and Aerospace    
Disaggregation of Revenue    
Net Sales 559  
Automotive and Aerospace | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   508
Automotive Aftermarket    
Disaggregation of Revenue    
Net Sales 418  
Automotive Aftermarket | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   417
Separation and Purification    
Disaggregation of Revenue    
Net Sales 236  
Separation and Purification | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   220
Other Industrial    
Disaggregation of Revenue    
Net Sales 1  
Other Industrial | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1
Commercial Solutions    
Disaggregation of Revenue    
Net Sales 485  
Commercial Solutions | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   443
Personal Safety    
Disaggregation of Revenue    
Net Sales 962  
Personal Safety | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   707
Roofing Granules    
Disaggregation of Revenue    
Net Sales 101  
Roofing Granules | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   97
Transportation Safety    
Disaggregation of Revenue    
Net Sales 236  
Transportation Safety | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   303
Other Safety and Graphics    
Disaggregation of Revenue    
Net Sales 1  
Drug Delivery    
Disaggregation of Revenue    
Net Sales 119  
Drug Delivery | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   121
Food Safety    
Disaggregation of Revenue    
Net Sales 82  
Food Safety | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   73
Health Information Systems    
Disaggregation of Revenue    
Net Sales 205  
Health Information Systems | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   191
Medical Consumables    
Disaggregation of Revenue    
Net Sales 776  
Medical Consumables | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   714
Oral Care    
Disaggregation of Revenue    
Net Sales 354  
Oral Care | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   336
Electronics    
Disaggregation of Revenue    
Net Sales 931  
Electronics | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   878
Energy    
Disaggregation of Revenue    
Net Sales 420  
Energy | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   413
Other Electronics and Energy    
Disaggregation of Revenue    
Net Sales 1  
Consumer Health Care    
Disaggregation of Revenue    
Net Sales 102  
Consumer Health Care | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   102
Home Care    
Disaggregation of Revenue    
Net Sales 269  
Home Care | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   261
Home Improvement    
Disaggregation of Revenue    
Net Sales 447  
Home Improvement | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   408
Stationery and Office    
Disaggregation of Revenue    
Net Sales 299  
Stationery and Office | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   292
Other Consumer    
Disaggregation of Revenue    
Net Sales 10  
Other Consumer | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   10
Corporate and Unallocated | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1
Elimination of Dual Credit    
Disaggregation of Revenue    
Net Sales (662)  
Elimination of Dual Credit | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   (601)
Industrial    
Disaggregation of Revenue    
Net Sales 3,144  
Industrial | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   2,936
Safety and Graphics    
Disaggregation of Revenue    
Net Sales 1,783  
Safety and Graphics | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1,550
Health Care    
Disaggregation of Revenue    
Net Sales 1,536  
Health Care | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1,435
Electronics and Energy    
Disaggregation of Revenue    
Net Sales 1,350  
Electronics and Energy | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1,291
Consumer    
Disaggregation of Revenue    
Net Sales 1,127  
Consumer | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1,073
United States    
Disaggregation of Revenue    
Net Sales 3,044  
United States | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   2,941
United States | Corporate and Unallocated | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1
United States | Elimination of Dual Credit    
Disaggregation of Revenue    
Net Sales (249)  
United States | Elimination of Dual Credit | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   (231)
United States | Industrial    
Disaggregation of Revenue    
Net Sales 1,100  
United States | Industrial | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1,082
United States | Safety and Graphics    
Disaggregation of Revenue    
Net Sales 652  
United States | Safety and Graphics | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   581
United States | Health Care    
Disaggregation of Revenue    
Net Sales 702  
United States | Health Care | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   690
United States | Electronics and Energy    
Disaggregation of Revenue    
Net Sales 229  
United States | Electronics and Energy | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   231
United States | Consumer    
Disaggregation of Revenue    
Net Sales 610  
United States | Consumer | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   587
Asia Pacific    
Disaggregation of Revenue    
Net Sales 2,676  
Asia Pacific | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   2,433
Asia Pacific | Corporate and Unallocated    
Disaggregation of Revenue    
Net Sales (1)  
Asia Pacific | Corporate and Unallocated | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   (1)
Asia Pacific | Elimination of Dual Credit    
Disaggregation of Revenue    
Net Sales (246)  
Asia Pacific | Elimination of Dual Credit | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   (220)
Asia Pacific | Industrial    
Disaggregation of Revenue    
Net Sales 944  
Asia Pacific | Industrial | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   853
Asia Pacific | Safety and Graphics    
Disaggregation of Revenue    
Net Sales 497  
Asia Pacific | Safety and Graphics | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   431
Asia Pacific | Health Care    
Disaggregation of Revenue    
Net Sales 299  
Asia Pacific | Health Care | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   260
Asia Pacific | Electronics and Energy    
Disaggregation of Revenue    
Net Sales 911  
Asia Pacific | Electronics and Energy | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   851
Asia Pacific | Consumer    
Disaggregation of Revenue    
Net Sales 272  
Asia Pacific | Consumer | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   259
Europe, Middle East and Africa    
Disaggregation of Revenue    
Net Sales 1,792  
Europe, Middle East and Africa | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1,577
Europe, Middle East and Africa | Elimination of Dual Credit    
Disaggregation of Revenue    
Net Sales (109)  
Europe, Middle East and Africa | Elimination of Dual Credit | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   (92)
Europe, Middle East and Africa | Industrial    
Disaggregation of Revenue    
Net Sales 785  
Europe, Middle East and Africa | Industrial | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   696
Europe, Middle East and Africa | Safety and Graphics    
Disaggregation of Revenue    
Net Sales 436  
Europe, Middle East and Africa | Safety and Graphics | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   351
Europe, Middle East and Africa | Health Care    
Disaggregation of Revenue    
Net Sales 394  
Europe, Middle East and Africa | Health Care | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   353
Europe, Middle East and Africa | Electronics and Energy    
Disaggregation of Revenue    
Net Sales 145  
Europe, Middle East and Africa | Electronics and Energy | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   143
Europe, Middle East and Africa | Consumer    
Disaggregation of Revenue    
Net Sales 141  
Europe, Middle East and Africa | Consumer | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   126
Latin America and Canada    
Disaggregation of Revenue    
Net Sales 767  
Latin America and Canada | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   736
Latin America and Canada | Corporate and Unallocated    
Disaggregation of Revenue    
Net Sales (1)  
Latin America and Canada | Corporate and Unallocated | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1
Latin America and Canada | Elimination of Dual Credit    
Disaggregation of Revenue    
Net Sales (59)  
Latin America and Canada | Elimination of Dual Credit | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   (58)
Latin America and Canada | Industrial    
Disaggregation of Revenue    
Net Sales 316  
Latin America and Canada | Industrial | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   305
Latin America and Canada | Safety and Graphics    
Disaggregation of Revenue    
Net Sales 198  
Latin America and Canada | Safety and Graphics | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   188
Latin America and Canada | Health Care    
Disaggregation of Revenue    
Net Sales 141  
Latin America and Canada | Health Care | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   133
Latin America and Canada | Electronics and Energy    
Disaggregation of Revenue    
Net Sales 66  
Latin America and Canada | Electronics and Energy | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   65
Latin America and Canada | Consumer    
Disaggregation of Revenue    
Net Sales 106  
Latin America and Canada | Consumer | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   102
Other Unallocated    
Disaggregation of Revenue    
Net Sales 1  
Other Unallocated | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   2
Other Unallocated | Corporate and Unallocated    
Disaggregation of Revenue    
Net Sales 2  
Other Unallocated | Elimination of Dual Credit    
Disaggregation of Revenue    
Net Sales 1  
Other Unallocated | Industrial    
Disaggregation of Revenue    
Net Sales 1  
Other Unallocated | Safety and Graphics | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1
Other Unallocated | Health Care | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1
Other Unallocated | Electronics and Energy    
Disaggregation of Revenue    
Net Sales 1  
Other Unallocated | Electronics and Energy | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   1
Other Unallocated | Consumer    
Disaggregation of Revenue    
Net Sales $ 2  
Other Unallocated | Consumer | Calculated under Revenue Guidance in Effect before Topic 606    
Disaggregation of Revenue    
Net Sales   $ 1
v3.8.0.1
Acquisitions and Divestitures - Acquisitions (Details) - Scott Safety - USD ($)
$ in Millions
1 Months Ended 3 Months Ended
Oct. 31, 2017
Mar. 31, 2018
Supplemental information:    
Cash paid, net of cash acquired $ 2,000  
Adjustments to purchase price allocation   $ 20
v3.8.0.1
Acquisitions and Divestitures - Divestitures (Details) - USD ($)
$ in Millions
1 Months Ended 3 Months Ended 9 Months Ended
May 31, 2018
Feb. 28, 2018
Dec. 31, 2017
Jan. 31, 2017
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2018
Divestiture Information              
Aggregate operating income of divested businesses         $ 15 $ 10  
Disposal Group, Held-for-sale, Not Discontinued Operations              
Divestiture Information              
Disposal - Accounts receivable     $ 25   20    
Disposal - Property, plant and equipment     20        
Disposal - Goodwill     275   $ 275    
Safety Prescription Eyewear Business | Disposal Group, Disposed of by Sale, Not Discontinued Operations              
Divestiture Information              
Annual sales of divested business       $ 45      
Pre-tax gain on sale           $ 29  
Communication Markets Division | Disposal Group, Held-for-sale, Not Discontinued Operations              
Divestiture Information              
Annual sales of divested business     400        
Aggregate selling price relative to the divestiture transaction     $ 900        
Estimated pre-tax gain on sale             $ 500
Personal Safety Product Offerings | Disposal Group, Disposed of by Sale, Not Discontinued Operations              
Divestiture Information              
Annual sales of divested business   $ 15          
Personal Safety Product Offerings | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Maximum              
Divestiture Information              
Pre-tax gain on sale   $ 20          
Abrasives glass products business | Disposal Group, Disposed of by Sale, Not Discontinued Operations              
Divestiture Information              
Annual sales of divested business $ 10            
Pre-tax gain on sale $ 15            
v3.8.0.1
Goodwill and Intangible Assets (Goodwill balance by business segment) (Details)
$ in Millions
3 Months Ended
Mar. 31, 2018
USD ($)
Goodwill  
Balance at the beginning of the period $ 10,513
Acquisition activity (20)
Divestiture activity (12)
Translation and other 89
Balance at the end of the period 10,570
Amount of Goodwill impairment 0
Industrial  
Goodwill  
Balance at the beginning of the period 2,678
Divestiture activity (4)
Translation and other 38
Balance at the end of the period 2,712
Safety and Graphics  
Goodwill  
Balance at the beginning of the period 4,419
Acquisition activity (20)
Divestiture activity (8)
Translation and other 18
Balance at the end of the period 4,409
Health Care  
Goodwill  
Balance at the beginning of the period 1,682
Translation and other 17
Balance at the end of the period 1,699
Electronics and Energy  
Goodwill  
Balance at the beginning of the period 1,524
Translation and other 12
Balance at the end of the period 1,536
Consumer  
Goodwill  
Balance at the beginning of the period 210
Translation and other 4
Balance at the end of the period $ 214
v3.8.0.1
Goodwill and Intangible Assets (Acquired Intangible Assets) (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Dec. 31, 2017
Acquired intangible assets disclosures    
Total gross carrying amount $ 4,376 $ 4,361
Total accumulated amortization (2,143) (2,073)
Total finite-lived intangible assets - net 2,233 2,288
Non-amortizable intangible assets (primarily tradenames) 652 648
Total intangible assets - net $ 2,885 2,936
Indefinite lived tradenames years in existence 55 years  
Customer related intangible assets    
Acquired intangible assets disclosures    
Total gross carrying amount $ 2,341 2,332
Total accumulated amortization (912) (874)
Patents    
Acquired intangible assets disclosures    
Total gross carrying amount 564 561
Total accumulated amortization (496) (489)
Other technology-based intangible assets    
Acquired intangible assets disclosures    
Total gross carrying amount 584 583
Total accumulated amortization (304) (292)
Definite-lived tradenames    
Acquired intangible assets disclosures    
Total gross carrying amount 679 678
Total accumulated amortization (265) (256)
Other amortizable intangible assets    
Acquired intangible assets disclosures    
Total gross carrying amount 208 207
Total accumulated amortization $ (166) $ (162)
v3.8.0.1
Goodwill and Intangible Assets (Schedules for Amortization Expense) (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Finite Lived Intangible Asset    
Amortization expense for acquired intangible assets $ 64 $ 64
Expected amortization expense for acquired intangible assets recorded as of balance sheet date    
Remainder of 2018 190  
2019 243  
2020 232  
2021 222  
2022 208  
2023 176  
After 2023 $ 962  
v3.8.0.1
Restructuring Actions and Exit Activities (Details)
$ in Millions
3 Months Ended
Jun. 30, 2017
USD ($)
individual
Mar. 31, 2017
USD ($)
2017 Restructuring Actions    
Restructuring Cost and Reserve    
Restructuring and related cost, number of positions affected | individual 1,300  
Restructuring charges $ 99  
Employee-Related    
Restructuring Cost and Reserve    
Pre-tax charge related to exit activities   $ 24
v3.8.0.1
Restructuring Actions and Exit Activities - Roll Forward (Details) - Employee-Related - 2017 Restructuring Actions - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Mar. 31, 2018
Dec. 31, 2017
Restructuring Reserve Roll Forward    
Restructuring actions balances, Beginning Balance $ 88  
Expenses incurred   $ 99
Cash payments (5) (8)
Adjustments (4) (3)
Restructuring actions balances, Ending Balance $ 79 $ 88
v3.8.0.1
Supplemental Income Statement Information (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Supplemental Income Statement Information    
Interest expense $ 82 $ 45
Interest income (21) (8)
Pension and postretirement net periodic benefit cost (benefit) (19) (32)
Total $ 42 $ 5
v3.8.0.1
Supplemental Equity and Comprehensive Income Information - SE Rf (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Increase (decrease) in equity    
Balance at the beginning of the period $ 11,622 $ 10,343
Net income 606 1,326
Other comprehensive income (loss), net of tax:    
Cumulative translation adjustment 167 292
Defined benefit pension and postretirement plans adjustment 116 83
Cash flow hedging instruments unrealized gain (loss) (61) (76)
Total other comprehensive income (loss), net of tax 222 299
Dividends declared (810) (702)
Stock-based compensation 144 128
Reacquired stock (972) (678)
Issuances pursuant to stock option and benefit plans 227 324
Balance at the end of the period 11,039 11,040
Common Stock and Additional Paid-in Capital    
Increase (decrease) in equity    
Balance at the beginning of the period 5,361 5,070
Other comprehensive income (loss), net of tax:    
Stock-based compensation 144 128
Balance at the end of the period 5,505 5,198
Retained Earnings    
Increase (decrease) in equity    
Balance at the beginning of the period 39,115 37,907
Net income 602 1,323
Other comprehensive income (loss), net of tax:    
Dividends declared (810) (702)
Issuances pursuant to stock option and benefit plans (454) (434)
Balance at the end of the period 38,453 38,094
Treasury Stock    
Increase (decrease) in equity    
Balance at the beginning of the period (25,887) (25,434)
Other comprehensive income (loss), net of tax:    
Reacquired stock (972) (678)
Issuances pursuant to stock option and benefit plans 681 758
Balance at the end of the period (26,178) (25,354)
Accumulated Other Comprehensive Income (Loss)    
Increase (decrease) in equity    
Balance at the beginning of the period (7,026) (7,245)
Other comprehensive income (loss), net of tax:    
Cumulative translation adjustment 168 289
Defined benefit pension and postretirement plans adjustment 116 83
Cash flow hedging instruments unrealized gain (loss) (61) (76)
Balance at the end of the period (6,803) (6,949)
Noncontrolling Interest    
Increase (decrease) in equity    
Balance at the beginning of the period 59 45
Net income 4 3
Other comprehensive income (loss), net of tax:    
Cumulative translation adjustment (1) 3
Balance at the end of the period $ 62 $ 51
v3.8.0.1
Supplemental Equity and Comprehensive Income Information - AOCI rf (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
AOCI Attributable to 3M, Net of Tax Roll Forward    
Stockholders' Equity Attributable to 3M, Beginning Balance $ 11,563  
Other comprehensive income (loss), before tax:    
Stockholders' Equity Attributable to 3M, Ending Balance 10,977  
Accumulated Other Comprehensive Income (Loss)    
AOCI Attributable to 3M, Net of Tax Roll Forward    
Stockholders' Equity Attributable to 3M, Beginning Balance (7,026) $ (7,245)
Other comprehensive income (loss), before tax:    
Amounts before reclassifications 47 125
Amounts reclassified out 185 101
Total other comprehensive income (loss), before tax 232 226
Tax effect (9) 70
Total other comprehensive income (loss), net of tax 223 296
Stockholders' Equity Attributable to 3M, Ending Balance (6,803) (6,949)
Cumulative Translation Adjustment    
AOCI Attributable to 3M, Net of Tax Roll Forward    
Stockholders' Equity Attributable to 3M, Beginning Balance (1,638) (2,008)
Other comprehensive income (loss), before tax:    
Amounts before reclassifications 129 226
Total other comprehensive income (loss), before tax 129 226
Tax effect 39 63
Total other comprehensive income (loss), net of tax 168 289
Stockholders' Equity Attributable to 3M, Ending Balance (1,470) (1,719)
Gains (losses) associated with defined benefit pension and postretirement plans amortization    
AOCI Attributable to 3M, Net of Tax Roll Forward    
Stockholders' Equity Attributable to 3M, Beginning Balance (5,276) (5,328)
Other comprehensive income (loss), before tax:    
Amounts reclassified out 151 119
Total other comprehensive income (loss), before tax 151 119
Tax effect (35) (36)
Total other comprehensive income (loss), net of tax 116 83
Stockholders' Equity Attributable to 3M, Ending Balance (5,160) (5,245)
Cash flow hedging instruments gains (losses)    
AOCI Attributable to 3M, Net of Tax Roll Forward    
Stockholders' Equity Attributable to 3M, Beginning Balance (112) 91
Other comprehensive income (loss), before tax:    
Amounts before reclassifications (82) (101)
Amounts reclassified out 34 (18)
Total other comprehensive income (loss), before tax (48) (119)
Tax effect (13) 43
Total other comprehensive income (loss), net of tax (61) (76)
Stockholders' Equity Attributable to 3M, Ending Balance $ (173) $ 15
v3.8.0.1
Supplemental Equity and Comprehensive Income Information - Reclass AOCI (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Amount Reclassified from Accumulated Other Comprehensive Income    
Net of tax $ (142) $ (71)
Gains (losses) associated with defined benefit pension and postretirement plans amortization    
Amount Reclassified from Accumulated Other Comprehensive Income    
Prior service benefit 19 22
Net actuarial loss (170) (141)
Total before tax (151) (119)
Tax effect 35 36
Net of tax (116) (83)
Cash flow hedging instruments gains (losses)    
Amount Reclassified from Accumulated Other Comprehensive Income    
Total before tax (34) 18
Tax effect 8 (6)
Net of tax (26) 12
Cash flow hedging instruments gains (losses) | Foreign currency forward/option contracts    
Amount Reclassified from Accumulated Other Comprehensive Income    
Cost of sales $ (34) $ 18
v3.8.0.1
Income Taxes - Tax Effected Operating Loss, Capital Loss, and Tax Credit Carryovers (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Mar. 31, 2018
Dec. 31, 2017
Mar. 31, 2017
Dec. 31, 2017
Income tax        
Net UTB impacting the effective tax rate $ 518 $ 526   $ 526
Interest and penalties related to unrecognized tax benefits, expense (benefit) recognized on a gross basis 9   $ 3  
Interest and penalties related to unrecognized tax benefits, accrued on a gross basis 69 68   68
Deferred Tax Assets, Valuation Allowance $ 85 81   $ 81
Effective tax rate (as a percent) 37.20%   23.70%  
Increase (decrease) in effective income tax rate from prior reporting period to current reporting period (as a percent) 13.50%      
Impact of factors that decreased the effective tax rate from prior reporting period to current reporting period (as a percent) 14.30%      
Impact of factors that increased the effective tax rate from prior reporting period to current reporting period (as a percent) 27.80%      
Statutory U.S. tax rate 21.00%     35.00%
Provisional income tax expense (benefit) from enactment of Tax Cuts and Jobs Act of 2017 $ 217 762    
Provisional transition tax expense (benefit) for accumulated foreign earnings from enactment of Tax Cuts and Jobs Act of 2017 132 745    
Provisional expense (benefit) from remeasurement of deferred tax assets and liabilities due to change in tax rate from enactment of Tax Cuts and Jobs Act of 2017 $ 85 $ 17    
Period of time over which TCJA transition tax on certain unrepatriated earnings of foreign subsidiaries may be paid 8 years      
Tax Cuts and Jobs Act of 2017 transition tax in current accrued income taxes payable $ 144      
Tax Cuts and Jobs Act of 2017 transition tax long term income taxes payable $ 733      
v3.8.0.1
Marketable Securities (current and non-current) (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Marketable Securities    
Current marketable securities $ 604 $ 1,076
Non-current marketable securities 27 27
Total marketable securities 631 1,103
Corporate debt securities    
Marketable Securities    
Current marketable securities 20 14
Commercial paper    
Marketable Securities    
Current marketable securities 495 899
Certificates of deposit/time deposits    
Marketable Securities    
Current marketable securities 59 76
U.S. municipal securities    
Marketable Securities    
Current marketable securities 3 3
Non-current marketable securities 27 27
Asset-backed securities total    
Marketable Securities    
Current marketable securities 27 84
Asset-backed securities Automobile loan related    
Marketable Securities    
Current marketable securities 8 16
Asset-backed securities Credit card related    
Marketable Securities    
Current marketable securities $ 19 $ 68
v3.8.0.1
Marketable Securities (Contractual maturity) (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Marketable securities by contractual maturity    
Due in one year or less $ 604  
Due after one year through five years 13  
Due after five years through ten years 14  
Total marketable securities $ 631 $ 1,103
v3.8.0.1
Long-Term Debt and Short-Term Borrowings - Short-Term Borrowings and Current Portion of Long-Term Debt (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Short-Term Borrowings and Current Portion of Long-Term Debt    
Short-term borrowings and current portion of long-term debt $ 3,449 $ 1,853
Commercial paper    
Short-Term Borrowings and Current Portion of Long-Term Debt    
Short-term borrowings and current portion of long-term debt $ 2,300 $ 745
v3.8.0.1
Pension and Postretirement Benefit Plans - Narrative (Details) - Funded
$ in Millions
3 Months Ended
Mar. 31, 2018
USD ($)
Qualified and Non-qualified Pension Benefits  
Benefit Plan Information  
Company contributions year to date $ 231
Qualified and Non-qualified Pension Benefits | Maximum  
Benefit Plan Information  
Estimated pension and postretirement employer contributions in current fiscal year 500
Qualified and Non-qualified Pension Benefits | Minimum  
Benefit Plan Information  
Estimated pension and postretirement employer contributions in current fiscal year 300
Postretirement Benefits  
Benefit Plan Information  
Company contributions year to date $ 1
v3.8.0.1
Pension and Postretirement Benefit Plans - Components of net periodic benefit cost and other information (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Net periodic benefit cost (benefit)    
Net periodic benefit cost (benefit) $ (19) $ (32)
Funded | Postretirement Benefits    
Net periodic benefit cost (benefit)    
Service cost 13 13
Interest cost 20 19
Expected return on plan assets (21) (21)
Amortization of prior service benefit (10) (13)
Amortization of net actuarial loss 15 14
Total non-operating expense (benefit) 4 (1)
Net periodic benefit cost (benefit) 17 12
Funded | United States | Qualified and Non-qualified Pension Benefits    
Net periodic benefit cost (benefit)    
Service cost 72 67
Interest cost 141 142
Expected return on plan assets (272) (259)
Amortization of prior service benefit (6) (6)
Amortization of net actuarial loss 126 97
Total non-operating expense (benefit) (11) (26)
Net periodic benefit cost (benefit) 61 41
Funded | International | Qualified and Non-qualified Pension Benefits    
Net periodic benefit cost (benefit)    
Service cost 36 33
Interest cost 40 37
Expected return on plan assets (78) (69)
Amortization of prior service benefit (3) (3)
Amortization of net actuarial loss 29 30
Total non-operating expense (benefit) (12) (5)
Net periodic benefit cost (benefit) $ 24 $ 28
v3.8.0.1
Derivatives - Cash Flow Hedges (Details) - Cash flow hedge - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Derivatives in Cash Flow Hedging Relationships    
Pretax Gain (Loss) Recognized in Other Comprehensive Income on Effective portion of Derivative $ (82) $ (101)
Pretax gain (loss) recognized in income on effective portion of derivative as a result of reclassification from accumulated other comprehensive income (34) 18
Accumulated other comprehensive income (loss), unrealized gain (loss) on cash flow hedges (173)  
After-tax net unrealized gain (loss) anticipated to be reclassified from AOCI to the income statement within next twelve months (107)  
After-tax net unrealized gain (loss) anticipated to be reclassified from AOCI to the Income Statement over remaining fiscal year (82)  
After-tax net unrealized gain (loss) anticipated to be reclassified from AOCI to the Income Statement in 2019 (57)  
After-tax unrealized gain (loss) anticipated to be reclassified from AOCI to the Income Statement after 2019 $ (34)  
Foreign currency forward/option contracts    
Derivatives in Cash Flow Hedging Relationships    
Maximum length of time hedged in cash flow hedge 36 months  
Pretax Gain (Loss) Recognized in Other Comprehensive Income on Effective portion of Derivative $ (79) (100)
Foreign currency forward/option contracts | Cost of sales    
Derivatives in Cash Flow Hedging Relationships    
Pretax gain (loss) recognized in income on effective portion of derivative as a result of reclassification from accumulated other comprehensive income (34) 18
Interest rate swap contracts    
Derivatives in Cash Flow Hedging Relationships    
Derivative notional amount 200  
Pretax Gain (Loss) Recognized in Other Comprehensive Income on Effective portion of Derivative (3) $ (1)
After-tax net unrealized gain (loss) anticipated to be reclassified from AOCI to the income statement within next twelve months $ (9)  
v3.8.0.1
Derivatives - Fair Value Hedges (Details) - Fair value hedges - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Derivatives in Fair Value Hedging Relationships    
Gain (Loss) on Derivative Recognized in income $ (11) $ (5)
Gain (Loss) on Hedged Item Recognized in Income 11 5
Interest rate swap contracts | Interest expense.    
Derivatives in Fair Value Hedging Relationships    
Gain (Loss) on Derivative Recognized in income (11) (5)
Gain (Loss) on Hedged Item Recognized in Income $ 11 $ 5
v3.8.0.1
Derivatives - Net Investment Hedges (Details) - Net Investment Hedges
€ in Millions, $ in Millions, ₩ in Billions
3 Months Ended
Mar. 31, 2018
USD ($)
Mar. 31, 2017
USD ($)
Mar. 31, 2018
KRW (₩)
Mar. 31, 2018
EUR (€)
Net investment hedges        
Effective portion of net investment hedge reclassified out of other comprehensive income into income $ 0 $ 0    
Pretax Gain (Loss) Recognized as Cumulative Translation within Other Comprehensive Income on Effective Portion of Instrument (134) (141)    
Ineffective portion of gain (loss) on derivative and amount excluded from effectiveness testing recognized in income (3) 2    
Foreign currency forward contracts        
Net investment hedges        
Derivative notional amount     ₩ 248 € 150
Pretax Gain (Loss) Recognized as Cumulative Translation within Other Comprehensive Income on Effective Portion of Instrument (6) (20)    
Foreign currency forward contracts | Cost of sales        
Net investment hedges        
Ineffective portion of gain (loss) on derivative and amount excluded from effectiveness testing recognized in income (1) 2    
Foreign Currency Denominated Debt        
Net investment hedges        
Face amount of debt dedesignated as a net investment hedge | €       300
Face amount of debt designated as a net investment hedge | €       € 4,100
Pretax Gain (Loss) Recognized as Cumulative Translation within Other Comprehensive Income on Effective Portion of Instrument (128) $ (121)    
Ineffective portion of gain (loss) on derivative and amount excluded from effectiveness testing recognized in income $ (2)      
v3.8.0.1
Derivatives - Not Designated (Details) - Derivatives not designated as hedging instruments - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Derivatives not designated as hedging instruments    
Gain (Loss) on Derivative Recognized in income $ 20 $ 41
Foreign currency forward/option contracts | Cost of sales    
Derivatives not designated as hedging instruments    
Gain (Loss) on Derivative Recognized in income (3) (1)
Foreign currency forward contracts | Interest expense.    
Derivatives not designated as hedging instruments    
Gain (Loss) on Derivative Recognized in income $ 23 $ 42
v3.8.0.1
Derivatives - BS Location (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Location and Fair Value Amount of Derivative Instruments    
Fair Value of Derivative Instruments, Assets $ 52 $ 78
Fair Value of Derivative Instruments, Liabilities 238 197
Derivatives designated as hedging instruments    
Location and Fair Value Amount of Derivative Instruments    
Fair Value of Derivative Instruments, Assets 36 48
Fair Value of Derivative Instruments, Liabilities 205 172
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 5 7
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 11 20
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 122 109
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 63 56
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 2,225 2,204
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 1,313 1,392
Derivatives designated as hedging instruments | Interest rate swap contracts | Other assets    
Location and Fair Value Amount of Derivative Instruments    
Fair Value of Derivative Instruments, Assets 20 21
Derivatives designated as hedging instruments | Interest rate swap contracts | Other current liabilities    
Location and Fair Value Amount of Derivative Instruments    
Fair Value of Derivative Instruments, Liabilities 2 1
Derivatives designated as hedging instruments | Interest rate swap contracts | Other liabilities    
Location and Fair Value Amount of Derivative Instruments    
Fair Value of Derivative Instruments, Liabilities 18 6
Derivatives designated as hedging instruments | Interest rate swap contracts | Current balance sheet location    
Location and Fair Value Amount of Derivative Instruments    
Derivative Notional Amount 450 450
Derivatives designated as hedging instruments | Interest rate swap contracts | Noncurrent balance sheet location    
Location and Fair Value Amount of Derivative Instruments    
Derivative Notional Amount 1,703 1,503
Derivatives not designated as hedging instruments    
Location and Fair Value Amount of Derivative Instruments    
Fair Value of Derivative Instruments, Assets 16 30
Fair Value of Derivative Instruments, Liabilities 33 25
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 16 30
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 33 25
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 $ 6,070 $ 4,974
v3.8.0.1
Derivatives - Offsetting Assets (Details)
$ in Millions
3 Months Ended
Mar. 31, 2018
USD ($)
Counterparty
Dec. 31, 2017
USD ($)
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 $ 52 $ 78
Net Amounts of Derivative Assets 26 51
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 52 78
Gross Amount of Eligible Offsetting Recognized Derivative Liabilities 26 27
Net Amounts of Derivative Assets $ 26 $ 51
v3.8.0.1
Derivatives - Offsetting Liabilities (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties    
Gross Amounts of Derivative Liabilities Presented in the Consolidated Balance Sheet $ 238 $ 197
Net Amount of Derivative Liabilities 212 170
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 238 197
Gross Amount of Eligible Offsetting Recognized Derivative Assets 26 27
Net Amount of Derivative Liabilities $ 212 $ 170
v3.8.0.1
Derivatives - Currency Effects (Details)
$ in Millions
3 Months Ended
Mar. 31, 2018
USD ($)
Foreign Currency  
Year-on-year foreign currency transaction effects, including hedging impact, gain (loss) impact on pre-tax income $ (64)
v3.8.0.1
Fair Value Measurements - Recurring Basis (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Assets and Liabilities Measured on Recurring Basis    
Available-for-sale marketable securities $ 631 $ 1,103
Gross Amounts of Derivative Assets Presented in the Consolidated Balance Sheet 52 78
Gross Amounts of Derivative Liabilities Presented in the Consolidated Balance Sheet 238 197
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 32 57
Gross Amounts of Derivative Liabilities Presented in the Consolidated Balance Sheet 218 190
Fair value on a recurring basis | Interest rate swap contracts    
Assets and Liabilities Measured on Recurring Basis    
Gross Amounts of Derivative Assets Presented in the Consolidated Balance Sheet 20 21
Gross Amounts of Derivative Liabilities Presented in the Consolidated Balance Sheet 20 7
Fair value on a recurring basis | Corporate debt securities    
Assets and Liabilities Measured on Recurring Basis    
Available-for-sale marketable securities 20 14
Fair value on a recurring basis | Commercial paper    
Assets and Liabilities Measured on Recurring Basis    
Available-for-sale marketable securities 495 899
Fair value on a recurring basis | Certificates of deposit/time deposits    
Assets and Liabilities Measured on Recurring Basis    
Available-for-sale marketable securities 59 76
Fair value on a recurring basis | Asset-backed securities Automobile loan related    
Assets and Liabilities Measured on Recurring Basis    
Available-for-sale marketable securities 8 16
Fair value on a recurring basis | Asset-backed securities Credit card related    
Assets and Liabilities Measured on Recurring Basis    
Available-for-sale marketable securities 19 68
Fair value on a recurring basis | U.S. municipal securities    
Assets and Liabilities Measured on Recurring Basis    
Available-for-sale marketable securities 30 30
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 32 57
Gross Amounts of Derivative Liabilities Presented in the Consolidated Balance Sheet 218 190
Fair value on a recurring basis | Level 2 | Interest rate swap contracts    
Assets and Liabilities Measured on Recurring Basis    
Gross Amounts of Derivative Assets Presented in the Consolidated Balance Sheet 20 21
Gross Amounts of Derivative Liabilities Presented in the Consolidated Balance Sheet 20 7
Fair value on a recurring basis | Level 2 | Corporate debt securities    
Assets and Liabilities Measured on Recurring Basis    
Available-for-sale marketable securities 20 14
Fair value on a recurring basis | Level 2 | Commercial paper    
Assets and Liabilities Measured on Recurring Basis    
Available-for-sale marketable securities 495 899
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 59 76
Fair value on a recurring basis | Level 2 | Asset-backed securities Automobile loan related    
Assets and Liabilities Measured on Recurring Basis    
Available-for-sale marketable securities 8 16
Fair value on a recurring basis | Level 2 | Asset-backed securities Credit card related    
Assets and Liabilities Measured on Recurring Basis    
Available-for-sale marketable securities 19 68
Fair value on a recurring basis | Level 3 | U.S. municipal securities    
Assets and Liabilities Measured on Recurring Basis    
Available-for-sale marketable securities $ 30 $ 30
v3.8.0.1
Fair Value Measurements - Recurring Reconciliation (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
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 $ 30 $ 20
Total gains or losses included in earnings 0 0
Total gains or losses included in other comprehensive income 0 0
Purchases and issuances 0 0
Sales and settlements 0 0
Transfers in and/or out of Level 3 0 0
Balance at the end of the period $ 30 $ 20
v3.8.0.1
Fair Value Measurements - Nonrecurring (Details)
$ in Millions
3 Months Ended
Mar. 31, 2017
USD ($)
Electronics and Energy  
Long-lived asset impairment charges $ 40
v3.8.0.1
Fair Value Measurements - Financial Instruments (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Carrying Value    
Financial Instruments    
Long-term debt, excluding current portion - Fair Value $ 12,211 $ 12,096
Fair Value    
Financial Instruments    
Long-term debt, excluding current portion - Fair Value $ 12,659 $ 12,535
v3.8.0.1
Commitments and Contingencies - Respirator and Environmental (Details)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2018
USD ($)
individual
lawsuit
defendant
case
claim
item
Dec. 31, 2017
item
Respirator Mask/Asbestos Litigation    
Loss contingencies    
Total number of named claimants 2,250 2,230
Number of total claims the Company prevailed after being taken to trial | claim 13  
Number of total claims taken to trial | claim 14  
Number of total claims settled and tried to verdict | claim 11  
Number of total claims tried to verdict | claim 12  
Payments for fees and settlements related to litigation | $ $ 12,000  
Insurance receivables | $ $ 4,000  
Respirator Mask/Asbestos Litigation | State court of Kentucky    
Loss contingencies    
Number of additional defendants two  
Litigation settlement awarded | $ $ 2,000  
Amount of punitive damages awarded | $ $ 63,000  
Respirator Mask/Asbestos Litigation - State of West Virginia    
Loss contingencies    
Number of additional defendants 2  
Accrued loss contingency reserve | $ $ 0  
Respirator Mask/Asbestos litigation - Excluding Aearo Technologies    
Loss contingencies    
Accrued loss contingency reserve | $ 598,000  
Respirator Mask/Asbestos Litigation - Aearo Technologies    
Loss contingencies    
Accrued loss contingency reserve | $ 29,000  
Quarterly fee paid to Cabot to retain responsibility and liability for products manufactured before July 11, 1995 | $ 100  
Environmental Matters - Remediation    
Loss contingencies    
Accrued loss contingency reserve | $ 31,000  
Insurance receivables | $ $ 8,000  
Number of years remediation payments expected to be paid for applicable sites 20 years  
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 70  
Amount of PFOA in drinking water allowed per provisional health advisories in parts per trillion (superseded) 400  
Amount of PFOS in drinking water allowed per provisional health advisories in parts per trillion (superseded) 200  
Number of PFCs the EPA has required to have public water system suppliers monitor 6  
Number of public water supplies the EPA reported results 4,920  
Number of water supplies that reported above advisory level with PFOA 13  
Number of water supplies that reported above advisory level with PFOS 46  
Number of water supplies that reported above advisory level with both PFOA and PFOS 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 1  
Environmental Matters - Regulatory Activities | Alabama    
Loss contingencies    
Number of years covered by permit for sludge containing PFCs 20 years  
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 35  
Amount of PFOS in drinking water allowed per Minnesota Department of Health in parts per trillion 27  
Amount of PFBS in drinking water allowed per Minnesota Department of Health in parts per billion 2  
Environmental Matters - Litigation | State Court of Lawrence County, Alabama    
Loss contingencies    
Total number of named claimants 200  
Environmental Matters - Litigation | U.S. District Court for the Northern District of Alabama    
Loss contingencies    
Number of unnamed defendant | defendant 3  
Environmental Matters - Litigation | Alabama    
Loss contingencies    
Number of local water works for whom the water authority supplies water 5  
Environmental Matters - Litigation | Morgan County, Alabama    
Loss contingencies    
Total number of named claimants 3  
Environmental Matters - Litigation | Minnesota    
Loss contingencies    
Litigation settlement awarded | $ $ 897,000  
Settlement amount paid as grant | $ 850,000  
Amount the State's damages expert contended that the State incurred in damages | $ 5,000,000  
Environmental Matters - Other Environmental Litigation    
Loss contingencies    
Accrued loss contingency reserve | $ $ 54,000  
Number of former disposal sites with PFC present in soil and groundwater in Washington County, Minnesota 2  
Environmental Matters - Other Environmental Litigation | Maximum    
Loss contingencies    
Number of years remediation payments expected to be paid for applicable sites 4 years  
Environmental Matters - Aqueous Film Forming Foam Litigation    
Loss contingencies    
Number of putative class action and other lawsuits 17  
Environmental Matters - Other PFC-related Environmental Litigation    
Loss contingencies    
Total number of named claimants | individual 8  
Number of counts in a litigation case | case 4  
Number of class action lawsuits | case 12  
Environmental Matters - Other PFC-related Environmental Litigation | U.S. District Court of New York State    
Loss contingencies    
Number of lawsuits filed | lawsuit 3  
v3.8.0.1
Commitments and Contingencies - Product Liability (Details)
3 Months Ended 12 Months Ended
Mar. 31, 2018
USD ($)
individual
lawsuit
state
case
item
Dec. 31, 2017
item
Product liability - Bair Hugger    
Product Liability Litigation    
Number of plaintiffs 4,370 4,270
Accrued loss contingency reserve | $ $ 0  
Number of total claims dismissed | case 61  
Product liability - Bair Hugger | U.S. District Court for the Western District of Tennessee    
Product Liability Litigation    
Number of lawsuits filed 1  
Product Liability Lava Ultimate Dental Restorative Material    
Product Liability Litigation    
Number of lawsuits pending | lawsuit 1  
Number of plaintiffs | individual 29  
Number of states involved in lawsuit | state 13  
v3.8.0.1
Stock-Based Compensation (Details)
3 Months Ended
Mar. 31, 2018
shares
Share-based Compensation Arrangement by Share-based Payment Award Activity  
Retirement age eligibility for employees 55 years
Retirement eligibility for employees, minimum years of service required 10 years
Percent of stock-based compensation related to retiree-eligible population (as a percent) 38.00%
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 25,900,000
v3.8.0.1
Stock-Based Compensation - Compensation (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Amounts recognized in the financial statements    
Stock-based compensation programs expense $ 159 $ 147
Income tax benefits (98) (148)
Stock-based compensation expenses (benefits), net of tax 61 (1)
Cost of sales    
Amounts recognized in the financial statements    
Stock-based compensation programs expense 23 23
Selling, general and administrative expenses    
Amounts recognized in the financial statements    
Stock-based compensation programs expense 109 98
Research, development and related expenses    
Amounts recognized in the financial statements    
Stock-based compensation programs expense $ 27 $ 26
v3.8.0.1
Stock-Based Compensation - Stock Options (Details) - Stock Options - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Stock Option Program    
Balance at the beginning of the period 34,965  
Granted - Annual 3,174  
Exercised (1,844)  
Forfeited (22)  
Balance at the end of the period 36,273  
Options exercisable 27,757  
Options exercisable, exercise price $ 120.20  
Weighted average exercise price - Beginning balance 125.73  
Weighted average exercise price - Granted - Annual 233.62  
Weighted average exercise price - Exercised 90.20  
Weighted average exercise price - Canceled 180.69  
Weighted average exercise price - Ending balance $ 136.94  
Weighted average remaining contractual life for options outstanding 73 months  
Weighted average remaining contractual life for options exercisable 63 months  
Aggregate intrinsic value for options outstanding $ 3,040  
Aggregate intrinsic value for options exercisable $ 2,757  
Expiration of annual grants 10 years  
Compensation expense yet to be recognized $ 123  
Expense recognition period 25 months  
Total intrinsic value of stock options exercised $ 283 $ 286
Cash received from options exercised 166 271
Tax benefit realized from exercise of stock options $ 61 $ 106
Share- based compensation assumptions    
Weighted average exercise price $ 233.63  
Risk-free interest rate (as a percent) 2.70%  
Dividend yield (as a percent) 2.40%  
Expected volatility (as a percent) 21.00%  
Expected life 78 months  
Black-Scholes fair value $ 41.59  
Maximum    
Stock Option Program    
Vesting period 3 years  
Minimum    
Stock Option Program    
Vesting period 1 year  
v3.8.0.1
Stock-Based Compensation - RSU, RS, Performance Shares (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Restricted Stock and Restricted Stock Units    
Unit and Shares Activity:    
Number of Awards - Nonvested - Beginning balance 1,994  
Number of Awards - Granted - Annual 467  
Number of Awards - Vested (611)  
Number of Awards - Forfeited (6)  
Number of Awards - Nonvested - Ending balance 1,844  
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 $ 162.60  
Weighted Average Grant Date Fair Value - Granted - Annual 233.61  
Weighted Average Grant Date Fair Value - Vested 165.67  
Weighted Average Grant Date Fair Value - Forfeited 171.27  
Weighted Average Grant Date Fair Value - Nonvested - Ending balance $ 179.55  
Compensation expense yet to be recognized $ 131  
Expense recognition period 26 months  
Fair value that vested $ 150 $ 127
Tax benefit realized from vesting $ 28 47
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 Awards - Nonvested - Beginning balance 686  
Number of Awards - Granted - Annual 156  
Number of Awards - Vested (206)  
Number of Awards - Performance Change 28  
Number of Awards - Forfeited (2)  
Number of Awards - Nonvested - Ending balance 662  
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 $ 171.90  
Weighted Average Grant Date Fair Value - Granted - Annual 231.34  
Weighted Average Grant Date Fair Value - Vested 159.82  
Weighted Average Grant Date Fair Value - Performance Change 205.82  
Weighted Average Grant Date Fair Value - Forfeited 181.11  
Weighted Average Grant Date Fair Value - Nonvested - Ending balance $ 191.02  
Compensation expense yet to be recognized $ 60  
Expense recognition period 11 months  
Fair value that vested $ 48 55
Tax benefit realized from vesting $ 11 $ 15
Vesting or performance period 3 years  
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%  
v3.8.0.1
Business Segments (Details)
3 Months Ended
Mar. 31, 2018
segment
Business Segments  
Number of business segments 5
Percentage of net sales for countries that centralized sales districts to overall international net sales 70.00%
v3.8.0.1
Business Segments - Segment information (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Business Segment Information      
Net sales $ 8,278 $ 7,685  
Operating Income 1,007 1,742  
Assets 38,575   $ 37,987
Depreciation and amortization 382 438  
Capital expenditures 304 287  
Business Segments. | Industrial      
Business Segment Information      
Net sales 3,144 2,936  
Operating Income 719 670  
Business Segments. | Safety and Graphics      
Business Segment Information      
Net sales 1,783 1,550  
Operating Income 483 399  
Business Segments. | Health Care      
Business Segment Information      
Net sales 1,536 1,435  
Operating Income 460 429  
Business Segments. | Electronics and Energy      
Business Segment Information      
Net sales 1,350 1,291  
Operating Income 337 256  
Business Segments. | Consumer      
Business Segment Information      
Net sales 1,127 1,073  
Operating Income 218 223  
Corporate and Unallocated      
Business Segment Information      
Net sales   1  
Operating Income (1,046) (93)  
Elimination of Dual Credit      
Business Segment Information      
Net sales (662) (601)  
Operating Income $ (164) $ (142)