REG - 3M Company - Annual Financial Report <Origin Href="QuoteRef">MMM.N</Origin> - Part 12
10/02/2017 17:40
- Part 12: For the preceding part double click ID:nRSJ6609Wk
3,678 3,799 3,847 3,716 15,040
Net income including noncontrolling interest 1,278 1,293 1,331 1,156 5,058
Net income attributable to 3M 1,275 1,291 1,329 1,155 5,050
Earnings per share attributable to 3M common shareholders - basic 2.10 2.13 2.20 1.93 8.35
Earnings per share attributable to 3M common shareholders - diluted 2.05 2.08 2.15 1.88 8.16
(Millions, except per-share amounts) First Second Third Fourth Year
2015 Quarter Quarter Quarter Quarter 2015
Net sales $ 7,578 $ 7,686 $ 7,712 $ 7,298 $ 30,274
Cost of sales 3,821 3,858 3,877 3,827 15,383
Net income including noncontrolling interest 1,201 1,303 1,298 1,039 4,841
Net income attributable to 3M 1,199 1,300 1,296 1,038 4,833
Earnings per share attributable to 3M common shareholders - basic 1.88 2.06 2.09 1.69 7.72
Earnings per share attributable to 3M common shareholders - diluted 1.85 2.02 2.05 1.66 7.58
Gross profit is calculated as net sales minus cost of sales.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
a. The Company carried out an evaluation, under the supervision and with the participation of its management, including the
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's
"disclosure controls and procedures" (as defined in the Exchange Act Rule 13a-15(e)) as of the end of the period covered by
this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective.
b. The Company's management is responsible for establishing and maintaining an adequate system of internal control over
financial reporting, as defined in the Exchange Act Rule 13a-15(f). Management conducted an assessment of the Company's
internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations
of the Treadway Commission in Internal Control - Integrated Framework (2013). Based on the assessment, management concluded
that, as of December 31, 2016, the Company's internal control over financial reporting is effective. The Company's internal
control over financial reporting as of December 31, 2016 has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report which is included herein, which expresses an unqualified
opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2016.
c. There was no change in the Company's internal control over financial reporting that occurred during the Company's most
recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
The Company is implementing an enterprise resource planning ("ERP") system on a worldwide basis, which is expected to
improve the efficiency of certain financial and related transaction processes. The gradual implementation is expected to
occur in phases over the next several years. The implementation of a worldwide ERP system will likely affect the processes
that constitute our internal control over financial reporting and will require testing for effectiveness.
The Company completed implementation with respect to elements of certain processes/sub-processes in limited
subsidiaries/locations and will continue to roll-out the ERP system over the next several years. As with any new
information technology application we implement, this application, along with the internal controls over financial
reporting included in this process, was appropriately considered within the testing for effectiveness with respect to the
implementation in these instances. We concluded, as part of our evaluation described in the above paragraphs, that the
implementation of ERP in these circumstances has not materially affected our internal control over financial reporting.
Item 9B. Other Information.
None.
PART III
Documents Incorporated by Reference
In response to Part III, Items 10, 11, 12, 13 and 14, parts of the Company's definitive proxy statement (to be filed
pursuant to Regulation 14A within 120 days after Registrant's fiscal year-end of December 31, 2016) for its annual meeting
to be held on May 9, 2017, are incorporated by reference in this Form 10-K.
Item 10. Directors, Executive Officers and Corporate Governance.
The information relating to directors and nominees of 3M is set forth under the caption "Proposal No. 1" in 3M's proxy
statement for its annual meeting of stockholders to be held on May 9, 2017 ("3M Proxy Statement") and is incorporated by
reference herein. Information about executive officers is included in Item 1 of this Annual Report on Form 10-K. The
information required by Items 405, 407(c)(3), (d)(4) and (d)(5) of Regulation S-K is contained under the captions "Section
16(a) Beneficial Ownership Reporting Compliance," "Corporate Governance At 3M - Identification, Evaluation, and Selection
of Nominees,," "-Nominees Proposed By Stockholders," "-Stockholder Nominations", "-Proxy Access Nominations" and "-Role of
the Nominating and Governance Committee" and "Corporate Governance At 3M -- Board Committees - Audit Committee" of the 3M
Proxy Statement and such information is incorporated by reference herein.
Code of Ethics. All of our employees, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting
Officer and Controller, are required to abide by 3M's long-standing business conduct policies to ensure that our business
is conducted in a consistently legal and ethical manner. 3M has posted the text of such code of ethics on its website
(http://www.3M.com/businessconduct). At the same website, any future amendments to the code of ethics will also be posted.
Any person may request a copy of the code of ethics, at no cost, by writing to us at the following address:
3M Company
3M Center, Building 220-11W-09
St. Paul, MN 55144-1000
Attention: Vice President, Compliance and Business Conduct
Item 11. Executive Compensation.
The information required by Item 402 of Regulation S-K is contained under the captions "Executive Compensation" (excluding
the information under the caption "- Compensation Committee Report") and "Director Compensation and Stock Ownership
Guidelines" of the 3M Proxy Statement. Such information is incorporated by reference.
The information required by Items 407(e)(4) and (e)(5) of Regulation S-K is contained in the "Executive Compensation"
section under the captions "Compensation Committee Report" and "Compensation Committee Interlocks and Insider
Participation" of the 3M Proxy Statement. Such information (other than the Compensation Committee Report, which shall not
be deemed to be "filed") is incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information relating to security ownership of certain beneficial owners and management is set forth under the
designation "Security Ownership of Management" and "Security Ownership of Certain Beneficial Owners" in the 3M Proxy
Statement and such information is incorporated by reference herein.
Equity compensation plans information as of December 31, 2016 follows:
Equity Compensation Plans Information (1)
A B C
Number of Weighted- Number of securities
securities to be average exercise remaining available for
issued upon price of future issuance under
exercise of outstanding equity compensation
outstanding options, plans (excluding
options, warrants warrants and securities reflected in
Plan Category and rights rights column (A))
Equity compensation plans approved by security holders
Stock options 36,196,232 $ 112.07 -
Restricted stock units 2,185,046 -
Performance shares 656,278 -
Non-employee director deferred stock units 242,779 -
Total 39,280,335 36,865,814
Employee stock purchase plan - 27,116,857
Subtotal 39,280,335 63,982,671
Total 39,280,335 63,982,671
(1) In column B, the weighted-average exercise price is only applicable to stock options. In column C, the number of
securities remaining available for future issuance for stock options, restricted stock units, and stock awards for
non-employee directors is approved in total and not individually with respect to these items.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
With respect to certain relationships and related transactions as set forth in Item 404 of Regulation S-K, no matters
require disclosure with respect to transactions with related persons. The information required by Item 404(b) and Item
407(a) of Regulation S-K is contained under the section "Corporate Governance at 3M" under the captions "Director
Independence" and "Related Person Transaction Policy and Procedures" of the 3M Proxy Statement and such information is
incorporated by reference herein.
Item 14. Principal Accounting Fees and Services.
The information relating to principal accounting fees and services is set forth in the section entitled "Audit Committee
Matters" under the designation "Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of the
Independent Accounting Firm" and "Fees of the Independent Accounting Firm" in the 3M Proxy Statement and such information
is incorporated by reference herein.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a) (1) Financial Statements. The consolidated financial statements filed as part of this report are listed in the index to
financial statements at the beginning of this document.
(a) (2) Financial Statement Schedules. Financial statement schedules are omitted because of the absence of the conditions
under which they are required or because the required information is included in the Consolidated Financial Statements or
the notes thereto. The financial statements of unconsolidated subsidiaries are omitted because, considered in the
aggregate, they would not constitute a significant subsidiary.
(a) (3) Exhibits. The exhibits are either filed with this report or incorporated by reference into this report. Exhibit
numbers 10.1 through 10.31 are management contracts or compensatory plans or arrangements. See (b) Exhibits, which follow.
(b) Exhibits.
(3) Articles of Incorporation and bylaws
(3.1) Certificate of incorporation, as amended as of May 11, 2007, is incorporated by reference from our Form 8-K dated May 14, 2007.
(3.2) Amended and Restated Bylaws, as adopted as of November 10, 2015, are incorporated by reference from our Form 8-K dated November 10, 2015.
(4) Instruments defining the rights of security holders, including indentures:
(4.1) Indenture, dated as of November 17, 2000, between 3M and The Bank of New York Mellon Trust Company, N.A., as successor trustee, with respect to 3M's senior debt securities, is incorporated by reference from our Form 8-K dated December 7, 2000.
(4.2) First Supplemental Indenture, dated as of July 29, 2011, to Indenture dated as of November 17, 2000, between 3M and The Bank of New York Mellon Trust Company, N.A., as successor trustee, with respect to 3M's senior debt securities, is incorporated by reference from our Form 10-Q for the quarter ended June 30, 2011.
(10) Material contracts and management compensation plans and arrangements:
(10.1) 3M Company 2016 Long-Term Incentive Plan is incorporated by reference from our Form 8-K dated May 12, 2016.
(10.2) Form of Stock Option Award Agreement under 3M Company 2016 Long-Term Incentive Plan is incorporated by reference from our Form 8-K dated May 12, 2016.
(10.3) Form of Stock Appreciation Right Award Agreement under 3M Company 2016 Long-Term Incentive Plan is incorporated by reference from our Form 8-K dated May 12, 2016.
(10.4) Form of Restricted Stock Unit Award Agreement under 3M Company 2016 Long-Term Incentive Plan is incorporated by reference from our Form 8-K dated May 12, 2016.
(10.5) Form of Performance Share Award Agreement under 3M Company 2016 Long-Term Incentive Plan is incorporated by reference from our Form 8-K dated May 12, 2016.
(10.6) 3M 2008 Long-Term Incentive Plan (including amendments through February 2, 2016) is incorporated by reference from our Form 10-K for the year ended December 31, 2015.
(10.7) Form of Agreement for Stock Option Grants to Executive Officers under 3M 2008 Long-Term Incentive Plan is incorporated by reference from our Form 8-K dated May 13, 2008.
(10.8) Form of Stock Option Agreement for options granted to Executive Officers under the 3M 2008 Long-Term Incentive Plan, commencing February 9, 2010, is incorporated by reference from our Form 10-K for the year ended December 31, 2009.
(10.9) Form of Restricted Stock Unit Agreement for restricted stock units granted to Executive Officers under the 3M Long-Term Incentive Plan, effective February 9, 2010, is incorporated by reference from our Form 10-K for the year ended December 31, 2009.
(10.10) Form of 3M 2010 Performance Share Award under the 3M 2008 Long-Term Incentive Plan is incorporated by reference from our Form 8-K dated March 4, 2010.
(10.11) Form of Stock Option Agreement for U.S. Employees under 3M 2008 Long-Term Incentive Plan is incorporated by reference from our Form 10-K for the year ended December 31, 2008.
(10.12) Form of Restricted Stock Unit Agreement for U.S. Employees under 3M 2008 Long-Term Incentive Plan is incorporated by reference from our Form 10-K for the year ended December 31, 2008.
(10.13) 3M 2005 Management Stock Ownership Program (including amendments through February 2, 2016) is incorporated by reference from our Form 10-K for the year ended December 31, 2015.
(10.14) Form of award agreement for non-qualified stock options granted under the 2005 Management Stock Ownership Program, is incorporated by reference from our Form 8-K dated May 16, 2005.
(10.15) Amended and Restated 3M VIP Excess Plan is filed herewith.
(10.16) Amended and Restated 3M VIP (Voluntary Investment Plan) Plus Plan is filed herewith.
(10.17) 3M Deferred Compensation Plan, as amended through February 2008, is incorporated by reference from our Form 8-K dated February 14, 2008.
(10.18) Amendment of 3M Deferred Compensation Plan is incorporated by reference from our Form 8-K dated November 14, 2008.
(10.19) 3M Deferred Compensation Excess Plan is incorporated by reference from our Form 10-K for the year ended December 31, 2009.
(10.20) 3M Performance Awards Deferred Compensation Plan is incorporated by reference from our Form 10-K for the year ended December 31, 2009.
(10.21) 3M Executive Annual Incentive Plan is incorporated by reference from our Form 8-K dated May 14, 2007.
(10.22) Description of changes to 3M Compensation Plan for Non-Employee Directors is incorporated by reference from our Form 8-K dated August 8, 2005.
(10.23) 3M Compensation Plan for Non-Employee Directors, as amended, through November 8, 2004, is incorporated by reference from our Form 10-K for the year ended December 31, 2004.
(10.24) Amendment of 3M Compensation Plan for Non-Employee Directors is incorporated by reference from our Form 8-K dated November 14, 2008.
(10.25) Amendment of 3M Compensation Plan for Non-Employee Directors as of August 12, 2013, is incorporated by reference from our Form 10-Q for the quarter ended September 30, 2013.
(10.26) 3M Executive Life Insurance Plan, as amended, is incorporated by reference from our Form 10-K for the year ended December 31, 2003.
(10.27) Summary of Personal Financial Planning Services for 3M Executives is incorporated by reference from our Form 10-K for the year ended December 31, 2003.
(10.28) 3M policy on reimbursement of incentive payments is incorporated by reference from our Form 10-K for the year ended December 31, 2006.
(10.29) Amended and Restated 3M Nonqualified Pension Plan I is filed herewith.
(10.30) Amended and Restated 3M Nonqualified Pension Plan II is filed herewith.
(10.31) Amended and Restated 3M Nonqualified Pension Plan III is filed herewith.
3 Policy on Reimbursement of Incentive Compensation (effective May 11, 2010) is incorporated by reference from our Form 10-Q dated August 4, 2010.
(10.32) Amended and restated five-year credit agreement as of March 9, 2016, is incorporated by reference from our Form 8-K dated March 11, 2016.
(10.33) Registration Rights Agreement as of August 4, 2009, between 3M Company and State Street Bank and Trust Company as Independent Fiduciary of the 3M Employee Retirement Income Plan, is incorporated by reference from our Form 8-K dated August 5, 2009.
Filed herewith, in addition to items, if any, specifically identified above:
(12) Calculation of ratio of earnings to fixed charges.
(21) Subsidiaries of the Registrant.
(23) Consent of independent registered public accounting firm.
(24) Power of attorney.
(31.1) Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
(31.2) Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
(32.1) Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
(32.2) Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
(95) Mine Safety Disclosures.
(101) The following financial information from 3M Company's Annual Report on Form 10-K for the period ended December 31, 2016, filed with the SEC on February 9, 2017, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statement of
Income for the years ended December 31, 2016, 2015 and 2014, (ii) the Consolidated Statement of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014, (iii) the Consolidated Balance Sheet at December 31, 2016 and 2015, (iv) the
Consolidated Statement of Changes in Equity for the years ended December 31, 2016, 2015 and 2014, (v) the Consolidated Statement of Cash Flows for the years ended December 31, 2016, 2015 and 2014, and (vi) Notes to Consolidated Financial Statements.
Item 16. Form 10-K Summary.
A Form 10-K summary is provided at the beginning of this document, with hyperlinked cross-references. This allows users to
easily locate the corresponding items in Form 10-K, where the disclosure is fully presented. The summary does not include
certain Part III information that is incorporated by reference from a future proxy statement filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
3M COMPANY
By /s/ Nicholas C. Gangestad
Nicholas C. Gangestad,
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
February 9, 2017
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities indicated on February 9, 2017.
Signature Title
Inge G. Thulin Chairman of the Board, President and Chief Executive Officer
(Principal Executive Officer and Director)
Eric D. Hammes Vice President, Controller and Chief Accounting Officer
(Principal Accounting Officer)
Sondra L. Barbour Director
Thomas K. Brown Director
Vance D. Coffman Director
David B. Dillon Director
Michael L. Eskew Director
Herbert L. Henkel Director
Muhtar Kent Director
Edward M. Liddy Director
Gregory R. Page Director
Robert J. Ulrich Director
Patricia A. Woertz Director
Nicholas C. Gangestad, by signing his name hereto, does hereby sign this document pursuant to powers of attorney duly
executed by the other persons named, filed with the Securities and Exchange Commission on behalf of such other persons, all
in the capacities and on the date stated, such persons constituting a majority of the directors of the Company.
By /s/ Nicholas C. Gangestad
Nicholas C. Gangestad, Attorney-in-Fact
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