REG - 3M Company - Annual Financial Report - Updated by Form 8-K <Origin Href="QuoteRef">MMM.N</Origin> - Part 11
19/05/2016 07:09
- Part 11: For the preceding part double click ID:nRSS6547Yj
2015 2014 2013
Weighted Weighted Weighted
Average Average Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
Options granted 1,007,669 $ 133.52 1,073,956 $ 118.73 1,259,247 $ 93.46
Options exercised (1,007,669) 133.52 (1,073,956) 118.73 (1,259,247) 93.46
Shares available for grant - December 31 28,104,335 29,112,004 30,185,960
The weighted-average fair value per option granted during 2015, 2014 and 2013 was $23.56, $20.95 and $16.49, respectively.
The fair value of GESPP options was based on the 15% purchase price discount. The Company recognized compensation expense
for GESSP options of $24 million in 2015, $22 million in 2014 and $21 million in 2013.
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.
Effective in the third quarter of 2015, within the Health Care business segment, the Company formed the Oral Care Solutions
Division, which combined the former 3M ESPE and 3M Unitek divisions.
Effective in the first quarter of 2016, 3M made a product line reporting change involving two of its business segments in
its continuing effort to improve the alignment of its businesses around markets and customers.
The change between business segments was as follows:
· Elements of the electronic bonding product lines were previously separately reflected in the Electronics Materials
Solutions Division (Electronics and Energy business segment) and the Industrial Adhesives and Tapes Division (Industrial
business segment). Effective in the first quarter of 2016, certain sales and operating income results for these electronic
bonding product lines in aggregate were equally divided between the Electronics and Energy business segment and Industrial
business segment. This change resulted in a decrease in net sales and operating income for total year 2015 of $33 million
and $7 million, respectively, in the Industrial business segment offset by a corresponding increase in the Electronics and
Energy business segment. In addition, certain assets were moved from the Industrial business segment to the Electronics and
Energy business segment as a result of this change.
The financial information presented herein reflects the impact of the preceding product line reporting change between
business segments for all periods presented.
Business Segment Products
Business Segment Major Products
Industrial Tapes, coated, nonwoven and bonded abrasives, adhesives, advanced ceramics, sealants, specialty materials, filtration products, closure systems for personal hygiene products, acoustic systems products, automotive components, abrasion-resistant films, structural adhesives and paint finishing and detailing products
Safety and Graphics Personal protection products, traffic safety and security products, commercial graphics systems, commercial cleaning and protection products, floor matting, roofing granules for asphalt shingles, and fall protection products
Health Care Medical and surgical supplies, skin health and infection prevention products, drug delivery systems, dental and orthodontic products, health information systems and food safety products
Electronics and Energy Optical films solutions for electronic displays, packaging and interconnection devices, insulating and splicing solutions for the electronics, telecommunications and electrical industries, touch screens and touch monitors, renewable energy component solutions, and infrastructure protection products
Consumer Sponges, scouring pads, high-performance cloths, consumer and office tapes, repositionable notes, indexing systems, construction and home improvement products, home care products, protective material products, and consumer and office tapes and adhesives
Business Segment Information
Net Sales Operating Income
(Millions) 2015 2014 2013 2015 2014 2013
Industrial $ 10,295 $ 10,985 $ 10,653 $ 2,256 $ 2,381 $ 2,301
Safety and Graphics 5,515 5,732 5,584 1,305 1,296 1,227
Health Care 5,420 5,572 5,334 1,724 1,724 1,672
Electronics and Energy 5,253 5,608 5,397 1,109 1,122 961
Consumer 4,422 4,523 4,435 1,046 995 945
Corporate and Unallocated 1 5 8 (355) (250) (322)
Elimination of Dual Credit (632) (604) (540) (139) (133) (118)
Total Company $ 30,274 $ 31,821 $ 30,871 $ 6,946 $ 7,135 $ 6,666
Assets Depreciation & Amortization Capital Expenditures
(Millions) 2015 2014 2013 2015 2014 2013 2015 2014 2013
Industrial $ 9,230 $ 8,536 $ 8,860 $ 374 $ 383 $ 373 $ 317 $ 395 $ 511
Safety and Graphics 7,564 4,939 5,122 245 234 255 199 221 207
Health Care 4,403 4,344 4,329 179 181 171 168 169 120
Electronics and Energy 4,788 5,088 5,309 291 271 260 211 232 261
Consumer 2,393 2,434 2,516 108 108 106 124 111 128
Corporate and Unallocated 4,340 5,868 7,168 238 231 206 442 365 438
Total Company $ 32,718 $ 31,209 $ 33,304 $ 1,435 $ 1,408 $ 1,371 $ 1,461 $ 1,493 $ 1,665
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 U.S. sales and related
operating income. Management evaluates each of its five business segments based on net sales and operating income
performance, including dual credit U.S. reporting to further incentivize U.S. sales growth. As a result, 3M provides
additional ("dual") credit to those business segments selling products in the U.S. to an external customer when that
segment is not the primary seller of the product. For example, certain respirators are primarily sold by the Personal
Safety Division within the Safety and Graphics business segment; however, the Industrial business segment also sells this
product to certain customers in its U.S. markets. In this example, the non-primary selling segment (Industrial) would also
receive credit for the associated net sales it initiated 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 for the U.S. in total are unchanged.
NOTE 17. Geographic Areas
Geographic area information is used by the Company as a secondary performance measure to manage its businesses. Export
sales and certain income and expense items are generally reported within the geographic area where the final sales to 3M
customers are made.
Property, Plant and
Net Sales Operating Income Equipment - net
(Millions) 2015 2014 2013 2015 2014 2013 2015 2014
United States $ 12,049 $ 11,714 $ 11,151 $ 2,647 $ 2,540 $ 2,210 $ 4,838 $ 4,619
Asia Pacific 9,041 9,418 9,047 2,580 2,487 2,386 1,647 1,798
Europe, Middle East and Africa 6,228 7,198 7,085 1,017 1,234 1,168 1,531 1,502
Latin America and Canada 2,982 3,504 3,611 706 867 908 499 570
Other Unallocated (26) (13) (23) (4) 7 (6) - -
Total Company $ 30,274 $ 31,821 $ 30,871 $ 6,946 $ 7,135 $ 6,666 $ 8,515 $ 8,489
Asia Pacific included China/Hong Kong net sales to customers of $2.945 billion in 2015, which approached 10 percent of
consolidated worldwide sales. China/Hong Kong net property, plant and equipment (PP&E) was $584 million at December 31,
2015.
NOTE 18. Quarterly Data (Unaudited)
(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
(Millions, except per-share amounts) First Second Third Fourth Year
2014 Quarter Quarter Quarter Quarter 2014
Net sales $ 7,831 $ 8,134 $ 8,137 $ 7,719 $ 31,821
Cost of sales 4,031 4,184 4,205 4,027 16,447
Net income including noncontrolling interest 1,225 1,283 1,311 1,179 4,998
Net income attributable to 3M 1,207 1,267 1,303 1,179 4,956
Earnings per share attributable to 3M common shareholders - basic 1.83 1.94 2.02 1.85 7.63
Earnings per share attributable to 3M common shareholders - diluted 1.79 1.91 1.98 1.81 7.49
Gross profit is calculated as net sales minus cost of sales.
Refer to Note 4 for discussion of "Restructuring Actions", which reduced diluted earnings per share by $0.14 in the fourth
quarter of 2015.
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