3M 2011 Annual Report Download - page 27

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21
related to Sumitomo 3M Limited (Japan), which is 3M’s most significant consolidated entity with non-3M ownership
interests. As of December 31, 2011, 3M’s effective ownership in Sumitomo 3M Limited is 75 percent.
Currency Effects:
3M estimates that year-on-year currency effects, including hedging impacts, increased net income attributable to 3M
by approximately $154 million in 2011 and increased net income attributable to 3M by approximately $15 million in
2010. This estimate includes the effect of translating profits from local currencies into U.S. dollars; the impact of
currency fluctuations on the transfer of goods between 3M operations in the United States and abroad; and
transaction gains and losses, including derivative instruments designed to reduce foreign currency exchange rate
risks and the negative impact of swapping Venezuelan bolivars into U.S. dollars. 3M estimates that year-on-year
derivative and other transaction gains and losses had an immaterial impact on net income attributable to 3M in 2011
and decreased net income attributable to 3M by approximately $115 million in 2010.
PERFORMANCE BY BUSINESS SEGMENT
Disclosures relating to 3M’s business segments are provided in Item 1, Business Segments. Financial information
and other disclosures are provided in the Notes to the Consolidated Financial Statements. As discussed in Note 17
to the Consolidated Financial Statements, effective in the first quarter of 2011, 3M made certain product moves
between its business segments in its continuing effort to drive growth by aligning businesses around markets and
customers. Segment information presented herein reflects the impact of these changes for all periods presented. The
reportable segments are Industrial and Transportation; Health Care; Consumer and Office; Safety, Security and
Protection Services; Display and Graphics; and Electro and Communications. Information related to 3M’s business
segments is presented in the tables that follow. Local-currency sales change amounts are separated into organic
local-currency sales (which include both organic volume impacts plus selling price impacts) and acquisition impacts.
The divestiture impact, translation impact and total sales change are also provided for each segment.
In addition to these six operating business segments, 3M assigns certain costs to “Corporate and Unallocated,”
which is presented separately in the preceding business segments table and in Note 17. Corporate and unallocated
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. The primary item driving higher 2011
expenses when compared to 2010 relates to pension and postretirement expense, as a portion of the 2011 increase
in these expenses was not allocated directly to the six operating business segments. The primary items driving
higher 2010 expenses when compared to 2009 relates to increased pension and postretirement expense, in addition
to increased stock-based compensation expense.
As discussed in the preceding overview and results of operations section, the combination of restructuring actions
and other special items significantly impacted 2009 results. There were no special items that impacted operating
income in 2011 or 2010. The following table summarizes special items by business segment.
2009 Restructuring and Other Summary
(Millions)
Restructuring
actions
Gain on
sale of
real estate Total
Industrial and Transportation ............. $ 89 $ — $89
Health Care ........................................ 20 — 20
Consumer and Office ......................... 13 — 13
Safety, Security and Protection Services 16 (15 ) 1
Display and Graphics ......................... 22 — 22
Electro and Communications ............. 11 — 11
Corporate and Unallocated ................ 38 — 38
Total operating income penalty (benefit) $ 209 $(15 ) $ 194
The following discusses total year results for 2011 compared to 2010, and also discusses 2010 compared to 2009,
for each business segment.