3M 2015 Annual Report Download - page 23
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Please find page 23 of the 2015 3M annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.TableofContents
Operating Income:
3Musesoperatingincomeasoneofitsprimarybusinesssegmentperformancemeasurementtools.Refertothetablebelowfora
reconciliationofoperatingincomemarginsfor2015versus2014,and2014versus2013.
Operating income margin:
Yearended
December31,
(Percentofnetsales) 2015 2014
Sameperiodlastyear 22.4 % 21.6 %
Increase/(decrease)inoperatingincomemargin,dueto:
Sellingpriceandrawmaterialimpacts 1.6 1.0
Organicvolumegrowth — 0.3
Pensionandpostretirementbenefitcosts (0.5) 0.5
Acquisitionsanddivestitures (0.2) (0.1)
Strategicinvestments (0.3) (0.6)
Foreignexchangeimpacts — (0.3)
Restructuringcharges (0.4) —
Productivityandother 0.3 —
Currentperiod 22.9 % 22.4 %
Operatingincomemarginswere22.9percentin2015comparedto22.4percentin2014,anincreaseof0.5percentagepoints.These
resultsincludedasignificantbenefitfromthecombinationofhighersellingpricesandlowerrawmaterialcosts,andabenefitfrom
productivityandotheritems.Thesebenefitswerepartiallyoffsetbyhigherpensionandpostretirementbenefitcosts,2015
restructuringcharges,higherstrategicinvestments,andacquisitionanddivestitureimpacts.Strategicinvestmentsincludein
crementalprogramsarounddisruptiveR&Dandbusinesstransformation.Acquisitionanddivestitureimpactsprimarilyrelatetothe
CapitalSafetyandPolyporeSeparationsMediaacquisitions,andthedivestituresofsubstantiallyallofthelibrarysystemsbusiness,
alongwiththelicenseplateconvertingbusinessinFrance.
Operatingincomemarginswere22.4percentin2014comparedto21.6percentin2013,anincreaseof0.8percentagepoints.These
resultsincludedasignificantbenefitfromthecombinationofhighersellingpricesandlowerrawmaterialcosts.Inaddition,lower
year-on-yearpensionandpostretirementbenefitcostsandprofitleverageonorganicvolumegrowthprovidedbenefits.Itemsthat
reducedoperatingincomemarginsincludedstrategicinvestments,whichincludedinvestmentsindisruptiveR&D,business
transformation,thesupplychaincenterofexpertiseinEurope,andportfoliomanagementactions.TheCompanyinvested$90
millionin2014inportfoliomanagementactionstoposition3Mforgreatersuccess.Foreigncurrencyeffectsandacquisitionimpacts
(Treo)reducedoperatingincomemargins.
Interest Expense and Income:
(Millions) 2015 2014 2013
Interestexpense $ 149 $ 142 $ 145
Interestincome (26) (33) (41)
Total $ 123 $ 109 $ 104
InterestExpense:Interestexpenseincreasedslightlyin2015comparedto2014,despitesignificantlyhigherdebtlevels,helpedby
loweraverageinterestrates.Interestexpensedecreasedin2014comparedto2013,againdespitehigherdebtlevels,primarilydueto
lowerU.S.borrowingcostsasdebtmaturitieswerereplacedwithlowercostfinancingfromcommercialpaperandlowerinterest
ratesonnewdebtissuances.
Capitalizedinterestrelatedtoproperty,plantandequipmentconstructioninprogressisrecordedasareductiontointerestexpense.
Theamountsshowninthetableaboveforinterestexpensearenetofcapitalizedinterestamountsof$13million,$15million,and
$21million,in2015,2014and2013,respectively.
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