Restructuring Actions

12 Months Ended

Dec. 31, 2011

Restructuring Actions

Restructuring Actions

NOTE 4.  Restructuring Actions

Restructuring actions generally include significant actions involving employee-related severance charges, contract termination costs, and impairment of assets associated with such actions. Accounting policies related to these activities are discussed in Note 1.

The following provides information concerning the Company’s 2009 restructuring actions.

2009 Restructuring Actions:

During the first nine months of 2009, management approved and committed to undertake certain restructuring actions. Due to the rapid decline in global business activity in the fourth quarter of 2008 and into the first three quarters of 2009, 3M aggressively reduced its cost structure and rationalized several facilities, including manufacturing, technical and office facilities. These actions included all geographies, with particular attention in the developed areas of the world that have and are experiencing large declines in business activity, and included the following actions during 2009:

·During the first quarter of 2009, 3M announced the elimination of approximately 1,200 positions. Of these employment reductions, about 43 percent were in the United States, 36 percent in Latin America, 16 percent in Europe and 5 percent in the Asia Pacific area. These restructuring actions resulted in a first-quarter 2009 pre-tax charge of $67 million, with $61 million for employee-related items/benefits and $6 million related to fixed asset impairments. The preceding charges were recorded in cost of sales ($17 million), selling, general and administrative expenses ($47 million), and research, development and related expenses ($3 million).

·During the second quarter of 2009, 3M announced the permanent reduction of approximately 900 positions, the majority of which were concentrated in the United States, Western Europe and Japan. In the United States, another 700 people accepted a voluntary early retirement incentive program offer, which resulted in a $21 million non-cash charge. Of these aggregate employment reductions, about 66 percent were in the United States, 17 percent in the Asia Pacific area, 14 percent in Europe and 3 percent in Latin America and Canada. These restructuring actions in total resulted in a second-quarter 2009 pre-tax charge of $116 million, with $103 million for employee-related items/benefits and $13 million related to fixed asset impairments. The preceding charges were recorded in cost of sales ($68 million), selling, general and administrative expenses ($44 million), and research, development and related expenses ($4 million).

·During the third quarter of 2009, 3M announced the elimination of approximately 200 positions, with the majority of those occurring in Western Europe and, to a lesser extent, the United States. These restructuring actions, including a non-cash charge related to a pension settlement in Japan, resulted in a third-quarter 2009 net pre-tax charge of $26 million for employee-related items/benefits and other, which is net of $7 million of adjustments to prior 2008 and 2009 restructuring actions. The preceding charges were recorded in cost of sales ($25 million) and research, development and related expenses ($1 million).

The restructuring expenses related to these actions are summarized by income statement line as follows:

(Millions)	2009
Cost of sales	$	110
Selling, general and administrative expenses	91
Research, development and related expenses	8
Total restructuring expense	$	209

3M began restructuring actions in the fourth quarter of 2008. Cash payments in 2008 related to this restructuring were not material. The roll-forward below begins with the ending 2008 accrued restructuring liability balances. Components of the 2009 restructuring actions by business segment and a roll-forward of associated balances follow.

(Millions)	Employee- Related Items/ Benefits and Other			Asset Impairments			Total
Accrued liability balance as of December 31, 2008 related to 2008 restructuring actions	$	186		$	—		$	186
Expenses incurred in 2009:
Industrial and Transportation	$	84		$	5		$	89
Health Care	20			—			20
Consumer and Office	13			—			13
Safety, Security and Protection Services	16			—			16
Display and Graphics	9			13			22
Electro and Communications	11			—			11
Corporate and Unallocated	37			1			38
Total 2009 expenses	$	190		$	19		$	209
Non-cash changes in 2009	$	(34	)	$	(19	)	$	(53	)
Cash payments, net of adjustments, in 2009	$	(266	)	$	—		$	(266	)
Accrued liability balance as of December 31, 2009	$	76		$	—		$	76
Cash payments, net of adjustments, in 2010	$	(54	)	$	—		$	(54	)
Accrued liability balance as of December 31, 2010	$	22		$	—		$	22
Cash payments, net of adjustments, in 2011	$	(16	)	$	—		$	(16	)
Accrued liability balance as of December 31, 2011	$	6		$	—		$	6