Pension and Postretirement Benefit Plans

6 Months Ended

Jun. 30, 2012

Pension and Postretirement Benefit Plans

Pension and Postretirement Benefit Plans

NOTE 8. Pension and Postretirement Benefit Plans

Components of net periodic benefit cost and other supplemental information for the three and six months endedJune 30, 2012 and 2011 follow:

Benefit Plan Information

		Three months ended June 30,
		Qualified and Non-qualified
		Pension Benefits								Postretirement
		United States				International				Benefits
(Millions)		2012		2011		2012		2011		2012		2011
Net periodic benefit cost (benefit)
	Service cost	$	64	$	52	$	31	$	28	$	20	$	15
	Interest cost		146		155		62		62		21		23
	Expected return on plan assets		(248)		(232)		(73)		(69)		(22)		(20)
	Amortization of transition (asset) obligation		―		―		―		―		―		―
	Amortization of prior service cost (benefit)		1		3		(5)		(4)		(18)		(18)
	Amortization of net actuarial (gain) loss		118		84		30		28		28		26
Net periodic benefit cost (benefit)		$	81	$	62	$	45	$	45	$	29	$	26
Settlements, curtailments, special termination benefits and other			―		―		―		―		―		―
Net periodic benefit cost (benefit) after settlements, curtailments,
	special termination benefits and other	$	81	$	62	$	45	$	45	$	29	$	26
	Six months ended June 30,
		Qualified and Non-qualified
		Pension Benefits								Postretirement
		United States				International				Benefits
(Millions)		2012		2011		2012		2011		2012		2011
Net periodic benefit cost (benefit)
	Service cost	$	127	$	103	$	62	$	56	$	39	$	30
	Interest cost		293		313		123		124		43		46
	Expected return on plan assets		(496)		(464)		(146)		(139)		(43)		(39)
	Amortization of transition (asset) obligation		―		―		(1)		―		―		―
	Amortization of prior service cost (benefit)		3		6		(9)		(7)		(36)		(36)
	Amortization of net actuarial (gain) loss		235		167		60		56		55		52
Net periodic benefit cost (benefit)		$	162	$	125	$	89	$	90	$	58	$	53
Settlements, curtailments, special termination benefits and other			26		―		―		―		―		―
Net periodic benefit cost (benefit) after settlements, curtailments,
	special termination benefits and other	$	188	$	125	$	89	$	90	$	58	$	53

For the six months endedJune 30, 2012, contributions totaling$609 million were made to the Company's U.S. and international pension plans and$63 million to its postretirement plans. On July 2, 2012, the Company contributed an additional $200 million to its U.S. qualified pension plan. For total year 2012, the Company expects to contributeapproximately$1 billion of cash to its U.S. and international pension and postretirement plans. The Company does not have a required minimum cash pension contribution obligation for its U.S. plans in 2012. Therefore, the amount of the anticipated discretionary pension contribution could vary significantly depending on the U.S. plans' funded status and the anticipated tax deductibility of the contribution. Future contributions will also depend on market conditions, interest rates and other factors. 3M's annual measurement date for pension and postretirement assets and liabilities is December 31 each year, which is also the date used for the related annual measurement assumptions.

Effective July 1, 2012, 3MCanada closed its pension plans to new participants.The change did not trigger a plan remeasurement and therefore there is no immediate impact to the liability and expense.

In December 2011, the Company began offering a voluntary early retirement incentive program to certain eligible participants of its U.S. pension plans who met age and years of pension service requirements. The eligible participants who accepted the offer and retired on February 1, 2012 received an enhanced pension benefit. Pension benefits are enhanced by adding one additional year of pension service and one additional year of age for certain benefit calculations. 616 participants accepted the offer and retired on February 1, 2012. As a result, the Company incurred a $26 million charge related to these special termination benefits in the first quarter of 2012.

3M was informed during the first quarter of 2009 that the general partners of WG Trading Company, in which 3M's benefit plans hold limited partnership interests, are the subject of a criminal investigation as well as civil proceedings by the SEC and CFTC (Commodity Futures Trading Commission). In March 2011, over the objections of 3M and six other limited partners of WG Trading Company,the district courtjudge ruled in favor of the court appointed receiver's proposed distribution plan. In April 2011, the 3M benefit plans received their share under the court-ordered distribution plan. 3M and six other limited partners of WG Trading Company have appealed the court's order to the United States Court of Appeals for the Second Circuit. The benefit plan trustee holdings of WG Trading Company interests were adjusted to reflect the decreased estimated fair market value, inclusive of estimated insurance proceeds, as of the annual measurement dates. The Company has insurance that it believes, based on what is currently known, will result in the recovery of a portion of the decrease in original asset value. As of the 2011 measurement date these holdings represented less than one percent of 3M's fair value of total plan assets. 3M currently believes that the resolution of these events will not have a material adverse effect on the consolidated financial position of the Company.