Business Segments

12 Months Ended

Dec. 31, 2012

Business Segments

Business Segments

NOTE 15. Business Segments

3M's businesses are organized, managed and internally grouped into segments based on differences in markets, products, technologies and services. In 2012, 3M managed its operations in six operating business segments: Industrial and Transportation; Health Care; Consumer and Office; Safety, Security and Protection Services; Display and Graphics; and Electro and Communications. 3M's six 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. These segments have worldwide responsibility for virtually all 3M product lines. 3M is not dependent on any single product/service or market. 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.

Consistent with 3M's strategy of building relevance and presence in the marketplace, the Company announced in October 2012 that it was immediately beginning to align resources and management toward a new structure comprised of five business groups: Consumer; Industrial; Health Care; Safety and Graphics; and Electronics and Energy. The company's operating results were managed on the basis of its existing segment structure through 2012, with the intention that results be managed under the new alignment once it is fully effective in the first quarter of 2013. As a result, the business segment information that follows is reported under the existing segment structure through 2012.

Business Segment Products
Business Segment		Major Products
Industrial and Transportation		Tapes, coated and nonwoven abrasives, adhesives, 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, energy control 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
Consumer and Office		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
Safety, Security and		Personal protection products, safety and security products, commercial cleaning and protection products, floor matting, roofing granules for asphalt shingles, infrastructure protection products, and track and trace solutions
	Protection Services
Display and Graphics		Optical films solutions for electronic displays, reflective sheeting for transportation safety, commercial graphics systems, and mobile interactive solutions, including mobile display technology, visual systems and computer screen films
Electro and Communications		Packaging and interconnection devices, insulating and splicing solutions for the electronics, telecommunications and electrical industries, and touch screens and touch monitors

Business Segment Information
		Net Sales						Operating Income
(Millions)		2012		2011		2010		2012		2011		2010
Industrial and Transportation		$	10,346	$	10,073	$	8,429	$	2,258	$	2,057	$	1,754
Health Care			5,158		5,031		4,513		1,646		1,489		1,362
Consumer and Office			4,316		4,153		3,853		930		840		840
Safety, Security and
	Protection Services		3,802		3,821		3,316		847		814		709
Display and Graphics			3,560		3,674		3,884		693		788		946
Electro and Communications			3,228		3,306		3,043		691		712		670
Corporate and Unallocated			5		11		10		(469)		(421)		(278)
Elimination of Dual Credit			(511)		(458)		(386)		(113)		(101)		(85)
Total Company		$	29,904	$	29,611	$	26,662	$	6,483	$	6,178	$	5,918

		Assets						Depreciation & Amortization						Capital Expenditures
(Millions)		2012		2011		2010		2012		2011		2010		2012		2011		2010
Industrial and Transportation		$	9,148	$	7,960	$	6,703	$	353	$	362	$	326	$	521	$	471	$	331
Health Care			4,304		4,198		4,189		169		199		131		113		159		78
Consumer and Office			2,421		2,400		2,149		109		101		100		103		97		69
Safety, Security and
	Protection Services		3,966		3,954		3,996		175		187		168		121		118		130
Display and Graphics			3,714		3,617		3,729		190		192		187		156		120		185
Electro and Communications			2,398		2,308		2,245		109		103		101		159		154		110
Corporate and Unallocated			7,925		7,179		7,145		183		92		107		311		260		188
Total Company		$	33,876	$	31,616	$	30,156	$	1,288	$	1,236	$	1,120	$	1,484	$	1,379	$	1,091

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 six operating 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 Occupational Health and Environmental Safety Division within the Safety, Security and Protection Services business segment; however, the Industrial and Transportation business segment also sells this product to certain customers in its U.S. markets. In this example, the non-primary selling segment (Industrial and Transportation) 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.