Restructuring Actions

6 Months Ended

Jun. 30, 2020

Restructuring Actions

Restructuring Actions

NOTE 5. Restructuring Actions

2020 Restructuring Actions:

Divestiture-Related Restructuring

During the second quarter of 2020, following the divestiture of substantially all of the drug delivery business (see Note 3) management approved and committed to undertake certain restructuring actions addressing corporate functional costs and manufacturing footprint across 3M in relation to the magnitude of amounts previously allocated/burdened to the divested business. These actions affected approximately 1,300 positions worldwide and resulted in a second quarter 2020 pre-tax charge of $55 million, within Corporate and Unallocated. The divestiture-related restructuring actions were recorded in the income statement as follows:

(Millions)	Second Quarter 2020
Cost of sales	$	42
Selling, general and administrative expenses		12
Research, development and related expenses		1
Total operating income impact	$	55

Divestiture-related restructuring actions, including cash and non-cash impacts, follow:

(Millions)	Employee-Related		Asset-Related and Other		Total
Expense incurred in the second quarter of 2020	$	32	$	23	$	55
Non-cash changes		—		(11)		(11)
Accrued divestiture-related restructuring action balances as of June 30, 2020	$	32	$	12	$	44

Remaining activities related to this divestiture-related restructuring are expected to be largely completed through the second quarter of 2021.

Other Restructuring

Additionally, in the second quarter of 2020, management approved and committed to undertake certain restructuring actions addressing structural enterprise costs and operations in certain end markets as a result of the COVID-19 pandemic and related economic impacts. These actions affected approximately 400 positions worldwide and resulted in a second quarter 2020 pre-tax charge of $58 million. The restructuring charges were recorded in the income statement as follows:

(Millions)	Second Quarter 2020
Cost of sales	$	13
Selling, general and administrative expenses		37
Research, development and related expenses		8
Total operating income impact	$	58

The business segment operating income impact of these restructuring charges are summarized by business segment as follows:

	Second Quarter 2020
(Millions)	Employee-Related		Asset-Related		Total
Safety and Industrial	$	7	$	—	$	7
Transportation and Electronics		11		—		11
Health Care		12		—		12
Consumer		5		—		5
Corporate and Unallocated		—		23		23
Total Operating Expense	$	35	$	23	$	58

Restructuring actions, including cash and non-cash impacts, follow:

(Millions)	Employee-Related		Asset-Related		Total
Expense incurred in the second quarter of 2020	$	35	$	23	$	58
Non-cash changes		—		(23)		(23)
Accrued restructuring action balances as of June 30, 2020	$	35	$	—	$	35

Remaining activities related to this restructuring are expected to be largely completed through the second quarter of 2021.

2019 Restructuring Actions:

As described in Note 5 in 3M’s 2019 Annual Report on Form 10-K, during the second quarter of 2019, in light of slower than expected 2019 sales, management approved and committed to undertake certain restructuring actions. These actions impacted approximately 2,000 positions worldwide, including attrition. The Company recorded second quarter 2019 pre-tax charges of $148 million. The restructuring charges were recorded in the income statement as follows:

(Millions)	Second Quarter 2019
Cost of sales	$	18
Selling, general and administrative expenses		89
Research, development and related expenses		5
Total operating income impact		112
Other expense (income), net		36
Total income before taxes impact	$	148

The operating income impact of these restructuring charges are summarized by business segment as follows:

	Second Quarter 2019
(Millions)	Employee-Related		Asset-Related		Total
Safety and Industrial	$	11	$	—	$	11
Transportation and Electronics		8		—		8
Health Care		6		—		6
Consumer		5		—		5
Corporate and Unallocated		42		40		82
Total Operating Expense	$	72	$	40	$	112

The second quarter 2019 actions included a voluntary early retirement incentive (further discussed in Note 11), the charge for which is included in other expense (income), net above.

Restructuring action activity from 2019, which includes both second and fourth quarter actions, including cash and non-cash impacts, follow:

(Millions)	Employee-Related
Accrued restructuring action balances as of December 31, 2019	$	140
Cash payments		(14)
Adjustments		(23)
Accrued restructuring action balances as of June 30, 2020	$	103

Remaining activities related to this restructuring are expected to be completed largely through early 2021.