Restructuring Actions and Exit Activities

3 Months Ended

Mar. 31, 2021

Restructuring Actions and Exit Activities

Restructuring Actions and Exit Activities

NOTE 5. Restructuring Actions and Exit Activities

2020 and 2021 Restructuring Actions:

Operational/Marketing Capability Restructuring:

As described in Note 5 in 3M’s 2020 Annual Report on Form 10-K, in late 2020, 3M announced it would undertake certain actions to further enhance its operations and marketing capabilities to take advantage of certain global market trends while de-prioritizing investments in slower-growth end markets. During the fourth quarter of 2020, management approved and committed to undertake associated restructuring actions impacting approximately 2,100 positions resulting in a pre-tax charge of $137 million. In the first quarter of 2021, management approved and committed to undertake additional actions under this initiative resulting in a pre-tax charge of $14 million. Remaining activities related to the restructuring actions approved and committed under this initiative are expected to be largely completed through 2021. 3M is planning further actions under this initiative throughout 2021. This aggregate initiative, spanning 2020 and 2021, is expected to impact approximately 2,900 positions worldwide with an expected pre-tax charge of $250 to $300 million. The related first quarter 2021 restructuring charges were recorded in the income statement as follows:

(Millions)	First Quarter 2021
Cost of sales	$	1
Selling, general and administrative expenses		9
Research, development and related expenses		4
Total operating income impact	$	14

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

	First Quarter 2021
(Millions)	Employee-Related
Safety and Industrial	$	2
Transportation and Electronics		3
Health Care		1
Consumer		1
Corporate and Unallocated		7
Total Operating Expense	$	14

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

(Millions)	Employee-Related
Accrued restructuring action balances as of December 31, 2020	$	101
Incremental expense incurred in the first quarter of 2021	$	14
Cash payments		(14)
Accrued restructuring action balances as of March 31, 2021	$	101

Divestiture-Related Restructuring

As described in Note 5 in 3M’s 2020 Annual Report on Form 10-K, during the second quarter of 2020, following the divestiture of substantially all of the drug delivery business, 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.

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

(Millions)	Employee-Related		Asset-Related and Other		Total
Accrued divestiture-related restructuring action balances as of December 31, 2020	$	15	$	9	$	24
Cash payments		(1)		—		(1)
Adjustments		(1)		—		(1)
Accrued divestiture-related restructuring action balances as of March 31, 2021	$	13	$	9	$	22

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

Other Restructuring

As described in Note 5 in 3M’s 2020 Annual Report on Form 10-K, 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.

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

(Millions)	Employee-Related
Accrued restructuring action balances as of December 31, 2020	$	24
Cash payments		(4)
Adjustments		(9)
Accrued restructuring action balances as of March 31, 2021	$	11

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