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Business Segments | 3 Months Ended
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Mar. 31, 2019
Business Segments |
Business Segments | NOTE 17. Business Segments 3M’s businesses are organized, managed and internally grouped into segments based on differences in markets, products, technologies and services. 3M manages its operations in five business segments: Industrial; Safety and Graphics; Health Care; Electronics and Energy; and Consumer. 3M’s five 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. 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, along with non-service cost components of pension and postretirement net periodic benefit costs. As part of 3M’s continuing effort to improve the alignment of its businesses around markets and customers, the Company made the following changes, effective in the first quarter of 2019, and other revisions impacting business segment reporting: Continued alignment of customer account activity
| · |  | As part of 3M’s regular customer-focus initiatives, the Company realigned certain customer account activity (“sales district”) to correlate with the primary divisional product offerings in various countries and reduce complexity for customers when interacting with multiple 3M businesses. This largely impacted the amount of dual credit certain business segments receive as a result of sales district attribution. 3M business segment reporting measures include dual credit to business segments for certain sales and operating income. This dual credit is based on which business segment provides customer account activity with respect to a particular product sold in a specific country. As a result, previously reported aggregate business segment net sales and operating income for the total year 2018 decreased $32 million and $8 million, respectively, offset by corresponding decreases in the elimination of dual credit net sales and operating income amounts.
Creation of Closure and Masking Systems Division and Medical Solutions Division
| · |  | 3M created the Closure and Masking Systems Division, which combines the masking tape, packaging tape and personal care portfolios formerly within Industrial Adhesives and Tapes Division in the Industrial business segment into a separate division also within the Industrial business segment. 3M created the Medical Solutions Division in the Health Care business segment, which combines the former Critical and Chronic Care Division and Infection Prevention Division (which were also both within the Health Care business segment).
Additional actions impacting business segment reporting
| · |  | The business associated with certain safety products sold through retail channels in the Asia Pacific region was realigned from the Personal Safety Division within the Safety and Graphics Business segment to the Construction and Home Improvement Division within the Consumer Business segment. This change resulted in a decrease in previously reported net sales and operating income for total year 2018 of $12 million and $1 million, respectively, in the Safety and Graphics business segment, offset by a corresponding increase in net sales and operating income within the Consumer business segment. Certain previously non-allocated costs related to manufacturing and technology of centrally managed material resource centers of expertise within Corporate and Unallocated are now reflected as being allocated to the business segments. As a result, previously reported aggregate business segment operating income for the total year 2018 decreased $58 million, offset by a corresponding increase in operating income within Corporate and Unallocated.
The financial information presented herein reflects the impact of the preceding changes between business segments for all periods presented. In March 2019, 3M announced the upcoming realignment of the company from five to four business segments. The new alignment will enable the company to better serve global customers and markets. This realignment will be effective in the second quarter of 2019, with the changes reflected in all periods presented. Business Segment Information
|  | Three months ended |
|  | March 31, |
(Millions) |  | 2019 |  | 2018 |
Net Sales |  |  |  |  |  |  |
Industrial |  | $ | 2,929 |  | $ | 3,135 |
Safety and Graphics |  |  | 1,704 |  |  | 1,779 |
Health Care |  |  | 1,540 |  |  | 1,535 |
Electronics and Energy |  |  | 1,190 |  |  | 1,350 |
Consumer |  |  | 1,123 |  |  | 1,145 |
Corporate and Unallocated |  |  | 21 |  |  | — |
Elimination of Dual Credit |  |  | (644) |  |  | (666) |
Total Company |  | $ | 7,863 |  | $ | 8,278 |
Operating Income |  |  |  |  |  |  |
Industrial |  | $ | 585 |  | $ | 714 |
Safety and Graphics |  |  | 396 |  |  | 481 |
Health Care |  |  | 432 |  |  | 458 |
Electronics and Energy |  |  | 284 |  |  | 336 |
Consumer |  |  | 219 |  |  | 220 |
Corporate and Unallocated |  |  | (624) |  |  | (1,037) |
Elimination of Dual Credit |  |  | (156) |  |  | (165) |
Total Company |  | $ | 1,136 |  | $ | 1,007 |
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. Corporate and Unallocated also includes sales, costs, and income from contract manufacturing, transition services and other arrangements with the acquirer of all of the Communication Markets Division following its divestiture in 2018. 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 sales and related operating income. Management evaluates each of its five business segments based on net sales and operating income performance, including dual credit reporting to further incentivize sales growth. As a result, 3M reflects additional (“dual”) credit to another business segment when the customer account activity (“sales district”) with respect to the particular product sold to the external customer is provided by a different business segment. This additional dual credit is largely reflected at the division level. For example, certain respirators are primarily sold by the Personal Safety Division within the Safety and Graphics business segment; however, a sales district within the Industrial business segment provides the contact for sales of the product to particular customers. In this example, the non-primary selling segment (Industrial) would also receive credit for the associated net sales initiated through its sales district 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 in total are unchanged.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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