29 unchanged sentences
3M is closely monitoring how the spread of COVID-19 is affecting employees and business operations and has developed preparedness plans to help protect the safety of employees around the world while safely continuing business.
−Removed: While nearly all of our manufacturing locations and distribution centers are fully or partially operational, the Company implemented plant and/or line shutdowns related to certain markets due to weaker customer demand or government mandates.
+Added: While nearly all of our manufacturing locations and distribution centers are fully or partially operational, the Company implemented plant and/or line shutdowns during 2020 related to certain markets due to weaker customer demand or government mandates.
Some of the above factors have increased the demand for 3M products, while others have decreased demand or made it more difficult for 3M to serve customers.
Serving 3M customers is a priority and teams continue to communicate with individual customers about potential disruptions.
−Removed: 3M’s total sales decreased 12.2% and 4.9% year-on-year in the second quarter and first six months of 2020, respectively.
−Removed: Organic local-currency sales decreased 13.1% and 6.5% year-on-year in the second quarter and first six months of 2020, respectively.
−Removed: Given the diversity of 3M’s businesses, the impact of COVID-19 varied across the Company in the second quarter and first six months of
+Added: 3M’s total sales increased 4.5% and decreased 1.8% year-on-year in the third quarter and first nine months of 2020, respectively.
+Added: Organic local-currency sales increased 0.9% and decreased 4.1% year-on-year in the third quarter and first nine months of 2020, respectively.
+Added: Given the diversity of 3M’s businesses, the impact of COVID-19 varied across the Company in the third quarter and first
+Added: nine months of 2020.
3M experienced strong sales growth in personal safety, as well as in other areas such as home improvement, general cleaning, semiconductor, data center, and biopharma filtration.
−Removed: COVID-related respirator sales are estimated to have impacted year-over-year organic local-currency sales growth by just under 3 percent and just over 2 percent for the second quarter and first six months of 2020, respectively.
−Removed: At the same time, 3M saw weak demand in several end markets, contributing in part to sales declines in a number of 3M’s businesses with the biggest year over year second quarter total sales decreases in oral care (down 58 percent), automotive and aerospace (down 44 percent), automotive aftermarket (down 33 percent), commercial solutions (down 31 percent), stationery and office (down 25 percent), and businesses aligned to general industrial applications such as industrial adhesives and tapes (down 18 percent) and abrasives (down 32 percent).
−Removed: 3M’s operating income margins increased 3.5 and 4.6 percentage points year-on-year in the second quarter and first six months of 2020, respectively.
−Removed: Factoring out the impact on operating income of special items as described in the Certain amounts adjusted for special items - (non-GAAP measures) section below, operating income margins decreased 1.2 and 0.9 percentage points to 19.6 percent and 20.2 percent, respectively, for the second quarter and first six months of 2020 when compared the same periods in 2019.
+Added: COVID-related respirator sales are estimated to have impacted year-on-year organic local-currency sales growth by approximately 3 percent and 2 percent for the third quarter and first nine months of 2020, respectively.
+Added: At the same time, weakness in several end markets, while improving, contributed in part to sales declines in a number of 3M’s businesses with the biggest year-on-year first nine months total sales decreases in oral care (down 25 percent), automotive and aerospace (down 23 percent), advanced materials (down 20 percent), commercial solutions (down 17 percent), stationery and office (down 15 percent), automotive aftermarket (down 13 percent), and businesses aligned to general industrial applications such as abrasives (down 19 percent) and industrial adhesives and tapes (down 8 percent).
+Added: 3M’s operating income margins decreased 2.3 and increased 2.3 percentage points year-on-year in the third quarter and first nine months of 2020, respectively.
+Added: Factoring out the impact on operating income of special items as described in the Certain amounts adjusted for special items - (non-GAAP measures) section below, operating income margins decreased 0.9 and 0.8 percentage points to 22.9 percent and 21.2 percent, respectively, for the third quarter and first nine months of 2020 when compared the same periods in 2019.
Various COVID-19 implications contributed in part to these decreases.
Overall, the impact of the COVID-19 pandemic on 3M’s consolidated results of operations was primarily driven by factors related to changes in demand for products and disruption in global supply chains as described above.
−Removed: While it is not feasible to identify or quantify all the other direct and indirect implications on 3M’s results of operations, below are factors that 3M believes have also impacted its operating income for the second quarter and first six months of 2020:
+Added: While it is not feasible to identify or quantify all the other direct and indirect implications on 3M’s results of operations, below are factors that 3M believes have also impacted its operating income for the third quarter and first nine months of 2020:
Factors contributing to charges:
3 unchanged sentences
● Charge of $22 million related to equity securities as discussed in the “ Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis” section of Note 13 that use the measurement alternative described therein in addition to an immaterial pre-tax charge related to impairment of certain indefinite lived tradenames in the first quarter of 2020.
−Removed: Factors providing benefits:
+Added: 3M continues to regularly consider if COVID-19 and other related market implications could indicate it is more likely than not the carrying amount of various applicable assets may be impaired and assess whether certain investments without readily determinable fair values may have been impacted.
+Added: Factors providing benefits or other impacts:
● Decreased discretionary spending in areas such as travel, professional services, and advertising/merchandising as well as cost reduction efforts, hiring freezes, and maintaining only essential contract workers.
−Removed: ● Government-sponsored COVID-response stimulus and relief initiatives, including certain employment retention benefits under the Coronavirus Aid, Relief and Economic Security (CARES) Act in the United States.
−Removed: ● Lower incentive compensation and self-insured medical visit/instance expense.
−Removed: ● Instituted accelerated vacation usage policies which benefit the second quarter of 2020 year-over-year.
3M plans to monitor discretionary spending and cost control efforts as the situation continues.
−Removed: 3M continues to consider if COVID-19 and other related market implications could indicate it is more likely than not the carrying amount of various applicable assets may be impaired and assess whether certain investments without readily determinable fair values may have been impacted.
−Removed: As previously disclosed, in light of circumstances, 3M took actions to ensure sources of cash may remain strong, including the March 2020 issuance of $1.75 billion of registered notes, suspension of share repurchases, and lowering its original $1.6 billion to $1.8 billion range of full year 2020 estimated capital spending which was further updated during the second quarter of 2020 to approximately $1.4 billion.
+Added: ● Government-sponsored COVID-response stimulus and relief initiatives, including certain employment retention benefits under the Coronavirus Aid, Relief and Economic Security (CARES) Act in the United States.
+Added: ● Lower self-insured medical visit/instance expense during the first nine months of 2020 as a result of lower expense in the second quarter of 2020 compared to the same period in 2019.
+Added: ● Instituted accelerated vacation usage policies which benefit the second quarter of 2020 year-on-year, but provide a penalty in comparison to prior year in the second half of 2020.
+Added: As previously disclosed, in light of circumstances, 3M took actions to ensure sources of cash may remain strong, including the March 2020 issuance of $1.75 billion of registered notes, suspension of share repurchases, and lowering its original $1.6 billion to $1.8 billion range of full year 2020 estimated capital spending which was further updated during the third quarter of 2020 to approximately $1.4 billion to $1.5 billion.
While estimated capital spending decreased, it includes additional expansion of respirator production capacity.
2 unchanged sentences
The Company also continues to evaluate the extent to which it may avail itself of various government-sponsored COVID-response stimulus, relief, and production initiatives around the world, such as under the Defense Production Act (DPA) and CARES Act in the United States.
−Removed: In the second quarter of 2020, under the DPA, the U.S.
−Removed: government initiated certain agreements with 3M involving just
−Removed: over $200 million of anticipated funding of assets to expand capacity to supply N-95 respirators to the U.S.
+Added: During 2020, under the DPA, the U.S.
+Added: government initiated certain agreements with 3M involving just over $200
+Added: million of anticipated funding of assets to expand capacity to supply N-95 respirators to the U.S.
The nature of the agreement provides a program of expedited partial funding to begin expansion while final terms are completed.
1 unchanged sentence
Earnings per share attributable to 3M common shareholders – diluted:
−Removed: The following table provides the increase (decrease) in diluted earnings per share for the three and six months ended June 30, 2020 and 2019.
+Added: The following table provides the increase (decrease) in diluted earnings per share for the three and nine months ended September 30, 2020 and 2019.
Three months ended
−Removed: Six months ended
+Added: Nine months ended
(Earnings per diluted share)
−Removed: June 30, 2020
−Removed: June 30, 2020
+Added: September 30, 2020
+Added: September 30, 2020
Same period last year
14 unchanged sentences
Current period
−Removed: For the second quarter of 2020, net income attributable to 3M was $1.3 billion, or $2.22 per diluted share compared to $1.1 billion or $1.92 per diluted share in the same period last year, an increase of 15.6 percent on a per diluted share basis.
−Removed: For the first six months of 2020 net income attributable to 3M was $2.6 billion, or $4.44 per diluted share compared to $2.0 billion or $3.44 per diluted share in the same period last year, an increase of 29.1 percent on a per diluted share basis.
+Added: For the third quarter of 2020, net income attributable to 3M was $1.413 billion, or $2.43 per diluted share compared to $1.583 billion or $2.72 per diluted share in the same period last year, a decrease of 10.7 percent on a per diluted share basis.
+Added: For the first nine months of 2020 net income attributable to 3M was $3.995 billion, or $6.87 per diluted share compared to $3.601 billion or $6.15 per diluted share in the same period last year, an increase of 11.7 percent on a per diluted share basis.
The Company refers to various amounts or measures on an “adjusted basis”.
1 unchanged sentence
These non-GAAP measures are further described and reconciled to the most directly comparable GAAP financial measures in the Certain amounts adjusted for special items - (non-GAAP measures) section below.
−Removed: On an adjusted basis for the second quarter 2020, net income attributable to 3M was $1.0 billion, or $1.78 per diluted share versus $1.2 billion, or $2.13 per diluted share in the same period last year, which was a decrease of 16.4 percent on a per diluted share basis.
−Removed: On an adjusted basis for the first six months of 2020, net income attributable to 3M was $2.3 billion, or $3.93 per diluted share versus $2.6 billion, or $4.35 per diluted share for the same period last year, which was a decrease of 9.7 percent on a per diluted share basis.
+Added: On an adjusted basis for the third quarter 2020, net income attributable to 3M was $1.413 billion, or $2.43 per diluted share versus $1.504 billion, or $2.58 per diluted share in the same period last year, which was a decrease of 5.8 percent on a per diluted share basis.
+Added: On an adjusted basis for the first nine months of 2020, net income attributable to 3M was $3.699 billion, or $6.36 per diluted share versus $4.058 billion, or $6.93 per diluted share for the same period last year, which was a decrease of 8.2 percent on a per diluted share basis.
Additional discussion related to the components of the year-on-year change in earnings per diluted share follows:
Organic growth/productivity and other:
−Removed: ● Lower organic local-currency sales growth as a result of significant COVID-19 related impacts, in addition to COVID-related net factors described in the preceding Overview—Consideration of COVID-19 section decreased earnings per diluted share year-on-year.
−Removed: These net factors included cost saving actions taken in response to COVID-19 but also reflected 2020 charges for items such as restructuring actions addressing structural enterprise costs and operations in certain end markets as a result of the COVID-19 pandemic and related economic impact (further described in Note 5).
−Removed: Partially offsetting this net decrease were benefits recognized in the first six months of 2020 related to the restructuring and other actions taken in 2019.
+Added: ● Lower organic volume growth in the first nine months of 2020 as a result of significant COVID-19 related impacts, in addition to COVID-related net factors described in the preceding Overview—Consideration of COVID-19 section, decreased earnings per diluted share year-on-year.
+Added: These net factors included cost saving actions taken in response to COVID-19 but also reflected second quarter 2020 charges for items such as restructuring actions addressing structural enterprise costs and operations in certain end markets as a result of the COVID-19 pandemic and related economic impact (further described in Note 5) along with certain related follow-on accelerated depreciation.
+Added: Additional items that reduced earnings per diluted share year-on-year include net gains related to certain property sales in the third quarter of 2019.
+Added: Partially offsetting this net decrease were benefits recognized in the first nine months of 2020 related to the restructuring and other actions taken in 2019 (and the adjustments thereto in 2020) in addition to continued cost management and productivity efforts.
● On a combined basis, higher defined benefit pension and postretirement service cost increased expense year-on-year.
−Removed: ● Interest expense (net of interest income) increased year-on-year for both the second quarter and first six months of 2020, as a result of higher U.S.
+Added: ● Interest expense (net of interest income) increased year-on-year for both the third quarter and first nine months of 2020, as a result of higher U.S.
average debt balances and lower year-on-year interest income driven by lower average interest rates on cash balances.
1 unchanged sentence
● Acquisition impacts, which are measured for the first twelve months post-transaction, relate to the acquisitions of M*Modal (first quarter 2019), and Acelity (fourth quarter 2019).
−Removed: These items collectively decreased earnings per diluted share by 4 cents and 9 cents year-on-year for the second quarter and first six months of 2020, respectively.
−Removed: The net impacts related to these acquisitions included income from operations, more than offset by transaction and integration costs.
+Added: These items collectively increased earnings per diluted share by 2 cents for the third quarter of 2020 and decreased earnings per diluted share by 7 cents for the first nine months of 2020.
+Added: The net impacts related to these acquisitions included income from operations, partially offset in the third quarter of 2020 and more than offset for the first nine months of 2020 by transaction and integration costs.
Financing costs related to these acquisitions is also included.
−Removed: ● Divestiture impacts include the lost operating income from divested businesses, which decreased earnings per diluted share by 3 cents for both the second quarter and first six months of 2020.
+Added: ● Divestiture impacts include the lost operating income from divested businesses, which decreased earnings per diluted share by 1 cent and 4 cents for the third quarter and first nine months of 2020, respectively.
This was primarily related to the divestiture of the Company’s drug delivery business.
Foreign exchange impacts:
−Removed: ● Foreign currency impacts (net of hedging) decreased pre-tax earnings year-on-year by approximately $37 million and $95 million, or the equivalent of 5 cents and 13 cents per diluted share the second quarter and first six months of 2020, respectively, excluding the impact of foreign currency changes on tax rates.
+Added: ● Foreign currency impacts (net of hedging) decreased pre-tax earnings year-on-year by approximately $8 million and $103 million, which had a minimal effect on diluted earnings per share for the third quarter of 2020 and 13 cents per diluted share for the first nine months of 2020, excluding the impact of foreign currency changes on tax rates.
Income tax rate:
● Certain items above reflect specific income tax rates associated with those items.
−Removed: Overall, the effective tax rate for the second quarter of 2020 was 21.0 percent, a decrease of 0.8 percentage points versus 2019.
−Removed: The effective tax rate for the first six months of 2020 was 19.2 percent, a decrease of 0.9 percentage points versus 2019.
−Removed: Excluding the special items (as discussed below), the effective tax rate decreased 1.6 percentage points and 0.2 percentage points year-on-year for the second quarter and first six months of 2020, respectively.
−Removed: ● Factors that decreased the effective tax rate for the second quarter year-over-year were the 2019 non-deductible charge related to the deconsolidation of the Venezuelan subsidiary, adjustments to uncertain tax positions not repeating in 2020 and increased year-over-year benefit from US international tax provisions.
−Removed: These decreases were partially offset by the 2019 tax benefit that did not repeat related to the “held for sale” status of legal entities associated with the then pending divestiture of the gas and flame detection business and decreased year-over-year benefit from stock options.
−Removed: ● Factors that decreased the effective rate for the first six months of 2020 year-over-year include the 2019 non-deductible charge related to the deconsolidation of the Venezuelan subsidiary, adjustments to uncertain tax positions not repeating in 2020, 2020 resolution of the tax treatment of the 2018 NRD lawsuit, and increased year-over-year benefit from US international tax provisions.
−Removed: These decreases were partially offset by the 2019 tax benefit that did not repeat related to the “held for sale” status of legal entities associated with the then-pending divestiture of the gas and flame detection business and decreased year-over-year benefit from stock options.
+Added: Overall, the effective tax rate for the third quarter of 2020 was 21.4 percent, an increase of 2.1 percentage points versus 2019.
+Added: The effective tax rate for the first nine months of 2020 was 20.0 percent, an increase of 0.3 percentage points versus 2019.
+Added: Excluding the special items (as discussed below), the effective tax rate increased 2.4 percentage points and 0.8 percentage points year-on-year for the third quarter and first nine months of 2020, respectively.
+Added: ● The primary factor that increased the effective tax rate for the third quarter year-on-year was nonrepeating 2019 favorable adjustments related to international tax provisions of U.S.
+Added: ● The effective tax rate for the first nine months of 2020 was largely consistent with that of 2019.
Shares of common stock outstanding:
−Removed: ● Lower shares outstanding increased earnings per share year-on-year by 2 cents and 4 cents per diluted share for the second quarter and first six months of 2020.
−Removed: Weighted-average diluted shares outstanding in the second quarter and first six months of 2020 declined 0.9 percent and 1.0 percent year-on-year, respectively, which benefited earnings per share.
−Removed: The decrease in the outstanding weighted-average diluted shares relates to the Company’s purchase $366 million of its own stock in the first six months of 2020, prior to 3M’s suspension of its stock repurchase program in late March 2020.
+Added: ● Lower shares outstanding had minimal impact to earnings per diluted share for the third quarter of 2020 and increased earnings per share year-on-year by 5 cents per diluted share for the first nine months of 2020.
+Added: Weighted-average diluted shares outstanding in the third quarter and first nine months of 2020 declined 0.1 percent and 0.7 percent year-on-year, respectively, which benefited earnings per share.
+Added: The decrease in the outstanding weighted-average diluted shares relates to the Company’s purchase of $366 million of its own stock in the first nine months of 2020, prior to 3M’s suspension of its stock repurchase program in late March 2020.
Certain amounts adjusted for special items - (non-GAAP measures):
24 unchanged sentences
In the second quarter of 2019, as a result of a “held for sale” tax benefit related to the legal entities associated with the pending divestiture of the Company’s gas and flame detection business, 3M recorded an after tax gain of $43 million.
+Added: In the third quarter of 2019, 3M recorded a gain related to the divestiture of the Company’s gas and flame detection business and an immaterial impact as a result of measuring a disposal group at the lower of its carrying amount or fair value less cost to sell, which in aggregate resulted in a pre-tax gain of $106 million ($79 million after tax).
Divestiture-related restructuring actions:
11 unchanged sentences
Earnings per diluted share percent change
−Removed: Three months ended June 30, 2019 GAAP
+Added: Three months ended September 30, 2019 GAAP
Adjustments for special items:
Gain/loss on sale of businesses
−Removed: Loss on deconsolidation of Venezuelan subsidiary
−Removed: Three months ended June 30, 2019 adjusted amounts (non-GAAP measures)
−Removed: Three months ended June 30, 2020 GAAP
+Added: Three months ended September 30, 2019 adjusted amounts (non-GAAP measures)
+Added: Three months ended September 30, 2020 GAAP
Adjustments for special items:
−Removed: Gain/loss on sale of businesses
−Removed: Divestiture-related restructuring actions
−Removed: Three months ended June 30, 2020 adjusted amounts (non-GAAP measures)
+Added: Three months ended September 30, 2020 adjusted amounts (non-GAAP measures)
(Dollars in millions, except per share amounts)
7 unchanged sentences
Earnings per diluted share percent change
−Removed: Six months ended June 30, 2019 GAAP
+Added: Nine months ended September 30, 2019 GAAP
Adjustments for special items:
2 unchanged sentences
Loss on deconsolidation of Venezuelan subsidiary
−Removed: Six months ended June 30, 2019 adjusted amounts (non-GAAP measures)
−Removed: Six months ended June 30, 2020 GAAP
+Added: Nine months ended September 30, 2019 adjusted amounts (non-GAAP measures)
+Added: Nine months ended September 30, 2020 GAAP
Adjustments for special items:
2 unchanged sentences
Divestiture-related restructuring actions
−Removed: Six months ended June 30, 2020 adjusted amounts (non-GAAP measures)
+Added: Nine months ended September 30, 2020 adjusted amounts (non-GAAP measures)
Sales and operating income by business segment:
−Removed: The following tables contain sales and operating income results by business segment for the three and six months ended June 30, 2020 and 2019.
+Added: The following tables contain sales and operating income results by business segment for the three and nine months ended September 30, 2020 and 2019.
Refer to the section entitled “Performance by Business Segment” later in MD&A for additional discussion concerning 2020 versus 2019 results, including Corporate and Unallocated.
Refer to Note 16 for additional information on business segments, including Elimination of Dual Credit.
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
(Dollars in millions)
5 unchanged sentences
Total Company
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
(Dollars in millions)
5 unchanged sentences
Total Company
−Removed: Three months ended June 30, 2020
+Added: Three months ended September 30, 2020
Worldwide Sales Change
5 unchanged sentences
Total Company
−Removed: Six months ended June 30, 2020
+Added: Nine months ended September 30, 2020
Worldwide Sales Change
6 unchanged sentences
Sales by geographic area:
−Removed: Percent change information compares the second quarter and first six months of 2020 with the same period last year, unless otherwise indicated.
+Added: Percent change information compares the third quarter and first nine months of 2020 with the same period last year, unless otherwise indicated.
From a geographic perspective, any references to EMEA refer to Europe, Middle East and Africa on a combined basis.
−Removed: Three months ended June 30, 2020
+Added: Three months ended September 30, 2020
Net sales (millions)
12 unchanged sentences
● In the Americas geographic area, U.S.
−Removed: total sales decreased 8 percent and organic-local currency sales decreased 13 percent.
+Added: total sales increased 11 percent and organic-local currency sales increased 5 percent.
Total sales in Mexico decreased 15 percent and organic local-currency sales decreased 13 percent.
−Removed: In Canada, total sales decreased 21 percent and organic local-currency sales decreased 23 percent.
−Removed: In Brazil, total sales decreased 36 percent and organic local-currency sales decreased 13 percent.
+Added: In Canada, total sales increased 4 percent as organic local-currency sales decreases of 1 percent were more than offset by acquisition-related sale growth.
+Added: In Brazil, total sales decreased 14 percent while organic local-currency sales increased 12 percent, as organic sales growth was more than offset by foreign currency translation impacts.
● In the Asia Pacific geographic area, China total sales increased 10 percent and organic local-currency sales increased 8 percent.
In Japan, total sales decreased 10 percent and organic local-currency sales decreased 13 percent.
−Removed: Six months ended June 30, 2020
+Added: Nine months ended September 30, 2020
Net sales (millions)
12 unchanged sentences
● In the Americas geographic area, U.S.
−Removed: total sales increased 2 percent while organic-local currency sales decreased 5 percent.
+Added: total sales increased 5 percent as organic-local currency sale decreases of 1 percent were more than offset by acquisition-related sales growth.
Total sales in Mexico decreased 18 percent and organic local-currency sales decreased 16 percent.
In Canada, total sales decreased 3 percent and organic local-currency sales decreased 6 percent.
−Removed: In Brazil, total sales decreased 22 percent and organic local-currency sales decreased 3 percent.
−Removed: ● In the Asia Pacific geographic area, China total sales decreased 6 percent and organic local-currency sales decreased 4 percent.
+Added: In Brazil, total sales decreased 20 percent while organic local-currency sales increased 2 percent, as organic sales growth was more than offset by foreign currency translation impacts.
+Added: ● In the Asia Pacific geographic area, China total sales decreased 1 percent and organic local-currency sales were flat.
In Japan, total sales decreased 5 percent and organic local-currency sales decreased 8 percent.
1 unchanged sentence
The stronger U.S.
−Removed: dollar had a negative impact on sales in the second quarter and first six months of 2020 compared to the same period last year.
−Removed: Net of the Company’s hedging strategy, foreign currency negatively impacted earnings in the second quarter and first six months of 2020 compared to the same periods last year.
+Added: dollar had a negative impact on sales in the first nine months of 2020 compared to the same period last year, which was partially offset by the positive impact of the weakening dollar in the third quarter of 2020 compared to the same period last year.
+Added: Net of the Company’s hedging strategy, foreign currency negatively impacted earnings in the third quarter and first nine months of 2020 compared to the same periods last year.
3M utilizes a number of tools to hedge currency risk related to earnings.
6 unchanged sentences
Financial condition:
−Removed: 3M generated $3.1 billion of operating cash flows in the first six months of 2020, an increase of $408 million when compared to the first six months of 2019, with this increase primarily due cost saving actions taken in response to COVID-19, lower year-on-year significant litigation-related charges and the timing of associated payments that impacted both the first quarter of 2020 and first quarter of 2019, and the deferring of income tax payments into the third quarter of 2020.
+Added: 3M generated $5.598 billion of operating cash flows in the first nine months of 2020, an increase of $866 million when compared to the first nine months of 2019, with this increase primarily due to cost saving actions taken in response to COVID-19 and lower year-on-year significant litigation-related charges and the timing of associated payments.
Refer to the section entitled “Financial Condition and Liquidity” later in MD&A for a discussion of items impacting cash flows.
1 unchanged sentence
This new program authorizes the repurchase of up to $10 billion of 3M’s outstanding common stock, with no pre-established end date.
−Removed: In the first six months of 2020, the Company purchased $366 million of its own stock, compared to $1.1 billion of stock purchases in the first six months of 2019.
−Removed: As of June 30, 2020, approximately $7.8 billion remained available under the authorization.
+Added: In the first nine months of 2020, the Company purchased $366 million of its own stock, compared to $1.2 billion of stock purchases in the first nine months of 2019.
+Added: As of September 30, 2020, approximately $7.8 billion remained available under the authorization.
In the first quarter of 2020, the Company suspended its stock repurchase program in the face of uncertainty arising from the COVID-19 pandemic.
2 unchanged sentences
In May 2020, 3M’s Board of Directors declared a second-quarter dividend of $1.47 per share.
+Added: In August 2020, 3M’s Board of Directors declared a third-quarter dividend of $1.47 per share.
3M currently has an A1 credit rating with a negative outlook from Moody’s Investors Service and an A+ credit rating with a negative outlook from Standard & Poor’s.
7 unchanged sentences
Three months ended
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
+Added: September 30,
(Percent of net sales)
7 unchanged sentences
and research, development and related expenses (R&D).
−Removed: The year-on-year increase in defined benefit pension and postretirement service cost expense for the second quarter and first six months of 2020 was approximately $7 million and $16 million, respectively.
+Added: The year-on-year increase in defined benefit pension and postretirement service cost expense for the third quarter and first nine months of 2020 was approximately $11 million and $27 million, respectively.
The Company is investing in an initiative called business transformation, with these investments impacting cost of sales, SG&A, and R&D.
4 unchanged sentences
These restructuring actions impacted cost of sales, SG&A, and R&D.
+Added: 3M also reflected adjustments in 2020 related to restructuring initiated in 2019.
See Note 5 for additional details.
2 unchanged sentences
Cost of sales includes manufacturing, engineering and freight costs.
−Removed: Cost of sales, measured as a percent of sales, increased in the second quarter of 2020 and decreased in the first six months of 2020 when compared to the same periods last year.
−Removed: Increases in the second quarter of 2020 were related to COVID-related net impacts, including period expenses of unabsorbed manufacturing costs, in addition to higher restructuring action charges taken versus the same period last year.
−Removed: Decreases in the first six months of 2020 included lower significant litigation-related charges taken in the first quarter of 2020 compared to the same period in 2019, which were partially offset by COVID-related net impacts, including period expenses of unabsorbed manufacturing costs, in addition to higher restructuring action charges taken versus the same period last year.
−Removed: In addition, selling price increased net sales year-on-year by 0.5 percent in both the second quarter and first six months of 2020, and lower raw material costs reduced cost of sales as a percentage of sales.
+Added: Cost of sales, measured as a percent of sales, decreased in the third quarter and first nine months of 2020 when compared to the same periods last year.
+Added: Decreases were related to lower significant litigation-related charges taken in the first quarter of 2020 compared to the same period in 2019, which were partially offset by COVID-related net impacts, including period expenses of unabsorbed manufacturing costs, in addition to higher restructuring action charges taken in the second quarter of 2020 versus the same period last year along with certain related follow-on accelerated depreciation.
+Added: In addition, selling price increased net sales year-on-year by 0.6 percent in the third quarter and 0.5 percent in the first nine months of 2020, and lower raw material costs reduced cost of sales as a percentage of sales.
Selling, General and Administrative Expenses:
−Removed: SG&A as a percent of sales in 2020 was affected by the COVID-19 pandemic’s impact on overall sales.
−Removed: SG&A in dollars decreased 5.4 percent and 7.5 percent in the second quarter and first six months of 2020, respectively, when compared to the same period last year.
−Removed: The decrease in the second quarter and first six months of 2020 relates to cost saving actions taken in response to COVID-19, lower year-on-year impact related to restructuring action charges and benefits from prior year restructuring, partially offset by other 2020 COVID-related impacts.
−Removed: The decrease in the first six months of 2020 also includes lower year-on-year impact related to significant litigation-related charges.
+Added: SG&A, as a percent of sales, increased in the third quarter and first nine months of 2020 when compared to the same periods last year.
+Added: SG&A was affected by the COVID-19 pandemic’s impact on overall sales and as a result yielded higher costs as a percent of sales.
+Added: SG&A was also impacted by increased spending year-on-year related to Acelity, which was acquired in the fourth quarter of 2019.
+Added: Partially offsetting these were cost saving actions taken in response to COVID-19, in addition to lower year-on-year second quarter impact related to restructuring action charges and benefits from prior year restructuring (and adjustments thereto in 2020).
+Added: Additional factors that decreased SG&A in the first nine months of 2020 also include lower year-on-year impact related to significant litigation-related charges.
Research, Development and Related Expenses:
−Removed: R&D in dollars decreased $46 million and increased $14 million in the second quarter and first six months of 2020, respectively, when compared to the same period last year.
−Removed: R&D, measured as a percent of sales, increased in the second quarter and first six months of 2020, as 3M continued to invest in its key initiatives, including R&D aimed at disruptive innovation programs with the potential to create entirely new markets and disrupt existing markets.
+Added: R&D in dollars increased $18 million and $32 million in the third quarter and first nine months of 2020, respectively, when compared to the same period last year.
+Added: R&D, measured as a percent of sales, was flat for the third quarter and and increased for the first nine months of 2020, as 3M continued to invest in its key initiatives, including R&D aimed at disruptive innovation programs with the potential to create entirely new markets and disrupt existing markets.
The increase is primarily driven by additional R&D spending related to the Company’s acquisition of Acelity.
3 unchanged sentences
During the first quarter of 2019, the Company sold certain oral care technology comprising a business and reflected an earnout on a previous divestiture resulting in a pre-tax gain of $8 million ($7 million gain after tax).
+Added: In the third quarter of 2019, 3M recorded a gain related to the divestiture of the Company’s gas and flame detection business and an immaterial impact as a result of measuring a disposal group at the lower of its carrying amount or fair value less cost to sell, which in aggregate resulted in a pre-tax gain of $106 million ($79 million after tax).
Refer to Note 3 for additional details on divestitures.
1 unchanged sentence
3M uses operating income as one of its primary business segment performance measurement tools.
−Removed: Refer to the table below for a reconciliation of operating income margins for the three and six months ended June 30, 2020 and 2019.
+Added: Refer to the table below for a reconciliation of operating income margins for the three and nine months ended September 30, 2020 and 2019.
Three months ended
−Removed: Six months ended
+Added: Nine months ended
(Percent of net sales)
−Removed: June 30, 2020
−Removed: June 30, 2020
+Added: September 30, 2020
+Added: September 30, 2020
Same period last year
12 unchanged sentences
Current period
−Removed: Operating income margins increased 3.5 and 4.6 percentage points year-on-year in the second quarter and first six months of 2020, respectively.
−Removed: Factoring out the impact on operating income of special items as described in the Certain amounts adjusted for special items - (non-GAAP measures) section above, operating margins decreased 1.2 and 0.9 percentage points to 19.6 percent and 20.2 percent, respectively, for the second quarter and first six months of 2020 when compared to the same periods in 2019.
+Added: Operating income margins decreased 2.3 percentage points and increased 2.3 percentage points year-on-year in the third quarter and first nine months of 2020, respectively.
+Added: Factoring out the impact on operating income of special items as described in the Certain amounts adjusted for special items - (non-GAAP measures) section above, operating margins decreased 0.9 and 0.8 percentage points to 22.9 percent and 21.2 percent, respectively, for the third quarter and first nine months of 2020 when compared to the same periods in 2019.
Additional discussion related to the components of the year-on-year change in operating income margins follows:
Organic volume/productivity and other:
−Removed: ● Lower organic volume growth as a result of significant COVID-19 related impacts, in addition to COVID-related net factors described in the preceding Overview—Consideration of COVID-19 section, decreased operating income margins year-on-year.
−Removed: These net factors included cost saving actions taken in response to COVID-19 but also reflected 2020 charges for items such as restructuring actions addressing structural enterprise costs and operations in certain end markets as a result of the COVID-19 pandemic and related economic impact (further described in Note 5).
−Removed: Partially offsetting this net decrease were benefits recognized in the first six months of 2020 related to restructuring and other actions taken in 2019.
+Added: ● Lower organic volume growth in the first nine months of 2020 as a result of significant COVID-19 related impacts, in addition to COVID-related net factors described in the preceding Overview—Consideration of COVID-19 section, decreased operating income margins year-on-year.
+Added: These net factors included cost saving actions taken in response to COVID-19 but also reflected second quarter 2020 charges for items such as restructuring actions addressing structural enterprise costs and operations in certain end markets as a result of the COVID-19 pandemic and related economic impact (further described in Note 5) along with certain related follow-on accelerated depreciation.
+Added: Additional items that reduced operating income margins year-on-year include net gains related to certain property sales in the third quarter of 2019.
+Added: Partially offsetting this net decrease were benefits recognized in the first nine months of 2020 related to restructuring and other actions taken in 2019 (and adjustments thereto in 2020) in addition to continued cost management and productivity efforts.
● Operating income margins decreased year-on-year due to higher defined benefit pension and postretirement service cost expense.
Acquisitions/divestitures:
−Removed: ● Acquisition-related impacts relate to the on-going integration of M*Modal and Acelity, which decreased operating income margins year-on-year .
−Removed: ● Divestiture impacts, which is comprised of lost operating income from divested businesses, increased operating income margins year-on-year.
+Added: ● Acquisition-related impacts relate to the ongoing integration of M*Modal and Acelity, which decreased operating income margins year-on-year .
+Added: ● Divestiture impacts, which includes lost operating income from divested businesses, increased operating income margins year-on-year.
Selling price and raw material impact:
−Removed: ● Higher selling prices in addition to lower raw material cost impacts benefited operating income margins year-on-year for both the second quarter and first six months of 2020.
+Added: ● Higher selling prices in addition to lower raw material cost impacts benefited operating income margins year-on-year for both the third quarter and first nine months of 2020.
Foreign exchange impacts:
1 unchanged sentence
Significant litigation-related charges:
−Removed: ● Operating income margins for the first six months of 2020 and 2019 included the $17 million and $548 million impact, respectively, of significant litigation-related charges (as discussed earlier in the Certain amounts adjusted for special items - (non-GAAP measures) section).
+Added: ● Operating income margins for the first nine months of 2020 and 2019 included the $17 million and $548 million impact, respectively, of significant litigation-related charges (as discussed earlier in the Certain amounts adjusted for special items - (non-GAAP measures) section).
Gain/loss on sale of businesses:
−Removed: ● Operating income margins for the second quarter of 2020 included a gain of $387 million on sale of businesses.
−Removed: There were no operating income margin impact related to gains on sale of businesses in the second quarter of 2019.
−Removed: For the first six months of 2020 and 2019 included a gain of $389 million and $8 million, respectively, on sale of businesses (as discussed earlier in the Certain amounts adjusted for special items - (non-GAAP measures) section).
+Added: ● There were no gains on the sale of businesses for the third quarter of 2020, whereas, operating income margins for the third quarter of 2019 included gains of $106 million on the sale of businesses.
+Added: The first nine months of 2020 and 2019 included gains of $389 million and $114 million, respectively, on sale of businesses.
+Added: See the Certain amounts adjusted for special items - (non-GAAP measures) section for more information.
Divestiture-related restructuring actions:
−Removed: ● Operating income margins for both the second quarter and first six months of 2020 included the $55 million impact as a result of certain restructuring actions following the divestiture of substantially all of the drug delivery business addressing corporate functional costs and manufacturing footprint across 3M in relation to the magnitude of amounts previously allocated/burdened to the divested business.
+Added: ● Operating income margins for the first nine months of 2020 included the $55 million second quarter impact as a result of certain restructuring actions following the divestiture of substantially all of the drug delivery business addressing corporate functional costs and manufacturing footprint across 3M in relation to the magnitude of amounts previously allocated/burdened to the divested business.
Refer to Note 5 for further details.
2 unchanged sentences
See Note 6 for a detailed breakout of this line item.
−Removed: Interest expense (net of interest income) increased in the second quarter and first six months of 2020 compared to the same period in 2019 due to higher U.S.
+Added: Interest expense (net of interest income) increased in the third quarter and first nine months of 2020 compared to the same period in 2019 due to higher U.S.
average debt balances and lower year-on-year interest income driven by lower average interest rates on cash balances.
−Removed: Other expense (income) decreased year-on-year in the first six months 2020 primarily due to the impact of the 2019 deconsolidation of the Company’s Venezuelan subsidiary.
+Added: Other expense (income) decreased year-on-year in the first nine months 2020 primarily due to the impact of the 2019 deconsolidation of the Company’s Venezuelan subsidiary.
Refer to Note 1 for additional details.
3 unchanged sentences
Three months ended
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
+Added: September 30,
(Percent of pre-tax income)
Effective tax rate
−Removed: The effective tax rate for the second quarter of 2020 was 21.0 percent, compared to 21.8 percent in the second quarter of 2019, a decrease of 0.8 percentage points.
−Removed: The effective tax rate for the first six months of 2020 was 19.2 percent, compared to 20.1 percent in the first six months 2019, a decrease of 0.9 percentage points.
+Added: The effective tax rate for the third quarter of 2020 was 21.4 percent, compared to 19.3 percent in the third quarter of 2019, an increase of 2.1 percentage points.
+Added: The effective tax rate for the first nine months of 2020 was 20.0 percent, compared to 19.7 percent in the first nine months 2019, an increase of 0.3 percentage points.
Factors that impacted the tax rates between years are further discussed in the Overview section above and in Note 8.
6 unchanged sentences
Three months ended
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
+Added: September 30,
Net income (loss) attributable to noncontrolling interest
2 unchanged sentences
Currency Effects:
−Removed: 3M estimates that year-on-year currency effects, including hedging impacts, decreased pre-tax income by approximately $37 million and $95 million for the second quarter of 2020 and six months ended June 30, 2020, respectively.
+Added: 3M estimates that year-on-year currency effects, including hedging impacts, decreased pre-tax income by approximately $8 million and $103 million for the third quarter of 2020 and nine months ended September 30, 2020, respectively.
This estimate includes the effect of translating profits from local currencies into U.S.
1 unchanged sentence
and transaction gains and losses, including derivative instruments designed to reduce foreign currency exchange rate risks.
−Removed: 3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, increased pre-tax income by approximately $12 million and $11 million for the three and six months ended June 30, 2020, respectively.
+Added: 3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, decreased pre-tax income by approximately $15 million and $4 million for the three and nine months ended September 30, 2020, respectively.
These estimates include transaction gains and losses, including derivative instruments designed to reduce foreign currency exchange rate risks.
18 unchanged sentences
In addition to these four business segments, 3M assigns certain costs to “Corporate and Unallocated,” which is presented separately in the preceding business segments table and in Note 16.
−Removed: Corporate and Unallocated 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.
−Removed: pension, stock-based
−Removed: compensation) that the Company determines not to allocate directly to its business segments.
+Added: Corporate and Unallocated 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
+Added: and environmental expenses, corporate restructuring charges and certain under- or over-absorbed costs (e.g.
+Added: pension, stock-based compensation) that the Company determines not to allocate directly to its business segments.
Additionally, Corporate and Unallocated operating income includes special items such as significant litigation-related charges/benefits, gain/loss on sale of businesses, and divestiture-related restructuring costs.
−Removed: Corporate and Unallocated also includes sales, costs, and income from contract manufacturing, transition services and other arrangements with the acquirer of the Communication Markets Division following its 2018 divestiture through 2019.
+Added: Corporate and Unallocated also includes sales, costs, and income from contract manufacturing, transition services and other arrangements with the acquirer of the Communication Markets Division following its 2018 divestiture through 2019 and the acquirer of the former drug delivery business following its 2020 divestiture.
Because this category includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis.
−Removed: Corporate and Unallocated expense for the second quarter and first six months 2020 when compared to same periods last year are as follows:
+Added: Corporate and Unallocated expense for the third quarter and first nine months 2020 when compared to same periods last year are as follows:
Special Items
1 unchanged sentence
Other Corporate Expense - Net
−Removed: Other corporate operating expenses decreased in both the second quarter and first six months of 2020, when compared to the same periods last year, primarily due to lower year-on-year restructuring charges.
+Added: Other corporate operating expenses increased in both the third quarter and first nine months of 2020, when compared to the same periods last year, due to lower year-on-year gains from certain property sales, in addition to transition service and other arrangement costs, net of income, post-divestiture of the Company’s former drug delivery business in 2020, and increased legal expenses.
+Added: These were partially offset by lower year-on-year restructuring charges.
In the second quarter of 2020 and 2019, operating expenses included non-divestiture-related restructuring charges of $23 million and $82 million, respectively, as further discussed in Note 5.
−Removed: In addition, 3M’s defined benefit pension and postretirement service-cost expense allocation to Corporate and Unallocated decreased year-on-year.
+Added: In addition, 3M’s defined benefit pension and postretirement service-cost expense allocation to Corporate and Unallocated increased year-on-year.
Operating Business Segments:
−Removed: Information related to 3M’s business segments for both the second quarter and first six months of 2020 and 2019 are presented in the tables that follow.
+Added: Information related to 3M’s business segments for both the third quarter and first nine months of 2020 and 2019 are presented in the tables that follow.
Organic local-currency sales include both organic volume impacts plus selling price impacts.
6 unchanged sentences
Three months ended
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
+Added: September 30,
Sales (millions)
5 unchanged sentences
Percent of sales
−Removed: Second quarter 2020 results:
−Removed: Sales in Safety and Industrial totaled $2.7 billion, down 9.2 percent in U.S.
−Removed: Organic local-currency sales decreased 6.1 percent, divestitures decreased sales by 0.9 percent, and foreign currency translation decreased sales by 2.2 percent.
+Added: Third quarter 2020 results:
+Added: Sales in Safety and Industrial totaled $3.0 billion, up 6.9 percent in U.S.
+Added: Organic local-currency sales increased 6.9 percent, divestitures decreased sales by 0.4 percent, and foreign currency translation increased sales by 0.4 percent.
On an organic local-currency sales basis:
−Removed: ● Sales increased in personal safety, while closure and masking systems, electrical markets, roofing granules, industrial adhesives and tape, abrasives, and automotive aftermarket sales declined year-on-year.
−Removed: ● Strong growth related to unprecedented demand for respirators as a result of the COVID-19 pandemic was more than offset by softness that impacted sales growth across most of the Company’s general industrial-related portfolio.
+Added: ● Sales increased in personal safety, roofing granules and automotive aftermarket, while electrical markets, industrial adhesives and tapes, closure and masking system, and abrasives sales declined year-on-year.
+Added: ● Strong growth related to unprecedented demand for respirators as a result of the COVID-19 pandemic was partially offset by softness that impacted sales growth across most of the Company’s general industrial-related portfolio.
Divestitures:
−Removed: ● 2018 divestitures that impacted second quarter 2019 results relate to the sale of the Company’s abrasives glass products business (second quarter of 2018).
−Removed: ● Also in 2018, 3M completed the sale of substantially all of its Communication Markets Division .
+Added: ● In 2018, 3M completed the sale of substantially all of its Communication Markets Division .
● In August 2019, 3M completed the sale of its gas and flame detection business.
Business segment operating income:
−Removed: ● Business segment operating income margins increased 1.8 percentage points, primarily related to strong productivity, cost discipline and benefits from second quarter 2019 restructuring and other actions.
−Removed: First six months 2020 results:
+Added: ● Business segment operating income margins increased 4.3 percentage points, primarily related to strong productivity and continued cost discipline.
+Added: First nine months 2020 results:
Sales in Safety and Industrial totaled $8.6 billion, down 1.2 percent in U.S.
−Removed: Organic local-currency sales decreased 1.9 percent, divestitures decreased sales by 0.9 percent, and foreign currency translation decreased sales by 2.2 percent.
+Added: Organic local-currency sales increased 0.9 percent, divestitures decreased sales by 0.8 percent, and foreign currency translation decreased sales by 1.3 percent.
On an organic local-currency sales basis:
−Removed: ● Sales increased in personal safety, while roofing granules, closure and masking systems, industrial adhesives and tapes, electrical markets, automotive aftermarket, and abrasives sales declined year-on-year.
+Added: ● Sales increased in personal safety and roofing granules, while electrical markets, industrial adhesives and tapes, closure and masking systems, automotive aftermarket, and abrasives sales declined year-on-year.
● Strong growth related to unprecedented demand for respirators as a result of the COVID-19 pandemic was more than offset by softness that impacted sales growth across most of the Company’s general industrial-related portfolio.
Divestitures:
−Removed: ● 2018 divestitures that impacted the first six months of 2019 results relate to the sale of certain personal safety product offerings primarily focused on noise, environmental, and heat stress monitoring (first quarter 2018), and it’s abrasives glass products business (second quarter of 2018).
+Added: ● 2018 divestitures that impacted the first nine months of 2019 results relate to the sale of certain personal safety product offerings primarily focused on noise, environmental, and heat stress monitoring (first quarter 2018), and it’s abrasives glass products business (second quarter of 2018).
● Also in 2018, 3M completed the sale of substantially all of its Communication Markets Division .
1 unchanged sentence
Business segment operating income:
−Removed: ● Business segment operating income margins increased 2.5 percentage points, primarily related to strong productivity, cost discipline and benefits from second quarter 2019 restructuring and other actions.
+Added: ● Business segment operating income margins increased 3.2 percentage points, primarily related to strong productivity, continued cost discipline and benefits from 2019 restructuring and other actions.
Transportation and Electronics Business:
Three months ended
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
+Added: September 30,
Sales (millions)
5 unchanged sentences
Percent of sales
−Removed: Second quarter 2020 results:
+Added: Third quarter 2020 results:
Sales in Transportation and Electronics totaled $2.3 billion, down 7.4 percent in U.S.
−Removed: Organic local-currency sales decreased 18.9 percent, divestitures decreased sales by 1.1 percent, and foreign currency translation decreased sales by 0.9 percent.
+Added: Organic local-currency sales decreased 7.1 percent, divestitures decreased sales by 1.2 percent, and foreign currency translation increased sales by 0.9 percent.
On an organic local-currency sales basis:
−Removed: ● Sales declined in electronics, transportation safety, advanced materials , commercial solutions, and automotive and aerospace.
+Added: ● Sales declined in transportation safety, commercial solutions, automotive and aerospace, and advanced materials.
Automotive and aerospace was primarily impacted by the decline in global car and light truck builds .
−Removed: ● Sales decreased 1 percent in 3M’s electronics-related businesses.
−Removed: Electronics-related sales declines were primarily related to softness in the consumer electronics end-market, partially offset by demand in semiconductor, data center, and factory automation end-markets.
+Added: Commercial solutions and transportation safety were impacted by soft-end markets such as hospitality, advertising and highway infrastructure due to social distancing and work-from-home protocols as a result of COVID-19.
+Added: ● Sales increased 1 percent in 3M’s electronics-related businesses.
+Added: Electronics-related sales increases were primarily related to demand in semiconductor, data center, and factory automation end-markets, partially offset by softness in the consumer electronics end-market.
Divestitures:
2 unchanged sentences
Business segment operating income:
−Removed: ● Business segment operating income margins decreased 4.4 percentage points, primarily related to lower sales which were partially offset by cost discipline and benefits from second quarter 2019 restructuring and other actions.
−Removed: First six months 2020 results:
+Added: ● Business segment operating income margins decreased 1.5 percentage points, primarily related to lower sales which were partially offset by continued cost discipline.
+Added: First nine months 2020 results:
Sales in Transportation and Electronics totaled $6.5 billion, down 11.2 percent in U.S.
1 unchanged sentence
On an organic local-currency sales basis:
−Removed: ● Sales were flat in electronics and declined in transportation safety, advanced materials, commercial solutions, and automotive and aerospace.
+Added: ● Sales declined in transportation safety, advanced materials, commercial solutions, and automotive and aerospace.
Automotive and aerospace was primarily impacted by the decline in global car and light truck builds .
+Added: Commercial solutions and transportation safety were impacted by soft-end markets such as hospitality, advertising and highway infrastructure due to social distancing and work-from-home protocols as a result of COVID-19.
● Sales were flat in 3M’s electronics-related businesses.
4 unchanged sentences
Business segment operating income:
−Removed: ● Business segment operating income margins decreased 2.4 percentage points, primarily related to lower sales and reduced productivity in key end-markets due to COVID-19 related impacts, partially offset by cost discipline and benefits from last year’s restructuring actions.
+Added: ● Business segment operating income margins decreased 2.1 percentage points, primarily related to lower sales and reduced productivity in key end-markets due to COVID-19 related impacts, partially offset by continued cost discipline and benefits from last year’s restructuring actions.
Health Care Business:
Three months ended
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
+Added: September 30,
Sales (millions)
5 unchanged sentences
Percent of sales
−Removed: Second quarter 2020 results:
−Removed: Sales in Health Care totaled $1.8 billion, down 0.4 percent in U.S.
−Removed: Organic local-currency sales decreased 12.4 percent, acquisitions increased sales by 17.9 percent, divestitures decreased sales by 4.3 percent, and foreign currency translation decreased sales by 1.6 percent.
+Added: Third quarter 2020 results:
+Added: Sales in Health Care totaled $2.2 billion, up 25.5 percent in U.S.
+Added: Organic local-currency sales increased 8.1 percent, acquisitions increased sales by 23.4 percent, divestitures decreased sales by 7.1 percent, and foreign currency translation increased sales by 1.1 percent.
On an organic local-currency sales basis:
−Removed: ● Sales increased in separation and purification sciences, while sales declined in medical solutions, food safety, and health information systems, and oral care.
−Removed: ● Sales declines year-on-year were primarily due to delays in elective medical procedures and closures of most dental offices across the world as a result of the COVID-19 pandemic.
−Removed: These impacts were most prevalent in the oral care and medical solutions businesses.
+Added: ● Sales increased in medical solutions, separation and purification sciences, and oral care, while sales declined in food safety and health information systems.
+Added: ● Medical solutions and oral care benefitted from increases in healthcare and elective procedure volumes, after significant disruptions in the second quarter, in addition to strong pandemic-related demand for disposable respirators.
+Added: These increases were partially offset by decreases in food safety, as a result of pandemic and related prevention protocols continuing to negatively impact the food services industry, and in health information systems, due to hospitals remaining cautious relative to their information technology investments.
Acquisitions:
6 unchanged sentences
Business segment operating income:
−Removed: ● Business segment operating income margins decreased 9.6 percentage points year-on-year, driven by sales declines and impacts related to the Acelity acquisition, partially offset by cost discipline and benefits from second quarter 2019 restructuring and other costs.
−Removed: First six months 2020 results:
+Added: ● Business segment operating income margins decreased 3.2 percentage points year-on-year, primarily driven by impacts related to the Acelity acquisition and investments in productivity and growth, partially offset by continued cost discipline.
+Added: First nine months 2020 results:
Sales in Health Care totaled $6.1 billion, up 15.1 percent in U.S.
1 unchanged sentence
On an organic local-currency sales basis:
−Removed: ● Sales increased in food safety, separation and purification sciences, and medical solutions, while sales decreased in health information systems and oral care.
−Removed: ● Oral care declined year-on-year primarily due to dental and orthodontia offices being impacted as a result of the COVID-19 pandemic.
+Added: ● Sales increased in separation and purification sciences, medical solutions, and food safety, while sales decreased in health information systems and oral care.
+Added: ● Increases in healthcare and elective procedure volumes benefited both Medical solutions and oral care after significant disruptions in the second quarter, with strong pandemic-related demand for disposable respirators resulting in increased sales for medical solutions, while oral care sales decreased year-on-year.
+Added: In addition, health information systems decreased due to hospitals remaining cautious relative to their information technology investments.
Acquisitions:
6 unchanged sentences
Business segment operating income:
−Removed: ● Business segment operating income margins decreased 7.0 percentage points year-on-year, driven by sales declines and impacts related to the Acelity acquisition, partially offset by cost discipline and benefits from second quarter 2019 restructuring and other costs.
+Added: ● Business segment operating income margins decreased 5.6 percentage points year-on-year, driven by impacts related to the Acelity acquisition in addition to significant sales declines in oral care during the second quarter of 2020, partially offset by continued cost discipline and benefits from 2019 restructuring and other costs.
Consumer Business:
Three months ended
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
+Added: September 30,
Sales (millions)
5 unchanged sentences
Percent of sales
−Removed: Second quarter 2020 results:
−Removed: Sales in Consumer totaled $1.2 billion, a decrease of 6.2 percent in U.S.
−Removed: Organic local-currency sales decreased 5.0 percent and foreign currency translation decreased sales by 1.2 percent.
+Added: Third quarter 2020 results:
+Added: Sales in Consumer totaled $1.4 billion, an increase of 5.6 percent in U.S.
+Added: Organic local-currency sales increased 5.5 percent and foreign currency translation increased sales by 0.1 percent.
On an organic local-currency sales basis:
−Removed: ● Sales grew in home care and home improvement, while consumer health care and stationery and office declined.
−Removed: ● Sales showed continued strength in the Company’s Filtrete TM , Scotch Blue TM , Scotch Brite TM , and Meguiars TM brands.
+Added: ● Sales grew in home care and home improvement, while consumer health care was flat.
+Added: ● Stationery and office declined year-on-year as a result of many business offices and schools remaining partially or fully closed due to the pandemic.
+Added: ● Sales showed continued strength in the Company’s Command TM , Filtrete TM , Scotch Blue TM , Scotch Brite TM , and Meguiars TM brands.
Business segment operating income:
−Removed: ● Business segment operating income margins increased 2.5 percentage points year-on-year as a result of strong productivity and cost discipline.
−Removed: First six months 2020 result:
−Removed: Sales in Consumer totaled $2.5 billion, an decrease of 1.0 percent in U.S.
+Added: ● Business segment operating income margins increased 2.0 percentage points year-on-year as a result of strong organic sales growth and continued cost discipline.
+Added: First nine months 2020 result:
+Added: Sales in Consumer totaled $3.9 billion, an increase of 1.3 percent in U.S.
Organic local-currency sales increased 2.1 percent and foreign currency translation decreased sales by 0.8 percent.
On an organic local-currency sales basis:
−Removed: ● Sales grew in home care and home improvement, home care, while consumer health care and stationery and office declined.
−Removed: ● Sales showed continued strength in the Company’s Filtrete TM , Scotch Blue TM , Scotch Brite TM , and Meguiars TM brands.
+Added: ● Sales grew in home care and home improvement, while consumer health care and stationery and office declined.
+Added: ● Stationery and office declined year-on-year as a result of many business offices and schools remaining partially or fully closed due to the pandemic.
+Added: ● Sales showed continued strength in the Company’s Command TM , Filtrete TM , Scotch Blue TM , Scotch Brite TM , and Meguiars TM brands.
Business segment operating income:
−Removed: ● Business segment operating income margins increased 2.1 percentage points year-on-year as a result of strong productivity and cost discipline.
+Added: ● Business segment operating income margins increased 2.1 percentage points year-on-year as a result of strong organic sales growth and continued cost discipline.
FINANCIAL CONDITION AND LIQUIDITY
−Removed: The strength and stability of 3M’s business model and strong free cash flow capability, together with proven capital markets access, position the Company to withstand an economic downturn.
+Added: The strength and stability of 3M’s business model and strong free cash flow capability, together with proven capital markets access, provides financial flexibility and enables the Company to invest through business cycles.
Investing in 3M’s business to drive organic growth and deliver strong return on invested capital remains the first priority for capital deployment.
5 unchanged sentences
3M maintains strong liquidity and further added to its liquidity position through the issuance of $1.75 billion in registered notes in March 2020.
−Removed: Sources for cash availability in the United States, such as ongoing cash flow from operations and access to capital markets, have historically been sufficient to fund dividend payments to shareholders, as well as funding U.S.
−Removed: acquisitions and other items as needed.
−Removed: The TCJA creates additional repatriation opportunities for 3M to access international cash positions on a continual and on-going basis and will help support U.S.
−Removed: capital deployments needs.
+Added: To fund cash needs in the United States, the Company relies on ongoing cash flow from U.S.
+Added: operations, access to capital markets and repatriation of the earnings of its foreign affiliates that are not considered to be permanently reinvested.
For those international earnings still considered to be reinvested indefinitely, the Company currently has no plans or intentions to repatriate these funds for U.S.
−Removed: See Note 10 in 3M’s 2019 Annual Report on Form 10-K for further information on earnings considered to be reinvested indefinitely.
+Added: See Note 8 for further information on earnings considered to be reinvested indefinitely.
3M’s primary short-term liquidity needs are met through cash on hand and U.S.
2 unchanged sentences
3M’s commercial paper program permits the Company to have a maximum of $5 billion outstanding with a maximum maturity of 397 days from date of issuance.
−Removed: At June 30, 2020, there was no commercial paper issued and outstanding, compared to $150 million outstanding at December 31, 2019.
+Added: At September 30, 2020, there was no commercial paper issued and outstanding, compared to $150 million outstanding at December 31, 2019.
The strength of 3M’s credit profile and significant ongoing cash flows provide 3M proven access to capital markets.
1 unchanged sentence
3M currently has an A1 credit rating with a negative outlook from Moody’s Investors Service and an A+ credit rating with a negative outlook from Standard & Poor’s.
−Removed: The Company’s total debt was $0.4 billion higher at June 30, 2020 when compared to December 31, 2019.
−Removed: Increases in debt related to the March 2020 issuance of $1.75 billion of registered notes, partially offset by the repayment of aggregate $445 million principal amount of Third Lien Notes subject to in-substance defeasance (see Note 10) and 650 million euros aggregate principal amount of floating-rate medium-term notes that matured, and lower commercial paper balance.
+Added: The Company’s total debt was $0.7 billion lower at September 30, 2020 when compared to December 31, 2019.
+Added: Decreases in debt include the repayment of aggregate $445 million principal amount of Third Lien Notes subject to in-substance defeasance (see Note 10), 650 million euros and $500 million aggregate principal amount of floating-rate medium-term notes that matured, lower
+Added: commercial paper balance, and the repayment of the 80 billion Japanese yen and 150 million euro credit facilities.
+Added: These decreases were partially offset by the March 2020 issuance of $1.75 billion of registered notes.
For discussion of repayments of and proceeds from debt refer to the following “Cash Flows from Financing Activities” section.
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In May 2016, in connection with the WKSI shelf, 3M entered into an amended and restated distribution agreement relating to the future issuance and sale (from time to time) of the Company’s medium-term notes program (Series F), up to the aggregate principal amount of $18 billion, which was an increase from the previous aggregate principal amount up to $9 billion of the same Series.
−Removed: As of June 30, 2020, the total amount of debt issued as part of the medium-term notes program (Series F), inclusive of debt issued in February 2019 and prior years is approximately $17.6 billion (utilizing the foreign exchange rates applicable at the time of issuance for the euro denominated debt).
+Added: As of September 30, 2020, the total amount of debt issued as part of the medium-term notes program (Series F), inclusive of debt issued in February 2019 and prior years is approximately $17.6 billion (utilizing the foreign exchange rates applicable at the time of issuance for the euro denominated debt).
Additionally, the August 2019 and March 2020 debt was issued under the WKSI shelf registration, but not as part of the medium-term notes program (Series F).
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The 364-day credit agreement includes a provision under which 3M may convert any advances outstanding on the maturity date into term loans with a maturity date one year later.
−Removed: These credit facilities were undrawn at June 30, 2020.
+Added: These credit facilities were undrawn at September 30, 2020.
Under both the $3.0 billion and $1.25 billion credit agreements, the Company is required to maintain its EBITDA to Interest Ratio as of the end of each fiscal quarter at not less than 3.0 to 1.
This is calculated (as defined in the agreement) as the ratio of consolidated total EBITDA for the four consecutive quarters then ended to total interest expense on all funded debt for the same period.
−Removed: At June 30, 2020, this ratio was approximately 18 to 1.
+Added: At September 30, 2020, this ratio was approximately 17 to 1.
Debt covenants do not restrict the payment of dividends.
−Removed: Apart from the committed credit facilities described above, 3M has a credit facility expiring in July 2020 in the amount of 80 billion Japanese yen that in July 2020 was further extended until August 2021.
−Removed: At June 30, 2020, 69 billion Japanese yen, or approximately $646 million at June 30, 2020 exchange rates, was drawn and outstanding.
+Added: Apart from the committed credit facilities described above, 3M has a credit facility initially expiring in July 2020 in the amount of 80 billion Japanese yen that in July 2020 was further extended until August 2021.
In November 2019, 3M entered into a credit facility expiring in November 2020 in the amount of 150 million euros.
−Removed: At June 30, 2020, 150 million euros, or $168 million at June 30, 2020 exchange rates, was drawn and outstanding.
−Removed: The Company also had an additional $267 million in stand-alone letters of credit and bank guarantees were also issued and outstanding at June 30, 2020.
+Added: During the third quarter of 2020, the Company paid the outstanding balances and closed these credit facilities.
+Added: The Company also had $271 million in stand-alone letters of credit and bank guarantees issued and outstanding at September 30, 2020.
These instruments are utilized in connection with normal business activities.
Cash, cash equivalents and marketable securities:
−Removed: At June 30, 2020, 3M had $4.5 billion of cash, cash equivalents and marketable securities, of which approximately $3.0 billion was held by the Company’s foreign subsidiaries and approximately $1.5 billion was held in the United States.
+Added: At September 30, 2020, 3M had $4.6 billion of cash, cash equivalents and marketable securities, of which approximately $2.9 billion was held by the Company’s foreign subsidiaries and approximately $1.7 billion was held in the United States.
These balances are invested in bank instruments and other high-quality fixed income securities.
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3M believes net debt is meaningful to investors as 3M considers net debt and its components to be important indicators of liquidity and financial position.
−Removed: The following table provides net debt as of June 30, 2020 and December 31, 2019.
−Removed: June 30, 2020
+Added: The following table provides net debt as of September 30, 2020 and December 31, 2019.
+Added: September 30, 2020
December 31, 2019
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Working capital (non-GAAP measure):
−Removed: June 30, 2020
+Added: September 30, 2020
December 31, 2019
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Working capital increased $3.0 billion compared with December 31, 2019.
−Removed: Balance changes in current assets increased working capital by $1.1 billion, driven by increases to cash and cash equivalents, partially offset by decreases in account receivable.
−Removed: Balance changes in current liabilities increased working capital by $1.9 billion, primarily due to decreases in the current portion of long-term debt and accrued payroll.
−Removed: Accounts receivable decreased $332 million compared to December 31, 2019, primarily due to lower sales in the second quarter of 2020 in relation to sales in the fourth quarter 2019 and increased expected credit losses on customer receivables related to COVID-19 uncertainty.
−Removed: Inventory increased $34 million from December 31, 2019 as a result of slowing growth conditions in several key end-markets and changes in channel inventory levels by customers, partially offset by impacts from foreign exchange rates and inventory included in the divestiture of the drug delivery business.
+Added: Balance changes in current assets increased working capital by $1.2 billion, driven by increases to cash and cash equivalents, partially offset by decreases in account receivable and inventory.
+Added: Balance changes in current liabilities increased working capital by $1.8 billion, primarily due to decreases in short-term borrowing and the current portion of long-term debt.
+Added: Accounts receivable decreased $168 million compared to December 31, 2019, primarily due to lower sales in 2020 in relation to sales in the fourth quarter 2019 and increased expected credit losses on customer receivables related to COVID-19 uncertainty.
+Added: Inventory decreased $150 million from December 31, 2019 as a result of actions taken to reduce inventory in light of slower growth conditions in several key end-markets, changes in channel inventory levels by customers related to impacts from COVID-19 and improving sequential organic sales volumes in the third quarter.
+Added: Inventory also decreased as a result of the divestiture of the drug delivery business.
Cash flows from operating, investing and financing activities are provided in the tables that follow.
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Cash Flows from Operating Activities:
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
Net income including noncontrolling interest
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Cash flows from operating activities can fluctuate significantly from period to period, as pension funding decisions, tax timing differences and other items can significantly impact cash flows.
−Removed: In the first six months of 2020, cash flows provided by operating activities increased $408 million compared to the same period last year, with this increase primarily due to cost saving actions taken in response to COVID-19, lower year-on-year significant litigation-related charges and the timing of associated payments and the deferring of income tax payments into the third quarter of 2020.
−Removed: Factors that decreased operating cash flows included decreases in accounts payable and increases in inventories The combination of accounts receivable, inventories and accounts payable increased working capital by $226 million in the first six months of 2020, compared to the working capital increases of $356 million in the first six months of 2019.
+Added: In the first nine months of 2020, cash flows provided by operating activities increased $0.9 billion compared to the same period last year, with this increase primarily due to cost saving actions taken in response to COVID-19 and lower year-on-year significant litigation-related charges and the timing of associated payments.
+Added: The combination of accounts receivable, inventories and accounts payable increased working capital by $108 million in the first nine months of 2020, compared to the working capital increases of $19 million in the first nine months of 2019.
Additional discussion on working capital changes is provided earlier in the “Financial Condition and Liquidity” section.
Cash Flows from Investing Activities:
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
Purchases of property, plant and equipment (PP&E)
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Investments in property, plant and equipment enable growth across many diverse markets, helping to meet product demand and increasing manufacturing efficiency.
−Removed: The Company expects full-year 2020 estimated capital spending to be approximately $1.4 billion
−Removed: (which was further updated in the second quarter of 2020 versus original guidance of $1.6 billion to $1.8 billion) as 3M reduces overall spending in light of uncertainty regarding COVID-19, but continues to invest in expanding the Company’s ability to increase production of respiratory products to meet worldwide demand.
+Added: The Company expects full-year 2020 estimated capital spending to be approximately $1.4 billion to $1.5 billion (which was further updated in the third quarter of 2020 versus original guidance of $1.6 billion to $1.8 billion) as 3M
+Added: reduces overall spending in light of uncertainty regarding COVID-19, but continues to invest in expanding the Company’s ability to increase production of respiratory products to meet worldwide demand.
3M invests in renewal and maintenance programs, which pertain to cost reduction, cycle time, maintaining and renewing current capacity, eliminating pollution, and compliance.
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The Company is actively considering additional acquisitions, investments and strategic alliances, and from time to time may also divest certain businesses.
−Removed: Acquisitions, net of cash acquired, in the first six months of 2019 primarily includes the purchase of M*Modal.
−Removed: Acquisitions, net of cash acquired, in the first six months of 2020 primarily relate to the payment made for contingent consideration in regards to the Acelity acquisition.
−Removed: Proceeds from sale of businesses in 2019 primarily relate to the sale of certain oral care technology comprising a business.
+Added: Acquisitions, net of cash acquired, in the first nine months of 2019 primarily includes the purchase of M*Modal.
+Added: Acquisitions, net of cash acquired, in the first nine months of 2020 primarily relate to the payment made for contingent consideration in regards to the Acelity acquisition.
+Added: Proceeds from sale of businesses in 2019 primarily relate to the sale of certain oral care technology comprising a business and the gas and flame detection business.
Proceeds from sale of businesses in 2020 primarily relate to the sales of the Company’s advanced ballistic-protection business and its drug delivery business.
Purchases of marketable securities and investments and proceeds from maturities and sale of marketable securities and investments are primarily attributable to certificates of deposit/time deposits, commercial paper, and other securities, which are classified as available-for-sale.
−Removed: In the first six months of 2020 these included the maturity of the held-to-maturity debt security that was entered into to satisfy the redemption of the Third Lien Notes (which matured in May 2020).
+Added: In the first nine months of 2020 these included the maturity of the held-to-maturity debt security that was entered into to satisfy the redemption of the Third Lien Notes (which matured in May 2020).
Refer to Note 9 for more details about 3M’s diversified marketable securities portfolio.
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Cash Flows from Financing Activities:
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
Change in short-term debt — net
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Net cash provided by (used in) financing activities
−Removed: Total debt was approximately $20.8 billion at June 30, 2020 and $20.3 billion at December 31, 2019.
+Added: Total debt was approximately $19.6 billion at September 30, 2020 and $20.3 billion at December 31, 2019.
+Added: Repayment of debt primarily consists of the aggregate $445 million principal amount of Third Lien Notes and the 650 million euros and $500 million aggregate principal amount of floating-rate medium-term notes that matured in May 2020 and August 2020, respectively.
Increases in debt related to the March 2020 issuance of $1.75 billion in registered notes.
−Removed: Repayment of debt primarily consists of the aggregate $445 million principal amount of Third Lien Notes and the 650 million euros aggregate principal amount of floating-rate medium-term notes that matured in May 2020.
−Removed: Outstanding commercial paper was zero at June 30, 2020, as compared to $150 million at December 31, 2019.
+Added: Outstanding commercial paper was zero at September 30, 2020, as compared to $150 million at December 31, 2019.
+Added: During the third quarter of 2020, the Company paid the outstanding balances on their Japanese yen and and euro credit facilities.
Net commercial paper issuances in addition to repayments and borrowings by international subsidiaries are largely reflected in “Change in short-term debt – net” in the preceding table.
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This new program authorizes the repurchase of up to $10 billion of 3M’s outstanding common stock, with no pre-established end date.
−Removed: In the first six months of 2020, the Company purchased $366 million of its own stock prior to 3M’s suspension of its share repurchase program in late March.
+Added: In the first nine months of 2020, the Company purchased $366 million of its own stock prior to 3M’s suspension of its share repurchase program in late March.
For more information, refer to the table titled “Issuer Purchases of Equity Securities” in Part II, Item 2.
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In May 2020, 3M’s Board of Directors declared a second-quarter 2020 dividend of $1.47 per share.
+Added: In August 2020, 3M’s Board of Directors declared a third-quarter 2020 dividend of $1.47 per share.
Other cash flows from financing activities may include various other items, such as cash paid associated with certain derivative instruments, distributions to or sales of noncontrolling interests, changes in cash overdraft balances, and principal payments for finance leases.
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The first quarter of each year is typically 3M’s seasonal low for free cash flow and free cash flow conversion.
−Removed: In the table below details the components of free cash flow for the six months ended June 30, 2020 and 2019.
−Removed: In the first six months of 2020 and 2019, free cash flow conversion was impacted by cost saving actions taken in response to COVID-19, significant litigation-related charges and timing of associated payments, and deferral of income tax payments into the third quarter of 2020.
+Added: In the table below details the components of free cash flow for the nine months ended September 30, 2020 and 2019.
+Added: In the first nine months of 2020 and 2019, free cash flow conversion was impacted by cost saving actions taken in response to COVID-19 and significant litigation-related charges and timing of associated payments.
Refer to the preceding “Cash Flows from Operating Activities” section for discussion of additional items that impacted operating cash flow.
Refer to the proceeding “Cash Flows from Investing Activities” section for discussion on capital spending for property, plant and equipment.
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
Major GAAP Cash Flow Categories
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.