3M 2007 Annual Report Download - page 90

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84
The following table adjusts the revised diluted earnings per share for 2005 from the preceding table to reflect the
approximate impact of using the non-substantive vesting period approach for these periods.
Stock-Based Compensation
Pro Forma Earnings Per Share – Diluted 2005
Earnings per share – diluted $ 3.98
Impact of retirement-eligible employees $(0.02)
Pro forma (adjusted to reflect non-substantive
vesting period approach) $ 3.96
NOTE 16. Business Segments
Effective in the first quarter of 2007, 3M made certain changes to its business segments in its continuing effort to drive
growth by aligning businesses around markets and customers. The most significant of these changes are summarized as
follows:
• 3M’s new emerging business opportunity in its Track and Trace initiative resulted in the merging of a number
of formerly separate efforts into one concerted effort for future growth. Track and Trace has a growing array of
applications – from tracking packages to managing medical and legal records. The establishment of this new
initiative within 3M’s Safety, Security and Protection Services segment resulted in the transfer of certain
businesses to this segment from other segments, including the transfer of HighJump Software Inc., a 3M
U.S.-based subsidiary that provides supply chain execution software and solutions (Industrial and
Transportation segment) and the transfer of certain Track and Trace products from the Electro and
Communications segment.
• 3M’s Visual Systems business (Consumer and Office segment), which offers analog overhead and electronic
projectors and film, was transferred to the Electro and Communications segment. This transfer is intended to
leverage common markets, customers, suppliers and technologies.
• 3M’s Industrial and Transportation segment (Energy and Advanced Materials business) transferred the 3M™
Aluminum Conductor Composite Reinforced (ACCR) electrical power cable to the Electro and
Communications segment (Electrical Markets business). With an aluminum-based metal matrix at its core, the
ACCR product increases transmission capacity for existing power lines. The Electrical Markets business sells
insulating, testing and connecting products to various markets, including the electric utility markets.
• Certain adhesives and tapes in the Industrial and Transportation segment (Industrial Adhesives and Tapes
business) were transferred to the Consumer and Office segment (primarily related to the Construction and
Home Improvement business and the Stationery Products business) and to the Electro and Communications
segment (Electronics Markets Materials business). Certain maintenance-free respirator products for the
consumer market in 3M’s Safety, Security and Protection Services segment were transferred to the Consumer
and Office segment (Construction and Home Improvement business).
• 3M transferred Film Manufacturing and Supply Chain Operations, a resource for the manufacturing and
development of films and materials, to the Display and Graphics Business from Corporate and Unallocated.
The financial information presented herein reflects the impact of all of the preceding changes for all periods
presented.
3M’s businesses are organized, managed and internally grouped into segments based on differences in products,
technologies and services. 3M continues to manage its operations in six operating business segments: Industrial and
Transportation segment, Health Care segment, Display and Graphics segment, Consumer and Office segment, Safety,
Security and Protection Services segment and Electro and Communications segment. 3M’s six business segments bring
together common or related 3M technologies, enhancing the development of innovative products and services and
providing for efficient sharing of business resources. These segments have worldwide responsibility for virtually all 3M
product lines. 3M is not dependent on any single product or market. Certain small businesses and lab-sponsored
products, as well as various corporate assets and expenses, are not allocated to the business segments.
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 and other financial
information shown. The allocations resulting from the shared utilization of assets are not necessarily indicative of the
underlying activity for segment assets, depreciation and amortization, and capital expenditures.