on a quarterly and annual basis.

 

Corporate and Unallocated operating expenses decreased by $149 million in 2013 when compared to 2012. Of the $149 million decrease in 2013, approximately $127 million was due to lower pension and postretirement benefit expense. The primary items driving the $51 million increase in Corporate and Unallocated in 2012 when compared to 2011 were pension and postretirement expense, as a portion of the 2012 increase in these expenses were not allocated directly to the five operating business segments ($63 million), partially offset by an increase in other environmental insurance receivables, which benefited 2012 by $15 million (as discussed in Note 13).

 

Operating Business Segments:

 

All five business segments, when comparing 2013 to 2012, were impacted by investments in business transformation, which are enabled by 3M’s global ERP implementation, and by higher allocated pension and postretirement benefit expenses. The implementation of 3M’s ERP system has increased spending in total, and the transition of 3M’s ERP system from the development stage into deployment has also resulted in more ERP costs being borne by the five operating business segments rather than Corporate and Unallocated. This negatively impacted each business segment’s annual 2013 operating income margins by approximately 0.30 percentage points when compared to 2012. 3M’s pension and postretirement benefit expenses declined $97 million when comparing 2013 to 2012; however, $127 million of this reduction was allocated to Corporate and Unallocated, resulting in $30 million of additional expense being absorbed by the five operating business segments in 2013, or a negative year-on-year impact of approximately 0.10 percentage points. Thus, while operating income margins have declined when comparing 2013 to 2012 for all five business segments, on average approximately 0.40 percentage points of this decline relates to the impact of higher ERP implementation expenses and higher pension and postretirement benefit expenses. When comparing 2012 to 2011, operating business segment results reflect $32 million in higher year-on-year pension and postretirement benefit expenses.

 

The following discusses total year results for 2013 compared to 2012, and also discusses 2012 compared to 2011, for each business segment.



Industrial Business (34.3% of consolidated sales):

  

The Industrial segment serves a broad range of markets, such as automotive original equipment manufacturer (OEM) and automotive aftermarket (auto body shops and retail), electronics, appliance, paper and printing, packaging, food and beverage, and construction. Industrial products include tapes, a wide variety of coated, non-woven and bonded abrasives, adhesives, advanced ceramics, sealants, specialty materials, 3M Purification Inc. (filtration products), closure systems for personal hygiene products, acoustic systems products, and components and products that are used in the manufacture, repair and maintenance of automotive, marine, aircraft and specialty vehicles.

 

Year 2013 results:

 

Sales in Industrial totaled $10.6 billion, up 6.5 percent in U.S. dollars. Organic