3M Reports Higher Fourth Quarter, Calendar Year 2002 Sales and Earnings.Business Editors ST. PAUL St. Paul as a missionary he fearlessly confronts the “perils of waters, of robbers, in the city, in the wilderness.” [N.T.: II Cor. 11:26] See : Bravery , Minn.--(BUSINESS WIRE)--Jan. 21, 2003 3M (NYSE NYSE See: New York Stock Exchange :MMM MMM Myeloid metaplasia with myelofibrosis, see there ) today announced its sales and profit results for the fourth quarter and calendar year 2002. The company reported fourth quarter net income of $511 million, or $1.29 per share, versus $381 million, or $0.96 per share, in the fourth quarter of 2001. Excluding non-recurring items (a) in the fourth quarter of 2001, net income increased 31.8 percent from $387 million in the year-earlier quarter. Required changes in goodwill accounting boosted earnings by 3 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . "Our fourth-quarter performance is another example of our team delivering solid results despite difficult economic circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or ," said W. James McNerney Walter James "Jim" McNerney, Jr., is an American businessman. On June 30, 2005 he was named the CEO of The Boeing Company. Prior to that, McNerney was the Chairman and Chief Executive of 3M. He had been a member of the Boeing board of directors since 2001. , Jr., 3M chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "By driving our five initiatives consistently and methodically me·thod·i·cal also me·thod·ic adj. 1. Arranged or proceeding in regular, systematic order. 2. Characterized by ordered and systematic habits or behavior. See Synonyms at orderly. across the entire enterprise, we were able to grow earnings by over 30 percent compared with a year ago. We're we're Contraction of we are. we're we are particularly pleased that our 3M Acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. and Six Sigma Not to be confused with Sigma 6. Six Sigma is a set of practices originally developed by Motorola to systematically improve processes by eliminating defects.[1] A defect is defined as nonconformity of a product or service to its specifications. initiatives are beginning to impact our top line performance." Worldwide sales in the fourth quarter totaled $4.138 billion, 7.3 percent higher than in the year-earlier quarter. Sales volumes increased by 6.0 percent. Volumes increased 14.2 percent in Transportation, Graphics and Safety, 4.6 percent in Industrial, 4.5 percent in Consumer and Office, 3.6 percent in Health Care and 2.2 percent in Electro E`lec´tro n. 1. An electrotype. and Communications and Specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. Material was down 1.7 percent. Currency effects increased worldwide sales by 2.0 percent while selling prices decreased 0.7 percent globally. Sales in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. totaled $1.838 billion, up 1.8 percent from the same quarter of 2001. Volumes increased 2.2 percent, while selling prices decreased 0.4 percent. Sales outside the United States totaled $2.300 billion, 12.2 percent higher than the fourth quarter of 2001. Volumes increased 9.4 percent and changes in the value of the U.S. dollar increased international sales by 3.8 percent. Selling prices decreased 1.0 percent. Volumes increased 22 percent in Asia Pacific driven by a 15 percent increase in Japan and a 29 percent increase in the rest of the region. Volumes also increased in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. by 6.5 percent, whereas volumes were flat in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). .
For the 2002 calendar year, net income was $1.974 billion, or $4.99 per share, compared with $1.430 billion, or $3.58 per share, in calendar year 2001. Included in these figures are non-recurring after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. costs (a) of $108 million ($0.27 per share) in 2002 and $312 million ($0.78 per share) in 2001. Excluding these items, earnings per share increased 20.6 percent from the prior year. Sales for the calendar year totaled $16.332 billion, up 1.7 percent in U.S. dollars. Volumes improved 1.4 percent versus the prior year, and selling prices and currency effects increased 2002 sales by 0.2 percent and 0.1 percent, respectively. "Despite challenging economic circumstances and many uncertainties in the marketplace, 3M employees exceeded expectations in 2002 and continued to lay the foundation for our future," McNerney said. "We increased earnings per share over 20 percent while simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics investing over $1 billion in R&D related activities to support future growth opportunities. And we generated significant free cash flow in 2002, which allowed us to: make selected and strategic acquisitions; voluntarily contribute over $1 billion to our global pension plans; pay almost $1 billion in dividends to our shareholders; all while maintaining a strong and healthy balance sheet." 3M also provided its earnings outlook for 2003. For the year, the company expects earnings will be within a range of $5.80 to $6.00 per share, a double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. increase over 2002. First-quarter earnings are expected to be between $1.38 and $1.43 per share. In the first quarter of 2002, the company earned $1.14 per share on a reported basis, which included non-recurring costs (a) of $0.09 per share. "We're committed to delivering double-digit earnings growth in 2003 despite the continuing uncertain economic and geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. landscape," McNerney said. "We'll we'll Contraction of we will. we'll we will or we shall we'll will ~shall continue to improve our operational efficiency while maintaining focus on long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , profitable growth, driven primarily by our 3M Acceleration initiative. We anticipate the same broad based earnings performance across our businesses as we saw in the fourth quarter, when all six of our business segments grew profits over 10 percent compared to a year ago. In addition, our recently announced business portfolio realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. will make us even more market- and customer-focused." McNerney and Patrick D. Campbell Campbell, city, United States Campbell, city (1990 pop. 36,048), Santa Clara co., W Calif., in the fertile Santa Clara valley; founded 1885, inc. 1952. , senior vice president and chief financial officer, will conduct an investor teleconference at 9 a.m. Eastern Time today. Investors can access a webcast of this conference, along with related charts, at http://investor.3M.com. (a) The first six months of 2002 included non-recurring charges that reduced operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. by $202 million and net income by $108 million ($.27 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share). These charges were associated with the company's restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan that was announced in 2001. For the full year 2001, 3M incurred pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of $504 ($312 million after-tax and minority interest, or $.78 per diluted share), primarily related to this restructuring plan. The fourth quarter of 2001 includes items that together resulted in a pre-tax charge of $15 million ($6 million after tax, or $.02 per diluted share). Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. " required the cessation cessation Vox populi The stopping of a thing. See Smoking cessation. of goodwill and other indefinite-lived asset amortization effective Jan. 1, 2002. This goodwill and indefinite-lived asset amortization reduced diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of by 12 cents in 2001 (3 cents in the fourth quarter of 2001). The above items are discussed in more detail in our 2001 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and our 2002 Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. . Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This news release contains forward-looking statements that reflect current views and estimates of 3M's management of future economic circumstances, industry conditions, company performance and financial results. The statements are based on many assumptions and factors including: (1) worldwide economic conditions; (2) foreign currency exchange rates and fluctuations in those rates; (3) the timing and acceptance of new product offerings; (4) purchased components and materials, including shortages and increases in the costs of such components and materials; (5) 3M's ability to successfully manage acquisitions, divestitures and strategic alliances; and (6) legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. . Any changes in such assumptions or factors could produce significantly different results. About 3M 3M is a $16 billion diversified diversified (di·verˑ·s technology company with leading positions in health care, safety, electronics, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , industrial, consumer and office, and other markets. Headquartered in St. Paul, Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces , the company has operations in more than 60 countries and serves customers in nearly 200 countries. 3M businesses share technologies, manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. , brands, marketing channels and other important resources. 3M, which celebrated its 100th anniversary in 2002, is one of the 30 stocks that make up the Dow Jones Industrial Average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. and also is a component of the Standard & Poor's 500 Index. For more information about 3M go to www.3M.com or www.3M.com/profile/pressbox/index.jhtml.
3M Company and Subsidiaries
SALES CHANGE ANALYSIS
(Unaudited)
Fourth-Quarter 2002
Worldwide U.S. Intl.
--------- --------- ---------
Volume - core 5.3% 1.3% 8.9%
Volume - acquisitions
and divestitures 0.7 0.9 0.5
Price (0.7) (0.4) (1.0)
Translation 2.0 -- 3.8
--------- --------- ---------
Total 7.3% 1.8% 12.2%
========= ========= =========
Year 2002
Worldwide U.S. Intl.
---------- --------- ---------
Volume - core 1.0% (1.6)% 3.2%
Volume - acquisitions
and divestitures 0.4 0.4 0.4
Price 0.2 (0.1) 0.5
Translation 0.1 -- 0.3
---------- --------- ---------
Total 1.7% (1.3)% 4.4%
========== ========= =========
3M Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Amounts in millions, except per-share amounts)
(Unaudited)
Three-months ended Twelve-months ended
December 31 December 31
------------------ -------------------
2002 2001 2002 2001
------- ------- ------- -------
Net sales $ 4,138 $ 3,856 $16,332 $16,054
------- ------- ------- -------
Operating expenses
Cost of sales 2,114 2,131 8,496 8,749
Selling, general and
administrative expenses 955 969 3,720 4,036
Research, development and
related expenses 273 262 1,070 1,084
Other expense (income) -- (88) -- (88)
------- ------- ------- -------
Total 3,342 3,274 13,286 13,781
------- ------- ------- -------
Operating income 796 582 3,046 2,273
------- ------- ------- -------
Interest expense and income
Interest expense 22 26 80 124
Interest income (12) (10) (39) (37)
------- ------- ------- -------
Total 10 16 41 87
------- ------- ------- -------
Income before income taxes
and minority interest 786 566 3,005 2,186
Provision for income taxes 255 175 966 702
Minority interest 20 10 65 54
------- ------- ------- -------
Net income $ 511 $ 381 $ 1,974 $ 1,430
======= ======= ======= =======
Weighted average common
shares outstanding - basic 390.3 391.5 390.0 394.3
Earnings per share - basic $ 1.31 $ 0.97 $ 5.06 $ 3.63
======= ======= ======= =======
Weighted average common
shares outstanding - diluted 395.6 396.8 395.5 399.9
Earnings per share - diluted $ 1.29 $ 0.96 $ 4.99 $ 3.58
======= ======= ======= =======
3M Company and Subsidiaries
Supplemental Unaudited Consolidated Statement of Income Information
(Dollars in millions, except per-share amounts)
Three-months ended Three-months ended
December 31, 2002 December 31, 2001
----------------------------- ----------------------------
Excluding Excluding
non- Non- non- Non-
recurring recurring Reported recurring recurring Reported
items items total items items total
--------- --------- -------- --------- --------- --------
Net sales $ 4,138 $ -- $ 4,138 $ 3,856 $ -- $ 3,856
--------- --------- -------- --------- --------- --------
Operating
expenses
Cost of
sales 2,114 -- 2,114 2,070 61 2,131
Selling,
general
and
admini-
strative
expenses 955 -- 955 927 42 969
Research,
development
and related
expenses 273 -- 273 262 -- 262
Other expense
(income) -- -- -- -- (88) (88)
--------- --------- -------- --------- --------- --------
Total 3,342 -- 3,342 3,259 15 3,274
--------- --------- -------- --------- --------- --------
Operating
income
(loss) 796 -- 796 597 (15) 582
Interest
expense and
(income),
net 10 -- 10 16 -- 16
--------- --------- -------- --------- --------- --------
Income
(loss)
before
income
taxes and
minority
interest 786 -- 786 581 (15) 566
Provision
(benefit)
for income
taxes 255 -- 255 184 (9) 175
Effective
tax rate 32.5% 32.5% 31.6% 31.0%
Minority
interest 20 -- 20 10 -- 10
--------- --------- -------- --------- --------- --------
Net income
(loss) $ 511 $ -- $ 511 $ 387 $ (6) $ 381
========= ========= ======== ========= ========= ========
Weighted
average
diluted
shares 395.6 396.8
Net income
per
diluted
share $ 1.29 $ 0.96
======== ========
Twelve-months ended Twelve-months ended
December 31, 2002 December 31, 2001
---------------------------- ----------------------------
Excluding Excluding
non- Non- non- Non-
recurring recurring Reported recurring recurring Reported
items items total items items total
--------- --------- -------- --------- --------- --------
Net sales $ 16,332 $ -- $16,332 $ 16,054 $ -- $16,054
--------- --------- -------- --------- --------- --------
Operating
expenses
Cost of
sales 8,375 121 8,496 8,477 272 8,749
Selling,
general
and
admini-
strative
expenses 3,643 77 3,720 3,736 300 4,036
Research,
development
and related
expenses 1,066 4 1,070 1,064 20 1,084
Other expense
(income) -- -- -- -- (88) (88)
--------- --------- -------- --------- --------- --------
Total 13,084 202 13,286 13,277 504 13,781
--------- --------- -------- --------- --------- --------
Operating
income
(loss) 3,248 (202) 3,046 2,777 (504) 2,273
Interest
expense and
(income),
net 41 -- 41 87 -- 87
--------- --------- -------- --------- --------- --------
Income
(loss)
before
income
taxes and
minority
interest 3,207 (202) 3,005 2,690 (504) 2,186
Provision
(benefit)
for income
taxes 1,042 (76) 966 886 (184) 702
Effective
tax rate 32.5% -- 32.1% 32.9% -- 32.1%
Minority
interest 83 (18) 65 62 (8) 54
--------- --------- -------- --------- --------- --------
Net income
(loss) $ 2,082 $ (108) $ 1,974 $ 1,742 $ (312) $ 1,430
========= ========= ======== ========= ========= ========
Weighted
average
diluted
shares 395.5 399.9
Net income
per
diluted
share $ 4.99 $ 3.58
======== ========
3M Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Dollars in millions, except per-share amounts)
(Unaudited)
Dec. 31, Dec. 31,
ASSETS 2002 2001
Current assets --------- --------
Cash and cash equivalents $ 618 $ 616
Accounts receivable - net 2,527 2,482
Inventories 1,931 2,091
Other current assets 983 1,107
--------- --------
Total current assets 6,059 6,296
Investments 238 275
Property, plant and equipment - net 5,651 5,615
Other assets 3,381 2,420
--------- --------
Total assets $15,329 $14,606
========= ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Short-term debt $ 1,237 $ 1,373
Accounts payable 945 753
Payroll 411 539
Income taxes 518 596
Other current liabilities 1,346 1,248
--------- --------
Total current liabilities 4,457 4,509
Long-term debt 2,140 1,520
Other liabilities 2,739 2,491
--------- --------
Total liabilities 9,336 8,520
--------- --------
Total stockholders' equity - net 5,993 6,086
Shares outstanding
December 31, 2002: 390,195,681 shares
December 31, 2001: 391,303,636 shares
--------- --------
Total liabilities and stockholders' equity $ 15,329 $14,606
========= ========
3M Company and Subsidiaries
BUSINESS SEGMENTS (Unaudited)
3M's net sales and operating income by segment for the fourth quarter
and the twelve-month periods ended December 31, 2002 and 2001 follow.
Effective January 1, 2002, the company adopted Emerging Issues Task
Force Issue (EITF) No. 00-25, "Vendor Income Statement
Characterization of Consideration Paid to a Reseller of the Vendor's
Products." This adoption resulted in a reclassification of
approximately $25 million of advertising expenses from selling,
general and administrative expenses to net sales for each of the years
1999 through 2001, with no impact on operating income. These
adjustments were reflected in the company's Consumer and Office
segment.
Effective July 1, 2002, the company also reclassified net sales and
operating income for the realignment of certain businesses from Health
Care to Consumer and Office. These businesses had net sales of $118
million and operating income of $7 million for total year 2001. This
realignment had no impact on total company net sales or operating
income.
-------------------------------
BUSINESS
SEGMENT Three-months ended Twelve-months ended
INFORMATION December 31 December 31
(Millions) 2002 2001 2002 2001
-------------------------------
NET SALES
Transportation, Graphics and
Safety $ 978 $ 845 $ 3,840 $ 3,526
Health Care 918 865 3,560 3,301
Industrial 812 761 3,225 3,199
Consumer and Office 727 690 2,792 2,817
Electro and Communications 466 469 1,914 2,171
Specialty Material 226 220 953 1,022
Corporate and Unallocated 11 6 48 18
-------------------------------
Total Company $4,138 $3,856 $16,332 $16,054
-------------------------------
OPERATING INCOME
Transportation, Graphics and
Safety $ 222 $ 150 $ 915 $ 695
Health Care 243 214 900 753
Industrial 134 99 563 518
Consumer and Office 126 97 514 454
Electro and Communications 56 29 265 218
Specialty Material 26 22 136 141
Corporate and Unallocated (11) (29) (247) (506)
-------------------------------
Total Company $ 796 $ 582 $ 3,046 $ 2,273
-------------------------------
First and second quarter 2002 operating income includes non-recurring charges (included in Corporate and Unallocated) of $54 million and $148 million, respectively, principally related to employee separation costs, accelerated depreciation Accelerated Depreciation Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset. Notes: The straight-line depreciation method spreads the cost evenly over the life of an asset. charges and other associated exit costs under the company's previously announced restructuring plan. The restructuring costs are not recorded in the individual business segments for internal management reporting purposes. This enhances comparability and reflects management focus on ongoing results. Non-recurring items negatively impacted total year 2001 operating income by $504 million. Fourth quarter 2001 non-recurring items (included in Corporate and Unallocated) on a combined basis resulted in a pre-tax charge of $15 million ($6 million after-tax, or $.02 per share). This related to charges in connection with 3M's restructuring plan, a reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of a 1999 litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. , and a net gain related to the sale of available-for-sale equity securities, partially offset by the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of available-for-sale equity securities. Third quarter 2001 operating income includes non-recurring charges of $69 million (included in Corporate and Unallocated) principally related to employee separation costs and accelerated depreciation charges under the company's restructuring plan. Second quarter 2001 operating income includes non-recurring charges of $397 million (included in Corporate and Unallocated) principally related to employee separation costs under the same restructuring plan. First quarter 2001 operating income includes non-recurring costs of $23 million recorded in cost of sales. These first quarter 2001 non-recurring costs (primarily related to acquisitions of inventory that must be recorded at fair market value instead of manufactured cost and the subsequent sale of these acquired inventories) totaled $10 million in Health Care; $7 million in Transportation, Graphics and Safety; and $6 million in the Electro and Communications segment. |
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