3M Reports Record Second-Quarter Sales and Earnings; Company Raises Earnings Estimate for 2004.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. -- 3M (NYSE NYSE See: New York Stock Exchange :MMM MMM Myeloid metaplasia with myelofibrosis, see there ) today announced its second quarter 2004 sales and earnings results. Net income for the quarter was $773 million, or $0.97 per share, versus $619 million, or $0.78 per share, in the second quarter of 2003. Second quarter net income increased nearly 25 percent, and per-share earnings increased more than 24 percent. "Solid sales growth and continued operational efficiency produced another outstanding earnings result," 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. . "Our employees continued to drive growth through strong connections with customers, leveraging our corporate initiatives and diverse technology base while maintaining good cost discipline." Worldwide sales in the second quarter totaled $5.01 billion, 9.5 percent higher than in the year-earlier quarter. Global sales volumes increased 7.7 percent, which is the fourth consecutive quarter of volume growth above 7 percent. Local-currency sales (which excludes the impact of currency translation on sales) increased 18.2 percent in Display and Graphics, 10.4 percent in Industrial, 4.8 percent in Electro E`lec´tro n. 1. An electrotype. and Communications, 4.3 percent in Transportation, 4.2 percent in Consumer and Office, 3.4 percent in Safety, Security and Protection Services, and .3 percent in Health Care. Currency effects increased sales by 2.8 percent while selling prices declined 1.0 percent. Sales outside 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 $3.04 billion, an increase of 14.4 percent versus the second quarter of last year. Volumes increased 10.9 percent, while selling prices declined 1.3 percent. Currency translation effects increased international sales by 4.8 percent. Local-currency sales increased 18.5 percent in Asia Pacific, 13.8 percent in the combined 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. , Africa and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of region and 0.5 percent 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). .In the United States, sales totaled $1.97 billion, up 2.7 percent from the same quarter of 2003. Volumes increased 3.1 percent, and selling prices declined by 0.4 percent. "Our broad-based broad-based Of or relating to an index or average that provides a good representation of the overall market. The S&P 500 and NYSE Composite are generally regarded as broad-based stock indexes, while the popular Dow Jones Industrial Average is biased growth in the second quarter reflects the fundamental strength of the 3M business model. Organic growth remains our focus, enabled by the 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. initiative and the market focused organization structure we established in 2003," McNerney said. "Although continued 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. uncertainty causes us to maintain a conservative economic outlook, we are confident in our ability to deliver solid results." 3M also increased its earnings outlook for 2004. The company now expects reported earnings will be within a range of $3.72 to $3.75 per share for the year, versus a previous expectation of $3.60 to $3.70 per share. 3M expects third-quarter earnings per share to match the company's record second quarter performance of .97 per share. 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 (8 a.m. Central) today. Investors can access a webcast of this conference, along with related charts and materials, at http://investor.3M.com. 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 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 , 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. . Changes in such assumptions or factors, including without limitation the outcome of and information derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from pending Congressional action concerning asbestos-related 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. , could produce significantly different results. About 3M -- A Global, Diversified diversified (di·verˑ·s Technology Company Every day, 3M people find new ways to make amazing a·maze v. a·mazed, a·maz·ing, a·maz·es v.tr. 1. To affect with great wonder; astonish. See Synonyms at surprise. 2. Obsolete To bewilder; perplex. v.intr. things happen. Wherever they are, whatever they do, the company's customers know they can rely on 3M to help make their lives better. 3M's brands include icons such as Scotch scotch 1 tr.v. scotched, scotch·ing, scotch·es 1. To put an abrupt end to: The prime minister scotched the rumors of her illness with a public appearance. 2. , Post-it, Scotchgard Scotchgard is a 3M brand of products used to protect fabric, furniture, and carpets. Like other fluorochemicals, Scotchgard is mostly inert, so by applying it to fabric, the fabric can be protected from stains and soiling. , Thinsulate Thinsulate is a synthetic fibre used for thermal insulation in clothing. The word is a portmanteau of thin and insulate, and is a trademark of the 3M Corporation. The material was first sold in about 1980. , Scotch-Brite, Filtrete, Command and Vikuiti. Serving customers in more than 200 countries around the world, the company's 67,000 people use their expertise, technologies and global strength to lead in major markets including consumer and office; display and graphics; electronics and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. ; safety, security and protection services; health care; industrial and transportation. For more information, including the latest product and technology news, visit www.3M.com. Scotch, Post-it, Scotchgard, Thinsulate, Scotch-Brite, Filtrete, Command and Vikuiti are trademarks of 3M.
3M Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Millions, except per-share amounts)
(Unaudited)
Three-months ended Six-months ended
June 30 June 30
------------------ ----------------
2004 2003 2004 2003
------ ------ ------ ------
Net sales $5,012 $4,580 $9,951 $8,898
------ ------ ------ ------
Operating expenses
Cost of sales 2,452 2,323 4,888 4,534
Selling, general and
administrative expenses 1,084 1,021 2,188 1,984
Research, development and
related expenses 290 276 572 546
Other expense - - - 93
------ ------ ------ ------
Total 3,826 3,620 7,648 7,157
------ ------ ------ ------
Operating income 1,186 960 2,303 1,741
------ ------ ------ ------
Interest expense and income
Interest expense 16 24 35 47
Interest income (10) (5) (20) (11)
------ ------ ------ ------
Total 6 19 15 36
------ ------ ------ ------
Income before income taxes
and minority interest 1,180 941 2,288 1,705
Provision for income taxes 389 310 755 558
Minority interest 18 12 38 26
------ ------ ------ ------
Net income $ 773 $ 619 $1,495 $1,121
====== ====== ====== ======
Weighted average common shares
outstanding - basic 782.5 781.8 782.7 780.9
Earnings per share - basic $ 0.99 $ 0.79 $ 1.91 $ 1.44
====== ====== ====== ======
Weighted average common shares
outstanding - diluted 799.7 792.3 799.6 791.4
Earnings per share - diluted $ 0.97 $ 0.78 $ 1.87 $ 1.42
====== ====== ====== ======
Cash dividends paid per common
share $ 0.36 $ 0.33 $ 0.72 $ 0.66
====== ====== ====== ======
3M Company and Subsidiaries
SUPPLEMENTAL CONSOLIDATED STATEMENT OF INCOME INFORMATION
(Millions, except per-share amounts)
(Unaudited)
Six-months ended Six-months ended
June 30, 2004 June 30, 2003
------------------------- ----------------------------
Excluding Excluding
special Special Reported special Special Reported
items items total items (a) items (a) total
------- ------- ------- ------- -------- -------
Net sales $9,951 $ - $9,951 $8,898 $ - $8,898
------- ------- ------- ------- -------- -------
Operating
expenses
Cost of
sales 4,888 - 4,888 4,534 - 4,534
Selling,
general and
admini-
strative
expenses 2,188 - 2,188 1,984 - 1,984
Research,
development
and related
expenses 572 - 572 546 - 546
Other
expense - - - - 93 93
------- ------- ------- ------- -------- -------
Total 7,648 - 7,648 7,064 93 7,157
------- ------- ------- ------- -------- -------
Operating
income (loss) 2,303 - 2,303 1,834 (93) 1,741
Interest
expense and
(income), net 15 - 15 36 - 36
------- ------- ------- ------- -------- -------
Income (loss)
before income
taxes and
minority
interest 2,288 - 2,288 1,798 (93) 1,705
Provision
(benefit) for
income taxes 755 - 755 593 (35) 558
Effective tax
rate 33.0% - 33.0% 33.0% - 32.8%
Minority
interest 38 - 38 26 - 26
------- ------- ------- ------- -------- -------
Net income
(loss) $1,495 $ - $1,495 $1,179 $ (58) $1,121
======= ======= ======= ======= ======== =======
Weighted
average
diluted
shares 799.6 - 799.6 791.4 791.4 791.4
Net income
per diluted
share $ 1.87 $ - $ 1.87 $ 1.49 $ (0.07) $ 1.42
======= ======= ======= ======= ======== =======
(a) In addition to disclosing results that are determined in
accordance with U.S. generally accepted accounting principles (GAAP),
the company also discloses non-GAAP results that exclude special
items. Special items represent significant charges or credits that are
important to an understanding of the company's ongoing operations. The
company provides reconciliations of its non-GAAP financial reporting
to the most comparable GAAP reporting. The company believes that
discussion of results excluding special items provides a useful
analysis of ongoing operating trends. Earnings per share and other
amounts before special items are not measures recognized under GAAP.
The determination of special items may not be comparable to similarly
titled measures used by other companies. During the first quarter of
2003, 3M recorded pretax charges of $93 million ($58 million
after-tax) related to an adverse court ruling in a lawsuit filed
against 3M in 1997 by LePage's Inc.
3M Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions)
(Unaudited)
Jun. 30, Jun. 30, Dec. 31,
ASSETS 2004 2003 2003
Current assets ------- ------- -------
Cash and cash equivalents $ 2,314 $ 974 $ 1,836
Accounts receivable - net 2,913 2,771 2,714
Inventories 1,940 1,990 1,816
Other current assets 1,460 1,302 1,354
------- ------- -------
Total current assets 8,627 7,037 7,720
Investments 211 233 218
Property, plant and equipment - net 5,456 5,555 5,609
Goodwill, intangible assets and other
assets 4,068 3,741 4,053
------- ------- -------
Total assets $18,362 $16,566 $17,600
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings and current
portion of long-term debt $ 1,358 $ 1,059 $ 1,202
Accounts payable 1,108 972 1,087
Accrued payroll 487 438 436
Accrued income taxes 1,094 813 880
Other current liabilities 1,547 1,545 1,477
------- ------- -------
Total current liabilities 5,594 4,827 5,082
Long-term debt 1,303 1,962 1,735
Other liabilities 3,008 2,822 2,898
------- ------- -------
Total liabilities 9,905 9,611 9,715
------- ------- -------
Total stockholders' equity - net 8,457 6,955 7,885
Shares outstanding
June 30, 2004: 782,703,301 shares
June 30, 2003: 783,006,860 shares
December 31, 2003: 784,117,360 shares
------- ------- -------
Total liabilities and stockholders'
equity $18,362 $16,566 $17,600
======= ======= =======
3M Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(Unaudited)
Six-months ended
June 30
2004 2003
------- -------
SUMMARY OF CASH FLOW:
NET CASH PROVIDED BY OPERATING ACTIVITIES $2,237 $1,890
------- -------
Cash flows from investing activities:
Purchases of property, plant and equipment (378) (264)
Acquisitions, net of cash acquired (86) (424)
Other investing activities 29 74
------- -------
NET CASH USED IN INVESTING ACTIVITIES (435) (614)
------- -------
Cash flows from financing activities:
Change in debt (286) (349)
Purchases of treasury stock (792) (280)
Reissuances of treasury stock 352 270
Dividends paid to stockholders (564) (515)
Other financing activities (23) (23)
------- -------
NET CASH USED IN FINANCING ACTIVITIES (1,313) (897)
------- -------
Effect of exchange rate changes on cash (11) (23)
------- -------
Net increase in cash and cash equivalents 478 356
Cash and cash equivalents at beginning of
period 1,836 618
------- -------
Cash and cash equivalents at end of period $2,314 $ 974
======= =======
3M Company and Subsidiaries
SUPPLEMENTAL CASH FLOW AND
NET WORKING CAPITAL TURNS INFORMATION
(Dollars in millions)
(Unaudited)
Six-months ended
June 30
2004 2003
------- -------
FREE CASH FLOW (Non-GAAP measure):
Net cash provided by operating activities $2,237 $1,890
Purchases of property, plant and equipment (378) (264)
------- -------
Free Cash Flow (a) $1,859 $1,626
======= =======
NET WORKING CAPITAL TURNS (Non-GAAP measure):
Net Working Capital Turns (b) 5.4 4.8
======= =======
(a) Free cash flow is not defined under GAAP. Therefore, it is
considered a non-GAAP measure. Non-GAAP measures should not be
considered a substitute for income or cash flow data prepared in
accordance with U.S. GAAP and may not be comparable to similarly
titled measures used by other companies. The company defines free cash
flow as net cash provided by operating activities less purchases of
property, plant and equipment. It should not be inferred that the
entire free cash flow amount is available for discretionary
expenditures. The company believes free cash flow is a useful measure
of performance and uses this measure as an indication of the strength
of the company and its ability to generate cash.
(b) The company also uses non-GAAP measures that place emphasis and
focus on certain working capital assets and liabilities. 3M's net
working capital index is defined as quarterly net sales multiplied by
four, divided by ending net accounts receivable plus inventory less
accounts payable. This measure is not recognized under U.S. generally
accepted accounting principles and may not be comparable to similarly
titled measures used by other companies.
3M Company and Subsidiaries
SALES CHANGE ANALYSIS
(Unaudited)
Three-Months Ended June 30, 2004
Sales Change Analysis United Inter-
By Geographic Area States national Worldwide
--------- -------- ---------
Volume - core 2.3% 10.6% 7.2%
Volume - acquisitions 0.8 0.3 0.5
--------- -------- ---------
Volume - total 3.1 10.9 7.7
Price (0.4) (1.3) (1.0)
--------- -------- ---------
Total local-currency sales 2.7 9.6 6.7
Translation - 4.8 2.8
--------- -------- ---------
Total sales change 2.7% 14.4% 9.5%
========= ======== =========
Local- Total
Sales Change Analysis currency Trans- Sales
By Business Segment Sales lation Change
--------- -------- ---------
Health Care 0.3% 2.8% 3.1%
Industrial 10.4 2.8 13.2
Display and Graphics 18.2 4.3 22.5
Consumer and Office 4.2 1.7 5.9
Safety, Security and Protection
Services 3.4 2.2 5.6
Electro and Communications 4.8 2.0 6.8
Transportation 4.3 3.1 7.4
3M Company and Subsidiaries
SALES CHANGE ANALYSIS
(Unaudited)
Six-Months Ended June 30, 2004
Sales Change Analysis United Inter-
By Geographic Area States national Worldwide
--------- -------- ---------
Volume - core 2.8% 11.2% 7.7%
Volume - acquisitions 0.7 0.2 0.4
--------- -------- ---------
Volume - total 3.5 11.4 8.1
Price (0.1) (1.0) (0.7)
--------- -------- ---------
Total local-currency sales 3.4 10.4 7.4
Translation - 7.5 4.4
--------- -------- ---------
Total sales change 3.4% 17.9% 11.8%
========= ======== =========
Local- Total
Sales Change Analysis currency Trans- Sales
By Business Segment Sales lation Change
--------- -------- ---------
Health Care 1.3% 4.7% 6.0%
Industrial 9.5 4.5 14.0
Display and Graphics 19.2 5.6 24.8
Consumer and Office 5.7 3.2 8.9
Safety, Security and Protection
Services 6.0 4.0 10.0
Electro and Communications 3.6 3.3 6.9
Transportation 6.2 5.0 11.2
3M Company and Subsidiaries
BUSINESS SEGMENTS
(Dollars in millions)
(Unaudited)
BUSINESS
SEGMENT Three-months ended Six-months ended
INFORMATION June 30 June 30
(Millions) 2004 2003 2004 2003
------- ------- ------- -------
NET SALES
Health Care $1,049 $1,017 $2,080 $1,963
Industrial 949 838 1,892 1,659
Display and Graphics 881 719 1,723 1,380
Consumer and Office 675 637 1,361 1,249
Safety, Security and Protection
Services 547 518 1,074 976
Electro and Communications 489 458 954 892
Transportation 411 383 849 764
Corporate and Unallocated 11 10 18 15
------- ------- ------- -------
Total Company $5,012 $4,580 $9,951 $8,898
------- ------- ------- -------
OPERATING INCOME
Health Care $ 274 $ 263 $ 536 $ 501
Industrial 167 102 333 234
Display and Graphics 311 209 605 391
Consumer and Office 123 108 245 218
Safety, Security and Protection
Services 136 131 261 236
Electro and Communications 79 71 144 118
Transportation 106 95 225 195
Corporate and Unallocated (10) (19) (46) (152)
------- ------- ------- -------
Total Company $1,186 $ 960 $2,303 $1,741
------- ------- ------- -------
The following 2004 and 2003 charges were recorded in Corporate and Unallocated for the six-months ended June June: see month. 30, 2004 and 2003. First quarter 2004 includes $16 million in expense related to a reduction in breast implant breast implant, saline- or silicone-filled prosthesis used after mastectomy as a part of the breast reconstruction process or used cosmetically to augment small breasts. receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed following an arbitration panel arbitration panel A group of individuals charged with resolving a dispute between individuals and/or organizations. Arbitration panels to resolve investment disputes are sponsored by self-regulatory organizations such as NASD. ruling in the first quarter that rejected re·ject tr.v. re·ject·ed, re·ject·ing, re·jects 1. To refuse to accept, submit to, believe, or make use of. 2. To refuse to consider or grant; deny. 3. the company's claims for recovery under certain of its claims-made policies claims-made policy Malpractice A type of medical malpractice or professional liability insurance policy for a physician or other health care professional in which coverage is provided for any claim that occurs only while the policy is in force . During the first quarter of 2003, 3M recorded pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charges of $93 million related to an adverse court ruling in a lawsuit lawsuit: see procedure; tort. filed against 3M in 1997 by LePage's Inc. First quarter 2003 also includes certain acquisition-related costs and respirator respirator /res·pi·ra·tor/ (res´pi-ra?ter) ventilator (2). cuirass respirator see under ventilator. mask/asbestos litigation expenses. |
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