Exhibit 99.1
FOR IMMEDIATE RELEASE
3M Delivers Record Second-Quarter Earnings;
Sales Increase 10.1 Percent to $4.6 Billion, An All-Time High
ST. PAUL, Minn. -- July 21, 2003 -- 3M (NYSE: MMM) today announced its sales
and earnings results for second quarter 2003.
The company reported net income of $619 million, or $1.56 per share, versus
$466 million, or $1.18 per share, in the second quarter of 2002. Excluding
special items(a) in the second quarter of 2002, net income increased 14.8
percent from $539 million last year, and earnings per share increased 14.7
percent from $1.36 per share in last year's second quarter.
"Our employees did a terrific job in the second quarter," said W. James
McNerney, Jr., 3M chairman and CEO. "Sales reached an all-time high, and both
net income and earnings per share were the highest of any second quarter in
3M's 100-year-plus history. Our corporate initiatives -- aimed at driving
higher top-line growth, productivity and free cash flow -- are making a real
difference in 2003."
Worldwide sales in the second quarter totaled $4.580 billion, 10.1 percent
higher than in the year-earlier quarter. Sales volumes increased 5.6 percent,
including a positive 1.8 percent impact from acquisitions. Volumes increased
21.9 percent in Display and Graphics (includes 9 percent from acquisitions),
11.0 percent in Safety, Security and Protection Services, 7.1 percent in
Transportation, 5.6 percent in Health Care, 3.0 percent in Consumer and Office
and 0.1 percent in Industrial. Volumes declined 6.8 percent in Electro and
Communications. Currency effects increased worldwide sales by 4.6 percent
while selling prices were down 0.1 percent.
Sales outside the United States totaled $2.655 billion, up 16.9 percent
compared to the second quarter of 2002. Volumes increased 8.5 percent, while
selling prices declined 0.1 percent. Changes in the value of the U.S. dollar
increased international sales by 8.5 percent. Volumes increased almost 18
percent in Asia Pacific driven by a 7 percent increase in Japan and a 28
percent increase in the rest of the region. Volumes increased 9.7 percent in
Latin America and 0.6 percent in Europe. In the United States, sales totaled
$1.925 billion, up 1.9 percent from the same quarter of 2002. Volumes increased
2.1 percent, while selling prices declined 0.2 percent.
"Clearly, it is prudent to maintain a cautious outlook on global economic
growth and to gear our plans accordingly," McNerney said. "At the same time,
we remain confident in our ability to improve every aspect of our company.
By driving higher and sustainable sales growth, extending productivity
improvements and generating cash flow to fuel growth, 3M can continue to
deliver high-quality results into the future."
3M also increased its earnings outlook for 2003. For the year, the company
now expects reported earnings will be within a range of $5.75 to $5.90 per
share. Excluding special items(a), 3M expects 2003 earnings to be between
$5.90 and $6.05 per share. Third-quarter earnings are expected to be in
the range of $1.56 to $1.60 per share.
Patrick D. Campbell, 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.
(a) During the second quarter of 2002, under its previously announced
restructuring plan, 3M incurred pretax charges of $148 million ($73 million
after-tax) primarily related to employee separation costs and accelerated
depreciation charges. The company incurred similar charges in the first
quarter of 2002 that totaled $54 million pre-tax ($35 million after-tax).
As previously announced by 3M on March 26, 2003, a court issued an adverse
ruling associated with a lawsuit filed against 3M in 1997 by LePage's Inc.
During the first quarter of 2003, 3M recorded pretax charges of $93 million
($58 million after-tax) related to this proceeding.
Forward-Looking Statements
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.
Any changes in such assumptions or factors could produce significantly
different results.
About 3M
3M is a $16 billion diversified technology company with leading positions in
consumer and office; display and graphics; electronics and telecommunications;
health care; industrial; safety, security and protection services;
transportation and other businesses. Headquartered in St. Paul, Minnesota,
the company has operations in more than 60 countries and serves customers in
nearly 200 countries. 3M is one of the 30 stocks that make up the Dow Jones
Industrial Average and also is a component of the Standard & Poor's 500 Index.
For more information about 3M, go to www.3M.com/profile/pressbox/index.jhtml.
3M Company and Subsidiaries
SALES CHANGE ANALYSIS
(Unaudited)
Second-Quarter 2003
Worldwide U.S. Intl.
--------- --------- ---------
Volume - core 3.8% 0.4% 6.6%
Volume - acquisitions
and divestitures 1.8 1.7 1.9
Price (0.1) (0.2) (0.1)
Translation 4.6 -- 8.5
------ ------ ------
Total 10.1% 1.9% 16.9%
====== ====== ======
Six-Months 2003
Worldwide U.S. Intl.
--------- --------- ---------
Volume - core 3.6% 0.0% 6.7%
Volume - acquisitions
and divestitures 1.9 1.7 2.0
Price (0.1) (0.3) 0.1
Translation 5.1 -- 9.4
------ ------ ------
Total 10.5% 1.4% 18.2%
====== ====== ======
3M Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Amounts in millions, except per-share amounts)
(Unaudited)
Three-months ended Six-months ended
June 30 June 30
------------------ -------------------
2003 2002 2003 2002
------- ------- ------- -------
Net sales $4,580 $4,161 $8,898 $8,051
------- ------- ------- -------
Operating expenses
Cost of sales 2,323 2,231 4,534 4,267
Selling, general and
administrative expenses 1,021 975 1,984 1,852
Research, development and
related expenses 276 269 546 533
Other expense -- -- 93 --
------- ------- ------- -------
Total 3,620 3,475 7,157 6,652
------- ------- ------- -------
Operating income 960 686 1,741 1,399
------- ------- ------- -------
Interest expense and income
Interest expense 24 20 47 39
Interest income (5) (9) (11) (18)
------- ------- ------- -------
Total 19 11 36 21
------- ------- ------- -------
Income before income taxes
and minority interest 941 675 1,705 1,378
Provision for income taxes 310 210 558 437
Minority interest 12 (1) 26 23
------- ------- ------- -------
Net income $ 619 $ 466 $ 1,121 $ 918
======= ======= ======= =======
Weighted average common
shares outstanding - basic 390.9 390.0 390.5 390.0
Earnings per share - basic $ 1.58 $ 1.19 $ 2.87 $ 2.35
======= ======= ======= =======
Weighted average common
shares outstanding - diluted 396.2 396.1 395.7 395.7
Earnings per share - diluted $ 1.56 $ 1.18 $ 2.83 $ 2.32
======= ======= ======= =======
Cash dividends paid
per common share $ 0.66 $ 0.62 $ 1.32 $ 1.24
======= ======= ======= =======
3M Company and Subsidiaries
Supplemental Unaudited Consolidated Statement of Income Information
(Dollars in millions, except per-share amounts)
Three-months ended Three-months ended
June 30, 2003 June 30, 2002
---------------------------- ----------------------------
Excluding Excluding
Special Special Reported special Special Reported
items items total items items total
--------- ------- -------- -------- -------- --------
Net sales $4,580 $ -- $4,580 $4,161 $ -- $4,161
--------- ------- -------- -------- -------- --------
Operating expenses
Cost of sales 2,323 -- 2,323 2,140 91 2,231
Selling, general and
administrative
expenses 1,021 -- 1,021 919 56 975
Research, development
and related expenses 276 -- 276 268 1 269
--------- ------- -------- -------- -------- --------
Total 3,620 -- 3,620 3,327 148 3,475
--------- ------- -------- -------- -------- --------
Operating
income (loss) 960 -- 960 834 (148) 686
Interest expense
and (income), net 19 -- 19 11 -- 11
--------- ------- -------- -------- -------- --------
Income (loss) before
income taxes and
minority interest 941 -- 941 823 (148) 675
Provision (benefit)
for income taxes 310 -- 310 267 (57) 210
Effective tax rate 33.0% 33.0% 32.5% 31.2%
Minority interest 12 -- 12 17 (18) (1)
--------- ------- -------- -------- -------- --------
Net income (loss) $ 619 $ -- $ 619 $ 539 $(73) $ 466
========= ======= ======== ======== ======== ========
Weighted average
diluted shares 396.2 -- 396.2 396.1 396.1 396.1
Net income per
diluted share $1.56 $ -- $1.56 $1.36 $(0.18) $1.18
========= ======= ======== ======== ======== ========
3M Company and Subsidiaries
Supplemental Unaudited Consolidated Statement of Income Information
(Dollars in millions, except per-share amounts)
Six-months ended Six-months ended
June 30, 2003 June 30, 2002
--------------------------- ---------------------------
Excluding Excluding
special Special Reported special Special Reported
items items total items items total
--------- ------- -------- --------- ------- -------
Net sales $8,898 $ -- $8,898 $8,051 $ -- $8,051
--------- ------- -------- --------- ------- --------
Operating expenses
Cost of sales 4,534 -- 4,534 4,146 121 4,267
Selling, general and
administrative
expenses 1,984 -- 1,984 1,775 77 1,852
Research, development
and related expenses 546 -- 546 529 4 533
Other expense -- 93 93 -- -- --
--------- ------- -------- --------- ------- --------
Total 7,064 93 7,157 6,450 202 6,652
--------- ------- -------- --------- ------- --------
Operating
income (loss) 1,834 (93) 1,741 1,601 (202) 1,399
Interest expense
and (income), net 36 -- 36 21 -- 21
--------- ------- -------- --------- ------- --------
Income (loss) before
income taxes and
minority interest 1,798 (93) 1,705 1,580 (202) 1,378
Provision (benefit)
for income taxes 593 (35) 558 513 (76) 437
Effective tax rate 33.0% -- 32.8% 32.5% -- 31.7%
Minority interest 26 -- 26 41 (18) 23
--------- ------- -------- --------- ------- --------
Net income (loss) $ 1,179 $ (58) $1,121 $ 1,026 $ (108) $ 918
========= ======= ======== ========= ======= ========
Weighted average
diluted shares 395.7 395.7 395.7 395.7 395.7 395.7
Net income per
diluted share $ 2.98 $(0.15) $ 2.83 $ 2.59 $(0.27) $ 2.32
========= ======= ======== ========= ======= ========
3M Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Dollars in millions, except per-share amounts)
(Unaudited)
Jun. 30, Jun. 30, Dec. 31,
2003 2002 2002
-------- -------- --------
ASSETS
Current assets
Cash and cash equivalents $ 974 $ 665 $ 618
Accounts receivable - net 2,771 2,795 2,527
Inventories 1,990 1,998 1,931
Other current assets 1,302 1,165 983
-------- -------- --------
Total current assets 7,037 6,623 6,059
Investments 233 250 238
Property, plant and equipment - net 5,555 5,552 5,621
Other assets 3,741 2,536 3,411
-------- -------- --------
Total assets $16,566 $14,961 $15,329
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term debt $ 1,059 $ 806 $ 1,237
Accounts payable 972 835 945
Payroll 438 476 411
Income taxes 813 678 518
Other current liabilities 1,545 1,391 1,346
-------- -------- --------
Total current liabilities 4,827 4,186 4,457
Long-term debt 1,962 1,838 2,140
Other liabilities 2,822 2,557 2,739
-------- -------- --------
Total liabilities 9,611 8,581 9,336
-------- -------- --------
Total stockholders' equity - net 6,955 6,380 5,993
Shares outstanding
June 30, 2003: 391,503,430 shares
June 30, 2002: 390,014,808 shares
December 31, 2002: 390,195,681 shares
-------- -------- --------
Total liabilities and stockholders' equity $16,566 $14,961 $15,329
======== ======== ========
3M Company and Subsidiaries
BUSINESS SEGMENTS (Unaudited)
- ----------------------------------------
BUSINESS
SEGMENT Three-months ended Six-months ended
INFORMATION June 30 June 30
(Millions) 2003 2002 2003 2002
- ----------------------------------------
NET SALES
Health Care $1,017 $ 896 $1,963 $1,741
Industrial 838 804 1,659 1,557
Consumer and Office 637 602 1,249 1,171
Display and Graphics 719 582 1,380 1,087
Electro and Communications 458 479 892 923
Safety, Security and Protection Services 518 445 976 858
Transportation 383 339 764 688
Corporate and Unallocated 10 14 15 26
- ----------------------------------------
Total Company $4,580 $4,161 $8,898 $8,051
- ----------------------------------------
OPERATING INCOME
Health Care $ 263 $ 213 $ 501 $ 433
Industrial 102 131 234 242
Consumer and Office 108 108 218 213
Display and Graphics 209 146 391 263
Electro and Communications 71 79 118 131
Safety, Security and Protection Services 131 92 236 178
Transportation 95 80 195 165
Corporate and Unallocated (19) (163) (152) (226)
- ----------------------------------------
Total Company $ 960 $ 686 $1,741 $1,399
- ----------------------------------------
As previously announced by 3M on March 26, 2003, a court issued an adverse
ruling associated with a lawsuit filed against 3M in 1997 by LePage's Inc.
During the first quarter of 2003, 3M recorded pretax charges of $93 million
related to this proceeding (recorded in Corporate and Unallocated). During the
second quarter of 2002, under its previously announced restructuring plan,
3M incurred pretax charges of $148 million primarily related to employee
separation costs and accelerated depreciation charges. The company incurred
similar charges in the first quarter of 2002 that totaled $54 million pre-tax.
These 2002 charges were recorded in Corporate and Unallocated.
- 30 -
Investor Contacts: Matt Ginter Media Contact: John Cornwell
3M 3M
(651) 733-8206 (651) 733-7698
Dan Colvin
3M
(651) 736-2637
From:
3M Public Relations and Corporate Communications
3M Center, Building 225-1S-15
St. Paul, MN 55144-1000