EXHIBIT 99.1
FOR IMMEDIATE RELEASE
3M THIRD-QUARTER EARNINGS RISE 20.3 PERCENT TO $0.83 PER SHARE;
SALES INCREASE 11.4 PERCENT TO A RECORD $4.62 BILLION
ST. PAUL, MINN. -- October 20, 2003 -- 3M (NYSE: MMM) today announced its sales
and earnings results for third quarter 2003.
Net income for the quarter was $663 million, or $0.83 per share, versus $545
million, or $0.69 per share, in the third quarter of 2002. Net income and
per-share earnings increased 21.6 percent and 20.3 percent, respectively (a).
"Our employees are connecting with customers like never before," said W. James
McNerney, Jr., 3M chairman and CEO, "and those connections are reflected in our
third-quarter results. Sales reached an all-time high for the third consecutive
quarter, boosted by sales volume increases in 6 of our 7 businesses, and we
achieved 20 percent-plus increases in both net income and earnings per share."
Third-quarter worldwide sales totaled $4.616 billion, up 11.4 percent compared
to the third quarter of 2002. Sales volumes increased 7.8 percent, including a
positive 2.0 percent impact from acquisitions. Volumes increased 33.6 percent in
Display and Graphics (includes 12 percent from acquisitions), 9.3 percent in
Safety, Security and Protection Services, 6.8 percent in Health Care, 5.0
percent in Consumer and Office, 3.9 percent in Transportation and 0.2 percent in
Industrial. Volumes declined 2.6 percent in Electro and Communications. Currency
translation effects increased worldwide sales by 3.9 percent while selling
prices were down 0.3 percent.
Sales outside the United States totaled $2.629 billion, an increase of 18.0
percent versus last year's comparable quarter. Volumes increased 11.5 percent,
while selling prices declined 0.7 percent. Currency translation effects
increased international sales by 7.2 percent. Volumes increased 22.3 percent in
Asia Pacific, 21.2 percent in Latin America and 0.9 percent in Europe. In the
United States, sales totaled $1.987 billion, up 3.7 percent from the same
quarter of 2002. Volumes increased 3.6 percent, while selling prices improved by
0.1 percent.
"The collective power of our five corporate initiatives -- Six Sigma, 3M
Acceleration, e-Productivity, Global Sourcing and Indirect Cost Reduction --
continues to drive better 3M results," McNerney said. "We're focused on
accelerating growth in all of our businesses, and maintaining strict cost
discipline throughout the company. We are confident in our ability to sustain
sales, earnings and cash momentum despite the ongoing uncertainties in the
global marketplace."
3M also provided its earnings outlook for the remainder of 2003. The company
expects fourth-quarter earnings to be between $0.73 and $0.75 per share. As a
result, 3M raised its expectations for full-year 2003 earnings to a range of
$2.98 to $3.00 per share on a reported basis. Excluding special items (b), 3M
expects 2003 earnings to be between $3.05 and $3.07 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) On August 11, 2003, 3M's Board of Directors declared a two-for-one split of
the company's common stock. Effective with third quarter 2003 reporting, all
share and per share data (such as per share amounts, weighted average shares and
shares outstanding) has been restated to reflect this split.
(b) 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. 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).
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. Changes in such assumptions
or factors, including without limitation the outcome of and information derived
from pending Congressional action concerning asbestos-related litigation, could
produce significantly different results.
ABOUT 3M -- A GLOBAL, DIVERSIFIED TECHNOLOGY COMPANY
Every day, 3M people find new ways to make amazing 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, Post-it,
Scotchgard, Thinsulate, Scotch-Brite, Filtrete, Dyneon and O-Cel-O. Serving
customers in more than 200 countries around the world, the company's 70,000
people use their expertise, technologies and global strength to lead in major
markets including consumer and office; display and graphics; electronics and
telecommunications; safety, security and protection services; health care;
industrial and transportation.
Scotch, Post-it, Scotchgard, Thinsulate, Scotch-Brite, Filtrete, Dyneon and
O-Cel-O are trademarks of 3M.
3M Company and Subsidiaries
SALES CHANGE ANALYSIS
(Unaudited)
Third-Quarter 2003
Worldwide U.S. Intl.
--------- --------- ---------
Volume - core 5.8% 2.1% 9.1%
Volume - acquisitions 2.0 1.5 2.4
--------- --------- ---------
Volume - total 7.8 3.6 11.5
Price (0.3) 0.1 (0.7)
Translation 3.9 -- 7.2
--------- --------- ---------
Total 11.4% 3.7% 18.0%
========= ========= =========
Nine-Months 2003
Worldwide U.S. Intl.
--------- --------- ---------
Volume - core 4.3% 0.7% 7.3%
Volume - acquisitions 1.9 1.7 2.2
--------- --------- ---------
Volume - total 6.2 2.4 9.5
Price (0.1) (0.2) (0.1)
Translation 4.7 -- 8.7
--------- --------- ---------
Total 10.8% 2.2% 18.1%
========= ========= =========
3M Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Amounts in millions, except per-share amounts)
(Unaudited)
Three-months ended Nine-months ended
September 30 September 30
----------------------- -----------------------
2003 2002 2003 2002
-------- -------- -------- --------
Net sales $ 4,616 $ 4,143 $ 13,514 $ 12,194
-------- -------- -------- --------
Operating expenses
Cost of sales 2,322 2,115 6,856 6,382
Selling, general and
administrative expenses 994 913 2,978 2,765
Research, development and
related expenses 270 264 816 797
Other expense -- -- 93 --
-------- -------- -------- --------
Total 3,586 3,292 10,743 9,944
-------- -------- -------- --------
Operating income 1,030 851 2,771 2,250
-------- -------- -------- --------
Interest expense and income
Interest expense 22 19 69 58
Interest income (6) (9) (17) (27)
-------- -------- -------- --------
Total 16 10 52 31
-------- -------- -------- --------
Income before income taxes
and minority interest 1,014 841 2,719 2,219
Provision for income taxes 339 274 897 711
Minority interest 12 22 38 45
-------- -------- -------- --------
Net income $ 663 $ 545 $ 1,784 $ 1,463
======== ======== ======== ========
Weighted average common
shares outstanding - basic 784.6 779.6 782.2 779.8
Earnings per share - basic $ 0.85 $ 0.70 $ 2.28 $ 1.88
======== ======== ======== ========
Weighted average common
shares outstanding - diluted 797.5 790.0 793.4 790.9
Earnings per share - diluted $ 0.83 $ 0.69 $ 2.25 $ 1.85
======== ======== ======== ========
Cash dividends paid
per common share $ 0.33 $ 0.31 $ 0.99 $ 0.93
======== ======== ======== ========
Share and per-share data has been restated to reflect the two-for-one stock
split effective with third quarter 2003 reporting.
3M Company and Subsidiaries
SUPPLEMENTAL UNAUDITED CONSOLIDATED STATEMENT OF INCOME INFORMATION
(Dollars in millions, except per-share amounts)
Nine-months ended Nine-months ended
September 30, 2003 September 30, 2002
----------------------------------- -----------------------------------
Excluding Excluding
special Special Reported special Special Reported
items items total items items total
------- ------- ------- ------- ------- -------
Net sales $13,514 $ -- $13,514 $12,194 $ -- $12,194
------- ------- ------- ------- ------- -------
Operating expenses
Cost of sales 6,856 -- 6,856 6,261 121 6,382
Selling, general and
administrative
expenses 2,978 -- 2,978 2,688 77 2,765
Research, development
and related expenses 816 -- 816 793 4 797
Other expense -- 93 93 -- -- --
------- ------- ------- ------- ------- -------
Total 10,650 93 10,743 9,742 202 9,944
------- ------- ------- ------- ------- -------
Operating
income (loss) 2,864 (93) 2,771 2,452 (202) 2,250
Interest expense
and (income), net 52 -- 52 31 -- 31
------- ------- ------- ------- ------- -------
Income (loss) before
income taxes and
minority interest 2,812 (93) 2,719 2,421 (202) 2,219
Provision (benefit)
for income taxes 932 (35) 897 787 (76) 711
Effective tax rate 33.2% -- 33.0% 32.5% -- 32.0%
Minority interest 38 -- 38 63 (18) 45
------- ------- ------- ------- ------- -------
Net income (loss) $ 1,842 $ (58) $ 1,784 $ 1,571 $ (108) $ 1,463
======= ======= ======= ======= ======= =======
Weighted average
diluted shares 793.4 793.4 793.4 790.9 790.9 790.9
Net income per
diluted share $ 2.32 $ (0.07) $ 2.25 $ 1.99 $ (0.14) $ 1.85
======= ======= ======= ======= ======= =======
Share and per-share data has been restated to reflect the two-for-one stock
split effective with third quarter 2003 reporting.
3M Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Dollars in millions, except per-share amounts)
(Unaudited)
Sep. 30, Sep. 30, Dec. 31,
2003 2002 2002
------- ------- -------
ASSETS
Current assets
Cash and cash equivalents $ 1,279 $ 821 $ 618
Accounts receivable - net 2,791 2,585 2,527
Inventories 1,882 1,945 1,931
Other current assets 1,390 1,205 983
------- ------- -------
Total current assets 7,342 6,556 6,059
Investments 214 247 238
Property, plant and equipment - net 5,467 5,451 5,621
Other assets 3,774 3,465 3,411
------- ------- -------
Total assets $16,797 $15,719 $15,329
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term debt $ 1,255 $ 1,261 $ 1,237
Accounts payable 969 867 945
Payroll 457 443 411
Income taxes 825 580 518
Other current liabilities 1,462 1,360 1,346
------- ------- -------
Total current liabilities 4,968 4,511 4,457
Long-term debt 1,738 1,678 2,140
Other liabilities 2,583 2,887 2,739
------- ------- -------
Total liabilities 9,289 9,076 9,336
------- ------- -------
Total stockholders' equity - net 7,508 6,643 5,993
Shares outstanding
September 30, 2003: 784,883,033 shares
September 30, 2002: 780,393,288 shares
December 31, 2002: 780,391,362 shares
------- ------- -------
Total liabilities and stockholders' equity $16,797 $15,719 $15,329
======= ======= =======
Shares data has been restated to reflect the two-for-one stock split effective
with third quarter 2003 reporting.
3M Company and Subsidiaries
BUSINESS SEGMENTS (Unaudited)
- -----------------------------------
BUSINESS
SEGMENT Three-months ended Nine-months ended
INFORMATION September 30 September 30
(Millions) 2003 2002 2003 2002
- -----------------------------------
NET SALES
Health Care $ 1,012 $ 901 $ 2,975 $ 2,642
Industrial 830 797 2,489 2,354
Consumer and Office 673 628 1,922 1,799
Display and Graphics 772 572 2,152 1,659
Electro and Communications 454 460 1,346 1,383
Safety, Security and Protection Services 482 423 1,458 1,281
Transportation 386 351 1,150 1,039
Corporate and Unallocated 7 11 22 37
- -----------------------------------
Total Company $ 4,616 $ 4,143 $ 13,514 $ 12,194
- -----------------------------------
OPERATING INCOME
Health Care $ 272 $ 224 $ 773 $ 657
Industrial 115 130 349 372
Consumer and Office 128 121 346 334
Display and Graphics 251 142 642 405
Electro and Communications 66 67 184 198
Safety, Security and Protection Services 111 89 347 267
Transportation 106 88 301 253
Corporate and Unallocated (19) (10) (171) (236)
- -----------------------------------
Total Company $ 1,030 $ 851 $ 2,771 $ 2,250
- -----------------------------------
During the first quarter of 2003, 3M recorded pretax charges of $93 million
related to an adverse court ruling in a lawsuit filed against 3M in 1997 by
LePage's Inc. 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 2003 and 2002 charges were recorded in Corporate and Unallocated.
INVESTOR CONTACTS: Matt Ginter MEDIA CONTACT: John Cornwell
3M 3M
(651) 733-8206 (651) 733-7698
Bruce Jermeland
3M
(651) 733-1807
FROM:
3M Public Relations and Corporate Communications
3M Center, Building 225-1S-15
St. Paul, MN 55144-1000