Exhibit 99

 FOR IMMEDIATE RELEASE

 

3M Reports Higher Second-Quarter Sales and Earnings

 

ST.  PAUL, Minn. — July 18, 2005 — 3M (NYSE:MMM) today announced its results for second quarter 2005.

 

The company reported net income of $776 million, or $1.00 per share in the second quarter, versus $773 million, or $0.97 per share in the second quarter of 2004.  Excluding a previously announced non-recurring tax charge related to the domestic reinvestment provisions of the American Jobs Creation Act of 2004(a), 3M earned $851 million or $1.09 per share in the second quarter, a 12.4 percent increase in earnings per share over the comparable quarter.

 

“The 3M team delivered another solid quarter, characterized by broad-based sales growth and a continued commitment to operational efficiency,” said Robert S. Morrison, 3M interim chairman and CEO.   “3M has an outstanding leadership team, a time-tested business model and deep commitment to delivering on its objectives. I am excited about the opportunity to lead the company during this period of transition.”

 

Worldwide sales in the second quarter totaled $5.3 billion, 5.6 percent higher than in the year-earlier quarter. Local currency sales increased 3.5 percent, with selling prices contributing 0.8 percent.  Local-currency sales increased 7.0 percent in Safety, Security and Protection Services, 6.7 percent in Transportation, 6.7 percent in Consumer and Office, 4.1 percent in Industrial, 3.8 percent in Health Care, and 1.5 percent in Electro and Communications, but declined 2.5 percent in Display and Graphics.

 

“For the rest of the year, we expect top-line growth to continue to accelerate,” said Patrick D. Campbell, senior vice president and CFO. “We anticipate that increased global demand for flat panel displays, particularly LCD televisions, will improve second-half sales of LCD enhancement films and fuel higher growth in our Display and Graphics business. We also expect solid second-half sales and earnings growth across the rest of our broad portfolio as our employees continue to leverage 3M’s outstanding customer relationships, product and technology platforms, extensive geographic presence, and, as always, operational discipline.”

 

3M also provided an update on the pending acquisition of CUNO Inc., a leader in the global liquid filtration and purification market, announced May 12, 2005. The companies have obtained all regulatory approvals and CUNO Inc. has scheduled a shareholder meeting Aug 2 to vote on the acquisition.  Pending shareholder approval, the acquisition is expected to close shortly thereafter.

 

For the year, the company now expects reported earnings to be within a range of $4.10 to $4.15 per share.  Excluding non-recurring items(a), 3M expects earnings of $4.20 to $4.25 per share, raising the low end of a previous expectation of $4.15 to $4.25 per share.  This expectation includes approximately $0.04 per share of earnings dilution from the CUNO acquisition.  Third-quarter earnings are expected to be in the range of $1.06 to $1.08 per share, including $0.03 per share of CUNO-related earnings dilution.  The company expects local currency growth of 4 to 7 percent in the third-quarter and full-year local currency growth of 4 to 6 percent, excluding acquisitions.

 

 

 

Patrick D. Campbell will conduct an investor teleconference at 9 a.m. Eastern Time (8 a.m. Central Time) today. Investors can access a webcast of this conference, along with related charts and materials, at http://investor.3M.com.

 

(a) 3M plans to reinvest approximately $1.7 billion of foreign earnings in the United States pursuant to the provisions of the American Jobs Creation Act of 2004. This act provides the company the opportunity to tax efficiently repatriate foreign earnings for U.S. qualifying investments specified in its domestic reinvestment plan. As a consequence, in the second quarter of 2005, 3M recorded a non-recurring charge of $75 million dollars, net of available foreign tax credits.

 

Forward-Looking Statements

This news release contains forward-looking information (within the meaning of the Private Securities Litigation Reform Act of 1995) about the company’s financial results and estimates, business prospects, and products under development that involve substantial risks and uncertainties. You can identify these statements by the use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Among the factors that could cause actual results to differ materially are the following: (1) worldwide economic conditions; (2) competitive conditions and customer preferences; (3) foreign currency exchange rates and fluctuations in those rates; (4) the timing and acceptance of new product offerings; (5) the availability and cost of purchased components and materials, including oil-derived compounds; (6) 3M’s ability to successfully integrate and obtain the anticipated synergies from acquisitions and strategic alliances; (7) generating less operating income from its corporate initiatives than estimated; and (8) legal proceedings, including the outcome of and information derived from pending Congressional action concerning asbestos-related litigation and other significant developments that could occur in the legal proceedings described in the company’s Annual Report on Form 10-K for the year ended December 31, 2004 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 (the “Reports”). Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located in the Reports. The information contained in this news release is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in this release as a result of new information or future events or developments.

 

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 Scotch, Post-it, Scotchgard, Thinsulate, 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; safety, security and protection services; health care; industrial and transportation.

 

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
		2005				2004				2005				2004
Net sales		$	5,294			$	5,012			$	10,460			$		9,951
Operating expenses
Cost of sales		2,594				2,452				5,131				4,888
Selling, general and administrative expenses		1,121				1,084				2,235				2,188
Research, development and related expenses		296				290				587				572
Total		4,011				3,826				7,953				7,648
Operating income		1,283				1,186				2,507				2,303
Interest expense and income
Interest expense		19				16				39				35
Interest income		(16			)	(10			)	(32			)	(20			)
Total		3				6				7				15
Income before income taxes and minority interest		1,280				1,180				2,500				2,288
Provision for income taxes		492				389				888				755
Minority interest		12				18				27				38
Net income		$		776		$		773		$	1,585			$	1,495
Weighted average common shares outstanding — basic		768.0				782.5				769.8				782.7
Earnings per share — basic		$		1.01		$		0.99		$		2.06		$	1.91
Weighted average common shares outstanding — diluted		780.2				799.7				783.6				799.6
Earnings per share — diluted		$		1.00		$		0.97		$		2.02		$	1.87
Cash dividends paid per common share		$		0.42		$		0.36		$		0.84		$	0.72

 

 

 

3M Company and Subsidiaries

SUPPLEMENTAL CONSOLIDATED STATEMENT OF INCOME INFORMATION

(Millions, except per-share amounts)

(Unaudited)

 

		Three-months ended									Six-months ended
		June 30, 2005									June 30, 2005
		Excluding									Excluding
		special			Special			Reported			special			Special			Reported
		items(a)			items(a)			total			items (a)			items (a)			total
Net sales		$	5,294		$	—		$	5,294		$	10,460		$	—		$	10,460
Operating expenses
Cost of sales		2,594			—			2,594			5,131			—			5,131
Selling, general and administrative expenses		1,121			—			1,121			2,235			—			2,235
Research, development and related expenses		296			—			296			587			—			587
Total		4,011			—			4,011			7,953			—			7,953
Operating income (loss)		1,283			—			1,283			2,507			—			2,507
Interest expense and (income), net		3			—			3			7			—			7
Income (loss) before income taxes and minority interest		1,280			—			1,280			2,500			—			2,500
Provision (benefit) for income taxes		417			75			492			813			75			888
Effective tax rate		32.5		%	—			38.4		%	32.5		%	—			35.5		%
Minority interest		12			—			12			27			—			27
Net income (loss)		$	851		$	(75	)	$	776		$	1,660		$	(75	)	$	1,585
Weighted average diluted shares		780.2			780.2			780.2			783.6			783.6			783.6
Net income per diluted share		$	1.09		$	(0.09	)	$	1.00		$	2.12		$	(0.10	)	$	2.02

(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. In the second quarter of 2005, 3M recorded a charge of $75 million, net of available foreign tax credits, related to its plans to reinvest approximately $1.7 billion of foreign earnings in the United States pursuant to the provisions of the American Jobs Creation Act of 2004.  No special items were recorded in 2004.

 

 

3M Company and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in millions)

(Unaudited)

 

		Jun. 30,			Jun. 30,			Dec. 31,
		2005			2004			2004
ASSETS
Current assets
Cash and cash equivalents		$	1,765		$	2,314		$	2,757
Accounts receivable — net		2,951			2,913			2,792
Inventories		2,020			1,940			1,897
Other current assets		1,212			1,460			1,274
Total current assets		7,948			8,627			8,720
Investments		274			211			227
Property, plant and equipment — net		5,516			5,456			5,711
Goodwill, intangible assets and other assets		5,819			4,068			6,050
Total assets		$	19,557		$	18,362		$	20,708
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term borrowings and current portion of long-term debt		$	1,103		$	1,358		$	2,094
Accounts payable		1,201			1,108			1,168
Accrued payroll		475			487			487
Accrued income taxes		1,187			1,094			867
Other current liabilities		1,340			1,547			1,455
Total current liabilities		5,306			5,594			6,071
Long-term debt		706			1,303			727
Other liabilities		3,445			3,008			3,532
Total liabilities		9,457			9,905			10,330
Total stockholders’ equity — net		10,100			8,457			10,378
Shares outstanding
June 30, 2005: 765,071,990 shares
June 30, 2004: 782,703,301 shares
December 31, 2004: 773,518,281 shares
Total liabilities and stockholders’ equity		$	19,557		$	18,362		$	20,708

 

 

 

3M Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)

(Unaudited)

 

		Six-months ended
		June 30
		2005			2004
SUMMARY OF CASH FLOW:
NET CASH PROVIDED BY OPERATING ACTIVITIES		$	2,171		$	2,237
Cash flows from investing activities:
Purchases of property, plant and equipment		(452		)	(378		)
Acquisitions, net of cash acquired		—			(86		)
Other investing activities		(31		)	29
NET CASH USED IN INVESTING ACTIVITIES		(483		)	(435		)
Cash flows from financing activities:
Change in debt		(991		)	(286		)
Purchases of treasury stock		(1,185		)	(792		)
Reissuances of treasury stock		287			352
Dividends paid to stockholders		(647		)	(564		)
Other financing activities		(36		)	(23		)
NET CASH USED IN FINANCING ACTIVITIES		(2,572		)	(1,313		)
Effect of exchange rate changes on cash		(108		)	(11		)
Net increase (decrease) in cash and cash equivalents		(992		)	478
Cash and cash equivalents at beginning of period		2,757			1,836
Cash and cash equivalents at end of period		$	1,765		$	2,314

                                                                                                 

 

 

3M Company and Subsidiaries

SUPPLEMENTAL CASH FLOW AND

OTHER SUPPLEMENTAL FINANCIAL INFORMATION

(Dollars in millions)

(Unaudited)

 

 

(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 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, 2005

 

 

 

 

 

 

 

3M Company and Subsidiaries

SALES CHANGE ANALYSIS

(Unaudited)

 

 

Six-Months Ended June 30, 2005

 

 

 

 

 

 

 

3M Company and Subsidiaries

BUSINESS SEGMENTS

(Dollars in millions)

(Unaudited)

 

 

BUSINESS
SEGMENT		Three-months ended						Six-months ended
INFORMATION		June 30						June 30
(Millions)		2005			2004			2005			2004
NET SALES
Health Care		$	1,112		$	1,049		$	2,225		$	2,080
Industrial		927			867			1,831			1,723
Display and Graphics		864			884			1,726			1,729
Consumer and Office		735			675			1,434			1,361
Safety, Security and Protection Services		599			547			1,156			1,074
Electro and Communications		594			572			1,151			1,123
Transportation		447			409			914			844
Corporate and Unallocated		16			9			23			17
Total Company		$	5,294		$	5,012		$	10,460		$	9,951
OPERATING INCOME
Health Care		$	310		$	274		$	619		$	536
Industrial		189			158			373			312
Display and Graphics		277			312			563			606
Consumer and Office		140			123			262			245
Safety, Security and Protection Services		151			136			284			261
Electro and Communications		118			89			221			166
Transportation		121			105			247			224
Corporate and Unallocated		(23		)	(11		)	(62		)	(47		)
Total Company		$	1,283		$	1,186		$	2,507		$	2,303

 

 

 

 

 

Investor Contacts:		Mark Colin		Media Contact:		Jacqueline Berry
		3M				3M
		(651) 733-8206				(651) 733-3611
		Bruce Jermeland
		3M
		(651) 733-1807

 

 

From:

3M Public Relations and Corporate Communications

3M Center, Building 225-1S-15

St. Paul, MN 55144-1000