Exhibit 99

 FOR IMMEDIATE RELEASE

 

3M Achieves Record Third-Quarter Sales and Earnings

- Per-Share Earnings Rise 12% On Record Sales Of $6.2 Billion

-Company Raises Full-Year Earnings Expectations  -

 

ST. PAUL, Minn. — October 19, 2007 - 3M (NYSE: MMM) today announced its sales and profit results for the third quarter of 2007.

 

The company posted record third-quarter sales of $6.2 billion, an increase of 5.5 percent. Sales rose 9.4 percent adjusted for recently divested businesses, primarily the company’s branded pharmaceuticals business.

 

Third-quarter net income was a record $960 million, or $1.32 per share, versus $894 million, or $1.18 per share, in the third quarter of 2006. Net income and earnings per share increased 7.4 percent and 11.9 percent, respectively. Included in these results is a net benefit from special items of $20 million, or $0.03 per share, in the third quarter of 2007, and a net gain of $10 million, or $0.01 per share, in last year’s third quarter (items d-f).

 

The company’s pharmaceuticals business, which was divested during the fourth quarter of 2006 and the first quarter of 2007, earned $0.07 per share in last year’s third quarter. Excluding special items in both periods and excluding the 2006 earnings from the now-divested pharmaceuticals business, earnings per share increased 17 percent.

 

“The strength of the 3M portfolio was evident in the third quarter as we again generated record sales,” said George W. Buckley, 3M chairman, president and CEO. “All of our businesses posted positive worldwide local-currency sales growth, led by a 17 percent increase in Health Care. Geographic diversity was also an important factor as all regions drove positive growth in local currencies, led by double-digit performances in Europe and Latin America. We leveraged this growth into a 12 percent improvement in earnings per share, and I would like to thank the entire 3M team for their hard work in achieving it.”

 

Buckley continued. “Our growth plans remain on track and are gaining momentum. We continue to accelerate investment in research and development, sales and marketing, and in simplification of our supply chains, while maintaining superior returns. By leveraging 3M’s many strengths, including market-leading global franchises, world-class technology to solve customer problems and an ever-expanding market presence, and combining them with an enthusiastic and talented workforce, we are well-positioned to take 3M to a higher level.”

 

Executive Summary

                  Revenues of $6.2 billion, up 5.5 percent from 2006 and up 9.4 percent excluding the impact of businesses divested within the past year

                  Local-currency sales, including the impact of acquisitions, up 6.3 percent

                  Acquisitions closed within the past year added 2.1 percent to third-quarter sales growth

                  Currency impacts added 3.1 points to overall sales growth

                  Reported operating income for the quarter increased 6.2 percent to $1.4 billion; excluding special items in the third quarter of both this year and last, operating income increased 3.3

 



 

percent; further excluding the 2006 earnings from the now-divested branded pharmaceuticals business, operating income improved by 9.1 percent

                  Reported earnings per share of $1.32, up 12 percent from the third quarter of 2006; excluding special items in both periods, earnings per share increased by more than 10 percent; further excluding 2006 earnings of the pharmaceuticals business, per-share earnings increased 17 percent

                  Returned $900 million to shareholders through cash dividends and repurchases of shares in the third quarter, bringing the year-to-date total up to $3.8 billion

 

Key Financial Highlights

Third-quarter worldwide sales totaled $6.2 billion, up 5.5 percent compared to the third quarter of 2006. Local-currency sales including acquisitions increased 6.3 percent and foreign exchange impacts added 3.1 percent in the quarter. Divestitures, primarily the recent sale of the company’s branded pharmaceuticals business, reduced reported sales growth by 3.9 percent. Local-currency sales including acquisitions increased 16.6 percent in Health Care, 6.7 percent in Safety, Security and Protection Services, 5.4 percent in Industrial and Transportation, 4.3 percent in Electro and Communications, 3.5 percent in Consumer and Office, and 1 percent in Display and Graphics.

 

Third-quarter net income was $960 million, or $1.32 per share, versus $894 million, or $1.18 per share, in the third quarter of 2006, an increase of 7.4 percent and 11.9 percent, respectively. Excluding special items in both periods, net income and earnings per share increased 6.4 percent and 10.3 percent, respectively. The company’s pharmaceuticals business, which was sold in multiple transactions during the fourth quarter of 2006 and the first quarter of 2007, earned $0.07 per share in last year’s third quarter.

 

For the first nine months of 2007, sales increased 6.5 percent to $18.3 billion, driven by a 7.7 percent increase in local-currency sales, including acquisitions. Year-to-date earnings were $4.42 per share, up 26.3 percent over 2006, and up 11.8 percent excluding special items (a-f) in both periods. Adjusting for the 2006 earnings from the now-divested branded pharmaceuticals business, year-to-date per-share earnings increased 17.7 percent.

 

 

Business Segment Discussion

 

Industrial and Transportation

                  Sales rose 9.3 percent to $1.8 billion

                  Sales up 5.4 percent in local currencies, including 1.2 percent from acquisitions

                  Broad-based sales performance: strongest growth in industrial adhesives and tapes, automotive, automotive aftermarket and abrasives businesses

                  Local-currency sales down slightly in diaper components business; working aggressively to improve working relationships with key OEMs

                  Positive growth in all major geographic regions with exceptional growth in Europe and Latin America

                  Solid operational performance, with profits up 11.4 percent and 20.9 percent operating margin

 

Display and Graphics

                  Sales exceeded $1 billion, an increase of 2 percent

                  Local-currency sales up slightly

 



 

                  LCD film sales increased slightly both year-on-year and sequentially

                  Strongest growth in Latin America, with sales up double-digits

                  Operating profit of $288 million; profits up in commercial graphics and traffic safety systems, down 11 percent in optical systems

                  Aggressive productivity actions drove company-high 28.5 percent operating margin

 

Health Care

                  Sales of $961 million, up 21 percent excluding impact of divestiture of branded pharmaceutical business

                  Local-currency sales growth of 16.6 percent including 4.6 percent from acquisitions

                  All health care businesses generated double-digit sales growth, led by drug delivery, medical and health information systems

                  Pharma divestiture reduced reported sales by 24 percent

                  Double-digit sales growth in all major geographic regions, adjusted for the pharmaceutical divestiture

                  Operating income of $259 million, up 13.7 percent, excluding pharma and special items; outstanding 26.9 percent margin

 

Consumer and Office

                  Sales increased 5.9 percent to $898 million

                  Local-currency sales growth of 3.5 percent, including a point from acquisitions

                  Strongest growth in home care and do-it-yourself businesses

                  Sales growth led by Europe and APAC

                  Generated positive US growth despite soft sales trends amongst big-box retailers

                  Operating margins of 21.3 percent

 

Safety, Security and Protection Services

                  Sales of $766 million, up 11 percent

                  Sales growth in local currency of 6.7 percent

                  Broad-based sales growth led by security systems, respiratory protection and corrosion protection products; recent acquisitions adding significantly to overall growth

                  Continued sales softness in roofing granules business, which impacted total segment sales growth by about 2 points

                  Profits up 11 percent to $157 million; operating margins of 20.5 percent

 

Electro and Communications

                  Sales grew 7.6 percent to $714 million

                  Local-currency growth of 4.3 percent, including a point from acquisitions

                  Outstanding sales and profit growth in both electrical and communication/telecom markets

                  Sluggish consumer electronics market continues to dampen overall growth

                  Outstanding productivity with profits up 16.4 percent to $140 million; margins of 19.6 percent, excluding special items during the quarter

 

Outlook

3M raised its 2007 full-year earnings expectations for the second consecutive quarter. The company now expects reported earnings to be in the range of $5.54 to $5.62 per share versus a prior estimate of $5.40 to $5.60. The new guidance includes an estimated full year 2007 net gain of approximately

 



 

$0.60 to $0.65 per share, due to special items—primarily the completed sale of the company’s branded pharmaceuticals business in Europe. 3M also expects full-year, local-currency sales growth, adjusted for the divestiture of its branded pharmaceuticals business, to be within a range of 7 to 8 percent.

 

George W. Buckley and 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 Time) today. Investors can access a Webcast of this conference, along with related charts and materials, at http://investor.3M.com.

 

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,” “will,” 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, compounds, raw materials and energy (including oil and natural gas and their derivatives) due to shortages, increased demand or supply interruptions (including those caused by natural and other disasters and other events); (6) the impact of acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio management actions and other evolving business strategies, and possible organizational restructuring; (7) generating less productivity improvements than estimated; and (8) legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2006 and its subsequent Quarterly Reports on Form 10-Q (the “Reports”). Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located in the Reports under “Risk Factors” in Part I, Item 1A (Annual Report) and in Part II, Item 1A (Quarterly Report). 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 news 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 around the world, the people of 3M 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

 

Nine-months ended

 

 

 

September 30

 

September 30

 

 

 

2007

 

2006

 

2007

 

2006

 

Net sales

 

$

6,177

 

$

5,858

 

$

18,256

 

$

17,141

 

Operating expenses

 

 

 

 

 

 

 

 

 

Cost of sales

 

3,240

 

2,990

 

9,437

 

8,551

 

Selling, general and administrative expenses

 

1,174

 

1,186

 

3,741

 

3,691

 

Research, development and related expenses

 

338

 

340

 

1,009

 

1,013

 

Gain on sale of businesses (a)

 

 

 

(854

)

 

Total

 

4,752

 

4,516

 

13,333

 

13,255

 

Operating income

 

1,425

 

1,342

 

4,923

 

3,886

 

Interest expense and income

 

 

 

 

 

 

 

 

 

Interest expense

 

53

 

37

 

139

 

84

 

Interest income

 

(37

)

(13

)

(94

)

(35

)

Total

 

16

 

24

 

45

 

49

 

Income before income taxes and minority interest

 

1,409

 

1,318

 

4,878

 

3,837

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

433

 

412

 

1,586

 

1,127

 

Minority interest

 

16

 

12

 

47

 

35

 

Net income

 

$

960

 

$

894

 

$

3,245

 

$

2,675

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding — basic

 

714.5

 

745.2

 

720.7

 

751.6

 

Earnings per share — basic

 

$

1.34

 

$

1.20

 

$

4.50

 

$

3.56

 

Weighted average common shares outstanding — diluted

 

729.9

 

756.2

 

734.3

 

765.1

 

Earnings per share — diluted

 

$

1.32

 

$

1.18

 

$

4.42

 

$

3.50

 

Cash dividends paid per common share

 

$

0.48

 

$

0.46

 

$

1.44

 

$

1.38

 

 



 

3M Company and Subsidiaries

SUPPLEMENTAL CONSOLIDATED STATEMENT OF INCOME INFORMATION

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Millions, except per-share amounts)

(Unaudited)

 

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (GAAP), the company also discusses non-GAAP measures that exclude special items. Operating income, net income, and diluted earnings per share measures that exclude special items are not in accordance with, nor are they a substitute for, GAAP measures. Special items represent significant charges or credits that are important to an understanding of the company’s ongoing operations. The company uses these non-GAAP measures to evaluate and manage the company’s operations. The company believes that discussion of results excluding special items provides a useful analysis of ongoing operating trends. The determination of special items may not be comparable to similarly titled measures used by other companies.

 

The reconciliation provided below reconciles the non-GAAP financial measures with the most directly comparable GAAP financial measures for the three months and nine months ended September 30, 2007.

 

 

 

Three-months ended

 

Nine-months ended

 

 

 

September 30, 2007

 

September 30, 2007

 

 

 

Operating
income

 

Net
income

 

Diluted
earnings
per
share

 

Operating
income

 

Net
income

 

Diluted
earnings
per
share

 

Reported GAAP measure

 

$

1,425

 

$

960

 

$

1.32

 

$

4,923

 

$

3,245

 

$

4.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of businesses (a)

 

 

 

 

(854

)

(553

)

(0.75

)

Environmental liabilities (b)

 

 

 

 

134

 

83

 

0.11

 

Restructuring actions (c)

 

 

 

 

45

 

30

 

0.04

 

Other exit activities (d)

 

26

 

17

 

0.02

 

26

 

17

 

0.02

 

Gain on sale of real estate (e)

 

(52

)

(37

)

(0.05

)

(52

)

(37

)

(0.05

)

Adjusted Non-GAAP measure

 

$

1,399

 

$

940

 

$

1.29

 

$

4,222

 

$

2,785

 

$

3.79

 

 


(a)          In June 2007, 3M completed the sale of its Opticom Priority Control Systems and Canoga Traffic Detection businesses. 3M received proceeds of $80 million from this transaction and recognized a pre-tax gain of $68 million in the Display and Graphics segment in the second quarter of 2007. In January 2007, 3M completed the sale of its global branded pharmaceuticals business in Europe. 3M received proceeds of $817 million from this transaction and recognized a pre-tax gain of $786 million in the first quarter of 2007 (Health Care segment). In December 2006, 3M completed the sale of its global branded pharmaceuticals business in the United States, Canada, and Latin America region and the Asia Pacific region, including Australia and South Africa. In connection with all of these transactions, 3M’s Drug Delivery Systems Division (DDSD) entered into agreements whereby it became a source of supply to the acquiring companies. Because of the extent of 3M cash flows from these agreements in relation

 



 

to those of the disposed businesses, the operations of the branded pharmaceuticals business are not classified as discontinued operations.

 

(b)         Net pre-tax charges for the first nine months of 2007 that have been recorded to address remediation activities associated with perfluoronated compounds totaled $134 million. These expenses are recorded in selling, general and administrative expenses in Corporate and Unallocated.

 

No adverse human health effects are caused by perfluoronated compounds at current levels of exposure. This conclusion is supported by a large body of research including laboratory studies and epidemiology studies of exposed employees. This research has been published in peer-reviewed scientific journals and shared with the EPA and global scientific-community.

 

(c)          During the fourth quarter of 2006 and first six months of 2007, management approved and committed to undertake restructuring actions. Net pre-tax restructuring charges for the first nine months of 2007 totaled $45 million. These charges primarily related to fixed asset impairments and employee-related restructuring liabilities, with the majority related to the phase-out of operations at a New Jersey roofing granule facility (Safety, Security and Protection Services segment). These charges are primarily recorded in cost of sales in the business segment where the expenses were incurred.

 

(d)         During the third quarter of 2007, the Company recorded a net pre-tax charge of $26 million related to the consolidation of certain flexible circuit capabilities. This charge related to employee reductions and fixed asset impairments in the Electro and Communications business segment and was recorded in cost of sales and selling, general and administrative expenses.

 

(e)          During the third quarter of 2007, the Company recorded a net pre-tax gain of $52 million related to the sale of a Korean laboratory facility. The company plans to subsequently invest in a more modern, customer-oriented laboratory center in Korea. The gain was recorded in selling, general and administrative expenses in Corporate and Unallocated.

 


 


The reconciliation provided below reconciles the non-GAAP operating income measure by business segment with the most directly comparable GAAP financial measure for the three-months and nine-months ended September 30, 2007.

 

 

 

Three-months ended

 

Nine-months ended

 

 

 

September 30, 2007

 

September 30, 2007

 

OPERATING
INCOME BY
BUSINESS SEGMENT

 

Reported
GAAP
measure

 

Special
items

 

Adjusted
Non-GAAP
measure

 

Reported
GAAP
measure

 

Special
items

 

Adjusted
Non-GAAP
measure

 

Industrial and Transportation

 

$

378

 

$

 

$

378

 

$

1,148

 

$

2

 

$

1,150

 

Health Care

 

259

 

 

259

 

1,600

 

(795

)

805

 

Display and Graphics

 

288

 

 

288

 

935

 

(64

)

871

 

Consumer and Office

 

192

 

 

192

 

533

 

 

533

 

Safety, Security and Protection Services

 

157

 

 

157

 

478

 

29

 

507

 

Electro and Communications

 

114

 

26

 

140

 

357

 

45

 

402

 

Corporate and Unallocated

 

37

 

(52

)

(15

)

(128

)

82

 

(46

)

Total Operating Income

 

$

1,425

 

$

(26

)

$

1,399

 

$

4,923

 

$

(701

)

$

4,222

 

 

The reconciliation provided below reconciles the non-GAAP financial measures with the most directly comparable GAAP financial measures for the three months and nine months ended September 30, 2006.

 

 

 

Three-months ended

 

Nine-months ended

 

 

 

September 30, 2006

 

September 30, 2006

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

earnings

 

 

 

 

 

earnings

 

 

 

Operating

 

Net

 

per

 

Operating

 

Net

 

per

 

 

 

income

 

income

 

share

 

income

 

income

 

share

 

Reported GAAP measure

 

$

1,342

 

$

894

 

$

1.18

 

$

3,886

 

$

2,675

 

$

3.50

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net benefit from certain income tax adjustments (f)

 

 

(19

)

(0.02

)

 

(124

)

(0.16

)

Antitrust settlement costs (f)

 

 

 

 

40

 

25

 

0.03

 

Pharmaceuticals costs (f)

 

13

 

9

 

0.01

 

22

 

15

 

0.02

 

Adjusted Non-GAAP measure

 

$

1,355

 

$

884

 

$

1.17

 

$

3,948

 

$

2,591

 

$

3.39

 

 


(f)            In the third quarter and first nine months of 2006, net income included gains due to a net benefit from certain income tax adjustments, which were partially offset by costs related to the Company’s efforts to seek strategic alternatives for its branded pharmaceuticals business (recorded in Health Care) and for the first nine months were also partially offset by settlement costs related to an antitrust class action (recorded in Corporate and Unallocated). Refer to 3M’s Current Report on Form 8-K dated May 25, 2007, which updated 3M’s Annual Report on Form 10-K, for further discussion of these items.

 



 

3M Company and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in millions)

(Unaudited)

 

 

 

Sept. 30,

 

Dec. 31,

 

Sept. 30,

 

 

 

2007

 

2006

 

2006

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,675

 

$

1,447

 

$

999

 

Marketable securities

 

1,024

 

471

 

130

 

Accounts receivable — net

 

3,703

 

3,102

 

3,332

 

Inventories

 

2,794

 

2,601

 

2,632

 

Other current assets

 

1,204

 

1,325

 

1,216

 

Total current assets

 

10,400

 

8,946

 

8,309

 

Marketable securities — non-current

 

556

 

166

 

112

 

Investments

 

295

 

314

 

287

 

Property, plant and equipment — net

 

6,340

 

5,907

 

5,782

 

Prepaid pension and postretirement benefits (g)

 

682

 

395

 

2,959

 

Goodwill, intangible assets and other assets (h)

 

6,082

 

5,566

 

5,234

 

Total assets

 

$

24,355

 

$

21,294

 

$

22,683

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Short-term borrowings and current portion of long-term debt

 

$

2,405

 

$

2,506

 

$

2,570

 

Accounts payable

 

1,503

 

1,402

 

1,373

 

Accrued payroll

 

610

 

520

 

535

 

Accrued income taxes

 

711

 

1,134

 

848

 

Other current liabilities

 

1,912

 

1,761

 

1,537

 

Total current liabilities

 

7,141

 

7,323

 

6,863

 

Long-term debt

 

2,824

 

1,047

 

1,230

 

Other liabilities (g)

 

3,420

 

2,965

 

3,607

 

Total liabilities

 

13,385

 

11,335

 

11,700

 

Total stockholders’ equity — net (g)

 

10,970

 

9,959

 

10,983

 

Shares outstanding

 

 

 

 

 

 

 

September 30, 2007: 713,228,973 shares

 

 

 

 

 

 

 

December 31, 2006: 734,362,802 shares

 

 

 

 

 

 

 

September 30, 2006: 736,366,111 shares

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

24,355

 

$

21,294

 

$

22,683

 

 



 


(g)         The change in prepaid pension and postretirement benefits, other liabilities, and total stockholders’ equity when compared to September 30, 2006 was partially due to the adoption of SFAS No. 158. As of December 31, 2006, the Company adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.” This standard required employers to recognize the under funded or over funded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position. As a result of the implementation of SFAS No. 158, the Company recognized an after-tax decrease in accumulated other comprehensive income (which is part of stockholders’ equity) of approximately $1.9 billion and reversed prepaid pension and postretirement benefit long-term assets of approximately $2.5 billion. Other liabilities, including the impact of deferred taxes, decreased by approximately $0.6 billion. This change impacted the Consolidated Balance Sheet only, with no impact to net income or cash flows.

 

(h) The goodwill, intangible assets and other assets increase when compared to September 30, 2006 primarily relates to acquisitions.

 


 


 

3M Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)

(Unaudited)

 

 

 

 

Nine-months ended

 

 

 

September 30

 

 

 

2007

 

2006

 

SUMMARY OF CASH FLOW:

 

 

 

 

 

 

 

 

 

 

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

$

2,719

 

$

2,517

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property, plant and equipment

 

(1,031

)

(763

)

Acquisitions, net of cash acquired

 

(255

)

(468

)

Proceeds from sale of businesses (a)

 

897

 

 

Other investing activities

 

(789

)

(198

)

NET CASH USED IN INVESTING ACTIVITIES

 

(1,178

)

(1,429

)

Cash flows from financing activities:

 

 

 

 

 

Change in debt

 

1,628

 

1,419

 

Purchases of treasury stock

 

(2,756

)

(2,021

)

Reissuances of treasury stock

 

689

 

426

 

Dividends paid to stockholders

 

(1,039

)

(1,037

)

Other financing activities

 

41

 

(25

)

NET CASH USED IN FINANCING ACTIVITIES

 

(1,437

)

(1,238

)

Effect of exchange rate changes on cash

 

124

 

77

 

Net increase (decrease) in cash and cash equivalents

 

228

 

(73

)

Cash and cash equivalents at beginning of period

 

1,447

 

1,072

 

Cash and cash equivalents at end of period

 

$

1,675

 

$

999

 

 



 

3M Company and Subsidiaries

SUPPLEMENTAL CASH FLOW AND

OTHER SUPPLEMENTAL FINANCIAL INFORMATION

(Dollars in millions)

(Unaudited)

 

 

 

Nine-months ended

 

 

 

September 30

 

 

 

2007

 

2006

 

NON-GAAP MEASURES:

 

 

 

 

 

Free Cash Flow:

 

 

 

 

 

Net cash provided by operating activities

 

$

2,719

 

$

2,517

 

Purchases of property, plant and equipment

 

(1,031

)

(763

)

Free Cash Flow (i)

 

$

1,688

 

$

1,754

 


(i)             Free cash flow is not defined under U.S. GAAP. Therefore, it should not be considered a substitute for income or cash flow data prepared in accordance with 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.

 

                        Net cash provided by operating activities and Free Cash Flow were negatively impacted by the timing of cash payments associated with certain current and prior period special items as follows:

1.               Third-quarter 2007 was negatively impacted by approximately $37 million in tax payments related to the sale of our global branded pharmaceuticals business.

2.               Second-quarter 2007 was negatively impacted by approximately $110 million in tax payments related to the sale of our global branded pharmaceuticals business.

3.               First-quarter 2007 was negatively impacted by approximately $394 million in tax payments related to the sale of our global branded pharmaceuticals business.

 

 

 

September 30

 

 

 

2007

 

2006

 

OTHER NON-GAAP MEASURES:

 

 

 

 

 

Net Working Capital Turns (j)

 

4.95

 

5.10

 


(j)             The company uses various working capital 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 GAAP and may not be comparable to similarly titled measures used by other companies.

 



 

3M Company and Subsidiaries

SALES CHANGE ANALYSIS

(Unaudited)

 

 

 

Three-Months Ended September 30, 2007

 

 

 

Sales Change Analysis

 

United

 

 

 

 

 

 

 

By Geographic Area

 

States

 

International

 

Worldwide

 

 

 

Volume — organic

 

0.1

%

7.1

%

4.2

%

 

 

Volume — acquisitions

 

2.4

 

1.7

 

2.1

 

 

 

Price

 

1.1

 

(0.8

)

 

 

 

Local-currency sales
(including acquisitions)

 

3.6

 

8.0

 

6.3

 

 

 

Divestitures

 

(4.2

)

(3.6

)

(3.9

)

 

 

Translation

 

 

5.1

 

3.1

 

 

 

Total sales change

 

(0.6

)%

9.5

%

5.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Sales Change Analysis

 

Local-

 

 

 

 

 

Total

 

By International

 

currency

 

 

 

 

 

Sales

 

Geographic Area

 

Sales(1)

 

Divestitures

 

Translation

 

Change

 

Europe, Middle East and Africa

 

11.8

%

(6.6

)%

7.8

%

13.0

%

Asia Pacific

 

4.1

%

(1.6

)%

2.4

%

4.9

%

Latin America and Canada

 

11.0

%

(2.9

)%

6.2

%

14.3

%


(1)   Including acquisitions — Europe, Middle East and Africa includes a 3.7% benefit

 

Worldwide

 

Local-

 

 

 

 

 

Total

 

Sales Change Analysis

 

currency

 

 

 

 

 

Sales

 

By Business Segment

 

Sales(2)

 

Divestitures

 

Translation

 

Change

 

Industrial and Transportation

 

5.4

%

%

3.9

%

9.3

%

Health Care

 

16.6

%

(24.3

)%

4.0

%

(3.7

)%

Display and Graphics

 

1.0

%

(0.8

)%

1.8

%

2.0

%

Consumer and Office

 

3.5

%

%

2.4

%

5.9

%

Safety, Security and Protection Services

 

6.7

%

%

4.2

%

10.9

%

Electro and Communications

 

4.3

%

%

3.3

%

7.6

%


(2)   Including acquisitions — Health Care includes a 4.6% benefit, related to numerous acquisitions, and a 4.5% benefit from supply agreements with the new owners of the Company’s branded pharmaceutical business; Safety, Security and Protection Services includes a 5.8% benefit from numerous acquisitions.

 

 



 

3M Company and Subsidiaries

SALES CHANGE ANALYSIS

(Unaudited)

 

 

 

 

 

 

Nine-Months Ended September 30, 2007

 

Sales Change Analysis

 

United

 

 

 

 

 

By Geographic Area

 

States

 

International

 

Worldwide

 

Volume — organic

 

1.5

%

8.3

%

5.6

%

Volume — acquisitions

 

2.7

 

2.3

 

2.5

 

Price

 

1.1

 

(1.4

)

(0.4

)

Local-currency sales
(including acquisitions)

 

5.3

 

9.2

 

7.7

 

 

 

 

 

 

 

 

 

Divestitures

 

(4.1

)

(3.7

)

(3.9

)

Translation

 

 

4.4

 

2.7

 

Total sales change

 

1.2

%

9.9

%

6.5

%

 

Sales Change Analysis

 

Local-

 

 

 

 

 

Total

 

By International

 

currency

 

 

 

 

 

Sales

 

Geographic Area

 

Sales(3)

 

Divestitures

 

Translation

 

Change

 

Europe, Middle East and Africa

 

13.6

%

(6.8

)%

8.0

%

14.8

%

Asia Pacific

 

5.3

%

(1.4

)%

1.4

%

5.3

%

Latin America and Canada

 

10.0

%

(2.7

)%

4.0

%

11.3

%


(3)   Including acquisitions — Europe, Middle East and Africa includes a 5.1% benefit

 

Worldwide

 

Local-

 

 

 

 

 

Total

 

Sales Change Analysis

 

currency

 

 

 

 

 

Sales

 

By Business Segment

 

Sales(4)

 

Divestitures

 

Translation

 

Change

 

Industrial and Transportation

 

5.0

%

%

3.2

%

8.2

%

Health Care

 

18.8

%

(24.5

)%

3.9

%

(1.8

)%

Display and Graphics

 

2.9

%

(0.2

)%

1.4

%

4.1

%

Consumer and Office

 

5.8

%

%

2.1

%

7.9

%

Safety, Security and Protection Services

 

12.6

%

%

4.0

%

16.6

%

Electro and Communications

 

2.3

%

%

2.6

%

4.9

%


(4)   Including acquisitions — Health Care includes a 4.9% benefit, related to numerous acquisitions, and a 4.8% benefit from supply agreements with the new owners of the Company’s branded pharmaceutical business; Safety, Security and Protection Services includes a 9.1% benefit from acquisitions, primarily Security Printing and Systems Limited, which was acquired in August 2006.

 

 

 



 

3M Company and Subsidiaries

BUSINESS SEGMENTS

(Dollars in millions)

(Unaudited)

 

Effective in the first quarter of 2007, 3M made certain changes to its business segments in its continuing effort to drive growth by aligning businesses around markets and customers. Segment information for all periods presented has been reclassified to reflect this new segment structure. Refer to 3M’s Form 10-Q for the quarterly period ended June 30, 2007 for further discussion of these changes.

 

BUSINESS

 

 

 

 

 

SEGMENT

 

Three-months ended

 

Nine-months ended

 

INFORMATION

 

September 30

 

September 30

 

(Millions)

 

2007

 

2006

 

2007

 

2006

 

NET SALES

 

 

 

 

 

 

 

 

 

Industrial and Transportation

 

$

1,807

 

$

1,654

 

$

5,396

 

$

4,988

 

Health Care

 

961

 

998

 

2,911

 

2,964

 

Display and Graphics

 

1,012

 

992

 

2,939

 

2,824

 

Consumer and Office

 

898

 

848

 

2,544

 

2,358

 

Safety, Security and Protection Services

 

766

 

691

 

2,323

 

1,992

 

Electro and Communications

 

714

 

664

 

2,075

 

1,979

 

Corporate and Unallocated

 

19

 

11

 

68

 

36

 

Total Company

 

$

6,177

 

$

5,858

 

$

18,256

 

$

17,141

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 

 

 

 

 

 

 

Industrial and Transportation

 

$

378

 

$

339

 

$

1,148

 

$

1,039

 

Health Care

 

259

 

287

 

1,600

 

846

 

Display and Graphics

 

288

 

293

 

935

 

822

 

Consumer and Office

 

192

 

190

 

533

 

475

 

Safety, Security and Protection Services

 

157

 

141

 

478

 

438

 

Electro and Communications

 

114

 

121

 

357

 

355

 

Corporate and Unallocated

 

37

 

(29

)

(128

)

(89

)

Total Company

 

$

1,425

 

$

1,342

 

$

4,923

 

$

3,886

 

 

For the three-months and nine-months ended September 30, 2007, refer to the preceding notes (a) through (e) and the preceding reconciliation of operating income by business segment for a discussion and summary of items that impacted reported business segment operating income. For the three-months and nine-months ended September 30, 2006, refer to the preceding note (f) for a discussion of special items that impacted reported operating income.

 

 

 



 

3M Company and Subsidiaries

QUARTERLY DILUTED EARNINGS PER SHARE,

INCLUDING STOCK OPTION IMPACT

(Unaudited)

 

2006 Diluted EPS

 

Q1

 

Q2

 

Q3

 

Q4

 

Year

 

Reported

 

$

1.17

 

$

1.15

 

$

1.18

 

$

1.57

 

$

5.06

 

Excluding Special Items (k)

 

$

1.17

 

$

1.05

 

$

1.17

 

$

1.10

 

$

4.49

 

Stock option impact
included in EPS

 

$

(0.02

)

$

(0.07

)

$

(0.04

)

$

(0.04

)

$

(0.17

)

 

 

 

Actual

 

Actual

 

Actual

 

Estimated

 

Guidance

 

2007 Diluted EPS

 

Q1

 

Q2

 

Q3

 

Q4

 

Year

 

Reported

 

$

1.85

 

$

1.25

 

$

1.32

 

 

 

$

5.54-$5.62

 

Excluding Special Items (k)

 

$

1.28

 

$

1.23

 

$

1.29

 

 

 

 

 

Stock option impact
included in EPS

 

$

(0.03

)

$

(0.07

)

$

(0.04

)

$

(0.04

)

$

(0.18

)

 


(k)          In addition to disclosing results that are determined in accordance with U.S. 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. Refer to the preceding “Supplemental Consolidated Statement of Income Information” for discussion of special items that impacted the three and nine months ended September 30, 2007 and 2006.

 

 

Investor Contacts:

 

Matt Ginter

3M

(651) 733-8206

 

Bruce Jermeland

3M

(651) 733-1807

 

Media Contact:

Jacqueline Berry

3M

(651) 733-3611

 

From:

3M Public Relations and Corporate Communications

3M Center, Building 225-1S-15

St. Paul, MN 55144-1000