Exhibit 99

 

FOR IMMEDIATE RELEASE

 

3M Announces Record Second-Quarter Earnings of $1.66 per Share;

Strong Productivity Efforts Drive 22.9 Percent Operating Margins

 

ST. PAUL, Minn. — July 26, 2012 - 3M (NYSE: MMM) today reported record second-quarter earnings of $1.66 per share, an increase of 3.8 percent versus the second quarter of 2011. Operating income was $1.7 billion and operating income margins for the quarter were 22.9 percent. All of the company’s six business segments posted operating income margins greater than 20 percent.

 

Sales were $7.5 billion, down 1.9 percent year-over-year. Organic local-currency sales grew 1.9 percent and acquisitions added 0.5 percent to sales. The company noted that the combination of challenging economic conditions and the strong U.S. dollar hurt sales in the quarter. Currency impacts reduced sales by 4.3 percent year-on-year.

 

On a business segment basis, organic local-currency sales increased 5.4 percent in Health Care, 4.2 percent in Industrial and Transportation, 3.1 percent in Consumer and Office and 3.1 percent in Safety, Security and Protection Services. Organic local-currency sales declined 1.8 percent in Electro and Communications and 6.6 percent in Display and Graphics, both impacted by weakness in the consumer electronics industry. On a geographic basis, organic local-currency sales grew 11.4 percent in Latin America/Canada and 3.6 percent in the United States, while Asia Pacific and EMEA (Europe, Middle East and Africa) declined 0.6 percent and 1.9 percent, respectively.

 

Second-quarter net income was $1.2 billion and earnings were $1.66 per share. Total-company operating income margins were 22.9 percent for the quarter, and free cash flow exceeded $1.0 billion.

 

“Our team performed very well in the quarter, delivering excellent productivity and record second-quarter earnings,” said Inge G. Thulin, 3M chairman, president and chief executive officer. “We achieved these results through outstanding factory efficiency and cost discipline throughout the organization.”

 

Thulin continued, “Going forward, we will keep driving to achieve strong earnings and cash flow. At the same time we will expand 3M’s customer relevance through strategic investments in manufacturing, innovation and commercialization.”

 

Looking ahead, 3M maintained its full-year 2012 earnings expectations of $6.35 to $6.50 per share. The company anticipates full-year organic local-currency sales growth of 2 to 5 percent and that foreign currency translation will reduce sales by approximately 3 percent for the year. 3M expects operating income margins in the range of 21.5 to 22.5 percent for the year.

 

Second-Quarter Business Segment Discussion

 

Industrial and Transportation

·                  Sales of $2.6 billion, down 0.6 percent in U.S. dollars. Organic local-currency sales increased 4.2 percent, acquisitions added 0.2 percent and foreign currency translation reduced sales by 5.0 percent.

·                  On an organic local-currency basis:

 



 

·                  Sales growth was strongest in automotive OEM, aerospace, abrasives and energy/advanced materials.

·                  Sales rose in Latin America/Canada, Asia Pacific and the U.S.; EMEA declined slightly.

·                  Operating income rose 13.0 percent to $614 million; operating income margin of 23.4 percent.

 

Health Care

·                  Sales of $1.3 billion, up 1.1 percent in U.S. dollars. Organic local-currency sales increased 5.4 percent, acquisitions added 0.4 percent and foreign currency translation reduced sales by 4.7 percent.

·                  On an organic local-currency basis:

·                  Sales rose in all businesses, led by food safety, health information systems and skin/wound care.

·                  Double-digit sales growth in Latin America/Canada and Asia Pacific; EMEA and the U.S. also posted positive growth.

·                  Operating income increased 13.4 percent to $414 million; operating income margin of 32.3 percent.

 

Consumer and Office

·                  Sales of $1.1 billion, up 2.3 percent in U.S. dollars. Organic local-currency sales increased 3.1 percent, acquisitions added 2.7 percent and foreign currency translation reduced sales by 3.5 percent.

·                  On an organic local-currency basis:

·                  Sales growth was led by the DIY and home care businesses.

·                  Sales expanded in Latin America/Canada, Asia Pacific and the U.S., partially offset by declines in EMEA.

·                  Operating income rose 10.2 percent to $222 million; operating income margin of 21.0 percent.

 

Safety, Security and Protection Services

·                  Sales of $991 million, down 1.9 percent in U.S. dollars. Organic local-currency sales increased 3.1 percent and foreign currency translation reduced sales by 5.0 percent.

·                  On an organic local-currency basis:

·                  Sales growth was strongest in infrastructure protection, personal safety and building and commercial services; sales declined year-on-year in security systems.

·                  Sales increased in Latin America/Canada, Asia Pacific and the U.S., partially offset by declines in EMEA.

·                  Operating income rose 6.3 percent to $258 million; operating margin of 26.0 percent.

 

Display and Graphics

·                  Sales of $882 million, down 9.3 percent in U.S. dollars. Organic local-currency sales declined 6.6 percent and foreign currency translation reduced sales by 2.7 percent.

·                  On an organic local-currency basis:

·                  Lower film volumes for LCD TVs drove double-digit sales declines in optical systems.

·                  Double-digit sales increases in both architectural markets and commercial graphics; sales down slightly in traffic safety systems.

 



 

·                  Sales declined in Asia Pacific and EMEA, partially offset by increases in the U.S. and Latin America/Canada.

·                  Operating income declined 19.1 percent to $179 million; operating margin of 20.3 percent.

 

Electro and Communications

·                  Sales of $824 million, down 4.7 percent in U.S. dollars. Organic local-currency sales declined 1.8 percent and foreign currency translation reduced sales by 2.9 percent.

·                  On an organic local-currency basis:

·                  Positive sales growth in electrical markets; telecom and consumer electronics-related businesses declined year-on-year.

·                  Sales rose in Latin America/Canada and the U.S., and were down year-on-year in EMEA and Asia Pacific.

·                  Operating income of $195 million, down 2.3 percent; operating margin of 23.7 percent.

 

3M will conduct an investor teleconference at 9:00 a.m. EDT (8:00 a.m. CDT) today. Investors can access this conference via the following:

 

·               Live webcast at http://investor.3M.com.

·               Live telephone:

Call 800-762-2596 within the U.S. or +1 212-231-2916 outside the U.S. Please join the call at least 10 minutes before the start time.

·               Webcast replay:

Go to 3M’s Investor Relations website at http://investor.3M.com and click on “Quarterly Earnings.”

·               Telephone replay:

Call 800-633-8284 (for both U.S. and outside the U.S.; access code is 21538621).

The telephone replay will be available until 10:00 a.m. CDT on July 31, 2012.

 

Forward-Looking Statements

This news release contains forward-looking information about 3M’s financial results and estimates and business prospects 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,” “target,” “forecast” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans or prospects. Among the factors that could cause actual results to differ materially are the following: (1) worldwide economic and capital markets conditions and other factors beyond the Company’s control, including natural and other disasters affecting the operations of the Company or its customers and suppliers; (2) the Company’s credit ratings and its cost of capital; (3) competitive conditions and customer preferences; (4) foreign currency exchange rates and fluctuations in those rates; (5) the timing and market acceptance of new product offerings; (6) 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); (7) 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; (8) generating fewer productivity improvements than estimated; (9) security breaches and other disruptions to the Company’s information technology infrastructure; and (10) 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 December 31, 2011 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 “Cautionary Note Concerning Factors That May Affect Future Results” and “Risk Factors” in Part I, Items 1 and 1A (Annual Report) and in Part I, Item 2 and 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.

 



 

3M Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME

(Millions, except per-share amounts)

(Unaudited)

 

 

 

Three-months ended

June 30,

 

Six-months ended

June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

7,534

 

$

7,680

 

$

15,020

 

$

14,991

 

Operating expenses

 

 

 

 

 

 

 

 

 

Cost of sales

 

3,870

 

4,040

 

7,759

 

7,842

 

Selling, general and administrative expenses

 

1,528

 

1,581

 

3,080

 

3,114

 

Research, development and related expenses

 

408

 

404

 

819

 

802

 

Total operating expenses

 

5,806

 

6,025

 

11,658

 

11,758

 

Operating income

 

1,728

 

1,655

 

3,362

 

3,233

 

Interest expense and income

 

 

 

 

 

 

 

 

 

Interest expense

 

43

 

50

 

83

 

93

 

Interest income

 

(10

)

(9

)

(19

)

(19

)

Total interest expense – net

 

33

 

41

 

64

 

74

 

Income before income taxes

 

1,695

 

1,614

 

3,298

 

3,159

 

Provision for income taxes

 

509

 

437

 

971

 

879

 

Net income including noncontrolling interest

 

$

1,186

 

$

1,177

 

$

2,327

 

$

2,280

 

Less: Net income attributable to noncontrolling interest

 

19

 

17

 

35

 

39

 

Net income attributable to 3M

 

$

1,167

 

$

1,160

 

$

2,292

 

$

2,241

 

Weighted average 3M common shares outstanding – basic

 

694.3

 

713.4

 

695.5

 

712.5

 

Earnings per share attributable to 3M common shareholders – basic

 

$

1.68

 

$

1.63

 

$

3.30

 

$

3.15

 

Weighted average 3M common shares outstanding – diluted

 

702.6

 

726.5

 

704.4

 

726.4

 

Earnings per share attributable to 3M common shareholders – diluted

 

$

1.66

 

$

1.60

 

$

3.25

 

$

3.09

 

Cash dividends paid per 3M common share

 

$

0.59

 

$

0.55

 

$

1.18

 

$

1.10

 

 



 

3M Company and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in millions)

(Unaudited)

 

 

 

Jun. 30,
2012

 

Dec. 31,
2011

 

Jun. 30,
2011

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,308

 

$

2,219

 

$

3,376

 

Marketable securities – current

 

1,595

 

1,461

 

1,148

 

Accounts receivable – net

 

4,364

 

3,867

 

4,385

 

Inventories

 

3,656

 

3,416

 

3,717

 

Other current assets

 

1,165

 

1,277

 

911

 

Total current assets

 

14,088

 

12,240

 

13,537

 

Marketable securities – non-current

 

1,031

 

896

 

407

 

Investments

 

152

 

155

 

166

 

Property, plant and equipment – net

 

7,706

 

7,666

 

7,624

 

Goodwill and intangible assets – net

 

8,911

 

8,963

 

9,258

 

Prepaid pension benefits

 

45

 

40

 

82

 

Other assets (a)

 

1,406

 

1,656

 

1,208

 

Total assets

 

$

33,339

 

$

31,616

 

$

32,282

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

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

 

$

650

 

$

682

 

$

1,116

 

Accounts payable

 

1,792

 

1,643

 

1,851

 

Accrued payroll

 

593

 

676

 

586

 

Accrued income taxes

 

440

 

355

 

365

 

Other current liabilities

 

2,232

 

2,085

 

2,285

 

Total current liabilities

 

5,707

 

5,441

 

6,203

 

Long-term debt

 

5,657

 

4,484

 

4,484

 

Pension and postretirement benefits (a)

 

3,355

 

3,972

 

1,932

 

Other liabilities

 

1,747

 

1,857

 

1,921

 

Total liabilities

 

$

16,466

 

$

15,754

 

$

14,540

 

 

 

 

 

 

 

 

 

Total equity (a)

 

$

16,873

 

$

15,862

 

$

17,742

 

Shares outstanding

 

 

 

 

 

 

 

June 30, 2012: 691,319,463 shares

 

 

 

 

 

 

 

December 31, 2011: 694,970,041 shares

 

 

 

 

 

 

 

June 30, 2011: 709,535,731 shares

 

 

 

 

 

 

 

Total liabilities and equity

 

$

33,339

 

$

31,616

 

$

32,282

 


(a)         The changes in 3M’s defined-benefit pension and postretirement plans’ funded status as of December 31, 2011 (primarily due to a decrease in discount rates) significantly impacted several balance sheet lines. These changes increased long-term liabilities by approximately $2.4 billion and decreased stockholders’ equity by approximately $1.6 billion, with the other major impact primarily related to increased deferred taxes within other assets. Other pension and postretirement changes during the year, such as contributions and amortization, also impacted these balance sheet captions.

 



 

3M Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)

(Unaudited)

 

 

 

Six-months ended

June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

$

2,217

 

$

2,184

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property, plant and equipment

 

(619

)

(526

)

Acquisitions, net of cash acquired

 

(144

)

(487

)

Purchases and proceeds from sale or maturities of
marketable securities and investments – net

 

(103

)

205

 

Other investing activities

 

12

 

(1

)

 

 

 

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

 

(854

)

(809

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Change in debt

 

1,192

 

(47

)

Purchases of treasury stock

 

(1,163

)

(1,358

)

Proceeds from issuances of treasury stock pursuant to stock
option and benefit plans

 

479

 

753

 

Dividends paid to shareholders

 

(820

)

(783

)

Other financing activities

 

41

 

(2

)

 

 

 

 

 

 

NET CASH USED IN FINANCING ACTIVITIES

 

(271

)

(1,437

)

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(3

)

61

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

1,089

 

(1

)

Cash and cash equivalents at beginning of year

 

2,219

 

3,377

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

3,308

 

$

3,376

 

 



 

3M Company and Subsidiaries

SUPPLEMENTAL CASH FLOW AND

OTHER SUPPLEMENTAL FINANCIAL INFORMATION

(Dollars in millions)

(Unaudited)

 

 

 

Three-months ended

June 30,

 

Six-months ended

June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

NON-GAAP MEASURES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow:

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

1,389

 

$

1,451

 

$

2,217

 

$

2,184

 

Purchases of property, plant and equipment

 

(358

)

(295

)

(619

)

(526

)

 

 

 

 

 

 

 

 

 

 

Free Cash Flow (b)

 

$

1,031

 

$

1,156

 

$

1,598

 

$

1,658

 


(b)         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.

 

 

 

June 30,

 

 

 

2012

 

2011

 

OTHER NON-GAAP MEASURES:

 

 

 

 

 

Net Working Capital Turns (c)

 

4.8

 

4.9

 


(c)          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 U.S. GAAP and may not be comparable to similarly titled measures used by other companies.

 


 


 

3M Company and Subsidiaries

SALES CHANGE ANALYSIS

(Unaudited)

 

Sales Change Analysis

By Geographic Area

 

 

 

Three-months ended June 30, 2012

 

 

 

United
States

 

Asia-
Pacific

 

Europe,
Middle
East and
Africa

 

Latin
America/
Canada

 

World-
Wide

 

Volume — organic

 

0.7

%

0.3

%

(4.6

)%

6.6

%

%

Price

 

2.9

 

(0.9

)

2.7

 

4.8

 

1.9

 

Organic local-currency sales

 

3.6

 

(0.6

)

(1.9

)

11.4

 

1.9

 

Acquisitions

 

0.4

 

 

1.6

 

 

0.5

 

Translation

 

 

(1.5

)

(10.6

)

(10.9

)

(4.3

)

Total sales change

 

4.0

%

(2.1

)%

(10.9

)%

0.5

%

(1.9

)%

 

Worldwide

Sales Change Analysis

By Business Segment

 

 

 

Three-months ended June 30, 2012

 

 

Organic

 

 

 

 

 

 

 

 

 

local-

 

 

 

 

 

Total

 

 

 

currency

 

Acqui-

 

Trans-

 

sales

 

 

 

sales

 

sitions

 

lation

 

change

 

Industrial and Transportation

 

4.2

%

0.2

%

(5.0

)%

(0.6

)%

Health Care

 

5.4

%

0.4

%

(4.7

)%

1.1

%

Consumer and Office

 

3.1

%

2.7

%

(3.5

)%

2.3

%

Safety, Security and Protection Services

 

3.1

%

%

(5.0

)%

(1.9

)%

Display and Graphics

 

(6.6

)%

%

(2.7

)%

(9.3

)%

Electro and Communications

 

(1.8

)%

%

(2.9

)%

(4.7

)%

 



 

Sales Change Analysis

By Geographic Area

 

 

 

Six-months ended June 30, 2012

 

 

 

United
States

 

Asia-
Pacific

 

Europe,
Middle East
and Africa

 

Latin America/
Canada

 

World-
Wide

 

Volume — organic

 

2.0

%

(1.5

)%

(3.6

)%

7.2

%

0.1

%

Price

 

2.7

 

(0.8

)

2.7

 

4.4

 

1.8

 

Organic local-currency sales

 

4.7

 

(2.3

)

(0.9

)

11.6

 

1.9

 

Acquisitions

 

0.4

 

0.5

 

2.6

 

0.1

 

1.0

 

Translation

 

 

(0.2

)

(7.3

)

(7.4

)

(2.7

)

Total sales change

 

5.1

%

(2.0

)%

(5.6

)%

4.3

%

0.2

%

 

Worldwide

Sales Change Analysis

By Business Segment

 

 

 

Six-months ended June 30, 2012

 

 

 

Organic

 

 

 

 

 

 

 

 

 

local-

 

 

 

 

 

Total

 

 

 

currency

 

Acqui-

 

Trans-

 

sales

 

 

 

sales

 

sitions

 

lation

 

change

 

Industrial and Transportation

 

5.4

%

1.6

%

(3.2

)%

3.8

%

Health Care

 

4.2

%

0.2

%

(2.9

)%

1.5

%

Consumer and Office

 

2.7

%

2.8

%

(2.2

)%

3.3

%

Safety, Security and Protection Services

 

4.9

%

%

(3.3

)%

1.6

%

Display and Graphics

 

(8.9

)%

%

(1.6

)%

(10.5

)%

Electro and Communications

 

(2.4

)%

%

(1.6

)%

(4.0

)%

 



 

3M Company and Subsidiaries

BUSINESS SEGMENTS

(Dollars in millions)

(Unaudited)

 

BUSINESS
SEGMENT
INFORMATION
(Millions)

 

 

 

Three-months ended

 

Six-months ended

 

 

 

June 30,

 

June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

NET SALES

 

 

 

 

 

 

 

 

 

Industrial and Transportation

 

$

2,627

 

$

2,641

 

$

5,287

 

$

5,091

 

Health Care

 

1,283

 

1,269

 

2,563

 

2,524

 

Consumer and Office

 

1,062

 

1,038

 

2,105

 

2,038

 

Safety, Security and Protection Services

 

991

 

1,011

 

1,972

 

1,940

 

Display and Graphics

 

882

 

973

 

1,714

 

1,916

 

Electro and Communications

 

824

 

864

 

1,632

 

1,700

 

Corporate and Unallocated

 

2

 

3

 

3

 

8

 

Elimination of Dual Credit

 

(137

)

(119

)

(256

)

(226

)

 

 

 

 

 

 

 

 

 

 

Total Company

 

$

7,534

 

$

7,680

 

$

15,020

 

$

14,991

 

 

 

 

Three-months ended

 

Six-months ended

 

 

 

June 30,

 

June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

OPERATING INCOME

 

 

 

 

 

 

 

 

 

Industrial and Transportation

 

$

614

 

$

544

 

$

1,214

 

$

1,060

 

Health Care

 

414

 

364

 

816

 

733

 

Consumer and Office

 

222

 

202

 

456

 

417

 

Safety, Security and Protection Services

 

258

 

242

 

489

 

441

 

Display and Graphics

 

179

 

222

 

342

 

452

 

Electro and Communications

 

195

 

200

 

363

 

378

 

Corporate and Unallocated

 

(124

)

(93

)

(262

)

(198

)

Elimination of Dual Credit

 

(30

)

(26

)

(56

)

(50

)

 

 

 

 

 

 

 

 

 

 

Total Company

 

$

1,728

 

$

1,655

 

$

3,362

 

$

3,233

 

 



 

About 3M

3M captures the spark of new ideas and transforms them into thousands of ingenious products.  Our culture of creative collaboration inspires a never-ending stream of powerful technologies that make life better.  3M is the innovation company that never stops inventing.  With $30 billion in sales, 3M employs 84,000 people worldwide and has operations in more than 65 countries.

 

Investor Contacts:

Matt Ginter

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