Exhibit 99

 

For Immediate Release

 

3M Posts First-Quarter Sales of $7.4 Billion and GAAP EPS of $2.05

 

First-Quarter Highlights:

·                 Company adopts new FASB accounting standard, which added $0.10, net, to EPS

·                 Operating income margins up 1.3 percentage points year-on-year to 24.1 percent

·                 Organic local-currency sales growth declined 0.8 percent

·                 Increased free cash flow 20 percent year-on-year to $946 million

·                 Increased first-quarter per share dividend by 8 percent, 58th consecutive year of increases

 

ST. PAUL, Minn. – April 26, 2016 - 3M (NYSE: MMM) today reported first-quarter earnings of $2.05 per share, an increase of 10.8 percent versus the first quarter of 2015. Sales declined 2.2 percent year-on-year to $7.4 billion. Organic local-currency sales declined 0.8 percent while acquisitions, net of divestitures, added 1.6 percent to sales. Foreign currency translation reduced sales by 3.0 percent year-on-year.

 

Operating income was $1.8 billion and operating income margins for the quarter were 24.1 percent, up 1.3 percentage points year-on-year. First-quarter net income was $1.3 billion and the company converted 74 percent of net income to free cash flow.

 

On March 30, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-09 for the accounting of employee share-based payments. 3M elected to adopt this new guidance ahead of the mandatory 2017 effective date for all U.S. public companies. The adoption of this ASU resulted in a first-quarter tax benefit to earnings of $0.10 per share, net of tax cost related to global cash optimization actions. Over the remainder of 2016, the company is planning to take further such actions, and as a result its full-year tax rate and earnings per share guidance remains unchanged.

 

3M paid $672 million in cash dividends to shareholders and repurchased $1.2 billion of its own shares during the quarter.

 

Organic local-currency sales growth was 6.2 percent in Health Care, 2.8 percent in Consumer and 2.4 percent in Safety and Graphics, with declines of 1.9 percent in Industrial and 11.7 percent in Electronics and Energy. On a geographic basis, organic local-currency sales growth was 4.2 percent in Latin America/Canada, 1.7 percent in EMEA (Europe, Middle East and Africa) and 0.3 percent in the U.S., with a decline of 5.6 percent in Asia Pacific.

 

“Our team continued to execute the 3M playbook and delivered another solid operational performance in the first quarter,” said Inge G. Thulin, 3M’s chairman, president and chief executive officer. “We expanded 3M’s profitability, improved our cash flow generation, and increased margins over a full percentage point. At the same time, we continued to invest in the business — including opening a new, world-class laboratory in the United States — while returning cash to our shareholders.”

 



 

For full-year 2016, 3M maintained its forecast for earnings per share in the range of $8.10 to $8.45 with organic local-currency sales growth of 1 to 3 percent. 3M also continues to expect its tax rate to be in the range of 29.5 to 30.5 percent and free cash flow conversion in the range of 95 to 105 percent.

 

First-Quarter Business Group Discussion

 

Industrial

·                  Sales of $2.6 billion, down 3.0 percent in U.S. dollars. Organic local-currency sales declined 1.9 percent while foreign currency translation reduced sales by 3.0 percent and acquisitions, net of divestitures, increased sales by 1.9 percent.

·                  On an organic local-currency basis:

·                  Sales growth in automotive OEM, automotive aftermarket and 3M Purification was offset by declines across the rest of the portfolio.

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

·                  Operating income was $617 million, up 3.6 percent year-on-year; operating margin of 23.9 percent.

 

Safety and Graphics

·                  Sales of $1.4 billion, up 2.9 percent in U.S. dollars. Organic local-currency sales increased 2.4 percent and acquisitions, net of divestitures, increased sales by 4.5 percent while foreign currency translation reduced sales by 4.0 percent.

·                  On an organic local-currency basis:

·                  Sales grew in roofing granules, commercial solutions and personal safety; sales declined in traffic safety and security.

·                  Sales grew across all geographic areas led by Asia Pacific and the U.S.

·                  Operating income was $345 million, an increase of 3.1 percent year-on-year; operating margin of 24.5 percent.

 

Health Care

·                  Sales of $1.4 billion, up 4.0 percent in U.S. dollars. Organic local-currency sales increased 6.2 percent, acquisitions increased sales by 0.9 percent and foreign currency translation reduced sales by 3.1 percent.

·                  On an organic local-currency basis:

·                  Strong sales growth across all businesses.

·                  Sales grew in all geographic areas led by Asia Pacific and Latin America/Canada.

·                  Operating income was $455 million, an increase of 11.5 percent year-on-year; operating margin of 32.9 percent.

 

Electronics and Energy

·                  Sales of $1.1 billion, down 13.6 percent in U.S. dollars. Organic local-currency sales declined 11.7 percent and foreign currency translation reduced sales by 1.9 percent.

·                  On an organic local-currency basis:

 



 

·                  Electronics-related sales decreased 18 percent with declines in both electronics materials solutions, and display materials and systems; energy-related sales declined 1 percent as growth in electrical markets was offset by declines in renewable energy and telecom.

·                  Sales declined in Asia Pacific and were flat in the other geographic areas.

·                  Operating income was $208 million, down 26.8 percent year-on-year; operating margin of 18.2 percent.

 

Consumer

·                  Sales of $1.0 billion, up 0.1 percent in U.S. dollars. Organic local-currency sales increased 2.8 percent and foreign currency translation reduced sales by 2.7 percent.

·                  On an organic local-currency basis:

·                  Sales grew in three of four businesses led by home improvement and consumer health care.

·                  Sales grew in Asia Pacific and the U.S. while declined in Latin America/Canada and EMEA.

·                  Operating income was $238 million, down 1.1 percent year-on-year; operating margin of 22.7 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://investors.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://investors.3M.com and click on “Quarterly Earnings.”

·               Telephone replay:

Call 800-633-8284 within the U.S. or +1 402-977-9140 outside the U.S. (for both U.S. and outside the U.S. access code is 21776139). The telephone replay will be available until 10:30 a.m. CDT on April 29, 2016.

 

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,” “aim,” “project,” “intend,” “plan,” “believe,” “will,” “should,” “could,” “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 or climate change 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) unanticipated problems or delays with the phased implementation of a global enterprise resource planning (ERP) system, or security breaches and other disruptions to the Company’s information technology infrastructure; (10) financial market risks that may affect the Company’s funding obligations under defined benefit pension and postretirement plans; and (11) 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, 2015. Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located in the Annual Report under “Cautionary Note Concerning Factors That May Affect Future Results” and “Risk Factors” in Part I, Items 1 and 1A. 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 

 

 

 

March 31,

 

 

 

2016

 

2015

 

 

 

 

 

 

 

Net sales

 

$

7,409

 

$

7,578

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

Cost of sales

 

3,678

 

3,821

 

Selling, general and administrative expenses

 

1,493

 

1,564

 

Research, development and related expenses

 

450

 

463

 

 

 

 

 

 

 

Total operating expenses

 

5,621

 

5,848

 

 

 

 

 

 

 

Operating income

 

1,788

 

1,730

 

 

 

 

 

 

 

Interest expense and income

 

 

 

 

 

Interest expense

 

47

 

31

 

Interest income

 

(5

)

(4

)

 

 

 

 

 

 

Total interest expense – net

 

42

 

27

 

 

 

 

 

 

 

Income before income taxes

 

1,746

 

1,703

 

 

 

 

 

 

 

Provision for income taxes

 

468

 

502

 

 

 

 

 

 

 

Net income including noncontrolling interest

 

$

1,278

 

$

1,201

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interest

 

3

 

2

 

 

 

 

 

 

 

Net income attributable to 3M

 

$

1,275

 

$

1,199

 

 

 

 

 

 

 

Weighted average 3M common shares outstanding – basic

 

607.4

 

636.2

 

Earnings per share attributable to 3M common shareholders – basic

 

$

2.10

 

$

1.88

 

 

 

 

 

 

 

Weighted average 3M common shares outstanding – diluted

 

621.3

 

649.2

 

Earnings per share attributable to 3M common shareholders – diluted

 

$

2.05

 

$

1.85

 

 

 

 

 

 

 

Cash dividends paid per 3M common share

 

$

1.11

 

$

1.025

 

 



 

3M Company and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in millions)

(Unaudited)

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2016

 

2015

 

2015

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,337

 

$

1,798

 

$

1,791

 

Marketable securities — current

 

176

 

118

 

1,018

 

Accounts receivable — net

 

4,485

 

4,154

 

4,408

 

Inventories

 

3,627

 

3,518

 

3,704

 

Other current assets

 

1,249

 

1,398

 

1,395

 

Total current assets

 

10,874

 

10,986

 

12,316

 

Marketable securities — non-current

 

15

 

9

 

13

 

Investments

 

115

 

117

 

102

 

Property, plant and equipment — net

 

8,614

 

8,515

 

8,286

 

Goodwill and intangible assets — net (a)

 

11,926

 

11,850

 

8,330

 

Prepaid pension benefits

 

226

 

188

 

56

 

Other assets

 

1,212

 

1,053

 

1,466

 

Total assets

 

$

32,982

 

$

32,718

 

$

30,569

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Short-term borrowings and

 

 

 

 

 

 

 

current portion of long-term debt

 

$

2,212

 

$

2,044

 

$

132

 

Accounts payable

 

1,581

 

1,694

 

1,801

 

Accrued payroll

 

468

 

644

 

446

 

Accrued income taxes

 

590

 

332

 

464

 

Other current liabilities

 

2,327

 

2,404

 

2,186

 

Total current liabilities

 

7,178

 

7,118

 

5,029

 

Long-term debt

 

8,927

 

8,753

 

6,434

 

Pension and postretirement benefits

 

3,454

 

3,520

 

3,764

 

Other liabilities

 

1,649

 

1,580

 

1,390

 

Total liabilities

 

$

21,208

 

$

20,971

 

$

16,617

 

 

 

 

 

 

 

 

 

Total equity

 

$

11,774

 

$

11,747

 

$

13,952

 

Shares outstanding

 

 

 

 

 

 

 

March 31, 2016: 606,514,530 shares

 

 

 

 

 

 

 

December 31, 2015: 609,330,124 shares

 

 

 

 

 

 

 

March 31, 2015: 634,340,975 shares

 

 

 

 

 

 

 

Total liabilities and equity

 

$

32,982

 

$

32,718

 

$

30,569

 

 


(a)                                 In August 2015, 3M completed the acquisitions of Capital Safety and Polypore’s Separations Media (Membrana) business. The combination of these acquisitions increased goodwill and intangible assets — net by approximately $3.8 billion when compared to March 31, 2015, balances.

 



 

3M Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)

(Unaudited)

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2016

 

2015

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

$

1,260

 

$

1,080

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property, plant and equipment

 

(314

)

(291

)

Acquisitions, net of cash acquired

 

(4

)

(150

)

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

 

(61

)

414

 

Other investing activities

 

99

 

27

 

 

 

 

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

 

(280

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Change in debt

 

138

 

(4

)

Purchases of treasury stock

 

(1,227

)

(886

)

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

 

357

 

309

 

Dividends paid to shareholders

 

(672

)

(652

)

Other financing activities

 

(22

)

79

 

 

 

 

 

 

 

NET CASH USED IN FINANCING ACTIVITIES

 

(1,426

)

(1,154

)

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(15

)

(32

)

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

(461

)

(106

)

Cash and cash equivalents at beginning of year

 

1,798

 

1,897

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

1,337

 

$

1,791

 

 



 

3M Company and Subsidiaries

SUPPLEMENTAL FINANCIAL INFORMATION

NON-GAAP MEASURES

(Dollars in millions)

(Unaudited)

 

 

 

Three months ended

 

 

 

March 31,

 

Free Cash Flow

 

2016

 

2015

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

1,260

 

$

1,080

 

Purchases of property, plant and equipment

 

(314

)

(291

)

 

 

 

 

 

 

Free Cash Flow (b)

 

$

946

 

$

789

 

 

 

 

 

 

 

Free Cash Flow Conversion (b)

 

74

%

66

%

 


(b)                                 Free cash flow and free cash flow conversion are not defined under U.S. generally accepted accounting principles (GAAP). Therefore, they 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 defines free cash flow conversion as free cash flow divided by net income attributable to 3M. The Company believes free cash flow and free cash flow conversion are useful measures of performance and uses these measures as an indication of the strength of the company and its ability to generate cash.

 

 

 

March 31,

 

December 31,

 

March 31,

 

Net Debt

 

2016

 

2015

 

2015

 

 

 

 

 

 

 

 

 

Total Debt

 

$

11,139

 

$

10,797

 

$

6,566

 

Less: Cash and Cash Equivalents and Marketable Securities

 

1,528

 

1,925

 

2,822

 

 

 

 

 

 

 

 

 

Net Debt (c)

 

$

9,611

 

$

8,872

 

$

3,744

 

 


(c)                                  The Company defines net debt as total debt less the total of cash, cash equivalents and current and long-term marketable securities. 3M considers net debt and its components to be an important indicator of liquidity and a guiding measure of capital structure strategy. Net debt is not defined under U.S. GAAP and may not be computed the same as similarly titled measures used by other companies.

 

 

 

March 31,

 

December 31,

 

March 31,

 

Working Capital Index

 

2016

 

2015

 

2015

 

 

 

 

 

 

 

 

 

Net Working Capital Turns (d)

 

4.5

 

4.9

 

4.8

 

 


(d)                                 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)

 

 

 

Three months ended March 31, 2016

 

 

 

 

 

 

 

Europe,

 

 

 

 

 

 

 

 

 

 

 

Middle

 

Latin

 

 

 

Sales Change Analysis

 

United

 

Asia-

 

East and

 

America/

 

World-

 

By Geographic Area

 

States

 

Pacific

 

Africa

 

Canada

 

Wide

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume — organic

 

0.3

%

(5.4

)%

0.5

%

(2.6

)%

(1.7

)%

Price

 

 

(0.2

)

1.2

 

6.8

 

0.9

 

Organic local-currency sales

 

0.3

 

(5.6

)

1.7

 

4.2

 

(0.8

)

Acquisitions

 

2.6

 

1.0

 

2.8

 

2.2

 

2.1

 

Divestitures

 

(0.6

)

(0.2

)

(0.7

)

(0.3

)

(0.5

)

Translation

 

 

(2.6

)

(2.9

)

(15.7

)

(3.0

)

Total sales change

 

2.3

%

(7.4

)%

0.9

%

(9.6

)%

(2.2

)%

 

 

 

Three months ended March 31, 2016

 

 

 

Organic

 

 

 

 

 

 

 

 

 

Worldwide

 

local-

 

 

 

 

 

 

 

Total

 

Sales Change Analysis

 

currency

 

 

 

 

 

 

 

sales

 

By Business Segment

 

sales

 

Acquisitions

 

Divestitures

 

Translation

 

change

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial

 

(1.9

)%

2.0

%

(0.1

)%

(3.0

)%

(3.0

)%

Safety and Graphics

 

2.4

%

6.9

%

(2.4

)%

(4.0

)%

2.9

%

Health Care

 

6.2

%

0.9

%

%

(3.1

)%

4.0

%

Electronics and Energy

 

(11.7

)%

%

%

(1.9

)%

(13.6

)%

Consumer

 

2.8

%

%

%

(2.7

)%

0.1

%

 



 

3M Company and Subsidiaries

BUSINESS SEGMENTS

(Dollars in millions)

(Unaudited)

 

Effective in the first quarter of 2016, 3M made a product line reporting change involving two of its business segments in its continuing effort to improve the alignment of its businesses around markets and customers.

 

The change between business segments was as follows:

·                  Elements of the electronic bonding product lines were previously separately reflected in the Electronics Materials Solutions Division (Electronics and Energy business segment) and the Industrial Adhesives and Tapes Division (Industrial business segment). Effective in the first quarter of 2016, certain sales and operating income results for these electronic bonding product lines in aggregate were equally divided between the Electronics and Energy business segment and Industrial business segment. This change resulted in a decrease in net sales for total year 2015 of $33 million in the Industrial business segment offset by a corresponding increase in the Electronics and Energy business segment.

 

The financial information presented herein reflects the impact of the preceding product line reporting change between business segments for all periods presented. Refer to 3M’s Current Report on Form 8-K furnished on March 15, 2016, for additional supplemental unaudited historical business segment net sales and operating income information.

 

BUSINESS SEGMENT INFORMATION

 

Three months ended

 

NET SALES

 

March 31,

 

(Millions)

 

2016

 

2015

 

 

 

 

 

 

 

Industrial

 

$

2,576

 

$

2,656

 

Safety and Graphics

 

1,412

 

1,372

 

Health Care

 

1,383

 

1,329

 

Electronics and Energy

 

1,144

 

1,324

 

Consumer

 

1,049

 

1,048

 

Corporate and Unallocated

 

1

 

2

 

Elimination of Dual Credit

 

(156

)

(153

)

 

 

 

 

 

 

Total Company

 

$

7,409

 

$

7,578

 

 

BUSINESS SEGMENT INFORMATION

 

Three months ended

 

OPERATING INCOME

 

March 31,

 

(Millions)

 

2016

 

2015

 

 

 

 

 

 

 

Industrial

 

$

617

 

$

596

 

Safety and Graphics

 

345

 

335

 

Health Care

 

455

 

408

 

Electronics and Energy

 

208

 

285

 

Consumer

 

238

 

240

 

Corporate and Unallocated

 

(41

)

(100

)

Elimination of Dual Credit

 

(34

)

(34

)

 

 

 

 

 

 

Total Company

 

$

1,788

 

$

1,730

 

 



 

About 3M

 

At 3M, we apply science in collaborative ways to improve lives daily. With $30 billion in sales, our 90,000 employees connect with customers all around the world.

 

 

 

 

 

Investor Contacts:

Bruce Jermeland

Media Contact:

Lori Anderson

 

3M

 

3M

 

(651) 733-1807

 

(651) 733-0831

 

 

 

 

 

Mike Kronebusch

 

 

 

3M

 

 

 

(651) 733-1141

 

 

 

From:

3M Public Relations and Corporate Communications

3M Center, Building 225-1S-15

St. Paul, MN 55144-1000