3M Reports Record Fourth-Quarter and Full-Year Sales and Earnings; Company Raises Earnings Estimates For 2004

January 20, 2004

ST. PAUL, Minn.--(BUSINESS WIRE)--3M (NYSE:MMM) today announced its sales and earnings results for fourth quarter and full year 2003.

Net income for the quarter was $619 million, or $0.77 per share, versus $511 million, or $0.65 per share, in the fourth quarter of 2002. Net income and per-share earnings increased 21.3 percent and 18.5 percent, respectively.

"Solid execution of both growth and productivity plans characterized the fourth quarter," said W. James McNerney, Jr., 3M chairman and CEO. "Sales reached an all-time high for the fourth consecutive quarter and earnings per share were the highest of any fourth quarter in 3M's history. It was a strong finish to the year."

Worldwide sales totaled $4.718 billion, up 14.0 percent compared to the fourth quarter of 2002. Sales volumes increased 7.6 percent, including a positive 1.7 percent impact from acquisitions. Volumes improved in all businesses, with an increase of 38.4 percent in Display and Graphics (includes 11.5 percent from acquisitions), 8.2 percent in Safety, Security and Protection Services, 2.6 percent in Transportation, 2.4 percent in Health Care, 2.2 percent in Industrial, 1.7 percent in Consumer and Office and 1.6 percent in Electro and Communications. Currency translation effects increased worldwide sales by 6.6 percent, while selling prices were down 0.2 percent.

Sales outside the United States totaled $2.849 billion, an increase of 23.9 percent versus last year's comparable quarter. Volumes increased 12.8 percent, while selling prices declined 0.8 percent. Currency translation effects increased international sales by 11.9 percent. Volumes increased 28.7 percent in Asia Pacific and 23.3 percent in Latin America, while European volumes declined 1.4 percent. In the United States, sales totaled $1.869 billion, up 1.6 percent from the same quarter of 2002. Volumes increased 1.1 percent, while selling prices improved by 0.5 percent.

Net income for the 2003 calendar year totaled $2.403 billion, or $3.02 per share, compared with $1.974 billion, or $2.50 per share, in 2002. Excluding special items (a), 2003 net income totaled $2.461 billion, or $3.09 per share; full-year net income and per-share earnings increased 18.2 percent and 17.5 percent, respectively. Full-year 2003 sales totaled $18.232 billion, up 11.6 percent in U.S. dollars. Volumes improved 6.6 percent versus the prior year, while selling prices declined 0.2 percent. Currency effects increased 2003 sales by 5.2 percent.

"Despite economic challenges in many parts of the world, the 3M team delivered a challenging operating plan in 2003," McNerney said, "and we are well-positioned for another successful year in 2004. Our corporate initiatives, now embedded in the 3M fabric, are helping to drive improvements in productivity, cash flow and, most importantly, top-line growth."

3M also raised its full-year 2004 earnings estimates. The company expects earnings to be in the range of $3.46 to $3.52 per share, an increase of 12 to 14 percent excluding special items in 2003. Sales volumes are anticipated to grow between 5 percent and 8 percent in 2004. For the first quarter of 2004, the company expects earnings to be in the range of $0.80 to $0.82 per share.

McNerney 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) today. Investors can access a webcast of this conference, along with related charts and materials, at http://investor.3m.com/.

(a) During the first quarter of 2003, 3M recorded pretax charges of $93 million ($58 million after-tax) related to an adverse court ruling in a lawsuit filed against 3M in 1997 by LePage's Inc. During the second quarter of 2002, under its previously announced restructuring plan, 3M incurred pretax charges of $148 million ($73 million after-tax) primarily related to employee separation costs and accelerated depreciation charges. The company incurred similar charges in the first quarter of 2002 that totaled $54 million pre-tax ($35 million after-tax).

Forward-Looking Statements

This news release contains forward-looking statements that reflect current views and estimates of 3M's management of future economic circumstances, industry conditions, company performance and financial results. The statements are based on many assumptions and factors including: (1) worldwide economic conditions; (2) foreign currency exchange rates and fluctuations in those rates; (3) the timing and acceptance of new product offerings; (4) purchased components and materials, including shortages and increases in the costs of such components and materials; (5) 3M's ability to successfully manage acquisitions, divestitures and strategic alliances; and (6) legal proceedings. Changes in such assumptions or factors, including without limitation the outcome of and information derived from pending Congressional action concerning asbestos-related litigation, could produce significantly different results.

About 3M -- A Global, Diversified Technology Company

Every day, 3M people find new ways to make amazing things happen. Wherever they are, whatever they do, the company's customers know they can rely on 3M to help make their lives better. 3M's brands include icons such as Scotch, Post-it, Scotchgard, Thinsulate, Scotch-Brite, Filtrete, Command and Dyneon. 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. For more information, including the latest product and technology news, visit www.3M.com.

Scotch, Post-it, Scotchgard, Thinsulate, Scotch-Brite, Filtrete, Command and Dyneon are trademarks of 3M.

3M Company and Subsidiaries
SALES CHANGE ANALYSIS
(Unaudited)

Fourth-Quarter 2003


Worldwide U.S. Intl.
Volume - core
5.9 %
0.0 %
10.7 %
Volume - acquisitions
1.7
1.1
2.1









Volume - total
7.6

1.1

12.8
Price
(0.2 )
0.5

(0.8 )
Translation
6.6
--
11.9









Total
14.0 %
1.6 %
23.9 %


Twelve-Months 2003


Worldwide
U.S.
Intl.
Volume - core
4.7 %
0.6 %
8.2 %
Volume - acquisitions
1.9
1.5

2.2









Volume - total
6.6

2.1

10.4
Price
(0.2 )
0.0

(0.3 )
Translation
5.2
--
9.5









Total
11.6 %
2.1 %
19.6 %









3M Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Amounts in millions, except per-share amounts)

(Unaudited)


Three-months ended Twelve-months ended


December 31
December 31


2003 2002
2003 2002
Net sales
$ 4,718
$ 4,138
$ 18,232
$ 16,332








Operating expenses







Cost of sales

2,429


2,114


9,285


8,496
Selling, general and







administrative expenses

1,061


955


4,039


3,720
Research, development







and related expenses

286


273


1,102


1,070
Other expense
--
--
93
--












Total
3,776
3,342
14,519
13,286












Operating income
942
796
3,713
3,046








Interest expense and







income







Interest expense

15


22


84


80
Interest income
(11 )
(12 )
(28 )
(39 )











Total
4
10
56
41








Income before income taxes







and minority interest

938


786


3,657


3,005
Provision for income taxes

305


255


1,202


966
Minority interest
14
20
52
65












Net income
$ 619
$ 511
$ 2,403
$ 1,974








Weighted average common







shares outstanding -







basic

784.6


780.6


782.8


780.0
Earnings per share -







basic
$ 0.79
$ 0.65
$ 3.07
$ 2.53








Weighted average common







shares outstanding -







diluted

800.9


791.3


795.3


791.0
Earnings per share -







diluted
$ 0.77
$ 0.65
$ 3.02
$ 2.50








Cash dividends paid







per common share
$ 0.33
$ 0.31
$ 1.32
$ 1.24












Share and per-share data have been adjusted to reflect the two-for-one stock split effective with third quarter 2003 reporting.

3M Company and Subsidiaries
SUPPLEMENTAL CONSOLIDATED STATEMENT OF INCOME INFORMATION
(Dollars in millions, except per-share amounts)
(Unaudited)

Twelve-months ended

Twelve-months ended



December 31, 2003
December 31, 2002


Excluding


Excluding



special
Special
Reported
special
Special
Reported


items items total items items total
Net sales
$ 18,232 $ -- $ 18,232 $ 16,332 $ -- $ 16,332
Operating











expenses











Cost of sales

9,285


--


9,285


8,375


121


8,496
Selling,











general and











administrative











expenses

4,039


--


4,039


3,643


77


3,720
Research,











development











and related











expenses

1,102


--


1,102


1,066

4


1,070
Other expense
-- 93 93 -- -- --
Total
14,426 93 14,519 13,084 202 13,286
Operating











income (loss)

3,806


(93 )

3,713


3,248


(202 )

3,046
Interest expense











and (income),











net
56 -- 56 41 -- 41
Income (loss)











before income











taxes and











minority











interest

3,750


(93 )

3,657


3,207


(202 )

3,005
Provision











(benefit) for











income taxes

1,237


(35 )

1,202


1,042


(76 )

966
Effective tax











rate

33.0 %

--


32.9 %

32.5 %

--


32.1 %
Minority











interest
52 -- 52 83 (18 ) 65
Net income











(loss)
$ 2,461 $ (58 ) $ 2,403 $ 2,082 $ (108 ) $ 1,974
Weighted











average











diluted shares

795.3


795.3


795.3


791.0


791.0


791.0
Net income per











diluted share
$ 3.09

$ (0.07 )
$ 3.02

$ 2.63

$ (0.13 )
$ 2.50


















Share and per-share data have been adjusted to reflect the two-for-one stock split effective with third quarter 2003 reporting.

3M Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions, except per-share amounts)
(Unaudited)

Dec. 31, Dec. 31,
ASSETS
2003
2002
Current assets



Cash and cash equivalents
$ 1,836
$ 618
Accounts receivable - net

2,714

2,527
Inventories

1,816

1,931
Other current assets
1,347
983




Total current assets

7,713

6,059
Investments

218

238
Property, plant and equipment - net

5,609

5,621
Other assets
4,053
3,411




Total assets
$ 17,593
$ 15,329




LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities



Short-term debt
$ 1,202
$ 1,237
Accounts payable

1,087

945
Payroll

436

411
Income taxes payable

880

518
Other current liabilities
1,477
1,346




Total current liabilities

5,082

4,457
Long-term debt

1,735

2,140
Other liabilities
2,910
2,739




Total liabilities
9,727
9,336




Total stockholders' equity - net

7,866

5,993
Shares outstanding



December 31, 2003: 784,117,360 shares



December 31, 2002: 780,391,362 shares





Total liabilities and stockholders' equity





$ 17,593
$ 15,329






Shares outstanding have been adjusted to reflect the two-for-one stock split effective with third quarter 2003 reporting.

3M Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(Unaudited)

Three-months ended Twelve-months ended


December 31
December 31


2003 2002
2003 2002
SUMMARY OF CASH FLOW:







NET CASH PROVIDED BY







OPERATING ACTIVITIES
$ 1,286
$ 999
$ 3,793
$ 2,992
















Cash flows from investing







activities:







Purchases of property, plant







and equipment

(261 )

(233 )

(677 )

(763 )
Acquisitions of businesses

(11 )

(1,170 )

(439 )

(1,258 )
Other investing activities
19
42
127
94
















NET CASH USED IN







INVESTING ACTIVITIES
(253 )
(1,361 )
(989 )
(1,927 )
















Cash flows from financing







activities:







Change in debt

(68 )

427


(440 )

445
Purchases of treasury stock

(291 )

(129 )

(685 )

(942 )
Reissuances of treasury







stock

130


96


555


522
Dividends paid to







stockholders

(259 )

(243 )

(1,034 )

(968 )
Other financing activities
(4 )
--
(23 )
(78 )








NET CASH USED IN







FINANCING ACTIVITIES
(492 )
151
(1,627 )
(1,021 )
















Effect of exchange rate







changes on cash
16
8
41
(42 )















Net increase (decrease) in







cash and cash equivalents

557


(203 )

1,218

2
Cash and cash equivalents at







beginning of period
1,279
821
618
616
















Cash and cash equivalents at







end of period
1,836
618
1,836
618








FREE CASH FLOW (Non-GAAP measure):









Net cash provided by







operating activities

1,286


999


3,793


2,992
Purchases of property, plant







and equipment
(261 )
(233 )
(677 )
(763 )
















FREE CASH FLOW
1,025
766
3,116
2,229
















3M Company and Subsidiaries
BUSINESS SEGMENTS
(Dollars in millions)
(Unaudited)
BUSINESS



SEGMENT
Three-months ended
Twelve-months ended
INFORMATION
December 31
December 31
(Millions)
2003
2002
2003
2002








NET SALES







Health Care
$ 1,020

$ 918

$ 3,995

$ 3,560
Industrial

865


793


3,354


3,147
Display and Graphics

810


569


2,962


2,228
Consumer and Office

685


645


2,607


2,444
Safety, Security and







Protection Services

470


405


1,928


1,686
Electro and Communications

472


448


1,818


1,831
Transportation

388


349


1,538


1,388
Corporate and Unallocated
8
11
30
48
















Total Company
$ 4,718
$ 4,138
$ 18,232
$ 16,332
OPERATING INCOME







Health Care
$ 254

$ 243

$ 1,027

$ 900
Industrial

109


115


458


487
Display and Graphics

243


129


885


534
Consumer and Office

114


114


460


448
Safety, Security and







Protection Services

90


71


437


338
Electro and Communications

71


55


255


253
Transportation

88


80


389


333
Corporate and Unallocated
(27 )
(11 )
(198 )
(247 )
















Total Company
$ 942
$ 796
$ 3,713
$ 3,046

During the first quarter of 2003, 3M recorded pretax charges of $93 million related to an adverse court ruling in a lawsuit filed against 3M in 1997 by LePage's Inc. During the second quarter of 2002, under it's previously announced restructuring plan, 3M incurred pretax charges of $148 million primarily related to employee separation costs and accelerated depreciation charges. The company incurred similar charges in the first quarter of 2002 that totaled $54 million pre-tax. These 2003 and 2002 charges were recorded in Corporate and Unallocated.

Contact:

3M, St. Paul
Investor Contacts:
Matt Ginter, 651-733-8206
or
Bruce Jermeland, 651-733-1807
or
Media Contact:
John Cornwell, 651-733-7698

Multimedia Files:

Categories: Press Releases