News Details

3M’s Global Strength Enables Record Second-Quarter Sales and Earnings

July 24, 2008

- Company Generates Broad-Based Sales Growth Of 10 Percent -

ST. PAUL, Minn.--(BUSINESS WIRE)--ST. PAUL, Minn.--(BUSINESS WIRE)--3M (NYSE: MMM) today announced second-quarter sales of $6.7 billion, an increase of 9.7 percent over second quarter of 2007. Net income was $945 million, or $1.33 per share, versus $917 million, or $1.25 per share in the corresponding period last year. Excluding special items in both 2007 and 2008 (a-e), net income in the second quarter of 2008 was $991 million, or $1.39 per share, versus $899 million, or $1.23 per share, in 2007, increases of 10.3 percent and 13 percent, respectively.

The strength of 3Ms global portfolio was evident in the second quarter, said George W. Buckley, 3M chairman, president and CEO. 3Ms three largest businesses, Industrial and Transportation, Health Care and Safety, Security and Protection Services, grew at double-digit rates. Our record sales and earnings for the second quarter are a remarkable achievement by 3M employees around the globe, given the tough economic conditions we have seen in the U.S. and the changing dynamics in the optical films industry.

The company drove outstanding growth across its international operations3M sales in Latin America increased 32 percent over last year, and Europe achieved 18 percent sales growth, while Canada grew by 14 percent. Sales in Asia Pacific improved by 1 percent, 17 percent excluding optical headwinds. International sales now account for close to two-thirds of 3Ms total.

Buckley continued, We remain committed to our long-term growth strategy as we continue to innovate and invest in 3Ms core, build upon and extend that core with acquisitions, invest in emerging business opportunities and leverage our world-class international presence. As always, these investments will be balanced with operational excellence to ensure that we continue to deliver on our commitments.

Executive Summary

  • Achieved record sales for the sixth consecutive quarter.
  • Revenues of $6.7 billion, up 9.7 percent from 2007, or up 13.7 percent excluding optical.
  • Local-currency sales, including the impact of acquisitions, up 4.6 percent from 2007, or up 8.1 percent excluding optical.
  • Currency impacts added 5.4 percent to sales in the quarter.
  • Operating income increased 8.5 percent, excluding special items in the second quarters of 2007 and 2008 (a-e), to $1.5 billion.
  • All six 3M businesses posted operating margins of 20 percent or greater, excluding special items (a-e).
  • Earnings per share of $1.39, up 13 percent, excluding special items in the second quarters of 2007 and 2008 (a-e).
  • Converted nearly 100 percent of net income to free cash flow in the quarter.
  • Returned $923 million to shareholders through cash dividends and share repurchases.

Key Financial Highlights

Second-quarter worldwide sales totaled $6.7 billion, an increase of 9.7 percent over last year. Local-currency sales including acquisitions increased 4.6 percent, and foreign exchange impacts added 5.4 points to growth in the quarter. Local-currency sales including acquisitions increased 25.6 percent in Safety, Security and Protection Services, 8.7 percent in Industrial and Transportation, 7.7 percent in Health Care, 3.5 percent in Consumer and Office and 2.2 percent in Electro and Communications, but declined 18.8 percent in Display and Graphics. Second-quarter net income was $991 million, or $1.39 per share, versus $899 million, or $1.23 per share, in the second quarter of 2007, excluding special items in both periods. Net income and earnings per share increased 10.3 percent and 13 percent respectively, excluding special items (a-e).

Business Segment Discussion

Industrial and Transportation

  • Sales increased 15.5 percent to $2.1 billion.
  • Sales up 8.7 percent in local currencies, including 4.2 percent from acquisitions.
  • Broad-based sales performance with double-digit growth in virtually all product divisions.
  • Double-digit sales growth in Europe, Asia Pacific and Latin America.
  • Filtrete Commercial HVAC Filters installed in Beijings National Stadium suites to improve indoor air quality.
  • Driving growth with our 3M Finishing Systems professional-grade abrasive power tools.
  • Exceptional operational performance, with profits up 18.1 percent to $425 million; operating margins of 20.4 percent, excluding special items.

Health Care

  • Sales rose 13.1 percent to $1.1 billion.
  • Local-currency sales growth of 7.7 percent including 1.1 percent from acquisitions.
  • Outstanding sales growth in the core, including 20 percent-plus growth in oral care and 15 percent-plus growth in medical.
  • Positive sales growth in all major geographies, including double-digit growth in Europe, Asia Pacific and Latin America.
  • Generated first sales of the 3M digital oral scanner for the oral care professional.
  • Awarded first prize for contributions to food safety technology by International Association for Food Protection.
  • Operating income increased 11.6 percent to $310 million, with margins approaching 28 percent, excluding special items.

Safety, Security and Protection Services

  • Sales of $1 billion, up 30.2 percent.
  • Sales growth in local currency of 25.6 percent, including 19.8 percent from acquisitions, primarily Aearo Technologies, Inc. in 2008.
  • Broad-based sales growth led by personal protection, protective window films, cleaning solutions for commercial buildings and corrosion protection products.
  • Double-digit sales growth in all geographic regions.
  • Launched a highly-durable, visible and flame resistant 3M Scotchlite trim designed for the oil and gas industry.
  • 3M Dynatel launched a more accurate, specially-designed underground pipe locator.
  • Product development team for 3M Speedglas auto-darkening filters and helmet awarded Business Week gold IDEA award for design excellence.
  • Profits up 30 percent to $220 million, with operating margins of 21.2 percent, excluding special items.

Consumer and Office

  • Sales up 7.8 percent to $899 million.
  • Local-currency sales increased 3.5 percent, including 0.7 percent from acquisitions.
  • Positive sales growth in all businesses led by do-it-yourself and home care businesses.
  • Positive sales growth across all major geographic regions, led by Europe and Asia Pacific.
  • Launched Scotch Fur Fighter pet hair remover and received Good Housekeeping seal of approval.
  • Introduced Nexcare cold sore treatment that leverages 3Ms skin wellness expertise.
  • Profits of $179 million, with operating margins of 20 percent.

Display and Graphics

  • Sales declined 15.9 percent to $846 million, with local-currency sales down 18.8 percent.
  • Sales rose 5.3 percent, excluding Optical and divestitures.
  • Positive sales growth in Commercial Graphics and Traffic Safety Systems; double-digit growth in both Europe and Latin America.
  • Commercial Graphics products widely used in conjunction with Beijing Olympics.
  • Optical sales down 36 percent with profits down 54 percent.
  • Traffic Safety Systems awarded first prize for environmental protection and mitigation by American Road & Transportation Builders Association.
  • Operating profits were $184 million, with a 21.7 percent margin.

Electro and Communications

  • Sales increased 7.9 percent to $748 million.
  • Local-currency growth of 2.2 percent, including 0.4 points from acquisitions.
  • Sales growth led by double-digit gains in Asia Pacific and Europe.
  • Double-digit sales growth in three businesses: Electrical Markets, Electronics Markets Materials and Communication Markets.
  • 3M Aluminum Conductor Composite Reinforced (ACCR), which carries more than twice the current of conventional steel-core conductors, announced two additional major installs in British Columbia, Canada and Silicon Valley, California.
  • Operating profits up 11.4 percent to $151 million, with margins exceeding 20 percent.

Outlook

3M again reiterated its 2008 earnings expectations. The company continues to expect full-year 2008 earnings to increase a minimum of 10 percent over 2007 earnings per share of $4.98, which excludes special items. 3M also expects operating margins of 22.5 to 23.5 percent and a tax rate of 31.5 to 32 percent for the year. Annual capital expenditures for 2008 are expected to be in the range of $1.3 to $1.4 billion.

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 companys 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 fewer productivity improvements than estimated; and (8) legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in the companys Annual Report on Form 10-K for the year ended Dec. 31, 2007 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (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 release is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in this presentation as a result of new information or future events or developments.

About 3M

A recognized leader in research and development, 3M produces thousands of innovative products for dozens of diverse markets. 3Ms core strength is applying its more than 40 distinct technology platforms often in combination to a wide array of customer needs. With $24 billion in sales, 3M employs 79,000 people worldwide and has operations in more than 60 countries. For more information, visit www.3M.com.

3M Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME

(Millions, except per-share amounts)
(Unaudited)

Three-months ended Six-months ended


June 30
June 30


2008 2007
2008 2007
Net sales
$ 6,739

$ 6,142

$ 13,202

$ 12,079
Operating expenses







Cost of sales

3,510


3,175


6,846


6,197
Selling, general and administrative expenses









1,394


1,286


2,669


2,567
Research, development and related expenses









363


352


714


671
(Gain) loss on sale of businesses (a, c)

23


(68 )

23


(854 )
Total

5,290


4,745


10,252


8,581
Operating income

1,449


1,397


2,950


3,498
Interest expense and income







Interest expense

51


48


106


86
Interest income

(18 )

(29 )

(48 )

(57 )
Total

33


19


58


29
Income before income taxes and minority interest









1,416


1,378


2,892


3,469
Provision for income taxes

453


445


923


1,153
Minority interest

18


16


36


31
Net income
$ 945

$ 917

$ 1,933

$ 2,285













Weighted average common shares outstanding - basic









702.1


718.4


704.3


723.9
Earnings per share - basic
$1.35

$1.28

$2.74

$3.16













Weighted average common shares outstanding - diluted









712.0


731.7


714.6


736.5
Earnings per share - diluted
$1.33

$1.25

$2.70

$3.10












Cash dividends paid per common share








$0.50

$0.48

$1.00

$0.96













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 companys ongoing operations. The company uses these non-GAAP measures to evaluate and manage the companys 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 six months ended June 30, 2008.







Three-months ended
Six-months ended


June 30, 2008
June 30, 2008




Diluted


Diluted






earnings




earnings


Operating
Net
per
Operating
Net
per


income
income
share
income
income
share
Reported GAAP measure
$1,449
$945
$1.33
$2,950
$1,933
$2.70
Special items:











Loss on sale of businesses (a)
23
32
0.04
23
32
0.05
Exit activities (b)
19
14
0.02
19
14
0.02
Adjusted Non-GAAP measure
$1,491
$991
$1.39
$2,992
$1,979
$2.77

























(a)

In June 2008, 3M completed the sale of HighJump Software, a 3M company, to Battery Ventures, a technology venture capital and private equity firm. 3M received proceeds of $85 million for this transaction and recognized, net of assets sold, transaction and other costs, a pre-tax loss of $23 million in the second quarter of 2008 (recorded in the Safety, Security and Protection Services segment). This pre-tax loss was reported on a separate line of the Consolidated Statement of Income. 3M's tax basis in HighJump Software was significantly lower than its book value, primarily related to the treatment of acquired goodwill. This resulted in a gain for tax purposes, which increased the provision for income taxes by $9 million.

(b)

In the second quarter of 2008, the Company recorded pre-tax charges of $19 million related to exit activities. These charges related to employee reductions at an Industrial and Transportation manufacturing facility located in the United Kingdom. These charges were recorded in cost of sales.


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 six-months ended June 30, 2008.






Three-months ended
Six-months ended


June 30, 2008
June 30, 2008

OPERATING


Reported
Adjusted
Reported
Adjusted

INCOME BY


GAAP
Special
Non-GAAP
GAAP
Special
Non-GAAP

BUSINESS SEGMENT


measure
items
measure
measure
items
measure
Industrial and Transportation
$ 406
$ 19
$ 425
$ 878
$ 19
$ 897
Health Care

310

-

310

631

-

631
Display and Graphics

184

-

184

371

-

371
Consumer and Office

179

-

179

345

-

345
Safety, Security and Protection Services













197

23

220

401

23

424
Electro and Communications

151

-

151

297

-

297
Corporate and Unallocated
22
-
22
27
-
27
Total Operating Income
$ 1,449
$ 42
$ 1,491
$ 2,950
$ 42
$ 2,992

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


Three-months ended Six-months ended


June 30, 2007

June 30, 2007




Diluted



Diluted






earnings





earnings


Operating
Net
per

Operating
Net
per


income
income
share

income
income
share
Reported GAAP measure
$1,397

$917

$1.25


$3,498

$2,285

$3.10
Special items:












Gain on sale of businesses (c)
(68 )
(47 )
(0.06 )

(854 )
(553 )
(0.75 )
Restructuring actions (d)
33

21

0.03


45

30

0.04
Environmental liabilities (e)
13

8

0.01


134

83

0.11
Adjusted Non-GAAP measure
$1,375

$899

$1.23


$2,823

$1,845

$2.50

(c)

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).

(d)

During the fourth quarter of 2006 and first six months of 2007, management approved and committed to undertake restructuring actions. In the second quarter of 2007, the Company recorded a net pre-tax restructuring charge of $33 million. This charge 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). Net pre-tax restructuring charges for the first six months of 2007 totaled $45 million. These charges are primarily recorded in cost of sales in the business segment where the expenses were incurred.

(e)

During the second quarter of 2007, 3M signed a consent agreement with the state of Minnesota to address potential sources of perfluoronated compounds near former waste disposal sites in the East St. Paul Metro area. Under this agreement, the Company will provide the state of Minnesota funds for the state's work at a former municipal landfill and to assist the state with its own environmental research of this chemistry, which resulted in a pre-tax charge of $13 million. This was an increase to the $121 million accrual that 3M made in the first quarter of 2007 to address remediation activities associated with perfluoronated compounds. 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.



Refer to 3Ms Current Report on Form 8-K dated May 19, 2008, which updated 3Ms Annual Report on Form 10-K dated February 15, 2008, for further discussion of these previously disclosed 2007 items.

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 six-months ended June 30, 2007.






Three-months ended
Six-months ended


June 30, 2007
June 30, 2007

OPERATING


Reported
Adjusted
Reported
Adjusted

INCOME BY


GAAP
Special
Non-GAAP
GAAP
Special
Non-GAAP

BUSINESS SEGMENT


measure
items
measure
measure
items
measure
Industrial and Transportation
$ 358

$ 2

$ 360

$ 768

$ 2

$ 770
Health Care

279


(2 )

277


1,341


(795 )

546
Display and Graphics

350


(64 )

286


646


(64 )

582
Consumer and Office

165

-


165


343

-


343
Safety, Security and Protection Services













140


29


169


321


29


350
Electro and Communications

135

-


135


245


19


264
Corporate and Unallocated

(30 )

13


(17 )

(166 )

134


(32 )
Total Operating Income
$ 1,397

$ (22 )
$ 1,375

$ 3,498

$ (675 )
$ 2,823
3M Company and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in millions)
(Unaudited)

June 30, Dec. 31, June 30,

ASSETS


2008
2007
2007
Current assets





Cash and cash equivalents
$ 1,547
$ 1,896
$ 1,348
Marketable securities

455

579

531
Accounts receivable - net

3,943

3,362

3,620
Inventories

3,175

2,852

2,779
Other current assets

1,419

1,149

1,176
Total current assets

10,539

9,838

9,454
Marketable securities - non-current

775

480

567
Investments

294

298

285
Property, plant and equipment - net

6,919

6,582

6,119
Prepaid pension and postretirement benefits

1,453

1,378

457
Goodwill, intangible assets and other assets

7,378

6,118

5,934
Total assets
$ 27,358
$ 24,694
$ 22,816

LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities





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








$ 1,913
$ 901
$ 2,669
Accounts payable

1,658

1,505

1,472
Accrued payroll

659

580

555
Accrued income taxes

643

543

841
Other current liabilities

2,114

1,833

1,838
Total current liabilities

6,987

5,362

7,375
Long-term debt

4,095

4,019

1,766
Other liabilities

3,741

3,566

3,403
Total liabilities

14,823

12,947

12,544
Total stockholders' equity - net

12,535

11,747

10,272
Shares outstanding





June 30, 2008: 698,990,402 shares





December 31, 2007: 709,156,031 shares





June 30, 2007: 715,811,722 shares


Total liabilities and stockholders' equity
$ 27,358
$ 24,694
$ 22,816
3M Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)
(Unaudited)

Six-months ended


June 30


2008 2007
SUMMARY OF CASH FLOW:



NET CASH PROVIDED BY



OPERATING ACTIVITIES
$ 2,240

$ 1,684
Cash flows from investing activities:



Purchases of property, plant
and equipment







(632 )

(652 )
Acquisitions, net of cash acquired

(549 )

(194 )

Proceeds from sale of businesses (a, c)



85


897
Other investing activities

(371 )

(402 )
NET CASH PROVIDED BY (USED IN)



INVESTING ACTIVITIES

(1,467 )

(351 )
Cash flows from financing activities:



Change in debt

313


888
Purchases of treasury stock

(1,082 )

(2,199 )
Reissuances of treasury stock

217


483
Dividends paid to stockholders

(704 )

(696 )
Other financing activities

139


35
NET CASH PROVIDED BY (USED IN)



FINANCING ACTIVITIES

(1,117 )

(1,489 )
Effect of exchange rate



changes on cash

(5 )

57

Net increase (decrease) in cash
and cash equivalents







(349 )

(99 )

Cash and cash equivalents at
beginning of period







1,896


1,447

Cash and cash equivalents at
end of period






$ 1,547

$ 1,348
3M Company and Subsidiaries

SUPPLEMENTAL CASH FLOW AND

OTHER SUPPLEMENTAL FINANCIAL INFORMATION

(Dollars in millions)
(Unaudited)

Six-months ended


June 30


2008 2007
NON-GAAP MEASURES



Free Cash Flow:



Net cash provided by operating activities
$ 2,240

$ 1,684
Purchases of property, plant and equipment

(632 )

(652 )
Free Cash Flow (f)
$ 1,608

$ 1,032

(f)

Free cash flow is not defined under U.S. generally accepted accounting principles (GAAP). Therefore, it should not be considered a substitute for income or cash flow data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. The company defines free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. The company believes free cash flow is a useful measure of performance and uses this measure as an indication of the strength of the company and its ability to generate cash.




Net cash provided by operating activities and Free Cash Flow were negatively impacted in 2007 by the timing of cash tax payments associated with special items. Tax payments related to the sale of our global branded pharmaceuticals business negatively impacted total year 2007 net cash provided by operating activities and Free Cash Flow by $628 million, with the impacts by quarter as follows: fourth-quarter 2007 ($87 million), third-quarter 2007 ($37 million), second-quarter 2007 ($110 million) and first-quarter 2007 ($394 million).


June 30


2008 2007
OTHER NON-GAAP MEASURES:



Net Working Capital Turns (g)
4.9
5.0

(g)

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. generally accepted accounting principles and may not be comparable to similarly titled measures used by other companies.
3M Company and Subsidiaries

SALES CHANGE ANALYSIS

(Unaudited)

Three-Months Ended June 30, 2008

Sales Change Analysis


United Inter-




By Geographic Area


States
national
Worldwide



Volume - organic
(1.9 )%
1.8 %
0.4 %



Volume - acquisitions
6.5

2.7

4.1




Price
2.0

(1.1 )
0.1




Local-currency sales
6.6

3.4

4.6




(including acquisitions)









Divestitures
(0.6 )
(0.1 )
(0.3 )



Translation
-

8.6

5.4




Total sales change
6.0 %
11.9 %
9.7 %



Sales Change Analysis


Local-






Total

By International


currency
Divest-
Trans-
Sales

Geographic Area


Sales (h)
itures
lation
Change
Europe, Middle East and Africa
6.4

%


(0.1 )%
11.8 %


18.1 %
Asia Pacific
(4.2 )%
-

%


5.1 %


0.9 %
Latin America and Canada
16.4

%


(0.2 )%
9.8 %


26.0 %

(h)

Including acquisitions - Europe, Middle East and Africa includes a 3.7% benefit from acquisitions; Asia Pacific includes a 1.0% benefit from acquisitions; Latin America and Canada includes a 4.7% benefit from acquisitions.

Worldwide

Local-

Total

Sales Change Analysis


currency
Divest-
Trans-
Sales

By Business Segment


Sales (i)
itures
lation
Change












Industrial and Transportation
8.7

%


-

%


6.8 %
15.5

%

Health Care
7.7

%


(0.1 )%
5.5 %
13.1

%

Display and Graphics
(18.8 )%
(0.6 )%
3.5 %
(15.9 )%
Consumer and Office
3.5

%


-

%


4.3 %
7.8

%

Safety, Security and Protection Services
25.6

%


(1.2 )%
5.8 %
30.2

%

Electro and Communications
2.2

%


-

%


5.7 %
7.9

%

(i)

Including acquisitions - Industrial and Transportation includes a 4.2% benefit from acquisitions; Health Care includes a 1.1% benefit from acquisitions; Consumer and Office includes a 0.7% benefit from acquisitions; Safety, Security and Protection Services includes a 19.8% benefit from acquisitions, primarily related to the April 2008 acquisition of Aearo; Electro and Communications includes a 0.4% benefit from acquisitions.
3M Company and Subsidiaries

SALES CHANGE ANALYSIS

(Unaudited)

Six-Months Ended June 30, 2008

Sales Change Analysis


United Inter-


By Geographic Area


States
national
Worldwide









Volume - organic
(2.2 )%
2.7 %
0.9 %

Volume - acquisitions
4.8

1.8

2.9


Price
1.8
(1.2 )
(0.1 )

Local-currency sales
4.4

3.3

3.7


(including acquisitions)







Divestitures
(0.5 )
-

(0.2 )

Translation
-
9.2
5.8

Total sales change
3.9 %
12.5 %
9.3 %

Sales Change Analysis


Local-




Total

By International


currency
Divest-
Trans-
Sales

Geographic Area


Sales (j)
itures
lation
Change
Europe, Middle East and Africa
4.8

%


-

%


11.8 %
16.6 %
Asia Pacific
(1.6 )%
-

%


5.8 %
4.2 %
Latin America and Canada
14.6

%


(0.1 )%
11.4 %
25.9 %

(j)

Including acquisitions - Europe, Middle East and Africa includes a 2.6% benefit from acquisitions; Asia Pacific includes a 0.6% benefit from acquisitions; Latin America and Canada includes a 3.0% benefit from acquisitions.

Worldwide

Local-

Total

Sales Change Analysis


currency
Divest-
Trans-
Sales

By Business Segment


Sales (k)
itures
lation
Change








Industrial and Transportation
9.1

%


-

%


7.2 %
16.3

%

Health Care
6.7

%


(0.1 )%
5.9 %
12.5

%

Display and Graphics
(14.1 )%
(0.7 )%
3.7 %
(11.1 )%
Consumer and Office
0.5

%


-

%


4.7 %
5.2

%

Safety, Security and Protection Services
16.2

%


(0.6 )%
6.4 %
22.0

%

Electro and Communications
2.7

%


-

%


5.8 %
8.5

%

(k)

Including acquisitions - Industrial and Transportation includes a 4.1% benefit from acquisitions; Health Care includes a 1.0% benefit from acquisitions; Consumer and Office includes a 0.5% benefit from acquisitions; Safety, Security and Protection Services includes a 11.1% benefit from acquisitions; Electro and Communications includes a 0.7% benefit from acquisitions.

3M Company and Subsidiaries

BUSINESS SEGMENTS

(Dollars in millions)

(Unaudited)








Effective in the first quarter of 2008, 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 3Ms Current Report on Form 8-K dated May 19, 2008, which updated 3Ms Annual Report on Form 10-K dated February 15, 2008, for discussion of these changes.











BUSINESS











SEGMENT


Three-months ended
Six-months ended

INFORMATION


June 30
June 30
(Millions)
2008
2007

2008
2007

NET SALES











Industrial and Transportation
$ 2,081
$ 1,802


$ 4,168
$ 3,585
Health Care

1,118

988



2,195

1,950
Display and Graphics

846

1,005



1,717

1,931
Consumer and Office

899

834



1,737

1,651
Safety, Security and Protection Services

1,040

799



1,899

1,557
Electro and Communications

748

693



1,473

1,357
Corporate and Unallocated

7


21


13
48
Total Company
$ 6,739
$ 6,142


$ 13,202
$ 12,079

OPERATING INCOME











Industrial and Transportation
$ 406
$ 358


$ 878
$ 768
Health Care

310

279



631

1,341
Display and Graphics

184

350



371

646
Consumer and Office

179

165



345

343
Safety, Security and Protection Services

197

140



401

321
Electro and Communications

151

135



297

245
Corporate and Unallocated
22
(30 )

27
(166 )
Total Company
$ 1,449
$ 1,397


$ 2,950
$ 3,498

For the three-months and six-months ended June 30, 2008 and June 30, 2007, refer to the preceding notes (a) through (e) and the preceding reconciliations of operating income by business segment for a discussion and summary of items that impacted reported business segment operating income.

Contact:

3M
Investor Contacts:
Matt Ginter, 651-733-8206
or
Bruce Jermeland, 651-733-1807
or
Media Contact:
Jacqueline Berry, 651-733-3611

Multimedia Files:

Categories: Press Releases