3M Delivers Fourth-Quarter Sales of $7.4 Billion and Earnings of $1.41 per Share; Company Posts Record Full-Year Sales of $29.9 Billion and Earnings of $6.32 per Share

Thu Jan 24, 2013 7:30am EST

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ST. PAUL, Minn.--(Business Wire)--
3M (NYSE: MMM) today reported fourth-quarter earnings of $1.41 per share, an
increase of 4.4 percent versus the fourth quarter of 2011. Operating income was
$1.4 billion and operating income margins for the quarter were 19.5 percent.
Fourth-quarter net income was $1.0 billion and free cash flow was $1.2 billion. 

Sales rose 4.2 percent year-on-year to $7.4 billion, an all-time fourth-quarter
record. Organic local-currency sales grew 4.3 percent, acquisitions added 0.9
percent to sales and currency impacts reduced sales by 1.0 percent year-on-year.


Organic local-currency sales growth was 8.7 percent in Consumer and Office, 8.3
percent in Display and Graphics, 5.9 percent in Health Care, 3.9 percent in
Industrial and Transportation and 1.8 percent in Electro and Communications;
Safety, Security and Protection Services declined 1.7 percent year-on-year. On a
geographic basis, organic local-currency sales grew 9.7 percent in Latin
America/Canada, 5.8 percent in Asia Pacific, 5.2 percent in the U.S. and
declined 1.0 percent in EMEA (Europe, Middle East and Africa). 

For the full year 2012, 3M posted record sales of $29.9 billion, up 1.0 percent
year-on-year. Organic local-currency sales grew 2.6 percent and acquisitions
added 0.8 percent to sales. Foreign currency translation reduced sales by 2.4
percent year-on-year. 

Four of the company`s six business segments posted full-year organic
local-currency growth, led by Health Care at 4.7 percent and Industrial and
Transportation at 4.5 percent. Latin America/Canada was the fastest-growing
geographic region in 2012 at 10.9 percent followed by the U.S. at 4.2 percent. 

Full-year 2012 earnings were $6.32 per share, an increase of 6.0 percent.
Operating margins were 21.7 percent and return on invested capital was 20
percent. 

"Fourth-quarter was a good finish to a successful year for 3M," said Inge G.
Thulin, 3M chairman, president and chief executive officer. "Our people executed
well in the face of challenging macroeconomic conditions and we have built good
momentum to innovate and move forward in 2013." 

3M affirmed its 2013 full-year performance expectations. The company anticipates
2013 earnings to be in the range of $6.70 to $6.95 per share with organic
local-currency sales growth of 2 to 5 percent. 3M also expects free cash flow
conversion to be in the range of 90 to 100 percent. 

Fourth-Quarter Business Segment Discussion

Industrial and Transportation

* Sales of $2.5 billion, up 3.8 percent in U.S. dollars. Organic local-currency
sales increased 3.9 percent, acquisitions (Ceradyne) added 1.2 percent to sales
and foreign currency translation reduced sales by 1.3 percent. 
* On an organic local-currency basis:

* Sales growth was strongest in liquid filtration, aerospace, industrial
adhesives and tapes, abrasives and automotive OEM; both the advanced materials
and the renewable energy businesses declined year-on-year. 
* Sales increased in Latin America/Canada, the U.S. and Asia Pacific and were
flat in EMEA.

* Operating income was $469 million, down 0.4 percent year-on-year; operating
margin of 18.8 percent.

Health Care

* Sales of $1.3 billion, up 5.6 percent in U.S. dollars. Organic local-currency
sales increased 5.9 percent, acquisitions (CodeRyte) added 0.5 percent and
foreign currency translation reduced sales by 0.8 percent. 
* On an organic local-currency basis:

* Sales increased in all businesses, with the strongest growth in food safety,
health information systems, skin/wound care and oral care. 
* Positive sales growth in all major geographies, with double-digit growth in
Latin America/Canada and Asia Pacific.

* Operating income increased 10.8 percent to $430 million; operating margin of
32.3 percent.

Consumer and Office

* Sales of $1.1 billion, up 7.7 percent in U.S. dollars. Organic local-currency
sales increased 8.7 percent and foreign currency translation reduced sales by
1.0 percent. 
* On an organic local-currency basis:

* Growth was led by consumer health care, DIY and stationery and office
supplies. 
* Sales rose in all major geographies with double-digit growth in the U.S. and
Latin America/Canada.

* Operating income increased 28.8 percent to $230 million; operating margin of
21.0 percent.

Display and Graphics

* Sales of $910 million, up 10.6 percent in U.S. dollars. Organic local-currency
sales increased 8.3 percent, acquisitions (Federal Signal Technologies) added
3.2 percent and foreign currency translation reduced sales by 0.9 percent. 
* On an organic local-currency basis:

* Sales increased at a double-digit rate in optical systems; sales also
increased in architectural markets, traffic safety systems and commercial
graphics. 
* Sales increased in Asia Pacific, Latin America/Canada and the U.S. and
declined year-on-year in EMEA.

* Operating income decreased 3.6 percent to $152 million; operating margin of
16.7 percent.

Safety, Security and Protection Services

* Sales of $904 million, down 2.5 percent in U.S. dollars. Organic
local-currency sales decreased 1.7 percent, divestitures reduced sales by 0.1
percent and foreign currency translation reduced sales by 0.7 percent. 
* On an organic local-currency basis:

* Sales growth was strongest in infrastructure protection, personal safety and
roofing granules; sales declined year-on-year in security systems. 
* Sales increased in Latin America/Canada and Asia Pacific; sales declined in
the U.S. and EMEA.

* Operating income decreased 5.2 percent to $162 million; operating margin of
18.0 percent.

Electro and Communications

* Sales of $776 million, up 1.0 percent in U.S. dollars. Organic local-currency
sales increased 1.8 percent and foreign currency translation reduced sales by
0.8 percent. 
* On an organic local-currency basis:

* Sales increased in both electrical and telecom markets, partially offset by a
decline in consumer electronics-related businesses. 
* Sales increased in Latin America/Canada, the U.S. and Asia Pacific and
declined year-on-year in EMEA.

* Operating income of $142 million, down 6.5 percent; operating margin of 18.4
percent.

3M will conduct an investor teleconference at 9:00 a.m. EST (8:00 a.m. CST)
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 21609530).
The telephone replay will be available until 10:00 a.m. CST on January 29,
2013.

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                              Twelve-months ended                           
                                                   December 31,                                    December 31,                                  
                                                   2012                       2011                 2012                        2011              
                                                                                                                                                 
 Net sales                                         $    7,387                 $    7,089           $    29,904                 $    29,611       
                                                                                                                                                 
 Operating expenses                                                                                                                              
 Cost of sales                                          3,991                      3,824                15,685                      15,693       
 Selling, general and administrative expenses           1,535                      1,522                6,102                       6,170        
 Research, development and related expenses             418                        379                  1,634                       1,570        
                                                                                                                                                 
 Total operating expenses                               5,944                      5,725                23,421                      23,433       
                                                                                                                                                 
 Operating income                                       1,443                      1,364                6,483                       6,178        
                                                                                                                                                 
 Interest expense and income                                                                                                                     
 Interest expense                                       44                         45                   171                         186          
 Interest income                                        (10    )                   (10    )             (39     )                   (39     )    
                                                                                                                                                 
 Total interest expense - net                           34                         35                   132                         147          
                                                                                                                                                 
 Income before income taxes                             1,409                      1,329                6,351                       6,031        
                                                                                                                                                 
 Provision for income taxes                             405                        355                  1,840                       1,674        
                                                                                                                                                 
 Net income including noncontrolling interest      $    1,004                 $    974             $    4,511                  $    4,357        
                                                                                                                                                 
 Less: Net income attributable to                                                                                                                
 noncontrolling interest                                13                         20                   67                          74           
                                                                                                                                                 
 Net income attributable to 3M                     $    991                   $    954             $    4,444                  $    4,283        
                                                                                                                                                 
 Weighted average 3M common shares                                                                                                               
 outstanding - basic                                    691.5                      701.2                693.9                       708.5        
 Earnings per share attributable to                                                                                                              
 3M common shareholders - basic                    $    1.43                  $    1.36            $    6.40                   $    6.05         
                                                                                                                                                 
 Weighted average 3M common shares                                                                                                               
 outstanding - diluted                                  701.2                      707.5                703.3                       719.0        
 Earnings per share attributable to                                                                                                              
 3M common shareholders - diluted                  $    1.41                  $    1.35            $    6.32                   $    5.96         
                                                                                                                                                 
 Cash dividends paid per 3M common share           $    0.59                  $    0.55            $    2.36                   $    2.20         
                                                                                                                                                 


                                                                              
 3M Company and Subsidiaries                                                  
 CONDENSED CONSOLIDATED BALANCE SHEET                                         
 (Dollars in millions)                                                        
 (Unaudited)                                                                  
                                                                              
                                            Dec. 31,           Dec. 31,       
                                            2012               2011           
 ASSETS                                                                       
 Current assets                                                               
 Cash and cash equivalents                  $      2,883       $      2,219   
 Marketable securities - current                   1,648              1,461   
 Accounts receivable - net                         4,061              3,867   
 Inventories                                       3,837              3,416   
 Other current assets                              1,201              1,277   
 Total current assets                              13,630             12,240  
 Marketable securities - non-current               1,162              896     
 Investments                                       163                155     
 Property, plant and equipment - net               8,378              7,666   
 Goodwill and intangible assets - net              9,310              8,963   
 Prepaid pension benefits                          16                 40      
 Other assets                                      1,217              1,656   
 Total assets                               $      33,876      $      31,616  
                                                                              
 LIABILITIES AND EQUITY                                                       
 Current liabilities                                                          
 Short-term borrowings and                                                    
 current portion of long-term debt          $      1,085       $      682     
 Accounts payable                                  1,762              1,643   
 Accrued payroll                                   701                676     
 Accrued income taxes                              371                355     
 Other current liabilities                         2,281              2,085   
 Total current liabilities                         6,200              5,441   
 Long-term debt                                    4,916              4,484   
 Pension and postretirement benefits               3,086              3,972   
 Other liabilities                                 1,634              1,857   
 Total liabilities                          $      15,836      $      15,754  
                                                                              
 Total equity                               $      18,040      $      15,862  
 Shares outstanding                                                           
 December 31, 2012: 687,091,650 shares                                        
 December 31, 2011: 694,970,041 shares                                        
 Total liabilities and equity               $      33,876      $      31,616  
                                                                              


                                                                                                      
 3M Company and Subsidiaries                                                                          
 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS                                                       
 (Dollars in millions)                                                                                
 (Unaudited)                                                                                          
                                                                                                      
                                                        Twelve-months ended                           
                                                        December 31,                                  
                                                        2012                        2011              
 NET CASH PROVIDED BY                                                                                 
 OPERATING ACTIVITIES                                   $    5,300                  $    5,284        
                                                                                                      
 Cash flows from investing activities:                                                                
 Purchases of property, plant                                                                         
 and equipment                                               (1,484  )                   (1,379  )    
 Acquisitions, net of cash acquired                          (1,046  )                   (649    )    
 Purchases and proceeds from sale or maturities of                                                    
 marketable securities and investments - net                 (211    )                   (745    )    
 Other investing activities                                  55                          55           
                                                                                                      
 NET CASH USED IN INVESTING ACTIVITIES                       (2,686  )                   (2,718  )    
                                                                                                      
 Cash flows from financing activities:                                                                
 Change in debt                                              722                         (307    )    
 Purchases of treasury stock                                 (2,204  )                   (2,701  )    
 Proceeds from issuances of treasury stock                                                            
 pursuant to stock option and benefit plans                  1,012                       902          
 Dividends paid to shareholders                              (1,635  )                   (1,555  )    
 Other financing activities                                  47                          (14     )    
                                                                                                      
 NET CASH USED IN FINANCING ACTIVITIES                       (2,058  )                   (3,675  )    
                                                                                                      
 Effect of exchange rate changes                                                                      
 on cash and cash equivalents                                108                         (49     )    
                                                                                                      
 Net increase (decrease) in cash                                                                      
 and cash equivalents                                        664                         (1,158  )    
 Cash and cash equivalents at                                                                         
 beginning of year                                           2,219                       3,377        
                                                                                                      
 Cash and cash equivalents at                                                                         
 end of period                                          $    2,883                  $    2,219        
                                                                                                      


                                                                                                                                               
 3M Company and Subsidiaries                                                                                                                   
 SUPPLEMENTAL CASH FLOW AND                                                                                                                    
 OTHER SUPPLEMENTAL FINANCIAL INFORMATION                                                                                                      
 (Dollars in millions)                                                                                                                         
 (Unaudited)                                                                                                                                   
                                                                                                                                               
                                                 Three-months ended                              Twelve-months ended                           
                                                 December 31,                                    December 31,                                  
                                                 2012                       2011                 2012                        2011              
                                                                                                                                               
 NON-GAAP MEASURES                                                                                                                             
                                                                                                                                               
 Free Cash Flow:                                                                                                                               
 Net cash provided by operating activities       $    1,738                 $    1,738           $    5,300                  $    5,284        
 Purchases of property, plant and equipment           (507   )                   (517   )             (1,484  )                   (1,379  )    
                                                                                                                                               
 Free Cash Flow (a)                              $    1,231                 $    1,221           $    3,816                  $    3,905        
                                                                                                                                               


 (a)    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.                           


                                                                                   
                                                       2012             2011       
 OTHER NON-GAAP MEASURES:                                                          
 Net Working Capital Turns at Dec. 31 (b)              4.8              5.0        
                                                                                   
 Return on Invested Capital for the                                                
 twelve-months ended Dec. 31 (c)                       19.8    %        19.9    %  
                                                                                   


 (b)    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.  


 (c)    The company uses non-GAAP measures to focus on shareholder value creation. 3M uses Return on Invested Capital (ROIC), defined as annualized after-tax operating income (including interest income) divided by average operating capital. Operating capital is defined as net assets (total assets less total liabilities) excluding debt. 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 December 31, 2012                                                            
                                                                            Europe,                                                 
                                                                            Middle              Latin                               
 Sales Change Analysis              United              Asia-               East and            America/            World-          
 By Geographic Area                 States              Pacific             Africa              Canada              Wide            
                                                                                                                                    
 Volume - organic                   3.8        %        7.4        %        (2.4  )    %        6.6        %        3.6        %    
 Price                              1.4                 (1.6  )             1.4                 3.1                 0.7             
 Organic local-currency sales       5.2                 5.8                 (1.0  )             9.7                 4.3             
 Acquisitions                       1.9                 -                   0.6                 0.4                 0.9             
 Translation                        -                   (0.7  )             (1.8  )             (2.9  )             (1.0  )         
 Total sales change                 7.1        %        5.1        %        (2.2  )    %        7.2        %        4.2        %    
                                                                                                                                    
                                    Three-months ended December 31, 2012                                                            
                                    Organic                                                                                         
 Worldwide                          local-                                                                          Total           
 Sales Change Analysis              currency            Acqui-              Divest-             Trans-              sales           
 By Business Segment                sales               sitions             itures              lation              change          
                                                                                                                                    
 Industrial and Transportation      3.9        %        1.2        %        -          %        (1.3  )    %        3.8        %    
 Health Care                        5.9        %        0.5        %        -          %        (0.8  )    %        5.6        %    
 Consumer and Office                8.7        %        -          %        -          %        (1.0  )    %        7.7        %    
 Safety, Security and                                                                                                               
 Protection Services                (1.7  )    %        -          %        (0.1  )    %        (0.7  )    %        (2.5  )    %    
 Display and Graphics               8.3        %        3.2        %        -          %        (0.9  )    %        10.6       %    
 Electro and Communications         1.8        %        -          %        -          %        (0.8  )    %        1.0        %    
                                                                                                                                    
                                    Twelve-months ended December 31, 2012                                                           
                                                                            Europe,                                                 
                                                                            Middle              Latin                               
 Sales Change Analysis              United              Asia-               East and            America/            World-          
 By Geographic Area                 States              Pacific             Africa              Canada              Wide            
                                                                                                                                    
 Volume - organic                   2.1        %        1.3        %        (2.8  )    %        6.9        %        1.2        %    
 Price                              2.1                 (1.2  )             2.2                 4.0                 1.4             
 Organic local-currency sales       4.2                 0.1                 (0.6  )             10.9                2.6             
 Acquisitions                       0.8                 0.3                 1.9                 0.1                 0.8             
 Translation                        -                   (0.6  )             (6.2  )             (6.3  )             (2.4  )         
 Total sales change                 5.0        %        (0.2  )    %        (4.9  )    %        4.7        %        1.0        %    
                                                                                                                                    
                                    Twelve-months ended December 31, 2012                                                           
                                    Organic                                                                                         
 Worldwide                          local-                                                      Total                               
 Sales Change Analysis              currency            Acqui-              Trans-              sales                               
 By Business Segment                sales               sitions             lation              change                              
                                                                                                                                    
 Industrial and Transportation      4.5        %        1.1        %        (2.9  )    %        2.7        %                        
 Health Care                        4.7        %        0.3        %        (2.5  )    %        2.5        %                        
 Consumer and Office                3.8        %        2.0        %        (1.9  )    %        3.9        %                        
 Safety, Security and                                                                                                               
 Protection Services                2.2        %        -          %        (2.7  )    %        (0.5  )    %                        
 Display and Graphics               (2.4  )    %        0.9        %        (1.6  )    %        (3.1  )    %                        
 Electro and Communications         (0.8  )    %        -          %        (1.6  )    %        (2.4  )    %                        
                                                                                                                                    


                                                                                                                                             
 3M Company and Subsidiaries                                                                                                                 
 BUSINESS SEGMENTS                                                                                                                           
 (Dollars in millions)                                                                                                                       
 (Unaudited)                                                                                                                                 
                                                                                                                                             
 BUSINESS SEGMENT INFORMATION                  Three-months ended                              Twelve-months ended                           
 NET SALES                                     December 31,                                    December 31,                                  
 (Millions)                                    2012                       2011                 2012                        2011              
                                                                                                                                             
 Industrial and Transportation                 $    2,493                 $    2,402           $    10,346                 $    10,073       
 Health Care                                        1,332                      1,261                5,158                       5,031        
 Consumer and Office                                1,097                      1,019                4,316                       4,153        
 Safety, Security and Protection Services           904                        927                  3,802                       3,821        
 Display and Graphics                               910                        823                  3,560                       3,674        
 Electro and Communications                         776                        768                  3,228                       3,306        
 Corporate and Unallocated                          1                          2                    5                           11           
 Elimination of Dual Credit                         (126   )                   (113   )             (511    )                   (458    )    
                                                                                                                                             
 Total Company                                 $    7,387                 $    7,089           $    29,904                 $    29,611       
                                                                                                                                             
                                                                                                                                             
 BUSINESS SEGMENT INFORMATION                  Three-months ended                              Twelve-months ended                           
 OPERATING INCOME                              December 31,                                    December 31,                                  
 (Millions)                                    2012                       2011                 2012                        2011              
                                                                                                                                             
 Industrial and Transportation                 $    469                   $    472             $    2,258                  $    2,057        
 Health Care                                        430                        389                  1,646                       1,489        
 Consumer and Office                                230                        179                  930                         840          
 Safety, Security and Protection Services           162                        171                  847                         814          
 Display and Graphics                               152                        157                  693                         788          
 Electro and Communications                         142                        153                  691                         712          
 Corporate and Unallocated                          (114   )                   (132   )             (469    )                   (421    )    
 Elimination of Dual Credit                         (28    )                   (25    )             (113    )                   (101    )    
                                                                                                                                             
 Total Company                                 $    1,443                 $    1,364           $    6,483                  $    6,178        
                                                                                                                                             


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 88,000 people worldwide and has operations in more than 70 countries.

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

Copyright Business Wire 2013

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