3M Reports Higher First-Quarter Sales and Earnings; Revenues Increase 11.0 Percent to a Record $4.32 Billion

3M (NYSE:MMM) today announced its sales and earnings results for first quarter 2003.

The company reported net income of $502 million, or $1.27 per share, versus $452 million, or $1.14 per share, in the first quarter of 2002. Excluding special items(a), 3M earned $1.42 per share, up 15.4 percent from $1.23 per share in last year's first quarter. Net income, excluding special items(a), was $560 million versus $487 million in the comparable quarter.

"The entire 3M team is energized by this quarter's results," said W. James McNerney, Jr., 3M chairman and CEO. "3Mers everywhere are driving our global corporate initiatives across the company and achieving both improved productivity and accelerated top-line growth."

Worldwide sales in the first quarter totaled $4.318 billion, 11.0 percent higher than in the year-earlier quarter. Sales volumes increased 5.4 percent, including a positive 2.0 percent impact from acquisitions. Volumes increased 24.4 percent in Display and Graphics (includes 12 percent from acquisitions), 5.0 percent in Safety, Security and Protection Services, 4.7 percent in Health Care, 3.9 percent in Industrial, 3.3 percent in Consumer and Office and 1.7 percent in Transportation. Volumes declined 5.1 percent in Electro and Communications. Currency effects increased worldwide sales by 5.6 percent, while selling prices were flat.

Sales in the United States totaled $1.800 billion, up 1.0 percent from the same quarter of 2002. Volumes increased 1.4 percent, including a positive 1.8 percent impact from acquisitions, while selling prices declined 0.4 percent.

Sales outside the United States totaled $2.518 billion. Volumes increased 8.7 percent versus the comparable quarter, which includes a positive 2.2 percent impact from acquisitions. Changes in the value of the U.S. dollar increased international sales by 10.4 percent and selling prices increased 0.4 percent. Volumes increased 19 percent in Asia Pacific driven by an 8 percent increase in Japan and a 30 percent increase in the rest of the region. Volumes also increased in Latin America by 17.5 percent, whereas volumes declined 1.1 percent in Europe.

"As everyone knows, geo-political and economic conditions remain highly uncertain," McNerney said. "Despite these conditions, we remain committed to achieving our top-line and profitability goals while driving higher cash flow and preserving a strong and healthy balance sheet."

3M also reaffirmed its earnings outlook for 2003. For the year, the company expects reported earnings will be within a range of $5.65 to $5.85 per share. Excluding special items, 3M expects 2003 earnings to be between $5.80 and $6.00 per share. Second-quarter earnings are expected to be in the range of $1.47 to $1.53 per share.

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) As previously announced by 3M on March 26, 2003, a court issued an adverse ruling associated with a lawsuit filed against 3M in 1997 by LePage's Inc. During the first quarter of 2003, 3M recorded pretax charges of $93 million ($58 million after-tax) related to this proceeding. During the first quarter of 2002, under its previously announced restructuring plan, 3M incurred pretax charges of $54 million ($35 million after-tax) primarily related to employee separation costs and accelerated depreciation charges.

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. Any changes in such assumptions or factors could produce significantly different results.

About 3M

3M is a $16 billion diversified technology company with leading positions in consumer and office; display and graphics; electronics and telecommunications; health care; industrial; safety, security and protection services; transportation and other businesses. Headquartered in St. Paul, Minnesota, the company has operations in more than 60 countries and serves customers in nearly 200 countries. 3M is one of the 30 stocks that make up the Dow Jones Industrial Average and also is a component of the Standard & Poor's 500 Index. For more information about 3M, go to www.3M.com/profile/pressbox/index.jhtml.

3M Company and Subsidiaries
SALES CHANGE ANALYSIS
(Unaudited)
 
    First-Quarter 2003
 
    Worldwide   U.S.   Intl.
 
Volume - core   3.4 %   (0.4 )%   6.5 %
 
Volume - acquisitions            
and divestitures   2.0     1.8     2.2  
 
Price   --     (0.4 )   .4  
 
Translation   5.6     --     10.4  
 
Total   11.0 %   1.0 %   19.5 %
                   
 
3M Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Amounts in millions, except per-share amounts)
(Unaudited)
 
    Three-months ended
    March 31
         
    2003   2002
         
Net sales   $ 4,318     $ 3,890  
         
Operating expenses        
Cost of sales     2,211       2,036  
Selling, general and        
administrative expenses     963       877  
Research, development and        
related expenses     270       264  
Other expense     93       --  
         
Total     3,537       3,177  
         
Operating income     781       713  
         
Interest expense and income        
Interest expense     23       19  
Interest income     (6 )     (9 )
         
Total     17       10  
         
Income before income taxes        
and minority interest     764       703  
 
Provision for income taxes     248       227  
 
Minority interest     14       24  
         
Net income   $ 502     $ 452  
         
Weighted average common        
shares outstanding - basic     390.0       389.9  
Earnings per share - basic   $ 1.29     $ 1.16  
         
Weighted average common        
shares outstanding - diluted     395.3       395.2  
Earnings per share - diluted   $ 1.27     $ 1.14  
                 
 
3M Company and Subsidiaries
Supplemental Unaudited Consolidated Statement of Income Information
(Dollars in millions, except per-share amounts)
 
    Three-months ended   Three-months ended
    March 31, 2003   March 31, 2002
 
    Excluding           Excluding        
    special   Special   Reported   special   Special   Reported
    items   items   total   items   items   total
 
Net sales   $ 4,318     $ --     $ 4,318     $ 3,890     $ --     $   3,890  
 
Operating                        
expenses                        
Cost of sales     2,211       --       2,211       2,006       30         2,036  
Selling,                        
general and                        
administrative                        
expenses     963       --       963       856       21         877  
Research,                        
development                        
and related                        
expenses     270       --       270       261     3         264  
Other expense     --       93       93       --       --         --  
 
Total     3,444       93       3,537       3,123       54         3,177  
 
Operating                        
income (loss)     874       (93 )     781       767       (54 )       713  
 
Interest expense                        
and (income),                        
net     17       --       17       10       --         10  
 
Income (loss)                        
before income                        
taxes and                        
minority                        
interest     857       (93 )     764       757       (54 )       703  
 
Provision                        
(benefit) for                        
income taxes     283       (35 )     248       246       (19 )       227  
Effective tax                        
rate     33.1 %         32.5 %     32.5 %           32.2 %
 
Minority                        
interest     14       --       14       24       --         24  
 
Net income                        
(loss)   $ 560     $ (58 )   $ 502     $ 487     $ (35 )   $   452  
 
Weighted                        
average                        
diluted shares     395.3       395.3       395.3       395.2       395.2         395.2  
Net income per                        
diluted share   $ 1.42     $ (.15 )   $ 1.27     $ 1.23     $ (.09 )   $   1.14  
                                                   
 
3M Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Dollars in millions, except per-share amounts)
(Unaudited)
 
    Mar. 31,   Mar. 31,   Dec. 31,
ASSETS   2003   2002   2002
Current assets            
Cash and cash equivalents   $ 561   $ 590   $ 618
Accounts receivable - net     2,643     2,610     2,527
Inventories     1,957     2,000     1,931
Other current assets     1,303     1,073     983
 
Total current assets     6,464     6,273     6,059
Investments     221     262     238
Property, plant and equipment - net     5,550     5,488     5,621
Other assets     3,610     2,408     3,411
 
Total assets   $ 15,845   $ 14,431   $ 15,329
 
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities            
Short-term debt   $ 1,200   $ 984   $ 1,237
Accounts payable     963     781     945
Payroll     409     531     411
Income taxes     652     595     518
Other current liabilities     1,468     1,121     1,346
 
Total current liabilities     4,692     4,012     4,457
Long-term debt     2,119     1,891     2,140
Other liabilities     2,718     2,526     2,739
 
Total liabilities     9,529     8,429     9,336
 
 
Total stockholders' equity - net     6,316     6,002     5,993
Shares outstanding            
March 31, 2003: 390,833,851 shares            
March 31, 2002: 389,347,924 shares            
December 31, 2002: 390,195,681 shares            
 
Total liabilities and stockholders'            
equity   $ 15,845   $ 14,431   $ 15,329
                   
 

3M Company and Subsidiaries

BUSINESS SEGMENTS (Unaudited)

As more fully described in 3M's 2002 Annual Report on Form 10-K, in September 2002, 3M announced it would strategically realign its organization for faster growth and a closer focus on markets and customers. This realignment resulted in seven reportable business segments compared to the previous structure of six reportable business segments. These structural changes were driven by 3M's strategic planning process and represent an important step toward access to its larger and faster-growing markets. Internal management reporting for the new reportable business segments commenced January 1, 2003. 3M provided in its "Management's Discussion and Analysis of Financial Condition and Results of Operations" section in its 2002 Annual Report on Form 10-K supplemental financial information related to these new business segments on an annual basis. This information was provided on a supplemental basis as the company did not operate under this new structure for these periods, and has only operated under this new structure since January 1, 2003. 3M filed a Current Report on Form 8-K on April 4, 2003, that provided supplemental unaudited financial information on both an annual and quarterly basis for the years ended December 31, 2002, 2001 and 2000 reflecting the historical realigned segments. This supplemental financial information was provided for the respective years to show the results on an interim basis for the realigned segments. Results under the new structure for the quarter ended March 31, 2003 and 2002 follow.

3M Company and Subsidiaries        
BUSINESS SEGMENTS (Unaudited)        
         
BUSINESS        
SEGMENT   Three-months ended
INFORMATION   March 31
(Millions)   2003   2002
 
NET SALES        
Health Care   $ 946     $ 845  
Industrial     821       753  
Consumer and Office     612       569  
Display and Graphics     661       505  
Electro and Communications     434       444  
Safety, Security and Protection Services     458       413  
Transportation     381       349  
Corporate and Unallocated   5       12  
 
Total Company   $ 4,318     $ 3,890  
 
 
OPERATING INCOME        
Health Care   $ 238     $ 220  
Industrial     132       111  
Consumer and Office     110       105  
Display and Graphics     182       117  
Electro and Communications     47       52  
Safety, Security and Protection Services     105       86  
Transportation     100       85  
Corporate and Unallocated   $ (133 )   $ (63 )
 
Total Company   $ 781     $ 713  
 

As previously announced by 3M on March 26, 2003, a court issued an adverse ruling associated with a lawsuit filed against 3M in 1997 by LePage's Inc. During the first quarter of 2003, 3M recorded pre-tax charges of $93 million ($58 million after-tax) related to this proceeding (recorded in Corporate and Unallocated). During the first quarter of 2002, under its previously announced restructuring plan, 3M incurred pre-tax charges of $54 million ($35 million after-tax) primarily related to employee separation costs and accelerated depreciation charges (recorded in Corporate and Unallocated).

3M, St. PaulInvestor Contacts:Matt Ginter, 651/733-8206orDan Colvin, 651/736-2637orMedia Contact:John Cornwell, 651/733-7698

Other Topics

Contact Media Relations

Contact Media Email
 

Media Hotline: 651-733-8805
 

These contacts are intended only for the media. If you are not a member of the media, please call 1-888-3M HELPS (1-888-364-3577).
 

We will get back to you within one business day.

Email Alerts

Subscribe to receive automatic updates via email for 3M news & stories.

Subscribe