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.
3M, St. PaulInvestor Contacts:Matt Ginter, 651-733-8206orBruce Jermeland, 651-733-1807orMedia Contact:John Cornwell, 651-733-7698
