42217cde aea0 4c9f 807f 0b6517b00c03

3M CO
FORM
8-K
(Current report filing)
Filed 10/24/13 for the Period Ending 10/24/13
Address
Telephone
CIK
Symbol
SIC Code
Industry
Sector
Fiscal Year
3M CENTER
BLDG. 220-11W-02
ST PAUL, MN 55144-1000
6517332204
0000066740
MMM
3841 - Surgical and Medical Instruments and Apparatus
Constr. - Supplies & Fixtures
Capital Goods
12/31
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 24, 2013
3M COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
File No. 1-3285
(Commission File Number)
41-0417775
(IRS Employer Identification No.)
3M Center, St. Paul, Minnesota
(Address of Principal Executive Offices)
55144-1000
(Zip Code)
(651) 733-1110
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions ( see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On October 24, 2013, 3M Company issued a press release reporting third-quarter 2013 results and updating its full-year performance
expectations (attached hereunder as Exhibit 99 and incorporated herein by reference).
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit Number
Description
99
Press Release, dated as of October 24, 2013, of 3M Company (furnished pursuant to Item 2.02 hereof)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
3M COMPANY
By:
Dated: October 24, 2013
2
/s/ Gregg M. Larson
Gregg M. Larson,
Deputy General Counsel and Secretary
Exhibit 99
FOR IMMEDIATE RELEASE
3M Delivers Record Third-Quarter Results
Highlights:
—
Earnings per share of $1.78, a third-quarter record
—
All-time record quarterly sales of $7.9 billion
—
Organic local-currency sales growth of 5.8 percent
—
Operating income margins of 22.0 percent
—
Returned $2.0 billion to shareholders via dividends and gross share repurchases
ST. PAUL, Minn. — October 24, 2013 - 3M (NYSE: MMM) today reported third-quarter earnings of $1.78 per share, an increase of 7.9
percent versus the third quarter of 2012. Sales grew 5.6 percent year-on-year to $7.9 billion. Organic local-currency sales grew 5.8 percent,
acquisitions added 1.5 percent to sales and currency impacts reduced sales by 1.7 percent year-on-year.
Operating income was $1.7 billion and operating income margins for the quarter were 22.0 percent. Third-quarter net income was $1.2 billion
and free cash flow was $0.7 billion.
The company paid $431 million in cash dividends to shareholders and repurchased $1.54 billion of its own shares during the quarter.
Organic local-currency sales growth was 8.1 percent in Safety and Graphics, 6.8 percent in Health Care, 6.2 percent in Industrial, 4.2 percent in
Consumer and 3.8 in Electronics and Energy. On a geographic basis, organic local-currency sales grew 10.5 percent in Latin America/Canada,
6.8 percent in Asia Pacific, 4.5 percent in the U.S. and 4.3 percent in EMEA (Europe, Middle East and Africa).
“The 3M team delivered another strong performance in the third quarter,” said Inge G. Thulin, 3M’s chairman, president and chief executive
officer. “All business groups generated positive organic sales growth and operating margins above 20 percent. At the same time, we further
strengthened the company through increased investments in innovation, commercialization and manufacturing. Finally, we returned $2 billion
of cash to our shareholders during the quarter via dividends and gross share repurchases, or $4.8 billion through nine months of the year.”
3M updated its full-year performance expectations. The company anticipates 2013 earnings to be in the range of $6.65 to $6.75 per share
versus a previous expectation of $6.60 to $6.85 per share. 3M expects full year organic local-currency sales growth of 3 to 4 percent versus a
previous expectation of 2 to 5 percent. In addition, the company expects that free cash flow conversion will be approximately 90 percent.
Third-Quarter Business Group Discussion
Industrial
•
Sales of $2.7 billion, up 8.6 percent in U.S. dollars. Organic local-currency sales increased 6.2 percent, acquisitions (Ceradyne) added
4.1 percent to sales and foreign currency translation reduced sales by 1.7 percent.
•
•
On an organic local-currency basis:
•
Sales grew in all businesses, led by aerospace, automotive, advanced materials, liquid filtration, automotive aftermarket and
industrial adhesives and tapes.
•
Sales rose in all major geographies, with double-digit growth in Latin America/Canada.
Operating income was $568 million, equal to third quarter of 2012; operating margin of 21.3 percent.
Electronics and Energy
Sales of $1.4 billion, an increase of 2.5 percent in U.S. dollars. Organic local-currency sales increased 3.8 percent and foreign
•
currency translation reduced sales by 1.3 percent.
•
On an organic local-currency basis:
•
Positive sales growth in both electronics- and energy-related businesses.
•
Sales grew in Asia Pacific, Latin America/Canada and EMEA, and declined in the U.S.
Operating income was $300 million, up 3.2 percent year-on-year; operating margin of 20.7 percent.
•
Safety and Graphics
•
Sales of 1.4 billion, up 6.7 percent in U.S. dollars. Organic local-currency sales increased 8.1 percent; acquisitions (Federal Signal
Technologies) added 0.9 percent to sales and foreign currency translation reduced sales by 2.3 percent.
•
On an organic local-currency basis:
Sales grew at a double-digit rate in roofing granules and personal safety; sales declined in architectural markets.
•
•
Sales rose in all major geographies, with double-digit growth in Asia Pacific and Latin America/Canada.
•
Operating income was $315 million, an increase of 7.3 percent year-on-year; operating margin of 21.8 percent.
Health Care
•
Sales of $1.3 billion, up 5.5 percent in U.S. dollars. Organic local-currency sales increased 6.8 percent and foreign currency
translation reduced sales by 1.3 percent.
•
On an organic local-currency basis:
•
Sales grew across the portfolio led by double-digit growth in food safety and health information systems.
•
Sales rose in all major geographies, with double-digit growth in Latin America/Canada.
Operating income was $426 million, an increase of 6.7 percent; operating margin of 32.1 percent.
•
Consumer
•
Sales of $1.2 billion, up 2.1 percent in U.S. dollars. Organic local-currency sales increased 4.2 percent, divestitures reduced sales by
0.2 percent and foreign currency translation reduced sales by 1.9 percent.
•
On an organic local-currency basis:
•
Sales growth was strongest in consumer health care, home care, stationery and office supplies and DIY.
•
Sales grew in all geographic areas led by Latin America/Canada and Asia Pacific.
•
Operating income was $247 million, up 0.6 percent year-on-year; operating margin of 21.5 percent .
3M will conduct an investor teleconference at 9:00 a.m. EDT (8:00 a.m. CDT) 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 21609533).
The telephone replay will be available until 10:00 a.m. CDT on October 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) unanticipated problems or delays with the phased implementation of a global enterprise resource
planning (ERP) system, or 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, 2012 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
September 30,
2013
2012
Net sales
$
Operating expenses
Cost of sales
Selling, general and administrative expenses
Research, development and related expenses
Total operating expenses
Operating income
Interest expense and income
Interest expense
Interest income
Total interest expense — net
Income before income taxes
Provision for income taxes
Net income including noncontrolling interest
$
Weighted average 3M common shares outstanding — basic
Earnings per share attributable to 3M common shareholders —
basic
$
$
$
23,302
$
22,517
3,935
1,487
397
12,130
4,808
1,277
11,694
4,567
1,216
6,177
5,819
18,215
17,477
1,739
1,678
5,087
5,040
33
(10)
44
(10)
113
(30)
127
(29)
23
34
83
98
1,716
1,644
5,004
4,942
471
464
1,399
1,435
1,245
$
1,230
1.81
1,180
$
19
$
679.8
$
7,497
4,148
1,609
420
15
Less: Net income attributable to noncontrolling interest
Net income attributable to 3M
7,916
Nine-months ended
September 30,
2013
2012
1,161
691.8
1.68
$
49
$
693.0
$
3,605
3,556
54
$
686.4
$
703.1
5.18
3,507
3,453
694.7
$
697.7
4.97
Weighted average 3M common shares outstanding — diluted
Earnings per share attributable to 3M common shareholders —
diluted
703.9
$
1.78
$
1.65
$
5.10
$
4.91
Cash dividends paid per 3M common share
$
0.635
$
0.59
$
1.905
$
1.77
3M Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions)
(Unaudited)
Sep. 30,
2013
ASSETS
Current assets
Cash and cash equivalents
Marketable securities — current
Accounts receivable — net
Inventories
Other current assets
Total current assets
Marketable securities — non-current
Investments
Property, plant and equipment — net
Goodwill and intangible assets — net
Prepaid pension benefits
Other assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings and current portion of long-term debt
Accounts payable
Accrued payroll
Accrued income taxes
Other current liabilities
Total current liabilities
Long-term debt
Pension and postretirement benefits
Other liabilities
Total liabilities
Total equity
Shares outstanding
September 30, 2013: 673,269,679 shares
December 31, 2012: 687,091,650 shares
September 30, 2012: 691,931,278 shares
Total liabilities and equity
$
Dec. 31,
2012
2,340
971
4,594
3,948
1,429
13,282
1,547
150
8,448
9,087
24
1,066
33,604
$
$
$
2,244
1,718
688
373
2,416
7,439
3,533
2,694
1,686
15,352
$
$
$
$
Sep. 30,
2012
2,883
1,648
4,061
3,837
1,201
13,630
1,162
163
8,378
9,310
16
1,217
33,876
$
$
$
1,085
1,762
701
371
2,281
6,200
4,916
3,086
1,634
15,836
$
1,506
1,805
684
301
2,299
6,595
4,852
3,114
1,777
16,338
18,252
$
18,040
$
18,141
33,604
$
33,876
$
34,479
$
$
3,029
1,989
4,409
3,842
1,225
14,494
1,400
142
7,939
9,063
47
1,394
34,479
3M Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(Unaudited)
Nine-months ended
September 30,
2013
2012
NET CASH PROVIDED BY OPERATING ACTIVITIES
$
Cash flows from investing activities:
Purchases of property, plant and equipment
Acquisitions, net of cash acquired
Purchases and proceeds from sale or maturities of
marketable securities and investments — net
Other investing activities
$
(1,122)
—
Cash flows from financing activities:
Change in debt
Purchases of treasury stock
Proceeds from issuances of treasury stock
pursuant to stock option and benefit plans
Dividends paid to shareholders
Other financing activities
NET CASH USED IN FINANCING ACTIVITIES
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
$
3,562
(977)
(248)
313
107
NET CASH USED IN INVESTING ACTIVITIES
Cash and cash equivalents at end of period
3,824
(938)
29
(702)
(2,134)
(234)
(3,538)
1,197
(1,490)
1,372
(1,307)
64
772
(1,228)
35
(3,643)
(714)
(22)
96
(543)
2,883
810
2,219
2,340
$
3,029
3M Company and Subsidiaries
SUPPLEMENTAL CASH FLOW AND
OTHER SUPPLEMENTAL FINANCIAL INFORMATION
(Dollars in millions)
(Unaudited)
Three-months ended
September 30,
2013
2012
Nine-months ended
September 30,
2013
2012
NON-GAAP MEASURES
Free Cash Flow:
Net cash provided by operating activities
Purchases of property, plant and equipment
$
Free Cash Flow (a)
$
(a)
1,151 $
(404)
747
1,345 $
(358)
$
987
$
3,824 $
(1,122)
2,702
$
3,562
(977)
2,585
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.
September 30,
2013
OTHER NON-GAAP MEASURES:
Net Working Capital Turns (b)
(b)
2012
4.6
4.7
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.
3M Company and Subsidiaries
SALES CHANGE ANALYSIS
(Unaudited)
During the first quarter of 2013, 3M completed a realignment of its business segments, as discussed in the following “Business Segments”
section, and realigned its geographic area reporting to include Puerto Rico in the United States, rather than in the Latin America/Canada
region. The financial information presented herein reflects, for all periods presented, the impact of these realignments.
Sales Change Analysis
By Geographic Area
Volume – organic
Price
Organic local-currency sales
Acquisitions
Divestitures
Translation
Total sales change
Three-months ended September 30, 2013
Europe,
Middle
Latin
AsiaEast and
America/
Pacific
Africa
Canada
United
States
3.7%
0.8
4.5
2.7
(0.1)
—
7.1%
7.3%
(0.5)
6.8
0.2
—
(5.3)
1.7%
3.4%
0.9
4.3
2.2
—
3.1
9.6%
4.9%
5.6
10.5
0.2
—
(6.3)
4.4%
WorldWide
4.8%
1.0
5.8
1.5
—
(1.7)
5.6%
Three-months ended September 30, 2013
Worldwide
Sales Change Analysis
By Business Segment
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Organic
localcurrency
sales
Acquisitions
6.2%
8.1%
3.8%
6.8%
4.2%
Divestitures
4.1%
0.9%
—%
—%
—%
Total
sales
change
Translation
—%
—%
—%
—%
(0.2)%
(1.7)%
(2.3)%
(1.3)%
(1.3)%
(1.9)%
8.6%
6.7%
2.5%
5.5%
2.1%
Sales Change Analysis
By Geographic Area
Nine-months ended September 30, 2013
Europe,
Middle
Latin
AsiaEast and
America/
Pacific
Africa
Canada
United
States
Volume – organic
Price
Organic local-currency sales
Acquisitions
Divestitures
Translation
Total sales change
2.1%
0.5
2.6
3.0
(0.1)
—
5.5%
4.6%
(0.9)
3.7
0.3
—
(4.0)
—%
1.0%
0.6
1.6
2.2
—
0.8
4.6%
WorldWide
3.4%
5.4
8.8
0.4
—
(4.8)
4.4%
2.7%
0.7
3.4
1.7
—
(1.6)
3.5%
Nine-months ended September 30, 2013
Worldwide
Sales Change Analysis
By Business Segment
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Organic
localcurrency
sales
Total
Acquisitions
4.2%
4.0%
—%
5.5%
3.6%
Divestitures
4.1%
1.7%
—%
0.1%
—%
Total
sales
change
Translation
—%
—%
—%
—%
(0.1)%
(1.7)%
(2.0)%
(1.2)%
(1.3)%
(1.7)%
6.6%
3.7%
(1.2)%
4.3%
1.8%
3M Company and Subsidiaries
BUSINESS SEGMENTS
(Dollars in millions)
(Unaudited)
Effective in the first quarter of 2013, 3M completed a realignment of its business groups (segments) to better serve global markets and
customers. This realignment included:
•
•
•
The alignment of divisions into five business groups (segments) as further described below.
The combination of certain existing divisions into new divisions. These included the Traffic Safety and Security Division (reflecting
the combination of the former Traffic Safety Systems Division and Security Systems Division) and the Optical Systems Division
(reflecting the combination of the former Optical Systems Division and Mobile Interactive Solutions Division).
The movement of certain product lines between various divisions.
In addition to the above, there were also adjustments for dual credit reporting to reflect the realigned structure. The new structure is comprised
of five business segments: Industrial, Safety and Graphics, Electronics and Energy, Health Care, and Consumer.
Industrial : This business segment, previously referred to as Industrial and Transportation, is largely unchanged, except for the transfer of
the Renewable Energy Division to the Electronics and Energy business segment.
Safety and Graphics : This business segment includes Architectural Markets, Building and Commercial Services, Commercial
Graphics, Industrial Mineral Products, Personal Safety, and Traffic Safety and Security. This new business segment also reflects the
movement of certain product lines between various divisions.
Electronics and Energy : This business segment includes Communication Markets, Electrical Markets, Electronics Markets Materials,
Electronic Solutions, Infrastructure Protection, Optical Systems, Renewable Energy, and 3M Touch Systems. This new business segment
also reflects the movement of certain product lines between various divisions.
Health Care : This business segment is largely unchanged, except for the movement of certain product lines between various divisions.
Consumer : This business segment, previously referred to as Consumer and Office, is largely unchanged, except for the movement of
certain product lines between various divisions.
The financial information presented herein reflects, for all periods presented, the impact of this realignment. Refer to 3M’s Current Report on
Form 8-K furnished on March 1, 2013 and 3M’s Current Report on Form 8-K filed on May 16, 2013 for additional information concerning the
business segment and geographic area realignments effective in the first quarter of 2013.
BUSINESS SEGMENT INFORMATION
NET SALES
(Millions)
Three-months ended
September 30,
2013
2012
Nine-months ended
September 30,
2013
2012
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Corporate and Unallocated
Elimination of Dual Credit
$
2,674 $
1,448
1,449
1,328
1,153
2
(138)
2,462 $
1,357
1,414
1,259
1,129
1
(125)
Total Company
$
7,916
7,497
BUSINESS SEGMENT INFORMATION
OPERATING INCOME
(Millions)
$
$
Three-months ended
September 30,
2013
2012
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Corporate and Unallocated
Elimination of Dual Credit
$
Total Company
$
568 $
315
300
426
247
(87)
(30)
1,739
$
8,012 $
4,318
4,066
3,975
3,332
6
(407)
23,302
$
7,519
4,165
4,118
3,811
3,272
4
(372)
22,517
Nine-months ended
September 30,
2013
2012
568 $
295
291
399
246
(93)
(28)
1,678
$
1,743 $
983
733
1,247
719
(249)
(89)
1,751
997
807
1,212
710
(355)
(82)
5,087
5,040
$
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.
Investor Contacts:
Matt Ginter
3M
(651) 733-8206
Bruce Jermeland
3M
(651) 733-1807
From:
3M Public Relations and Corporate Communications
3M Center, Building 225-1S-15
St. Paul, MN 55144-1000
Media Contact:
Jacqueline Berry
3M
(651) 733-3611