9a875d2f f9cc 44bd b728 a39fac56e4a7

 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 22, 2015
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)
3M Center, St. Paul, Minnesota
(Address of Principal Executive Offices)
41-0417775
(IRS Employer Identification No.)
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):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
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 22, 2015, 3M Company issued a press release reporting third-quarter 2015 results, updating its 2015 financial expectations, and announcing a
restructuring plan (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 22, 2015, 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: /s/ Gregg M. Larson
Gregg M. Larson,
Deputy General Counsel and Secretary
Dated: October 22, 2015
2
Exhibit 99
FOR IMMEDIATE RELEASE
3M Delivers Third-Quarter Sales of $7.7 Billion and Earnings of $2.05 per Share;
Company Announces Restructuring Plan
Third-Quarter Highlights:
·
Operating income margins of 24.3 percent, up 0.9 percentage points year-on-year
·
Organic local-currency sales growth of 1.2 percent, positive across all geographic areas
·
Returned $2.2 billion to shareholders via dividends and gross share repurchases
·
Closed acquisitions of Capital Safety and Polypore’s Separations Media business
ST. PAUL, Minn. – October 22, 2015 – 3M (NYSE: MMM) today reported third-quarter earnings of $2.05 per share, an increase of 3.5 percent versus the third
quarter of 2014. Sales declined 5.2 percent year-on-year to $7.7 billion. Organic local-currency sales grew 1.2 percent and acquisitions, net of divestitures, added
another 1.0 percent. Foreign currency translation reduced sales by 7.4 percent year-on-year.
Operating income was $1.9 billion and operating income margins for the quarter were 24.3 percent, up 0.9 percentage points year-on-year. Third-quarter net
income was $1.3 billion and the company converted 101 percent of net income to free cash flow.
3M paid $635 million in cash dividends to shareholders and repurchased $1.5 billion of its own shares during the quarter.
Organic local-currency sales growth was 5.0 percent in Consumer, 3.7 percent in Health Care, 2.9 percent in Safety and Graphics and 0.2 percent in Industrial;
Electronics and Energy declined 2.8 percent. On a geographic basis, organic local-currency sales grew 2.3 percent in Latin America/Canada, 1.5 percent in the
U.S., 1.5 percent in EMEA (Europe, Middle East and Africa) and 0.4 percent in Asia Pacific.
“3M delivered a solid operational performance in a continued slow-growth environment, marked by strong earnings, organic growth in all geographic areas and
expanded margins,” said Inge G. Thulin, 3M’s chairman, president and chief executive officer. “We continue to take actions to strengthen our portfolio, increase
our scientific edge through research and development, and transform our business processes through a new global ERP system. We are building a stronger, more
streamlined and more focused company that can compete and win for years to come.”
To further strengthen its competitiveness, 3M also announced a restructuring plan that will result in an expected reduction of 1,500 positions worldwide with
estimated pre-tax savings of $130 million in 2016. The company anticipates a fourth-quarter pre-tax charge of approximately $100 million, or $0.13 per share,
related to this plan. Reductions will be primarily focused on structural overhead, largely in the U.S., and slower-growing markets with particular emphasis on
EMEA and Latin America.
3M also updated its guidance for the full-year 2015.
Excluding the announced restructuring charges, 3M now expects earnings will be in the range of $7.73 to $7.78 per share, versus a prior range of $7.73 to $7.93 per
share. On a GAAP basis, including the announced restructuring charges, the company expects earnings will be in the range of $7.60 to $7.65 per share.
Organic local-currency sales growth is expected to be in the range of 1.5 to 2.0 percent, versus previous guidance of 2.5 to 4 percent. The company anticipates that
full-year free cash flow conversion will be in the range of 95 to 100 percent, versus a previous estimated range of 90 to 100 percent.
Third-Quarter Business Group Discussion
Industrial
·
Sales of $2.6 billion, down 7.1 percent in U.S. dollars. Organic local-currency sales increased 0.2 percent, acquisitions increased sales 0.7 percent and
foreign currency translation reduced sales by 8.0 percent.
·
On an organic local-currency basis:
·
Sales growth was led by automotive OEM, 3M purification, abrasives, and industrial adhesives and tapes; advanced materials declined.
·
Sales grew in Latin America/Canada, Asia Pacific and EMEA; sales declined in the U.S.
·
Operating income was $580 million, a decrease of 5.8 percent year-on-year; operating margin of 22.5 percent.
Safety and Graphics
·
Sales of $1.4 billion, down 2.2 percent in U.S. dollars. Organic local-currency sales increased 2.9 percent, acquisitions increased sales 4.2 percent and
foreign currency translation reduced sales by 9.3 percent.
·
On an organic local-currency basis:
·
Sales grew in roofing granules, commercial solutions and personal safety; traffic safety and security declined.
·
Sales increased in Asia Pacific, EMEA and the U.S.; sales declined in Latin America/Canada.
·
Operating income was $324 million, a decrease of 4.8 percent year-on-year; operating margin of 22.9 percent.
Health Care
·
Sales of $1.3 billion, down 3.2 percent in U.S. dollars. Organic local-currency sales increased 3.7 percent, acquisitions increased sales by 0.9 percent and
foreign currency translation reduced sales by 7.8 percent.
·
On an organic local-currency basis:
·
Sales grew in health information systems, food safety, critical and chronic care, oral care and infection prevention; drug delivery systems
declined year-on-year.
·
Sales grew in all areas led by Latin America/Canada, Asia Pacific and the U.S.
·
Operating income was $432 million, an increase of 0.1 percent year-on-year; operating margin of 32.1 percent.
Electronics and Energy
·
Sales of $1.4 billion, down 8.1 percent in U.S. dollars. Organic local-currency sales declined 2.8 percent, divestitures reduced sales by 0.7 percent and
foreign currency translation reduced sales by 4.6 percent.
·
On an organic local-currency basis:
·
Electronics-related sales declined 3 percent, as sales grew in electronics materials solutions and declined in display materials and systems;
energy-related sales declined 2 percent, as growth in telecom was offset by declines in electrical markets and renewable energy.
·
Sales grew in EMEA; sales declined in the U.S., Latin America/Canada and Asia Pacific.
·
Operating income was $342 million, an increase of 1.4 percent year-on-year; operating margin of 24.9 percent.
Consumer
·
Sales of $1.2 billion, down 1.2 percent in U.S. dollars. Organic local-currency sales increased 5.0 percent and foreign currency translation reduced sales
by 6.2 percent.
·
On an organic local-currency basis:
·
Sales growth was led by stationery and office supplies, home improvement and home care.
·
Sales rose in the U.S., Asia Pacific and EMEA; Latin America/Canada sales declined year-on-year.
·
Operating income was $293 million, up 7.5 percent year-on-year; operating margin of 25.2 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://investors.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://investors.3M.com and click on “Quarterly Earnings.”
·
Telephone replay:
·
Call 800-633-8284 within the U.S. or +1 402-977-9140 outside the U.S. (for both U.S. and outside the U.S. access code is 21735069). The telephone
replay will be available until 10:30 a.m. CDT on October 27, 2015.
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,” “aim,” “project,” “intend,” “plan,” “believe,” “will,”
“should,” “could,” “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, 2014, 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,
2015
2014
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
Less: Net income attributable to noncontrolling interest
Net income attributable to 3M
Weighted average 3M common shares outstanding – basic
Earnings per share attributable to 3M common shareholders – basic
Weighted average 3M common shares outstanding – diluted
Earnings per share attributable to 3M common shareholders – diluted
Cash dividends paid per 3M common share
$
$
38
(7)
31
1,845
547
1,298
2
1,296
620.6
2.09
631.2
2.05
1.025
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
110
(25)
85
5,388
1,569
3,819
42
3,777
652.9
5.78
665.7
5.67
2.565
104
(18)
86
5,360
1,558
3,802
7
3,795
629.4
6.03
641.2
5.92
3.075
28
(7)
21
1,880
569
1,311
8
1,303
645.3
2.02
657.9
1.98
0.855
12,420
4,875
1,334
18,629
5,473
24,102
$
11,556
4,644
1,330
17,530
5,446
22,976
$
4,205
1,597
434
6,236
1,901
8,137
3,877
1,530
429
5,836
1,876
7,712
Nine months ended
September 30,
2015
2014
$
3M Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions)
(Unaudited)
September 30,
2015
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 (a)
Prepaid pension benefits (c)
Other assets (c)
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 (b)
Total current liabilities
Long-term debt
Pension and postretirement benefits (c)
Other liabilities
Total liabilities
Total equity (b)(c)
Shares outstanding
September 30, 2015: 615,712,937 shares
December 31, 2014: 635,134,594 shares
September 30, 2014: 640,818,842 shares
Total liabilities and equity
December 31,
2014
September 30,
2014
$
1,605
153
4,610
3,709
1,531
11,608
13
112
8,470
11,986
60
1,009
33,258
$
$
$
$
2,279
1,600
684
105
2,364
7,032
8,974
3,462
1,566
21,034
12,224
$
$
$
$
$
$
2,119
1,796
728
382
2,680
7,705
5,225
1,849
1,791
16,570
16,206
$
106
1,807
732
435
2,918
5,998
6,731
3,843
1,555
18,127
13,142
$
1,929
767
4,711
3,945
1,329
12,681
1,105
108
8,499
8,729
720
934
32,776
$
1,897
626
4,238
3,706
1,298
11,765
828
102
8,489
8,485
46
1,554
31,269
$
$
33,258
$
31,269
$
32,776
(a) In August 2015, 3M completed the acquisitions of Capital Safety and Polypore’s Separations Media business. In March 2015, 3M completed the
acquisition of Ivera Medical Corp. The combination of these acquisitions increased goodwill and intangible assets — net by approximately $3.9 billion at
September 30, 2015.
(b) (c) In December 2014, 3M’s board of directors declared a first-quarter 2015 dividend of $1.025 per share (paid in March 2015). This reduced 3M’s
stockholders equity and increased other current liabilities as of December 31, 2014, by approximately $0.6 billion.
The changes in 3M’s defined benefit pension and postretirement plans’ funded status, which is required to be measured as of each year-end, significantly
impacted several balance sheet amounts. In the fourth quarter of 2014, these required annual measurements decreased prepaid pension benefits by $0.7
billion, increased deferred taxes within other assets by $0.8 billion, increased pension and postretirement benefits’ long-term liabilities by $1.9 billion, and
decreased stockholders’ equity by $1.8 billion. Other pension and postretirement changes during the year, such as contributions and amortization, also
impacted these balance sheet amounts.
3M Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(Unaudited)
Nine months ended
September 30,
2015
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
NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES
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
Purchase of noncontrolling interest (d)
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
Cash and cash equivalents at end of period
(d) $
$
(1,003)
(94)
383
136
(578)
3,787
(4,104)
518
(1,933)
—
38
(1,694)
(69)
(292)
1,897
1,605
$
1,448
(4,373)
739
(1,672)
(699)
84
(4,473)
(44)
(652)
2,581
1,929
4,443
(1,015)
(2,910)
1,256
58
(2,611)
2014
4,082
$
This is primarily related to the purchase of the remaining noncontrolling interest of Sumitomo 3M Limited from Sumitomo Electric Industries, Ltd. for 90
billion Japanese Yen. The transaction closed on September 1, 2014, for approximately $865 million at closing date exchange rates. Approximately $694
million was recorded as a financing activity in the statement of cash flows while the remainder was recorded as a current liability (paid in October 2014).
3M Company and Subsidiaries
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP MEASURES
(Dollars in millions)
(Unaudited)
Three months ended
September 30,
Free Cash Flow
2015
Net cash provided by operating activities
Purchases of property, plant and equipment
Free Cash Flow (e)
Free Cash Flow Conversion (e)
(e) 2014
1,664
$
(354)
1,310
$
101%
$
$
2015
1,711
$
(369)
1,342
$
103%
Nine months ended
September 30,
2014
4,082
$
(1,015)
3,067
$
81%
4,443
(1,003)
3,440
91%
Free cash flow and free cash flow conversion are not defined under U.S. generally accepted accounting principles (GAAP). Therefore, they should not be
considered a substitute for income or cash flow data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used
by other companies. The Company defines free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. It
should not be inferred that the entire free cash flow amount is available for discretionary expenditures. The Company defines free cash flow conversion as
free cash flow divided by net income attributable to 3M. The Company believes free cash flow and free cash flow conversion are useful measures of
performance and uses these measures as an indication of the strength of the Company and its ability to generate cash.
September 30,
2015
Net Debt
Total Debt
Less: Cash and Cash Equivalents and
Marketable Securities
Net Debt (f)
(f) $
December 31,
2014
11,253
$
6,837
1,771
9,482
$
$
7,344
September 30,
2014
3,351
3,486
$
3,801
3,543
$
The Company defines net debt as total debt less the total of cash, cash equivalents and current and long-term marketable securities. 3M considers net debt
and its components to be an important indicator of liquidity and a guiding measure of capital structure strategy. Net debt is not defined under U.S. GAAP
and may not be computed the same as similarly titled measures used by other companies.
Working Capital Index
Net Working Capital Turns (g)
(g) September 30,
2015
4.6
December 31,
2014
5.0
September 30,
2014
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)
Sales Change Analysis
By Geographic Area
Volume — organic
Price
Organic local-currency sales
Acquisitions
Divestitures
Translation
Total sales change
Three months ended September 30, 2015
Europe,
Middle
Latin
AsiaEast and
America/
Pacific
Africa
Canada
United
States
1.2%
0.3
1.5
1.8
(0.3)
—
3.0%
0.4%
—
0.4
0.5
(0.1)
(6.9)
(6.1)%
(0.6)%
2.1
1.5
0.9
(0.1)
(14.4)
(12.1)%
WorldWide
(2.7)%
5.0
2.3
1.1
(0.1)
(21.1)
(17.8)%
0.1%
1.1
1.2
1.1
(0.1)
(7.4)
(5.2)%
Three months ended September 30, 2015
Organic
localcurrency
sales
Worldwide
Sales Change Analysis
By Business Segment
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Translation
—%
—%
(0.7)%
—%
—%
(8.0)%
(9.3)%
(4.6)%
(7.8)%
(6.2)%
Nine months ended September 30, 2015
Europe,
Middle
Latin
AsiaEast and
America/
Pacific
Africa
Canada
United
States
Divestitures
0.7%
4.2%
—%
0.9%
—%
(7.1)%
(2.2)%
(8.1)%
(3.2)%
(1.2)%
Sales Change Analysis
By Geographic Area
Volume — organic
Price
Organic local-currency sales
Acquisitions
Divestitures
Translation
Total sales change
Acquisitions
0.2%
2.9%
(2.8)%
3.7%
5.0%
Total
sales
change
2.5%
0.4
2.9
0.8
(0.3)
—
3.4%
2.2%
—
2.2
0.2
(0.1)
(5.6)
(3.3)%
(1.2)%
1.8
0.6
0.3
—
(15.8)
(14.9)%
WorldWide
(2.2)%
4.4
2.2
0.4
(0.1)
(16.4)
(13.9)%
1.0%
1.0
2.0
0.5
(0.1)
(7.1)
(4.7)%
Nine months ended September 30, 2015
Organic
localcurrency
sales
Worldwide
Sales Change Analysis
By Business Segment
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Acquisitions
1.5%
4.0%
(0.2)%
3.3%
3.5%
Divestitures
0.2%
1.4%
—%
0.8%
—%
Total
sales
change
Translation
—%
—%
(0.8)%
—%
—%
(7.6)%
(8.7)%
(4.3)%
(7.5)%
(5.7)%
(5.9)%
(3.3)%
(5.3)%
(3.4)%
(2.2)%
3M Company and Subsidiaries
BUSINESS SEGMENTS
(Dollars in millions)
(Unaudited)
BUSINESS SEGMENT INFORMATION
NET SALES
(Millions)
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Corporate and Unallocated
Elimination of Dual Credit
Total Company
Three months ended
September 30,
$
2014
2,575
1,417
1,378
1,346
1,162
2
(168)
7,712
$
$
$
2015
$
$
$
2014
1,787
1,023
902
1,280
792
(232)
(106)
5,446
$
$
1,851
1,011
858
1,293
741
(184)
(97)
5,473
$
$
$
2015
616
340
338
432
272
(63)
(34)
1,901
$
Nine months ended
September 30,
2014
580
324
342
432
293
(58)
(37)
1,876
Three months ended
September 30,
$
8,363
4,365
4,233
4,180
3,395
5
(439)
24,102
$
2014
7,867
4,221
4,010
4,039
3,321
—
(482)
22,976
2015
2,772
1,448
1,500
1,390
1,177
3
(153)
8,137
BUSINESS SEGMENT INFORMATION
OPERATING INCOME
(Millions)
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Corporate and Unallocated
Elimination of Dual Credit
Total Company
2015
Nine months ended
September 30,
$
About 3M
At 3M, we apply science in collaborative ways to improve lives daily. With $32 billion in sales, our 90,000 employees connect with customers all around the
world. Learn more about 3M’s creative solutions to the world’s problems at www.3M.com or on Twitter @3M or @3MNewsroom.
Investor Contacts:
Bruce Jermeland
Media Contact:
Donna Fleming Runyon
3M
3M
(651) 733-1807
(651) 736-7646
Mike Kronebusch
3M
(651) 733-1141
From:
3M Public Relations and Corporate Communications
3M Center, Building 225-1S-15
St. Paul, MN 55144-1000