41eb2ef7 39f3 4ba9 ba01 c31042cd4cfc

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): July 23, 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)
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 July 23, 2015, 3M Company issued a press release reporting second-quarter 2015 results and updating its 2015 financial
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 July 23, 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: July 23, 2015
Exhibit 99
FOR IMMEDIATE RELEASE
3M Announces Second-Quarter Results;
Company Delivers Sales of $7.7 Billion and All-Time Record Earnings of $2.02 per Share
Second-Quarter Highlights:
–
–
–
–
Operating income margins of 23.9 percent, up 1.1 percentage points year-on-year
Organic local-currency sales growth of 1.8 percent, positive across all geographic areas
Returned $2.3 billion to shareholders via dividends and gross share repurchases
Announced acquisition of Capital Safety, a leading global provider of fall protection equipment, for a total enterprise value of $2.5
billion
ST. PAUL, Minn. – July 23, 2015 - 3M (NYSE: MMM) today reported second-quarter earnings of $2.02 per share, an increase of 5.8 percent
versus the second quarter of 2014. Sales declined 5.5 percent year-on-year to $7.7 billion. Organic local-currency sales grew 1.8 percent and
foreign currency translation reduced sales by 7.3 percent year-on-year.
Operating income was $1.8 billion and operating income margins for the quarter were 23.9 percent, up 1.1 percentage points year-on-year.
Second-quarter net income was $1.3 billion and the company converted 74 percent of net income to free cash flow.
3M paid $646 million in cash dividends to shareholders and repurchased $1.7 billion of its own shares during the quarter.
Organic local-currency sales growth was 4.9 percent in Safety and Graphics, 3.4 percent in Health Care, 3.4 percent in Consumer and 1.4
percent in Industrial; Electronics and Energy declined 3.0 percent. On a geographic basis, organic local-currency sales grew 4.1 percent in the
U.S., 0.8 percent in Latin America/Canada, 0.5 percent in Asia Pacific, and 0.4 percent in EMEA (Europe, Middle East and Africa).
“In the face of a mixed economic environment, the 3M team delivered positive organic growth in all geographic areas while expanding
worldwide margins by over a full point,” said Inge G. Thulin, 3M’s chairman, president and chief executive officer. “We also continued to
invest in our future, including strategic acquisitions. In June, we announced the acquisition of Capital Safety, which will bolster our personal
safety platform and build on our fundamental strengths in technology, manufacturing, global capabilities and brand.”
3M also updated its guidance for the full-year 2015.
The company expects earnings will be in the range of $7.80 to $8.00 per share, versus a prior range of $7.80 to $8.10 per share. Organic localcurrency sales growth is expected to be in the range of 2.5 to 4 percent, versus previous guidance of 3 to 6 percent.
3M continues to expect that foreign currency translation will reduce 2015 sales by 6 to 7 percent. The company also anticipates that full-year
free cash flow conversion will be in the range of 90 to 100 percent.
“We are amending our growth outlook slightly to account for lower-than-expected global economic growth,” said Thulin. “As always, we are
focused on executing our plan and improving those factors within our control. I am confident in our team’s ability to generate profitable growth
and premium returns into the future.”
Second-Quarter Business Group Discussion
Industrial
•
Sales of $2.6 billion, down 6.4 percent in U.S. dollars. Organic local-currency sales increased 1.4 percent and foreign currency
translation reduced sales by 7.8 percent.
On an organic local-currency basis:
•
•
Sales growth was led by 3M purification, aerospace and commercial transportation, and automotive OEM.
Sales grew in the U.S. and Latin America/Canada; Asia Pacific was flat; EMEA sales declined slightly.
•
•
Operating income was $609 million, a decline of 1.2 percent year-on-year; operating margin of 23.1 percent.
Safety and Graphics
•
Sales of $1.4 billion, down 4.1 percent in U.S. dollars. Organic local-currency sales increased 4.9 percent and foreign currency
translation reduced sales by 9.0 percent.
•
On an organic local-currency basis:
•
Sales grew in all businesses led by roofing granules, commercial solutions and personal safety.
•
Sales increased in Asia Pacific, the U.S. and EMEA; Latin America/Canada sales declined.
•
Operating income was $364 million, an increase of 3.1 percent year-on-year; operating margin of 25.4 percent.
Health Care
•
Sales of $1.4 billion, down 3.7 percent in U.S. dollars. Organic local-currency sales increased 3.4 percent, acquisitions increased sales
by 0.7 percent and foreign currency translation reduced sales by 7.8 percent.
•
On an organic local-currency basis:
•
Sales growth was positive in food safety, health information systems, oral care, critical and chronic care, and infection
prevention; drug delivery systems declined year-on-year.
•
Sales grew in Asia Pacific, Latin America/Canada and the U.S.; EMEA was flat.
•
Operating income was $440 million, an increase of 1.3 percent year-on-year; operating margin of 32.3 percent.
Electronics and Energy
•
Sales of $1.3 billion, down 7.9 percent in U.S. dollars. Organic local-currency sales declined 3.0 percent, divestitures reduced sales by
0.7 percent and foreign currency translation reduced sales by 4.2 percent.
•
On an organic local-currency basis:
Electronics-related sales declined 2 percent, as growth in electronics materials solutions was offset by a decline in display
•
materials and systems; energy-related
•
sales declined 3 percent, as electrical markets, telecom and renewable energy declined.
•
Sales grew in the U.S. and declined in EMEA, Asia Pacific and Latin America/ Canada.
Operating income was $277 million, a decline of 5.2 percent year-on-year; operating margin of 21.2 percent.
Consumer
•
Sales of $1.1 billion, down 2.5 percent in U.S. dollars. Organic local-currency sales increased 3.4 percent and foreign currency
translation reduced sales by 5.9 percent.
•
On an organic local-currency basis:
•
Sales increased across the portfolio, led by DIY, stationery and office supplies, and home care.
•
Sales grew in the U.S. and Asia Pacific; Latin America/Canada was flat; EMEA sales declined.
•
Operating income was $259 million, up 7.4 percent year-on-year; operating margin of 23.3 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 21735068).
The telephone replay will be available until 10:30 a.m. CDT on July 28, 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
June 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
7,686
$
8,134
$
2014
15,264
$
15,965
4,184
1,646
448
7,679
3,114
901
8,215
3,278
900
5,846
6,278
11,694
12,393
1,840
1,856
3,570
3,572
35
(7)
45
(9)
66
(11)
82
(18)
28
36
55
64
1,812
1,820
3,515
3,508
509
537
1,011
1,000
1,303
$
1,300
2.06
1,283
$
16
$
631.3
$
2015
3,858
1,550
438
3
$
Six-months ended
June 30,
1,267
643.0
1.94
$
5
$
652.0
$
2,504
2,499
34
$
633.8
$
664.6
3.94
2,508
2,474
656.7
$
646.1
3.77
Weighted average 3M common shares outstanding – diluted
Earnings per share attributable to 3M common shareholders –
diluted
669.6
$
2.02
$
1.91
$
3.87
$
3.70
Cash dividends paid per 3M common share
$
1.025
$
0.855
$
2.05
$
1.71
3M Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions)
(Unaudited)
Jun. 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
Prepaid pension benefits (b)
Other assets (b)
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 (a)
Total current liabilities
Long-term debt
Pension and postretirement benefits (b)
Other liabilities
Total liabilities
Total equity (a)(b)
Shares outstanding
June 30, 2015: 624,745,409 shares
December 31, 2014: 635,134,594 shares
June 30, 2014: 647,969,147 shares
Total liabilities and equity
$
Dec. 31,
2014
2,983
502
4,578
3,847
1,521
13,431
13
106
8,389
8,340
54
1,055
31,388
$
$
$
86
1,714
582
327
2,386
5,095
8,431
3,683
1,049
18,258
$
$
$
$
Jun. 30,
2014
1,897
626
4,238
3,706
1,298
11,765
828
102
8,489
8,485
46
1,554
31,269
$
$
$
106
1,807
732
435
2,918
5,998
6,731
3,843
1,555
18,127
$
1,650
1,844
656
478
2,412
7,040
5,323
1,829
1,932
16,124
13,130
$
13,142
$
17,846
31,388
$
31,269
$
33,970
$
$
2,125
884
4,759
4,093
1,332
13,193
1,204
113
8,685
9,025
672
1,078
33,970
(a) 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.
(b) The changes in 3M’s defined benefit pension and postretirement plans’ funded status, which is required to be measured as of each yearend, 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)
Six-months ended
June 30,
2015
2014
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
2,418
$
2,732
(661)
(153)
928
52
(634)
(94)
133
16
166
(579)
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
1,876
(2,581)
450
(1,298)
79
1,021
(3,134)
585
(1,122)
66
NET CASH USED IN FINANCING ACTIVITIES
(1,474)
(2,584)
(24)
(25)
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
1,086
1,897
$
2,983
(456)
2,581
$
2,125
3M Company and Subsidiaries
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP MEASURES
(Dollars in millions)
(Unaudited)
Three-months ended
June 30,
2015
2014
Free Cash Flow
Net cash provided by operating activities
Purchases of property, plant and equipment
$
Free Cash Flow (c)
$
1,338 $
(370)
968
Free Cash Flow Conversion (c)
(c)
$
74%
Six-months ended
June 30,
2015
2014
1,640 $
(341)
2,418 $
(661)
2,732
(634)
1,299
1,757
2,098
$
103%
70%
June 30,
2015
December 31,
2014
June 30,
2014
Total Debt
Less: Cash and Cash Equivalents and Marketable Securities
$
8,517 $
3,498
6,837 $
3,351
6,973
4,213
Net Debt (d)
$
5,019 $
3,486 $
2,760
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 (e)
(e)
85%
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.
Net Debt
(d)
$
June 30,
2015
December 31,
2014
4.6
5.0
June 30,
2014
4.6
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 June 30, 2015
Europe,
Middle
Latin
AsiaEast and
America/
Pacific
Africa
Canada
United
States
3.9%
0.2
4.1
0.3
(0.3)
—
4.1%
0.5%
—
0.5
—
(0.1)
(5.4)
(5.0)%
(1.3)%
1.7
0.4
—
—
(16.8)
(16.4)%
WorldWide
(3.4)%
4.2
0.8
—
(0.1)
(15.5)
(14.8)%
0.8%
1.0
1.8
0.1
(0.1)
(7.3)
(5.5)%
Three-months ended June 30, 2015
Worldwide
Sales Change Analysis
By Business Segment
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Organic
localcurrency
sales
1.4%
4.9%
(3.0)%
3.4%
3.4%
Acquisitions
—%
—%
—%
0.7%
—%
Divestitures
—%
—%
(0.7)%
—%
—%
Translation
(7.8)%
(9.0)%
(4.2)%
(7.8)%
(5.9)%
Total
sales
change
(6.4)%
(4.1)%
(7.9)%
(3.7)%
(2.5)%
Sales Change Analysis
By Geographic Area
Volume – organic
Price
Organic local-currency sales
Acquisitions
Divestitures
Translation
Total sales change
Six-months ended June 30, 2015
Europe,
Middle
Latin
AsiaAmerica/
East and
Pacific
Africa
Canada
United
States
3.1%
0.4
3.5
0.4
(0.3)
—
3.6%
3.0%
0.1
3.1
—
(0.1)
(4.9)
(1.9)%
(1.3)%
1.6
0.3
—
—
(16.5)
(16.2)%
WorldWide
(1.8)%
4.0
2.2
—
(0.1)
(14.0)
(11.9)%
1.5%
1.0
2.5
0.1
(0.1)
(6.9)
(4.4)%
Six-months ended June 30, 2015
Worldwide
Sales Change Analysis
By Business Segment
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Organic
localcurrency
sales
Acquisitions
2.1%
4.4%
1.3%
3.2%
2.8%
—%
—%
—%
0.7%
—%
Divestitures
—%
—%
(0.8)%
—%
—%
Translation
(7.4)%
(8.3)%
(4.2)%
(7.4)%
(5.5)%
Total
sales
change
(5.3)%
(3.9)%
(3.7)%
(3.5)%
(2.7)%
3M Company and Subsidiaries
BUSINESS SEGMENTS
(Dollars in millions)
(Unaudited)
BUSINESS SEGMENT INFORMATION
NET SALES
(Millions)
Three-months ended
June 30,
2015
2014
Six-months ended
June 30,
2015
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Corporate and Unallocated
Elimination of Dual Credit
$
2,634 $
1,432
1,310
1,364
1,111
(4)
(161)
2,815 $
1,494
1,422
1,416
1,139
(1)
(151)
Total Company
$
7,686
8,134
BUSINESS SEGMENT INFORMATION
OPERATING INCOME
(Millions)
$
$
Three-months ended
June 30,
2015
2014
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Corporate and Unallocated
Elimination of Dual Credit
$
Total Company
$
609 $
364
277
440
259
(74)
(35)
1,840
$
2014
5,292 $
2,804
2,632
2,693
2,159
(2)
(314)
15,264
$
5,591
2,917
2,733
2,790
2,218
2
(286)
15,965
Six-months ended
June 30,
2015
617 $
353
293
434
241
(49)
(33)
1,856
$
2014
1,207 $
699
560
848
499
(174)
(69)
1,235
671
520
861
469
(121)
(63)
3,570
3,572
$
- 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
3M
(651) 733-1807
Mike Kronebusch
3M
(651) 733-1141
From:
3M Public Relations and Corporate Communications
3M Center, Building 225-1S-15
St. Paul, MN 55144-1000
Media Contact:
Lori Anderson
3M
(651) 733-0831