77c7fc8c a83c 4681 b1dd d942fc660690

3M CO
FORM
8-K
(Current report filing)
Filed 04/23/15 for the Period Ending 04/23/15
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
http://www.edgar-online.com
© Copyright 2015, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.
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): April 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 April 23, 2015, 3M Company issued a press release reporting first-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 April 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: April 23, 2015
Exhibit 99
FOR IMMEDIATE RELEASE
3M Announces First-Quarter Results;
Company Posts Sales of $7.6 Billion and Earnings of $1.85 per Share
First-Quarter Highlights:
–
–
–
–
–
–
Organic local-currency sales growth of 3.3 percent
Positive organic local-currency growth in all business groups and geographic areas
Operating income margins of 22.8 percent, up 0.9 percentage points year-on-year
Returned $1.5 billion to shareholders via dividends and gross share repurchases
Increased first-quarter per-share dividend by 20 percent
Announced acquisition of Polypore’s Separations Media business for $1.0 billion
ST. PAUL, Minn. — April 23, 2015 - 3M (NYSE: MMM) today reported first-quarter earnings of $1.85 per share, an increase of 3.4 percent
versus the first quarter of 2014. Sales declined 3.2 percent year-on-year to $7.6 billion. Organic local-currency sales grew 3.3 percent and
foreign currency translation reduced sales by 6.5 percent year-on-year.
Operating income was $1.7 billion and operating income margins for the quarter were 22.8 percent, up 0.9 percentage points year-on-year.
First-quarter net income was $1.2 billion and the company converted 66 percent of net income to free cash flow.
3M paid $652 million in cash dividends to shareholders as the company increased its first-quarter per-share dividend by 20 percent. Also, the
company repurchased $886 million of its own shares during the quarter.
Organic local-currency sales growth was 5.8 percent in Electronics and Energy, 4.1 percent in Safety and Graphics, 3.0 percent in Health Care,
2.7 percent in Industrial and 2.1 percent in Consumer. On a geographic basis, organic local-currency sales grew 5.6 percent in Asia Pacific, 3.6
percent in Latin America/Canada, 3.1 percent in the U.S. and 0.3 percent in EMEA (Europe, Middle East and Africa).
“We are executing well against a more challenging economic backdrop in early 2015,” said Inge G. Thulin, 3M’s chairman, president and chief
executive officer. “The stronger U.S. dollar negatively impacted sales and earnings in the first quarter, and global economic growth was mixed.
Despite these near-term challenges, we grew organically in all business groups and all geographic areas, and expanded operating margins by
nearly a full percentage point.”
Thulin continued, “We also continue to invest for long-term success through research and development, commercialization and acquisitions. In
February, we announced plans to acquire Polypore’s Separations Media business for $1.0 billion, which will enhance our existing filtration
platform and help generate new growth opportunities across the company.”
The company noted that foreign currency impacts reduced first-quarter pre-tax earnings by approximately $90 million or the equivalent of
$0.10 per share. For 2015 in total, 3M now expects foreign currency impacts to reduce earnings by $0.35 to $0.40 per share versus a prior
expectation of negative $0.20 per share.
In light of the stronger U.S. dollar, 3M updated its 2015 financial expectations. The company now expects earnings to be in the range of $7.80
to $8.10 per share versus $8.00 to $8.30 per share previously. Foreign currency translation is expected to reduce 2015 sales by 6 to 7 percent
versus a previous expected reduction of 4 to 5 percent. 3M also estimates its full-year tax rate will be in the range of 28.5 to 29.5 percent versus
a previous forecast of 28 to 29 percent.
For the full year, 3M maintained its forecast for organic local-currency sales growth in the range of 3 to 6 percent. The company also affirmed
its expectation of 90 to 100 percent free cash flow conversion.
First-Quarter Business Group Discussion
Industrial
Sales of $2.7 billion, down 4.3 percent in U.S. dollars. Organic local-currency sales increased 2.7 percent and foreign currency
•
translation reduced sales by 7.0 percent.
•
On an organic local-currency basis:
•
Sales growth was led by aerospace and commercial transportation, automotive OEM and 3M Purification.
•
Sales increased in Latin America/Canada, the U.S. and Asia Pacific; EMEA sales were flat.
Operating income was $598 million, down 3.3 percent year-on-year; operating margin of 22.5 percent.
•
Safety and Graphics
•
Sales of $1.4 billion, down 3.6 percent in U.S. dollars. Organic local-currency sales increased 4.1 percent and foreign currency
translation reduced sales by 7.7 percent.
•
On an organic local-currency basis:
Sales grew in personal safety, commercial solutions, and traffic safety and security; roofing granules declined year-on-year.
•
•
Sales grew across all major geographies led by Asia Pacific, Latin America/Canada and the U.S.
Operating income was $335 million, an increase of 5.3 percent year-on-year; operating margin of 24.4 percent.
•
Health Care
•
Sales of $1.3 billion, down 3.3 percent in U.S. dollars. Organic local-currency sales increased 3.0 percent, acquisitions increased sales
by 0.7 percent and foreign currency translation reduced sales by 7.0 percent.
•
On an organic local-currency basis:
Sales growth was positive in food safety, critical and chronic care, health information systems, infection prevention and oral
•
care; drug delivery systems declined year-on-year.
•
Sales increased in Asia Pacific, Latin America/Canada and the U.S.; EMEA sales declined year-on-year.
Operating income was $408 million, a decline of 4.3 percent year-on-year; operating margin of 30.7 percent.
•
Electronics and Energy
•
Sales of $1.3 billion, up 0.8 percent in U.S. dollars. Organic local-currency sales increased 5.8 percent, divestitures reduced sales by
0.9 percent and foreign currency translation reduced sales by 4.1 percent.
•
On an organic local-currency basis:
Electronics-related sales increased 12 percent with strong growth in both electronics materials solutions, and display
•
materials and systems; energy-related sales declined 3 percent, with electrical markets flat while telecom and renewable
energy both declined.
•
Sales grew in all major geographies led by Asia Pacific, EMEA and Latin America/Canada.
•
Operating income was $283 million, up 24.3 percent year-on-year; operating margin of 21.4 percent.
Consumer
•
Sales of $1.0 billion, down 2.9 percent in U.S. dollars. Organic local-currency sales increased 2.1 percent and foreign currency
translation reduced sales by 5.0 percent.
•
On an organic local-currency basis:
Sales grew in all businesses led by DIY and home care.
•
•
Sales increased in the U.S. and Asia Pacific; EMEA and Latin America/Canada sales declined slightly year-on-year.
Operating income was $240 million, up 5.2 percent year-on-year; operating margin of 22.9 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 21735067).
The telephone replay will be available until 10:30 a.m. CDT on April 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. Changes in such assumptions or factors
could produce significantly different results. A further description of these factors is located in the Annual Report under “Cautionary Note
Concerning Factors That May Affect Future Results” and “Risk Factors” in Part I, Items 1 and 1A. 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
March 31,
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
$
7,578
$
3,821
1,564
463
4,031
1,632
452
5,848
6,115
1,730
1,716
31
(4)
37
(9)
27
28
1,703
1,688
502
463
1,201
$
2
Less: Net income attributable to noncontrolling interest
7,831
1,225
18
Net income attributable to 3M
$
1,199
$
1,207
Weighted average 3M common shares outstanding – basic
Earnings per share attributable to 3M common shareholders – basic
$
636.2
1.88
$
661.5
1.83
Weighted average 3M common shares outstanding – diluted
Earnings per share attributable to 3M common shareholders – diluted
$
649.2
1.85
$
674.5
1.79
Cash dividends paid per 3M common share
$
1.025
$
0.855
3M Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions)
(Unaudited)
Mar. 31,
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
March 31, 2015: 634,340,975 shares
December 31, 2014: 635,134,594 shares
March 31, 2014: 654,278,447 shares
Total liabilities and equity
$
Dec. 31,
2014
1,791
1,018
4,408
3,704
1,597
12,518
13
102
8,286
8,330
56
1,338
30,643
$
$
$
132
1,801
446
464
2,239
5,082
6,459
3,764
1,386
16,691
$
$
$
$
Mar. 31,
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
$
2,176
1,866
491
481
2,436
7,450
4,401
1,809
1,963
15,623
13,952
$
13,142
$
17,924
30,643
$
31,269
$
33,547
$
$
1,954
860
4,598
3,972
1,378
12,762
1,360
120
8,630
8,988
624
1,063
33,547
(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)
Three-months ended
March 31,
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 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
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
$
1,080
$
1,092
(291)
(150)
414
27
(293)
—
(2)
8
—
(287)
(4)
(886)
309
(652)
79
574
(1,708)
267
(566)
34
(1,154)
(1,399)
(32)
(33)
(106)
1,897
(627)
2,581
1,791
$
1,954
3M Company and Subsidiaries
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP MEASURES
(Dollars in millions)
(Unaudited)
Three-months ended
March 31,
2015
2014
Free Cash Flow
Net cash provided by operating activities
Purchases of property, plant and equipment
$
Free Cash Flow (c)
$
1,080 $
(291)
789
Free Cash Flow Conversion (c)
(c)
1,092
(293)
$
799
66%
66%
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.
March 31,
2015
Net Debt
December 31,
2014
March 31,
2014
Total Debt
Less: Cash and Cash Equivalents and Marketable Securities
$
6,591
2,822
$
6,837
3,351
$
6,577
4,174
Net Debt (d)
$
3,769
$
3,486
$
2,403
(d)
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)
March 31,
2015
December 31,
2014
4.8
5.0
March 31,
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
Three-months ended March 31, 2015
Europe,
Middle
Latin
AsiaEast and
America/
Pacific
Africa
Canada
United
States
Volume – organic
Price
Organic local-currency sales
Acquisitions
Divestitures
Translation
Total sales change
2.5%
0.6
3.1
0.4
(0.3)
—
3.2%
5.4%
0.2
5.6
—
(0.1)
(4.3)
1.2%
(1.2)%
1.5
0.3
—
—
(16.2)
(15.9)%
Worldwide
(0.2)%
3.8
3.6
—
(0.1)
(12.3)
(8.8)%
2.3%
1.0
3.3
0.1
(0.1)
(6.5)
(3.2)%
Three-months ended March 31, 2015
Worldwide
Sales Change Analysis
By Business Segment
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Organic
localcurrency
sales
Acquisitions
2.7%
4.1%
5.8%
3.0%
2.1%
—%
—%
—%
0.7%
—%
Divestitures
—%
—%
(0.9)%
—%
—%
Translation
(7.0)%
(7.7)%
(4.1)%
(7.0)%
(5.0)%
Total
sales
change
(4.3)%
(3.6)%
0.8%
(3.3)%
(2.9)%
3M Company and Subsidiaries
BUSINESS SEGMENTS
(Dollars in millions)
(Unaudited)
Three-months ended
March 31,
2015
2014
BUSINESS SEGMENT INFORMATION
NET SALES
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Corporate and Unallocated
Elimination of Dual Credit
$
2,658 $
1,372
1,322
1,329
1,048
2
(153)
2,776
1,423
1,311
1,374
1,079
3
(135)
Total Company
$
7,578
7,831
$
Three-months ended
March 31,
2015
2014
BUSINESS SEGMENT INFORMATION
OPERATING INCOME
Industrial
Safety and Graphics
Electronics and Energy
Health Care
Consumer
Corporate and Unallocated
Elimination of Dual Credit
$
Total Company
$
598 $
335
283
408
240
(100)
(34)
1,730
$
618
318
227
427
228
(72)
(30)
1,716
- 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:
Matt Ginter
3M
(651) 733-8206
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