3M Reports First Quarter Results
ST. PAUL, Minn., April 23--
3M reported first quarter 2001 earnings of $1.16 per share, up
3 cents per share from the first quarter last year, excluding non-recurring
items in both periods.* Net income totaled $467 million, compared with
$456 million in the comparable period excluding non-recurring items. Sales
totaled $4.17 billion, up 2.3 percent in U.S. dollars and 6.7 percent in local
currencies.
"Our people delivered solid results under extremely difficult U.S.
economic conditions, continued strengthening of the U.S. dollar and sharply
higher energy costs," said W. James McNerney, Jr., chairman of the board and
CEO. Currency effects reduced earnings for the quarter by 7 cents per share
and higher U.S. energy costs reduced earnings by 4 cents per share. Aggressive
global cost control combined with good international volume gains largely
offset these negative pressures.
"We are intensely focused on driving down costs to deliver positive
earnings growth in an uncertain global economic environment," McNerney said.
"Unusually unpredictable market and currency trends produce a range of $4.75
to $5.00 per share for 2001 earnings in total, with negative market and
currency trends more than offset in any scenario by our aggressive cost plan."
3M earned $4.68 per share in 2000, excluding non-recurring items. The company
expects earnings for the second quarter to be similar to, or up slightly from,
the second quarter last year.
3M also announced it will consolidate operations and streamline the
organization to increase speed and productivity. This strategic and selective
restructuring will reduce 3M's global workforce by about 5,000 positions, or
about 7 percent, over the next 12 months. About half of the employment
reductions will occur outside the United States.
Business units, functional groups and geographic areas across the company
are driving the restructuring. In particular, much of the streamlining will be
targeted at parts of the company facing the greatest economic challenges, and
where the greatest opportunities exist to eliminate unnecessary structure and
improve productivity, efficiency and the supply chain.
"Our management team is accelerating efforts to grow our strong market
positions and deliver solid financial results," McNerney said. "We've
identified opportunities to streamline our supply chain and achieve other
structural improvements -- especially important now in light of the current,
difficult economic situation, and the reality that these conditions may last
longer than expected."
McNerney added, "While no one likes to eliminate jobs, this action is
consistent with our resolve to achieve solid growth, make the whole
organization faster, and advance 3M to an even higher level."
3M continues its significant investment in technology and product
development. The company also has launched five initiatives, including a major
Six Sigma push, to drive long-term growth, profitability and cash flow.
"Our businesses continue to strengthen their leading market positions,"
McNerney said. "As a result, we're well-positioned to resume strong growth
once economic conditions improve."
The company expects to incur a one-time charge of approximately
$600 million over the next few quarters as a result of this action. The
restructuring is expected to provide annual pre-tax savings of approximately
$300 million upon completion of the plan. Not included in the charge are
previously incurred costs related to elimination of some jobs stemming from
the ongoing integration of recently acquired businesses.
McNerney and Robert Burgstahler, chief financial officer, will conduct an
investor teleconference at 9:00 a.m. Eastern Time (8:00 a.m. Central) today.
This conference will be available via webcast at http://investor.3M.com
* During the first quarter of 2001, 3M incurred one-time, pre-tax costs of
$23 million primarily related to acquisitions. These costs were recorded in
cost of sales. During the first quarter of 2000, 3M recorded a $50 million
pre-tax gain related to the termination of a product distribution agreement in
the company's health care business. Including these non-recurring items,
earnings totaled $453 million, or $1.13 per share, in the first quarter of
2001, compared with $487 million, or $1.21 per share, in the first quarter of
2000.
Minnesota Mining and Manufacturing Company and Subsidiaries
(Unaudited)
Sales Change Analysis
First-Quarter 2001
U.S. Intl. Worldwide
Volume (2.0)% 14.5% 6.5%
Price 0.5 (0.5) 0.0
Translation -- (8.0) (4.5)
==== ==== ====
Total (1.5)% 6.0% 2.0%
Minnesota Mining and Manufacturing Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
3 Months Ended 3 Months Ended
March 31 March 31
(Amounts in millions, 2001 2000
except per-share amounts)
Net sales $4,170 $4,075
Operating expenses
Cost of sales 2,196 2,091
Selling, general and administrative expenses 959 956
Research, development and related expenses 278 263
Other expense (income) -- net -- (50)
------ -------
Total 3,433 3,260
------ -------
Operating income 737 815
------ -------
Other income and expense
Interest expense 38 26
Interest and other income (12) (6)
------ -------
Total 26 20
------ -------
Income before income taxes and minority interest 711 795
Provision for income taxes 238 282
Minority interest 20 26
------ -------
Net income $453 $487
====== =======
Weighted average common shares
outstanding -- basic 396.3 397.7
Earnings per share -- basic $1.14 $1.22
====== =======
Weighted average common shares
outstanding -- diluted 402.4 401.9
Earnings per share -- diluted $1.13 $1.21
====== =======
Minnesota Mining and Manufacturing Company and Subsidiaries
SUPPLEMENTAL CONSOLIDATED STATEMENT OF INCOME INFORMATION (Unaudited)
(Amounts in millions, except per-share amounts)
3 Months Ended 3 Months Ended
March 31, 2001 March 31, 2000
Excluding Excluding
Non- Non- Non- Non-
recurring recurring Reported recurring recurring Reported
Items Items Total Items Items Total
Operating
income (loss) $760 $(23) $737 $765 $50 $815
Other income
and expense 26 -- 26 20 -- 20
Income (loss)
before income
taxes and
minority
interest $734 $(23) $711 $745 $50 $795
Provision
(benefit) for
income taxes 245 (7) 238 263 19 282
Effective tax
rate 33.5% 33.5% 35.3% 35.5%
Minority
interest 22 (2) 20 26 -- 26
Net income
(loss) $467 $(14) $453 $456 $31 $487
Per share
-- diluted $1.16 $(0.03) $1.13 $1.13 $0.08 $1.21
Minnesota Mining and Manufacturing Company and Subsidiaries
CONSOLIDATED BALANCE SHEET (Unaudited)
March 31 Dec. 31
(Dollars in millions) 2001 2000
Assets
Current assets
Cash and cash equivalents $575 $302
Accounts receivable -- net 2,948 2,891
Inventories 2,341 2,312
Other current assets 961 874
------- -------
Total current assets 6,825 6,379
Property, plant and equipment -- net 5,853 5,823
Investments and other assets 2,686 2,320
------- -------
Total $15,364 $14,522
======= =======
-----------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities
Short-term debt $2,302 $1,866
Other current liabilities 3,132 2,888
------- -------
Total current liabilities 5,434 4,754
Long-term debt 955 971
Other liabilities 2,502 2,266
Stockholders' equity -- net 6,473 6,531
Shares outstanding
March 31, 2001: 395,914,197 shares
December 31, 2000: 396,085,348 shares
------- -------
Total $15,364 $14,522
======= =======
Minnesota Mining and Manufacturing Company and Subsidiaries
BUSINESS SEGMENTS (Unaudited)
Business Segment First First
Information Qtr Qtr
(Millions) 2001 2000
Net sales
Industrial $865 $915
Transportation, Graphics and Safety 893 874
Health Care 829 769
Consumer and Office 695 690
Electro and Communications 606 507
Specialty Material 281 314
Corporate and Unallocated 1 6
_____________________________________________________________________
Total Company $4,170 $4,075
Operating income
Industrial $170 $185
Transportation, Graphics and Safety 177 209
Health Care 165 193
Consumer and Office 113 105
Electro and Communications 68 89
Specialty Material 48 51
Corporate and Unallocated (4) (17)
_____________________________________________________________________
Total Company $737 $815
First quarter 2001 operating income includes non-recurring costs of
$23 million recorded in cost of sales. These non-recurring costs were
primarily acquisition related costs of $10 million in Health Care, $7 million
in Transportation, Graphics and Safety, and $6 million in the Electro and
Communications segment. First quarter 2000 operating income includes a
$50 million benefit relating to the termination of a product distribution
agreement in the Health Care segment.
