3M Reports Record Fourth-Quarter, Full-Year 1999 Sales and Profits*
26 January 2000
3M Reports Record Fourth-Quarter, Full-Year 1999 Sales and Profits*
Q4 EPS Rise 28% on 9% Volume Increase; Operating Profit Margin for Year
Expands to 18.2% From 16.9%
ST. PAUL, Minn., Jan. 26 -- 3M reported fourth quarter
1999 earnings of $444 million, or $1.10 per share, up 27.9 percent from
86 cents per share in the same quarter of 1998.
Sales reached $4.023 billion, a year-over-year increase of 6.3 percent in
U.S. dollars and more than 9 percent in local currencies. Unit sales
increased 8 percent in the United States and 10 percent internationally.
For all of 1999, earnings per share increased 12.6 percent to $4.21, and
net income rose 12.2 percent to $1.711 billion. Revenues totaled
$15.659 billion, an increase of 4.3 percent in U.S. dollars and more than
5.5 percent in local currencies. Sales, net income and per-share earnings all
established new records.
Operating income for the year was 18.2 percent of sales, up from
16.9 percent of sales in 1998. Net profit margin was 10.9 percent, up from
10.2 percent in 1998. Sales growth, combined with continued productivity
gains, drove the margin increases.
L. D. DeSimone, chairman and chief executive officer, said, "We're pleased
with our record fourth-quarter and full-year 1999 results. Our volume growth
increased during each quarter of 1999, and we enter 2000 with good momentum.
We're growing through a strong flow of innovative new products, increasing
participation in the most dynamic segments of the global economy, and
excellent customer relationships."
During 1999, 3M generated 34 percent of sales -- $5.3 billion -- from
products new to the market within the past four years. "We continue to focus
on differentiated, high-value products for fast-growing markets, including
electronics, telecommunications and health care," DeSimone said. Sales of the
company's high-impact Pacing Plus programs totaled about $1.5 billion, up
about 50 percent from 1998.
3M sales and profit growth was particularly strong in the Asia Pacific
area. "Our people did an expert job navigating through difficult challenges
in Asia during 1998, and we emerged in 1999 with even stronger customer
relationships and competitive positions," DeSimone said.
3M expects to achieve record sales and profits again in 2000, with
per-share earnings increasing 10 percent or more. "Our focus on growth,
productivity and competitiveness, together with continued expansion of the
global economy, will drive results," DeSimone said.
"I have great confidence in our ability to generate consistent, solid
growth on a long-term basis. We have a rich and growing technology base,
innovative products, leading market positions, a global presence, powerful
brands and strong customer relationships."
About 3M
3M is a $15.7 billion diversified manufacturing and technology company
with operations in more than 60 countries. Headquartered in St. Paul, Minn.,
3M makes a wide variety of products serving customers in dozens of markets,
including industrial, electronic, automotive, telecommunications, health care,
transportation safety, consumer and office. 3M is traded on the New York,
Chicago, Pacific and Swiss stock exchanges under the symbol MMM. It is one of
the 30 stocks that make up the Dow Jones Industrial Average and also is a
component of the Standard & Poor's 500 Index. Additional information about
the company is available on the Internet at http://www.3M.com
* This news release discussion excludes non-recurring items in all
periods. For full-year 1999, net income of $1.711 billion excludes
non-recurring items totaling $100 million ($52 million after tax). Full-year
1999 non-recurring items consist of a $73 million charge related to
litigation, gains on divestitures of $147 million (net of an investment
valuation adjustment), and a $26 million gain related to a change in estimate
of the restructuring liability. Fourth-quarter 1998 net income of
$348 million, or 86 cents per share, excludes charges related to restructuring
of $161 million ($99 million after tax) and ESOP debt refinancing of
$38 million (net of tax). For full-year 1998, net income of $1.526 billion
excludes charges related to restructuring of $493 million ($313 million after
tax) and ESOP debt refinancing of $38 million (net of tax). For full-year
1997, net income of $1.626 billion excludes a one-time gain of $803 million
($495 million after tax) on the sale of National Advertising Company.
Forward-Looking Statements
Certain portions of this news release that do not relate to historical
financial information constitute forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties.
Actual future results and trends may differ materially from historical results
or those expected depending on a variety of factors, including: (1) worldwide
economic growth; (2) foreign exchange rates and fluctuations in those rates;
(3) raw materials, including shortages and increases in the costs of key raw
materials; and (4) legal proceedings.
Minnesota Mining and Manufacturing Company and Subsidiaries
(Unaudited)
Sales Change Analysis
Fourth-Quarter 1999
U.S. International Worldwide
Volume 8% 10% 9%
Price (1) 0 0
Translation -- (5) (3)
Total 7% 5% 6%
Sales Change Analysis
Full-Year 1999
U.S. International Worldwide
Volume 4% 7% 5%
Price (1) 1 0
Translation -- (3) (1)
Total 3% 5% 4%
Minnesota Mining and Manufacturing Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
3 Months Ended 12 Months Ended
(Amounts in millions, December 31 December 31
except per-share amounts)
1999 1998 1999 1998
Net sales $4,023 $3,785 $15,659 $15,021
Operating expenses
Cost of goods sold 2,249 2,257 8,852 8,705
Restructuring charge --
inventory -- 10 -- 39
Total cost of goods sold 2,249 2,267 8,852 8,744
Selling, general and
administrative expenses 1,034 946 3,879 3,784
Restructuring charge (credit)
-- other (2) 151 (28) 454
Total 3,281 3,364 12,703 12,982
Operating income 742 421 2,956 2,039
Other income and expense
Interest expense 26 33 109 139
Investment and other income
-- net (11) (9) (33) (42)
Gain on divestiture -- net -- -- -- (10)
Total 15 24 76 87
Income before income taxes, minority
interest and extraordinary loss 727 397 2,880 1,952
Provision for income taxes 256 133 1,032 685
Minority interest 27 15 85 54
Income before extraordinary loss 444 249 1,763 1,213
Extraordinary loss from early
extinguishment of debt -- net of
income taxes -- (38) -- (38)
Net income $444 $211 $1,763 $1,175
Weighted average common shares
outstanding -- basic 400.0 401.7 402.0 403.3
Income before extraordinary loss $1.11 $0.62 $4.39 $3.01
Extraordinary loss -- (0.10) -- (0.10)
Earnings per share -- basic $1.11 $0.52 $4.39 $2.91
Weighted average common shares
outstanding -- diluted 404.8 405.9 406.5 408.0
Income before extraordinary loss $1.10 $0.61 $4.34 $2.97
Extraordinary loss -- (0.09) -- (0.09)
Earnings per share -- diluted $1.10 $0.52 $4.34 $2.88
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
Dec. 31, 1999 Dec. 31, 1998
Excluding
Reported Non-recurring Non-recurring Reported
Total Items Items Total
Operating income
(loss) $ 742 $ 582 $ (161) $ 421
Other expense $ 15 $ 24 -- $ 24
Income (loss)
before income
taxes, minority
interest and
extraordinary
loss $ 727 $ 558 $ (161) $ 397
Provision (benefit)
for income taxes $ 256 $ 195 $ (62) $ 133
Effective tax rate 35.2% 35.1% 38.6% 33.6%
Minority interest $ 27 $ 15 -- $ 15
Extraordinary loss,
net of tax -- -- $ (38) $ (38)
Net income (loss) $ 444 $ 348 $ (137) $ 211
Per share --
diluted $1.10 $0.86 $(0.34) $0.52
12 Months Ended 12 Months Ended
Dec. 31, 1999 Dec. 31, 1998
Excluding Excluding
Non- Non- Non- Non-
recurring recurring Reported recurring recurring Reported
Items Items Total Items Items Total
Operating income
(loss) $2,856 $ 100 $2,956 $2,532 $ (493) $2,039
Other expense $ 76 -- $ 76 $ 87 -- $ 87
Income (loss)
before income
taxes, minority
interest and
extra-ordinary
loss $2,780 $ 100 $2,880 $2,445 $ (493) $1,952
Provision (benefit)
for income taxes $ 984 $ 48 $1,032 $ 865 $ (180) $ 685
Effective tax rate 35.4% 47.8% 35.8% 35.4% 36.5% 35.1%
Minority interest $ 85 -- $ 85 $ 54 -- $ 54
Extraordinary loss,
net of tax -- -- -- -- $ (38) $ (38)
Net income (loss) $1,711 $ 52 $1,763 $1,526 $ (351) $1,175
Per share --
diluted $ 4.21 $0.13 $ 4.34 $ 3.74 $(0.86) $ 2.88
Minnesota Mining and Manufacturing Company and Subsidiaries
CONSOLIDATED BALANCE SHEET (Unaudited)
Dec. 31 Dec. 31
(Dollars in millions) 1999 1998
Assets
Current assets
Cash and cash equivalents $ 387 $ 211
Other securities 54 237
Accounts receivable -- net 2,778 2,666
Inventories 2,030 2,219
Other current assets 1,001 985
Total current assets 6,250 6,318
Property, plant and equipment -- net 5,656 5,566
Investments and other assets 1,990 2,269
Total $13,896 $14,153
Liabilities and Stockholders' Equity
Current liabilities
Short-term debt $ 1,130 $ 1,492
Other current liabilities 2,847 2,894
Total current liabilities 3,977 4,386
Other liabilities 2,150 2,217
Long-term debt 1,480 1,614
Stockholders' equity -- net 6,289 5,936
Shares outstanding
December 31, 1999: 398,710,817 shares
December 31, 1998: 401,924,248 shares
Total $13,896 $14,153