3M Reports Record Second-Quarter Results; Company Posts Sales of $7.8 Billion and Earnings per Share of $1.71

  3M Reports Record Second-Quarter Results; Company Posts Sales of $7.8
  Billion and Earnings per Share of $1.71

Business Wire

ST. PAUL, Minn. -- July 25, 2013

3M (NYSE: MMM) today reported second-quarter earnings of $1.71 per share, an
increase of 3.0 percent versus the second quarter of 2012. Sales grew 2.9
percent year-on-year to a record $7.8 billion. Organic local-currency sales
grew 2.3 percent and acquisitions added 1.9 percent to sales. Currency impacts
reduced sales by 1.3 percent year-on-year.

Operating income was $1.7 billion and operating income margins for the quarter
were 22.0 percent. Second-quarter net income was $1.2 billion and free cash
flow was $1.3 billion.

The company paid $436 million in cash dividends to shareholders and
repurchased $1.2 billion of its own shares during the quarter.

Organic local-currency sales growth was 5.7 percent in Health Care, 3.3
percent in Industrial, 2.9 percent in Consumer and 2.0 percent in Safety and
Graphics; Electronics and Energy declined 2.1 percent year-on-year. On a
geographic basis, organic local-currency sales grew 8.5 percent in Latin
America/Canada, 2.2 percent in Asia Pacific, 1.9 percent in EMEA (Europe,
Middle East and Africa) and 0.8 percent in the U.S.

“This was a good quarter for 3M, with strong performances across the
portfolio,” said Inge G. Thulin, 3M’s chairman, president and chief executive
officer. “Four of our five business segments achieved positive organic growth
and posted operating margins above 21 percent. We converted 107 percent of net
income to free cash flow in the quarter, which fueled ongoing investment in
the business and allowed for significant cash returned to shareholders. Our
employees executed well in the face of continued slow economic growth.”

3M reiterated its 2013 full-year performance expectations. The company
anticipates 2013 earnings to be in the range of $6.60 to $6.85 per share with
organic local-currency sales growth of 2 to 5 percent. 3M continues to expect
free cash flow conversion will be in the range of 90 to 100 percent.

In addition, the company now expects full-year gross share repurchases will be
in the range of $3.5 billion to $4.5 billion versus a previous range of $2
billion to $3 billion.

Second-Quarter Business Group Discussion

Industrial

  *Sales of $2.7 billion, up 6.6 percent in U.S. dollars. Organic
    local-currency sales increased 3.3 percent, acquisitions (Ceradyne) added
    4.6 percent to sales and foreign currency translation reduced sales by 1.3
    percent.
  *On an organic local-currency basis:

       *Sales grew in most businesses led by aerospace, automotive
         aftermarket, liquid filtration, industrial adhesives and tapes and
         automotive OEM.
       *Sales rose in all major geographies led by Latin America/Canada, the
         U.S. and EMEA.

  *Operating income was $599 million, up 1.2 percent year-on-year; operating
    margin of 22.5 percent.

Safety and Graphics

  *Sales of $1.5 billion, up 2.3 percent in U.S. dollars. Organic
    local-currency sales increased 2.0 percent; acquisitions (Federal Signal
    Technologies) added 1.9 percent to sales and foreign currency translation
    reduced sales by 1.6 percent.
  *On an organic local-currency basis:

       *Sales growth was led by commercial graphics, personal safety,
         architectural markets and building and commercial services; sales
         declined in roofing granules and traffic safety and security systems.
       *Sales grew in Latin America/Canada, Asia Pacific and EMEA and
         declined in the U.S.

  *Operating income was $333 million, down 9.7 percent year-on-year;
    operating margin of 22.9 percent.

Electronics and Energy

  *Sales of $1.3 billion, down 3.2 percent in U.S. dollars. Organic
    local-currency sales decreased 2.1 percent and foreign currency
    translation reduced sales by 1.1 percent.
  *On an organic local-currency basis:

       *Electronics-related sales declined year-on-year as end-markets
         remained soft during the quarter.
       *Energy-related sales also declined year-on-year; weakness in
         renewable energy more than offset sales gains in electrical markets.
       *Sales increased slightly in Latin America/Canada and declined in
         APAC, EMEA and the U.S.

  *Operating income was $237 million, down 16.0 percent year-on-year;
    operating margin of 17.7 percent.

Health Care

  *Sales of $1.3 billion, up 4.6 percent in U.S. dollars. Organic
    local-currency sales increased 5.7 percent and foreign currency
    translation reduced sales by 1.1 percent.
  *On an organic local-currency basis:

       *Sales growth was strongest in health information systems, food
         safety, critical and chronic care, oral care and infection
         prevention; sales declined in drug delivery.
       *Sales grew in all major geographies, with double-digit growth in
         Latin America/Canada and APAC.

  *Operating income increased 1.2 percent to $417 million; operating margin
    of 31.2 percent.

Consumer

  *Sales of $1.1 billion, up 1.4 percent in U.S. dollars. Organic
    local-currency sales increased 2.9 percent, divestitures reduced sales by
    0.1 percent and foreign currency translation reduced sales by 1.4 percent.
  *On an organic local-currency basis:

       *Sales growth driven by the consumer health care, home care,
         stationery & office supplies and DIY businesses.
       *Sales increased in all regions led by Latin America/Canada, Asia
         Pacific and the U.S.

  *Operating income grew 3.5 percent to $235 million; operating margin of
    21.4 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://investor.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://investor.3M.com and click
    on “Quarterly Earnings.”
  *Telephone replay:
    Call 800-633-8284 (for both U.S. and outside the U.S.; access code is
    21609532).
    The telephone replay will be available until 10:00 a.m. CDT on July 30,
    2013.

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," "project," "intend," "plan," "believe,"
"will," "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, 2012 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          Six-months ended
                         June 30,                    June 30,
                         2013          2012          2013           2012
                                                                    
Net sales                $ 7,752      $ 7,534      $ 15,386      $ 15,020 
                                                                    
Operating expenses
Cost of sales              4,013         3,870         7,982          7,759
Selling, general and
administrative             1,610         1,528         3,199          3,080
expenses
Research,
development and           427         408         857          819    
related expenses
                                                                    
Total operating           6,050       5,806       12,038       11,658 
expenses
                                                                    
Operating income          1,702       1,728       3,348        3,362  
                                                                    
Interest expense and
income
Interest expense           41            43            80             83
Interest income           (10   )      (10   )      (20    )      (19    )
                                                                    
Total interest            31          33          60           64     
expense – net
                                                                    
Income before income       1,671         1,695         3,288          3,298
taxes
                                                                    
Provision for income      458         509         928          971    
taxes
                                                                    
Net income including
noncontrolling           $ 1,213      $ 1,186      $ 2,360       $ 2,327  
interest
                                                                    
Less: Net income
attributable to           16          19          34           35     
noncontrolling
interest
                                                                    
Net income               $ 1,197      $ 1,167      $ 2,326       $ 2,292  
attributable to 3M
                                                                    
Weighted average 3M
common shares              688.2         694.3         689.6          695.5
outstanding – basic
Earnings per share
attributable to 3M       $ 1.74       $ 1.68       $ 3.37        $ 3.30   
common shareholders
– basic
                                                                    
Weighted average 3M
common shares              699.1         702.6         700.6          704.4
outstanding –
diluted
Earnings per share
attributable to 3M       $ 1.71       $ 1.66       $ 3.32        $ 3.25   
common shareholders
– diluted
                                                                    
Cash dividends paid      $ 0.635      $ 0.59       $ 1.27        $ 1.18   
per 3M common share
                                                                             


3M Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions)
(Unaudited)
                                                             
                                          Jun. 30,     Dec. 31,     Jun. 30,
                                          2013         2012         2012
ASSETS
Current assets
Cash and cash equivalents                 $ 2,942      $ 2,883      $ 3,308
Marketable securities – current             1,310        1,648        1,595
Accounts receivable – net                   4,542        4,061        4,364
Inventories                                 3,919        3,837        3,656
Other current assets                       1,270       1,201       1,165
Total current assets                       13,983      13,630      14,088
Marketable securities – non-current         1,542        1,162        1,031
Investments                                 154          163          152
Property, plant and equipment – net         8,329        8,378        7,706
Goodwill and intangible assets – net        9,017        9,310        8,911
Prepaid pension benefits                    22           16           45
Other assets                               1,083       1,217       1,406
Total assets                              $ 34,130     $ 33,876     $ 33,339
                                                                    
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings and
current portion of long-term debt         $ 1,062      $ 1,085      $ 650
Accounts payable                            1,920        1,762        1,792
Accrued payroll                             589          701          593
Accrued income taxes                        460          371          440
Other current liabilities                  2,304       2,281       2,232
Total current liabilities                  6,335       6,200       5,707
Long-term debt                              4,884        4,916        5,657
Pension and postretirement benefits         2,909        3,086        3,355
Other liabilities                          1,683       1,634       1,747
Total liabilities                         $ 15,811     $ 15,836     $ 16,466
                                                                    
Total equity                              $ 18,319     $ 18,040     $ 16,873
Shares outstanding
June 30, 2013: 683,468,043 shares
December 31, 2012: 687,091,650 shares
June 30, 2012: 691,319,463 shares                                 
Total liabilities and equity              $ 34,130     $ 33,876     $ 33,339
                                                                      


3M Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(Unaudited)
                                                   Six-months ended
                                                     June 30,
                                                     2013         2012
NET CASH PROVIDED BY
OPERATING ACTIVITIES                                 $ 2,673       $ 2,217  
                                                                    
Cash flows from investing activities:
Purchases of property, plant
and equipment                                          (718   )       (619   )
Acquisitions, net of cash acquired                     -              (144   )
Purchases and proceeds from sale or maturities
of
marketable securities and investments – net            (52    )       (103   )
Other investing activities                            30           12     
                                                                    
NET CASH USED IN INVESTING ACTIVITIES                 (740   )      (854   )
                                                                    
Cash flows from financing activities:
Change in debt                                         (13    )       1,192
Purchases of treasury stock                            (1,995 )       (1,163 )
Proceeds from issuances of treasury stock
pursuant to stock option and benefit plans             1,103          479
Dividends paid to shareholders                         (876   )       (820   )
Other financing activities                            54           41     
                                                                    
NET CASH USED IN FINANCING ACTIVITIES                 (1,727 )      (271   )
                                                                    
Effect of exchange rate changes
on cash and cash equivalents                          (147   )      (3     )
                                                                    
Net increase (decrease) in cash
and cash equivalents                                   59             1,089
Cash and cash equivalents at
beginning of year                                     2,883        2,219  
                                                                    
Cash and cash equivalents at
end of period                                        $ 2,942       $ 3,308  
                                                                    


3M Company and Subsidiaries
SUPPLEMENTAL CASH FLOW AND
OTHER SUPPLEMENTAL FINANCIAL INFORMATION
(Dollars in millions)
(Unaudited)
                                                            
                           Three-months ended          Six-months ended
                           June 30,                    June 30,
                           2013          2012          2013          2012
                                                                     
NON-GAAP MEASURES
                                                                     
Free Cash Flow:
Net cash provided by       $ 1,679       $ 1,389       $ 2,673       $ 2,217
operating activities
Purchases of property,      (394  )      (358  )      (718  )      (619  )
plant and equipment
                                                                     
Free Cash Flow (a)         $ 1,285      $ 1,031      $ 1,955      $ 1,598 
                                                                     

        Free cash flow is not defined under U.S. GAAP. Therefore, it should
        not be considered a substitute for income or cash flow data prepared
        in accordance with GAAP and may not be comparable to similarly titled
        measures used by other companies. The company defines free cash flow
(a)   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 believes free cash flow is a useful measure
        of performance and uses this measure as an indication of the strength
        of the company and its ability to generate cash.
        

                                     
                                  June 30,
                                  2013   2012
OTHER NON-GAAP MEASURES:
Net Working Capital Turns (b)     4.7    4.8
                                         

        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
(b)   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)

During the first quarter of 2013, 3M completed a realignment of its business
segments, as discussed in the following "Business Segments" section, and
realigned its geographic area reporting to include Puerto Rico in the United
States, rather than in the Latin America/Canada region. The financial
information presented herein reflects, for all periods presented, the impact
of these realignments.

                 
                    Three-months ended June 30, 2013
                                         Europe,   
                                             Middle       Latin     
Sales Change        United       Asia-       East and     America/     World-
Analysis
By Geographic       States       Pacific     Africa       Canada       Wide
Area
                                                                             
Volume –            0.7    %     3.1   %     1.4    %     2.4    %     1.7   %
organic
Price               0.1         (0.9)      0.5         6.1         0.6   
Organic
local-currency      0.8          2.2         1.9          8.5          2.3
sales
Acquisitions        3.4          0.4         2.1          0.7          1.9
Translation         –           (3.9)      0.9         (3.2)       (1.3) 
Total sales         4.2    %     (1.3) %     4.9    %     6.0    %     2.9   %
change
                                                                             
                    Three-months ended June 30, 2013
                    Organic
Worldwide           local-                                             Total
Sales Change        currency     Acqui-      Divest-      Trans-       sales
Analysis
By Business         sales        sitions     itures       lation       change
Segment
                                                                             
Industrial          3.3    %     4.6   %     –      %     (1.3)  %     6.6   %
Safety and          2.0    %     1.9   %     –      %     (1.6)  %     2.3   %
Graphics
Electronics and     (2.1)  %     –     %     –      %     (1.1)  %     (3.2) %
Energy
Health Care         5.7    %     –     %     –      %     (1.1)  %     4.6   %
Consumer            2.9    %     –     %     (0.1)  %     (1.4)  %     1.4   %
                                                                             
                    Six-months ended June 30, 2013
                                             Europe,
                                             Middle       Latin
Sales Change        United       Asia-       East and     America/     World-
Analysis
By Geographic       States       Pacific     Africa       Canada       Wide
Area
                                                                             
Volume –            1.2    %     3.2   %     0.1    %     2.7    %     1.6   %
organic
Price               0.4         (1.1)      0.4         5.2         0.5   
Organic
local-currency      1.6          2.1         0.5          7.9          2.1
sales
Acquisitions        3.2          0.3         2.2          0.5          1.8
Translation         –           (3.3)      (0.3)       (4.1)       (1.5) 
Total sales         4.8    %     (0.9) %     2.4    %     4.3    %     2.4   %
change
                                                                             
                    Six-months ended June 30, 2013
                    Organic
Worldwide           local-                                             Total
Sales Change        currency     Acqui-      Divest-      Trans-       sales
Analysis
By Business         sales        sitions     itures       lation       change
Segment
                                                                             
Industrial          3.1    %     4.1   %     –      %     (1.6)  %     5.6   %
Safety and          2.1    %     2.0   %     –      %     (1.9)  %     2.2   %
Graphics
Electronics and     (2.1)  %     –     %     –      %     (1.1)  %     (3.2) %
Energy
Health Care         4.8    %     0.2   %     –      %     (1.3)  %     3.7   %
Consumer            3.2    %     –     %     –      %     (1.5)  %     1.7   %
                                                                             

                         3M Company and Subsidiaries
                              BUSINESS SEGMENTS
                            (Dollars in millions)
                                 (Unaudited)

Effective in the first quarter of 2013, 3M completed a realignment of its
business groups (segments) to better serve global markets and customers. This
realignment included:

  *The alignment of divisions into five business groups (segments) as further
    described below.
  *The combination of certain existing divisions into new divisions. These
    included the Traffic Safety and Security Division (reflecting the
    combination of the former Traffic Safety Systems Division and Security
    Systems Division) and the Optical Systems Division (reflecting the
    combination of the former Optical Systems Division and Mobile Interactive
    Solutions Division).
  *The movement of certain product lines between various divisions.

In addition to the above, there were also adjustments for dual credit
reporting to reflect the realigned structure. The new structure is comprised
of five business segments: Industrial, Safety and Graphics, Electronics and
Energy, Health Care, and Consumer.

Industrial: This business segment, previously referred to as Industrial and
Transportation, is largely unchanged, except for the transfer of the Renewable
Energy Division to the Electronics and Energy business segment.

Safety and Graphics: This business segment includes Architectural Markets,
Building and Commercial Services, Commercial Graphics, Industrial Mineral
Products, Personal Safety, and Traffic Safety and Security. This new business
segment also reflects the movement of certain product lines between various
divisions.

Electronics and Energy: This business segment includes Communication Markets,
Electrical Markets, Electronics Markets Materials, Electronic Solutions,
Infrastructure Protection, Optical Systems, Renewable Energy, and 3M Touch
Systems. This new business segment also reflects the movement of certain
product lines between various divisions.

Health Care: This business segment is largely unchanged, except for the
movement of certain product lines between various divisions.

Consumer: This business segment, previously referred to as Consumer and
Office, is largely unchanged, except for the movement of certain product lines
between various divisions.

The financial information presented herein reflects, for all periods
presented, the impact of this realignment. Refer to 3M's Current Report on
Form 8-K furnished on March 1, 2013 and 3M's Current Report on Form 8-K filed
on May 16, 2013 for additional information concerning the business segment and
geographic area realignments effective in the first quarter of 2013.

                                                
BUSINESS SEGMENT         Three-months ended          Six-months ended
INFORMATION
NET SALES                June 30,                    June 30,
(Millions)               2013        2012          2013         2012
                                                                    
Industrial               $ 2,663       $ 2,499       $ 5,338        $ 5,057
Safety and Graphics        1,453         1,421         2,870          2,808
Electronics and            1,340         1,384         2,617          2,704
Energy
Health Care                1,336         1,277         2,647          2,552
Consumer                   1,098         1,083         2,179          2,143
Corporate and              2             1             4              3
Unallocated
Elimination of Dual       (140  )      (131  )      (269   )      (247   )
Credit
                                                                    
Total Company            $ 7,752      $ 7,534      $ 15,386      $ 15,020 
                                                                    
                                                                    
BUSINESS SEGMENT         Three-months ended          Six-months ended
INFORMATION
OPERATING INCOME         June 30,                    June 30,
(Millions)               2013          2012          2013           2012
                                                                    
Industrial               $ 599         $ 592         $ 1,175        $ 1,183
Safety and Graphics        333           368           668            702
Electronics and            237           282           433            516
Energy
Health Care                417           412           821            813
Consumer                   235           227           472            464
Corporate and              (88   )       (124  )       (162   )       (262   )
Unallocated
Elimination of Dual       (31   )      (29   )      (59    )      (54    )
Credit
                                                                    
Total Company            $ 1,702      $ 1,728      $ 3,348       $ 3,362  
                                                                    

About 3M
3M captures the spark of new ideas and transforms them into thousands of
ingenious products. Our culture of creative collaboration inspires a
never-ending stream of powerful technologies that make life better. 3M is the
innovation company that never stops inventing. With $30 billion in sales, 3M
employs 88,000 people worldwide and has operations in more than 70 countries.

Contact:

3M
Investor Contacts:
Matt Ginter, 651-733-8206
or
Bruce Jermeland, 651-733-1807
or
Media Contact:
Jacqueline Berry, 651-733-3611