3M Delivers Record Third-Quarter Results

  3M Delivers Record Third-Quarter Results

Highlights:

  *Earnings per share of $1.78, a third-quarter record
  *All-time record quarterly sales of $7.9 billion
  *Organic local-currency sales growth of 5.8 percent
  *Operating income margins of 22.0 percent
  *Returned $2.0 billion to shareholders via dividends and gross share
    repurchases

Business Wire

ST. PAUL, Minn. -- October 24, 2013

3M (NYSE: MMM) today reported third-quarter earnings of $1.78 per share, an
increase of 7.9 percent versus the third quarter of 2012. Sales grew 5.6
percent year-on-year to $7.9 billion. Organic local-currency sales grew 5.8
percent, acquisitions added 1.5 percent to sales and currency impacts reduced
sales by 1.7 percent year-on-year.

Operating income was $1.7 billion and operating income margins for the quarter
were 22.0 percent. Third-quarter net income was $1.2 billion and free cash
flow was $0.7 billion.

The company paid $431 million in cash dividends to shareholders and
repurchased $1.54 billion of its own shares during the quarter.

Organic local-currency sales growth was 8.1 percent in Safety and Graphics,
6.8 percent in Health Care, 6.2 percent in Industrial, 4.2 percent in Consumer
and 3.8 in Electronics and Energy. On a geographic basis, organic
local-currency sales grew 10.5 percent in Latin America/Canada, 6.8 percent in
Asia Pacific, 4.5 percent in the U.S. and 4.3 percent in EMEA (Europe, Middle
East and Africa).

“The 3M team delivered another strong performance in the third quarter,” said
Inge G. Thulin, 3M’s chairman, president and chief executive officer. “All
business groups generated positive organic sales growth and operating margins
above 20 percent. At the same time, we further strengthened the company
through increased investments in innovation, commercialization and
manufacturing. Finally, we returned $2 billion of cash to our shareholders
during the quarter via dividends and gross share repurchases, or $4.8 billion
through nine months of the year.”

3M updated its full-year performance expectations. The company anticipates
2013 earnings to be in the range of $6.65 to $6.75 per share versus a previous
expectation of $6.60 to $6.85 per share. 3M expects full year organic
local-currency sales growth of 3 to 4 percent versus a previous expectation of
2 to 5 percent. In addition, the company expects that free cash flow
conversion will be approximately 90 percent.

Third-Quarter Business Group Discussion

Industrial

  *Sales of $2.7 billion, up 8.6 percent in U.S. dollars. Organic
    local-currency sales increased 6.2 percent, acquisitions (Ceradyne) added
    4.1 percent to sales and foreign currency translation reduced sales by 1.7
    percent.
  *On an organic local-currency basis:

       *Sales grew in all businesses, led by aerospace, automotive, advanced
         materials, liquid filtration, automotive aftermarket and industrial
         adhesives and tapes.
       *Sales rose in all major geographies, with double-digit growth in
         Latin America/Canada.

  *Operating income was $568 million, equal to third quarter of 2012;
    operating margin of 21.3 percent.

Electronics and Energy

  *Sales of $1.4 billion, an increase of 2.5 percent in U.S. dollars. Organic
    local-currency sales increased 3.8 percent and foreign currency
    translation reduced sales by 1.3 percent.
  *On an organic local-currency basis:

       *Positive sales growth in both electronics- and energy-related
         businesses.
       *Sales grew in Asia Pacific, Latin America/Canada and EMEA, and
         declined in the U.S.

  *Operating income was $300 million, up 3.2 percent year-on-year; operating
    margin of 20.7 percent.

Safety and Graphics

  *Sales of 1.4 billion, up 6.7 percent in U.S. dollars. Organic
    local-currency sales increased 8.1 percent; acquisitions (Federal Signal
    Technologies) added 0.9 percent to sales and foreign currency translation
    reduced sales by 2.3 percent.
  *On an organic local-currency basis:

       *Sales grew at a double-digit rate in roofing granules and personal
         safety; sales declined in architectural markets.
       *Sales rose in all major geographies, with double-digit growth in Asia
         Pacific and Latin America/Canada.

  *Operating income was $315 million, an increase of 7.3 percent
    year-on-year; operating margin of 21.8 percent.

Health Care

  *Sales of $1.3 billion, up 5.5 percent in U.S. dollars. Organic
    local-currency sales increased 6.8 percent and foreign currency
    translation reduced sales by 1.3 percent.
  *On an organic local-currency basis:

       *Sales grew across the portfolio led by double-digit growth in food
         safety and health information systems.
       *Sales rose in all major geographies, with double-digit growth in
         Latin America/Canada.

  *Operating income was $426 million, an increase of 6.7 percent; operating
    margin of 32.1 percent.

Consumer

  *Sales of $1.2 billion, up 2.1 percent in U.S. dollars. Organic
    local-currency sales increased 4.2 percent, divestitures reduced sales by
    0.2 percent and foreign currency translation reduced sales by 1.9 percent.
  *On an organic local-currency basis:

       *Sales growth was strongest in consumer health care, home care,
         stationery and office supplies and DIY.
       *Sales grew in all geographic areas led by Latin America/Canada and
         Asia Pacific.

  *Operating income was $247 million, up 0.6 percent year-on-year; operating
    margin of 21.5 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
    21609533).
    The telephone replay will be available until 10:00 a.m. CDT on October 29,
    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      Nine-months ended
                               September 30,           September 30,
                               2013        2012        2013         2012
                                                                    
Net sales                      $ 7,916    $ 7,497    $ 23,302    $ 22,517 
                                                                    
Operating expenses
Cost of sales                    4,148       3,935       12,130       11,694
Selling, general and             1,609       1,487       4,808        4,567
administrative expenses
Research, development and       420       397       1,277      1,216  
related expenses
                                                                    
Total operating expenses        6,177     5,819     18,215     17,477 
                                                                    
Operating income                1,739     1,678     5,087      5,040  
                                                                    
Interest expense and income
Interest expense                 33          44          113          127
Interest income                 (10   )    (10   )    (30    )    (29    )
                                                                    
Total interest expense – net    23        34        83         98     
                                                                    
Income before income taxes       1,716       1,644       5,004        4,942
                                                                    
Provision for income taxes      471       464       1,399      1,435  
                                                                    
Net income including           $ 1,245    $ 1,180    $ 3,605     $ 3,507  
noncontrolling interest
                                                                    
Less: Net income
attributable to
noncontrolling interest         15        19        49         54     
                                                                    
Net income attributable to     $ 1,230    $ 1,161    $ 3,556     $ 3,453  
3M
                                                                    
Weighted average 3M common
shares
outstanding – basic              679.8       693.0       686.4        694.7
Earnings per share
attributable to
3M common shareholders –       $ 1.81     $ 1.68     $ 5.18      $ 4.97   
basic
                                                                    
Weighted average 3M common
shares
outstanding – diluted            691.8       703.1       697.7        703.9
Earnings per share
attributable to
3M common shareholders –       $ 1.78     $ 1.65     $ 5.10      $ 4.91   
diluted
                                                                    
Cash dividends paid per 3M     $ 0.635    $ 0.59     $ 1.905     $ 1.77   
common share
                                                                    

3M Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions)
(Unaudited)
                                                           
                                         Sep. 30,   Dec. 31,   Sep. 30,
                                         2013       2012       2012
ASSETS
Current assets
Cash and cash equivalents                $ 2,340    $ 2,883    $ 3,029
Marketable securities – current            971        1,648      1,989
Accounts receivable – net                  4,594      4,061      4,409
Inventories                                3,948      3,837      3,842
Other current assets                      1,429     1,201     1,225
Total current assets                      13,282    13,630    14,494
Marketable securities – non-current        1,547      1,162      1,400
Investments                                150        163        142
Property, plant and equipment – net        8,448      8,378      7,939
Goodwill and intangible assets – net       9,087      9,310      9,063
Prepaid pension benefits                   24         16         47
Other assets                              1,066     1,217     1,394
Total assets                             $ 33,604   $ 33,876   $ 34,479
                                                               
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings and
current portion of long-term debt        $ 2,244    $ 1,085    $ 1,506
Accounts payable                           1,718      1,762      1,805
Accrued payroll                            688        701        684
Accrued income taxes                       373        371        301
Other current liabilities                 2,416     2,281     2,299
Total current liabilities                 7,439     6,200     6,595
Long-term debt                             3,533      4,916      4,852
Pension and postretirement benefits        2,694      3,086      3,114
Other liabilities                         1,686     1,634     1,777
Total liabilities                        $ 15,352   $ 15,836   $ 16,338
                                                               
Total equity                             $ 18,252   $ 18,040   $ 18,141
Shares outstanding
September 30, 2013: 673,269,679 shares
December 31, 2012: 687,091,650 shares
September 30, 2012: 691,931,278 shares                       
Total liabilities and equity             $ 33,604   $ 33,876   $ 34,479
                                                               

3M Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(Unaudited)
                                                  
                                                    Nine-months ended
                                                    September 30,
                                                    2013        2012
NET CASH PROVIDED BY
OPERATING ACTIVITIES                                $ 3,824     $ 3,562  
                                                                 
Cash flows from investing activities:
Purchases of property, plant
and equipment                                         (1,122 )     (977   )
Acquisitions, net of cash acquired                    -            (248   )
Purchases and proceeds from sale or maturities of
marketable securities and investments – net           313          (938   )
Other investing activities                           107        29     
                                                                 
NET CASH USED IN INVESTING ACTIVITIES                (702   )    (2,134 )
                                                                 
Cash flows from financing activities:
Change in debt                                        (234   )     1,197
Purchases of treasury stock                           (3,538 )     (1,490 )
Proceeds from issuances of treasury stock
pursuant to stock option and benefit plans            1,372        772
Dividends paid to shareholders                        (1,307 )     (1,228 )
Other financing activities                           64         35     
                                                                 
NET CASH USED IN FINANCING ACTIVITIES                (3,643 )    (714   )
                                                                 
Effect of exchange rate changes
on cash and cash equivalents                         (22    )    96     
                                                                 
Net increase (decrease) in cash
and cash equivalents                                  (543   )     810
Cash and cash equivalents at
beginning of year                                    2,883      2,219  
                                                                 
Cash and cash equivalents at
end of period                                       $ 2,340     $ 3,029  
                                                                          

3M Company and Subsidiaries
SUPPLEMENTAL CASH FLOW AND
OTHER SUPPLEMENTAL FINANCIAL INFORMATION
(Dollars in millions)
(Unaudited)
                                                                
                                Three-months ended      Nine-months ended
                                September 30,           September 30,
                                2013        2012        2013         2012
                                                                     
NON-GAAP MEASURES
                                                                     
Free Cash Flow:
Net cash provided by            $ 1,151     $ 1,345     $ 3,824      $ 3,562
operating activities
Purchases of property, plant     (404  )    (358  )    (1,122 )    (977  )
and equipment
                                                                     
Free Cash Flow (a)              $ 747      $ 987      $ 2,702     $ 2,585 
                                                                             

      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 as
(a)  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.
      

                                                  September 30,
                                                     2013    2012
OTHER NON-GAAP MEASURES:
Net Working Capital Turns (b)   4.6      4.7
                                                              

      The company uses various working capital measures that place emphasis
      and focus on certain working capital assets and liabilities. 3M’s net
(b)  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)

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 September 30, 2013
                                              Europe,            
                                                Middle     Latin
Sales Change Analysis     United     Asia-      East and   America/   World-
By Geographic Area        States     Pacific    Africa     Canada     Wide
                                                                             
Volume – organic          3.7    %   7.3    %   3.4    %   4.9    %   4.8    %
Price                     0.8      (0.5 )    0.9      5.6      1.0   
Organic local-currency    4.5        6.8        4.3        10.5       5.8
sales
Acquisitions              2.7        0.2        2.2        0.2        1.5
Divestitures              (0.1 )     –          –          –          –
Translation               –        (5.3 )    3.1      (6.3 )    (1.7 ) 
Total sales change        7.1   %   1.7   %   9.6   %   4.4   %   5.6   %
                                                                             
                          Three-months ended September 30, 2013
                          Organic
Worldwide                 local-                                      Total
Sales Change Analysis     currency   Acqui-     Divest-    Trans-     sales
By Business Segment       sales      sitions    itures     lation     change
                                                                             
Industrial                6.2    %   4.1    %   –      %   (1.7 ) %   8.6    %
Safety and Graphics       8.1    %   0.9    %   –      %   (2.3 ) %   6.7    %
Electronics and Energy    3.8    %   –      %   –      %   (1.3 ) %   2.5    %
Health Care               6.8    %   –      %   –      %   (1.3 ) %   5.5    %
Consumer                  4.2    %   –      %   (0.2 ) %   (1.9 ) %   2.1    %
                                                                             
                          Nine-months ended September 30, 2013
                                                Europe,
                                                Middle     Latin
Sales Change Analysis     United     Asia-      East and   America/   World-
By Geographic Area        States     Pacific    Africa     Canada     Wide
                                                                             
Volume – organic          2.1    %   4.6    %   1.0    %   3.4    %   2.7    %
Price                     0.5      (0.9 )    0.6      5.4      0.7   
Organic local-currency    2.6        3.7        1.6        8.8        3.4
sales
Acquisitions              3.0        0.3        2.2        0.4        1.7
Divestitures              (0.1 )     –          –          –          –
Translation               –        (4.0 )    0.8      (4.8 )    (1.6 ) 
Total sales change        5.5   %   –     %   4.6   %   4.4   %   3.5   %
                                                                             
                          Nine-months ended September 30, 2013
                          Organic
Worldwide                 local-                                      Total
Sales Change Analysis     currency   Acqui-     Divest-    Trans-     sales
By Business Segment       sales      sitions    itures     lation     change
                                                                             
Industrial                4.2    %   4.1    %   –      %   (1.7 ) %   6.6    %
Safety and Graphics       4.0    %   1.7    %   –      %   (2.0 ) %   3.7    %
Electronics and Energy    –      %   –      %   –      %   (1.2 ) %   (1.2 ) %
Health Care               5.5    %   0.1    %   –      %   (1.3 ) %   4.3    %
Consumer                  3.6    %   –      %   (0.1 ) %   (1.7 ) %   1.8    %
                                                                             

                         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 INFORMATION   Three-months ended      Nine-months ended
NET SALES                      September 30,           September 30,
(Millions)                     2013        2012        2013         2012
                                                                    
Industrial                     $ 2,674     $ 2,462     $ 8,012      $ 7,519
Safety and Graphics              1,448       1,357       4,318        4,165
Electronics and Energy           1,449       1,414       4,066        4,118
Health Care                      1,328       1,259       3,975        3,811
Consumer                         1,153       1,129       3,332        3,272
Corporate and Unallocated        2           1           6            4
Elimination of Dual Credit      (138  )    (125  )    (407   )    (372   )
                                                                    
Total Company                  $ 7,916    $ 7,497    $ 23,302    $ 22,517 
                                                                    
                                                                    
BUSINESS SEGMENT INFORMATION   Three-months ended      Nine-months ended
OPERATING INCOME               September 30,           September 30,
(Millions)                     2013        2012        2013         2012
                                                                    
Industrial                     $ 568       $ 568       $ 1,743      $ 1,751
Safety and Graphics              315         295         983          997
Electronics and Energy           300         291         733          807
Health Care                      426         399         1,247        1,212
Consumer                         247         246         719          710
Corporate and Unallocated        (87   )     (93   )     (249   )     (355   )
Elimination of Dual Credit      (30   )    (28   )    (89    )    (82    )
                                                                    
Total Company                  $ 1,739    $ 1,678    $ 5,087     $ 5,040  
                                                                             

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
 
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