3M Reports Record Third-Quarter Sales and Earnings per Share
Company Continues Multi-Quarter Trend of Broad-Based Revenue Growth
ST. PAUL, Minn.--(BUSINESS WIRE)--3M (NYSE:MMM) today announced its sales and profit results for the third quarter of 2006.
Third-quarter worldwide sales were a record $5.9 billion, up 8.8 percent compared to
the third quarter of 2005. Total local-currency sales increased 7.3 percent, including 1.7 percent from acquisitions. Each business contributed positively to the growth, with local-currency sales increasing 17.1 percent in Safety, Security and Protection Services, 8.2 percent in Display and Graphics, 6.9 percent in Industrial and Transportation, 6 percent in Health Care, 5.8 percent in Consumer and Office and 3.4 percent in Electro and Communications.
Third-quarter net income was $894 million, or $1.18 per share, including net gains of $0.01 per share due to a net benefit from certain income tax adjustments, partially offset by costs related to the company's current efforts to seek strategic alternatives for its branded pharmaceuticals business. In the third quarter of 2005, net income was $840 million, or $1.08 per share. Included in these results are stock options related costs of $0.04 per share in the third quarter of 2006 and $0.02 per share in the third quarter of 2005(a).
"This was a strong performance by the 3M team with broad sales growth across our portfolio," said George W. Buckley, 3M chairman of the board, president and CEO. "All six of our businesses posted positive local currency growth for the fifth consecutive quarter, led by Safety, Security and Protection Services at over 17 percent growth. In addition, we continued to drive growth via leveraging our world-class geographic infrastructure."
Local-currency growth was 9.5 percent in Asia Pacific, 8.4 percent in Europe, 6.3 percent in Latin America and 6.2 percent in the United States. Worldwide sales in dollars increased 8.8 percent, reaching an all-time quarterly high, and earnings per share improved 9.3 percent versus last year's third quarter.
Buckley also commented on 3M's LCD films business, which is part of the Display and Graphics segment. "As anticipated, LCD industry inventories have returned to more normal levels and our growth in this business accelerated in the third quarter as consumers purchased more LCD televisions. In addition, we saw continued manufacturing process improvement in this business as the quarter progressed and the new production line is now behaving in line with our expectations."
Buckley continued, "Looking ahead, we will continue to follow our agenda for accelerating innovation and growth via investments in R&D, sales and marketing, growth-oriented capital investment and selected acquisitions. These investments will be funded over time by productivity improvement efforts, such as global strategic sourcing and lean six sigma, to relentlessly drive out cost, simplify our supply chains and improve customer service."
For the fourth quarter of 2006, the company expects organic local-currency sales growth of 4 to 8 percent. Acquisitions are expected to add approximately 1.5 percent to fourth-quarter sales growth. The company expects fourth-quarter earnings per share will be in the range of $1.10 to $1.16, excluding an estimated $0.12 to $0.13 per share of one-time acquisition costs related to the purchase of Brontes Technologies Inc.(b). Also included in estimated fourth quarter earnings is $0.04 per share cost from stock options expensing. In the fourth quarter of 2005, before a cumulative effect of accounting change, 3M earned $1.01 per share, including $0.02 per share from stock options expensing.
Buckley and Patrick D. Campbell, senior vice president and chief financial officer, will conduct an investor teleconference at 9 a.m. Eastern Time (8 a.m. Central Time) today. Investors can access a webcast of this conference, along with related charts and materials, at investor.3M.com.
(a) 3M adopted Statement of Financial Accounting Standards No. 123R effective Jan. 1, 2006, using the modified retrospective method, with prior periods adjusted to give effect to the fair-value-based method of accounting for stock option awards granted in fiscal years beginning on or after Jan. 1, 1995.
(b) On Oct. 17, 2006, the company announced its intent to acquire Brontes Technologies Inc., a Lexington, Mass.-based developer of proprietary 3-D imaging technology for $95 million in cash. The transaction will result in an estimated fourth-quarter 2006 charge in the range of $0.12 to $0.13 per share, reflecting the one-time write-off of in-process research and development costs. Financial accounting standards require companies to expense such costs upon acquisition.
About 3M - A Global, Diversified Technology Company
Every day, 3M people find new ways to make amazing things happen. Wherever they are, whatever they do, the company's customers know they can rely on 3M to help make their lives better. 3M's brands include Scotch, Post-it, Scotchgard, Thinsulate, Scotch-Brite, Filtrete, Command and Vikuiti. Serving customers in more than 200 countries around the world, the people of 3M use their expertise, technologies and global strength to lead in major markets including consumer and office; display and graphics; electronics and telecommunications; safety, security and protection services; health care; industrial and transportation. For more information, including the latest product and technology news, visit www.3M.com.
