UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ Ö ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
Commission file number 1-3285
3M COMPANY
State of Incorporation: Delaware I.R.S. Employer Identification No. 41-0417775
Principal executive offices: 3M Center, St. Paul, Minnesota 55144
Telephone number: (651) 733-1110
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes Ö . No .
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes Ö . No .
Shares of common stock outstanding at June 30, 2004: 782,703,301.
This document contains 46 pages.
The table of contents is set forth on page 2.
The exhibit index begins on page 32.
1
3M COMPANY
FORM 10-Q
For the Quarterly Period Ended June 30, 2004
TABLE OF CONTENTS
PAGE
PART I |
||
ITEM 1. | 3 | |
Index to Financial Statements: | ||
|
3 | |
4 | ||
5 | ||
6 | ||
6 | ||
8 | ||
9 | ||
Note 4. Supplemental Stockholders’ Equity and |
10 | |
11 | ||
12 | ||
13 | ||
14 | ||
Note 9. Review Report of Independent Registered Public Accounting Firm | 14 | |
15 | ||
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 |
Index to Management’s Discussion and Analysis: | ||
16 | ||
17 | ||
19 | ||
23 | ||
26 | ||
ITEM 3. | 27 | |
ITEM 4. | 27 | |
PART II | ||
ITEM 1. | 28 | |
ITEM 2. | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities | 30 |
ITEM 3. | 30 | |
ITEM 4. | 31 | |
ITEM 5. | 31 | |
ITEM 6. | 31 | |
| 32 |
2
3M COMPANY
FORM 10-Q
For the Quarterly Period Ended June 30, 2004
PART I. Financial Information
Consolidated Statement of Income
(Unaudited)
| 3M Company and Subsidiaries | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended June 30 | Six months ended June 30 | |||||||||||||
| (Millions, except per share amounts) | 2004 | 2003 | 2004 | 2003 | ||||||||||
| Net sales | $ | 5,012 | $ | 4,580 | $ | 9,951 | $ | 8,898 | ||||||
| Operating expenses | ||||||||||||||
| Cost of sales | 2,452 | 2,323 | 4,888 | 4,534 | ||||||||||
| Selling, general and administrative expenses | 1,084 | 1,021 | 2,188 | 1,984 | ||||||||||
| Research, development and related expenses | 290 | 276 | 572 | 546 | ||||||||||
| Other expense | — | — | — | 93 | ||||||||||
| Total | 3,826 | 3,620 | 7,648 | 7,157 | ||||||||||
| Operating income | 1,186 | 960 | 2,303 | 1,741 | ||||||||||
| Interest expense and income | ||||||||||||||
| Interest expense | 16 | 24 | 35 | 47 | ||||||||||
| Interest income | (10 | ) | (5 | ) | (20 | ) | (11 | ) | ||||||
| Total | 6 | 19 | 15 | 36 | ||||||||||
| Income before income taxes and minority interest | 1,180 | 941 | 2,288 | 1,705 | ||||||||||
| Provision for income taxes | 389 | 310 | 755 | 558 | ||||||||||
| Minority interest | 18 | 12 | 38 | 26 | ||||||||||
| Net income | $ | 773 | $ | 619 | $ | 1,495 | $ | 1,121 | ||||||
| Weighted average common shares outstanding – basic | 782.5 | 781.8 | 782.7 | 780.9 | ||||||||||
| Earnings per share – basic | $ | .99 | $ | .79 | $ | 1.91 | $ | 1.44 | ||||||
| Weighted average common shares outstanding – diluted | 799.7 | 792.3 | 799.6 | 791.4 | ||||||||||
| Earnings per share – diluted | $ | .97 | $ | .78 | $ | 1.87 | $ | 1.42 | ||||||
| Cash dividends paid per common share | $ | .36 | $ | .33 | $ | .72 | $ | .66 | ||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.
3
Consolidated Balance Sheet
(Unaudited)
| 3M Company and Subsidiaries | ||||||||
| Jun. 30 | Dec. 31 | |||||||
| (Dollars in millions, except per share amounts) | 2004 | 2003 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 2,314 | $ | 1,836 | ||||
| Accounts receivable – net | 2,913 | 2,714 | ||||||
| Inventories | ||||||||
| Finished goods | 998 | 921 | ||||||
| Work in process | 605 | 596 | ||||||
| Raw materials and supplies | 337 | 299 | ||||||
| Total inventories | 1,940 | 1,816 | ||||||
| Other current assets | 1,460 | 1,354 | ||||||
| Total current assets | 8,627 | 7,720 | ||||||
| Investments | 211 | 218 | ||||||
| Property, plant and equipment | 15,724 | 15,841 | ||||||
| Less: Accumulated depreciation | (10,268 | ) | (10,232 | ) | ||||
| Property, plant and equipment – net | 5,456 | 5,609 | ||||||
| Goodwill | 2,513 | 2,419 | ||||||
| Intangible assets – net | 286 | 274 | ||||||
| Other assets | 1,269 | 1,360 | ||||||
| Total assets | $ | 18,362 | $ | 17,600 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Short-term borrowings and current portion of long-term debt | $ | 1,358 | $ | 1,202 | ||||
| Accounts payable | 1,108 | 1,087 | ||||||
| Accrued payroll | 487 | 436 | ||||||
| Accrued income taxes | 1,094 | 880 | ||||||
| Other current liabilities | 1,547 | 1,477 | ||||||
| Total current liabilities | 5,594 | 5,082 | ||||||
| Long-term debt | 1,303 | 1,735 | ||||||
| Other liabilities | 3,008 | 2,898 | ||||||
| Total liabilities | 9,905 | 9,715 | ||||||
| Commitments and contingencies (Note 7) | ||||||||
| Stockholders equity | ||||||||
| Common stock, $.01 par value, 944,033,056 shares issued | 9 | 9 | ||||||
| Capital in excess of par value | 287 | 287 | ||||||
| Retained earnings | 14,763 | 14,010 | ||||||
| Treasury stock, at cost; 161,329,755 shares at Jun. 30, 2004; | ||||||||
| 159,915,696 shares at Dec. 31, 2003 | (4,764 | ) | (4,641 | ) | ||||
| Unearned compensation | (214 | ) | (226 | ) | ||||
| Accumulated other comprehensive income (loss) | (1,624 | |||||||