3M Second-Quarter Sales Increase 18 Percent; Per-Share Earnings Rise 38 Percent

Company Again Raises 2010 Sales and Earnings Expectations

ST. PAUL, Minn.--(BUSINESS WIRE)--3M (NYSE: MMM) today reported record second-quarter earnings of $1.54 per share on sales of $6.7 billion. Sales and per-share earnings increased 17.7 percent and 37.5 percent, respectively, versus the second quarter of 2009. Excluding special items (b-c) recorded in the second quarter of 2009, earnings per share rose 28.3 percent.

“Our new product vitality index is the highest in recent memory and we are taking share in many of our businesses”

Sales improved in all businesses and geographic regions, with particular strength in Electro and Communications at 32 percent, Display and Graphics at 30 percent and Industrial and Transportation at 23 percent. On a geographic basis, sales growth was strongest in emerging economies, where sales expanded by 38 percent versus the second quarter of 2009. Total-company sales rose 18 percent year-on-year and 6 percent sequentially, and have now returned to second quarter 2008 levels.

3M generated record second-quarter operating income of $1.596 billion and operating margins were 23.7 percent. All six of the company’s business segments posted operating margins of 22 percent or higher.

“Our growth strategy continues to gain momentum as we again delivered strong top-line growth and outstanding leverage to the bottom line,” said George W. Buckley, 3M chairman, president and chief executive officer. “I thank the 3M team around the world for continuing to deliver during these uncertain times.”

Buckley added that the second-quarter results reaffirm the company’s long-term strategy of accelerating investment in higher growth opportunities.

“Our new product vitality index is the highest in recent memory and we are taking share in many of our businesses,” he said. “3M’s improved engine of organic growth, combined with our commitment to operational excellence positions us well to deliver sustainable increases in sales, earnings and free cash flow.”

For the third consecutive quarter, 3M increased its full-year 2010 performance expectations. The company now expects organic sales volumes to grow 13 to 15 percent versus a prior expected range of 10 to 12 percent. Operating income margins, previously anticipated to exceed 22 percent, are now expected to exceed 22.5 percent for the year. Finally, the company expects that per-share earnings will be in the range of $5.65 to $5.80, excluding the Medicare Part D-related charge recorded in the first quarter of this year, versus a prior expected range of $5.40 to $5.60.

Key Financial Highlights
Second-quarter worldwide sales totaled $6.7 billion, up 17.7 percent compared to the second quarter of 2009. Local-currency sales including acquisitions increased 17.9 percent. Divestitures and foreign exchange impacts each reduced sales by 0.1 percent.

Sales growth was broad-based, with year-on-year increases of 32 percent in Electro and Communications, 30 percent in Display and Graphics, 23 percent in Industrial and Transportation, 10 percent in both Consumer and Office and in Safety, Security and Protection Services and 5 percent in Health Care. On a geographic basis, sales rose 42 percent in Asia Pacific, 21 percent in Latin America and Canada and 9 percent in the United States. Sales rose over 4 percent in Europe in the quarter, as organic volume growth of nearly 11 percent was partially offset by 6-plus points of negative currency impact, primarily due to the weaker Euro.

Second-quarter net income was $1.121 billion, or $1.54 per share, versus $783 million, or $1.12 per share, in the second quarter of 2009. Total-company operating income was $1.596 billion, a record for any second quarter in 3M’s history, and margins were 23.7 percent. All six of 3M’s business segments posted operating margins of 22 percent or higher.

Business Segment Highlights
(All figures are on GAAP basis and include the impact of special items (a-c))

Industrial and Transportation

• Sales of $2.2 billion, up 23.2 percent in local currency.
• Broad-based double-digit local-currency growth across much of the portfolio; renewable energy up 71 percent, automotive OEM up 45 percent, abrasives up 28 percent and industrial adhesives and tapes up 22 percent.
• All businesses delivered year-on-year profit growth.
• Double-digit sales and profit growth across all major geographic regions, led by Asia Pacific.
• Operating income up 66 percent to $476 million with operating margin of 22 percent.

Health Care

• Sales of $1.1 billion, up 5.7 percent in local currency.
• Double-digit local-currency sales growth in drug delivery systems.
• Solid local-currency growth in skin and wound care, health information systems and oral care businesses; sales in infection prevention business up slightly in local currency.
• Positive local-currency growth across all major geographic regions led by Latin America and Canada.
• Operating income of $344 million, up 5 percent; operating margin of 30.9 percent.

Display and Graphics

• Sales of $1.0 billion, up 29.2 percent in local currency.
• Optical systems sales up 64 percent in local currency; new 3M film solutions for LED-back-lit televisions continue to boost sales.
• Commercial graphics and mobile interactive solutions posted double-digit local-currency sales increases; sales down slightly in traffic safety systems business.
• Strong double-digit sales growth in both Asia Pacific and Latin America.
• Operating profits up 69 percent to $308 million, and margins were 29.5 percent.

Consumer and Office

• Sales of $1.0 billion, up 9.7 percent in local currency, including 4.5 percent from acquisitions, primarily ACE™ and A-One.
• Accelerated investments in advertising and promotion drove strong, broad-based sales growth.
• Double-digit sales increases in consumer health care, do-it-yourself, office supplies and home care businesses.
• Positive local-currency sales growth in all geographic regions, with double-digit increases in Asia Pacific and Latin America.
• Operating income of $211 million, up 7 percent year-on-year.

Safety, Security and Protection Services

• Sales of $842 million, up 10.3 percent in local currency.
• Double-digit sales increases in security systems, roofing granules and building and commercial services; high single-digit growth in the personal protective equipment business.
• Broad-based geographic growth with double-digit sales gains in Canada, Asia Pacific, Latin America and the United States.
• Operating margin of 23.4 percent, with profits up 9 percent year-on-year.

Electro and Communications

• Sales of $726 million, up 31.6 percent in local currency.
• Consumer electronics continues to drive growth; 3M businesses that serve this market posted sales increases of 50 percent-plus year-on-year and 10 percent sequentially.
• Double-digit sales increase in electrical markets; telecom infrastructure business declined slightly year-on-year but rose 9 percent sequentially.
• Profits increased 148 percent as all businesses delivered year-on-year improvement; operating margins of 22.8 percent, up 10.7 percentage points.

3M Achieves Record Sales of $6.9 Billion on 11 Percent Organic Volume Growth

Company Drives 13 Percent Increase in Earnings per Share

ST. PAUL, Minn.--(BUSINESS WIRE)--3M (NYSE: MMM) today reported record third-quarter earnings of $1.53 per share on sales of $6.9 billion. Sales and per-share earnings increased 11 percent and 13.3 percent, respectively, versus the third quarter of 2009. Operating income was a third quarter record $1.576 billion and operating margins were 22.9 percent. Operating margins exceeded 20 percent in all six of the company’s business segments for the third consecutive quarter.

“The 3M team posted yet another outstanding quarter, with 11 percent organic volume growth and 23 percent margins”

During the third quarter, the company drove double-digit sales increases in four of its six business segments, led by Electro and Communications at 25 percent and Display and Graphics at 19 percent. Asia Pacific led all geographic regions with a 28 percent sales increase.

Sales in emerging markets grew by 25 percent in the third quarter and now comprise 34 percent of 3M’s worldwide sales. Sales grew by 48 percent in Korea, 39 percent in India, 32 percent in Russia, 31 percent in the China/Hong Kong region and 25 percent in Brazil.

“The 3M team posted yet another outstanding quarter, with 11 percent organic volume growth and 23 percent margins,” said George W. Buckley, 3M chairman, president and CEO. “We drove growth throughout the portfolio, with more than 80 percent of our operating divisions posting year-on-year sales increases. New products are fueling market share gains and filling adjacent spaces everywhere, but particularly in emerging markets, the fastest-growing area of our company. My thanks to the many 3Mers around the world who continue to make this happen.”

For the first nine months of 2010, sales increased 17.4 percent to $20 billion, driven primarily by a 16 percent increase in organic volumes. Year-to-date earnings were $4.36 per share, up 35.8 percent over 2009.

3M also commented on its full-year 2010 performance expectations. The company expects that full-year organic sales volume growth will be in the range of 13.5 to 14 percent and that operating margins will equal approximately 22.5 percent for the year.

The company also expects that full-year earnings per share, excluding the Medicare Part D-related charge recorded in the first quarter of this year, will be in the range of $5.70 to $5.74. The high end of this range is down 6 cents per share versus the company’s prior expectations, due solely to anticipated earnings dilution related to the company’s October 2010 purchases of Attenti Holdings S.A. and Arizant Inc. and a controlling interest in Cogent Inc. GAAP earnings are expected to be in the range of $5.59 to $5.63 per share for 2010 in total.

Key Financial Highlights

Worldwide sales totaled $6.9 billion in the third quarter, up 11 percent compared to the third quarter of 2009. Local-currency sales including acquisitions increased 11.1 percent, divestitures reduced sales by 0.1 percent and year-on-year changes in foreign exchange rates had no impact on third quarter sales.

Third-quarter sales growth was broad-based, with year-on-year local-currency increases of 24 percent in Electro and Communications, 18 percent in Display and Graphics, 14 percent in Industrial and Transportation, 11 percent in Consumer and Office and 2 percent in Health Care. In the company’s Safety, Security and Protection Services Business, local-currency sales declined 2 percent versus the third quarter of 2009.

On a geographic basis, sales rose 28 percent in Asia Pacific, 14 percent in Latin America/Canada and 6 percent in the United States. In Europe, organic volumes rose 4 percent, but sales in total declined 1 percent as currency effects more than offset volume gains.

Third-quarter net income was $1.106 billion, or $1.53 per share, versus $957 million, or $1.35 per share, in last year’s third quarter. Total-company operating income was $1.576 billion, a third-quarter record for 3M, and operating margins were 22.9 percent. Margins exceeded 20 percent in all six of 3M’s business segments.

Business Segment Highlights

(All figures are on GAAP basis and include the impact of special items (b-c))

Industrial and Transportation

• Sales of $2.2 billion, up 14.2 percent in local currency.
• Double-digit local-currency growth in many businesses led by renewable energy at 83 percent, energy and advanced materials at 25 percent, abrasives at 18 percent and auto OEM at 17 percent.
• Continued rapid sales growth in Asia Pacific with 25 percent local-currency growth; also drove double-digit local-currency sales growth in Europe and in Latin America/Canada.
• Operating income up 14 percent to $446 million; operating margin of 20.2 percent.

Health Care

• Sales of $1.1 billion, up 1.6 percent in local currency.
• Year-on-year H1N1-related comps reduced sales growth by 2 percent.
• Local-currency sales up 11 percent in Latin America/Canada and 9 percent in Asia Pacific.
• Local-currency sales down slightly in both the U.S. and Western Europe; hospital admits down and elective procedures being postponed due to macroeconomic uncertainty.
• Positive local-currency sales growth in skin and wound care, health information systems, drug delivery and oral care.
• Operating income of $326 million; operating margin of 29.8 percent.

Display and Graphics

• Sales of $1.1 billion, up 18.4 percent in local currency.
• Commercial graphics business continued to strengthen with double-digit local-currency sales growth; sales also rose in traffic safety systems and in mobile interactive solutions.
• Local-currency sales up 28 percent in optical systems, driven by new products for LED flat screen TVs; September sales impacted by inventory adjustments in the LCD TV channel.
• Strong double-digit sales growth in Asia Pacific, Latin America/Canada and the U.S.
• Operating income up 37 percent to $282 million; operating margin of 26.4 percent.

Consumer and Office

• Sales increased 11.1 percent in local currency and exceeded $1 billion for the first time ever.
• Double-digit local-currency sales growth in the office products and DIY businesses; high-single-digit growth in home care and stationery products.
• Sales growth broadly dispersed around the world: Asia Pacific up 27 percent, Latin America/Canada up 21 percent, U.S. up 9 percent.
• Advertising/merchandising investments rose over 30 percent year on year.
• Operating income of $235 million; operating margin of 22.9 percent.

Safety, Security and Protection Services

• Sales of $810 million, down 1.6 percent in local currency; H1N1-related comps reduced sales growth by 10 percent.
• Double-digit sales increase in security systems, corrosion protection and building and commercial services businesses.
• Sales in occupational health and environmental safety business declined 5 percent, again impacted by H1N1; double-digit sales decline in roofing granules business due to sluggish residential construction and repair market.
• Positive sales growth in Asia Pacific and Latin America/Canada; U.S. and European sales down year on year.
• Operating profit of $164 million; operating margin declined year on year to 20.2 percent, largely attributable to H1N1 comps and transient volume declines in roofing granules.

Electro and Communications

• Sales of $772 million, up 23.9 percent in local currency.
• Continued strength in businesses that serve the consumer electronics industry; local-currency sales up over 50 percent in electronics markets materials and 30 percent in the electronic solutions business.
• Double-digit local-currency sales growth in electrical products; local-currency sales up slightly in the telecom infrastructure business.
• Sales grew in all geographies, led by Asia Pacific at 36 percent and both the U.S. and Latin America/Canada at 22 percent.
• Operating income of $173 million, up 49 percent; operating margin of 22.4 percent.

3M Outlines Strategy for Accelerated Growth in Sales, Profits and Cash Flow

– Company Provides Financial Outlook for 2011 –

ST. PAUL, Minn.--At an institutional investor and analyst meeting in New York later today, 3M chairman, president and CEO George W. Buckley will outline the company’s ongoing commitment to investing in its core businesses while continuing to focus on profitability and cash generation.

“Developing markets currently represent one-third of 3M sales and will likely reach forty-five percent by 2015”

“Our continuing strong performance clearly demonstrates that our growth strategy is working,” George W. Buckley said. “3M’s innovation engine has been revitalized and is driving growth across our many businesses and around the world.”

Buckley will highlight the company’s continuing commitment to growing its core businesses and expanding market share through increased investments in R&D, sales and marketing and new manufacturing capacity, particularly in fast growth developing economies. “Developing markets currently represent one-third of 3M sales and will likely reach forty-five percent by 2015,” Buckley added.

In addition, he will reaffirm the company’s focus on complementary acquisitions of both technologies and businesses to pursue adjacent market opportunities and to build new platforms for future growth. Buckley will cite 3M’s recent purchases of Cogent Inc. and Attenti Holdings S.A. in the security market space and Arizant Inc. in the healthcare market as examples of new high growth platforms for 3M.

Additional presenters at the conference will include: Pat Campbell, CFO; Fred Palensky, Executive Vice President, R&D; Stefan Gabriel, President, 3M New Ventures; Inge Thulin, Executive Vice President, International Operations and Rosa Miller, Vice President, Latin America.

3M also provided its 2011 sales and earnings outlook. The company anticipates sales of $29 billion to $30.5 billion, with organic sales volumes growing 5.5 to 7.5 percent, currency effects adding 1 to 2 percent and acquisitions adding 4 to 6 percent to sales for the year. 3M also expects that 2011 earnings will be between $5.90 and $6.10 per share, which includes a $0.27 per share year-on-year increase in pension expense. The company continues to expect 2010 earnings per share to be in the range of $5.59 to $5.63 per share, or $5.70 to $5.74 per share excluding the Medicare Part D-related charge recorded in the first quarter of 2010.

Excluding the 2011 pension expense increase, 2011 earnings are expected to be in the range of $6.17 to $6.37 per share, an increase of 10 to 14 percent versus 2010 estimated GAAP earnings levels.

SARA LEE ANNOUNCES $500 MILLION ACCELERATED SHARE REPURCHASE AND UPDATES EARNINGS GUIDANCE TO REFLECT THIS ACTION

SARA LEE ANNOUNCES $500 MILLION ACCELERATED SHARE REPURCHASE AND
UPDATES EARNINGS GUIDANCE TO REFLECT THIS ACTION

Initiated first $500 million of $2.5 to $3.0 billion share repurchase plan

Repurchase expected to add $0.02 to fiscal 2010 earnings per share

Tax provision for repatriation expected to result in an $(0.80) per share charge

Currency hedges put in place to protect anticipated value of Household & Body Care proceeds
DOWNERS GROVE, Ill. (Mar. 2, 2010) – Sara Lee Corp. (NYSE: SLE) today announced it has initiated an accelerated share repurchase program under which it will repurchase $500 million of common stock. The repurchase is part of its recently announced capital plan under which the company intends to buy back $2.5 to $3.0 billion of stock over a three year period, with $1.0 to $1.3 billion to be repurchased in calendar year 2010. As a result of the repurchase, the company’s shares outstanding will be reduced from 697 million to approximately 661 million.
Sara Lee also announced today that it has hedged €1.6 billion of the proceeds anticipated to be generated by the divestiture of its Household & Body Care (H&BC) business at a euro-dollar rate of $1.35 per euro. To date, the company has announced binding agreements to sell its Body Care business to Unilever for €1.275 billion and its Air Care business to Proctor & Gamble for €320 million. The company continues to work toward the sale of the remaining parts of the business, Insecticides and Shoe Care.
“We recently announced our intention to use the H&BC proceeds and cash on hand to aggressively repurchase shares,” said Sara Lee Corp. chairman and chief executive officer Brenda C. Barnes. “Today’s announcement reflects our commitment to act swiftly and create value for our shareholders. At the same time, our actions to hedge the euro-dollar rate will protect the value of the proceeds from the sale of H&BC.”
Sara Lee announces $500 million accelerated share repurchase and updates earnings guidance – Page 2
Additional information about the accelerated share repurchase
The company’s share repurchases will be made through an accelerated share repurchase contract with Goldman, Sachs & Co., which is expected to be in effect for the next three to five months. During this time, Sara Lee cannot repurchase shares in the open market. The accelerated share repurchase contract is subject to a final adjustment upon completion, which may impact the total dollar amount expended or the number of shares acquired. Sara Lee has filed a Form 8-K with the Securities and Exchange Commission describing the accelerated share repurchase contract in more detail. The Form 8-K can be accessed in the Investor Relations section (Financial/SEC Information page) on www.saralee.com.
Updated Earnings Per Share (EPS) guidance
Solely as a result of the accelerated share repurchase and a one-time charge, Sara Lee is updating EPS guidance. The accelerated repurchase reduces the company’s shares outstanding on a weighted average basis over the course of fiscal 2010 and is expected to add $0.02 per share to EPS. The company also anticipates taking a one-time $550 million book charge, or $(0.80) per share, to provide for taxes on the deemed repatriation of both existing overseas cash and the book value of the H&BC business.
After the H&BC deals have closed, additional tax charges on the repatriation of the gains on the transactions are likely, though at this time the size and timing of these charges have not been determined and are therefore not reflected in the updated guidance below. Sara Lee confirms the other elements of the company’s guidance (excluding the elements set forth below) previously provided on February 4, 2010.

All amounts in U.S. dollars per share	Fiscal 2010 Guidance (1)	Fiscal 2009
Total diluted EPS	0.58 – 0.63	0.52
Diluted EPS from continuing operations	0.79 – 0.82	0.31
Diluted EPS from discontinued operations	(0.21) – (0.19)	0.21
Contingent sale proceeds	0.19	0.21
Total significant items (2)	(0.63)	(0.51)
Significant items related to continuing operations	(0.15)	(0.51)
Significant items related to discontinued operations	(0.48)	(0.01)
Adjusted EPS (2)(3)	1.02 – 1.07	0.82
Adjusted EPS from continuing operations	0.75 – 0.78	0.61
Adjusted EPS from discontinued operations	0.27 – 0.29	0.22

(1) Fiscal 2010 has an extra, 53rd week.
(2) Amounts are rounded and may not add to the total.
(3) “Adjusted EPS” and other “adjusted” financial measures are explained at the end of this release.

Additional information

Sara Lee announces $500 million accelerated share repurchase and updates earnings guidance –
“Adjusted EPS” and other “adjusted” financial measures are explained at the end of this release.
Additional information about currency hedges
The company has hedged the euro-dollar exchange rate at $1.35 per euro. These hedges have been structured as third party forward currency contracts that should have an immaterial impact on the company’s income statement. These contracts will be settled in cash as they expire beginning in July 2010. The proceeds from the H&BC transaction will be recorded on the company’s Statement of Cash Flows as Cash from Investing Activities while any hedging gains or losses will be reported as Cash from Operations.