UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended June 30, 1994
Commission file number: 1-3285
MINNESOTA MINING AND MANUFACTURING COMPANY
State of Incorporation: Delaware
I.R.S. Employer Identification No. 41-0417775
Executive offices: 3M Center, St. Paul, Minnesota 55144
Telephone number: (612) 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 X . No .
On June 30, 1994, there were 422,518,064 shares of the Registrant's
common stock outstanding.
This document contains 20 pages.
MINNESOTA MINING AND MANUFACTURING COMPANY
AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF INCOME
(Amounts in millions, except per-share data)
(Unaudited)
Three months ended Six months ended
June 30 June 30
1994 1993 1994 1993
Net Sales $3,772 $3,540 $7,404 $7,057
Operating Expenses
Cost of goods sold 2,247 2,131 4,415 4,243
Selling, general and
administrative expenses 955 893 1,870 1,768
Total 3,202 3,024 6,285 6,011
Operating Income 570 516 1,119 1,046
Other Income and Expense
Interest expense 21 15 38 26
Investment and other
income - net (11) (21) (16) (30)
Implant litigation - net -- -- 35 --
Total 10 (6) 57 (4)
Income Before Income Taxes
and Minority Interest 560 522 1,062 1,050
Provision for Income Taxes 201 184 382 372
Minority Interest 16 7 31 17
Net Income $ 343 $ 331 $ 649 $ 661
Average Number of Common
Shares Outstanding 422.9 436.4 425.0 436.9
Earnings Per Share $ .81 $ .76 $ 1.53 $ 1.51
Cash dividends declared
and paid per share $ .440 $ .415 $ .880 $ .830
Share and per-share data reflect the two-for-one stock split
effective March 15, 1994.
The Notes to Financial Statements are an integral part of this
statement.
MINNESOTA MINING AND MANUFACTURING COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in millions)
June 30,
ASSETS 1994 December 31,
Current Assets (Unaudited) 1993
Cash and cash equivalents $ 309 $ 274
Other securities 170 382
Accounts receivable - net 2,976 2,610
Inventories
Finished goods 1,380 1,246
Work in process 653 604
Raw materials and supplies 545 551
Total inventories 2,578 2,401
Other current assets 769 696
Total current assets 6,802 6,363
Investments 507 455
Property, Plant and Equipment 12,158 11,488
Less accumulated depreciation (7,197) (6,658)
Property, plant and equipment - net 4,961 4,830
Other Assets 894 549
Total $13,164 $12,197
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 905 $ 878
Income taxes 184 290
Short-term debt 852 697
Other current liabilities 1,471 1,417
Total current liabilities 3,412 3,282
Other Liabilities 2,233 1,607
Long-term Debt 951 796
Stockholders' Equity
Common stock, no par, 472,016,528
shares issued 296 296
Retained earnings 8,746 8,500
Unearned compensation - ESOP (469) (479)
Cumulative translation - net (164) (331)
Net unrealized loss - debt & equity securities (8) ---
Less cost of treasury stock -
June 30, 1994, 49,498,464 shares;
December 31, 1993, 42,537,890 shares (1,833) (1,474)
Stockholders' Equity - net 6,568 6,512
Total $13,164 $12,197
Share data reflect the two-for-one stock split effective March 15, 1994.
The Notes to Financial Statements are an integral part of this
statement.
MINNESOTA MINING AND MANUFACTURING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(Unaudited)
Six months ended
June 30
1994 1993
Cash Flows from Operating Activities:
Net income $ 649 $ 661
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 535 517
Working capital and other changes (335) (190)
Net cash provided by operating activities 849 988
Cash Flows from Investing Activities:
Capital expenditures (501) (521)
Proceeds from sale of property, plant and equipment 24 36
Other (31) (2)
Net cash used in investing activities (508) (487)
Cash Flows from Financing Activities:
Net change in short-term debt 185 135
Repayment of long-term debt (52) (96)
Proceeds from long-term debt 302 54
Purchases of treasury stock (458) (383)
Reissuances of treasury stock 70 114
Payment of dividends (374) (364)
Net cash used in financing activities (327) (540)
Effect of exchange rate changes on cash 21 (14)
Net increase (decrease) in cash and
cash equivalents 35 (53)
Cash and cash equivalents at beginning of year 274 382
Cash and cash equivalents at end of period $ 309 $ 329
The Notes to Financial Statements are an integral part of this
statement.
MINNESOTA MINING AND MANUFACTURING COMPANY
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The interim financial statements are unaudited but, in the opinion of
management, reflect all adjustments necessary for a fair presentation
of financial position, results of operations and cash flows for such
periods. These adjustments consist of normal, recurring items. The
results of operations for any interim period are not necessarily
indicative of results for the full year. The condensed consolidated
financial statements and notes are presented as permitted by Form 10-Q
and do not contain certain information included in the company's annual
consolidated financial statements and notes. This Form 10-Q should be
read in conjunction with the company's consolidated financial
statements and notes included in the 1993 Annual Report on Form 10-K.
The share and per-share data contained in this Form 10-Q reflect the
two-for-one common stock split effective March 15, 1994.
Effective January 1, 1994, the company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
This adoption will have no impact on the company's results of
operations. The unrealized gains and losses for available-for-sale
debt and equity securities are separately disclosed as a component of
stockholders' equity. The following accounting policies are updated
from the 1993 Form 10-K as follows:
Other Securities: Other securities consist of marketable securities
and interest-bearing bank deposits with varied maturity dates. These
securities are employed in the company's banking, captive insurance
and cash management operations. Other securities classified as
available-for-sale are reported at fair value and held-to-maturity
securities are reported at amortized cost.
Investments: Investments primarily include assets from captive
insurance and banking operations and from venture capital
investments. Investments classified as available-for-sale are
reported at fair value and held-to-maturity investments are reported
at amortized cost. Other investments are stated at cost, which
approximates fair value.
Also effective January 1, 1994, the company adopted FASB Interpretation
Number (FIN) 39 which requires gross reporting for environmental and
other liabilities, and any related insurance receivable assets. The
presentation of liabilities net of claims for recovery is no longer
appropriate. The impact of this adoption was to increase primarily
"Other Assets" and "Other Liabilities" from year-end 1993 balances.
Earnings for the first six months ended June 30, 1994, were negatively
impacted by a first quarter net pre-tax charge of $35 million related
to mammary implant litigation. This charge reflected the company's
participation in the multi-billion dollar global settlement, other
mammary implant litigation, and probable insurance recoveries. The
company in the first quarter of 1994 accrued a liability having a net
present value of $308 million to cover probable liabilities and
expenses, and also recorded a receivable, primarily on the "Other
Assets" line of the Consolidated Balance Sheet, having a nominal value
of $273 million, for probable insurance recoveries. The result of
these accounting actions was a net pre-tax charge to first quarter 1994
earnings of $35 million ($22 million after taxes, or 5 cents per
share). See Part II, Item 1, Legal Proceedings, for additional
information on this topic.
On June 16, 1994, the company issued a three-year, $200 million 6.375%
Euronote. This was swapped to yield an all-in cost of 6-month average
LIBOR less 36.5 basis points. On March 29, 1994, the company issued a
$100 million medium-term note at the 5-year treasury rate plus 25 basis
points (6.25%), and put it on a cancelable swap to average LIBOR
floating. On an all-in basis, the rate will average LIBOR less 27
basis points for two years, or for five years, if the swap is not
canceled. If the swap is canceled, the company will pay 6.18 percent
fixed for the final three years.
Coopers & Lybrand, the company's independent accountants, have
performed a review of the unaudited interim financial statements
included herein and their report thereon accompanies this filing.
MINNESOTA MINING AND MANUFACTURING COMPANY
AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
This Quarter
All share and per-share data reflect the two-for-one stock split
effective March 15, 1994.
Worldwide sales for the second quarter totaled $3.772 billion, an
increase of 6.6 percent from $3.540 billion in the second quarter last
year. Net income increased 3.7 percent to $343 million, or $.81 per
share, compared with $331 million, or $.76 per share, in the same
quarter last year. Worldwide unit sales rose about 9 percent.
In the United States, the company's unit sales rose about 7 percent
compared with the second quarter last year, with all three sectors
showing higher growth. The Information, Imaging and Electronic Sector
had strong gains in its memory technologies and electro-
telecommunications businesses. Life Sciences Sector volume increased
with solid growth in its traffic and personal safety businesses, in
addition to good gains in its health care businesses. The Industrial
and Consumer Sector posted good volume gains in its tapes, abrasives,
specialty chemicals, office supplies and consumer products businesses.
Internationally, unit volume increased about 10 percent, with all three
sectors showing higher growth. Volume rose about 8 percent in Europe
with double-digit increases in France, Spain, the Netherlands and in
the Nordic region. Volume also increased in Italy and Germany. In the
Asia Pacific area, volume was up about 11 percent. Volume in Japan was
up about 4 percent, while volume growth in the rest of Asia rose nearly
30 percent. In Latin America, volume was up more than 25 percent.
Canada and Africa also reported good volume gains.
Worldwide selling prices declined about 2 percent compared to the
second quarter of 1993, mainly because of competition in the Memory
Technologies Group. Prices declined about 2 percent in both the United
States and internationally. Currency translation had a minimal impact
on international and worldwide sales.
Cost of goods sold, which includes manufacturing, research and
development, and engineering, was 59.6 percent of sales, down six-
tenths of a percentage point from the second quarter last year. Cost
of goods sold was helped by the 9 percent volume gain, cost-control
efforts and lower raw material costs. Research and development costs
were three-tenths of a percentage point lower than the second quarter
of 1993. These benefits were partially offset by lower selling prices.
Selling, general and administrative spending of $955 million was 25.3
percent of sales. This was an increase of one-tenth of a percentage
point from a year ago. SG&A spending included investments to sustain
rapid growth in the Asia region.
Worldwide operating income was $570 million in the second quarter, up
10.4 percent from the same quarter last year.
U.S. operating income was up about 7 percent and operating margins
improved by one-tenth of a percentage point. U.S. margins were helped
by higher unit sales volume and lower raw material costs. All three
U.S. business sectors contributed to this operating income increase.
International operating income increased about 14 percent and margins
were up by almost a full percentage point. International margins were
helped by higher unit sales volume, improved economic conditions in
Europe and Japan, and cost-control efforts.
Interest expense of $21 million in the second quarter of 1994 was
$6 million higher than in the same quarter last year. This increase
was mainly due to a planned increase in debt. Investment and other
income declined $10 million from the second quarter last year, mainly
due to one-time gains on investments in 1993.
The second-quarter 1994 worldwide effective tax rate was 36.0 percent,
up five-tenths of a point from the second-quarter rate last year, and
up seven-tenths of a point from the rate for 1993 overall. The higher
tax rate in 1994 is due to a lower level of foreign tax credits and the
accounting benefit in 1993 of revaluing deferred tax assets at the
higher 1993 U.S. statutory tax rate.
The company estimates that changes in the value of the U.S. dollar
reduced net income by $2 million, or about 1 cent per share, in the
second quarter compared to the corresponding quarter of 1993. This
estimate includes the effect of translating sales and profits from
local currencies into U.S. dollars, the costs in local currencies of
transferring goods between the parent company in the United States and
international companies, and transaction gains and losses in countries
not considered to be highly inflationary.
Year-to-date
On a year-to-date basis, worldwide sales totaled $7.404 billion, an
increase of 4.9 percent from $7.057 billion in the first six months of
last year.
Volume growth for the first six months of 1994 was 7 percent in the
United States and 8 percent in international operations. Both U.S. and
international prices declined about 2 percent. Currency translation
decreased international sales by almost 1 percent and worldwide sales
by about half a percent.
Cost of goods sold was 59.6 percent of sales, down six-tenths of a
point from the same period last year. The factors that influenced gross
margins for the second quarter were the same factors that affected
year-to-date results.
Selling, general and administrative spending of $1.870 billion for the
first six months was 25.3 percent of sales. This is up three-tenths of
a point from the same period last year, but up only one-tenth of a
point from the 1993 total year average.
Worldwide operating income increased 7.0 percent to $1.119 billion in
1994 up from $1.046 billion in 1993. Operating income in the United
States was up about 10 percent and margins improved by seven-tenths of
a percentage point. International operating income was up about 5
percent and margins were unchanged. Worldwide employment levels have
declined by more than 1,150 compared with the end of June 1993.
Interest expense was $38 million, up from $26 million in the first half
of 1993. This increase is mainly due to a planned increase in debt.
Investment and other income was $16 million in the first six months of
1994, a decline of $14 million compared to the same period last year.
This change was mainly due to one-time gains on investments in 1993.
As discussed in the Notes to Financial Statements, mammary implant
litigation resulted in a net pre-tax charge of $35 million in the first
quarter of 1994. Although there can be no certainty that the company
may not ultimately incur charges in excess of presently established
reserves, the company believes that such additional charges, if any,
will not pose a material risk to the financial position of the company
or its results of operations.
Year-to-date net income was $649 million, or $1.53 per share ($671
million, or $1.58 per share, excluding the first quarter pre-tax charge
of $35 million, or $22 million after taxes, relating to mammary-implant
litigation.) This compared with $661 million, or $1.51 per share, in
the first half of 1993.
****
Looking ahead, assuming no significant slowing in worldwide economic
activity, the company looks for good growth in second-half sales and
earnings.
Volume growth, productivity improvements and favorable raw material
prices should benefit full-year 1994 results. The weaker dollar is
expected to slightly benefit second-half earnings. The company
estimates that currency effects, based on levels at the end of June,
could add a few cents a share to second-half earnings compared to the
same period last year.
Investment in research and development will continue in order to help
the company meet its goal of 30 percent of sales coming from products
introduced in the last four years. The company continues to
aggressively explore cost-reduction and rationalization opportunities
around the world. Worldwide employment by the end of the year could be
down by more than 1,000 people from 1993 year-end levels, despite the
addition of people in the Asia region to sustain rapid growth there.
This would bring employment at the end of this year to fewer than
85,000 people, a decline of nearly 5,000 over a four-year period.
FINANCIAL CONDITION AND LIQUIDITY
The company's financial condition and liquidity remain strong.
Working capital increased $309 million to $3.390 billion from $3.081
billion as of December 31, 1993. The accounts receivable average days
sales outstanding was 66 days, the same as at year-end. The company's
key inventory index, which represents the number of months of
inventory, was 4.0 months, unchanged from year-end. The company's
current ratio was 2.0, compared with 1.9 at year-end.
The adoption of FIN 39 and the mammary implant litigation (refer to the
Notes to Financial Statements) were the primary contributors to the
increase in the "Other Assets" and "Other Liabilities" components of
the Consolidated Balance Sheet compared to year-end 1993 balances.
Total debt increased $310 million from year-end 1993 to $1.803 billion.
As of June 30, 1994, total debt was 27 percent of stockholders' equity,
up from 23 percent at year-end 1993. The company's borrowings continue
to maintain AAA long-term ratings.
Return on average stockholders' equity for the quarter was at 21.2
percent, up from 19.9 percent a year earlier, meeting the company's
goal of 20 to 25 percent. Return on capital employed for the quarter
was 21.1 percent, up from 20.1 percent in the comparable 1993 period.
The company's goal is 27 percent or better.
Net cash provided by operating activities totaled $849 million in the
first six months of the year, down $139 million from the same period
last year. This decrease was mainly due to the receipt of a large
legal settlement in 1993 of $129 million. Net income was negatively
impacted by the $22 million first quarter 1994 non-cash charge relating
to mammary implant litigation. This litigation could result in timing
differences in the cash flows of future periods. The company believes
that these differences, if any, will not pose a material risk to the
financial position of the company.
Cash used in investing activities was $508 million, up $21 million from
the same period last year. Capital expenditures for the first six
months of 1994 were $501 million, a decrease of about 4 percent
compared with the same period last year.
Financing activities in both short-term and long-term debt provided net
cash inflows of $435 million, compared to inflows in the same period
last year of $93 million. Treasury stock repurchases were $458 million,
compared to repurchases in the same period last year of $383 million.
The company repurchased about 8.8 million shares of treasury stock in
the first six months of this year, compared to 7.1 million shares in
the same period last year. The Board of Directors authorized the
repurchase of up to 24 million shares of 3M common stock between
February 14, 1994, and February 10, 1995. Of this number, 18.0 million
shares remained authorized for repurchase as of June 30, 1994. Stock
repurchases are made to support employee stock purchase plans and for
other corporate purposes.
Dividends paid increased 3.0 percent to $374 million in the first six
months of this year. The dividend payout ratio increased to 57.7
percent in the first six months from 57.1 percent for the entire year
in 1993.
The company expects cash generated by normal operations will support
its growth. With its AAA long-term ratings on its debt, the company
has sufficient borrowing capacity to supplement cash flows from
operations. 3M maintains a shelf registration with the Securities and
Exchange Commission that provides the means to offer medium-term notes
not to exceed $601 million. As of June 30, 1994, $402 million was
available for future financial needs.
MINNESOTA MINING AND MANUFACTURING COMPANY
AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The company and certain of its subsidiaries are named
defendants in a number of actions, governmental proceedings
and claims, including product liability claims involving
products now or formerly manufactured and sold by the
company, many of which relate to silicone gel mammary
implants, and some of which claims are purported or
tentatively certified class actions. Mammary implant cases
and claims are discussed separately below. In some actions,
the claimants seek damages as well as other relief which, if
granted, would require substantial expenditures.
The company is involved in a number of environmental
proceedings by governmental agencies asserting liability for
past waste disposal and other alleged environmental damage.
The company conducts ongoing investigations, assisted by
environmental consultants, to determine accruals for the
probable, estimable costs of remediation. The remediation
accruals are reviewed each quarter and changes are made as
appropriate.
Some of these matters raise difficult and complex factual and
legal issues and are subject to many uncertainties,
including, but not limited to, the facts and circumstances of
each particular action, the jurisdiction and forum in which
each action is proceeding, and differences in applicable law.
Accordingly, the company is not always able to estimate the
nature and precise amount of future liabilities with respect
to such matters.
Mammary Implant Litigation
As of June 30, 1994, the company had been named as a
defendant, often with multiple co-defendants, in 5,148 claims
and lawsuits in various courts, all seeking damages for
personal injuries from allegedly defective breast implants.
These claims and lawsuits purport to represent 12,418
individual claimants. These claims and lawsuits are
generally in very preliminary stages, and it is not yet
certain how many of these lawsuits and claims involve
products manufactured and sold by the company, as opposed to
other manufacturers. The company entered the business in
1977 by purchasing McGhan Medical and then sold that business
in 1984.
On April 8, 1994, the company and other defendants concluded
provisional agreements with a plaintiffs' negotiating
committee regarding their contributions to a "global
settlement" in the amount of $4.75 billion, previously
announced by the committee and three major defendants in
these claims and lawsuits. The company has agreed that its
maximum commitment of $325 million will be paid into a court-
administered fund within 3 years from the date that the final
order ratifying the global settlement is entered and after
appeals, if any, have been exhausted. The company has the
unilateral right to withdraw from the agreement should there
be an unacceptable level of individual plaintiffs and
claimants electing to remove themselves from the settlement
("opt-outs"). The global settlement has received preliminary
approval from the court, and a hearing has been set for
August 18, 1994, with respect to final approval. The
deadline for claimants to opt-out of the settlement has
expired, and the company is attempting to assess the extent
and impact of opt-outs. The company will not be required to
make any payments until the opt-outs are determined and the
global settlement is found acceptable by the company based
upon the level of opt-outs.
The company in the first quarter of 1994 accrued a liability
having a net present value of $308 million to cover probable
liabilities and expenses and also recorded a receivable
having a nominal value of $273 million for probable insurance
recoveries. The result of these accounting actions was a net
pre-tax charge to first quarter 1994 earnings of $35 million
($22 million after taxes). Based on the amounts and timing
of the payment obligations under the settlement, the
company's current estimates of potential liabilities and
expenses that may not be covered by the settlement, and the
amounts and timing of receipt of insurance proceeds, the
company believes that this accrual and recovery is the best
estimate of the probable impact of the mammary implant claims
and lawsuits. No insurers have denied coverage, and the
insurance recovery recorded by the company represents the
amount that the company considers appropriate to record as
recoverable at this time.
Although there can be no certainty that the company may not
ultimately incur charges in excess of presently established
reserves, the company believes that such additional charges,
if any, will not pose a material risk to the financial
position of the company or its results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The registrant held its Annual Meeting of
Stockholders on May 10, 1994.
(b) Proxies for the meeting were solicited pursuant to
Regulation 14; there was no solicitation in opposition
to management's nominees for directors as listed in the
Proxy Statement and all such nominees were elected.
Directors elected were Lawrence E. Eaton, Allen F.
Jacobson, and Aulana L. Peters.
Directors whose terms continue after the meeting were
Edward A. Brennan, Livio D. DeSimone, Harry A.
Hammerly, Ronald A. Mitsch, Allen E. Murray, Rozanne L.
Ridgway, Frank Shrontz, F. Alan Smith, and Louis W.
Sullivan.
(c) Briefly described below are the other matters voted
upon at the Annual Meeting and the number of
affirmative votes and negative votes cast.
i) Ratification of the appointment of Coopers &
Lybrand, independent certified public
accountants, to audit the books and accounts
of the company and its subsidiaries for the year
1994.
For 349,214,814
Against 1,036,006
Abstain 1,224,916
ii) Approval of the Executive Profit Sharing
Plan.
For 332,482,318
Against 14,378,810
Abstain 4,580,832
iii) Approval of amendments to the Performance
Unit Plan.
For 334,948,758
Against 11,153,960
Abstain 5,299,152
Item 6. Exhibits and Reports on Form 8-K
(a) The following documents are filed as exhibits to this
Report.
(11) A statement regarding the computation of per
share earnings. Page 18.
(12) A statement regarding the ratio of earnings to
fixed charges. Page 19.
(15) A letter from the company's independent
accountants regarding unaudited interim
financial statements. Page 20.
(b) The company filed a report on Form 8-K dated April 8,
1994, related to mammary implant litigation.
April 8, 1994: Item 5, Other Events, Mammary Implant
Litigation, reporting that the company and other
defendants concluded their own provisional agreement
with the plaintiffs' negotiating committee regarding
their contributions to the settlement fund. The
company in the first quarter of 1994 accrued a
liability and receivable, the result of which was a net
pre-tax charge to first quarter earnings of $35
million.
None of the other items contained in Part II of Form 10-Q is applicable
to the company for the quarter ended June 30, 1994.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of Minnesota Mining and Manufacturing
Company:
We have reviewed the accompanying condensed consolidated balance sheet
of Minnesota Mining and Manufacturing Company and subsidiaries as of
June 30, 1994, and the related condensed consolidated statements of
income for the three- and six-month periods ended June 30, 1994 and
1993, and cash flows for the six-month periods ended June 30, 1994 and
1993. These financial statements are the responsibility of the
Company's management.
We conducted our reviews in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical review procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications
that should be made to the accompanying condensed consolidated
financial statements for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of December 31,
1993, and the related consolidated statements of income and cash flows
for the year then ended (not presented herein); and in our report dated
February 14, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
December 31, 1993, is fairly stated in all material respects in
relation to the consolidated balance sheet from which it has been
derived.
/s/ COOPERS & LYBRAND
COOPERS & LYBRAND
St. Paul, Minnesota
July 27, 1994
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
MINNESOTA MINING AND MANUFACTURING COMPANY
(Registrant)
Date: August 11, 1994
/s/ Giulio Agostini
Giulio Agostini, Senior Vice President,
Finance and Office Administration
(Mr. Agostini is the Principal Financial and
Accounting Officer and has been duly
authorized to sign on behalf of the
registrant.)
EXHIBIT 11
MINNESOTA MINING AND MANUFACTURING COMPANY AND SUBSIDIARIES
EARNINGS PER SHARE OF COMMON STOCK
Three months ended Six months ended
June 30 June 30
1994 1993 1994 1993
------------ ------------ ------------ ------------
Net income (millions) $343 $331 $649 $661
- --------------------------------------------------------------------------------
Primary earnings per share:
Earnings per share $.81 $.76 $1.53 $1.51
Weighted average number of
common shares outstanding 422,949,559 436,360,117 425,015,945 436,946,431
- --------------------------------------------------------------------------------
Fully diluted earnings
per share: (1)
Earnings per share $.81 $.75 $1.52 $1.50
Weighted average number of
common shares outstanding 422,949,559 436,360,117 425,015,945 436,946,431
Common equivalent shares 2,692,411 4,960,108 3,226,278 4,429,070
----------- ----------- ----------- -----------
Average number of common
shares and equivalents
outstanding 425,641,970 441,320,225 428,242,223 441,375,501
- --------------------------------------------------------------------------------
Share and per-share data reflect the two-for-one stock split effective
March 15, 1994.
Primary earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding for each period.
The calculation excludes the effect of common equivalent shares
resulting from stock options using the treasury stock method as the
effect would not be material.
Fully diluted earnings per share is computed based on the weighted
average number of common shares and common equivalent shares outstanding
for each period.
(1) This calculation is submitted in accordance with Regulation S-K Item
601(b)(11) although not required by APB Opinion No. 15 because it
results in dilution of less than 3%.
EXHIBIT 12
MINNESOTA MINING AND MANUFACTURING COMPANY AND SUBSIDIARIES
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
Six Months
Ended
June 30, Year Year Year Year Year
1994 1993 1992 1991 1990 1989
EARNINGS -------- ------- ------- ------- ------- -------
Income Before Income Taxes,
Minority Interest and
Cumulative Effect of
Accounting Changes $1,062 $2,002 $1,947 $1,877 $2,135 $2,099
Add:
Interest on debt 38 50 76 97 98 98
Interest component of the
ESOP benefit expense 20 41 42 44 45 --
Portion of rent under
operating leases
representative of the
interest component 23 47 47 47 44 35
Less:
Equity in undistributed
income of 20-50% owned
companies 1 -- (1) (6) 1 4
-------- ------- ------- ------- ------- -------
TOTAL EARNINGS AVAILABLE
FOR FIXED CHARGES $1,142 $2,140 $2,113 $2,071 $2,321 $2,228
FIXED CHARGES
Interest on debt 38 50 76 97 98 98
Interest component of the
ESOP benefit expense 20 41 42 44 45 --
Portion of rent under
operating leases
representative of the
interest component 23 47 47 47 44 35
------- ------ ------ ------ ------ ------
TOTAL FIXED CHARGES $81 $138 $165 $188 $187 $133
RATIO OF EARNINGS TO
FIXED CHARGES 14.10 15.51 12.81 11.02 12.42 16.75
EXHIBIT 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
We are aware that our report dated July 27, 1994, on our reviews of
interim condensed consolidated financial information of Minnesota
Mining and Manufacturing Company and subsidiaries (the Company) for
the three- and six-month periods ended June 30, 1994 and 1993, and
included in the Company's quarterly report on Form 10-Q for the
period ended June 30, 1994, is incorporated by reference in the
Company's registration statements on Form S-8 (Registration Nos. 2-
78422, 33-14791, 33-48690 and 33-49842), and Form S-3 (Registration
No. 33-48089). Pursuant to Rule 436(c), under the Securities Act
of 1933, this report should not be considered a part of the
registration statements prepared or certified by us within the
meaning of Sections 7 and 11 of that Act.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
St. Paul, Minnesota
August 11, 1994
