- 3M's Q2 earnings conference call transcript discusses disappointing Q2 performance due to a rapid inventory correction in the optical films business that supplies LCD TV and monitor manufacturers. This impacted 3M's margins.
- The company also had issues with the startup of a new optical film plant that has had low yields. Additional factors like a decline in the monitor market and simultaneous inventory correction in LCD TVs also impacted results.
- Despite these issues, 3M remains optimistic about its growth strategy and diversifying its business over the long-term.
The document is an agenda for the 2008 3M Annual Investor Day conference. It provides details on the schedule of presentations which will cover topics such as 3M's strategic update, LCD film business, growth in emerging markets, business overviews for various divisions, and Q&A with speakers. The event will include business and product displays in addition to the formal program.
The document summarizes the Electro & Communications Business (ECB) at 3M. It discusses how the ECB has improved its business footprint through a focus on customers, growth initiatives, and operational excellence. Key highlights include stronger financial results from a more balanced portfolio, growth opportunities in infrastructure and electronics markets, and initiatives to shift activities closer to customers through global centers of excellence. The ECB is well positioned for continued accelerating growth.
- 3M reported second quarter sales of $5.7 billion, up 7.5% from the previous year, with all six business segments experiencing positive growth.
- Net income was $882 million or $1.15 per share, which included various one-time gains and costs. This represented 16.9% income growth and 19.8% EPS growth from the previous year.
- Sales and profits were lower than expected due largely to lower than anticipated sales and higher costs in the Optical Systems Division, which produces films for LCD displays. The company expects these issues to be resolved in the second half of the year.
George Buckley discusses innovation and growth at 3M. Some key points:
1) 3M had strong sales and earnings growth in Q1 2007, with all business posting sales increases.
2) Buckley outlines 3M's strategy of growing its core businesses, making complementary acquisitions, building new businesses, and focusing on international growth.
3) Buckley emphasizes the importance of innovation, efficiency gains, and focusing on customers to drive profitable growth.
The document summarizes 3M's outlook for 2009. It discusses 3M's Q4 2008 performance, which saw a rapid deterioration in business activity and sales declines of 17% in November and expected similar declines in December. For full year 2008, 3M expects EPS of $5.10-$5.15, down from the prior estimate of $5.40-$5.48 due to weaker than expected Q4 organic volume growth of -10% to -12%. The document also outlines topics to be covered, including an update on Q4 2008 trends, 2009 scenario planning, and Q&A.
The document summarizes Patrick Campbell's presentation at the 2008 Citigroup Global Industrial Manufacturing Conference about 3M Company's performance and outlook. The presentation highlights 3M's track record of accelerated growth, premium returns, and enhanced shareholder value. It also reviews 3M's recent financial performance, diverse business portfolio, international operations, innovation initiatives, and financial strength to support continued growth in 2008.
Patrick D. Campbell, Senior Vice President and CFOfinance10
The document provides an agenda for a two-day 3M investor conference. Day one includes presentations from several senior vice presidents on topics like financial results, health care business, and safety services. There will be product displays and tours of the 3M Innovation Center. Day two includes presentations on supply chain operations and tours of a pilot plant and main Hutchinson manufacturing plant. The document also provides forward-looking statements about 3M's financial projections and discloses risk factors that could affect results.
- Kodak reported its second quarter 2006 sales and earnings results in an August 1, 2006 conference call.
- Key highlights included achieving aggressive cash goals for the quarter, film and photofinishing achieving 10% operating margins, and health group margins recovering to the low teens range. Digital earnings turned positive in the second quarter, ahead of expectations.
- While some segments like consumer digital were behind plans, overall results demonstrated continued progress in Kodak's transformation and execution of its digital strategy. Management remained confident in achieving full-year financial targets.
The document is an agenda for the 2008 3M Annual Investor Day conference. It provides details on the schedule of presentations which will cover topics such as 3M's strategic update, LCD film business, growth in emerging markets, business overviews for various divisions, and Q&A with speakers. The event will include business and product displays in addition to the formal program.
The document summarizes the Electro & Communications Business (ECB) at 3M. It discusses how the ECB has improved its business footprint through a focus on customers, growth initiatives, and operational excellence. Key highlights include stronger financial results from a more balanced portfolio, growth opportunities in infrastructure and electronics markets, and initiatives to shift activities closer to customers through global centers of excellence. The ECB is well positioned for continued accelerating growth.
- 3M reported second quarter sales of $5.7 billion, up 7.5% from the previous year, with all six business segments experiencing positive growth.
- Net income was $882 million or $1.15 per share, which included various one-time gains and costs. This represented 16.9% income growth and 19.8% EPS growth from the previous year.
- Sales and profits were lower than expected due largely to lower than anticipated sales and higher costs in the Optical Systems Division, which produces films for LCD displays. The company expects these issues to be resolved in the second half of the year.
George Buckley discusses innovation and growth at 3M. Some key points:
1) 3M had strong sales and earnings growth in Q1 2007, with all business posting sales increases.
2) Buckley outlines 3M's strategy of growing its core businesses, making complementary acquisitions, building new businesses, and focusing on international growth.
3) Buckley emphasizes the importance of innovation, efficiency gains, and focusing on customers to drive profitable growth.
The document summarizes 3M's outlook for 2009. It discusses 3M's Q4 2008 performance, which saw a rapid deterioration in business activity and sales declines of 17% in November and expected similar declines in December. For full year 2008, 3M expects EPS of $5.10-$5.15, down from the prior estimate of $5.40-$5.48 due to weaker than expected Q4 organic volume growth of -10% to -12%. The document also outlines topics to be covered, including an update on Q4 2008 trends, 2009 scenario planning, and Q&A.
The document summarizes Patrick Campbell's presentation at the 2008 Citigroup Global Industrial Manufacturing Conference about 3M Company's performance and outlook. The presentation highlights 3M's track record of accelerated growth, premium returns, and enhanced shareholder value. It also reviews 3M's recent financial performance, diverse business portfolio, international operations, innovation initiatives, and financial strength to support continued growth in 2008.
Patrick D. Campbell, Senior Vice President and CFOfinance10
The document provides an agenda for a two-day 3M investor conference. Day one includes presentations from several senior vice presidents on topics like financial results, health care business, and safety services. There will be product displays and tours of the 3M Innovation Center. Day two includes presentations on supply chain operations and tours of a pilot plant and main Hutchinson manufacturing plant. The document also provides forward-looking statements about 3M's financial projections and discloses risk factors that could affect results.
- Kodak reported its second quarter 2006 sales and earnings results in an August 1, 2006 conference call.
- Key highlights included achieving aggressive cash goals for the quarter, film and photofinishing achieving 10% operating margins, and health group margins recovering to the low teens range. Digital earnings turned positive in the second quarter, ahead of expectations.
- While some segments like consumer digital were behind plans, overall results demonstrated continued progress in Kodak's transformation and execution of its digital strategy. Management remained confident in achieving full-year financial targets.
- The document is the transcript from Eastman Kodak's fourth quarter 2007 earnings call.
- Kodak achieved all of its key strategic goals for 2007, including 8% digital revenue growth. Net cash generation was $333 million, above its $200 million goal.
- All of Kodak's major business segments - Graphic Communication Group, Film Products Group, and Consumer Digital Imaging Group - met or exceeded their financial targets for the quarter and year. Kodak has now completed its large corporate restructuring and established a sustainable business model.
This document provides a summary of Eastman Kodak's first quarter 2007 earnings call.
1) Kodak reported revenue that was essentially on plan for the quarter, with earnings from operations slightly ahead of plan. Traditional revenues declined less than expected while digital revenues were on plan.
2) Kodak saw strong demand for its new line of consumer inkjet printers and will increase investments in this business.
3) Graphic communications saw some new product launches but digital revenue growth was below projections.
4) SG&A expenses declined significantly year-over-year, putting Kodak on track to meet full-year targets. Restructuring activities also progressed according to plan.
James Beer, CFO of Symantec, discusses Symantec's performance in the most recent quarter and outlook. Some key points:
- Symantec hit its targets for revenue, EPS, deferred revenue, and cash flow from operations in the last quarter, demonstrating strong execution.
- The company saw double-digit growth in archiving, backup, consumer, and storage management. Operating margins improved 500 basis points year-over-year.
- The sales pipeline remains strong heading into the current quarter. Key growth areas include data loss prevention, software as a service, and endpoint virtualization.
- Symantec will continue focusing on improving operating margins by 100 basis points per year through revenue
- Symantec held an earnings call to discuss its fiscal second quarter 2009 results. The call included comments from the CEO, COO, and CFO.
- While revenue grew year-over-year, softness in the retail sector and IT spending slowdown impacted results. Currency fluctuations also negatively affected revenue.
- However, storage, backup, archiving, and large enterprise deals performed well. New products were also highlighted.
- Margins increased through cost savings and efficiencies. Guidance was updated to reflect economic uncertainties.
The document summarizes Symantec's fiscal second quarter 2009 earnings conference call. It introduces the speakers and outlines that John Thompson will provide high-level comments on the company's performance, Enrique Salem will discuss quarterly highlights, and James Beer will review the financials and guidance. Thompson notes growth in revenue and margins despite economic challenges. Salem highlights softness in retail but growth in electronic sales for consumer security products. Beer will review the financial results and updated guidance.
Corning posted record performance in the first half of 2008 but experienced weak performance in the second half due to the global recession. While sales were up 21% in the first half, they declined 30% in the fourth quarter compared to the third quarter and previous year. Corning implemented cost-cutting measures like job cuts and spending reductions to prepare for a weak 2009. However, Corning remains confident in its long-term strategies and innovative products to drive future growth once the economy recovers.
Kodak reported its financial results for the first quarter of 2008. Total revenue grew 1% year-over-year to $2.5 billion, driven by 10% growth in digital businesses. The loss from continuing operations before taxes improved by $119 million compared to the prior year, primarily due to lower restructuring charges. Cash usage increased by $311 million versus the prior year due to higher working capital needs and other factors. While some business segments faced challenges, Kodak remains committed to achieving its full-year financial targets.
This document discusses calculating the lifetime value of cinema customers and increasing attendance frequency. It finds that the net lifetime revenue of a customer going 6 times per year is only $1,663 over 30 years. To meaningfully increase this, cinemas need strategies to get customers attending 1-2 more times annually through targeted marketing. This is best done by focusing on younger customers and building a customer database to segment and regularly communicate with occasional attendees.
Bullwhip Effect by Means of Numerical Simulation_PVPaolo Vaona
This document discusses the bullwhip effect and provides an example of how it negatively impacted Cisco in 2001. It defines the bullwhip effect as increasing volatility in orders that is amplified as it moves up the supply chain. Common causes are discussed, like demand forecasting, order batching, and price fluctuations. The document then details how Cisco failed to anticipate the 2001 economic downturn and continued building inventory based on overly optimistic forecasts, despite warnings from manufacturing partners. This led to a $2.2 billion inventory write-off when demand collapsed. Cisco later worked to more closely integrate with suppliers to better manage its supply chain.
This annual report from Andrews Inc. discusses the company's strategy, execution challenges, and performance over the past few years. The company originally planned to focus on high-margin segments but faced slower than expected market shifts and customer preference changes that slowed the transition of its products between segments. As a result, key metrics like return on equity and contribution margins underperformed. However, the report is optimistic that recent strategic changes like product improvements and exiting low-margin businesses will return the company to profitability and high performance in the coming years.
Kodak reported that for the second quarter they were on plan for revenue and ahead of plan for earnings, with digital revenue growth beginning to accelerate. The company also discussed progress in various business units, with the Film Products Group exceeding expectations and the Consumer Digital Imaging Group showing improvements in digital revenue and margins. Kodak reaffirmed its commitment to achieving its full-year goals and financial targets.
The document is a feasibility report for launching a new TV model for LG Company. It provides an overview of LG Company's sales growth over the past 5 years. It then outlines 10 steps for how to launch the new "Classic" TV model, including design, production numbers, models, warranty, packaging, promotion, distribution channels, pricing, discount policies, and credit facilities. The report recommends that LG Company launch the new TV model based on expected demand and the company's success in recent years.
- Kodak reported third quarter 2006 earnings. Digital earnings grew $98 million year-over-year while traditional earnings declined $48 million, marking the first time digital growth exceeded traditional decline.
- Consumer digital group became profitable, with earnings of $24 million versus a loss of $61 million last year. Gross profit improved across major product lines.
- Cash position improved, ending the quarter with $1.1 billion versus $610 million last year. Management remains confident in guidance targets for digital earnings and investable cash.
- 1,650 additional positions were eliminated, bringing total job cuts to over 22,200 as restructuring continues. Restructuring costs for the year are now estimated at $1 billion
Kodak reported its first quarter 2006 earnings. The company faced higher than normal inventory in its consumer digital business due to fourth quarter price reductions. Its graphic communications business performed better than expected. Film and photofinishing revenue declined as expected but earnings were slightly better than planned.
Kodak also announced it would pursue strategic alternatives for its health business and restructure its global manufacturing and logistics operations. It will reduce corporate costs by retiring three senior officers and realigning organizational entities to further its transformation to a digital company.
This document is the transcript of an earnings call for Eastman Kodak Company for Q2 2008.
The key points are:
1) Kodak reported revenue growth of 1% for Q2 driven by digital camera, printer, and digital plate sales, offset by declines in traditional film.
2) Gross profit margins declined to 23.5% due to higher commodity costs and investments in consumer inkjet and digital printing.
3) Kodak announced a $125 million increase in investments in consumer inkjet, digital printing, and workflow products.
4) For the full year, Kodak expects revenue growth of 0-2% and earnings from operations at the low
The document advertises the 2nd Annual Thin Film Solar Summit U.S. conference happening on December 1-2, 2009 in San Francisco. It promotes the many benefits attendees will receive such as learning how to secure financing, reduce costs through new technologies and scaling up production, and identify the most promising market opportunities in thin-film solar. Experts from organizations like the DOE, First Solar, and Solyndra will present on various topics. Attendees can also network with over 250 other thin-film industry experts. The summit aims to provide attendees with the information and connections needed to strengthen their business and ensure success in the growing thin-film solar market.
Opening address at the asian banker 2014 panel on banking infrastructure mana...Eric Tachibana
The document discusses the issue of "technical debt" that banks accumulate over time through mergers and acquisitions, outdated systems, and other factors. This technical debt results in high costs just to maintain existing systems, leaving little budget for innovation. Three options are proposed to address technical debt: 1) refactor platforms from the ground up, 2) liquidate or sell banks, 3) move information technology and operations functions out of banks by using cloud computing or outsourcing models. The panel will focus on these options for transforming banks' operational platforms to compete amid new industry threats.
Motorola held a conference call to discuss its second quarter 2002 earnings. The opening remarks provided an overview of Motorola's five-point plan to enhance shareholder value and highlighted improvements in leadership, balance sheet, costs, innovation and portfolio evaluation. Gross margins improved to 33.6% from 26% a year ago. Net debt was reduced by $600 million and cash increased by $500 million. Personal Communications sector sales increased 5% year-over-year with market share gains and four consecutive quarters of positive earnings. The order and backlog system is being adjusted to a more efficient model, which will lower reported order levels going forward.
PPG Industries reported strong financial performance in the second quarter of 2008. Sales grew 42% to a record $4.4 billion due to acquisition and organic growth. Segment earnings increased 18% despite inflationary pressures. Price increases contributed to growth, offsetting weak demand in automotive and construction. The company expects moderating growth and higher prices to offset costs in the third quarter.
- Sales down – despite positive exchange rate effects – due to lower prices and volumes, falling 0.9% to €6.4 billion
- Gross profit margin narrowed on negative price trend to 19.2%, against 19.4% in prior-year period
- EBITDA before restructuring expenses at €86 million, versus €191 million in prior year; after restructuring expenses of €63 million, EBITDA was €24 million
- Net loss of €349 million under added impact of goodwill impairments in North America activities
- Strong positive free cash flow of €191 million, compared with negative €64 million in prior year
- Very solid balance sheet maintained with 39% equity ratio
- Implementation of digitalization strategy ramped up with major progress and positive response among suppliers, customers and competitorsSharp increase in EBITDA expected with net income marginally back in positive figures in 2016
Morgan Stanley Basic Materials Conferencefinance10
1) 3M's international operations represent its largest growth platform.
2) In 2005, international sales grew 5.8% with organic local-currency growth of 4.1% and acquisitions contributing 1.0% to growth.
3) Asia Pacific sales grew 10.6% in local currency in 2005.
Morgan Stanley Basic Materials Conferencefinance10
This document provides an overview of 3M's performance in 2005 and outlook for 2006 from the perspective of Pat Campbell, 3M's Senior Vice President and Chief Financial Officer, at the Morgan Stanley 2006 Basic Materials Conference.
Key highlights from 2005 include sales growth of 5.8% to $21.2 billion, EPS growth of 13.6% to $4.26, operating income growth of 9.4% to $5 billion, and economic profit growth of 11.3% to $2 billion. All business segments achieved positive organic local currency sales growth.
For 2006, 3M plans over $10 million in growth investments, primarily aimed at organic growth, and a 15% increase in capital expenditures.
- The document is the transcript from Eastman Kodak's fourth quarter 2007 earnings call.
- Kodak achieved all of its key strategic goals for 2007, including 8% digital revenue growth. Net cash generation was $333 million, above its $200 million goal.
- All of Kodak's major business segments - Graphic Communication Group, Film Products Group, and Consumer Digital Imaging Group - met or exceeded their financial targets for the quarter and year. Kodak has now completed its large corporate restructuring and established a sustainable business model.
This document provides a summary of Eastman Kodak's first quarter 2007 earnings call.
1) Kodak reported revenue that was essentially on plan for the quarter, with earnings from operations slightly ahead of plan. Traditional revenues declined less than expected while digital revenues were on plan.
2) Kodak saw strong demand for its new line of consumer inkjet printers and will increase investments in this business.
3) Graphic communications saw some new product launches but digital revenue growth was below projections.
4) SG&A expenses declined significantly year-over-year, putting Kodak on track to meet full-year targets. Restructuring activities also progressed according to plan.
James Beer, CFO of Symantec, discusses Symantec's performance in the most recent quarter and outlook. Some key points:
- Symantec hit its targets for revenue, EPS, deferred revenue, and cash flow from operations in the last quarter, demonstrating strong execution.
- The company saw double-digit growth in archiving, backup, consumer, and storage management. Operating margins improved 500 basis points year-over-year.
- The sales pipeline remains strong heading into the current quarter. Key growth areas include data loss prevention, software as a service, and endpoint virtualization.
- Symantec will continue focusing on improving operating margins by 100 basis points per year through revenue
- Symantec held an earnings call to discuss its fiscal second quarter 2009 results. The call included comments from the CEO, COO, and CFO.
- While revenue grew year-over-year, softness in the retail sector and IT spending slowdown impacted results. Currency fluctuations also negatively affected revenue.
- However, storage, backup, archiving, and large enterprise deals performed well. New products were also highlighted.
- Margins increased through cost savings and efficiencies. Guidance was updated to reflect economic uncertainties.
The document summarizes Symantec's fiscal second quarter 2009 earnings conference call. It introduces the speakers and outlines that John Thompson will provide high-level comments on the company's performance, Enrique Salem will discuss quarterly highlights, and James Beer will review the financials and guidance. Thompson notes growth in revenue and margins despite economic challenges. Salem highlights softness in retail but growth in electronic sales for consumer security products. Beer will review the financial results and updated guidance.
Corning posted record performance in the first half of 2008 but experienced weak performance in the second half due to the global recession. While sales were up 21% in the first half, they declined 30% in the fourth quarter compared to the third quarter and previous year. Corning implemented cost-cutting measures like job cuts and spending reductions to prepare for a weak 2009. However, Corning remains confident in its long-term strategies and innovative products to drive future growth once the economy recovers.
Kodak reported its financial results for the first quarter of 2008. Total revenue grew 1% year-over-year to $2.5 billion, driven by 10% growth in digital businesses. The loss from continuing operations before taxes improved by $119 million compared to the prior year, primarily due to lower restructuring charges. Cash usage increased by $311 million versus the prior year due to higher working capital needs and other factors. While some business segments faced challenges, Kodak remains committed to achieving its full-year financial targets.
This document discusses calculating the lifetime value of cinema customers and increasing attendance frequency. It finds that the net lifetime revenue of a customer going 6 times per year is only $1,663 over 30 years. To meaningfully increase this, cinemas need strategies to get customers attending 1-2 more times annually through targeted marketing. This is best done by focusing on younger customers and building a customer database to segment and regularly communicate with occasional attendees.
Bullwhip Effect by Means of Numerical Simulation_PVPaolo Vaona
This document discusses the bullwhip effect and provides an example of how it negatively impacted Cisco in 2001. It defines the bullwhip effect as increasing volatility in orders that is amplified as it moves up the supply chain. Common causes are discussed, like demand forecasting, order batching, and price fluctuations. The document then details how Cisco failed to anticipate the 2001 economic downturn and continued building inventory based on overly optimistic forecasts, despite warnings from manufacturing partners. This led to a $2.2 billion inventory write-off when demand collapsed. Cisco later worked to more closely integrate with suppliers to better manage its supply chain.
This annual report from Andrews Inc. discusses the company's strategy, execution challenges, and performance over the past few years. The company originally planned to focus on high-margin segments but faced slower than expected market shifts and customer preference changes that slowed the transition of its products between segments. As a result, key metrics like return on equity and contribution margins underperformed. However, the report is optimistic that recent strategic changes like product improvements and exiting low-margin businesses will return the company to profitability and high performance in the coming years.
Kodak reported that for the second quarter they were on plan for revenue and ahead of plan for earnings, with digital revenue growth beginning to accelerate. The company also discussed progress in various business units, with the Film Products Group exceeding expectations and the Consumer Digital Imaging Group showing improvements in digital revenue and margins. Kodak reaffirmed its commitment to achieving its full-year goals and financial targets.
The document is a feasibility report for launching a new TV model for LG Company. It provides an overview of LG Company's sales growth over the past 5 years. It then outlines 10 steps for how to launch the new "Classic" TV model, including design, production numbers, models, warranty, packaging, promotion, distribution channels, pricing, discount policies, and credit facilities. The report recommends that LG Company launch the new TV model based on expected demand and the company's success in recent years.
- Kodak reported third quarter 2006 earnings. Digital earnings grew $98 million year-over-year while traditional earnings declined $48 million, marking the first time digital growth exceeded traditional decline.
- Consumer digital group became profitable, with earnings of $24 million versus a loss of $61 million last year. Gross profit improved across major product lines.
- Cash position improved, ending the quarter with $1.1 billion versus $610 million last year. Management remains confident in guidance targets for digital earnings and investable cash.
- 1,650 additional positions were eliminated, bringing total job cuts to over 22,200 as restructuring continues. Restructuring costs for the year are now estimated at $1 billion
Kodak reported its first quarter 2006 earnings. The company faced higher than normal inventory in its consumer digital business due to fourth quarter price reductions. Its graphic communications business performed better than expected. Film and photofinishing revenue declined as expected but earnings were slightly better than planned.
Kodak also announced it would pursue strategic alternatives for its health business and restructure its global manufacturing and logistics operations. It will reduce corporate costs by retiring three senior officers and realigning organizational entities to further its transformation to a digital company.
This document is the transcript of an earnings call for Eastman Kodak Company for Q2 2008.
The key points are:
1) Kodak reported revenue growth of 1% for Q2 driven by digital camera, printer, and digital plate sales, offset by declines in traditional film.
2) Gross profit margins declined to 23.5% due to higher commodity costs and investments in consumer inkjet and digital printing.
3) Kodak announced a $125 million increase in investments in consumer inkjet, digital printing, and workflow products.
4) For the full year, Kodak expects revenue growth of 0-2% and earnings from operations at the low
The document advertises the 2nd Annual Thin Film Solar Summit U.S. conference happening on December 1-2, 2009 in San Francisco. It promotes the many benefits attendees will receive such as learning how to secure financing, reduce costs through new technologies and scaling up production, and identify the most promising market opportunities in thin-film solar. Experts from organizations like the DOE, First Solar, and Solyndra will present on various topics. Attendees can also network with over 250 other thin-film industry experts. The summit aims to provide attendees with the information and connections needed to strengthen their business and ensure success in the growing thin-film solar market.
Opening address at the asian banker 2014 panel on banking infrastructure mana...Eric Tachibana
The document discusses the issue of "technical debt" that banks accumulate over time through mergers and acquisitions, outdated systems, and other factors. This technical debt results in high costs just to maintain existing systems, leaving little budget for innovation. Three options are proposed to address technical debt: 1) refactor platforms from the ground up, 2) liquidate or sell banks, 3) move information technology and operations functions out of banks by using cloud computing or outsourcing models. The panel will focus on these options for transforming banks' operational platforms to compete amid new industry threats.
Motorola held a conference call to discuss its second quarter 2002 earnings. The opening remarks provided an overview of Motorola's five-point plan to enhance shareholder value and highlighted improvements in leadership, balance sheet, costs, innovation and portfolio evaluation. Gross margins improved to 33.6% from 26% a year ago. Net debt was reduced by $600 million and cash increased by $500 million. Personal Communications sector sales increased 5% year-over-year with market share gains and four consecutive quarters of positive earnings. The order and backlog system is being adjusted to a more efficient model, which will lower reported order levels going forward.
PPG Industries reported strong financial performance in the second quarter of 2008. Sales grew 42% to a record $4.4 billion due to acquisition and organic growth. Segment earnings increased 18% despite inflationary pressures. Price increases contributed to growth, offsetting weak demand in automotive and construction. The company expects moderating growth and higher prices to offset costs in the third quarter.
- Sales down – despite positive exchange rate effects – due to lower prices and volumes, falling 0.9% to €6.4 billion
- Gross profit margin narrowed on negative price trend to 19.2%, against 19.4% in prior-year period
- EBITDA before restructuring expenses at €86 million, versus €191 million in prior year; after restructuring expenses of €63 million, EBITDA was €24 million
- Net loss of €349 million under added impact of goodwill impairments in North America activities
- Strong positive free cash flow of €191 million, compared with negative €64 million in prior year
- Very solid balance sheet maintained with 39% equity ratio
- Implementation of digitalization strategy ramped up with major progress and positive response among suppliers, customers and competitorsSharp increase in EBITDA expected with net income marginally back in positive figures in 2016
Morgan Stanley Basic Materials Conferencefinance10
1) 3M's international operations represent its largest growth platform.
2) In 2005, international sales grew 5.8% with organic local-currency growth of 4.1% and acquisitions contributing 1.0% to growth.
3) Asia Pacific sales grew 10.6% in local currency in 2005.
Morgan Stanley Basic Materials Conferencefinance10
This document provides an overview of 3M's performance in 2005 and outlook for 2006 from the perspective of Pat Campbell, 3M's Senior Vice President and Chief Financial Officer, at the Morgan Stanley 2006 Basic Materials Conference.
Key highlights from 2005 include sales growth of 5.8% to $21.2 billion, EPS growth of 13.6% to $4.26, operating income growth of 9.4% to $5 billion, and economic profit growth of 11.3% to $2 billion. All business segments achieved positive organic local currency sales growth.
For 2006, 3M plans over $10 million in growth investments, primarily aimed at organic growth, and a 15% increase in capital expenditures.
Citigroup 19th Annual Global Industrial Manufacturing Conferencefinance10
Pat Campbell, Sr. Vice President and CFO of 3M, presented at the Citigroup 19th Annual Global Industrial Manufacturing Conference. The presentation summarized 3M's financial results for 2005, including 5.8% sales growth to $21.2 billion and 13.6% EPS growth to $4.26. It also outlined 3M's strategy of driving growth through its technology platforms, global infrastructure, and presence in emerging markets.
Patrick D. Campbell Senior Vice President and Chief Financial Officerfinance10
3M aims to accelerate growth to enhance shareholder value. The presentation outlines plans to achieve 5-8% organic local currency growth in traditional businesses through leveraging existing assets, pursue international expansion, and continue productivity initiatives. It also discusses growing new market adjacencies at a faster pace through acquisitions and new brands. Maintaining strong margins and returns on invested capital as growth increases is a key focus.
Inge G. Thulin Executive Vice President, International Operationsfinance10
This document discusses 3M's international operations and growth strategies. It notes that 3M has subsidiaries in 69 countries representing 61% of sales. Key points include:
1) 3M focuses on developing local market knowledge and solutions through its extensive international subsidiary network.
2) 3M pursues growth in both developed and developing markets by emphasizing customer success, operational excellence, and engaged employees.
3) 3M's customer technology centers allow it to collaborate closely with customers and develop local applications of its technologies.
James B. Stake Executive Vice President, Display and Graphics Businessfinance10
This document summarizes key points from a 3M investor meeting presentation about the Display & Graphics business. It discusses growth in the commercial graphics, traffic safety systems, and optical systems divisions. It highlights increasing demand and investments in LCD manufacturing capacity. The optical systems division is developing new films and technologies to improve LCD brightness and energy efficiency. 3M aims to drive growth through innovation, quality leadership, and a global technology pipeline across multiple display technologies.
oe E. Harlan Executive Vice President, Electro and Communications Businessfinance10
The document summarizes an investor meeting presentation about 3M's Electro & Communications Business (ECB). It highlights that ECB has maintained strong growth and margins in recent years. Going forward, ECB is positioned for continued growth by leveraging its market-focused customer-centric approach, differentiated technologies, international expansion, adjacent markets, service differentiation, and competitive culture. ECB serves the electrical, communications, and electronics industries with products like tapes, films, adhesives, and interconnect solutions.
rad T. Sauer Executive Vice President, Health Care Businessfinance10
3M's health care business has experienced strong growth in recent years. To continue this growth, 3M is pursuing strategies like reconfiguring its health care portfolio to focus on areas of strength, redirecting resources towards high growth areas, and rapidly expanding in developing countries through new products, sales coverage and manufacturing. 3M will also drive organic growth through increased R&D investment, acquisitions that bring synergies, and penetrating new market spaces like digital dentistry and food safety testing.
ean Lobey Executive Vice President, Safety, Security and Protection Service B...finance10
Jean Lobey discusses 3M's Safety, Security, and Protection Services (SS&PS) business. In 2005, SS&PS generated $2.3 billion in sales and $553 million in operating income. SS&PS provides solutions across three markets: safety, security, and protection. 3M aims to drive over 8% annual growth for SS&PS through new product development, market expansion, adjacent market opportunities, and responding to world events. 3M is also focusing on penetrating developing markets and bringing SS&PS closer to customers through increased international manufacturing and labs.
Moe S. Nozari Executive Vice President, Consumer and Office Businessfinance10
Moe Nozari, Executive Vice President of 3M's Consumer & Office Business, outlined growth opportunities including new product platforms, core brands, key accounts, and international expansion. The business achieved 5-8% annual growth and outpaced industry competitors. Nozari highlighted 3M's category defining brands, innovative new products, strong customer relationships, and global supply chain as drivers of continued success.
H.C. Shin Executive Vice President, Industrial and Transportation Businessfinance10
The document discusses strategies for growth of 3M's Industrial and Transportation Business. It outlines four main strategies: 1) Growth through market segment programs focused on key industries like transportation, electronics, and oil/gas. 2) Growth through new platforms in areas like supply chain execution, filtration, and composites. 3) Geographic penetration in emerging markets like China, India, Eastern Europe, and Brazil. 4) Growth by leveraging the 3M brand through channel growth programs and a service/quality initiative. Specific examples of market and product strategies are provided for segments like automotive, aircraft manufacturing, and oil/gas extraction.
George W. Buckley Chairman, President and Chief Executive Officerfinance10
George Buckley presents an emerging strategy for growth at 3M. He outlines 3M's core competencies in applying coatings to various backings using precision manufacturing. Buckley describes how 3M leverages its technology platforms across multiple markets through sharing technologies and an "adjacency lattice" approach. The strategy emphasizes growing 3M's core businesses, gaining scale in large markets, and increasing relative share in smaller markets through globalization and a focus on innovation.
George Buckley, Chairman and CEO of 3M, outlines the company's strategy for growth while maintaining premium margins. 3M will pursue growth through four principal elements: growing its current core business, complementary acquisitions, building new business through entrepreneurial ventures, and international expansion. 3M's core competencies in applying coatings to backings and micro-replication technologies position it for continued innovation across multiple industries.
6 Prudential's "Inside Our Best Ideas" Conferencefinance10
This document discusses 3M's strategy for growth through customer value enhancement and operational excellence. It summarizes 3M's historical financial performance, showing increasing margins, earnings per share, and return on invested capital. 3M's strategy focuses on growing its core businesses, pursuing complementary acquisitions, expanding into adjacencies, and international growth. 3M aims to drive growth and share gains by enhancing customer competitiveness, business returns, and brand value.
George Buckley outlines 3M's strategy for sustainable growth. He discusses leveraging operational excellence through productivity initiatives to maximize profitability. 3M will focus on growing its core businesses, pursue complementary acquisitions, and develop new business opportunities through emerging business opportunities. The strategy aims to achieve 5-8% annual organic growth through international expansion, new markets, and customer value enhancement.
1) The document discusses 3M's strategy for growth through customer value enhancement, continued commitment to operational excellence, and plans to drive higher earnings.
2) 3M aims to grow its core business, pursue complementary acquisitions, build new businesses through adjacencies and emerging business opportunities, and focus on international growth.
3) Near term actions to drive growth include capital investments in core manufacturing capacity expansions, 2006 acquisitions mostly of small companies, and a manufacturing strategy focused on strategic needs in the core or near adjacencies through bolt-on acquisitions.
Morgan Stanley Global Industrials CEOs Unplugged Conferencefinance10
George Buckley presented on innovation and growth at 3M. He discussed 3M's strong financial results in the second quarter with sales growth of 8% and EPS growth of 17.1%. Buckley outlined 3M's plan to drive growth through reinvigorating R&D, accelerating international expansion, investing in supply chain capabilities, and acquiring companies to accelerate growth in core businesses. He emphasized 3M's focus on continuing to innovate, serve customers, and improve efficiency through initiatives like Six Sigma and Lean.
Credit Suisse 16th Annual Chemical Conference finance10
3M reported strong financial results for the second quarter of 2007, with sales growth of 8% and earnings per share growth of 17.1% compared to the same period last year. The company is focused on driving higher growth through initiatives like rebuilding R&D, improving the supply chain, and emphasizing growth in international markets. 3M's growth strategy includes investing in the core business, pursuing complementary acquisitions, building new businesses, and expanding internationally.
Jean Lobey, Executive Vice President, Safety, Security and Protection Servicesfinance10
This document provides an overview of 3M's Safety, Security and Protection Services business. It discusses the markets served, key growth strategies, new product innovations, and capacity expansion plans. The business aims to become a $10 billion leader in safety, security and protection products across multiple markets and customer groups. Key strategies include driving core growth through new products, pursuing adjacencies/M&A, expanding internationally, and growing special initiatives like tracking/tracing solutions and mining.
Brad T. Sauer, Executive Vice President, Health Carefinance10
This document provides an overview of 3M's Safety, Security and Protection Services business. It discusses the markets served, key growth strategies, new product innovations, and capacity expansion plans. The business aims to become a $10 billion leader in safety, security and protection products across multiple markets and customer groups. Key strategies include driving core growth through new products, pursuing adjacencies/M&A, expanding internationally, and growing special initiatives like tracking/tracing solutions and mining.
Monthly Market Risk Update: June 2024 [SlideShare]Commonwealth
Markets rallied in May, with all three major U.S. equity indices up for the month, said Sam Millette, director of fixed income, in his latest Market Risk Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
Discovering Delhi - India's Cultural Capital.pptxcosmo-soil
Delhi, the heartbeat of India, offers a rich blend of history, culture, and modernity. From iconic landmarks like the Red Fort to bustling commercial hubs and vibrant culinary scenes, Delhi's real estate landscape is dynamic and diverse. Discover the essence of India's capital, where tradition meets innovation.
A toxic combination of 15 years of low growth, and four decades of high inequality, has left Britain poorer and falling behind its peers. Productivity growth is weak and public investment is low, while wages today are no higher than they were before the financial crisis. Britain needs a new economic strategy to lift itself out of stagnation.
Scotland is in many ways a microcosm of this challenge. It has become a hub for creative industries, is home to several world-class universities and a thriving community of businesses – strengths that need to be harness and leveraged. But it also has high levels of deprivation, with homelessness reaching a record high and nearly half a million people living in very deep poverty last year. Scotland won’t be truly thriving unless it finds ways to ensure that all its inhabitants benefit from growth and investment. This is the central challenge facing policy makers both in Holyrood and Westminster.
What should a new national economic strategy for Scotland include? What would the pursuit of stronger economic growth mean for local, national and UK-wide policy makers? How will economic change affect the jobs we do, the places we live and the businesses we work for? And what are the prospects for cities like Glasgow, and nations like Scotland, in rising to these challenges?
In World Expo 2010 Shanghai – the most visited Expo in the World History
https://www.britannica.com/event/Expo-Shanghai-2010
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13 Jun 24 ILC Retirement Income Summit - slides.pptxILC- UK
ILC's Retirement Income Summit was hosted by M&G and supported by Canada Life. The event brought together key policymakers, influencers and experts to help identify policy priorities for the next Government and ensure more of us have access to a decent income in retirement.
Contributors included:
Jo Blanden, Professor in Economics, University of Surrey
Clive Bolton, CEO, Life Insurance M&G Plc
Jim Boyd, CEO, Equity Release Council
Molly Broome, Economist, Resolution Foundation
Nida Broughton, Co-Director of Economic Policy, Behavioural Insights Team
Jonathan Cribb, Associate Director and Head of Retirement, Savings, and Ageing, Institute for Fiscal Studies
Joanna Elson CBE, Chief Executive Officer, Independent Age
Tom Evans, Managing Director of Retirement, Canada Life
Steve Groves, Chair, Key Retirement Group
Tish Hanifan, Founder and Joint Chair of the Society of Later life Advisers
Sue Lewis, ILC Trustee
Siobhan Lough, Senior Consultant, Hymans Robertson
Mick McAteer, Co-Director, The Financial Inclusion Centre
Stuart McDonald MBE, Head of Longevity and Democratic Insights, LCP
Anusha Mittal, Managing Director, Individual Life and Pensions, M&G Life
Shelley Morris, Senior Project Manager, Living Pension, Living Wage Foundation
Sarah O'Grady, Journalist
Will Sherlock, Head of External Relations, M&G Plc
Daniela Silcock, Head of Policy Research, Pensions Policy Institute
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The Rise and Fall of Ponzi Schemes in America.pptxDiana Rose
Ponzi schemes, a notorious form of financial fraud, have plagued America’s investment landscape for decades. Named after Charles Ponzi, who orchestrated one of the most infamous schemes in the early 20th century, these fraudulent operations promise high returns with little or no risk, only to collapse and leave investors with significant losses. This article explores the nature of Ponzi schemes, notable cases in American history, their impact on victims, and measures to prevent falling prey to such scams.
Understanding Ponzi Schemes
A Ponzi scheme is an investment scam where returns are paid to earlier investors using the capital from newer investors, rather than from legitimate profit earned. The scheme relies on a constant influx of new investments to continue paying the promised returns. Eventually, when the flow of new money slows down or stops, the scheme collapses, leaving the majority of investors with substantial financial losses.
Historical Context: Charles Ponzi and His Legacy
Charles Ponzi is the namesake of this deceptive practice. In the 1920s, Ponzi promised investors in Boston a 50% return within 45 days or 100% return in 90 days through arbitrage of international reply coupons. Initially, he paid returns as promised, not from profits, but from the investments of new participants. When his scheme unraveled, it resulted in losses exceeding $20 million (equivalent to about $270 million today).
Notable American Ponzi Schemes
1. Bernie Madoff: Perhaps the most notorious Ponzi scheme in recent history, Bernie Madoff’s fraud involved $65 billion. Madoff, a well-respected figure in the financial industry, promised steady, high returns through a secretive investment strategy. His scheme lasted for decades before collapsing in 2008, devastating thousands of investors, including individuals, charities, and institutional clients.
2. Allen Stanford: Through his company, Stanford Financial Group, Allen Stanford orchestrated a $7 billion Ponzi scheme, luring investors with fraudulent certificates of deposit issued by his offshore bank. Stanford promised high returns and lavish lifestyle benefits to his investors, which ultimately led to a 110-year prison sentence for the financier in 2012.
3. Tom Petters: In a scheme that lasted more than a decade, Tom Petters ran a $3.65 billion Ponzi scheme, using his company, Petters Group Worldwide. He claimed to buy and sell consumer electronics, but in reality, he used new investments to pay off old debts and fund his extravagant lifestyle. Petters was convicted in 2009 and sentenced to 50 years in prison.
4. Eric Dalius and Saivian: Eric Dalius, a prominent figure behind Saivian, a cashback program promising high returns, is under scrutiny for allegedly orchestrating a Ponzi scheme. Saivian enticed investors with promises of up to 20% cash back on everyday purchases. However, investigations suggest that the returns were paid using new investments rather than legitimate profits. The collapse of Saivian l
“Amidst Tempered Optimism” Main economic trends in May 2024 based on the results of the New Monthly Enterprises Survey, #NRES
On 12 June 2024 the Institute for Economic Research and Policy Consulting (IER) held an online event “Economic Trends from a Business Perspective (May 2024)”.
During the event, the results of the 25-th monthly survey of business executives “Ukrainian Business during the war”, which was conducted in May 2024, were presented.
The field stage of the 25-th wave lasted from May 20 to May 31, 2024. In May, 532 companies were surveyed.
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✅ More survey results in the presentation.
✅ Video presentation: https://youtu.be/4ZvsSKd1MzE
Navigating Your Financial Future: Comprehensive Planning with Mike Baumannmikebaumannfinancial
Learn how financial planner Mike Baumann helps individuals and families articulate their financial aspirations and develop tailored plans. This presentation delves into budgeting, investment strategies, retirement planning, tax optimization, and the importance of ongoing plan adjustments.
Explore the world of investments with an in-depth comparison of the stock market and real estate. Understand their fundamentals, risks, returns, and diversification strategies to make informed financial decisions that align with your goals.
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1. Q206 Earnings Conference Call Transcript
Matt Ginter- Vice-President of Investor Relations and Financial Planning and
Analysis
Good morning, I'm Matt Ginter, head of Investor Relations for 3M, and welcome to our
second quarter 2006 business review. Before we begin, I have a few brief
announcements.
As in prior quarters, today’s discussion will follow a series of PowerPoint slides, which
are currently available on our investor relation’s website. During today’s conference call,
we will make certain predictive statements that reflect our current views and estimates
about our future performance and financial results. These statements are based on certain
assumptions and expectations of future events that are subject to risks and uncertainties.
Item 1A of our most recent form 10-Q lists some of the most important risk factors that
could cause actual results to differ from our predictions.
Both George Buckley, our Chairman, President and CEO, and Pat Campbell, our CFO,
will make some formal comments on our results and forward outlook, and then we will
open it up for Q&A. So now I'd like to turn the program over to George Buckley…
George.
George Buckley- Chairman, President and CEO
Thank you, Matt and good morning everybody.
Clearly this quarter was a tougher one than the last one and I want to get right down to
explaining what went on. Let me begin by stating how disappointed we were in our
performance, and that no one on this call is more disappointed in it than me.
The rapid impact of the Optical films inventory correction clearly accounts for the lion’s
share of the shortfall this quarter. You also saw this pattern repeated in the earnings of the
many LCD OEM manufacturers that we supply our products to.
We had three things which happened in this optical films business this quarter. First,
sales of monitors, where 3M has traditionally had high attachment rates and good
margins, sharply declined. Desktop monitors have matured and are becoming
commoditized. Second, we had a simultaneous inventory correction in the channel for
LCD TV’s. Lastly, we had a troublesome start up of a new optical film plant that makes
DBEF film product.
The new plant first went live with commercial product at low volumes in November of
last year, and helped us service the market as LCD TV production accelerated. We have
had difficulty manufacturing consistently excellent film and the new line was shut down
for much of April due to a mechanical failure. The film line was quickly repaired and has
2. been running since the first of May. Overall, the start up has been challenging and yields
are, by our standards, very low. It is important to note that the plant has been delivering
significant quantities of high-quality film to customers and we are able to screen out film
that does not meet specifications prior to shipping. It is hard to separate all the
contributory costs here, but we estimate these issues are costing us a couple points of
margin in this business.
These plants are very complex and the manufacturing processes to get high yield and
consistently high quality product is very challenging. This is why it is so hard for others
to enter these high performance optical film markets. It is not at all unusual for these
things to happen during plant startups. I would state here that, even with this yield
challenge, we have more than enough capacity to meet anticipated customer demand later
this year. This plant was added to increase capacity in anticipation of growth, as well as
to significantly reduce the manufacturing costs for large-format films for LCD TVs.
Longer term, as larger formats get more popular, this is an important strategic advantage
for 3M.
The dynamics of the rapid changes in the consumer electronics field are well known. We
had been heretofore blessed by strong growth in LCD TVs and monitors, driven by early
adopter purchases of these products. But in my view, we are beginning to see the LCD
TV market changing gradually from a pure early adopter mode to the more traditional
seasonal cycles seen in other consumer electronic purchases. The inventory correction
that took place in the channel may therefore have been exaggerated by these seasonal
pattern changes.
To people unfamiliar with these markets, the sharp fall off seemed unusual and
surprising. But let me explain how these markets work.
This is a market where the end product has a life cycle of only nine to twelve months, and
the price of that product is declining by 20 - 25% annually. So if the retailer and
manufacturer do not correct the inventory ASAP, if they see excess, perhaps only in one
quarter, the end product is potentially obsolete and worth considerably less at retail than
it was previously. Consumer electronics are not like wine, they do not get better with
age. In environments of relatively low margin for the OEM manufacturers of these
products, it is absolutely vital that they do not become the victims of excess inventory.
This all explains why, in these kinds of markets, inventory corrections can be sharp and
disturbing, even if you have the best sales and operating planning process possible.
Precise projections of volume are hard. But they are just that, corrections, and the
demand changes can be just as high in the opposite direction, especially as seasonality
creeps more vividly into the picture. It does not signify that somebody in the
management of these companies was asleep at the switch – things simply changed
tremendously quickly.
From our perspective, it also tells you why it is critical that we continue to invest in order
to diversify our offerings, in the optical systems division and throughout the broad 3M
3. portfolio, in order to prevent a largely cyclical business from becoming too large a
portion of our revenues and profits. This is absolutely essential.
We do not know precisely how long it will take for the excess retail inventory to bleed
off. According to Display Search, channel inventory for LCD TVs is dropping rapidly,
but the correction at our end of the channel will continue for a little while longer. It
began to accelerate rapidly for us in mid-June and I think it will likely persist into the
middle of the third quarter.
Another unknown right now is where the mix of Optical film margins will eventually
settle out. Pricing pressure in this industry is enormous, and while I expect margins to
remain attractive, and to additionally offset some of the downward price pressure with
ongoing cost improvements, given the poor state of the monitor market, the reality is that
we will be somewhat lower in mix than in the past.
Nevertheless, despite all of what I have said, this optical films business continues to be a
jewel in 3M’s crown and provides a high growth opportunity for the future. 3M’s
capability remains unmatched in this category - both our technology and our
manufacturing - and despite the onset of seasonality going forward, we believe the
second quarter to be the low point of the year, revenues will again increase in the third
and fourth quarters in anticipation of the holiday buying season.
I can assure you that the issues within our control – specifically things like the scale-up of
the new multi-layer film manufacturing line to increase capacity - are being addressed
immediately and forcefully. They will be resolved as quickly as possible.
I mentioned at our May meeting in New York that we are significantly under invested in
our core. This fact compounds the transition issues we face both in cost and targeted
growth rates, and finding the right balance in this transition requires a lot of finesse and
care. Internally we are working on new ways to stretch our capital dollars much further
than was once the case so we don’t induce a glut of capital spending going forward.
Unfortunately, under-investing in the past has created some challenges in the present.
Putting aside the aforementioned optical issues, manufacturing costs in the second quarter
increased in a handful of divisions, and in many cases we can point to under-capacity as
the root cause. For example, in our roofing granules business, we are short of capacity in
facilities that serve the still hurricane-torn areas of the southern United States. We are
still supplying our customers, but we must do so from farther-away locations, and we are
contractually obligated to pay the huge extra freight bills to get the rock to their shingle
manufacturing sites. Nor are we allowed to pass through the costs of raw materials as
copper used to color the granules; copper has tripled in cost this past twelve months or so.
These two factors alone cost this business several hundred basis points of operating
margin in Q2.
Moving now to SG&A, investment spending also increased this quarter. This would not
have been a visible problem but for the optical issues I mentioned earlier. Our
4. enthusiasm to invest in sales growth contributed to this increase, and we overshot our
targeted spending mark. But because this increase was self-generated, it can also be self-
corrected, and it is being corrected as we speak.
We also saw a continued trend upwards in inventory that began back in late 2004, that
has to be bled off over the next few quarters. We did this to attack some poor service
issues. These service issues are a function of the very long and convoluted supply chains
we built over our long history and, over the next few years, we’ll gradually unravel that
puzzle and change the supply chain footprint to better reflect our customer’s service
needs. This inventory challenge was exacerbated in the second quarter by the shortfall in
Optical systems sales, but also by the sluggishness we saw in visual systems, automotive
and diaper tapes sales, which I’ll mention again in a few minutes.
Even as we make necessary corrections, the enthusiasm for growth that we shared with
you earlier in the year has not waned one iota. The emerging growth mind-set at 3M
continues to gain momentum, and will continue to dominate our plans and our path going
forward. When a company makes the kind of change in emphasis we’ve been making to
encourage growth, it’s always a challenge to get the early balance right. Investments in
new products and supporting channel investment always happen a little before the sales
growth and earnings improvement can be measured.
Overall, if you exclude for a moment the shortfall in optical film sales, our growth rate
would have been well within our targeted range for the quarter. I can assure you that our
growth plan is gaining momentum and the trick here will be to avoid getting distracted by
short term events and not losing our focus on growth.
We achieved this growth despite significant quarterly contractions in some sizable non-
core businesses. For example, sales in our visual systems business were down 18% year
on year and revenues declined by 8% in our diaper tape business. The latter case is a
classic example of a business that did not invest in its own future and suffered the
consequences. We are now visibly inventing our way out of this problem, but it takes
time to do it.
The fact is that progress is evident in each main element of our growth plan: expanding
the core, growing through strategic acquisitions, building new businesses, and in
international growth. Let me take a moment to provide you with some examples.
A number of our large core divisions showed double-digit local currency sales growth in
the quarter. Examples include dental at 17 percent growth, commercial graphics at 14
percent, electronic markets materials division at 13 percent, electrical markets division at
11 percent, construction and home improvement at 10 percent, and occupational health
and environmental safety, which is the home to our market leading family of respiratory
protection products and services, at 10 percent. And our traffic and safety systems
division, another large core business, was just shy of double-digit growth. I think we
could have had even greater sales in some of these divisions if we had the necessary
capacity.
5. We made significant progress in the quarter toward building new businesses to capitalize
on emerging opportunities in high growth markets. For example, our Track and Trace
initiative is nicely taking shape. We put in place a leader with experience in building
businesses at EDS, to pull together the existing assets within 3M and to identify potential
acquisitions to fill in the gaps in our offerings.
Turning to acquisitions, we have announced eight so far this year. Our most recent and
largest is the purchase of Security Printing & Systems Ltd in the UK. This is a very
exciting and potentially very valuable asset – Security Printing has supplied passports to
the UK Government for more than 40 years, but for us, the addition of RFID components
imbedded in electronic passports will bolster both our track and trace and overall border
and civil security capabilities. They also have superb security and secure ID card
capabilities and we intend to expand and grow this business significantly internationally
as part of our Track and Trace initiative. This is the first of several tuck in acquisitions in
this area that I expect you will see.
The fourth element of our growth agenda – International – continued to demonstrate both
progress and its potential. Optical film sales dragged Asia’s results down a bit, and
therefore International down in total, but as we discussed, this is a short-term situation. I
call your attention to performance in several key countries. In the quarter, China posted
local currency growth of 27 percent, India was up 47 percent, and Poland grew 24
percent. Russia posted local currency growth of 22 percent, and Turkey 34 percent.
Overall, there is no doubt whatsoever that our growth agenda is advancing and delivering
real results. The near term difficulties with Optical in no way diminish my confidence
and optimism in 3M’s prospects. Our top line guidance remains five-and-one-half to
eight percent, which is in the neighborhood of 2 times IPI. Realizing that economic
conditions wax and wane, 2X appears to be a good growth target for 3M.
Now I will turn the call over to Pat, who will walk you through the financial details of
our second quarter results. Pat …
Pat Campbell- Chief Financial Officer
Thanks, George, and good morning everyone. Please turn to slide number two.
Second quarter sales were $5.7 billion, up 7.5% versus last year. Organic local-currency
growth was 4.6%, and acquisitions – mainly CUNO - added 2.6% to the top line growth.
Three of our six businesses grew in line with our expectations, primarily Health Care,
Safety, Security and Protection and Electro and Communications. On a geographic basis,
organic local-currency sales were up 6.5% in Asia Pacific, about 5% in the U.S. and 3%
in Europe. As we mentioned on last quarter’s conference call, second quarter sales
growth was negatively impacted by approximately one percentage point due to the timing
of this year’s Easter holiday.
6. Reported second quarter operating income was $1.2 billion, a decline of 5.5% year-on-
year. This percentage does not tell the entire story, as 4.3% of this decline was due to
higher stock options expense and 3.9% was due to a combination of special items –
which I will explain in detail in a moment. Adjusting for these items, year on year
operating income was up 2.7%. Operating income margins were 21.5% including a
negative 1.6% margin impact from stock option expensing. Putting these adjustments
aside, this was the first time in over four years that we did not expand operating margins
year on year, and we missed our earnings guidance, which I am very disappointed in.
Second quarter earnings per share were $1.15, up almost 20% year on year. Special items
this quarter added a net 10 cents to earnings per share, while last year’s second quarter
results included a 10 cent penalty. Again, I will explain these items in detail in a moment.
Also included in this result is 7 cents of stock option expense in the second quarter as
compared with 4 cents for the same quarter last year.
Let me be clear. The second quarter increase in option expense is not a function of
granting more options to employees. Rather, as we discussed on last quarter’s conference
call, the increase was largely due to a requirement under FAS123R to immediately
expense stock options upon grant date for those employees who are considered retirement
eligible. A 3M employee is considered to be retirement eligible upon reaching age 55
with 5 years of service. Twenty-five percent of this year’s grant award was to these
employees. Since we grant our employee stock options in the second-quarter, the
immediate expensing of those options granted to retirement eligible employees results in
higher stock option expense in the second-quarter. Accounting rules do not allow
restatement for the retirement eligible impact. In the second quarter, the specific cost
associated with this pool of employees was $55 million pre-tax, or 5 cents per share.
I know many of you are interested in a status update on our efforts to seek strategic
alternatives for the pharmaceutical business, but there is not much to report yet. An
offering memorandum went out during the quarter, we have received initial bids, and due
diligence is underway.
Please turn to slide number three for a recap of our sales performance.
As I mentioned, worldwide sales increased 7.5% versus last year’s second quarter.
Volumes increased 7.4%, with organic volumes up 4.8% and acquisitions adding 2.6% to
growth. Selling prices and foreign exchange impacts basically offset one another in the
quarter.
In the United States, sales improved 8.4% vs. last year’s second quarter. Organic growth
in the quarter was 4.9% with volumes up 3.1% and selling prices adding 1.8%. All 6
businesses had positive growth in the quarter. Acquisitions added 3.5% to US growth in
the second-quarter.
Sales in our international operations were up 6.9% in U.S. dollar terms. Local-currency
sales were up 6.3%, with organic volumes increasing 6.0% and selling prices decreasing
7. 1.6%. International selling prices were down about as expected, impacted by our
businesses that serve the consumer electronics industry. International sales were
impacted by the slowdown in the LCD industry, as our optical film sales are recorded
where our customers reside in the Asia Pacific region. Acquisitions added almost 2.0% of
additional growth, and foreign currency translation increased second-quarter sales by
about a half a point.
Organic local-currency growth was 6.5% in Asia Pacific, with Japan down one percent
and the rest of the region up 11%. Acquisitions added 2.2% of additional growth in the
quarter. All six of our businesses posted positive local-currency growth in Asia Pacific
during this quarter.
Europe delivered 4.9% local-currency growth in the quarter, including acquisition related
growth of 1.8%. As we mentioned on last quarter’s conference call, second-quarter
growth in Europe was tempered due to the timing of the Easter holiday. Since Easter is
in the second quarter this year compared with the first quarter last year, local-currency
growth in Europe was held back due to fewer billing days in the second quarter. We
estimate the impact on Europe’s second quarter local-currency growth was about 4
percentage points. Importantly, European organic local-currency growth over the last
two quarters has averaged over 5%, an encouraging sign compared to recent years.
And finally, local-currency growth was just shy of 4% in Latin America. Excluding the
impact of the decline in our CRT rear projection business in Mexico and the move of a
sizable flexible circuit customer from Puerto Rico to Singapore, Latin American organic
local-currency sales increased 10.3%. Acquisitions added an additional 2 points of
growth in the quarter.
As we discussed in last quarter's call and included in our first-quarter 10-Q, I would like
to take a moment to explain the earnings impact of special items. On slide four we have
provided a detailed earnings analysis of second quarter special items for both 06 and 05.
Two of this quarter’s special items impacted SG&A expense. First, we entered into an
agreement in principle during the second quarter to resolve the antitrust class action
involving direct purchasers of transparent tape that, as previously disclosed, had been
scheduled to start trial at the end of May. The settlement is conditioned on court
approval, which will be sought promptly upon execution of final settlement agreements
and is expected to be granted later this year. Second, during the quarter we incurred
expenses associated with our efforts in seeking strategic alternatives for our
pharmaceutical business. These costs included items such as professional fees along with
retention bonuses for key employees during this transition period. The combination of
these two items negatively impacted earnings-per-share by $0.04.
Also affecting this year's second quarter was $105 million of positive adjustments related
to the resolution of the US tax audit through 2001, the substantial resolution of audits in
certain European countries and adjustments and tax accruals for all other open years.
These tax adjustments amounted to a $0.14 per-share benefit. The company will
8. complete the preparation and filing of our 2005 federal income tax return in the third
quarter. As part of this process the company anticipates it will record a positive
adjustment to its provision to US income taxes in 2005. The amounts are uncertain at
this point in time and our forward guidance today will exclude any adjustments.
George will address our guidance later in the call.
As you may recall, in last year’s second quarter we announced our intent to reinvest $1.7
billion of foreign earnings back in the United States pursuant to the provisions of the
American Jobs Creation Act of 2004. This act provided the company the opportunity to
tax effectively repatriate foreign earnings for U.S. qualifying investments specified in its
domestic reinvestment plan. As a consequence, in the second quarter of 2005, we
recorded a non-recurring charge of $0.10 per-share.
In total, special items in this year’s second quarter resulted in an earnings-per-share
benefit of $0.10 per share versus a charge of $0.10 per share in last year’s second quarter.
Including all of the special items in both periods, second quarter 2006 earning-per-share
were $1.15 versus $0.96 cents in the second quarter of 2005. As mentioned, option
expense was $0.07 cents in the second quarter this year versus $0.04 cents in last year’s
comparable quarter.
On slide number five, we compare our second-quarter P&L versus last year’s comparable
quarter. Again, note that we elected to restate prior periods for the expensing of stock
options. Therefore all numbers shown will reflect this as well as excluding special items.
As I previously mentioned sales were up 7.5% year over year.
Second quarter gross margins were 50.1%, down 70 basis points year on year. The
combination of lower than anticipated sales volumes, higher than expected start-up costs
for our new multilayer LCD film facility, along with supply chain inefficiencies in a
handful of businesses that are capacity constrained, drove much of the increase. These
businesses include roofing granules, medical supplies and respiratory products, to name a
few. In addition, 30 basis points of the gross margin decrease was attributable to the
difference in stock options expense year on year.
SG&A expense was 22.4% of sales, up 1.1 percentage points vs. the comparable quarter
last year. The increase is largely due to the combination of higher advertising and
merchandising investments, along with hiring additional sales reps to ensure better global
market coverage in many of our businesses. Obviously these investments are aimed
directly at higher revenue growth. Finally, 40 basis points of the SG&A increase was
attributable to the stock options expense year on year difference.
R&D expense increased 10.3% year on year, or 6.2% to sales.
Operating margins were 21.5%, including a 160 basis point drag from the expensing of
stock options.
9. Second quarter net interest expense was $11 million versus $3 million last year, with the
increase in interest expense due to higher interest rates and a decrease in interest income
due to lower cash balances.
3M's tax rate for the second quarter, excluding special items, was 32.5%, similar to recent
quarters. Putting aside the impact of stock options, the tax rate reflects a 30 basis point
increase due to the expiration of the R&D and Orphan Drug Tax Credits on December
31, 2005. In the event the Internal Revenue Code is amended to reinstate these credits,
an equivalent positive impact would be reflected in our tax rate in future quarters.
Including the special items in the quarter, our tax rate was 23.3%.
Net income was $808 million dollars, down 2.6%, and earnings per share decreased about
1.0%. Second quarter results include $56 million after-tax due to stock option expense,
or $0.07 per share, versus $22 million after-tax and $0.04 per share in last year’s second
quarter.
The sequential quarterly P&L comparison is found on slide number six. Remember that
the first quarter was an all-time record operating margin for the company.
Sales were up 1.7% versus the first-quarter as four of our six businesses drove positive
sequential growth. Health Care, Electro and Communications and Consumer and Office
and Safety Security and Protection. Operating income declined 10.5% sequentially, half
of which was due to the difference in stock options expense, with the remainder primarily
related to the decline in optical film performance.
On a sequential basis, net income and earnings-per-share both declined by approximately
10%. Stock option expense was $0.07 per share in the second quarter versus $0.02 per
share in the first quarter.
Slide seven shows our year to date performance.
With half of the year behind us, I felt it was important to reflect on our performance to
date versus last year.
Please remember that, while the quarter did not meet our expectations, this is a very good
business. Margins, ROIC and return on equity are all well in excess of 20%.
First, sales are up almost 8% through the first six months, with organic local-currency
growth up 6.4%. Acquisitions added an additional 2.4% of growth.
Operationally, we are performing at levels very similar to last year. Year to date we have
been able to leverage the top-line growth into a 9.4% EPS growth, excluding special
10. items in each year. On a year-to-date comparative basis stock options had a negligible
impact.
Please turn to slide eight where I will recap our segment results.
Our Industrial and Transportation business delivered local-currency growth of 11.0%
including 7.9% growth from acquisitions, primarily CUNO. We acquired CUNO in
August of 2005. It is a world-class liquid filtration company with a long history of
double-digit top line growth at attractive operating margins. It is a great addition to our
portfolio.
Operating income in the second-quarter was $321 million, up about 3% including a
negative 3.2% impact year over year from the expensing of stock options. We drove
positive local-currency sales growth vs. last year’s second quarter in all business with the
exception of personal care. However, growth was below our expectations in three key
businesses- automotive aftermarket, industrial adhesives and tapes as well as the
automotive OEM business which George referred to, which continues to be impacted by
softness in the US automotive industry.
As we have mentioned in past quarters and as George referred to earlier, sales in our
Personal Care diaper tape business continued to decline year on year, which reduced
overall Industrial and Transportation sales and operating income growth by 0.8% and
1.4%, respectively. This business is working relentlessly to invent new solutions for its
customers to recover volume lost over the past year or so. We will be more competitive
in this space, but it will take us some time.
Health Care’s sales were $1 billion in the second quarter. Organic local-currency growth
was 3.3%, with acquisitions adding an additional 80 basis points of growth. Growth was
led by our dental and medical supplies businesses, two solid 3M franchises that offer
some of the strongest brands in their respective industries. Excluding our pharmaceutical
business, which is approximately 20% of Health Care, second quarter local-currency
growth was greater than 7.0%.
Geographically, Health Care’s revenue growth was strongest in the North America.
Operating income in the quarter was down 5.0%. Adjusting for stock options and
pharmaceuticals, operating income would’ve been flat for the quarter. Health Care was
adversely impacted in the quarter by operational issues in medical and orthodontic
associated with product start-ups and supply chain.
The underlying fundamentals in Health Care remain very strong. An aging population,
along with emerging economies rapidly adopting western health care practices, make this
business an important platform for future growth. We are investing in sales and
marketing capabilities in this business in our core strength areas, such as infection
prevention, wound care, dental and orthodontic product systems, and others.
11. Moving on, the Display and Graphics business posted local-currency sales growth of
6.5% with an operating income decline of approximately 13% including a 3.3% reduction
due to stock options. .
As George mentioned, Commercial Graphics delivered strong double-digit local-currency
growth in the second-quarter with strong end market penetration and differentiated
products that offer superior value to customers. And Traffic Safety Systems maintained
the momentum from the last three quarters with near double-digit local-currency growth.
Optical film sales volumes increased at double-digit rates in the second quarter, however
as George mentioned, sales growth was below our expectations. We estimate that the
impact from the overall LCD industry slowdown and inventory correction in the second
quarter, along with the mix impact from weakness in the monitor segment, accounted for
approximately 2/3 of the shortfall in optical film operating income versus our
expectations. The remainder of the shortfall was due to manufacturing start-up costs
previously mentioned by George.
As in past quarters, sales growth in Display and Graphics was dampened by the
continuing decline of our CRT rear projection lens business. Excluding the negative
impact of the CRT rear projection lens business, total D and G local-currency sales would
have been up 8.1%.
Consumer and Office posted organic local-currency sales growth of 4.4% in the quarter,
with an additional 20 basis points of growth coming from acquisitions. Growth was led
by our businesses serving the retail do-it-yourself channel – boosted by outstanding
brands such as Scotch blue masking tape and Filtrete home filters. We also posted solid
growth in the retail office superstores and commercial office channel.
On a geographic basis, revenue growth was strongest in the United States, while growth
outside the US remains a bigger challenge, particularly in Western Europe.
Second quarter operating income was $121 million, down 11% year on year. Options hurt
income growth by about 4 percentage points.
During the second quarter we increased our advertising and merchandising investment in
Consumer and Office to support the recent launch of a national advertising campaign for
Post It Picture Paper, along with other products such as Scotch blue masking tape,
Scotch-Brite home cleaning products and Nexcare brand bandages. While these
investments impacted the growth rate in operating income this quarter, it is a vital step in
supporting both new and existing products for our retail customer base.
Our Visual Systems business, which offers primarily analog overhead and electronic
projectors and film, continued to experience declines, which reduced second quarter
Consumer and Office sales and operating income by 1.1% and 1.6%, respectively.
12. We anticipate that operating income in the third quarter will grow at a double-digit rate in
the Consumer and Office business.
Local-currency growth in our Safety, Security and Protection Services business was up
8.3% to $653 million. Growth in the business continues to be driven by strong global
demand for personal safety products, especially respiratory protection. We continue to
invest in additional respirator capacity, such as our recent announcement of a new
respirator manufacturing facility in Korea, which will serve the Asia Pacific region.
Operating income was $145MM in the second quarter, down 1.6% versus last year’s
second quarter, including a 3.7% negative impact from stock options.
Gross margins declined both year on year and sequentially in this business, with the
majority of the impact due to our roofing granules business, which George described in
his opening comments.
Finally, our Electro and Communications business posted sales of $632 million. Organic
local-currency growth was 5.3%, driven by strong global demand for our specialty
adhesives, fluids and tapes for the electronics market, along with electrical products for
insulating, testing and sensing. Acquisitions contributed another 80 basis points to growth
in the quarter. Operating income was $123 million, up 7% year on year, and including a
negative 4.3% impact of stock options.
Electro and Communications has performed consistently well over the past several
quarters.
Please turn to slide number 9, where I will review a few balance sheet and cash flow
metrics.
Net working capital turns were 5.2, down 0.2 turns sequentially and down 0.4 turns vs.
the second quarter of 2005. The sequential change is partly due to normal seasonal
increases in certain businesses. For example, we build inventory in Consumer and Office
in anticipation of the big back-to-school season. Our optical films business is building
inventory in preparation for accelerating demand for LCD TVs during this year’s holiday
season. And finally, In Traffic Safety Systems, where sales are skewed toward the
warmer months of summer, we also build inventory to prepare for this peak season.
Capital expenditures were $261million, an increase of $44MM year on year and $71MM
sequentially. To date we have spent $451 million of our expected $1.1 billion capital
expenditure plan for 2006. The second quarter acceleration is demand driven, as these
investments are largely supporting growing businesses. We have recently announced
additional capital investments for optical films in Poland, respiratory protection products
in Korea, and customer centers in China and Russia, among others. We also have
approved capacity additions for medical supplies, Filtrete filters, Scotch blue painters
tape and roofing granules, just to name a few.
13. Second quarter free cash flow was $539 million, which was lower than last year due in
large part to second quarter 2006 tax payments of approximately $500 million versus
$270 million in last year’s second. Also, as I just mentioned, we are continuing to invest
in cap ex and working capital in anticipation of increasing demand.
We paid $348 million in dividends to our shareholders in the second quarter. Stock
repurchases were $527 million during the quarter, up from the first quarter’s $251
million. Weighted average diluted shares outstanding were 770.4 million, down 2% from
last year. And finally, our debt to capital ratio was 19.0% at the end of the second
quarter.
Now I will turn the call back to George, who will address our expectations going
forward. Please turn to slide number 10.
George Buckley- Chairman, President and CEO
Thank you Pat. The longer-term outlook for the rest of the year looks OK for now. We
have cost savings actions in place to inoculate ourselves against the remaining short-term
challenges with the LCD film situation. I do see signs of uncertainty creeping into the
US economy, and of course, the global picture. On costs, we’ve seen disappointing price
gouging from some suppliers and increases in other commodity and transportation costs.
This has crept into our factory cost. This has cost us 60 basis points in the year over year
quarter. For the next 6 months, we will be using our superb lean 6-sigma capabilities to
gradually get this out of our cost base.
As for our guidance going forward, for the third quarter, we expect organic local-
currency sales growth of 4 to 8 percent. I set the bottom 4% number to allow for any
residual bleed off in any LCD oriented inventory, with acquisitions adding about an
additional 1.5 points of growth to this picture.
Third quarter earnings per share are expected to be in the range of $1.10 to $1.15,
including $0.04 per share impact from stock options expensing. 2005 third quarter
earnings-per-share, restated to reflect stock options expensing of $0.02 per share, were
$1.08.
For the 2006 calendar year, our guidance remains unchanged versus our July 7th press
release. We expect full year 2006 earnings per share to be within the range of $4.55 to
$4.65, including a $0.17 impact from option expensing in 2006 and $0.14 option cost in
2005. Also included in this estimate are the previously mentioned net gains from special
items of $0.10 per share in the second quarter of 2006. Organic local-currency growth is
expected to be 5.5 to 8 percent for the year with acquisitions adding approximately 2
percentage points of additional growth.
As Pat mentioned earlier, we may have further positive tax adjustments in the third
quarter, the amount of which is unknown at this point. We also will incur additional
restructuring charges or other expenses associated with evaluating strategic options for
14. our pharmaceuticals business. Neither of these items are included in our third quarter or
full year guidance.
Let me just say in conclusion that 3M is a superb company and we will manage these
short-term challenges vigorously. Having led the company for a little over 6 months, I’m
coming to know the superb character and capabilities of 3M’s people. We don’t like
getting buffeted by things outside of our control, but we do know how to handle them.
Whatever adjustments may be made, the underlying fundamentals of 3M, combined with
its culture of innovation, give me tremendous confidence in our ability to grow and
deliver superior returns for the long haul.
That concludes our formal comments. Also joining Pat, Matt and myself is Jim Stake,
executive vice-president of Display and Graphics, who would be happy to take any of
your questions. Thank you everybody.