3M In and Out: Fool by Numbers

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On Jan. 24, 2006, Motley Fool Inside Value pick 3M (NYSE: MMM) released Q4 2005 earnings for the period ended Dec. 31, 2005.

• Net income and earnings per share were affected by stock options-related expenses for the current quarter and full year. Earnings per share net of that came in at $1.04, compared with $0.91 in the prior-year period.
• Local currency sales rose 7.3%, and currency effects negatively affected sales to the tune of 2.7%. Volume growth in sales was negative on an organic basis (down 1.4%), driven by the strength of price increases (3.2%) and the impact of acquisitions.
• Sales were driven by strong results in its Industrial and Electro & Communications units, where local currency results climbed 18.2% and 10.9%, respectively. Industrial results got a boost from the company's CUNO acquisition, which contributed 12% to sales growth.

(Figures in millions, except per-share data)

Income Statement Highlights

	Avg. Est.	Q4 2005	Q4 2004	% Change
Sales	$5,325	$5,325	$5,091	+4.6%
Net Profit	--	$761	$720	+5.7%
EPS	$0.99	$0.99	$0.91	+8.8%

Get back to basics with a look at the income statement.

Margin Checkup

	Q4 2005	Q4 2004	Change
Gross Margin	50.84%	48.67%	+2.16%
Op. Margin	22.76%	21.45%	+1.31%
Net Margin	14.29%	14.14%	+0.15%

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q4 2005	Q4 2004	% Change
Cash + ST Invest.	$1,072	$2,757	-61.1%
Inventory	$2,162	$1,897	+14.0%
Accounts Rec.	$2,838	$2,792	+1.6%

Liabilities	Q4 2005	Q4 2004	% Change
Long-Term Debt*	$2,381	$2,821	-15.6%
Accounts Pay.	$1,256	$1,168	+7.5%

*Long-term debt numbers include short-term/current portion of long-term debt.

Cash Flow Highlights

	Q4 2005	Q4 2004	% Change
Cash From Ops.	$4,258	$4,282	-0.6%
Capital Expend.*	$2,236	$1,010	+121.4%
Free Cash Flow	$2,022	$3,272	-38.2%

*Capex numbers include the effect of cash acquisitions -- $1.2 billion in the most recently ended period and $73 million in the period prior.

Find out why Fools always follow the money.

Related Companies:

• General Electric (NYSE: GE)
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• Johnson & Johnson (NYSE: JNJ)
• Bayer AG (NYSE: BAY)

Related Foolishness:

• 3M Needs to Get MMMoving
• GE Has Staying Power
• High-Stakes Medical Device Chicken

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all of the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Michael Olsen owned shares in 3M. Fool rules are here.