3M 2004 Annual Report Download - page 46

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20
INDEX TO MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS:
Item 7 Reference (pages)
Results of operations 20
Performance by business segment 22
Performance by geographic area 27
Critical accounting estimates 28
New accounting pronouncements 29
Financial condition and liquidity 30
Financial instruments 35
Forward-looking statements 35
Item 7A
Quantitative and qualitative disclosures about market risk 36
RESULTS OF OPERATIONS
Net Sales:
2004 2003
Worldwide U.S. International Worldwide U.S. International
Net sales (millions) $20,011 $7,878 $12,133 $18,232 $7,581 $10,651
Components of
net sales change:
Volume – core 6.2% 3.2% 8.2% 4.7% 0.6% 8.2%
Volume – acquisitions 0.5 0.8 0.3 1.9 1.5 2.2
Volume – total 6.7 4.0 8.5 6.6 2.1 10.4
Price (0.7) (0.1) (1.1) (0.2) – (0.3)
Local currency 6.0 3.9 7.4 6.4 2.1 10.1
Translation 3.8 – 6.5 5.2 – 9.5
Total 9.8% 3.9% 13.9% 11.6% 2.1% 19.6%
In 2004, core volume growth (which excludes the impact of businesses acquired in the last 12 months) was broad-
based, with all seven businesses posting worldwide local-currency sales growth. Local-currency growth was led by
Display and Graphics; Industrial; Consumer and Office; Safety, Security and Protection Services; and the
Transportation businesses. Health Care local-currency sales increased 1.7%, as results were negatively impacted by
2003 sales from pharmaceutical and drug delivery agreements that did not repeat in 2004. Electro and
Communications local-currency sales increased 0.3%, the first year of positive growth since 2000. Acquisitions
increased 2004 sales by 0.5%, driven by the 2004 acquisitions of HighJump Software, Inc. and Hornell Holding AB.
Internationally, selling prices declined 1.1%, with most of the decline coming in certain businesses that serve the
electronics industry, where it is important to look at the combined impact of volume and price. On a geographic basis,
local-currency sales growth in 2004 was led by the Asia Pacific area. Refer to both the “Performance by Business
Segment” and “Performance by Geographic Area” sections for additional discussion of sales change.
In 2003, core volume growth (which excludes the impact of businesses acquired in the last 12 months) was led by
display enhancement films, broad-based growth in most of the Health Care businesses, personal protection products,
and growth in products related to construction and home improvement/home care. Acquisitions increased 2003 sales
by nearly 2%, driven primarily by the December 2002 acquisition of Corning Precision Lens, Inc. On a geographic
basis, 2003 core volume growth was strongest in the Asia Pacific area.