3M 2007 Annual Report Download - page 93

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NOTE 18. Quarterly Data (Unaudited)
(Millions, except per-share amounts)
First Second Third Fourth Year
2007 Quarter Quarter Quarter Quarter 2007
Net sales $5,937 $6,142 $6,177 $6,206 $24,462
Cost of sales 3,022 3,175 3,240 3,298 12,735
Net income 1,368 917 960 851 4,096
Earnings per share – basic 1.88 1.28 1.34 1.20 5.70
Earnings per share – diluted 1.85 1.25 1.32 1.17 5.60
First Second Third Fourth Year
2006 Quarter Quarter Quarter Quarter 2006
Net sales $5,595 $5,688 $5,858 $5,782 $22,923
Cost of sales 2,721 2,840 2,990 3,162 11,713
Net income 899 882 894 1,176 3,851
Earnings per share – basic 1.19 1.17 1.20 1.60 5.15
Earnings per share – diluted 1.17 1.15 1.18 1.57 5.06
Gross profit is calculated as net sales minus cost of sales. In 2007, gains on sales of businesses and real estate, net
of restructuring and other items, increased net income by $448 million, or $0.62 per diluted share, with $422 million, or
$0.57 per diluted share recorded in the first quarter of 2007. 2007 included net benefits from gains related to the sale
of businesses and a gain on sale of real estate, which were partially offset by increases in environmental liabilities,
restructuring actions, and other exit activities. In 2006, a gain on sale, net of restructuring and other items, increased
net income by $438 million, or $0.57 per diluted share, with $354 million, or $0.47 per diluted share, recorded in the
fourth quarter of 2006. 2006 included net benefits from gains related to the sale of certain portions of 3M’s branded
pharmaceuticals business and favorable income tax adjustments, which were partially offset by restructuring actions,
acquired in-process research and development expenses, settlement costs of a previously disclosed antitrust class
action, and environmental obligations related to the pharmaceuticals business.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
a. The Company carried out an evaluation, under the supervision and with the participation of its management,
including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of
the Company’s “disclosure controls and procedures” (as defined in the Exchange Act Rule 13a-15(e)) as of the end of
the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures are effective.
b. The Company’s management is responsible for establishing and maintaining an adequate system of internal control
over financial reporting, as defined in the Exchange Act Rule 13a-15(f). The management conducted an assessment
of the Company’s internal control over financial reporting based on the framework established by the Committee of
Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework. Based on the
assessment, the management concluded that, as of December 31, 2007, the Company’s internal control over financial
reporting is effective. The Company’s internal control over financial reporting as of December 31, 2007 has been
audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report
which is included herein, which expresses an unqualified opinion on the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2007.
c. There was no change in the Company’s internal control over financial reporting that occurred during the Company’s
most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.