3M 2012 Annual Report Download - page 32

26
Safety, Security and Protection Services Business (12.7% of consolidated sales):
2012
2011
2010
Sales (millions)
$
3,802
$
3,821
$
3,316
Sales change analysis:
Organic local currency
2.2
%
7.1
%
6.1
%
Acquisitions
―
4.7
1.2
Translation
(2.7)
3.4
0.5
Total sales change
(0.5)
%
15.2
%
7.8
%
Operating income (millions)
$
847
$
814
$
709
Percent change
4.1
%
14.9
%
(2.6)
%
Percent of sales
22.3
%
21.3
%
21.4
%
The Safety, Security and Protection Services segment serves a broad range of markets that increase the safety, security
and productivity of workers, facilities and systems. Major product offerings include personal protection products, cleaning
and protection products for commercial establishments, safety and security products (including border and civil security
solutions), roofing granules for asphalt shingles, infrastructure protection products used in the oil and gas pipeline
markets, and track and trace solutions.
Year 2012 results:
Safety, Security and Protection Services sales totaled $3.8 billion, down 0.5 percent in U.S. dollars. Organic local-
currency sales grew 2.2 percent and foreign currency translation reduced sales by 2.7 percent. Organic local-currency
sales growth was led by infrastructure protection and personal safety, with growth also in building and commercial
services and roofing granules.
2012 organic local-currency sales declined 18 percent in security systems, as government spending for security solutions
has been declining over the last few years. As discussed later in the “Critical Accounting Estimates” section, 3M will
continue to monitor this business to assess whether long-term expectations have been significantly impacted such that an
asset or goodwill impairment test would be required. The Company completed its annual goodwill impairment test in the
fourth quarter of 2012, with no impairment indicated.
Geographically, organic local-currency sales increased 19 percent in Latin America/Canada. Organic local-currency sales
were flat in Asia Pacific and the United States, and declined 2 percent in EMEA.
The combination of selling price increases and raw material cost reductions, plus factory efficiencies, drove a 4.1 percent
increase in operating income. Operating income margins increased 1.0 percentage points to 22.3 percent.
Year 2011 results:
Safety, Security and Protection Services sales increased 15.2 percent in 2011. H1N1-related comparisons reduced 2011
sales growth by 2.5 percent, as 3M generated sales related to the H1N1 virus in the first three quarters of 2010. Even with
this difficult comparison, organic local-currency sales growth was 7.1 percent. Acquisitions added 4.7 percent, with this
benefit primarily related to Attenti Holdings S.A. and Cogent Inc., which were acquired in the fourth quarter of 2010. Attenti
Holdings S.A. is a supplier of remote people-monitoring technologies used for offender-monitoring applications and to
assist eldercare facilities in monitoring and enhancing the safety of patients. Cogent Inc. is a provider of finger, palm, face
and iris biometric systems for governments, law enforcement agencies, and commercial enterprises. Foreign currency
effects added 3.4 percent to 2011 sales. All geographic regions posted positive sales growth, with sales growth led by
Asia Pacific, Latin America/Canada, and the U.S. These three regions all had sales growth in excess of 15 percent.
Sales increased in all businesses. Sales dollar increases were largest in personal protection products, security systems,
building and commercial services, and infrastructure protection. Sales growth in personal protection products, or more
specifically, respiratory products, was hampered by H1N1-related comparisons, partially offset by some modest additional
sales of personal protective equipment related to the cleanup efforts in Japan.
Operating income for 2011 rose 14.9 percent to $814 million. 3M achieved a 21.3 percent operating income margin,
despite H1N1-related comparisons that negatively impacted results.