3M 2010 Annual Report Download - page 32

Download and view the complete annual report

Please find page 32 of the 2010 3M annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

26
Safety, Security and Protection Services Business (12.4% of consolidated sales):
2010
2009
2008
Sales (millions) ...........................................................................
$
3,308
$
3,064
$
3,330
Sales change analysis:
Organic local-currency sales (volume and price) ................
6.3
(5.0
)
4.3
Acquisitions .........................................................................
1.2
2.3
10.9
Local-currency sales ...........................................................
7.5
%
(2.7
)%
15.2
%
Divestitures .........................................................................
—
(0.9
)
(1.8
)
Translation ..........................................................................
0.5
(4.4
)
1.8
Total sales change ..................................................................
8.0
%
(8.0
)%
15.2
%
Operating income (millions) .......................................................
$
707
$
724
$
689
Percent change .......................................................................
(2.4
)%
5.1
%
20.3
%
Percent of sales ......................................................................
21.4
%
23.6
%
20.7
%
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, safety and security products (including border and civil security solutions), cleaning and protection products
for commercial establishments, track and trace solutions, and roofing granules for asphalt shingles. In the second
quarter of 2008, 3M completed the sale of its HighJump Software business which provided supply chain execution
software solutions. 3M’s Track and Trace Solutions utilize radio frequency identification (RFID) technology to provide
a growing array of solutions — from library patron self-checkout systems to tracking packages.
Year 2010 results:
Safety, Security and Protection Services sales increased 8.0 percent in 2010. Local-currency sales growth was 7.5
percent, which included a 1.2 percent benefit from acquisitions. Foreign exchange impacts added 0.5 percent to
sales. The acquisition benefit primarily related to two fourth-quarter 2010 acquisitions, namely Attenti Holdings S.A.
and Cogent Inc. 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.
3M’s security systems business led 2010 sales growth, helped by strong organic volume and acquisition growth
(Cogent Inc.) that drove local-currency growth of nearly 50 percent. Corrosion protection products, track and trace
products (helped by acquisition growth related to Attenti Holdings S.A.) and building and commercial services also
were strong contributors to sales growth. Sales of personal protection products increased in 2010, despite negative
year-on-year impacts from H1N1. Industrial minerals sales also increased for the year, helped by a strong fourth
quarter of 2010. Geographically, local-currency sales growth was broad-based, led by Latin America and Asia
Pacific. Europe/Middle East Africa sales growth was led by Central East Europe and Middle East Africa.
Operating income for 2010 was $707 million, with a 21.4 percent operating income margin. Operating income
declined 2.4 percent, penalized by year-on-year H1N1-related comparisons, which reduced Safety, Security and
Protection Services sales growth rates by approximately 6 percent year-on-year. In addition, fourth-quarter 2010
acquisition-related costs also penalized operating income. In 2009, this business segment recorded charges of $16
million related to restructuring actions, with this charge comprised of employee-related liabilities for severance and
benefits. This charge was largely offset by a gain of $15 million related to the sale of 3M’s New Jersey roofing
granule facility.
Year 2009 results:
In 2009, sales in Safety, Security and Protection Services totaled $3.1 billion, down 8.0 percent in dollar-terms and
2.7 percent in local currencies. 3M drove positive local-currency growth in personal protection products, but all other
businesses posted declines for the full year. The global economic downturn negatively impacted the industrial and
construction-related businesses within this segment.
Despite the 8 percent sales decline for the year, operating income margins rose to 23.6 percent. In 2009, this
business segment recorded charges of $16 million related to restructuring actions, comprised of employee-related
liabilities for severance and benefits. This charge was partially offset by a gain of $15 million related to the sale of
3M’s New Jersey roofing granule facility. In the second quarter of 2008, 3M completed the sale of its HighJump