3M 2011 Annual Report Download - page 30

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Operating income increased 1.1 percent to $1.4 billion, and operating income margins were 30.2 percent. Health
Care recorded charges of $20 million related to restructuring actions in 2009, with this charge comprised of
employee-related liabilities for severance and benefits. Lower year-on-year H1N1-related sales penalized both sales
and operating income in 2010.
Consumer and Office Business (14.0% of consolidated sales):
2011 2010 2009
Sales (millions) .................................................................... $ 4,153 $ 3,853 $ 3,471
Sales change analysis:
Organic local-currency sales (volume and price) ......... 4.0 7.1% (3.1 )%
Acquisitions .................................................................. 1.4
2.9 2.6
Local-currency sales .................................................... 5.4 % 10.0% (0.5 )%
Translation ................................................................... 2.4 1.0 (2.5 )
Total sales change ........................................................... 7.8 % 11.0% (3.0 )%
Operating income (millions) ................................................ $ 840 $ 840 $ 748
Percent change ................................................................ —
% 12.3% 9.5 %
Percent of sales ............................................................... 20.2 % 21.8% 21.5 %
The Consumer and Office segment serves markets that include consumer retail, office retail, home improvement,
building maintenance and other markets. Products in this segment include office supply products, stationery
products, construction and home improvement products (do-it-yourself), home care products, protective material
products, certain consumer retail personal safety products, and consumer health care products.
Year 2011 results:
Sales in Consumer and Office increased 7.8 percent in 2011 to $4.2 billion, with all businesses posting positive sales
growth. Local-currency sales increased 5.4 percent, which included 4.0 percent from organic growth and 1.4 percent
from acquisitions. Acquisition growth was largely due to the October 2011 acquisition of the do-it-yourself and
professional business of GPI Group and the April 2010 acquisition of the A-One branded label business and related
operations. GPI is a manufacturer and marketer of home improvement products such as tapes, hooks, insulation and
floor protection products and accessories. The addition of GPI’s products will expand 3M’s product portfolio in core
and complementary categories in the construction and home improvement markets. A-One is the largest branded
label business in Asia and the second largest worldwide. 3M also acquired Hybrivet Systems Inc. in the first quarter
of 2011, a provider of instant-read products to detect lead and other contaminants and toxins. Foreign currency
impacts contributed 2.4 percent to sales growth in the Consumer and Office segment. On a geographic basis, sales
increased in all regions, led by Asia Pacific, Latin America/Canada and Europe, which all had sales growth rates in
excess of 10 percent. U.S. sales also grew, albeit at a slower rate.
Consumer and Office operating income was flat when comparing 2011 to 2010, reflecting continued ongoing
investments in developing economies in brand development and marketing and sales coverage. Even with these
investments, Consumer and Office generated operating income margins of 20.2 percent.
In December 2011, 3M entered into a definitive agreement to acquire the Office and Consumer Products business of
Avery Dennison Corp. for a total purchase price of approximately $550 million, subject to certain adjustments. The
Office and Consumer Products business of Avery Dennison is a leading supplier of office and education products,
including labels, binders, presentation products, filing and indexing products, writing instruments, and other office and
home organization products. The transaction is expected to be completed in the second half of 2012, subject to
customary closing conditions including any necessary regulatory approvals.
Year 2010 results:
Sales in Consumer and Office increased 11.0 percent in 2010 to $3.9 billion. Local-currency sales increased 10.0
percent, which included 7.1 percent from organic growth and 2.9 percent from acquisitions. Acquisition growth for
2010 was primarily comprised of the July 2009 acquisition of ACE® and related brands, which sells elastic bandage,
supports and thermometer product lines through consumer channels in North America, and the April 2010 acquisition
of the A-One branded label business (discussed above). In addition, the January 2010 acquisition of Incavas
Industria de Cabos e Vassouras Ltda., a manufacturer of floor care products, contributed to acquisition sales growth.
Foreign currency impacts added 1.0 percent to sales growth.