3M Stock Hits All-Time High; Co. Posts Record Sales

Investors reacted positively to 3M's fourth-quarter and full-year 2012 financial results, sending its stock to a record $99.76 on Thursday.

Maplewood-based 3M Company’s stock reached an all-time high of $99.70 on Wednesday as investors awaited financial results—and then it broke that record Thursday after the company reported increased profits and record sales for both the fourth quarter of 2012 and the full year.

3M shares climbed to $99.76 following news of the results, which included a 3.9 percent increase in fourth-quarter net income to $991 million, or $1.41 per share.

The results mirrored expectations of analysts surveyed by Bloomberg. Revenue for the quarter rose 4.2 percent to reach $7.4 billion, setting a fourth-quarter record.

Strong sales for the quarter were driven mainly by 3M’s consumer and office business unit, which makes Post-it notes and Scotch tape and posted a 28.8 percent increase in profits. Its health care unit also contributed, with a 10.8 percent increase in quarterly profits. The company said it also saw strong fourth-quarter sales in Latin America, Canada, and the Asia Pacific region.

Meanwhile, profits for the full year totaled $6.5 billion, or $6.32 per share, up 4.9 percent from 2011. Sales for the year reached a record high of $29.9 billion, up 1 percent year-over-year.

“[The fourth quarter] was a good finish to a successful year for 3M,” CEO Inge Thulin said in a statement. “Our people executed well in the face of challenging macroeconomic conditions and we have built good momentum to innovate and move forward in 2013.”

3M in October consolidated six major business segments down to five. The company also announced at the time that it had shifted around some of its senior executives.

The changes came about seven months after Thulin took the helm as CEO, who described the restructuring as “a natural outcome of our strategy to increase relevance to our customers and to broaden our presence in the markets we serve.”

3M is Minnesota’s fifth-largest public company based on revenue. Shares of the company’s stock were trading at $99.59 mid-morning on Thursday, up 0.1 percent.

—Nataleeya Boss
([email protected])

Apogee to Invest $30M in MN or GA Plant

The company is comparing the cost and benefits of each location and pursuing state and local support for both locations.

Bloomington-based Apogee Enterprises, Inc., the parent company of glass manufacturer Viracon, announced Tuesday that it plans to invest $30 million in one of two Viracon plants—and its Owatonna plant is in the running.

The company is also considering Viracon’s plant in Statesboro, Georgia. The two plants are Viracon’s largest, Apogee said.

“Apogee is pursuing state and local support for both locations,” and is comparing the cost and benefits of each location, the company said.

The investment will result in an 18-month project that will “improve efficiencies and allow Viracon to offer the new products required to strengthen its competitive position,” Apogee said.

Apogee did not say when it will make a decision or whether the investment will create new jobs; calls to the company were not immediately returned.

Viracon employs about 2,000 people in the United States, and more than 1,000 work at the plant in Owatonna.

Viracon’s glass has been used in such buildings as the recently-rebuilt World Trade Center and the Petronas Towers in Kuala Lumpur, Malaysia, which is among the tallest buildings in the world. Local structures adorning Viracon-made glass include the Xcel Energy Center in St. Paul and the University of Minnesota’s TCF Bank Stadium in Minneapolis.

Apogee is among Minnesota’s 40-largest companies based on revenue. The company’s stock price more than doubled between November 2011 and November 2012, thanks to a steady increase in revenue, which totaled $662.5 million for the fiscal year that ended in March—up about 13 percent from $582.8 million during the previous year.

—Nataleeya Boss
([email protected])

Monticello Manufacturer Plans Plant Expansion, Hiring

WSI Industries said that its 47,000-square-foot expansion will accommodate new machinery and new employees.

     WSI's Monticello manufacturing facility

WSI Industries, Inc., said Wednesday that it intends to break ground this month on a major expansion that will double the manufacturing space at its Monticello facility.

The company said that it expects the 47,000-square-foot expansion to be complete in early 2013. It didn’t disclose the cost of the expansion.

WSI is a contract manufacturer of precision parts for a wide range of industries, including aerospace, energy, marine, defense, recreational vehicle, and bioscience. The expansion comes on the heels of positive third-quarter sales that totaled $9.5 million, up 45 percent from the same period a year ago. Earnings for the quarter totaled $598,000, or 21 cents per share, representing a 51 percent jump from the prior year.

The company has also seen consistent annual growth, with revenue totaling $18.8 million in its 2010 fiscal year and $25 million in 2011. It expects to exceed $31 million in sales for the fiscal year that ends August 26.

WSI’s financial strength has led to a steady growth of its work force—and the company foresees additional hiring on the horizon.

President and CEO Benjamin Rashleger told Twin Cities Business on Thursday that the company has steadily added employees over the past several years, growing from 59 employees in 2009 to 91 today.

Rashleger said that, like many other manufacturers, WSI is having a difficult time finding qualified employees, but the company is interested in adding several new workers to meet its current needs.

“I’d hire five to 10 [qualified workers] right now if they walked through the door today,” he said.

As WSI expands its Monticello plant, which is the company’s sole facility, it plans to add new machinery to meet the needs of a growing and diverse client base.

“If we continue the same success in growing our business, we will add new machines, and we will need new people to run them,” Rashleger said.

The expanded facility could accommodate up to roughly 160 employees—meaning that if the company continues its pace of growth, it could eventually boost its headcount by about 70 workers, Rashleger said.

WSI said that it expects the construction of its expanded facility will have a “minimal impact” on its current manufacturing processes.

“This expansion illustrates the confidence we have in our current customers and their future success, as well as our ability to continue to attract and obtain new business in the contract manufacturing market,” Rashleger said in a statement. “We believe the additional space provided by the expansion will provide us the opportunity to also expand the capabilities and services we can offer to our customers, in addition to the added capacity, which will also help to drive the expansion of the business by attracting new customers and programs.”

WSI is among Minnesota’s 100 largest public companies based on its revenue. Shares of the company’s stock were trading up about 3 percent at $6.30 during Thursday morning trading.

—Jake Anderson
([email protected])

MTS Agrees to Pay $7.75M to Settle Federal Investigation

The Eden Prairie-based test system maker, which has been under investigation for more than a year, said that the deal must still be approved by the U.S. Department of Justice.

MTS Systems Corporation said Tuesday that it has agreed to pay a $7.75 million settlement to end a federal investigation into the company’s government contracting and exporting practices.

MTS, an Eden Prairie-based test system maker, has been under investigation by the U.S. Department of Commerce and the U.S. Attorney’s office in Minnesota for more than a year.

In March 2011, the company was temporarily barred from federal government contracting. MTS was suspended for not properly disclosing in regulatory documents that it had pleaded guilty to two misdemeanors for making false statements related to the planned sale of equipment, which could have been used to test nuclear weapons in India. The equipment was never shipped, but MTS employees creating export applications allegedly failed to disclose their knowledge about how it might be used, and the company was fined $836,000.

The company’s CEO, Laura Hamilton, in August resigned amid the ongoing investigation. Jeffrey Graves took the reigns as chief executive in May.

The settlement announced Tuesday, which must still be approved by the U.S. Department of Justice, would conclude the investigations by the U.S. Department of Commerce and the U.S. Attorney’s office, according to MTS.

“The resolution of this matter has been a top priority for the company,” Graves said in a statement. “We have invested significant resources to improve our government contracting and general compliance infrastructure during the last 18 months. As a result, we are a stronger company today and remain committed to meeting the government’s fully responsible contractor status.”

MTS, which was suspended from contracting between March and September of 2011, has said that it lost an estimated $15 million related to the investigation and lost market opportunities. The Air Force lifted the ban after MTS agreed to enhance its business ethics and compliance policies and procedures, expand employee training in those areas, heighten reporting obligations, and hire a compliance monitor. In October, MTS appointed Steven Mahon chief compliance officer.

As of October 1, the end of MTS’s most recent fiscal year, the company employed roughly 2,000 workers and reported revenue of $467 million. Shares of the company’s stock were trading down about 1 percent at $43.02 during Wednesday morning trading.

—Jake Anderson
([email protected])

Polaris Forms Joint Venture, Will Expand in India

Medina-based Polaris Industries and New Delhi-based Eicher Motors Limited will together form a company and invest about $50 million over the next three years to develop a new line of vehicles for India and other emerging markets.

Medina-based Polaris Industries, Inc., on Tuesday announced a joint venture through which it plans to develop and market vehicles in India.

Polaris and New Delhi-based vehicle and motorcycle manufacturer Eicher Motors Limited will together form a company that will make and sell a new line of personal vehicles for India and other emerging markets.

Polaris and Eicher will each own 50 percent of the new entity, which will be based in India and governed by a board that has equal representation from both companies.

Polaris spokeswoman Marlys Knutson told Twin Cities Business that a name for the joint company and the city where it will be based have not yet been determined.

The two companies will together invest approximately $50 million over the next three years and open a manufacturing facility in India, where they expect to start production in 2015.

Founded in 1982, Eicher has more than $1 billion in annual revenue and a dealer network of more than 400 locations in India, according to Polaris. The company makes a line of motorcycles called Royal Enfield and, since 2008, has been part of a joint venture with Sweden-based Volvo through which the two companies manufacture and market trucks, buses, and engineering components.

Polaris, which makes off-road vehicles—including all-terrain vehicles (ATVs), snowmobiles, and motorcycles—and on-road electric-powered or hybrid vehicles, currently exports some of its products to India. However, it doesn’t yet have any manufacturing facilities in the country.

“This agreement instantly expands and enhances Polaris’ presence in India and . . . additional emerging markets around the globe and leverages Polaris’ strength in product innovation and vehicle development,” Polaris CEO Scott Wine said in a statement. “Eicher’s financial strength and rich history as a leader in the Indian market makes them the perfect partner for Polaris in India. This joint venture represents an incredible opportunity to develop new vehicles and realize global growth.”

In addition to announcing its joint venture, Polaris on Tuesday reported record second-quarter financial results and raised its full-year forecast. For the quarter that ended on June 30, the company earned $69.8 million, or 98 cents per share—up 43 percent from the same quarter last year. Revenue for the quarter totaled $755.4 million, representing an increase of 24 percent over last year’s second-quarter sales.

The company now expects 2012 earnings of $4.05 to $4.15 per share, up from its prior forecast of $3.85 to $4 per share.

Polaris is among Minnesota’s 25-largest public companies based on revenue, which totaled $2.6 billion in 2011.

—Nataleeya Boss
([email protected])

Bankrupt NewPage Rejects $1.4B Merger with Verso Paper

NewPage, which employs 285 at its Duluth paper mill, said that the proposed merger “posed significant downside risks to its stakeholders, employees, and business.”

The operator of a large Duluth paper mill on Tuesday shot down a proposed merger with a competitor that operates another Minnesota mill.

Miamisburg, Ohio-based NewPage Corporation—which owns the Duluth mill and filed for Chapter 11 bankruptcy protection in September—said in a press release that it has rejected a $1.43 billion merger proposed by Verso Paper Corporation.

A group of NewPage’s secondary creditors brought the merger proposal before a group of its primary creditors. Under the terms of the deal, Verso—a Memphis, Tennessee-based company whose Sartell paper mill was damaged in a May explosion and fire—offered NewPage’s first-lien note holders $1.08 billion of new Verso notes, $150 million of Verso stock, and $200 million in cash. It also said it would pay NewPage’s debtor-in-possession financing and give NewPage’s secondary note holders an unspecified amount of Verso stock.

Verso’s stock price closed up 48 percent Tuesday following the announcement of its merger proposal.

“Verso believes that a combination with NewPage would create a stronger business in the global coated and supercalendered paper industry because of the material cost savings that would be achieved,” the company said in a press release. “Verso also believes that a combination with NewPage would provide a compelling option for a restructuring in that it would afford NewPage’s first-lien note holders a very attractive recovery, while at the same time treating fairly the other NewPage constituencies, including its employees, other creditor classes, and customers.”

NewPage, however, said Tuesday: “After thoroughly evaluating this proposal, NewPage determined that the combination posed significant downside risks to its stakeholders, employees, and business. NewPage has also been advised that the first-lien note holder group did not support the proposal. Accordingly, NewPage does not anticipate further discussions regarding this proposal.”

NewPage, which has been hit by rising materials prices and a reduced demand for its paper products, reported $3.5 billion in 2011 revenue. In addition to the Duluth mill, the company owns paper mills in Kentucky, Maine, Maryland, Michigan, and Wisconsin.

NewPage on Tuesday released a series of documents detailing its discussions with note holders and creditors as it seeks to finalize a restructuring plan. Among other things, the documents indicate that the company has struck a deal with the unions that represent many of its employees, through which the company will freeze some pension plans and shift workers to a health care plan with higher deductibles and out-of-pocket costs.

However, NewPage spokesman Matt Christenson told Twin Cities Business on Thursday that the Duluth plant is non-union and therefore not affected by those contract changes. The Duluth facility employs 285, and no layoffs have occurred there since NewPage filed for bankruptcy, he said.

Verso, meanwhile, reported a net loss of $137 million, including restructuring costs, on revenue of $1.7 billion in 2011. Following the May 28 explosion and fire at its Sartell mill, which killed one factory worker and injured four others, the company said last month that the damage would take “several months” to repair. Subsequently, “a clear majority of the hourly and salaried workers” were reportedly laid off from the mill.

Before the layoffs occurred, Verso employed 259 in Sartell, making it the city’s second-largest employer.

—Jake Anderson
([email protected])

Post-Explosion, Most Sartell Paper Mill Workers Laid Off

The recently damaged mill’s future remains uncertain as owner Verso Paper Corporation is still assessing the costs and the processes that would be required if it were to repair the mill.

Verso Paper Corporation, which owns the Sartell paper mill that was damaged in a May 28 explosion and fire, has given layoff notices to most of the workers at the plant, according to a report in the St. Cloud Times.

“I don’t have an exact number, but a clear majority of the hourly and salaried workers have been laid off,” Verso spokesman Bill Cohen told the newspaper. “We’re working closely with all levels of government—including state, county, and local—to try and make sure those folks get taken care of to the best of our ability.”

Before the layoffs occured, Verso employed 259 at the Sartell mill and was the second-largest employer in the city of about 16,000. Approximately 50 people were working at the plant when the explosion occurred.

The future of the mill, which has been closed since the fire, remains unclear. The mill will likely sit idle into the fall, and Verso is still assessing the costs and the processes that would be required if it opted to repair the mill, Cohen told the St. Cloud Times.

The explosion and subsequent fire, which killed factory worker Jon Maus and injured four others, mainly damaged the mill’s paper warehouse and some electrical systems. The fire also destroyed more than 5,000 tons of finished paper and some unfinished inventory—which together are reportedly valued at about $5 million.

Cohen told Twin Cities Business earlier this month that in order to serve customers that relied on the Sartell mill, Verso will draw from its other mills or warehouses. The company has three other mills, which are located in Maine and Michigan.

Meanwhile, Minnesota Senate Majority Leader David Senjem told the St. Cloud Times that if there is a special legislative session centered around flood relief for the Duluth area, legislators should also use the opportunity to discuss providing state aid to Verso.

To read the full story in the St. Cloud Times, click here.

—Nataleeya Boss
([email protected])

St. Jude: New Device’s Failure Unrelated to Recalled Devices’ Flaw

St. Jude Medical claims that a defective device reported to the U.S. Food and Drug Administration last month did not have the same flaw as an older line of devices that was recalled last year.

St. Jude Medical, Inc., said Friday that its defibrillator lead that was removed from a patient in April and reported to be damaged did not have the same critical flaw as an older but similar line of recalled devices.

Leads are wires that connect defibrillators to the heart.

In May, a physician reported to the U.S. Food and Drug Administration (FDA) that one of St. Jude’s Durata leads failed after it was implanted in a patient. The report, which the FDA received on May 2, claimed that the lead had cables protruding through its insulation lining—a problem seen in some of the company’s Riata leads, which were recalled last year, according to a report by Dow Jones Newswires.

St. Jude subsequently analyzed that particular lead and the medical records of the patient from whom the failed device was removed, and it found that the lead was damaged because it was scraping against another object within the patient's body—either a hardened heart valve or another lead that had been implanted in the patient. Such external abrasion is a “known cause of failure across all cardiac leads in the industry” and is “different from the inside-out abrasion seen with externalized conductors observed in some Riata leads,” the company said.

St. Jude stopped selling its Riata line of leads in December 2010 and recalled them a year later amid reports of their failure. According to a Reuters report, the Riata leads failed because the silicone coating around the wires eroded at a higher-than-expected rate, causing wires to protrude out of the leads.

Durata replaced Riata, and the insulation coating around the Durata leads was designed to prevent the problems seen in the older leads.

St. Jude’s shares fell 6 percent to $36.23 earlier this month when media reports about the Durata lead failure emerged. Shares of the company’s stock were trading up 2.6 percent at $37.90 on Friday, following St. Jude’s announcement about its findings related to the Durata lead failure and at $37.70 early Tuesday afternoon.

Little Canada-based St. Jude is among Minnesota’s 15-largest public companies based on revenue, which totaled $5.6 billion in 2011.

—Nataleeya Boss
([email protected])

3M to Buy Toll Collection Tech Biz for $110M

Maplewood-based 3M said the acquisition of Federal Signal Technologies Group will expand its traffic products business.

3M Company announced Thursday that it plans to buy Federal Signal Technologies Group (FSTech), a division of Oak Brook, Illinois-based Federal Signal Corporation.

Maplewood-based 3M will pay $110 million in cash for FSTech, which makes electronic toll collection and parking management systems. 3M expects to close the deal later this year.

FSTech employs approximately 500 people in Arizona, California, Illinois, Michigan, Missouri, North Carolina, Tennessee, Texas, Hong Kong, Dubai, and the United Kingdom. Its products include toll collection hardware and software, vehicle identification systems, license plate recognition systems, and parking lot fare collection systems.

FSTech’s 2011 revenue totaled $106.9 million, according to U.S. Securities and Exchange Commission filings.

3M said that FSTech’s offerings will add to its own traffic products and services related to transportation safety, traffic management, vehicle registration, and commercial transportation.

“3M’s expertise and innovation in the traffic industry make it a natural choice to continue to build this important business for our customers and for drivers everywhere,” Dan McGurran, director of 3M’s motor vehicle systems and services division, said in a statement.

3M is Minnesota’s fifth-largest public company based on revenue, which totaled $29.6 billion in 2011.

—Nataleeya Boss
([email protected])

MN Co. Among 13 Chosen for $54M Energy Dept. Program

Third Wave Systems, Inc., which makes manufacturing software, will use the money to develop technology designed to boost efficiency in factories.

The U.S. Department of Energy on Tuesday awarded Eden Prairie-based Third Wave Systems, Inc., a $4.07 million grant to help the company develop technology designed to boost energy efficiency.

The grant is part of a $54 million initiative aimed at funding projects that will help manufacturers increase the efficiency of their operations, reduce costs, and reduce the energy needed to power their facilities.

Third Wave is one of 13 companies from across the country that received grants through the initiative. The companies were selected from a pool of more than 250 applicants based on a “highly-competitive” bidding process, Third Wave said in a news release.

Third Wave makes manufacturing software for aerospace and automotive companies. The company will use the grant to develop technology intended to help manufacturers better predict costs during the design process.

“We cannot afford to continue making machining decisions based on trial-and-error methods that require extensive time and resources,” Kerry Marusich, president of Third Wave Systems, said in a statement. “I am confident this program will adeptly further the sustainable manufacturing efforts that are so key to the future of the American manufacturer.”

Third Wave will work on the project in collaboration with researchers at Purdue University, the Georgia Institute of Technology, the University of California Santa Barbara, and The Pennsylvania State University.

“By investing in breakthrough technologies that can drastically reduce the amount of energy consumed during manufacturing, the energy department is supporting President Obama’s blueprint for an economy built on American manufacturing, American energy, and skills for American workers,” U.S. Energy Secretary Steven Chu said in statement. “The projects . . . will improve the competitive position of U.S. industry and help manufacturers produce more while saving energy, saving money, and protecting our air and water.”

—Nataleeya Boss
([email protected])