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2008 Citigroup Conference Presentation
- 1. Patrick D. Campbell
Vice President and CFO
3M Company
Accelerated Growth
Premium Returns
Enhanced Shareholder Value
March 5, 2008
1
© 3M 3M 2008. Rights Reserved.
© 2007. All All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 2. Forward-Looking Statements
This presentation contain forward-looking information (within the meaning of the Private Securities Litigation
Reform Act of 1995) about 3M’s financial results and estimates and business prospects that involve substantial
risks and uncertainties. You can identify these statements by the use of words such as “anticipate,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe,” “will,” and other words and terms of similar meaning in connection
with any discussion of future operating or financial performance. Among the factors that could cause actual
results to differ materially are the following: (1) worldwide economic conditions; (2) competitive conditions and
customer preferences; (3) foreign currency exchange rates and fluctuations in those rates; (4) the timing and
acceptance of new product offerings; (5) the availability and cost of purchased components, compounds, raw
materials and energy (including oil and natural gas and their derivatives) due to shortages, increased demand
or supply interruptions (including those caused by natural and other disasters and other events); (6) the impact
of acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio management
actions and other evolving business strategies, and possible organizational restructuring; (7) generating less
productivity improvements than estimated; and (8) legal proceedings, including significant developments that
could occur in the legal and regulatory proceedings described in the company’s Annual Report on Form 10-K for
the year ended Dec. 31, 2007. Changes in such assumptions or factors could produce significantly different
results. A further description of these factors is located in the Reports under “Risk Factors” in Part I, Item 1A
(Annual Report). The information contained in this presentation is as of the date indicated. The company
assumes no obligation to update any forward-looking statements contained in this presentation as a result of
new information or future events or developments.
2
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 3. Today’s Agenda
1. Recent performance
1
2. Unparalleled and diverse portfolio
2
3. International operations
3
4. Innovation
4
5. Financial strength
5
6. 2008 outlook
6
3
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 4. Planning Framework
Growth Operational Excellence
Protect and Adjacency
Grow the Core Build Out Leverage
Comp/Benefit
Sourcing Overhead
Competitiveness
New Technology New Products M&A
Control Price
Service & Quality Solve Low Turns
Leakage
Revolution Inventory
Emerging Bus. Localized, Simplified Go to Market
Opportunities Supply Chains Strategies Lean Six Sigma / Factory Cost Reductions
(EBO’s)
Operational Excellence Within a Growth Culture Is Essential
4
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 5. A Long-Term Track Record Of Success
Operating Margins
Local Currency Growth
$6,000 25%
10%
8% 20%
Operating Income
$4,500
GR
6%
CA
15% 15%
OI %
4% $3,000
GR
6% C A 10%
2%
$1,500
5%
0%
2001 2005 2006 2007
-2% $0 0%
2001 2005 2006 2007
EPS ROIC %
$6 24%
$5
GR 20%
A
18% C ts
+6 Poin
$4 16%
$3 12%
$2 8%
$1 4%
$0 0%
2001 2005 2006 2007 2001 2005 2006 2007
* Amounts exclude special items and pharma in all periods. See appendix.
5
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 6. All Businesses Are Contributing, But Changing
Total Local Currency Operating Margins
+23.0%
34%
21%
31%
17%
28%
13%
25%
9%
22%
5% 19%
16%
1%
2002 2003 2004 2005 2006 2007
2001 13%
-3% 2001 2002 2003 2004 2005 2006 2007
D&G LC Growth Other Segments LC Growth Total 3M LC Growth D&G OI Margin Other Segments OI Margin Total 3M OI Margin
Portfolio Breadth Strengthens Results
Amounts exclude special items and pharma in all periods. See appendix.
6
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 7. Unparalleled and Diverse Portfolio
7
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 8. 3M: A Global Diversified Materials Science Company
By Segment Estimate By End Markets
Superior materials science and
innovation company with more than 4% - 5% Res. & Com. Const.
11% Electro & Com. 40 technology platforms serving 10%-13% Transportation
multiple end markets
Safety, Sec. &
13%
Strong global diversified portfolio
Protection
10% - 13% Gov’t & Infrastructure
with operations in more than 60
Consumer &
14% countries
Office
12% - 15% Electronics & Tech
Superb international distribution
Display & capabilities
16%
14% - 16%
Graphics Consumer
63% of sales are international
growing at 12% CAGR over last 5
16% Health Care
years 16% Health Care
28%+ sales in emerging markets
growing at 19%+ CAGR during
last 5 years
30% 25% - 30% Industrial
Industrial &
World class margins and returns
Transportation
Returned > 100% of reported net
income to shareholders over last 5 2007
2007
years via dividends and share
$24.5B Sales
$24.5B Sales repurchases
8
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 9. Industrial and Transportation
($ in billions)
CAGR: Sales 9%, OI 13%
$7.5
$7.3
Sales Op Income $1.9
Operating Income
$6.6
Sales
$6.5
$1.4
$6.0
$5.6
$5.5 $0.9
2004 2005 2006 2007
LC Org Sls 5.2% 3.1% 4.4% 4.0%
Global market leader in tapes,
OI Margin 18.4% 20.0% 20.4% 20.7%
abrasives, autobody repair and
specialty automotive OEM solutions
Amounts exclude special items in all periods. See appendix.
9
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 10. Health Care
($ in billions)
CAGR: Sales 12%, OI 12%
$4.3 $1.3
Sales Op Income
$4.0
Operating Income
$3.2
Sales
$3.4 $1.0
$3.0
$2.8
$2.5 $0.6
2004 2005 2006 2007
LC Org Sls 2.8% 5.1% 7.4% 13.9%
Technology leadership across health
OI Margin 27.8% 30.0% 28.3% 27.5%
care market; a growing space driven by
aging population and global expansion
Amounts exclude special items and pharma in all periods. See appendix.
10
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 11. Display and Graphics
($ in billions)
CAGR: Sales 4%, OI 0%
$4.0 $1.3
$3.9
Sales Op Income
$3.7
Operating Income
$3.6
Sales
$3.5 $1.0
$3.4
$3.0 $0.6
2004 2005 2006 2007
LC Org Sls 10.1% 3.1% 4.9% 2.6%
Leading market positions in LCD
OI Margin 32.8% 32.5.% 28.7% 28.5%
films, traffic safety systems and
commercial graphics
Amounts exclude special items in all periods. See appendix.
11
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 12. Consumer and Office
($ in billions)
CAGR: Sales 8%, OI 8%
$3.5 $1.0
$3.4
Sales Op Income
$3.2
Operating Income
Sales
$3.0 $0.7
$2.9
$2.7
$2.5 $0.4
2004 2005 2006 2007
LC Org Sls 10.9% 6.4% 6.8% 4.1%
Category defining brands:
OI Margin 20.4% 20.9% 20.0% 20.3%
Scotch®, Post-it®, Scotch-Brite®,
Filtrete™ and Command™
12
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 13. Safety, Security and Protection Services
($ in billions)
CAGR: Sales 13%, OI 13%
$3.2 $0.8
Sales Op Income $3.1
Operating Income
$2.7
Sales
$2.6 $0.6
$2.3
$2.2
$2.0 $0.3
2004 2005 2006 2007
Global leader in respiratory protection,
LC Org Sls 4.1% 6.2% 9.6% 3.4%
roofing granules, building safety solutions &
OI Margin 20.9% 22.1% 21.0% 20.9%
automated library systems; emerging security
systems & RFID platforms
Amounts exclude special items in all periods. See appendix.
13
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 14. Electro and Communications
($ in billions)
CAGR: Sales 5%, OI 23%
$2.9 $0.6
Sales Op Income
$2.8
$2.7
Operating Income
$2.5
Sales
$2.5 $0.4
$2.4
$2.0 $0.2
2004 2005 2006 2007
LC Org Sls 2.1% 3.5% 4.2% -0.5%
Leading positions in electrical tapes,
OI Margin 12.0% 16.5% 17.5% 19.3%
copper interconnects, OEM insulating
tapes & medium-voltage splicing
& terminating solutions
Amounts exclude special items in all periods. See appendix.
14
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 15. International Operations
Our Largest Growth Platform
15
© 3M 2007. All Rights Reserved.
2008. Citigroup 2008 Global Industrial Manufacturing Conference
- 16. 3M’s Subsidiary Network
Poland Switzerland
Norway
Hungary
Canada
Czech
Trinidad Austria
East Romania
Republic Sweden
& Tobago Finland Ukraine
Puerto Rico
Russia
Germany
Dominican
Republic Kazakhstan
Denmark
Korea
Jamaica Netherlands
Belgium
Japan
United
Mexico
Kingdom
China
Guatemala
Portugal
Hong Kong
El Salvador
Spain Taiwan
Costa Rica
Vietnam
Panama France Pakistan
Colombia
Philippines
UAE
Morocco
Indonesia
Venezuela Thailand
Israel
Ecuador Italy Malaysia Singapore
Egypt
Peru
Greece Sri New Zealand
Australia
Lanka
Brazil Kenya
India
Chile Turkey
Uruguay Key
Argentina Sales & Marketing
South Africa
Manufacturing/Converting
Technical Capabilities
16
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 17. 3M’s Dependency on US Economy Lessens Over Time
70%
64-65%
65%
Percentage Non-US
60%
55%
51%
50%
45%
40%
E
98
99
00
01
02
03
04
05
06
07
08
19
19
20
20
20
20
20
20
20
20
20
Amounts exclude pharma in all periods.
17
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 18. Accelerating International Sales Growth
International Sales Growth
($ in Billions)
$16
$15.5
$13.6
14
$12.4
GR
$11.7
CA
12
%
12
$10.2
10
$8.5 $8.5
$8.2
$7.9
$7.5
8
3% CAGR
6
4
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Our Single Largest Growth Platform…
Amounts exclude pharma in all periods.
18
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 19. …With a Growing Percentage of Emerging Market Sales
International Sales Growth
$8 ($ in Billions)
$7.0
7
Emerging Markets Adding $6.1
Almost $1B/Year Or 4% To
6
Growth $5.2
5
$4.5
GR
A
+C
4 $3.7 %
19
$2.9
$2.8
3 $2.7
$2.5
$2.4
5% CAGR
2
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Emerging Markets = Central/Eastern Europe + Middle East Africa + Asia Pacific ex. Japan/ANZ + Latin America
19 Amounts exclude pharma in all periods
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 20. Innovation
20
© 3M 3M 2008. Rights Reserved.
© 2007. All All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 21. 3M’s Core Strength: Connecting Technology to Markets
A B P S
b i m m
A C E N P S
c e m t o u
A D F M P T
N
d d c i p t
w
P V
A D F F I M M O
r p
m i e s s e o p
R W
A D F I L M M P
p e
n o i m m f r d
P S W
A E F I M
e e o
s c l n d
3M Technology Capability
Technology-enabled
NPI
solutions
Voice of The Market
21
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 22. The Oldest Can Be Forever New - Abrasive Reinvention
FROM TO
Trizact™ Hook-it™
Super Abrasives
Cubitron™ Sandblaster™
Traditional mineral materials and market focus; Synthetic materials and specialized
metal finishing and wood-working applications; aerospace, healthcare,
composites
2003 OI Margin = 12% 2012 OI Margin = 25%
2003 ROIC = 16% 2012 ROIC = 45%
2003 Growth Rate ≈ 1% 2007 Growth Rate = 7.8%
Movement to higher growth, higher profit market zones
22
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 23. Lava™ Chairside Oral Scanner
“Digital Impressions”
Technology Obtained via Brontes Acquisition
23
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 24. 3M Mobile Projection Products
Coming Soon to a………
Mobile Phone Media Player Digital Camera Smartphone
UMPC Pocket Big Screen TV Camcorder Laptop
…….Near You
24
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 25. High Performance Window Film
Prestige and Crystalline Window Films
Film + Nanomaterials Nanomaterial
hardcoat
HPWF 875
PSA
Liner
• Film offers IR reflectivity and the
nanomaterial hardcoat absorbs IR
resulting in rejection of up to 97% of the
sun’s IR energy
• Tiered global launch with a new business
model to meet service expectations – met
100% of sales forecast in 1st year
• Established a technology platform to
launch subsequent products (Prestige
Safety – 2007). Superior heat rejection with low reflectivity
and high visible light transmission
25
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 26. New Consumer Products Inspired by Non-Woven
Technology
Non-woven
• New performance attributes
• Natural materials
• Sustainable and renewable
26
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 27. Advanced Materials Provides Basis for 3M Aluminum
Composite Conductor Composite (ACCR)
Key Features:
Capable of carrying 2-3x the
Capable of carrying 2-3x the
current of conventional, steel
current of conventional, steel
core conductors
core conductors
Strong like steel
Compatible with existing
Compatible with existing
Light weight like aluminum structures
structures
Highly conductive
Less sag
Less sag
Low thermal expansion
Almost no corrosion due to:
Almost no corrosion due to:
Metal matrix
Metal matrix
Chemically compatible
Chemically compatible
(inorganic)
(inorganic)
materials
materials
Environmental stability
Environmental stability
Aluminum-oxide fibers
Aluminum-oxide fibers
27
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 28. Solar: Strong Capabilities & Technology Base
Optically Clear UV Micro-replicated Wavelength Selective
Barrier Films IR Reflective Films
Stable Fluoropolymer Films Lens Film Mirror Films
Metallized Anti-soil & Electrical Foil & Structural Tapes, 60 Years of Experience
Mirror Films Hard Coatings Connectors Sealants & Adhesives (Weathering Resource Center)
28
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 29. Financial Strength
29
© 3M 2007. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 30. Financial Policy
First priority: fund available growth
Capital expenditures: drive 20%+ ROIC via organic growth
Supplement organic with accretive, growth-enhancing acquisitions
Increase annual dividend
Maintain competitive yield and payout ratio
Offset inflation at a minimum, with the maximum dependent on
other growth-generating uses at that time
Opportunistic share buyback
Economic dynamics and alternative cash uses will drive
repurchase levels
Ready to support the stock when warranted
For the right growth investments, lever up as required
Managing With “AA” Operating Discipline; Will Consider “A” For The
Right Strategic Cash-Generating Opportunity
30
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 31. Cash Back to Shareholders
$3,500
For The Period 2001-2007:
Stock Repurchases in Millions
$3,000
$12.7B in share repurchases
$2,500
$2,000
$8.1B in dividends paid
$1,500
Dividend CAGR of 6.5%
$1,000
$500
No-equity-dilution policy
$0
2001 2002 2003 2004 2005 2006 2007
$1,400
Dividends in Millions
Returned 108% of Reported
Net Income Via Dividends
$1,100
and Share Repurchases
$800
2001 2002 2003 2004 2005 2006 2007
31
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 32. Outlook
32
© 3M 2007. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 33. General Outlook For 2008
Moderately softer but stable Investments
worldwide economic growth R&D investments and plant start-ups
Investing in emerging markets
Slower but sustainable growth in
developing economies – BRICP LCD films
Continued slow US ; H2 stronger than Productivity
H1; no relief on residential housing Lean Six Sigma, benefit cost
Low single-digit IPI growth in Western containment, G&A leverage
Europe and Japan
Tailwinds
Higher commodity prices/RMs; raising
Favorable currency trends
prices to help offset
Fewer shares outstanding
Some commodities likely to ease
We Will Deliver a Minimum of 10%+ EPS Growth in 2008
33
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 34. Driving Toward Our Long-Term Objectives
Deliver sales growth at >2x IPI
Customer-inspired innovation
Move into faster-growing market spaces
Aggressively drive EBOs
Commitment to double-digit earnings growth
Maintain >20% ROIC
Continuous supply chain improvement
Quadruple win: better service, improve inventory, lower logistics cost, lower
tax rate
Driving to 30.5% tax rate by 2012
Unlimited Potential for Shareholder Value Creation
34
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 35. Question and Answer
March 5, 2008
35
© 3M 3M 2008. Rights Reserved.
© 2007. All All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 36. Appendix
March 5, 2008
36
© 3M 3M 2008. Rights Reserved.
© 2007. All All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 37. Industrial & Transportation
2007 Sales Breakdown
2005 2006 2007 CAGR
Other
Liquid Filtration 7%
Sales $6.0B $6.6B $7.3B 10% 7% Adhesives & Tapes
33%
OI $1.2B $1.4B $1.5B 12% Energy & Adv Mtls
11%
OI% 20.0% 20.4% 20.7%
Abrasives
13%
Transportation
With leading positions in: 29%
Abrasives
Industrial tapes
Autobody repair solutions
2007 Sales by Geography
Specialty solutions for automotive OEMs
LAC
12%
U.S.
35%
APAC
24%
Europe
29%
37 Amounts exclude special items in all periods. See appendix.
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 38. Health Care
2007 Sales Breakdown
2005 2006 2007 CAGR Health
Information
Sales $3.0B $3.2B $4.0B 16% Systems
10%
OI $0.9B $0.9B $1.1B 11% Drug Delivery
14%
OI% 30.0% 28.3% 27.5% Medical
50%
Oral Care
With leading positions in: 26%
Skin & wound care
Infection prevention
Stethoscopes
Restorative dentistry & orthodontics 2007 Sales by Geography
Coding and reimbursement software
Inhalation drug delivery
LAC
8%
APAC
11%
U.S.
45%
Europe
36%
38 Amounts exclude special items and pharma in all periods. See appendix.
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 39. Display & Graphics
2007 Sales Breakdown
2005 2006 2007 CAGR Projection
Systems
Sales $3.6B $3.7B $3.9B 5% Commercial 5%
Graphics
OI $1.2B $1.1B $1.1B -2% 20%
Optical
OI% 32.5% 28.7% 28.5% 51%
Traffic Safety
24%
With leading positions in:
LCD films
Commercial graphics
Reflective materials for highway signs, license
2007 Sales by Geography
plates and construction work zones
LAC
5%
Europe
17%
APAC
U.S.
59%
19%
39 Amounts exclude special items in all periods. See appendix.
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 40. Consumer & Office
2007 Sales Breakdown
2005 2006 2007 CAGR
Sales $2.9B $3.2B $3.4B 8% Prot. Mtrls &
Consumer HC
OI $0.6B $0.6B $0.7B 6% 6%
OI% 20.9% 20.0% 20.3%
Home Care
Office &
23%
Stationery
44%
Home to many category-defining brands:
DIY
Scotch® 27%
Post-it®
Scotch-Brite®
Filtrete™
2007 Sales by Geography
Command™
LAC
10%
APAC
13%
U.S.
Europe 59%
18%
40
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 41. Safety, Security & Protection Services
2007 Sales Breakdown
2005 2006 2007 CAGR Corrosion
Protection
8%
Sales $2.3B $2.7B $3.1B 15% Roofing Granules
9% Personal
OI $0.5B $0.6B $0.6B 12% Protection
Equipment
Security & RFID
OI% 22.1% 21.0% 20.9% 46%
17%
With leading positions in: Building Svcs
20%
Respiratory protection
Roofing granules for asphalt shingles
Automated library systems
Building safety solutions
2007 Sales by Geography
LAC
12%
U.S.
35%
APAC
18%
Europe
35%
41 Amounts exclude special items in all periods. See appendix.
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 42. Electro & Communications
2007 Sales Breakdown
2005 2006 2007 CAGR
Sales $2.5B $2.7B $2.8B 5%
OI $0.4B $0.5B $0.5B 14% Telecom&Other
27%
OI% 16.5% 17.5% 19.3% Electronics
43%
With leading positions in: Electrical Mkts
Electrical tapes 30%
Splicing/terminating solutions for medium voltage
OEM insulating tapes
Copper interconnects
2007 Sales by Geography
Fluorochemicals for electronics applications
LAC
10%
APAC
39%
Europe
23%
U.S.
28%
42 Amounts exclude special items in all periods. See appendix.
© 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference
- 43. Non-GAAP Financial Measures
3M Company and Subsidiaries
SUPPLEMENTAL CONSOLIDATED INFORMATION
NON-GAAP FINANCIAL MEASURES
(Millions, except per-share amounts)
(Unaudited)
The Company uses non-GAAP measures to focus on shareholder value creation. 3M uses Return on
In addition to reporting financial results in accordance with U.S. generally accepted accounting principles
Invested Capital, defined as after-tax operating income divided by average operating capital. This measure
(GAAP), the Company also discusses non-GAAP measures that exclude special items. Sales, operating
excludes special items and the historical impacts of the Pharmaceuticals business (see Notes 1 and 2).
income and diluted earnings per share measures that exclude special items and that exclude the impact of
These measures are not recognized under U.S. generally accepted accounting principles and may not be
Pharmaceuticals are not in accordance with, nor are they a substitute for, GAAP measures. Special items
comparable to similarly titled measures used by other companies.
represent significant charges or credits that are important to an understanding of the Company’s ongoing
operations. The company uses these non-GAAP measures to evaluate and manage the Company’s
Year Year Year Year
operations. The company believes that discussion of results excluding special items provides a useful 2001 2005 2006 2007
analysis of ongoing operating trends. The determination of special items may not be comparable to Return on Invested Capital 12.8% 22.1% 25.3% 24.0%
similarly titled measures used by other companies. Special items for the twelve months ended December Return on Invested Capital - excluding
31, 2007 and 2006 and prior periods presented have been previously provided (See Note 1). In addition, the Pharmaceuticals and Special Items 15.3% 21.9% 21.6% 21.4%
Company believes that providing financial results excluding the impact of Pharmaceuticals provides useful
information (See Note 2). The reconciliations provided below reconcile the non-GAAP financial measures As previously indicated, the Company provides non-GAAP measures, including the business segment
with the most directly comparable GAAP financial measures for the periods indicated. operating income amounts shown within this presentation that exclude special items. Special items for the
years 2007 and 2006 have been previously provided in an 8-K that was furnished to the U.S. Securities and
Exchange Commission on January 29, 2008. An 8-K furnished March 4, 2008, provided results that reflect
Year Year Year Year Year Year Year
(Millions, except per-share amounts) 2001 2002 2003 2004 2005 2006 2007
for all periods presented the impacts of certain business segment product moves effective in the first quarter
Sales Dollars:
of 2008. There were no special items that impacted business segment operating income results for the years
Reported GAAP $ 16,054 $ 16,332 $ 18,232 $ 20,011 $ 21,167 $ 22,923 $ 24,462
Pharmaceutical $ (699) $ (767) $ (813) $ (793) $ (797) $ (774) $ - 2005 and 2004.
Adjusted Non-GAAP $ 15,355 $ 15,565 $ 17,419 $ 19,218 $ 20,370 $ 22,149 $ 24,462
Operating Income Dollars: (1) Special items for the periods presented have been discussed in Form 8-K’s that were furnished to the
Reported GAAP $ 2,075 $ 2,816 $ 3,504 $ 4,326 $ 4,854 $ 5,696 $ 6,193
U.S. Securities and Exchange Commission on January 29, 2008 and January 30, 2007 and in 3M’s
Special Items $ 504 $ 202 $ 93 $ (523) $ (681)
2003 Form 10-K filed March 2, 2004. Also reference 3M’s Form 8-K dated March 4, 2008, which
Pharmaceutical $ (157) $ (200) $ (217) $ (194) $ (226) $ (256) $ -
Adjusted Non-GAAP $ 2,422 $ 2,818 $ 3,380 $ 4,132 $ 4,628 $ 4,917 $ 5,512
provided results that reflect for all periods presented the impacts of certain business segment product
moves effective in the first quarter of 2008.
Diluted Earnings per Share:
Reported GAAP $ 1.60 $ 2.32 $ 2.88 $ 3.56 $ 3.98 $ 5.06 $ 5.60
Special Items $ 0.39 $ 0.14 $ 0.07 $ - $ 0.14 $ (0.57) $ (0.62)
(2) In December 2006 and January 2007, 3M completed the sale of its global branded Pharmaceuticals
Pharmaceutical $ (0.12) $ (0.17) $ (0.18) $ (0.16) $ (0.20) $ (0.23) $ -
business. In connection with these transactions, 3M’s Drug Delivery Systems Division became a
Adjusted Non-GAAP $ 1.87 $ 2.29 $ 2.77 $ 3.40 $ 3.92 $ 4.26 $ 4.98
source of supply to the acquiring companies. Because of the extent of 3M cash flows from these
agreements in relation to the disposed businesses, the operations of the branded Pharmaceuticals
The Company uses local-currency sales growth, which excludes the impact of translation or currency business were not classified as discontinued operations. The sale of the branded Pharmaceuticals
exchange rates, as an indication of its economic sales growth. The Company has provided the components business impacted both sales and operating income growth in 2007, as significant Pharmaceuticals
of local-currency sales growth below, including the impact of translation. The Company has provided sales and income are in the reported base 2006 period and also in prior periods. Where indicated, to
provide more meaningful trend information, portions of this presentation exclude the impact of 2006
local-currency sales growth that excludes the historical impacts of divestitures, primarily the
and prior Pharmaceutical financial results, as this business was sold in December 2006 and January
Pharmaceuticals business, to portray what it believes are more meaningful sales growth trends. 3M believes
2007.
this non-GAAP sales growth information excluding divestitures provides useful information (See Note 2).
These measures are not in accordance with, nor are they a substitute for, GAAP measures.
Year Year Year Year Year Year Year
2001 2002 2003 2004 2005 2006 2007
Sales Change Percents:
Total Reported Sales Change -3.9% 1.7% 11.6% 9.8% 5.8% 8.3% 6.7%
Less: Translation Impact -3.3% 0.1% 5.2% 3.8% 0.7% 0.6% 3.2%
Local-Currency Sales Change (including divestitures) -0.6% 1.6% 6.4% 6.0% 5.1% 7.7% 3.5%
Local Currency Sales Change (excluding divestitures) -1.1% 1.4% 6.8% 6.5% 5.3% 8.1% 7.3%
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