2. Forward Looking Statements
This presentation contains forward-looking information 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,” “target,”
“forecast” and other words and terms of similar meaning in connection with any discussion of future operating
or financial performance or business plans or prospects. Among the factors that could cause actual results to
differ materially are the following: (1) worldwide economic and capital markets 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 fewer 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 December 31, 2007 and its subsequent Quarterly
Reports on Form 10-Q (the “Reports”). 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) and in Part II, Item 1A (Quarterly 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.
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4. Actions
Reduced over 2,400 permanent positions in Q4; more likely in 2009
– One-time net cost of $219M, with 2009 savings of $235M
Temporarily furloughed > 1,000 additional factory workers
Maintaining only essential contract workers
Deferring merit pay increases
– 2009 savings of $100M
Modifying policy on banked vacation
– $100M savings in both 2009 and 2010
Cutting 2009 cap ex by > 30%
Halting stock repurchases until environment improves
4
5. FY08 P&L Highlights: Comparison vs. Last Year
3M
($ in Millions)
2007 2008 Change ex. Optical
Except per share amounts
Net Sales $24,462 $25,269 3.3% 6.5%
Gross Margin 48.2% 47.5% -0.7 pts ----
SG&A $4,907 $5,134 4.6% 5.2%
R&D and related exp. $1,372 $1,391 1.4% 3.4%
Op. Income $5,512 $5,487 -0.4% 9.2%
+0.5 pts
Op. Income % 22.5% 21.7% -0.8 pts
Tax Rate 31.8% 30.9% -0.9 pts
Net Income $3,648 $3,654 0.2%
EPS $4.98 $5.17 3.8%
*Excludes special items. Refer to 3M’s January 29th, 2009 press release for a complete list and explanation of these items.
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6. Q408 P&L Highlights: Comparison vs. Last Year
3M
($ in Millions)
Q4 2007 Q4 2008 Change ex. Optical
Except per share amounts
Net Sales $6,206 $5,509 -11.2% -8.1%
Gross Margin 46.9% 45.1% -1.8 pts -0.7 pts
SG&A $1,267 $1,175 -7.3% -6.7%
R&D and related exp. $357 $337 -5.6% -3.5%
Op. Income $1,290 $974 -24.4% -14.2%
-1.3 pts
Op. Income % 20.8% 17.7% -3.1 pts
Tax Rate 30.7% 27.6% -3.1 pts
Net Income $863 $676 -21.6%
EPS $1.19 $0.97 -18.5%
*Excludes special items. Refer to 3M’s January 29th, 2009 press release for a complete list and explanation of these items.
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7. Sales Recap: Q408 vs. Q407
Total Company Ex. Optical
WW
US Int’l WW
(8.1%)
Sales growth - USD (6.0%) (14.1%) (11.2%)
(0.3%)
Less: divestiture impact (0.7%) (0.1%) (0.3%)
(7.8%)
Growth adjusted for divestitures (5.3%) (14.0%) (10.9%)
(5.3%)
Less: currency impact ----- (7.5%) (4.9%)
(2.5%)
Total local currency growth (5.3%) (6.5%) (6.0%)
Components of Total LC Growth
(8.7%)
Volume – organic (13.1%) (10.1%) (11.0%)
2.6%
Selling price changes 3.1% 1.0% 1.7%
(6.1%)
Organic local currency growth (10.0%) (9.1%) (9.3%)
3.6%
Volume – acquired 4.7% 2.6% 3.3%
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8. Balance Sheet & Cash Flow
Q4 2007 Q3 2008 Q4 2008
($ in Millions)
Free Cash Flow $1,252(b) $792(a) $662
Net W/C Turns 5.3 5.0 4.5
Inventories $2,852 $3,078 $3,013 Slowing factories
Receivables-Net $3,362 $3,763 $3,195 Slow Nov/Dec sales
Cap-ex $391 $376 $463 Expect to cut by > 30% in ‘09
Dividends Paid $341 $348 $346 ‘08 per-share increase of 4%
Share Repurchases $483 $515 $34 Preserving cash
(a) Includes U.S. pension contribution of $200 million in Q3 2008.
Excludes certain special items that impacted cash flow. Refer to 3M's January 29th, 2009 press release for an explanation of these items.
(b)
Refer to 3M’s January 29th, 2009 press release for a complete discussion of net working capital turns and free cash flow
Note:
(non-GAAP measures).
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9. 2008 Global Pension & Post Retirement Benefits Status
Worldwide funded status of 85%
$B
– U.S. 89%
– International 75%
2008 actual U.S. plan asset performance
of (13.6%)
2009 U.S. plan assumptions
– Return on assets 8.5%
– Discount rate 6.14%
2009 estimated worldwide funding of
$600M to $850M
2009 estimated EPS headwind of ($0.07)
for pension and post-retirement benefits
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10. Segment Highlights – Industrial & Transportation
Fourth Quarter Q4 Highlights
• Local-currency sales down 6.3% including 3.2% benefit
Operating
from acquisitions
(11.3%) Income Margins
Q4 ’07 Q4‘08 • Positive sales growth in automotive aftermarket with
especially good growth in autobody abrasives; operating
19.1% 14.3%
income growth in energy markets
• Local-currency sales declines in all regions
(33.4%)
• Operating margins of 14.3%
Q4 ‘07 Q4 ‘08 Q4 ‘07 Q4 ‘08
Sales Operating Income
Full Year Highlights
• Local-currency growth of 4.6%, including 3.9% from
Full Year acquisitions; 8 acquisitions closed including Meguiar’s
+7.6% • Outstanding sales growth in adhesives and tapes,
Operating
automotive aftermarket and abrasives businesses
Income Margins
2007 2008
• Strong market penetration in BRICP
20.7% 19.7%
• Announced new Renewable Energy unit to address
global demand for alternative power sources
• Full-year profit increase of 2.4% with strong operating
+2.4%
margins of 19.7%
2007 2008 2007 2008
Sales Operating Income
*Excludes special items. Refer to 3M’s January 29th, 2009 press release for a complete list and explanation of these items.
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11. Segment Highlights – Health Care
Fourth Quarter Q4 Highlights
• Local-currency sales growth of 4.5% including 2.2%
(2.1%) from acquisitions
Operating
Income Margins
• Solid growth in core infection prevention and skin &
Q4 ’07 Q4 ‘08
wound care products
27.0% 28.9%
• Entered licensing contract in drug delivery to
collaborate on dry powder inhalation technology
+4.5% • Sales growth led by the US and Asia Pacific
• Excellent operating margin of 28.9% with operating
income up 4.5%
Q4 ‘07 Q4 ‘08
Q4 ‘07 Q4 ‘08
Operating Income
Sales
Full Year Highlights
Full Year
• 6.8% local-currency sales growth including 1.7% from 4
+8.2% Operating closed acquisitions in 2008, including TOP-Service, Imtec
Income Margins
and Solumed
2007 2008
• Double-digit growth in medical, dental and orthodontic
27.5% 28.7%
businesses
• Sales growth in all geographic regions, led by double-digit
growth in Asia Pacific and Latin America and solid growth
+13.0%
in Europe and the U.S.
• Drove outstanding full-year operating margin of 28.7%
with profits up 13%
2007 2008
2007 2008
Operating Income
Sales
*Excludes special items. Refer to 3M’s January 29th, 2009 press release for a complete list and explanation of these items.
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12. Segment Highlights – Safety, Security & Protection Svcs
Q4 Highlights
Fourth Quarter
• Local-currency growth of 13.2% including 15.7% from
+2.9% Operating
acquisitions, primarily Aearo Technologies
Income Margins
Q4 ’07 Q4 ‘08 • Growth led by the personal protection equipment
business
17.8% 16.7%
• Track and trace business leads profit growth with new
product solutions for libraries
(3.5%)
• Positive sales growth in the US and Asia Pacific
• Operating income of $128 million with margins of 16.7%
Q4 ‘07 Q4 ‘08 Q4 ‘07 Q4 ‘08
Sales Operating Income
Full Year Highlights
Full Year
• Local-currency growth of 18.3%, including 14.1% from
+18.6%
acquisitions, primarily Aearo Technologies
Operating
Income Margins
• Completed divestiture of HighJump Software
2007 2008
20.9% 21.3% • Robust demand continued in personal protection,
building and commercial services and RFID solutions
• Double-digit sales growth in every geographic region;
+20.9% good market penetration in developing countries,
especially BRICP countries
• Strong operating income increase of 20.9% with full-year
2007 2008 2007 2008
operating margins of 21.3%
Sales Operating Income
*Excludes special items. Refer to 3M’s January 29th, 2009 press release for a complete list and explanation of these items.
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13. Segment Highlights – Consumer & Office
Fourth Quarter Q4 Highlights
• Local-currency sales down 6.5% including 0.2%
Operating
(11.2%)
benefit from acquisitions
Income Margins
Q4 ’07 Q4 ‘08
• Weakness across all businesses and in every
18.1% 15.5%
geographic region, with home care and do-it-yourself
businesses posting the positive local-currency sales
growth
(24.1%)
• Good performance by Nexcare™ first-aid skincare
and bandages, Scotch-Brite™ scouring products and
Q4 ‘07 Q4 ‘08 Q4‘07 Q4 ‘08
Filtrete™ air filtration solutions
Sales Operating Income
• Operating margins of 15.5%
Full Year Full Year Highlights
+1.1%
Operating
• Local-currency sales down 0.3% for 2008, including
Income Margins
0.4% benefit from acquisitions
2007 2008
• Full-year sales growth in home care, consumer health
20.3% 19.8%
care and do-it-yourself businesses
• Double-digit full-year sales and operating income
growth in Asia Pacific and Latin America, with solid
(1.5%)
single-digit growth in Europe
• Difficult US office markets and residential housing
2007 2008 2007 2008
construction markets persist
Sales Operating Income
• Operating margins of nearly 20%
*Excludes special items. Refer to 3M’s January 29th, 2009 press release for a complete list and explanation of these items.
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14. Segment Highlights – Display & Graphics
Fourth Quarter Q4 Highlights
• Local-currency decline of 25.8%; sales down 7.7%
Operating
excluding Optical Systems
Income Margins
(28.4%) Q4 ’07 Q4 ‘08
• Optical Systems sales and profits down 48% and 94%,
respectively due to rapid contraction of LCD market
25.8% 10.2%
• Local-currency sales in traffic safety systems up nearly
3% including 2.3% from acquisitions
(71.6%) • Media and advertising slowdown negatively impacts
commercial graphics
Q4 ‘07 Q4 ‘08 Q4 ‘07 Q4 ‘08
Sales Operating Income • Strong local-currency growth in Latin America
• Operating margins of 10.2%
Full Year
Full Year Highlights
Operating
• Local-currency sales down 17.9% for 2008
(16.6%) Income Margins
2007 2008
• Aggressively addressing cost structure to offset
28.5% 19.1% weak top-line growth, particularly in optical film
business
• 2-lamp energy saving story in LCD monitors
continues to gain traction
(44.1%)
• MPRO, 3M’s first handheld digital projector,
featured by Popular Science and covered
2007 2008 2007 2008
extensively at CES by national media
Sales Operating Income
• Full-year operating income margins of 19.1%
*Excludes special items. Refer to 3M’s January 29th, 2009 press release for a complete list and explanation of these items.
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15. Segment Highlights – Electro & Communications
Q4 Highlights
Fourth Quarter
• Local-currency sales down 12.3%, including 0.3%
Operating benefit from acquisitions
Income Margins
Q4 ’07 Q4 ‘08
(15.3%) • Electronic solutions and electronic markets materials
saw orders cancelled due to economic conditions
17.8% 14.5%
• Electrical markets won another contract from a major
utility for its ACCR overhead power cable solution
(30.6%) • Operating margins of 14.5%
Q4 ‘07 Q4 ‘08 Q4 ‘07 Q4 ‘08
Sales Operating Income Full Year Highlights
• Sales in local currency down 1.7% for 2008, including
Full Year 0.4% benefit from acquisitions
+1.0%
• Sales growth led by international performance
Operating
Income Margins
particularly Asia Pacific and Latin America
2007 2008
• Electrical markets and electronics markets materials
19.3% 19.3%
drove solid growth
• Soft telecommunications infrastructure market
worldwide
+1.1%
• Continued strong operational discipline with operating
margins of 19.3%
2007 2008 2007 2008
Sales Operating Income
*Excludes special items. Refer to 3M’s January 29th, 2009 press release for a complete list and explanation of these items.
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16. 2009 Planning Framework
Organic volume
– -5% to -9%
Foreign currency
– -6% to -7%
Earnings-per-share
– -9% to -17%, or $4.30 to $4.70
Free cash flow will approximate net income, however
pension and severance funding will be a wild card
*Excludes special items.
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