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2008 Citigroup Conference Presentation

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  • 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% 43 © 3M 2008. All Rights Reserved. Citigroup 2008 Global Industrial Manufacturing Conference