JPMorgan Conference Presentation

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JPMorgan Conference Presentation

  1. 1. George W. Buckley Chairman, President and CEO 3M Company Accelerated Growth Premium Returns Enhanced Shareholder Value June 4, 2008 1 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  2. 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 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. 2 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  3. 3. Today’s Agenda Recent performance 1 Unparalleled and diverse portfolio 2 International operations 3 Innovation 4 Financial strength 5 3 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  4. 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. 2008 JPMorgan Basics and Industrials Conference
  5. 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 25% $5 GR A 18% C 20% ts +8 Poin $4 15% $3 10% $2 $1 5% $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. 2008 JPMorgan Basics and Industrials Conference
  6. 6. A Look Back: Q108 Highlights Positives Strong revenue growth and double-digit profit growth in 4 of 6 businesses Profit margins of 20 percent or better in all businesses Rapid growth in developing countries – China, Russia, India, Middle East, Eastern Europe – all growing 15 to 30 percent Tax rate improvement Closed Aearo acquisition April 1st Balance sheet remains strong 50th consecutive annual dividend increase Returned $863 million to shareholders via dividends and share repurchases Challenges Tough U.S. economy, particularly in retail, auto OEM and housing Optical Systems Commodity prices at record levels and consequent impact on energy and transportation costs Sales Up 9%, EPS Up 8%, 23.2% OI Margins In A Tough US Environment; Ex-Optical, Sales & Operating Income Rose 11% & 12%, Respectively 6 *Excludes special items in 2007. Refer to 3M’s April 24, 2008 press release for a complete list and explanation of these items. © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  7. 7. 3M: A Powerful, Diverse and Integrated Enterprise Q1 2008 Sales = $6.5 billion, up 9% Q1 2008 EPS = $1.38, up 8% E&C 11% EMEA I&TB US C&O 28% 32% 34% 13% Int’l 66% SS&PS 13% HCB APAC LAC 17% D&G 27% 11% 14% Emerging markets up 13% Four of six business—strong sales growth & double-digit operating income increases Developed markets up 7% Results impacted by weaknesses in D&G Total company up 9% and C&O 7 *Excludes special items in 2007. Refer to 3M’s April 24, 2008 press release for a complete list and explanation of these items. © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  8. 8. Unparalleled and Diverse Portfolio 8 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  9. 9. Industrial and Transportation ($ 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 $0.9 2004 2005 2006 2007 LC Org Sls 5.2% Global market leader in tapes, 3.1% 4.4% 4.0% OI Margin 18.4% 20.0% 20.4% 20.7% abrasives, autobody repair and specialty automotive OEM solutions Amounts exclude special items in all periods. See appendix. 9 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  10. 10. Health Care ($ 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 $0.6 2004 2005 2006 2007 LC Org Sls 2.8% 5.1% 7.4% 13.9% Technology leadership across health OI Margin 27.8% 30.0% 28.3% 27.5% care market; a growing space driven by aging population and global expansion Amounts exclude special items and pharma in all periods. See appendix. 10 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  11. 11. Display and Graphics ($ 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 $0.6 2004 2005 2006 2007 LC Org Sls 10.1% 3.1% 4.9% 2.6% Leading market positions in LCD OI Margin 32.8% 32.5.% 28.7% 28.5% films, traffic safety systems and commercial graphics Amounts exclude special items in all periods. See appendix. 11 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  12. 12. Consumer and Office ($ 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 $0.4 2004 2005 2006 2007 LC Org Sls 10.9% 6.4% 6.8% 4.1% Category defining brands: OI Margin 20.4% 20.9% 20.0% 20.3% Scotch®, Post-it®, Scotch-Brite®, Filtrete™ and Command™ 12 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  13. 13. Safety, Security and Protection Services ($ 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 $0.3 2004 2005 2006 2007 Global leader in respiratory protection, LC Org Sls 4.1% 6.2% 9.6% 3.4% roofing granules, building safety solutions & OI Margin 20.9% 22.1% 21.0% 20.9% automated library systems; emerging security systems & RFID platforms Amounts exclude special items in all periods. See appendix. 13 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  14. 14. Electro and Communications ($ 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. 2008 JPMorgan Basics and Industrials Conference
  15. 15. The 3M Portfolio 2007 Sales = $24.5 billion Res. & Com. Const. 4% -5% Transport E&C 10% - 13% I&TB 11% Industrial SSPS 30% 25%- 30% Gov't & 13% Infrastructure 10% - 13% C&O Health Care Electronics 14% HCB 16% 12% - 15% D&G 16% Consumer 16% 14% - 16% Segment Breakdown End Market Breakdown A Global, Diversified & Powerful Set Of Businesses 15 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  16. 16. International Operations Our Largest Growth Platform 16 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  17. 17. 3M’s Subsidiary Network Poland Switzerland Norway Hungary Canada Czech Trinidad Austria East Romania Republic Sweden & Tobago Finland Ukraine Puerto Rico Russia Germany Dominican Republic Kazakhstan Denmark Korea Jamaica Netherlands Belgium Japan United Mexico Kingdom China Guatemala Portugal Hong Kong El Salvador Spain Taiwan Costa Rica Vietnam Panama France Pakistan Colombia Philippines UAE Morocco Indonesia Venezuela Thailand Israel Ecuador Italy Malaysia Singapore Egypt Peru Greece Sri New Zealand Australia Lanka Brazil Kenya India Chile Turkey Uruguay Key Argentina Sales & Marketing South Africa Manufacturing/Converting Technical Capabilities 17 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  18. 18. 3M’s Dependency on US Economy Lessens Over Time 70% 64-65% 65% Percentage Non-US 60% 55% 51% 50% 45% 40% E 98 99 00 01 02 03 04 05 06 07 08 19 19 20 20 20 20 20 20 20 20 20 Amounts exclude pharma in all periods. 18 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  19. 19. Accelerating International Sales Growth International Sales Growth ($ 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. 19 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  20. 20. …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 20 Amounts exclude pharma in all periods © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  21. 21. Innovation 21 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  22. 22. 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 22 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  23. 23. 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 2012 OI Margin = 25% 2003 OI Margin = 12% 2012 ROIC = 45% 2003 ROIC = 16% 2007 Growth Rate = 7.8% 2003 Growth Rate ≈ 1% Movement to higher growth, higher profit market zones 23 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  24. 24. Lava™ Chairside Oral Scanner “Digital Impressions” Technology Obtained via Brontes Acquisition 24 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  25. 25. 3M Mobile Projection Products Huge Interest by branded consumer electronics manufacturers and ODM’s. Applications being considered in:- Mobile Phone Media Players Digital Cameras Smartphones UMPC Pocket Big Screen TVs Camcorders 25 Laptops © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  26. 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. 2008 JPMorgan Basics and Industrials Conference
  27. 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. 2008 JPMorgan Basics and Industrials Conference
  28. 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. 2008 JPMorgan Basics and Industrials Conference
  29. 29. Financial Strength 29 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  30. 30. Financial Policy First priority: fund available organic 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. 2008 JPMorgan Basics and Industrials Conference
  31. 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 $1,300 Returned 108% of Reported $1,200 Net Income Via Dividends $1,100 and Share Repurchases $1,000 $900 $800 2001 2002 2003 2004 2005 2006 2007 31 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  32. 32. 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 32 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  33. 33. Question and Answer 33 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  34. 34. Appendix 34 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  35. 35. 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% 35 Amounts exclude special items in all periods. See appendix. © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  36. 36. 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% 36 Amounts exclude special items and pharma in all periods. See appendix. © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  37. 37. 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% 37 Amounts exclude special items in all periods. See appendix. © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  38. 38. 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% 38 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  39. 39. 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% 39 Amounts exclude special items in all periods. See appendix. © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  40. 40. 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% 40 Amounts exclude special items in all periods. See appendix. © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference
  41. 41. Non-GAAP Financial Measures 3M Company and Subsidiaries SUPPLEMENTAL CONSOLIDATED INFORMATION NON-GAAP FINANCIAL MEASURES (Millions, except per-share amounts) (Unaudited) In addition to reporting financial results in accordance with U.S. generally accepted accounting principles The Company uses non-GAAP measures to focus on shareholder value creation. 3M uses Return on (GAAP), the Company also discusses non-GAAP measures that exclude special items. Sales, operating Invested Capital (ROIC), defined as annualized after-tax operating income (including interest income) divided by average operating capital. Operating capital is defined as net assets (total assets less total income and diluted earnings per share measures that exclude special items and that exclude the impact of liabilities) excluding debt and minority interest liabilities. 3M’s ROIC calculation was revised in 2008 to Pharmaceuticals are not in accordance with, nor are they a substitute for, GAAP measures. Special items include interest income and to simplify/improve the means for determining operating capital. Prior period represent significant charges or credits that are important to an understanding of the Company’s ongoing amounts have been updated to conform to the revised calculation. This measure excludes special items and operations. The company uses these non-GAAP measures to evaluate and manage the Company’s the historical impacts of the Pharmaceuticals business (see Notes 1 and 2). These measures are not operations. The company believes that discussion of results excluding special items provides a useful recognized under U.S. generally accepted accounting principles and may not be comparable to similarly analysis of ongoing operating trends. The determination of special items may not be comparable to titled measures used by other companies. similarly titled measures used by other companies. Special items for the twelve months ended December 31, 2007 and 2006 and prior periods presented have been previously provided (See Note 1). In addition, the Year Year Year Year First Three Company believes that providing financial results excluding the impact of Pharmaceuticals provides useful 2001 2005 2006 2007 Months 2008 information (See Note 2). The reconciliations provided below reconcile the non-GAAP financial measures Return on Invested Capital 14.2% 24.4% 27.8% 27.1% 22.0% with the most directly comparable GAAP financial measures for the periods indicated. Return on Invested Capital - excluding Pharmaceuticals and Special Items 16.3% 23.8% 23.6% 24.2% 22.0% Year Year Year Year Year Year Year First Three (Millions, except per-share amounts) 2001 2002 2003 2004 2005 2006 2007 Months 2008 Sales Dollars: As previously indicated, the Company provides non-GAAP measures, including the business segment Reported GAAP $ 16,054 $ 16,332 $ 18,232 $ 20,011 $ 21,167 $ 22,923 $ 24,462 $ 6,463 operating income amounts shown within this presentation that exclude special items. Special items for the Pharmaceutical $ (699) $ (767) $ (813) $ (793) $ (797) $ (774) $ - $ - Adjusted Non-GAAP $ 15,355 $ 15,565 $ 17,419 $ 19,218 $ 20,370 $ 22,149 $ 24,462 $ 6,463 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 filed May 19, 2008, provided results that reflect for all Operating Income Dollars: Reported GAAP $ 2,075 $ 2,816 $ 3,504 $ 4,326 $ 4,854 $ 5,696 $ 6,193 $ 1,501 periods presented the impacts of certain business segment product moves effective in the first quarter of Special Items $ 504 $ 202 $ 93 $ - $ - $ (523) $ (681) $ - 2008. There were no special items that impacted business segment operating income results for the first Pharmaceutical $ (157) $ (200) $ (217) $ (194) $ (226) $ (256) $ - $ - Adjusted Non-GAAP $ 2,422 $ 2,818 $ 3,380 $ 4,132 $ 4,628 $ 4,917 $ 5,512 $ 1,501 three months of 2008, year 2005 and year 2004. Diluted Earnings per Share: Reported GAAP $ 1.60 $ 2.32 $ 2.88 $ 3.56 $ 3.98 $ 5.06 $ 5.60 $ 1.38 (1) Special items for the periods presented have been discussed in Form 8-K’s that were furnished to the Special Items $ 0.39 $ 0.14 $ 0.07 $ - $ 0.14 $ (0.57) $ (0.62) $ - Pharmaceutical $ (0.12) $ (0.17) $ (0.18) $ (0.16) $ (0.20) $ (0.23) $ - $ - U.S. Securities and Exchange Commission on January 29, 2008 and January 30, 2007 and in 3M’s Adjusted Non-GAAP $ 1.87 $ 2.29 $ 2.77 $ 3.40 $ 3.92 $ 4.26 $ 4.98 $ 1.38 2003 Form 10-K filed March 2, 2004. Also reference 3M’s Form 8-K dated May 19, 2008, which provided results that reflect for all periods presented the impacts of certain business segment product The Company uses local-currency sales growth, which excludes the impact of translation or currency moves effective in the first quarter of 2008. exchange rates, as an indication of its economic sales growth. The Company has provided the components of local-currency sales growth below, including the impact of translation. The Company has provided (2) In December 2006 and January 2007, 3M completed the sale of its global branded Pharmaceuticals local-currency sales growth that excludes the historical impacts of divestitures, primarily the business. In connection with these transactions, 3M’s Drug Delivery Systems Division became a Pharmaceuticals business, to portray what it believes are more meaningful sales growth trends. 3M believes source of supply to the acquiring companies. Because of the extent of 3M cash flows from these this non-GAAP sales growth information excluding divestitures provides useful information (See Note 2). agreements in relation to the disposed businesses, the operations of the branded Pharmaceuticals These measures are not in accordance with, nor are they a substitute for, GAAP measures. business were not classified as discontinued operations. The sale of the branded Pharmaceuticals business impacted both sales and operating income growth in 2007, as significant Pharmaceuticals Year Year Year Year Year Year Year First Three 2001 2002 2003 2004 2005 2006 2007 Months 2008 sales and income are in the reported base 2006 period and also in prior periods. Where indicated, to Sales Change Percents: provide more meaningful trend information, portions of this presentation exclude the impact of 2006 Total Reported Sales Change -3.9% 1.7% 11.6% 9.8% 5.8% 8.3% 6.7% 8.9% Less: Translation Impact -3.3% 0.1% 5.2% 3.8% 0.7% 0.6% 3.2% 6.1% and prior Pharmaceutical financial results, as this business was sold in December 2006 and January Local-Currency Sales Change (including divestitures) -0.6% 1.6% 6.4% 6.0% 5.1% 7.7% 3.5% 2.8% 2007. Local Currency Sales Change (excluding divestitures) -1.1% 1.4% 6.8% 6.5% 5.3% 8.1% 7.3% 3.0% 41 © 3M 2008. All Rights Reserved. 2008 JPMorgan Basics and Industrials Conference

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