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Lehman Brothers Conference Presentation
- 1. George W. Buckley
Chairman of the Board, President, and CEO
3M Company
Accelerated Growth
Premium Returns
Enhanced Shareholder Value
February 12, 2008
© 3M 3M 2007. Rights Reserved.
© 2007. All All Rights Reserved. Lehman Brothers 2008 Industrial Select 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, 2006 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 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 3. Today’s Agenda
1. What happened at 3M in 2007
1
2. Recent performance
2
3. Unparalleled portfolio
3
4. Innovation
4
5. International operations
5
6. 2008 outlook
6
3
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 4. What Happened At 3M In 2007
We overcame the loss of $775M of Pharma sales and $255M of
Pharma earnings
We dealt with the loss of $40M + earnings in a little known end-of-
life flex-circuit issue (ink jet mainly)
We closed inefficient plants in Japan, Italy, US (multiple), Canada
and New Zealand
We put massive effort into solving long-standing capacity and
supply chain issues
We dealt with a significant legacy of underinvestment in technology
We bought back record numbers of shares and increased dividends
We did this in a softer optical environment for 3M
4
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 5. What Happened At 3M In 2007
Completed 16 acquisitions, including the second largest in our
history
We opened plants in China (2), Russia, Turkey, India, Mexico,
Canada and several line extensions in the US
Several other supply chains straightened out
We announced (final) closure of the East Side St Paul facility
We completed the Pharma sale and a couple of small non-core
businesses in Health Care and Traffic Safety
We instituted a new planning approach
We launched a new AIP for senior executive employees
5
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 6. The World 3M Lives In
A portfolio of mostly short-cycle businesses which can create short-
term variability on a quarter-by-quarter basis, but which has
consistently delivered on a year-by-year basis
A wide geographic portfolio increasingly focused on high-growth
emerging markets
The best technology sharing company in the world and among the
most innovative
An incredibly diverse product portfolio that partially inoculates us
against one or even two market declines
6
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 7. Our Direction Remains…
Investing to accelerate sustainable, profitable growth
Continue to strengthen the traditional core of 3M and further build on
our enduring franchises
Accelerating international growth, still enhanced by FX benefits
Continue a steady diet of tuck-in acquisitions
Continue to optimize our supply chains
It’s not just about factory foot print
Increasing sourcing in low cost countries
Driving operational excellence to maintain superior margins and ROIC
Steadily increasing dividends and consistent share buy backs
Provide attractive returns while maintaining flexibility to grow
7
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 8. Growth Must Be Balanced with Operational Excellence
Growth Operational Excellence
Protect and Adjacency
Grow the Core Build Out
3. Solve Low
1. Factory Cost 2. Control Price
1. New Technology 2. New Products 3. M&A Turns Inventory
Reduction Leakage
4. Emerging Bus. 4. Service & Quality
5. Localized, Simplified 6. Go to 5. Sourcing 6. Lean Six Sigma
Opportunities Revolution
Supply Chains Market
(EBO’s)
Operational Excellence Within A Growth Culture Is Essential
8
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 9. …And Our Formula Is Working
2005 2006
($Billions) 2007
Sales $20.4 $22.1 $24.5 Accelerating growth
% Growth +9% +10%
O.I. $4.6 $4.9 $5.5 Maintaining best-of-breed
22% 23%
% to Sales
EPS $3.92 $4.26 $4.98 Double-digit gains
% Growth 9% 17%
21.9% 21.6% 21.4%
ROIC Premium asset returns
Executing the Plan
Amounts exclude special items and pharma in all periods. See appendix for GAAP reported numbers. Return on Invested Capital is a non-GAAP measure; see appendix.
9
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 10. Delivered Double-Digit EPS Growth In 2007 Despite Impact Of
Pharma Divestiture
Earnings Per Share Ex. Pharma
$6.00
17%
$4.98
$5.00
11% Pharma
$4.49
$0.23 Base
$4.00
$4.26
$3.00
2006 2007
Actual Actual
Accelerated Sales Growth and Operational Excellence Is
Driving Results
Amounts exclude special items in all periods. See appendix for GAAP reported numbers.
10
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 11. All Businesses Are Contributing, But Changing
Total Local Currency Operating Margins
+27.8%
34%
21%
31%
17%
28%
13%
25%
9%
22%
5% 19%
16%
1%
2002 2003 2004 2005 2006 2007
2001 13%
-3% 2001 2002 2003 2004 2005 2006 2007
D&G LC Growth Other Segments LC Growth Total 3M LC Growth D&G OI Margin Other Segments OI Margin Total 3M OI Margin
Portfolio Breadth Strengthens Results
Amounts exclude special items in all periods. See appendix for GAAP reported numbers.
11
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 12. An Outstanding Portfolio: Growing, Profitable, Stable
Safety, Security &
($ in billions)
Health Care Protection Services
CAGR: Sales 12%, OI 12% CAGR: Sales 13%, OI 13%
$3.2 $0.8
$4.3 $1.3
$3.1
$4.0
$2.7
$2.6 $0.6
$3.4 $1.0
$3.2
$2.3
$3.0
$2.8
$2.2
$2.0 $0.3
$2.5 $0.6
2004 2005 2006 2007
2004 2005 2006 2007
LC Org Sls 2.8% LC Org Sls 4.1%
5.1% 7.4% 13.9% 6.2% 9.6% 3.4%
OI Margin 27.8% OI Margin 20.9%
30.0% 28.3% 27.5% 22.1% 21.0% 20.9%
Sales Operating Income
Amounts exclude special items in all periods. See appendix for GAAP reported numbers.
12
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 13. An Outstanding Portfolio: Growing, Profitable, Stable
Electro &
($ in billions)
Display & Graphics Communications
CAGR: Sales 5%, OI 0% CAGR: Sales 4%, OI 20%
$2.9 $0.6
$4.0 $1.3
$3.9 $2.8
$3.8
$2.6
$2.5
$3.5 $2.5
$2.5 $0.4
$1.0
$3.4
2004 2005 2006 2007
$2.0 $0.2
$3.0 $0.6
2004 2005 2006 2007
LC Org Sls 2.1% 1.5% 2.7% 0.8%
LC Org Sls 11.4% 4.6% 5.9% 1.7%
OI Margin 12.2% 16.8% 17.4% 18.8%
OI Margin 33.0% 32.4.% 28.7% 28.9%
Sales Operating Income
Amounts exclude special items in all periods. See appendix for GAAP reported numbers.
13
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 14. An Outstanding Portfolio: Growing, Profitable, Stable
Industrial &
($ in billions)
Consumer and Office
Transportation
CAGR: Sales 8%, OI 7%
CAGR: Sales 9%, OI 13%
$3.5 $1.0
$7.5 $3.4
$7.3 $1.9
$3.2
$6.6
$3.0 $0.7
$2.9
$6.5
$1.4
$6.0
$2.7
$5.6
$2.5 $0.4
$5.5 $0.9
2004 2005 2006 2007
2004 2005 2006 2007
LC Org Sls 5.2% LC Org Sls 10.9%
3.3% 4.4% 4.0% 6.1% 6.8% 4.0%
OI Margin 18.4% OI Margin
20.0% 20.4% 20.8% 20.4% 20.8% 19.9% 20.2%
Sales Operating Income
Amounts exclude special items in all periods. See appendix for GAAP reported numbers.
14
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 15. More Divisions Are Growing Faster…
# of Divisions
Total Local Currency Sales Growth
20
Better
17
15 16
Better
12
10 11
Better
7
5 6
0
< 5% 5-10% 10%+
2005 2007
An Improved Growth Profile with Lower Risk
15
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 16. …And More Divisions Are Accelerating Profit Growth As Well
# of Divisions
Operating Income Growth
20
Better
17
15
15
12
10
Better
8 Better
5 6 6
4
1
0
< 5% 5-10% 10-15% 15%+
2005 2007
Gaining Competitiveness Across 3M
Amounts exclude special items in all periods
16
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 17. Innovation
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 18. 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
18
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 19. 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
19
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 20. 3M’s Platforms Broadly Supported by Nanotechnology
Ad Am
Ce Fi Nw Mr
Ceramics Adhesives Films
Advanced Nonwoven Micro-
Materials Materials replication
Nanotechnology
Nanomaterial
Zirconia cubes
hardcoats
10nm
Silica spheres
75 nm
Nanoprocessing Nanocomposites Nanocatalysis Nanofabrication
Window Film Dental restoratives Filtration Drug Delivery
Reinventing material science through nanotechnology
20
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 21. New Product Success Ensures Long-Term Market
Sustainability
Just Some of 3M’s New
Platforms
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 22. Lava™ Chairside Oral Scanner
“Digital Impressions”
Technology Obtained via Brontes Acquisition
Technology Obtained via Brontes Acquisition
22
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 23. Digital Workflow for Oral Care
Prosthodontics
Model Production CAD/CAM Crown / Bridge
Orthodontics
Custom Appliances Design
Virtual Model Custom
Virtual Model Custom Design Digital Appliances
23
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select 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
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 25. A Great New Emerging Platform: Optically Clear
Adhesives (OCA)
Light Extraction PSA for OLED
Protective film
Functional
Injected
PSA
Hole
Visible Light Photons
OLED Glass
ITO
(n=1.51)
Anode
Al/Cathode
Organic Layer Injected Electron
25
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 26. 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
26
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 27. New Consumer Products Inspired by Non-Woven
Technology
Non-woven
• New performance attributes
• Natural materials
• Sustainable and renewable
27
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 28. Microreplication Drives Abrasives - 3M™ Trizact™ Belts
3M™ Trizact™ Cloth Belts 3M™ Trizact™ Diamond Cloth Belts
Benefits
- Increases throughput
- Reduces down-time
- Improves quality
- Long lasting
- Lower overall cost
28
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 29. 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
29
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 30. Advances in Ceramics Produce High Strength Glass Bubbles
• Stronger, Lighter, More Versatile
• Processing Advances and Capacity
• Building Blocks for Composites, Cements,
Insulation, Oil and Gas Fluids
Enhanced
Oil & Gas
Production
30
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 31. 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)
31
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 32. International Operations
Our Largest Growth Platform
32
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 33. 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
33
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 34. 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
34 Amounts exclude pharma in all periods.
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 35. 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…
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 36. …With a Growing Percentage of Emerging Market Sales
International Sales Growth
$8 ($ in Billions)
$7.0
7
Emerging Markets $6.1
6 Adding Almost $1B/Year
$5.2
Or 4% To Growth
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
Amounts exclude pharma in all periods
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 37. 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
Actively Managing Whatever Comes Our Way
37
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 38. 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
38
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 39. 3M Is A Premium Company That Will Only Get Better
Superior materials science and innovation
Superb international distribution with already-strong capabilities in
high-growth developing countries
Leading market positions with many enduring franchises
World-class margins and returns
Deliver on our commitments, year-in and year-out
Committed to shareholders
Over the period 2002-07: $11B share repurchases, $7B dividends; returned
>100% of reported net income via dividends and share repurchases
We Will Again Deliver On Our Commitments In 2008; We Will Invest To Ensure
A Strong Future For 3M; Our Team Will Get The Job Done Once Again
39
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 40. Question and Answer
February 12, 2008
© 3M 3M 2007. Rights Reserved.
© 2007. All All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 41. Appendix
February 12, 2008
© 3M 3M 2007. Rights Reserved.
© 2007. All All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference
- 42. 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
operations. The company believes that discussion of results excluding special items provides a useful
2005 2006 2007
analysis of ongoing operating trends. The determination of special items may not be comparable to
Return on Invested Capital 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 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
Year Year Year Year Year Year Year
Exchange Commission on January 29, 2008. There were no special items that impacted business segment
(Millions, except per-share amounts) 2001 2002 2003 2004 2005 2006 2007
Sales Dollars:
operating income results for the years 2005 and 2004.
Reported GAAP $ 16,054 $ 16,332 $ 18,232 $ 20,011 $ 21,167 $ 22,923 $ 24,462
Pharmaceutical $ (699) $ (767) $ (813) $ (793) $ (797) $ (774) $ -
Adjusted Non-GAAP $ 15,355 $ 15,565 $ 17,419 $ 19,218 $ 20,370 $ 22,149 $ 24,462
(1) Special items for the periods presented have been discussed in Form 8-K’s that were furnished to the
U.S. Securities and Exchange Commission on January 29, 2008 and January 30, 2007 and in 3M’s
Operating Income Dollars:
2003 Form 10-K filed March 2, 2004. Also reference 3M’s Form 8-K dated May 25, 2007, which
Reported GAAP $ 2,075 $ 2,816 $ 3,504 $ 4,326 $ 4,854 $ 5,696 $ 6,193
Special Items $ 504 $ 202 $ 93 $ (523) $ (681)
provided results that reflect for all periods presented the impacts of certain business segment product
Pharmaceutical $ (157) $ (200) $ (217) $ (194) $ (226) $ (256) $ -
moves effective in the first quarter of 2007.
Adjusted Non-GAAP $ 2,422 $ 2,818 $ 3,380 $ 4,132 $ 4,628 $ 4,917 $ 5,512
Diluted Earnings per Share:
(2) In December 2006 and January 2007, 3M completed the sale of its global branded Pharmaceuticals
Reported GAAP $ 1.60 $ 2.32 $ 2.88 $ 3.56 $ 3.98 $ 5.06 $ 5.60
business. In connection with these transactions, 3M’s Drug Delivery Systems Division became a
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) $ -
source of supply to the acquiring companies. Because of the extent of 3M cash flows from these
Adjusted Non-GAAP $ 1.87 $ 2.29 $ 2.77 $ 3.40 $ 3.92 $ 4.26 $ 4.98
agreements in relation to the disposed businesses, the operations of the branded Pharmaceuticals
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
The Company uses local-currency sales growth, which excludes the impact of translation or currency
sales and income are in the reported base 2006 period and also in prior periods. Where indicated, to
exchange rates, as an indication of its economic sales growth. The Company has provided the components
provide more meaningful trend information, portions of this presentation exclude the impact of 2006
of local-currency sales growth below, including the impact of translation. The Company has provided
and prior Pharmaceutical financial results, as this business was sold in December 2006 and January
local-currency sales growth that excludes the historical impacts of divestitures, primarily the
2007.
Pharmaceuticals business, to portray what it believes are more meaningful sales growth trends. 3M believes
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%
42
© 3M 2007. All Rights Reserved. Lehman Brothers 2008 Industrial Select Conference