© 3M 2007. All Rights Reserved.
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2007 3M Investor Conference
AgendaTuesday, October 91:00-1:45 Patrick D. Campbell, Senior Vice President and Chief Financial Officer1:45–3:15 George W. Buckley, Chairman of the Board, President and Chief Executive Officer3:15-3:30 Break3:30-4:00 Brad T. Sauer, Executive Vice President, Health Care Business4:00-4:30 Jean Lobey, Executive Vice President, Safety, Security & Protection Services Business4:30-5:15 Panel Q&A5:15-9:00 Product and technology displays, 3M Innovation Center tours; food and cocktails
After 5:30 p.m., buses will depart every 30 minutes to the St. Paul Hotel
Wednesday, October 106:30-7:30 Continental breakfast7:30-8:00 John K. Woodworth, Senior Vice President, Supply Chain Operations8:00 Depart for pilot plant8:15-9:15 Film pilot plant tour9:30 Depart for Hutchinson plant (box lunch/snack provided)11:00-2:00 Hutchinson plant tour2:00-3:30 Return trip to airport, St. Paul Hotel and 3M Center
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2007 3M Investor Conference
• Opened Sept. 2006 • >35,000 visitors• ~1,500 events• >700 customer visits
3M Innovation Center: Connecting With Customers
• 15% of visits from International customers
• Supports worldwide network of customer technical centers in 26 countries
Providing Access to Global 3M Problem Solving Capabilities
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2007 3M Investor Conference
Forward-Looking StatementsThese presentations contains forward-looking information (within the meaning of the Private Securities Litigation
Reform Act of 1995) about the company’s financial results and estimates, business prospects, and products under development 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 Part I, Item 1A (Annual Report) and Part II, Item 1A (Quarterly Report), “Risk Factors.” The information contained in these
presentations is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in thes presentations as a result of new information or future events or developments.
October 9 & 10, 20073M Investor Conference
© 3M 2007. All Rights Reserved.
Working Our Plan
Patrick D. CampbellSr. Vice President and Chief Financial OfficerOctober 9th, 2007
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2007 3M Investor Conference
Last Year We Asked These Questions….
Can we accelerate growth?
Plans To Drive Higher Earnings & P/E
Are our current margins sustainable?
How will our more aggressive growth plans impact ROIC?
How will we deploy the balance sheet?
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2007 3M Investor Conference
…. And Since Then We Have Delivered These Results*
Executing the Plan
22.7%21.6%21.9%ROIC
$2.5017.9%
$4.268.7%
$3.92EPS% Growth
$2.823.4%
$4.922.2%
$4.622.7%
O.I.% to Sales
$12.1+10.9%
$22.1+8.7%
$20.4Sales% Growth
H10720062005($Billions)
* Excludes special items and pharma in all periods. See appendix for GAAP reported numbers. Return on Invested Capital is a non-GAAP measure; see appendix for a full reconciliation to GAAP results.
Accelerating growth
Maintaining best-of-breed
Double-digit gains
Premium asset returns
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2007 3M Investor Conference
12%
16%
20%
24%
2001 2005 2006 1H07
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
2001 2005 2006 1H070%
5%
10%
15%
20%
25%Operating Income Operating Margin %
EPS
Operating Income & Margins
+12.0% +6.3%
+14.1%
21.6%
ROIC
15.3%
21.9%22.7%
Driving Sustainable Results Over The Long Haul* ….
$0.00$1.00$2.00
$3.00$4.00$5.00
2001 2005 2006 1H07
+15.0%+8.7%
+17.9%
5.3%
8.1% 8.4%
-1.1%
-1.5%0.0%1.5%3.0%4.5%6.0%7.5%9.0%
2001 2005 2006 1H07
Total LC Growth
6% CAGR
18% CAGR
+6.3 Points
15% CAGR
(11.0%)
(14.5%)
* Excludes special items and pharma in all periods. See appendix for GAAP reported numbers. Return on Invested Capital is a non-GAAP measure; see appendix for a full reconciliation to GAAP results.
Maintaining Premium Returns; Accelerating Sustainable LC Growth
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2007 3M Investor Conference
Portfolio Breadth Strengthens Results
Total Local Currency OI Margins
* Excludes special items and pharma in all periods.
+27.8%
D&G LC Growth Other Segments LC Growth Total 3M LC Growth
2001 2002 2003 2004 2005 2006
21%
17%
13%
9%
5%
1%
-3%
All Businesses Contributing, But Changing*
2001 20032002 20052004 2006
34%
31%
13%
28%
16%
25%
19%
22%
D&G OI Margin Other Segment OI Margin Total 3M OI Margin
© 3M 2007. All Rights Reserved.
9
2007 3M Investor Conference~2X Global IPI5.3%-1.1%LC Growth*22% to 23%22.7%15.8%Margins*
2001 2005 2008 2011
Valu
e Cre
atio
n
Productivity
Growth
Holding Margins While Accelerating Growth
* Excludes special items and pharma in all periods.
Our Journey to a Faster Growth High Return Company…
© 3M 2007. All Rights Reserved.
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2007 3M Investor Conference
2001 2005 2008 2011
Valu
e Cre
atio
n
Productivity
Growth
~2X Global IPI5.3%-1.1%LC Growth*22% to 23%22.7%15.8%Margins*
Indirect CostsGlobal Sourcing
Six SigmaOverhead Leverage
Health Care Containment
Restructuring
Big 3MUpgrade Marketing Skills
Brand BuildingEnd Mkt Org Structure
ServiceInt’l Portfolio Planning
Price Leakage 21.9%15.3%ROIC
$3.9215.0%
$1.87EPS% Change
$4.622.7%
$2.415.8%
Operating Income% to Sales
$20.46.0%
$15.4Sales% Growth
’05’01($ in Millions)
* Excludes special items and pharma in all periods.
Our Journey to a Faster Growth High Return Company…
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2007 3M Investor Conference
Total Local Currency Sales Growth 2x IPI
Leverage Total Local Currency Growth – 30% to 40%
Productivity offsets inflation/pricing; reinvest excess
Delivering Sustainable Long-Term Shareholder Return
3M’s Iterative Financial Planning Model
Other potential gains – FX, pension, asset sales
Share repurchases offset dilution at minimum
Incremental Tax Rate Improvements
Double Digit EPS Growth
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2007 3M Investor Conference
2001 2005 2008 2011
Valu
e Cre
atio
n
Productivity
Growth
~2X Global IPI5.3%-1.1%LC Growth*22% to 23%22.7%15.8%Margins*
Indirect CostsGlobal Sourcing
Six SigmaOverhead Leverage
Health Care Containment
Restructuring
Big 3MUpgrade Marketing Skills
Brand BuildingEnd Mkt Org Structure
ServiceInt’l Portfolio Planning
Price Leakage
* Excludes special items and pharma in all periods.
Our Journey to a Faster Growth High Return Company…
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2007 3M Investor Conference
Drive Out Cost … Localize … Reinvest in Growth … Iterate* Excludes pharma and special items in all periods.
$0.0
$0.5
$1.0
$1.5
$2.0
2001 2005 2006 20080%
2%
4%
6%
8%
10%
Overhead Cost $B% to Sales
~2.5% of Margin
2001-05
~1.5% of Margin
2005-08
Volume Leverage TechnologyInt’l Localization Lean Principles
Blocking/Tackling
Via
General & Administrative Cost Leverage*
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2007 3M Investor Conference
2001 2005 2008 2011
Valu
e Cre
atio
n
Productivity
~2X Global IPI5.3%-1.1%LC Growth*22% to 23%22.7%15.8%Margins*
Indirect CostsGlobal Sourcing
Six SigmaOverhead Leverage
Health Care Containment
RestructuringLean Six Sigma
Growth
Big 3MUpgrade Marketing Skills
Brand BuildingEnd Mkt Org Structure
ServiceInt’l Portfolio Planning
Price Leakage
* Excludes special items and pharma in all periods.
Our Journey to a Faster Growth High Return Company…
© 3M 2007. All Rights Reserved.
Lean Six Sigma
Driving Growthand Operational Excellence
John Houle, Staff Vice President, Supply Chain and Manufacturingand Lean Six Sigma
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2007 3M Investor Conference
LeanLean processes tell us……“Don’t perpetuate a process that does not add value for the CUSTOMER!”
Six SigmaSix Sigma processes advise…“Once we identify value-added processes, let’s absolutely minimize the variability and get them in control.”
VA X VA VA
Don’t waste your efforts employing Six Sigma principles to something that does not add value for the Customer.
Lean + Six Sigma =
Strength in Processes
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2007 3M Investor Conference
Lean Six Sigma – Continuous Evolution, Strong Foundation
Lean Six Sigma is aligned to our businesses enabling growth, productivity, and operational excellence
Excellent deployment of Lean Six Sigma globally>55,000 employees trained >49,000 projects in-process or closed>700 full-time employees dedicated globally>760 customer projects either in-process or closed
Contributed More Than $4.5B in Savings Since 2001
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2007 3M Investor Conference
Lean Six Sigma Example3M Perth, Ontario, Canada - Tape Manufacturing
ONTARIO
MANITOBA
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2007 3M Investor Conference
3M Perth, Ontario Products
Tartan™ Filament Tape 8934
Filament Tapes
Scotch® Filament Tape 899
Scotch® Filament Tape 894
Scotch® Filament Tape 893
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2007 3M Investor Conference
3M Perth, OntarioBusiness situation:
Needed improved linkage between planning, production and shippingNeeded clear priorities establishedManual printing of priority lists
Lean tools applied Visual controls – scheduling and status boards
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2007 3M Investor Conference
Quick assessment schedule to planQuick visibility of order statusResource prioritization Overtime requirements planningVisibility for material delivery
Visual Scheduling Benefits
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2007 3M Investor Conference
2006 20072005
On-time Improvement – 19%
3M Perth, Ontario
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2007 3M Investor Conference
Lean Six Sigma Example3M Ames, Iowa – Abrasive Manufacturing
Disc Roll Sheets HookitTM
RolocTM
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2007 3M Investor Conference
3M Ames, IowaBusiness situation:
Cyclical customer demand, resulting in: • Poor service levels • Increased cost of goods sold
Lean tools applied Changeover wheelsPull systemsLevel schedule loading
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2007 3M Investor Conference
2006 2007
Total Backorder Reduction -77%
3M Ames, Iowa
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2007 3M Investor Conference
Lines on Time /Product Availability - 6% Improvement
2006 2007
3M Ames, Iowa
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2007 3M Investor Conference
Lean Six Sigma Example3M Irvine, CA – Dental Product Manufacturing
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2007 3M Investor Conference
3M Irvine, CA – Products
Filtek™ Z250 Filtek™ Supreme
Crowns
Adper™ Scotchbond
Paradigm™ MZ100
RelyX™ ARC
Sof-Lex™
Z100™Imprint™ II Garant™
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2007 3M Investor Conference
3M Irvine, CABusiness situation
Capacity and lead time negatively impacting service
Lean tools applied 5S, visual management: production status boardsValue stream maps – current & futurePlan for every part / material delivery system Operator balance / standard work / cell design for flowChangeover reduction
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2007 3M Investor Conference
AfterAfter
3M Irvine, CA
BeforeBefore
Transforming the Shop Floor
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2007 3M Investor Conference
Lead Time Reduction from 105 days 55 daysUS Lines On-time delivery from 74% 89%Int’l Lines On-time delivery from 71% 84%
InternationalUS
3M Irvine, CA
2003 2004 2005 20062003 2004 2005 2006
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2007 3M Investor Conference
Lean Six Sigma
Strong foundation built on Six SigmaAligned to our business objectivesTransforming how we execute and energizing our workforceDriving growth through customer success
A Key Tool To Achieve Growth And Productivity
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2007 3M Investor Conference
2001 2005 2008 2011
Valu
e Cre
atio
n
Productivity
~2X Global IPI5.3%-1.1%LC Growth*22% to 23%22.7%15.8%Margins*
Indirect CostsGlobal Sourcing
Six SigmaOverhead Leverage
Health Care Containment
RestructuringLean Six Sigma
Supply ChainService
CostWorking Capital
Taxes
Growth
Big 3MUpgrade Marketing Skills
Brand BuildingEnd Mkt Org Structure
ServiceInt’l Portfolio Planning
Price Leakage
* Excludes special items and pharma in all periods.
Our Journey to a Faster Growth High Return Company…
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2007 3M Investor Conference
Accelerated GrowthService, higher fill rates
A Huge Prize Remains for Supply Chain Improvements
Accelerate Growth … Drive Productivity … Reinvest
Cost reductionLabor, logistics, shrinkage
Lower InventoryWIP, FG, local sourcing
+1 point minimum,adds ~$100M OI
Minimum +1 turn,adds ~$700M to FCF
+80 to 100 bps gross margin,adds ~$300M to $400M OI/year
2012 Opportunity
$1 Billion-PlusOpportunity
plus
equals
plus
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2007 3M Investor Conference
2006 Sales
39%
61%
2006 PP&E - Net
57%43%
International
InternationalU.S.U.S.
Global Sales vs. Net PP&E Footprint
Moving Assets to Low Tax Growth Markets
U.S.
2012 Sales
~35%
~65%
2012 PP&E - Net
~45%~55%
International
U.S.International
U.S.
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2007 3M Investor Conference
Geographic Imbalance Stresses Inventory Performance
Minimum 1 Turn Improvement = $700MM In 2012
5.3 to 4.73.5 to 5.3Inventory Turns Change
$0.7B($0.4B)Inventory Change
$2.9B$3.3BTotal Sales Growth
2004-062001-04
2001-04Turns improved, but
service levels declined …not sustainable
2004-06Renewed focus on service, driving fundamental supply
chain changes for permanentturns improvement
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2007 3M Investor Conference
$0
$500
$1,000
$1,500
$2,000
$2,500
Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08
Ultim
ate C
apac
ityNew Plant Construction Timeline
4 plants
4 plants
4 plants1 plant 3 plants
1 plant
Plan Is On Track
2 plants
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2007 3M Investor Conference
Tax Rate Vs. Peers
Significant Opportunity To Create Sustainable Shareholder Value
Why Are We Higher Than Our Peers?
• Manufacturing and IP predominantly in the US, Western Europe and Japan
• All business operations headquartered in US
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
3M ITW DHR UTX HON DD JNJ
Tax R
ate %
Peer Ave = 27%
2006 Rates2007e
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2007 3M Investor Conference
Technical capability will continue to expand faster in international growth
markets
Heavily weighted to US, Western Europe, Japan
Technical Resources
After-taxPre-taxInternal Financial Measurements
Business unit operations will migrate to international markets
All US-based(~50% of divisions have
int’l sales >60%)
Business Unit Operations
Locate capacity in low-tax locations with common shipping locations to
growth markets
Heavily weighted to US, Western Europe, Japan
Manufacturing Asset Locations
FutureToday
Target Tax Rate 30.5% by 2012; Reduction of ~2.5%
Tax Reduction: A Benefit Of Our Supply Chain Strategy
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2007 3M Investor Conference
2001 2005 2008 2011
Valu
e Cre
atio
n
Productivity
~2X Global IPI5.3%-1.1%LC Growth*22% to 23%22.7%15.8%Margins*
Indirect CostsGlobal Sourcing
Six SigmaOverhead Leverage
Health Care Containment
RestructuringLean Six Sigma
Supply ChainService
CostWorking Capital
Taxes
Growth
Big 3MUpgrade Marketing Skills
Brand BuildingEnd Mkt Org Structure
ServiceInt’l Portfolio Planning
Price Leakage
Selective Restructuring
* Excludes special items and pharma in all periods.
Our Journey to a Faster Growth High Return Company…
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2007 3M Investor Conference
Not Only Building, But Also Rationalizing Old and Acquired Facilities
Actively Managing Excess Facilities to Improve Productivity and Inventories
2002 – 2005 –2003 – 2006 –2004 – 2007 –
© 3M 2007. All Rights Reserved.
Capital Allocation – ’07 to ‘08
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2007 3M Investor Conference
Financial PolicyFirst priority: fund available growth
Capital expenditures: drive 20%+ ROIC via organic growthSupplement organic with accretive, growth-enhancing acquisitions
Increase annual dividendMaintain competitive yield and payout ratioOffset inflation at a minimum, with the maximum dependent on other growth-generating uses at that time
Opportunistic share buybackEconomic dynamics and alternative cash uses will drive repurchase levelsReady 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
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2007 3M Investor Conference
Capital Allocation Model – ’07 to ’08
Maintaining Balance While Increasing Growth Investments
Cash Flow From Operations
~$9 to $10B
Asset Sales
~$400M to $500M
Growth Employees/Retirees ShareholdersCap Ex
~$2.8 to $3BAligned to higher
growth
M&A$1B to $2B
Aligned with strategic intent
Pension~$0.3 to $0.7BFully-funded
status
Dividends~$2.8B
Continue historicaltrack record
Net Share Repurchase~$2.5 to $3.5B
Opportunisticallypursue additional
shares
+ = Cash Available~$9.5 to $10.5B
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2007 3M Investor Conference
Business and Real Estate Divestitures
Divesting Non-Strategic Businesses; Actively Monetizing 8-10 Real Estate Properties at Present
Businesses
3M Pharmaceuticals
Real EstateCergy, France
St. Paul, MN
3M Opticom Priority Control Systems
San Felice, Italy Suwon, Korea
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2007 3M Investor Conference
Capital Expenditures & Depreciation
$0
$400
$800
$1,200
$1,600
1997 1998 2001 2002 2003 2004 2005 2006 2007e 2008e
Cap Ex Depreciation
Investing in Growth; Manageable Impact on D&A
Depreciation % to sales 5.4% 5.5% 6.2% 5.6% 5.1% 4.8% 4.4% 4.3% 4.0% 4.0%
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2007 3M Investor Conference
M&A Strategy
Will fit tightly defined strategic needs in the core or in near adjacenciesMajority will be bolt-on acquisitions placed in markets we understandChannels of distribution will be familiarThe acquisition may bring technology, market access or scaleAcquisitions will have an ethical fit Some acquisitions will be international, aimed at gaining market access While top brands are preferred, some will be appropriately chosen secondary brands
Margin dilutive acquisitions will always contribute to net positive shareholder value through higher growthPrice will always be a factorTail liabilities will be scrutinizedWill be EPS accretive or neutral end of year 1 excluding purchase accountingMajority of acquisitions will be Economic Profit accretive by the end of year 3
Strategic Intent Economics
M&A Remains A Key Component Of Our Growth Strategy
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2007 3M Investor Conference
Amounts exclude Brontes, a pre-revenue technology acquisition in the dental business; price multiples reflect 12-month forward sales and EBITDA amounts
Expanding Our Business Portfolio Via Acquisitions …2006-07 Acquisition ActivityPurchase price $1.1BPrice/sales 1.4xPrice/EBITDA 8.4xImpact on Growth ~3%Business # of Acq’s Growth ImpactSafety, Sec & Prot 7 7.5%Ind’l & Transp 7 3.6%Health Care 10 3.0%Consumer & Office 3 1.0%Electro & Comm 4 0.8%Display & Graphics 1 0.2%
Current M&A Environment Favoring Strategic Buyers
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2007 3M Investor Conference
Stepped Up Pace of Acquisitions 2006-07
Industrial & Transportation
Healthcare
Display & Graphics
Consumer & Office
Electro & Communications
Safety, Security, & Protection Svcs
Accelerating Growth In All Businesses
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2007 3M Investor Conference
Global Pension & Post-Employment Liabilities
88% 87%
94%
99%
80%83%
75%
70%
75%
80%
85%
90%
95%
100%
2001 2002 2003 2004 2005 2006 2007e
Fund
ed S
tatu
s (%
)
Good Progress, Nearly Fully Funded
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2007 3M Investor Conference
Dividend Trends
Source: FactSet. Based on data as of September 28,2007Note: Revenue growth calculated as CY2006-2008E CAGR.1. Calculated as annualized dividends per share / average 2007 YTD share price.2. Calculated as LTM dividends per share / LTM EPS from operations.3. Excludes 1 company with dividend-payout ratio greater than 200% and 7 companies for which 2008E IBES projected revenues were not available.
S&P 500 DividendS&P 500 Dividend--Paying Paying CompaniesCompanies’’ Dividend YieldDividend Yield11
S&P 500 DividendS&P 500 Dividend--Paying Paying CompaniesCompanies’’ Payout RatioPayout Ratio22
1.7%
2.4%
1.8%1.9%
2.3%
0%
1%
2%
3%
4%
< 5% ≥ 5% and <10%
≥ 10% and <15%
≥ 15%
Revenue Growth
Div
iden
d Yi
eld
Mean:
# Companies 3 201 156 68 67# Paying Div. 164 130 48 29% Paying Div. 82% 83% 71% 43%
2.1%
3M
33.7%
24.0%
35.9%32.8%
38.7%
0%
10%
20%
30%
40%
50%
< 5% ≥ 5% and <10%
≥ 10% and <15%
≥ 15%
Revenue Growth
Divi
dend
Pay
out
# Companies 3 201 156 68 67# Paying Div. 164 130 48 29% Paying Div. 82% 83% 71% 43%
34.1%Mean:
3M
10/9/2007 1:14 PM© 3M 2007. All Rights Reserved.
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2007 3M Investor Conference
Dividend Trends
Source: FactSet. Based on data as of September 28,2007Note: Revenue growth calculated as CY2006-2008E CAGR.1. Calculated as annualized dividends per share / average 2007 YTD share price.2. Calculated as LTM dividends per share / LTM EPS from operations.3. Excludes 1 company with dividend-payout ratio greater than 200% and 7 companies for which 2008E IBES projected revenues were not available.
S&P 500 DividendS&P 500 Dividend--Paying Paying CompaniesCompanies’’ Dividend YieldDividend Yield11
S&P 500 DividendS&P 500 Dividend--Paying Paying CompaniesCompanies’’ Payout RatioPayout Ratio22
1.7%
2.4%
1.8%1.9%
2.3%
0%
1%
2%
3%
4%
< 5% ≥ 5% and <10%
≥ 10% and <15%
≥ 15%
Revenue Growth
Div
iden
d Yi
eld
Mean:
# Companies 3 201 156 68 67# Paying Div. 164 130 48 29% Paying Div. 82% 83% 71% 43%
2.1%
3M
33.7%
24.0%
35.9%32.8%
38.7%
0%
10%
20%
30%
40%
50%
< 5% ≥ 5% and <10%
≥ 10% and <15%
≥ 15%
Revenue Growth
Divi
dend
Pay
out
# Companies 3 201 156 68 67# Paying Div. 164 130 48 29% Paying Div. 82% 83% 71% 43%
34.1%Mean:
3M
Highly Competitive Yield … Above Peers & S&P500
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2007 3M Investor Conference
Share Repurchase
17% Premium7% PremiumP/E (2007 EPS Consensus)
Less StableRelatively StableEconomic Environment
TighterHighly LiquidCredit Availability
Spreads wider, yield curve steeper, markets
uncertain
Rates low, tight spreads, stable marketsBorrowing Costs
TodayEarly 2007
Near-Term Economics Less Compelling;More Importantly, Maintaining Flexibility for Growth
© 3M 2007. All Rights Reserved.
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2007 3M Investor Conference
Stock Repurchases in Millions
$0
$500
$1,000
$1,500
$2,000
$2,500
2001 2002 2003 2004 2005 2006 1H07
Cash Back to ShareholdersFor The Period 2001-1H07:
$11.7 billion in share repurchases$7.4 billion in dividends paidDividend CAGR of ~8%No equity dilution policyDividends in Millions
$0
$400
$800
$1,200
$1,600
2001 2002 2003 2004 2005 2006 1H07
Returned ~109% of Reported Net Income
Via Dividends and Share Repurchases
© 3M 2007. All Rights Reserved.
Summary
© 3M 2007. All Rights Reserved.
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2007 3M Investor Conference
We’ve Talked About Our Journey And Productivity…
2001 2005 2008 2011
Valu
e Cre
atio
n
Productivity
Growth
~2X Global IPI5.3%-1.1%LC Growth*22% to 23%22.7%15.8%Margins*
Indirect CostsGlobal Sourcing
Six SigmaOverhead Leverage
Health Care Containment
Restructuring
Big 3MUpgrade Marketing Skills
Brand BuildingEnd Mkt Org Structure
ServiceInt’l Portfolio Planning
Price Leakage
Selective Restructuring
Lean Six Sigma
Supply ChainService
CostWorking Capital
Taxes
* Excludes special items and pharma in all periods.
© 3M 2007. All Rights Reserved.
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2007 3M Investor Conference
…Now Let’s Focus On Growth…
2001 2005 2008 2011
Valu
e Cre
atio
n
Productivity
~2X Global IPI5.3%-1.1%LC Growth*22% to 23%22.7%15.8%Margins*
Indirect CostsGlobal Sourcing
Six SigmaOverhead Leverage
Health Care Containment
RestructuringSelective Restructuring
Lean Six Sigma
Supply ChainService
CostWorking Capital
Taxes
Growth
Big 3MUpgrade Marketing Skills
Brand BuildingEnd Mkt Org Structure
ServiceInt’l Portfolio Planning
Price Leakage
Emerging MarketsSupply Chain Re-engineering
LocalizationEntrepreneurial Culture
Capital Investments
Rebuilding R&D
Enduring Franchises
EBOs
M&A
* Excludes special items and pharma in all periods.
© 3M 2007. All Rights Reserved.
Appendix
© 3M 2007. All Rights Reserved.
59
2007 3M Investor Conference
Non-GAAP Financial Measures Year Year Year First Six
2001 2005 2006 Months 2007Sales Change Percents:Total Reported Sales Change -3.9% 5.8% 8.3% 7.1%Less: Translation Impact -3.3% 0.7% 0.6% 2.5%Total Reported Local-Currency Sales Change -0.6% 5.1% 7.7% 4.6%
Local Currency Sales Change ex-Pharmaceuticals -1.1% 5.3% 8.1% 8.4%
The Company uses non-GAAP measures to focus on shareholder value creation. 3M uses Return on Invested Capital, defined as after-tax operating income divided by average operating capital. This measure excludes special items and the historical impacts of the Pharmaceuticals business (see Notes 1 and 2). These measures are not recognized under U.S. generally accepted accounting principles and may not be comparable to similarly titled measures used by other companies.
Year Year Year First Six 2001 2005 2006 Months 2007Return on Invested Capital 12.8% 22.1% 25.3% 28.0%
Return on Invested Capital - excluding
Pharmaceuticals and Special Items 15.3% 21.9% 21.6% 22.7%
(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 July 26, 2007 and January 30, 2007 and in 3M’s 2001 Form 10-K filed March 11, 2002.
(2) In December 2006 and January 2007, 3M completed the sale of its global branded Pharmaceuticals
business. In connection with these transactions, 3M’s Drug Delivery Systems Division became a 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 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 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 and prior Pharmaceutical financial results, as this business was sold in December 2006 and January 2007.
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 (GAAP), the Company also discusses non-GAAP measures that exclude special items. Sales, operating income and diluted earnings per share measures that exclude special items and that exclude the impact of Pharmaceuticals are not in accordance with, nor are they a substitute for, GAAP measures. Special items 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 operations. The company believes that discussion of results excluding special items provides a useful analysis of ongoing operating trends. The determination of special items may not be comparable to similarly titled measures used by other companies. Special items for the six months ended June 30, 2007 and prior periods presented have been previously provided (See Note 1). In addition, the 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 with the most directly comparable GAAP financial measures for the periods indicated.
Year Year Year First Six(Millions, except per-share amounts) 2001 2005 2006 Months 2007Sales Dollars:Reported GAAP 16,054$ 21,167$ 22,923$ 12,079$ Pharmaceutical (699)$ (797)$ (774)$ -$ Adjusted Non-GAAP 15,355$ 20,370$ 22,149$ 12,079$
Operating Income Dollars:Reported GAAP 2,075$ 4,854$ 5,696$ 3,498$ Special Items 504$ (523)$ (675)$ Pharmaceutical (157)$ (226)$ (256)$ -$ Adjusted Non-GAAP 2,422$ 4,628$ 4,917$ 2,823$
Diluted Earnings per Share:Reported GAAP 1.60$ 3.98$ 5.06$ 3.10$ Special Items 0.39$ 0.14$ (0.57)$ (0.60)$ Pharmaceutical (0.12)$ (0.20)$ (0.23)$ -$ Adjusted Non-GAAP 1.87$ 3.92$ 4.26$ 2.50$
The Company uses local-currency sales growth, which excludes the impact of translation or currency 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 local-currency sales growth that excludes the historical impacts of the Pharmaceuticals business to portray what it believes are more meaningful sales growth trends. 3M believes this non-GAAP sales growth information excluding Pharmaceuticals provides useful information (See Note 2). These measures are not in accordance with, nor are they a substitute for, GAAP measures.