3M Company 2009 Outlook Meeting

George W. Buckley
Chairman, President and Chief Executive Officer

2009 Outlook
Meeting
December 8, 2008
© 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting

Patrick D. Campbell
Senior Vice President and Chief Financial Officer

2009 Outlook
Meeting
December 8, 2008

Forward Looking Statements

This presentation contains forward-looking information about 3M’s financial results and estimates and business
prospects that involve substantial risks and uncertainties. You can identify these statements by the use of
words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will,” “target,” “forecast”
and other words and terms of similar meaning in connection with any discussion of future operating or financial
performance or business plans or prospects. Among the factors that could cause actual results to differ
materially are the following: (1) worldwide economic and capital markets conditions; (2) competitive conditions
and customer preferences; (3) foreign currency exchange rates and fluctuations in those rates; (4) the timing
and acceptance of new product offerings; (5) the availability and cost of purchased components, compounds,
raw materials and energy (including oil and natural gas and their derivatives) due to shortages, increased
demand or supply interruptions (including those caused by natural and other disasters and other events); (6)
the impact of acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio
management actions and other evolving business strategies, and possible organizational restructuring; (7)
generating fewer productivity improvements than estimated; and (8) legal proceedings, including significant
developments that could occur in the legal and regulatory proceedings described in the company’s Annual
Report on Form 10-K for the year ended December 31, 2007 and its subsequent Quarterly Reports on Form
10-Q (the “Reports”). Changes in such assumptions or factors could produce significantly different results. A
further description of these factors is located in the Reports under “Risk Factors” in Part I, Item 1A (Annual
Report) and in Part II, Item 1A (Quarterly Report). The information contained in this presentation is as of the
date indicated. The company assumes no obligation to update any forward-looking statements contained in
this presentation as a result of new information or future events or developments.

3 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting

Topics Of Discussion

Update on 2008 finish
1

2009 scenario planning
2

Summary
3

Q&A
4



1

2

Summary
3

Q&A
4


Summary – Q3 Earnings Call (October 21, 2008)

The 3M advantage – diversification of geographies, markets, products & technologies
106-year company history; proven ability to prosper during economic downturns
Strong balance sheet and consistent cash flow
Continuous assessment and rebalancing
– More restructuring likely in slower growth markets
– Investing prudently in under-penetrated businesses and geographic areas
2008 full-year financial expectations:
– $5.40 to $5.48 per share
– Operating margins 22.5% to 23%
– Tax rate 31.5% to 32%
– Cap-ex $1.3B to $1.4B

*Excludes special items. Please refer to 3M’s October 21, 2008 press release for a complete list and explanation of the special items for the first nine months of 2008.
6 3M 2009 Outlook Meeting

Q4 2008 Trends
Rapid Deterioration In Business Activity As Quarter Progresses

October – sales were a little soft, but profits were in-line with guidance
– Organic local currency sales down 3%
– Currency down 5%

November – rapid volume slowdown, many businesses impacted
– Organic local currency sales down 17%
– Currency down 6%

December – highly uncertain but expecting another month similar to
November

Customers Aggressively Responding To Economic Perfect Storm


2008 EPS Update
Q4 and FY ‘08 Expectations: 2008 Full Year EPS
Q4 organic volume growth $5.40 - $5.48
$5.50
Was: -1% to -2%

Q4 FX EPS impact $5.40
Was: flat to -$0.02

FY 2008 operating margin $5.30
Was: 22.5% to 23%

FY 2008 Tax rate
$5.20
Was: 31.5% to 32% $5.10 - $5.15
FY 2008 Cap-ex
$5.10
$1.3B to $1.4B

Q3 Earnings
Call 10/21/08

2008 EPS Update
Q4 organic volume growth $5.50
Was: -1% to -2%
Now: -10% to -12%
$5.40
Q4 FX EPS impact
Was: flat to -$0.02 Organic
Volume
$5.30
FY 2008 operating margin -$0.22 to
Was: 22.5% to 23% -$0.25
$5.20
FY 2008 Tax rate $5.10 - $5.15
Was: 31.5% to 32%
$5.10
FY 2008 Cap-ex
$1.3B to $1.4B

Q3 Earnings
Call 10/21/08

2008 EPS Update
Was: -1% to -2%
Now: -10% to -12%
$5.40
Q4 FX EPS impact
Was: flat to -$0.02
Now: -$0.08 $5.30
FY 2008 operating margin
Was: 22.5% to 23%
$5.20
FX
FY 2008 Tax rate
-$0.08
Was: 31.5% to 32%
$5.10
FY 2008 Cap-ex
$1.3B to $1.4B
Q3 Earnings
Call 10/21/08

2008 EPS Update
Was: -1% to -2%
Now: -10% to -12%
$5.40
Q4 FX EPS impact
Was: flat to -$0.02
Now: -$0.08 $5.30
FY 2008 operating margin
Was: 22.5% to 23%
$5.20
Now: 21.5% to 22.0%
$5.10 - $5.15
FY 2008 Tax rate
$5.10
Was: 31.5% to 32%
Now: 31.0% to 31.5%
FY 2008 Cap-ex
Revised
$1.3B to $1.4B (no change)
2008 EPS

Q4 2008 Restructuring Actions
Continue To Aggressively Restructure The Business To Address Challenges

Have reduced positions across all businesses and staffs
– ≈1,800 internally announced
– Another ≈500 before year-end; mostly international
– More possible pending business conditions
All geographies impacted somewhat but heavy focus on developed
economies
– U.S., Western Europe and Japan

Rationalizing 10 manufacturing, technical and office facilities

Aggregate Costs Of $215M (≈$0.22 Q4 Special Item)
With 2009 Savings Of $225M


1

2

Summary
3

Q&A
4


2009 Planning Mindset
Adjusting To Low-Growth Economy In Short-Term While Maintaining Long-Term Growth Focus

Cash optimization in highly uncertain world – planning conservatively and
preserving cash
– Capital expenditures < $1.2B  Disciplined A/R management
– Tighter acquisition screens  Careful demand planning
– Minimal share repurchase
Facing into headwinds
– Organic volume growth  Currency
– Pension  Higher net interest expense
Maximizing opportunities
– Going after market share gains  Productivity programs
– Restructuring  Raw materials/pricing
– Deferring annual pay increases  Modifying working schedules

Driving Sufficient Cost Reduction To Offset Volume Risk

2009 Scenario Planning

Organic volume
– -3% to -7%
Foreign currency
– -6% to -7%
Earnings-per-share
– -3% to -12%
Margins steady vs. 2008
Free cash flow will approximate net income, however pension
and severance funding will be a wild card


WW IPI Forecasts For 2009
Source: Global Insight

-0.4% 0% -0.4%

Goldman Sachs

UBS
Global Insight
Some Are Expecting A “V” Shaped
Recovery – We Are Not
Our Plan
Assumes
-2 % to -3%

Planning For Softness Throughout 2009

Forecasting 09 Organic Volume Growth
Learning From The Recession Of 2001-02

Quarterly % YOY Growth, 2000-03

During the 4 worst quarters of
the
2001-02 economic slowdown:
1) Global IPI was down 3%
2) 3M organic volume was down
5% to 6%

Notes:1) 3M data excludes divested pharmaceutical business; 2) economic data from Global Insight

We Have Been Experiencing A Slowing Economy For Some Time…
• U.S.
•Office retail
• Telecom
•Housing
• Advertising
•Auto OEM
• Credit market crisis
• Japan, Korea • Industrial
• Economic slowdown
• Western Europe
spreads rapidly
across industries

U.S. Recession
Started Q4 2007!
(12/1/08)

Organic Volume Growth

…And We Expect To Come Out Faster On The Recovery

Working The Model Sequentially…A Hypothetical ‘09 Progression

Organic Volume Growth %
2%
Q408e Q109e Q209e Q309e Q409e FY09e
0%

-2%

-4%

-6%

-8%

-10%
Possible
Trough
Ave Organic Volume Down 5%



2%
Q408e Q109e Q209e Q309e Q409e FY09e
0%

-2%

-4%

-6%

-8%

-10%
Possible
Trough



2%
Q408e Q109e Q209e Q309e Q409e FY09e
0%

-2%

-4%

-6%

-8%
Range:
-3% to -7%
-10%


Our Planning Headset Is Closer To The Upper End Of the Range


Industrial Production Forecast – Past And Future
Expecting Wide Variations Of Growth Across Regions

(Global Insight: Industrial Production, YOY percent change)

Growth Is Slowing Everywhere, But There Is Still Growth To
Be Had In Developing Markets

Emerging Markets A Bigger Factor Today Vs. 2001-02
And While Economic Growth Will Slow There In 2009, It Remains Robust

3M Sales To Emerging Market Industrial Production Growth %
Countries
$7.5B
20%
China
Brazil
Central Eur/Balkans
15%
India
Russia
10%

$2.7B
5%

0%
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
2001 2008e
% of 3M 17% 30% Source: Global Insight

Even In This Environment There Will Be Good Growth Opportunities
Note: Emerging Markets = Central/East Europe + Middle East + APAC ex-Japan/ANZ + Latin America; economic data from Global Insight


Organic Volume Impact

2009 EPS Impact Organic volumes to be in the range of -3% to -7%
Recognizing Q4 2008 organic volume @ -10%
Developing economies expected to have positive
growth albeit at lower rates
Developed economies expected to be negative
Managing developed economies for operating
leverage and investing in developing economies
to drive growth

-$0.30 to -$0.70


Foreign Currency
Step Change In Foreign Currency Rates Coincident With Credit Crisis
Percent Change

Foreign Currency A Significant Headwind In 2009
Note: currency mix based on Q3 2008 YTD weighted average sales

Foreign Currency
Step Change In Foreign Currency Rates Coincident With Credit Crisis
Percent Change

Ave 2008 November
Currencies Rates End Rates
EUR 1.47 1.29
JPY 103.5 95.2
BRL 1.83 2.34
CAD .93 0.81
RMB 6.92 6.83
GBP 1.85 1.52
KRW 1123 1478

Foreign Currency A Significant Headwind In 2009
Note: currency mix based on Q3 2008 YTD weighted average sales

Foreign Currency Headwind

2009 EPS Impact Used spot rates as of November month-end
$0.50
Tremendous volatility in rates over last couple of
months
Estimated 2009 sales impact in the range of -6%
$0.25
to -7%
-$0.45 toHedge approximately ½ of foreign currency
-$0.50 exposures on a rolling 12-month basis
$0.00

($0.25)

-$0.45
($0.50)


Restructuring
Proactively Reducing Structure In A Slower Growth World

Continuously assessing and rebalancing structure
2009 EPS Impact
$0.50
to meet business needs
Actions to date:
$0.25 to $0.30
– Q2 2008: ≈200 positions
$0.25
– Q3 2008: ≈900 positions
– Q4 2008: ≈2,300 positions
$0.00 Consolidating facilities
Aggressive actions in slower growth mature
economies
($0.25)
More restructuring likely in 2009

($0.50)


Raw Materials And Selling Prices

Raw Materials:
2009 EPS Impact
In midst of rapid declines in many commodities;
full benefit not expected until H2 2009
Commodities to trend down; more upside is
$0.15 to $0.20
possible
Raw materials represent ½ of COGS or
approximately 25% to sales
Selling prices:
Focusing on maintaining 2008 price increases
Drive opportunities to optimize price/value
Category-defining brands a major strength

Highly Fluid Environment But Net Upside in 2009

Productivity
Continuing To Aggressively Reduce Costs And Improve Processes

2009 EPS Impact Reducing indirect costs – a $4B+ category
Lean Six Sigma
Continued supply chain improvements
$0.20 to $0.25
Redesigning employee benefit programs
G&A cost containment
Deferring annual pay increases
Modifying working schedules


Pension Expense
Managing Through A Very Unique Market Environment

Fully funded through Q3 2008 however Q4
2009 EPS Impact
$0.50
market returns pressuring asset values
Contributed $200M to U.S. plan in Q3 2008
Higher discount rate expected for year-end
$0.25
liability measurement given current credit
environment
No mandatory funding obligation
$0.00

Effective 2009, all new U.S. employees
-$0.08 to -$0.12 participate exclusively in a new defined
contribution plan
($0.25)

($0.50)


Net Interest Expense
Expecting Higher Costs But Improving Liquidity And Certainty
AA/Aaa credit rating
2009 EPS Impact
Uninterrupted access to CP market; strong demand for 3M
paper; CP maturities out to Feb ’09
Strong, consistent FCF; unused $1.5B credit facility
Opportunistic bond issuances: Aug ‘08: $850M, 5 yr @
4.375%; Oct ‘08: $800M, 3 yr @ 4.5%
2009 expense higher due to extending duration on debt
portfolio (less reliance on commercial paper) & lower interest
rates on cash & marketable securities
Q3 ‘08 Capital Structure Long-Term Debt Maturities
$B $B

-$0.05 to -$0.10

Q4’08 includes $0.4B in puttable securities with
longer final maturities
Cash > CP


Putting It All Together

$5.10
to
$5.15
$0.20 to
$0.25

$0.15 to
$0.20
-$0.08 to
$0.25 to -$0.12 -$0.05 to
$0.30
-$0.10

-$0.30 to
-$0.70

-$0.45

Productivity Efforts Cover The Volume Risk, But FX Too Much To Overcome
*Excludes special items.


Putting It All Together

2009 EPS
-3% to -12%
$5.10
to
$5.15
$0.20 to
$0.25
EPS
$0.08 Range
$0.15 to
$4.50
$0.20
-$0.08 to
to
$0.25 to -$0.12 -$0.05 to
$0.30 $4.95
-$0.10

-$0.30 to
-$0.70

-$0.45

Productivity Efforts Cover The Volume Risk, But FX Too Much To Overcome
*Excludes special items.



1

2

Summary
3

Q&A
4


2009 Planning Mindset
Adjusting To Low-Growth Economy In Short-Term While Maintaining Long-Term Growth Focus

Cash optimization in highly uncertain world – planning conservatively and
preserving cash
– Capital expenditures < $1.2B  Disciplined A/R management
– Tighter acquisition screens  Careful demand planning
– Minimal share repurchase
Facing into headwinds
– Organic volume growth  Currency
– Pension  Higher net interest expense
Maximizing opportunities
– Going after market share gains  Productivity programs
– Restructuring  Raw materials/pricing
– Deferring annual pay increases  Modifying working schedules

Driving Sufficient Cost Reduction To Offset Volume Risk

Questions
and
Answers

2009 Outlook
Meeting
December 8, 2008

3M Company 2009 Outlook Meeting

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