3M 2007 Annual Report Download - page 2

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George W. Buckley
Chairman of the Board,
President and Chief Executive Officer
To our shareholders
I’m pleased to report excellent progress in 2007 toward our goal of
accelerating and sustaining 3M’s growth. 3Mers in every function and in every
region of the world have rallied around this goal and have worked very hard to
reinvigorate innovation, while continuing to deliver excellent financial results
and impressive returns to our shareholders: $4.6 billion via dividends and
share repurchases.
For the year, we achieved $24.5 billion in sales, an all-time record for the company. Sales were
up 7 percent from the previous year and up 11 percent when adjusted for recently divested
businesses. This is great progress for a company of our size. Net income for 2007 was
$4.1 billion, or $5.60 per share, versus $3.9 billion, or $5.06 per share, in 2006 — up 6 percent
and 11 percent, respectively. Excluding special items, 2007 earnings were $4.98 per share, up
11 percent. On balance, I am very pleased with the results we generated even as we continued to
invest significantly in our collective future.
For example, we invested more than $1.4 billion in capital expenditures during 2007 to plant
the seeds for future growth, absorbing more than $20 million of start-up expenses in the
process, and we invested tens of millions of dollars on emerging business opportunities. These
investments enabled enormous progress toward streamlining our supply chain and expanding
the top line. We opened new plants in Korea, three in China, one each in Russia, India, Canada,
Mexico and Turkey, plus several plant extensions in the United
States. Our supply chain initiative is not only about new plants, but
about shortening and straightening supply chains through existing
plants, mainly in the United States. Last year, we strengthened our
supply chain by closing inefficient plants in Italy, Japan, Canada,
New Zealand and the United States, and by reducing the size of
others in the United Kingdom and the United States. In all, we
have closed over 50 inefficient plants around the world in the last
five years. We did all this with minimal disruption to operations
— some might say without even a hiccup. In my view, this was a
truly remarkable achievement by our people. As we strengthen our
supply chain we improve profitability, while bolstering our prospects
for growth through improved customer service.
For most companies, growth is fundamentally a story about new
products and new markets, and that is especially true for 3M.
Sometimes that growth comes through product extensions;