3M 2008 Annual Report Download

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2008 Annual Report
Steadfast
Amid Uncertainty

Table of contents

  • Page 1
    2008 Annual Report Steadfast Amid Uncertainty

  • Page 2
    ... part highly regarded and appreciated by investors. As a direct result of this approach, we have been able to provide consistent returns to our shareholders through good times and bad. Even through a tough 2008, we still delivered a world class ROIC of 19.7 percent (20.8 percent excluding special...

  • Page 3
    ... until production volumes return to more normal levels. Contract workers have been severely reduced. These 2008 actions in total are expected to save the company $250 to $300 million in 2009. In October 2008, the leadership team decided to defer merit pay increases for all employees in 2009 (except...

  • Page 4
    ... spending is simply carryover from 2008 or for the tooling needed for new products and continued operations. That said, we will continue to selectively invest in capacity such as in the solar energy market where demand for our products is very high. All current spending is being done strictly...

  • Page 5
    ... is reassuring to have businesses such as Health Care and Safety, Security and Protection Services in our arsenal. Over the next economic cycle, markets will recover and will drift out of phase and the full power of 3M's diversity will be evident once again. 3M's international sales now approach 64...

  • Page 6
    ... plus equity) Additional Information Cash dividends paid Per share Stock price at year-end Total assets Long-term debt (excluding current portion) Capital expenditures Depreciation and amortization Research, development and related expenses Number of employees at year-end Average shares outstanding...

  • Page 7
    ... OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2008 Commission file number 1-3285 3M COMPANY State of Incorporation: Delaware I.R.S. Employer Identification No. 41-0417775 Principal executive offices: 3M Center, St. Paul, Minnesota 55144 Telephone number: (651) 733...

  • Page 8
    ... Information Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services...

  • Page 9
    ...businesses around markets and customers. Segment information presented herein reflects the impact of these changes for all periods presented. 3M continues to manage its operations in six operating business segments: Industrial and Transportation; Health Care; Safety, Security and Protection Services...

  • Page 10
    ... abrasives; structural adhesives; and other specialty materials. In addition, 3M provides paint finishing and detailing products, including a complete system of cleaners, dressings, polishes, waxes and other products. Health Care Business: The Health Care segment serves markets that include medical...

  • Page 11
    ...; protective material products; certain maintenance-free respirators; and Nexcareâ„¢ Adhesive Bandages. Display and Graphics Business: The Display and Graphics segment serves markets that include electronic display, traffic safety and commercial graphics. This segment includes optical film solutions...

  • Page 12
    ...operations through careful management of existing raw material inventories and development and qualification of additional supply sources. 3M manages commodity price risks through negotiated supply contracts, price protection agreements and forward physical contracts. Environmental Law Compliance 3M...

  • Page 13
    ... of the Board, Sumitomo 3M Limited, 2003-2004 Division Vice President, Occupational Health and Environmental Safety Division, 2003-2006 Staff Vice President, Human Resources Operations, 2005 Executive Director, Human Resources Operations, 2004-2005 Director, Compensation and Employee Administration...

  • Page 14
    ...'s business may be adversely affected by factors in the United States and other countries that are beyond its control, such as disruptions in financial markets or downturns in economic activity in specific countries or regions, or in the various industries in which the Company operates; social...

  • Page 15
    .... 3M's general offices, corporate research laboratories, and certain division laboratories are located in St. Paul, Minnesota. The Company operates 82 manufacturing facilities in 29 states. The Company operates 102 manufacturing and converting facilities in 35 countries outside the United States. 3M...

  • Page 16
    ... 2009, 3M's Board of Directors extended this share repurchase authorization until the remaining $2.6 billion (as of December 31, 2008) is fully utilized. Issuer Purchases of Equity Securities (registered pursuant to Section 12 of the Exchange Act) Total Number of Shares Purchased as Part of Publicly...

  • Page 17
    ...exit activities ($45 million pre-tax, $29 million after-tax). 2006 results included net gains that increased operating income by $523 million and net income by $438 million. 2006 included net benefits from gains related to the sale of certain portions of 3M's branded pharmaceuticals business ($1.074...

  • Page 18
    ...the impact of these changes for all periods presented. 3M manages its operations in six operating business segments: Industrial and Transportation; Health Care; Safety, Security and Protection Services; Consumer and Office; Display and Graphics; and Electro and Communications. 3M had record sales in...

  • Page 19
    ... in Asia Pacific and Latin America. The electronics solutions and communications markets businesses remain soft. 3M also continued to experience declines in the flexible circuits business, where a number of product solutions are going end-of-life. Within Display and Graphics, positive sales growth...

  • Page 20
    ... material inventories and development and qualification of additional supply sources. 3M manages commodity price risks through negotiated supply contracts, price protection agreements and forward physical contracts. In 2009, 3M is changing its annual stock option and restricted stock unit grant date...

  • Page 21
    ... sale of businesses include the second-quarter 2007 sale of 3M's Opticom Priority Control Systems and Canoga Traffic Detection businesses, and the first-quarter 2007 sale of the global branded pharmaceuticals business in Europe. Concerning the real estate sale, 3M sold a laboratory facility located...

  • Page 22
    ... growth of 7.3 percent was led by the Health Care; Safety, Security and Protection Services; Industrial and Transportation and Consumer and Office segments. Acquisitions increased 2007 sales by 2.4 percent, led by the August 2006 acquisition of Security Printing and Systems Limited and the late 2006...

  • Page 23
    ... points in 2008 compared to 2007, with this increase primarily due to the decline in Optical Systems sales and the rapid volume declines of certain other businesses in the fourth quarter. For the majority of the year 3M's broad-based portfolio performed as expected, with benefits from selling price...

  • Page 24
    ... (recorded in the Display and Graphics segment) in 2007. In December 2006, 3M completed the sale of its global branded pharmaceuticals businesses in the United States, Canada, and Latin America region and the Asia Pacific region, including Australia and South Africa. 3M received proceeds of $1.209...

  • Page 25
    ... segment; the Health Care segment; Safety, Security and Protection Services segment; Consumer and Office segment; Display and Graphics segment; and Electro and Communications segment. Information related to 3M's business segments is presented in the tables that follow. Local-currency sales (which...

  • Page 26
    ... and Transportation ...Health Care: Gain on sale of pharmaceuticals business ...Restructuring actions and other...Safety, Security and Protection Services Consumer and Office ...Display and Graphics ...Electro and Communications ...Corporate and Unallocated ...Total operating income penalty (benefit...

  • Page 27
    ... and Asia Pacific, followed by Europe. Local-currency sales were flat in Latin America. Operating income in the fourth quarter declined 42 percent to $203 million, which included net charges of $36 million for restructuring actions and exit activities. Full-year 2008 sales looked far more positive...

  • Page 28
    ... in the medical products area, specifically in core infection prevention and skin and wound care products. Geographically, the U.S. and Asia Pacific led sales growth. Operating income margins of 24.0 percent in the fourth quarter of 2008 were the highest in the Company, which includes the impact of...

  • Page 29
    ...pharmaceuticals business in the Asia Pacific region, including Australia and South Africa. The Company also sold its branded pharmaceuticals business in the United States, Canada and Latin America in late December 2006. The operating income gain related to this sale, which is included in Health Care...

  • Page 30
    ... platforms, led by infection prevention solutions and skin and wound care therapy products in medical, HFA-based components (non-CFC) for drug inhalers in drug delivery, and healthcare funding and performance management solutions for the hospital market in health information systems. Geographically...

  • Page 31
    ... protection solutions, protective window films, and cleaning solutions for commercial buildings, and RFID solutions (Track and Trace). Aearo, acquired in April 2008, manufactures and sells personal protection and energy absorbing products. Aearo expanded 3M's platform by adding hearing protection...

  • Page 32
    ..., and for its do-it-yourself retail channel. Elsewhere around the globe, 3M's Consumer and Office business drove positive local-currency sales growth in both Latin America and Asia Pacific, but overall growth was muted by declines in Europe. Worldwide operating income declined in the fourth quarter...

  • Page 33
    ... of the Opticom/Canoga business sale. The Company recorded positive sales growth in all major businesses - commercial graphics, traffic safety systems and optical systems. Throughout the year, commercial graphics saw strong performance in the vehicle wrapping market where 3M provides films, inks and...

  • Page 34
    ..., automotive and medical markets; with products that enable the efficient transmission of electrical power and speed the delivery of information and ideas. Products include electronic and interconnect solutions, micro interconnect systems, high-performance fluids, high-temperature and display tapes...

  • Page 35
    ...Dollars in millions) 2008 % of Total Oper. Income Local Currency 2008 vs. 2007 % Change Total Translation Sales Change Oper. Income Sales Divestitures United States...$ Asia Pacific...Europe, Middle East and Africa .. Latin America and Canada ...Other Unallocated . Total Company ...$ 9,179 6,423...

  • Page 36
    ... Supplemental Information (Millions, except Employees) Employees as of December 31, 2008 2007 2006 Capital Spending 2007 Property, Plant and Equipment - net 2008 2007 2006 2008 2006 United States...Asia Pacific...Europe, Middle East and Africa...Latin America and Canada ...Total Company ... 33...

  • Page 37
    ...3M, reporting units generally correspond to a division. These eight reporting units were comprised of the following divisions: Occupational Health and Environmental Safety, CUNO, Optical Systems, 3M ESPE, Communication Markets, Security Systems, Industrial Adhesives and Tapes, and Health Information...

  • Page 38
    ... eight reporting units all generated operating income for total year 2008. As part of its annual impairment testing in the fourth quarter, 3M used discounted cash flow models for its CUNO, Optical Systems and Security Systems divisions. A weighted-average discounted cash flow analysis was performed...

  • Page 39
    ... ongoing cash flow. Increases in long-term debt have been used to partially fund share repurchase activities and acquisitions. On April 1, 2008, 3M (Safety, Security and Protection Services Business) completed its acquisition of 100 percent of the outstanding shares of Aearo - a global leader in...

  • Page 40
    .... The Company will continue to invest in its operations to drive growth, including continual review of acquisition opportunities. 3M paid dividends of $1.398 billion in 2008, and has a long history of dividend increases. In February 2009, the Board of Directors increased the quarterly dividend on 3M...

  • Page 41
    ...460 ) Investments in property, plant and equipment enable growth in diverse markets, helping to meet product demand and increasing manufacturing efficiency. In 2008, major facility efforts included completion of production lines in the United States for both Consumer and Office and Health Care, an...

  • Page 42
    ...debt were used, in part, to fund share repurchase activities. Repurchases of common stock are made to support the Company's stock-based employee compensation plans and for other corporate purposes. In February 2007, 3M's Board of Directors authorized a two-year share repurchase of up to $7.0 billion...

  • Page 43
    .... In February 2009, the Board of Directors increased the quarterly dividend on 3M common stock by 2.0 percent to 51 cents per share, equivalent to an annual dividend of $2.04 per share. This marked the 51st consecutive year of dividend increases. Other cash flows from financing activities primarily...

  • Page 44
    ... and terms of similar meaning, typically identify such forwardlooking statements. In particular, these include statements about the Company's strategy for growth, product development, market position, future performance or results of current or anticipated products, interest rates, foreign exchange...

  • Page 45
    ... context of Item 7A, market risk refers to the risk of loss arising from adverse changes in financial and derivative instrument market rates and prices, such as fluctuations in interest rates and foreign currency exchange rates. The Company discusses risk management in various places throughout this...

  • Page 46
    ... Information ...Income Taxes ...Marketable Securities...Long-Term Debt and Short-Term Borrowings...Pension and Postretirement Benefit Plans...Derivatives...Fair Value Measurements ...Commitments and Contingencies ...Employee Savings and Stock Ownership Plans ...Stock-Based Compensation...Business...

  • Page 47
    ... communicated written policies, including business conduct policies, which are designed to require all employees to maintain high ethical standards in the conduct of Company affairs. Internal auditors continually review the accounting and control system. 3M Company Management's Report on Internal...

  • Page 48
    ... statements, the Company changed the manner in which it accounts for defined benefit pension and other post-retirement plans in 2006 and the manner in which it accounts for uncertain tax positions in 2007. A company's internal control over financial reporting is a process designed to provide...

  • Page 49
    ... of Income 3M Company and Subsidiaries Years ended December 31 (Millions, except per share amounts) 2008 2007 2006 Net sales ...Operating expenses Cost of sales ...Selling, general and administrative expenses ...Research, development and related expenses ...(Gain)/loss on sale of businesses...Total...

  • Page 50
    ... securities - current...Accounts receivable - net of allowances of $85 and $75...Inventories ...Finished goods...Work in process ...Raw materials and supplies ...Total inventories ...Other current assets ...Total current assets ...Marketable securities - non-current...Investments ...Property, plant...

  • Page 51
    ... Statement of Changes in Stockholders' Equity and Comprehensive Income 3M Company and Subsidiaries Years Ended December 31 (Millions) 2008 2007 2006 Common Stock, par value ...Additional Paid-in Capital Beginning balance ...Stock-based compensation expense (excluding tax benefit) ...Stock-based...

  • Page 52
    ... tax benefits from stock-based compensation ...Changes in assets and liabilities Accounts receivable ...Inventories...Accounts payable...Accrued income taxes...Product and other insurance receivables and claims ...Other - net ...Net cash provided by operating activities...Cash Flows from Investing...

  • Page 53
    ... policies, equity and cost method investments, and real estate not used in the business. Investments in life insurance are reported at the amount that could be realized under contract at the balance sheet date, with any changes in cash surrender value or contract value during the period accounted...

  • Page 54
    ... the Company serves numerous markets, the rebate programs offered vary across businesses, but the most common incentive relates to amounts paid or credited to customers for achieving defined volume levels or growth objectives. Free goods are accounted for as an expense and recorded in cost of sales...

  • Page 55
    ... in the weighted average shares outstanding for calculating basic and diluted earnings per share is attributable to the dilution associated with the Company's stock-based compensation plans. Certain Management Stock Ownership Program average options outstanding during the years 2008, 2007 and 2006...

  • Page 56
    ...The Company recognizes compensation expense for both its General Employees' Stock Purchase Plan (GESPP) and the Long-Term Incentive Plan (LTIP). Under SFAS No. 123R, "Share-Based Payment", and related interpretations, the fair value of the share-based compensation is determined at the grant date and...

  • Page 57
    ... Task Force reached a consensus on EITF Issue No. 07-3, "Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used in Future Research and Development Activities" that would require nonrefundable advance payments made by the Company for future R&D activities to be capitalized and...

  • Page 58
    ... additional disclosures beginning January 1, 2009 and application to useful life estimates prospectively for intangible assets acquired after December 31, 2008. The Company does not expect this standard to have a material impact on 3M's consolidated results of operations or financial condition. In...

  • Page 59
    ... $781 million (recorded in the Health Care segment) in 2007. In December 2006, 3M completed the sale of its global branded pharmaceuticals business in the United States, Canada, and Latin America region and the Asia Pacific region, including Australia and South Africa. 3M received proceeds of $1.209...

  • Page 60
    ... and marketer of leading-edge medical products designed to prevent infections in operating rooms and hospitals. (3) In April 2008, 3M (Consumer and Office Business) purchased 100 percent of the outstanding shares of Kolors Kevarkian, S.A., a manufacturer of branded floor cleaning tools based...

  • Page 61
    ... interest in PolyMask Corporation, a joint venture between 3M and Sealed Air that produces protective films. The acquisition of Sealed Air's interest results in 100 percent ownership by 3M. 3) In February 2007, 3M (Health Care Business) purchased 100 percent of the outstanding shares of Acolyte...

  • Page 62
    ... authorities, headquartered in Newbury, U.K. 9) In August 2007, 3M (Health Care Business) purchased certain assets of Neoplast Co. Ltd., a manufacturer/distributor of surgical tapes and dressings and first aid bandages for both the professional and consumer markets across the Asia Pacific region...

  • Page 63
    ... outstanding shares of SBG (Software und Beratung im Gesundheitswesen) GmbH, a Berlin-based developer of software for managing diagnosis-related information in hospitals. 6) In June 2006, 3M (Safety, Security and Protection Services Business) purchased certain assets of POMP Medical and Occupational...

  • Page 64
    ... outstanding shares of Global Beverage Group Inc., a Canadian-based provider of delivery management software solutions for the direct-store-delivery of consumer packaged goods. 15) In November 2006, 3M (Health Care Business) purchased 100 percent of the outstanding shares of Biotrace International...

  • Page 65
    ... employment policies and substantive severance plans and are reflected in the quarter in which management approves the associated actions. Severance amounts for which affected employees were required to render service in order to receive benefits at their termination dates were measured at the date...

  • Page 66
    ... Actions EmployeeRelated Items/ Benefits and Other Asset Impairments (Millions) Total Expense incurred in 2008: Industrial and Transportation...Health Care...Safety, Security and Protection Services ...Consumer and Office...Display and Graphics ...Electro and Communications...Corporate...

  • Page 67
    ... accrued balance...Expenses (credits) incurred in 2007: Pharmaceuticals business actions ...Overhead reduction actions...Business-specific actions ...2007 expense...Non-cash changes in 2007: Pharmaceuticals business actions ...Overhead reduction actions...Business-specific actions ...2007 non-cash...

  • Page 68
    ...in the United States, 21 percent in Europe, 12 percent in Latin America and Canada, and 9 percent in the Asia Pacific area. As a result of the second-quarter 2007 phaseout of operations at a New Jersey roofing granule facility and the sale of the Company's Opticom Priority Control Systems and Canoga...

  • Page 69
    ...); Health Care ($9 million); Safety, Security and Protection Services ($3 million); and Corporate and Unallocated ($2 million). These charges were recorded in cost of sales ($38 million), selling, general and administrative expenses ($17 million), and research, development and related expenses...

  • Page 70
    ... of $98 million and $44 million as of December 31, 2008, and 2007, respectively. Other liabilities Long term taxes payable...Employee benefits...Minority interest in subsidiaries ...Product and other claims ...Capital lease obligations ...Deferred income...Deferred income taxes ...Other ...Total...

  • Page 71
    NOTE 6. Supplemental Stockholders' Equity and Accumulated Other Comprehensive Income Information Common stock ($.01 par value per share) of 3.0 billion shares is authorized, with 944,033,056 shares issued. Treasury stock is reported at cost, with 250,489,769 shares at December 31, 2008, 234,877,025 ...

  • Page 72
    ... and exchange rate impacts, which are presented separately. "Other - net" in the Consolidated Statement of Cash Flows within operating activities in 2008, 2007 and 2006 includes changes in liabilities related to 3M's restructuring actions (Note 4). Transactions related to investing and financing...

  • Page 73
    ... U.S. tax rate ...State income taxes - net of federal benefit ...International income taxes - net...Foreign export sales benefit...U.S. business credits...Reserves for tax contingencies/return to provision ...Gain on sale of pharmaceuticals business...Restructuring actions...In-process research and...

  • Page 74
    ... of its U.S. federal and state income tax returns for 2007 and 2006, respectively, which did not result in any material changes to the Company's financial position. In 2006, considering the developments noted below and other factors, including the impact on open audit years of the resolution of...

  • Page 75
    .... 31, 2008 Dec. 31, 2007 Agency securities ...Corporate securities ...Asset-backed securities: Automobile loans related ...Credit cards related ...Other...Asset-backed securities total ...Other securities ...Current marketable securities ...Agency securities ...Asset-backed securities: Credit cards...

  • Page 76
    ... The factors evaluated to differentiate between temporary and other-than-temporary include the projected future cash flows, credit ratings actions, and assessment of the credit quality of the underlying collateral. The balance at December 31, 2008 for marketable securities and short-term investments...

  • Page 77
    ... 849 $ 2,586 $ 6,058 The Company's $350 million of dealer remarketable securities (classified as current portion of long-term debt) were remarketed for one year in December 2008. Long-term debt payments due in 2009 include these $350 million of dealer remarketable securities and $62 million of...

  • Page 78
    ... is serviced by dividends on stock held by the ESOP and by Company contributions. These contributions are not reported as interest expense, but are reported as an employee benefit expense in the Consolidated Statement of Income. Other borrowings includes debt held by 3M's international companies and...

  • Page 79
    ... health care and life insurance benefit plans, the Company has set aside amounts at least equal to annual benefit payments with an independent trustee. In August 2006, the Pension Protection Act (PPA) was signed into law in the U.S. The PPA increased the funding target for defined benefit pension...

  • Page 80
    ...cost ...Participant contributions ...Foreign exchange rate changes Plan amendments...Actuarial (gain) loss ...Medicare Part D Reimbursement...Benefit payments ...Settlements, curtailments, special termination benefits and other ...Benefit obligation at end of year Change in plan assets Fair value of...

  • Page 81
    ... The following amounts relate to pension plans with accumulated benefit obligations in excess of plan assets as of December 31: Qualified and Non-qualified Pension Plans United States International 2008 2007 2008 2007 (Millions) Projected benefit obligation...Accumulated benefit obligation ...Fair...

  • Page 82
    ... ) Other supplemental information for the years ended December 31 follows: Weighted-average assumptions used to determine benefit obligations Qualified and Non-qualified Pension Benefits United States International 2008 2007 2006 2008 2007 Postretirement Benefits 2008 2007 2006 2006 Discount rate...

  • Page 83
    ... health care trend rates shown above reflect 3M's expected medical and drug claims experience. The Company has developed certain long-term strategies to help offset trend rates through care management, strategic sourcing activities and plan design. A one percentage point change in assumed health...

  • Page 84
    ... total international plan assets. The other countries' asset allocations would not have a significant impact on the information presented. In the third quarter of 2008, the Company made discretionary contributions totaling $200 million to its U.S. qualified pension plan. In 2009, the Company expects...

  • Page 85
    ...time over which 3M is hedging its exposure to the variability in future cash flows for a majority of the forecasted transactions is 12 months. Hedge ineffectiveness was not material for the years 2008, 2007 and 2006. Cash Flow Hedging - Commodity Price Management: The Company manages commodity price...

  • Page 86
    ... not have a material impact on 3M's consolidated results of operations or financial condition. As indicated in Note 10, in November 2006, the Company entered into a $400 million fixed-to-floating interest rate swap concurrent with the issuance of the three-year medium-term note due in 2009. Also as...

  • Page 87
    ... inputs that reflect the Company's assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices (unadjusted) in...

  • Page 88
    ... and third-party indicative bid levels in markets that are not active. 3M classifies these securities as level 3. Available-for-sale investments: Investments include equity securities that are traded in an active market. Closing stock prices are readily available from active markets and are used...

  • Page 89
    ..., 2008. Refer to Note 11 for additional discussion concerning pension and postretirement benefit plans. Fair value of financial instruments: At December 31, 2008 and 2007, the Company's financial instruments included cash and cash equivalents, marketable securities, accounts receivable, investments...

  • Page 90
    ... United States, and regulatory proceedings worldwide. These include various products liability (involving products that the Company now or formerly manufactured and sold), intellectual property, and commercial claims and lawsuits, including those brought under the antitrust laws, and environmental...

  • Page 91
    ... decline in the number of new claims filed annually by apparently unimpaired claimants. The Company attributes this decline to several factors, including certain changes enacted in several states in recent years of the law governing asbestos-related claims, and the highly-publicized decision in mid...

  • Page 92
    ...is currently shared in an informal arrangement among Aearo, Cabot, American Optical Corporation and a subsidiary of Warner Lambert and their insurers (the "Payor Group"). Liability is allocated among the parties based on the number of years each company sold respiratory products under the "AO Safety...

  • Page 93
    ... certified the class in the Whitaker lawsuit and is set for trial in late March or early April 2009. In addition, three former employees filed age discrimination charges against the Company with the U.S. Equal Employment Opportunity Commission and the pertinent state agencies in Minnesota, Texas and...

  • Page 94
    ... Equal Employment Opportunity Commission and the pertinent state agency in California, asserting claims on behalf of a class of all current and certain former salaried employees who worked in California. Although the claim was filed in 2007, it was not served on the Company until October 2008, which...

  • Page 95
    ... Minnesota, and from historic waste disposal sites in the vicinity of that facility. After the District Court granted the Company's motion to dismiss the claims for medical monitoring and public nuisance in April 2005, the plaintiffs filed an amended complaint adding additional allegations involving...

  • Page 96
    ...financial position, results of operations and cash flows for the legal proceedings and claims pending against the Company could change in the future. The Company estimates insurance receivables based on an analysis of its numerous policies, including their exclusions, pertinent case law interpreting...

  • Page 97
    ... time between settlement and payment of a claim, no meaningful conclusions may be drawn from quarterly or annual changes in the amount of receivables for expected insurance recoveries or changes in the number of claimants. On January 5, 2007 the Company was served with a declaratory judgment action...

  • Page 98
    ... to their elections. Vested employees may diversify their 3M shares into other investment options. During 2008 the Board of Directors approved various changes to the employee savings plans. Effective January 1, 2009, employer contributions will no longer be based on Company performance; however, the...

  • Page 99
    ...In May 2008, shareholders approved 35 million shares for issuance under the "3M 2008 Long-Term Incentive Plan", which replaced and succeeded the 2005 Management Stock Ownership Program (MSOP), the 3M Performance Unit Plan, and the 1992 Directors Stock Ownership Program. Shares under this plan may be...

  • Page 100
    ... the General Employees' Stock Purchase Plan (GESPP), are as follows: Stock-Based Compensation Expense (Millions, except per share amounts) Years ended December 31 2008 2007 2006 Cost of sales...Selling, general and administrative expenses Research, development and related expenses Operating Income...

  • Page 101
    ... at the date of grant. There are no GESPP shares under option at the beginning or end of each year because options are granted on the first business day and exercised on the last business day of the same month. General Employees' Stock Purchase Plan 2008 Shares Exercise Price* Shares 2007 Exercise...

  • Page 102
    ... products, safety and security products, energy control products, commercial cleaning and protection products, floor matting, roofing granules for asphalt shingles, and Track and Trace products, such as library patron self-checkout systems (supply chain execution software solutions sold in June 2008...

  • Page 103
    ... screens and touch monitors Business Segment Information (Millions) 2008 Net Sales 2007 2006 Operating Income 2008 2007 2006 Industrial and Transportation Health Care ...Safety, Security and Protection Services...Consumer and Office ...Display and Graphics ...Electro and Communications Corporate...

  • Page 104
    .... Net sales to customers 2008 2007 2006 Operating Income 2008 2007 2006 Property, plant and equipment, net 2008 2007 2006 (Millions) United States...$ 9,179 Asia Pacific...6,423 Europe, Middle East and Africa...6,941 Latin America and Canada ...2,723 Other Unallocated ...3 Total Company ...$ 25...

  • Page 105
    ...At the same website, any future amendments to the code of ethics will also be posted. Any person may request a copy of the code of ethics, at no cost, by writing to us at the following address: 3M Company 3M Center, Building 220-9E-02 St. Paul, MN 55144-1000 Attention: Director, Business Conduct and...

  • Page 106
    ... and management is set forth under the designation "Beneficial Ownership Table" and "Security Ownership of More Than 5 Percent Stockholders" in the 3M Proxy Statement and such information is incorporated by reference herein. Equity compensation plans information follows: Equity Compensation Plans...

  • Page 107
    ... as follows: Page Number Report of Independent Registered Public Accounting Firm Consolidated Statement of Income for the years ended December 31, 2008, 2007 and 2006 Consolidated Balance Sheet at December 31, 2008 and 2007 Consolidated Statement of Changes in Stockholders' Equity and Comprehensive...

  • Page 108
    ...December 31, 2004. (10.27) Amendment of 3M 1992 Directors Stock Ownership Program is incorporated by reference from our Form 8-K dated November 14, 2008. (10.28) 3M Executive Life Insurance Plan, as amended, is incorporated by reference from our Form 10-K for the year ended December 31, 2003. (10.29...

  • Page 109
    ....32) Amended and Restated 3M Nonqualified Pension Plan II is incorporated by reference from our Form 8K dated December 23, 2008. (10.33) 3M Nonqualified Pension Plan III is incorporated by reference from our Form 8-K dated November 14, 2008. (10.34) Employment agreement dated as of December 6, 2005...

  • Page 110
    ...hereby sign this document pursuant to powers of attorney duly executed by the other persons named, filed with the Securities and Exchange Commission on behalf of such other persons, all in the capacities and on the date stated, such persons constituting a majority of the directors of the Company. By...

  • Page 111
    ... should contact: 3M Investor Relations 3M Center, Building 225-01-S-15 St. Paul, MN 55144-1000 Phone: (651) 737-8503 Fax: (651) 737-2901 Corporate News and Reports Corporate news releases, 3M's Annual Report, and Forms 10-K and 10-Q are available online at: http://investor.3M.com Product Information...

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