3M (MMM) 2007 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing and welcome to the 3M fourth quarter 2006 earnings conference call.

During the presentation, all participants are be in a listen-only mode.

Afterwards, you will be invited to participate in the question and answer session.

(OPERATOR INSTRUCTIONS)

As a reminder this conference is being recorded Tuesday, January 29, 2008.

We will turn the call over to 3M.

Good morning, I am Matt Ginter, Head of Investor Relations for 3M, and I would like to welcome all analysts and investors to our fourth quarter business review.

You will find this morning's presentation on our website at 3M.com.

These slides will remain on the site along with an audio replay of today's call for an extended period of time.

If you would, please take a moment to read the forward-looking statements on slide 2.

During today's conference call we will make certain predictive statements that reflect our current views and estimates about our future performance and financial results.

These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties.

Item 1A of our most recent forms 10K and 10-Q list some of our most important risk factors that could cause actual results to differ from our predictions.

George Buckley, our CEO, and Pat Campbell, our CFO, will both make some formal comments today, and then we will get to your questions.

We know how busy you all are during earnings season, so we will do everything we can to keep the call to about one hour today.

You can help us during the q&a again by limiting yourself to one question and one follow up, so we can address all questions adequately.

If you would like, get back in the queue and if we have time we will take your questions beyond two.

So now please go to slide number 3 and I'd like to turn the program over to Pat.

Thanks, Matt, and good morning everyone and thank you for joining us today.

We managed 3M to drive sustainable long shareholder value and while it is certainly critical that we regularly assess our interim quarterly assessment against our objectives, it is equally if not more important that we examine our results over the longer term.

So today I will begin with a summary of a few critical full-year metrics before I get into the fourth quarter results.

By all accounts, 2007 was a very good year for 3M.

The numbers I will quote on this slide exclude the impact of divested businesses, primarily Pharmaceuticals and special items in all periods.

Sales were up 10.5% for the year, with a record 63% of our sales coming from our International operations, which is a testament to the strength of our unparalleled international capabilities.

Earnings per share rose nearly 17%, driven primarily by a 12% operating profit improvement.

Operating margins stayed flat year-on-year at 22.5%.

Capital efficiency is another critical measurement for us, and we strive to balance investments to accelerate growth with the necessary operating discipline in order to sustain 20%-plus ROIC.

In 2007, return on investment capital was 21.4%, about equal to last year, again excluding the impact of divested businesses.

Finally, we returned over $4.6 billion to shareholders in 2007 via a combination of dividends and share repurchases.

This was an all-time annual record and a hefty 24% increase over the prior year.

So all in all, 2007 was a very successful year for 3M.

We continued to execute our investment strategy to accelerate future growth, while maintaining premium returns and double-digit earnings growth.

At the same time, we rewarded our shareholders handsomely.

As with any long term strategy, there is still much to be done; most notably, in accelerating our sustainable top line growth rate.

But our plans remain on track, and I am very pleased with our progress to date.

lease go to slide number 4, and let's turn our attention now to the fourth quarter.

This was another very good quarter for 3M, with healthy sales and profit increases despite tough end-markets in the United States.

We maintained - we managed to maintain and post another record sales quarter of $6.2 billion, an increase of 11% adjusted for divested businesses, and helped by favorable currency of 4.7%.

The rest of the discussion on this slide excludes the impact of divested businesses.

One of 3M's indelible strengths is its breadth of its portfolio, and the fourth quarter was another shining example of this.

In dollar terms, all six of our businesses grew sales year-on-year, led by Healthcare at a whopping 22.4%.

We also saw a strong double-digit growth in both Industrial and Transportation, and in Safety, Security and Protection Services; and on a local currency basis, 5 of these same 6 businesses posted positive growth.

So there is no doubt that our portfolio is stronger today than it was just a short while ago, as more businesses are contributing to growth each and every day.

This certainly gives me confidence in looking into the future.

Looking at the company geographically, we [then] drove broad-based growth, with double-digit dollar sales growth in Europe, Latin America and Canada, excluding divestitures.

Even after excluding positive currency impacts, local currency growth was positive in every major region of the world.

Fourth quarter earnings were $1.19 per share.

This figure excludes approximately $0.02 of costs related to restructuring actions due to the creation of a new projection systems organization and selective restructurings in our U.S.

organizations of Display and Graphics, and Industrial and Transportation.

While certainly not everything went right in the quarter, and we can always perform better, we did manage to increase sales and EPS by 7 and 8% respectively, excluding special items, or 11 and 14% further excluding divestitures, which I am very pleased with in this tough economic environment.

Now let's dig a little deeper into the quarter.

Please turn to slide number 5.

All information on this slide excludes special items.

Fourth quarter gross margins were 46.9% and operating margins were 20.8%.

Both were in line with last year's fourth quarter, after adjusting for the impact of divestitures.

SG&A expense was up 5.7% year-on-year to $1.3 billion, or up 11.7% adjusted for divestitures.

This increase is somewhat higher than is typical for us, but remember that a weak dollar inflates our costs, just as it does our sales.

So the 11.7% increase when compared with our 11% sales increase, ex Pharma, is more than reasonable.

So let's break down SG&A just a little further.

Administrative costs, adjusted for the Pharma divestiture and currency, were about flat year-on-year, so we continue to leverage SG&A.

Selling expenses, which includes sales reps, marketing, advertising and the like, were up 9% excluding divestitures and currency impacts.

We invested most heavily in two businesses, one of which was Healthcare, and areas such as Oral Care, Medical, and through recent acquisitions such as Biotrace, [Echo Light] and SoftMed, where we are investing today for growth tomorrow.

And in Consumer and Office, we have stepped up our investment in brands to support the long-term health of this business, and to drive sales with our customers.

Research and Development and related expenditures were up nearly 13% year-over-year, excluding divestitures, driven by Healthcare and Industrial and Transportation, to support our underlying strategy to reinvigorate our core businesses.

Operating income was up - was $1.3 billion, an increase of 5.2%, or 11.2% excluding divestitures.

Non-operating expense was $33 million, up $11 million year-on-year.

$8 million of this increase was due to an impaired auction rate security that we wrote off during the quarter.

he fourth quarter tax rate was 30.7%, up slightly from last year's 30.3% rate.

And finally, earnings per share were $1.19, a year-on-year increase of 8.2%; again adjusting for divestitures, EPS increased 14.4%.

Now, let's peel the onion back a little further by looking at the components of our fourth quarter sales improvement.

Please turn to slide 6.

In U.S.

dollar terms, global sales increased 7.3%, or 11% adjusting for divestitures, primarily the Pharma business.

International sales growth ex divestitures was 13.5%, while the U.S.

operations expanded sales by 6.7%.

We continue to benefit from favorable currency comps, primarily the stronger Euro.

Currency impacts added 4.7% to worldwide sales growth; so on an ex currency basis, total currency growth was 6.3% globally.

In the United States, total growth was 6.7%, led by a strong performance in three of our segments, Healthcare, Industrial and Transportation, and Electro and Communications businesses.

Sales were down slightly in our other three businesses, due to a slowdown in a handful of divisions tied to residential construction, consumer spending, highway construction and consumer electronic devices that have come to end of life.

Acquisitions in Industrial and Transportation, and Healthcare, accounted for most the 3.8% acquisition growth in the U.S.

Organic volume added 1.9%, and selling price added a 4% to growth in the quarter.

International total local currency growth in the fourth quarter was 6.1%.

Latin America led the way with 16.2% growth, as 5 to 6 businesses within that region posted strong double-digit growth rates.

Europe grew up to 6.4%, led by Healthcare at 18.4%.

Rounding out International, Asia/Pacific and Canada both drove local currency growth rates of approximately 4%.

Excluding Optical Films, the the Asia/Pacific region had the strongest quarterly local currency growth of the year.

Organic volumes increased 5% in International, with double-digit volume growth from emerging markets.

Acquisitions added 1.3% and selling prices were down just slightly in the fourth quarter.

Let me turn to our business segment results now.

This discussion excludes special items in all periods.

Please turn to slide 7 for a summary of our results of our largest segment, the Industrial and Transportation business.

Industrial and Transportation had another strong quarter, with sales up 13.7% to $1.9 billion.

Local currency sales increased 7.8%, including 4% from acquisitions.

Operating income increased 13.5% to $360 million, with margins right in line with last year at 19.1%.

Full year sales increased 9.6% to $7.3 billion, while profits increased 11.3% to $1.5 billion.

The Industrial and Transportation team's strong operational discipline drove an all-time record full-year operating margin of 20.8%, up 40 basis points versus last year.

Over the past four years, this business has improved operating margins by nearly 500 basis points.

The contributions to sales growth in the fourth quarter were similar to previous quarters, as the largest divisions within Industrial and Transportation continued to lead the way.

Most notably, Industrial Adhesives and Tapes, Abrasives, Automotive After-Market, and our Automotive OEM division.

Energy and Advanced Materials division showed strong performance due to strong market-focused programs in the oil and gas and solar industries.

3M's proprietary glass [bulb] material is widely used in weight-reduction applications, such as construction of deep oil wells, aerospace and automotive industries.

Internationally, full-year sales growth was strong across all regions.

Significant manufacturing investment was made in emerging markets, such as India, China and Poland, to simplify our supply chains and get closer to local customers.

As a result, Industrial and Transportation business continues to generate over 20% of its growth in emerging economies, resulting in roughly $1.2 billion of business coming from emerging economies.

The increased focus and technical investment in our core Adhesives, Abrasives and Tapes platforms continues to drive growth in this segment across the many markets we serve, notably Industrial, Automotive, Aerospace, Energy and Filtration, just to name a few.

3M is clearly recognized as the number one brand of choice in Adhesive and Tapes categories globally.

In addition, during the fourth quarter the Industrial and Transportation business added 4 more gap-filling acquisitions, bringing the total to 7 for the year.

In combination with our focused investments in R&D, these acquisitions will help to strengthen our core Tapes, Adhesives and Abrasives platforms for many years to come.

Please turn to slide 8, where we will discuss the fourth quarter and 2007 highlights for our Healthcare business.

Healthcare completed an outstanding 2007 with a very strong fourth quarter.

Excluding Pharma, quarterly sales rose more than 22% year-on-year.

Local currency sales were up 17% versus last year, driven primarily by organic growth, but also boosted 3.5 points by acquisitions.

Much of the acquisition growth came from two deals that closed in late 2006.

Biotrace International Plc, a UK-based provider of microbiology products, and SoftMed, a Maryland-based provider of health information software solutions.

In total, Healthcare added five acquisitions in 2007 to strengthen the portfolio and accelerate growth into the future.

Also included in this quarter's results was 3.7 points of growth due to supply agreements related to the sale of our branded Pharmaceutical business, in which our Drug Delivery Systems division became a supplier to the acquiring companies.

Excluding Pharma, fourth quarter profits were up 18.7% to $286 million.

Healthcare's full-year results were equally impressive.

Sales rose nearly 23% and operating income surged 19%, both excluding the impact of Pharma.

Full-year local currency sales growth was 18.3%, largely organic, and including 4.5% from the Pharma supply agreements.

Acquisitions added 4.4.

point of full-year growth in Healthcare.

The Healthcare portfolio really hit on all cylinders in 2007, as every division posted double-digit sales growth for both the fourth quarter and the year, led by Medical Supplies, Drug Delivery, as well as Health Information Systems.

Our portfolio market-leading products in medical includes infection prevention solutions; skin and wound care therapy, including surgical preps and drapes; Tegaderm brand transparent dressings; medical tapes; Littmann brand stethoscopes; and cardiac-monitoring electrodes.

In the Drug Delivery Systems, we drove strong growth in HFA-based components for drug inhalers.

HFA is an environmentally-friendly propellant pioneered by 3M that is superior to traditional ozone-depleting CFCs.

We also saw strong in Health Information Systems, where 3M is the worldwide expert in healthcare funding and performance management solutions for the hospital market.

In Oral Care, we continue to drive core growth in the areas of dental restoratives and cavity prevention, along with esthetic products in both dental and orthodontic channels.

Looking geographically, Healthcare ex Pharma achieved double-digit growth rates in all major regions.

Please turn to slide 9 for a review of the fourth quarter and full year results for the Display and Graphics segment.

Display and Graphics sales were just shy of $1 billion in the fourth quarter, up slightly year-over-year, and profits were a hefty $252 million, although down a few points year-on-year.

Sales growth was negatively impacted by nearly 1%, due to the third quarter divestiture of our Opticom and Canoga Loop businesses, both of which were good businesses but no longer considered strategic to our portfolio.

Fourth quarter local currency declined slightly in Display and Graphics.

On the positive side, Commercial Graphics division posted another solid quarter to finish the year on a positive note.

Throughout 2007 we saw strong performance in the vehicle wrapping market, where we provide films, inks and other products for this rolling billboard industry.

Full year sales grew solid single digits on a local currency basis in this, one of our largest, divisions.

In Traffic Safety Systems, which is also one of our largest divisions, local currency sales were down slightly in the fourth quarter and grew at a slow single-digit clip for the full year.

Not surprisingly, we grew faster outside the United States throughout 2007, as our market-leading reflective solutions for highway construction projects are a perfect match in developing economies that are adding infrastructure.

In the United States, the road construction market continued to be burdened by significant inflation on road service materials such as asphalt and concrete, which diverted spending from other construction products such as our reflective sign sheeting.

Both Commercial Graphics and Traffic Safety Solutions are absolutely fabulous 3M franchises that often get overlooked.

Both command leading market positions, are highly profitable and they set the pace for innovation, quality and service in their respective markets.

Offsetting this growth was a low single-digit decline in our Optical Film business.

Profit margins for the quarter were 26.4%, or down 1.1 percentage points year-on-year, driven by the Optical Film business which we anticipated and described in our December investor meeting in New York.

We remain keenly focused on the market segmentation in the Optical business, with strong penetration in handhelds, computer displays and LCD televisions.

We continue to face attachment rate pressure in the computer monitor and LCD TV segments, although in the fourth quarter we did see a mixed shift back to 1080p TVs.

This is good for our business, as 3M optical films are used more heavily in 1080p sets.

We believe over the longer term the 1080p LCD TVs will gain an increasing share over the overall LCD TV market.

We remain optimistic about the longer-term prospects for our Optical Film business, though we will face continuing price down and attachment rate pressure in 2008, as we adjust our prices to meet our customer needs.

Our continued investment in this business had led to a solid stream of new products that our customers are very excited about, and will allow us to maintain our market leadership in brightness enhancement.

Our films are also a unique environmental solution, through rapidly-reduced energy consumption, an increasingly important requirement for both retail customers and government agencies.

Full year sales in Display and Graphics grew 3.2% and profits rose 3.7% to $1.1 billion.

Operating margins were 29% for the year, up 20 basis points over 2006.

Please now turn to slide 10 for details on the Consumer and Office business.

Based on the business conditions of our U.S.

customers, this business turned in very, very good results.

Sales in this segment increased 6.6% to $859 million in the fourth quarter, with local currency sales up 2.6%.

While this is below our long-term run rate in this business, it is truly an outstanding result, considering the difficult sales environment in the U.S.

retail and office markets.

Fourth quarter worldwide sales growth was led by our Construction and Home Improvement business, where we are driving penetration in the DIY retail channel with market-leading products such as Scotch Blue Painter's Tape, Filtrete Home Furnace Filters and the Command mounting and fasting products, just to name a few.

We also drove good growth in the Home Cleaning category with our family of scouring and cleaning products.

Finally, we saw a nice rebound in the Office Supply area, with low single-digit local currency growth in the quarter.

Looking across geographies, our International operations had an outstanding quarter.

Sales in dollars grew at double-digit rates in Europe, Asia/Pacific and Latin America, as we are committed to expanding our international penetration.

Operating profit was up slightly in the fourth quarter to $155 million, and margins were a solid 18.1%.

For the full year, Consumer Office sales grew at a healthy 7.6% clip, and operating profits rose 9.3%.

Operating margins increased 30 basis points year-on-year, exceeding 20%.

Please turn to slide 11 for a review of our Safety, Security and Protection Services segment.

Sales in this business grew 11.3% in the fourth quarter, led by Respiratory Protection, Corrosion Protection, and Building and Commercial Services businesses.

Local currency growth was 5.3%, including 2.4% from acquisitions, primarily E Wood, a UK-based provider of corrosion protection products.

For the first time this year, we saw a year-on-year growth, albeit small, in our Roof and Granules business, which provides mineral [use] on [asphalt] shingles for the residential housing market.

While this is a positive result, it is still too early to know if this business is turning the corner, as the U.S.

housing market continues to remain weak going into 2008.

Geographically, we drove a strong double-digit growth in the quarter, led by Europe, and to a lesser extent, Asia/Pacific and Latin America.

Fourth quarter operating income rose 10.3% to $133 million, and margins were almost 18%.

For the full year, sales increased 15.3%, with local currency sales of 10.8%.

Acquisitions contributed 7.4 percentage points to local currency growth, primarily Security Printing and Systems Ltd.

and E Wood.

Full year sales growth was led by the Respiratory Protection business, followed by Security Systems, Corrosion Protection and Building Commercial Services.

2007 growth was held back by market softness in the U.S.

residential construction market, which negatively impacted our Roof and Granules business.

This softness reduced full year growth in Safety, Security and Protection by about 1.5%.

Worldwide operating income for 2007 was $640 million, up almost 15% versus 2006, and full year margins were a robust 21%.

Finally, during the year we added a couple of small but strategic gap-fill acquisitions in E Wood and [Rockford] Thompson.

We'll also announced a more sizable acquisition on November 15th, Aero Technologies, a global leader in the Personal Protection industry.

Aero will significantly broaden our safety solutions beyond our existing industry-leading respiratory protection products lineup.

We continue to expect the Aero acquisition to close towards the end of the first quarter.

Please turn to slide number 12.

Electro and Communications sales grew 7.3% in the fourth quarter.

Local currency growth was 2.4%, about half of which was acquisitions.

Growth in the quarter continued to be led by our Electrical Markets business, a leading provider of insulating, protecting and sensing solutions for the electrical trades and power producers, along with the Electronics Markets Materials business and the Consumer Electronics industry, with high-value specialty tapes, adhesives and fluids.

Fourth quarter operating profit increased almost 17% to $120 million.

Our Flexible Circuits business, which supplies components primarily to the inkjet printer market, continues to weigh on overall segment results, as the inkjet market becomes commoditized and a number of applications go end of life.

Softness in this business held back overall Electro and Communications sales and profit growth by 3% and 13% respectively in the quarter.

For 2007 in total, Electro and Communications had a truly outstanding year, especially considering that Flex Circuits hurt total segment sales and profit growth by 2.5 and 9.3% respectively.

Total sales growth was 5.5%, with a 2.3% local currency growth, including a 1.5 point boost from acquisitions.

Growth was led by Communications and Electro markets divisions, as they both excelled in delivering double-digit percent increases in sales and profits in 2007.

Geographically, growth was consistent across all regions, led by Europe and the U.S.

The Electro team has done a remarkable job over the years driving productivity and taking aggressive actions to improve its competitiveness, and 2007 was no exception.

Full year profits increased 14.2% and margins were almost 19%.

Please turn to slide 13, where I will review a few balance sheet and cash flow metrics.

Free cash flow in the fourth quarter was just shy of $1.3 billion, versus $900 million in last year's fourth quarter, adjusting for Pharma gains and taxes.

And while you don't see it on the chart, full year free cash flow was $3.5 billion, up 30% versus last year's $2.7 billion.

The timing of income tax payments can swing our free cash flow in any given period, as was the case in both 2006 and 2007.

Working capital and turns improved sequentially by .3 turns, and were about in line with last year's fourth quarter.

Capital expenditures in the fourth quarter totaled $391 million, not too dissimilar from both year-on-year and sequentially.

For 2007, we invested a little over $1.4 billion in capital expenditures, which was near the low end of our expected range of 1.4 to $1.5 billion.

Dividend payments to our shareholders were $341 million, and we continued to buy back stock during the quarter, with growth - gross share repurchase of $483 million.

For the total year we returned $4.6 million of cash to our shareholders via a combination of dividends and share repurchases, which is the most of any year in our history.

Weighted average diluted shares outstanding were down 3.1% year-on-year, and down slightly on a sequential basis.

Finally, our debt to cap ratio was 30% at the end of the year.

This concludes my formal business review.

Now I would like to hand it over to George for a recap of 2007 and our outlook for 2008.

Thank you very much, Pat, well done.

And a sincere welcome to all of our listeners this morning.

I will make a few brief comments about the quarter and then the year, our 2008 outlook, and then we will be happy to address your questions.

Needless to say, this was a very good quarter for 3M, with operating earnings a couple of pennies consolidated expectations, excluding a couple of pennies also on special items that we had in the quarter.

Pat has already outlined the growth numbers but just for emphasis, we achieved over 7% sales growth, and 11% in the quarter after correcting for Pharma, which I think is pretty good in this kind of environment.

Obviously, we are pleased with the good Q4 performance, but the real issue here is not what we did in the fourth quarter but our outlook for 2008; and importantly, how that outlook may or may not impact our longer-term strategic plan.

I can imagine the question that you are asking yourself right now is: how immune or otherwise is a company like 3M to slowing economic trends?

So before going into 2008 guidance, I want to outline to you how 3M's sales might be affected by our presence in various kinds of markets.

We have been asked by investors if we lead, follow or are concurrent with market trends.

Essentially the root question there is: are the current earnings trends an indicator of what is to come, what is here now or what has already passed?

Before beginning to answer that question, I want to stress again that 63% of 3M sales were outside the United States in 2007, and that this will increase to about 65% in 2008.

When you look at it this way, 3M is in fact a broad-based international company that seems to be masquerading as a U.S.

company.

I would also like to get an accurate set of numbers by geographic region out on the table.

In 2007, sales in Latin America were 7% of the total for 3M; in APAC they were 27%; in Europe, the Middle East and Africa, they were also 27%; in Canada, 6%; and in the U.S., they were 33%.

In 2008, the U.S.

will be about 31% of total sales.

It is also important to note that about $7 billion of our global sales, or nearly 30% of the total, are generated in emerging economies such as central and east Europe, developing Asia and Latin America.

These sales have been growing at almost 20% annually over the past 5 years.

Allow me to stress, please, that there is no company that I know of, even ones much larger than us, that can match 3M's capability with respect to international distribution.

I would like to spend a few minutes discussing our four principal channels of distribution, and their relationship to economic trends.

These are, first, the Mass Retail Market channel; second, Industrial Distribution; third, our OEM channel; and fourth, Healthcare.

In our Consumer and Office business, our method of distribution is mostly through mass channel retailers.

To get the size of this business in perspective, in 2008, 58% of the total sales of this segment were U.S.-based, equal to only 8% of total 3M sales.

This Consumer channel is the one which is the closest to the day-to-day economic cycles in the U.S., and living in that space can feel like you are taking the pulse of the economy on a real-time basis, every day, and that is how sales vary.

We make Post-It Notes today, shipment to our retailer tomorrow, and they're sold to a consumer on Monday.

Industrial Distribution is a channel which - it's a bit farther back up the supply chain, and lags the economy a little, perhaps by a month or so.

This channel amounts to 30% of 3M sales.

We supply hundreds of large and thousands of small distributors around the world via this channel.

The third channel on my list, the OEM channel, is one where the parts that we make are spec'd into another product that they are making.

Through this channel, we service such industries at Telecom, with products such as infrastructure build-out; upgrade and refurbishment; Electronics, through TVs and hand-held devices; forms [of] test and measurement equipment; and the Automotive industry, among others.

We also service the Oil and Gas, Mining, and Aerospace industries through this channel, as well as through general distribution.

Of course, these sales, while locked in by specification, follow the cycles of the markets they serve or the success of the products they eventually become part of.

Lastly, we have large, strong, cycle-resistant businesses.

For example, our sizable Healthcare business here in the U.S., which is $4 billion in total and $1.8 billion in the United States, which is 20% of U.S.

sales, is largely immune to the economic cycles, as is the Automotive After-Market.

The same can be said about a large part of our Safety and Security business, which is another $3 billion, which will reach $4 billion annualized run rate by the end of 2008.

In addition, we are driving some good growth platforms such as Oil and Gas, Alternative Energy, Minerals Extractions and Aerospace.

These elements help offset the impact of channels or businesses which may erode a little in economic downturns.

On balance, the sales mix we had means we are somewhere between concurrent with the market or a few weeks of [light].

Those parts of our business which are closer to the consumer would tend to go into decline first, and faster than some of our peers, who have long-cycle product streams, but they also come out a lot faster.

Sales could also be temporarily distorted by inventory corrections, both on the way down as well as on the way up, and often it's sometimes in between.

So all in all, cyclic downturns when they occur tend to be much less persistent and pervasive for 3M than other companies with long-cycle portfolios, and much more attenuated because of huge regional and business market diversity that we have.

There are many challenges that companies like 3M face, but two of the biggest are to resist the temptation, specifically the temptation to add costs when times are good, and to cut R&D and other growth investments when times are more challenging.

We were courageous these past two years in taking our large list of restructuring, reinvestment, rebuilding, and reinvention activities as a means of assuring a strong future for 3M.

In 2007, we invested heavily in the future.

We exceeded our external growth commitments, even as we were investing to reinvent sizable parts of 3M for the long term.

We made enormous strides in getting our manufacturing footprint right, by opening new plants in Korea, three in China, one each in Russia, India, Canada, Mexico and Turkey, plus several plant extensions in the U.S.

and Canada.

We also closed inefficient plants in the U.S., in Italy, Japan, Canada and New Zealand, and downsized others in the U.S.

and the UK.

We have closed over 50 inefficient plants around the world in the last 5 years.

In 2007 you will note that we also increased R&D spending ex divestitures by 11.4%, yet carried that increase in our earnings numbers.

We invested $20 million on plant start-ups, and we also invested tens of millions of dollars on a number of emergent business opportunities; again, all to accelerate growth momentum.

All of these investments were washed into operating earnings.

One of the real benefits of this extra R&D is that we are now able to recycle somewhere around 20%, and increasing, of waste material on [bed] production that was formally disposed of in landfills.

We are also now able to recycle somewhat smaller percentage amounts on [de-bed].

The early signs, too, are that our Optical Systems penetration strategy is beginning to get traction, with encouraging signs on volume wins.

We opened up new markets in Kazakhstan and North Africa, investing and spending in the here and now to get a little benefit of growth and penetration in these very attractive markets.

On the capital front, we spent hundreds of millions of dollars adding capacity close to our customers, and getting our supply chain straightened out.

While much was achieved, much remains to be done in this area.

We continued on course with strategic M&E activities, with 16 acquisitions that built new competencies in products and markets where we needed it.

As much as anything here, acquisitions brought us speed in reducing time-to-market.

All of these actions are helping us build an incredibly powerful company for the future, even as we deliver in the short term.

In 2008, we expect that we will generally continue this investment pattern, and that assumption is baked into our forecasted earnings.

That said, we will always use prudence and circumstance to guide the size and timing of our actions.

In 2008, we will make appropriate real-time adjustments on investments, with constant attention to economic circumstances.

Our approach to investing in the future is a practical approach, and not blindly ideological.

In 2007 we drove $1.5 billion of growth, or $2.3 billion of growth ex divestitures.

To put this in perspective, this is almost as big as our Electro and Communications business is today.

All business segments contributed to this growth, and the growth came in many different ways.

There was simple penetration with existing products such as Filtrete Brand Home Filters in the Consumer and Office segment, which by the way I will point is rapidly becoming the next enduring 3M franchise, and there were many new product launches; R&D revitalization; localization, such as our acquisitions of medical and dental companies in Brazil, Chile and Thailand; or entirely new product-to-service segments, such as passport production in the U.K.

An awful lot was done here in this company last year.

We made great progress on the cost of the aluminum composite conductor program we've spoken about before, which has the potential to significantly change the way in which electricity is distributed.

And anybody who went to the recent CES show in Las Vegas perhaps saw our new microprojector that will fit in the palm of your hand.

Several companies expressed keen interest in this product, and we're going all-out to commercialize on this as soon as possible.

Innovation is again alive and well at 3M.

One of 3M's great strengths is that there is no one single source of growth.

We are very diverse market-wise and geography-wise, and therefore growth patterns are likely to be repeatable and extendable.

In my view, this makes us the right kind of investment bet in times like these, and also for the long term.

I would be remiss if I didn't continue to stress the long-term health of 3M.

Within 10 years of your life - within 10 years your life will have changed significantly, and 3M will be driving a lot of that change.

Your personal life will be impacted most by technology and innovations; hospitals will be safer because of 3M's infection platforms; you will use less energy, in part driven by 3M products; solar will become a bigger piece of your life, in part due to 3M; your security fears will ease, again because of 3M; your life will be impacted everywhere by digital information display and electronics, and we will have and we will have a piece of the change also; in many places, precious water will become more drinkable and usable, and fluids more pure because of 3M.

The future looks very bright for our company.

Let me speak now briefly about 2008 guidance.

From our perspective, nothing has materially changed since our December 12th meeting in New York.

Some things have worsened a little, for example the U.S.

economy in general, but other factors have stabilized or improved, such as the performance of our core businesses like Abrasives and Industrial Tapes.

International continues to grow very strong.

Despite what we read and hear in the press, not everything in the garden is gloomy; a few more tailwinds have appeared.

For example, we expect commodity prices to ease during the year, particularly some metals, wood pulp and paper, that will help gross margin pressure.

It will specifically help Consumer and Office, Industrial Minerals and our Electro and Communications businesses.

Foreign exchange will still also be a very positive factor in our case.

Going forward, we expect M&A pricing to moderate, bringing new opportunities for growth at 3M that we might otherwise have passed up on.

We have proven ability to execute on cost reductions, due to our great lean Six Sigma capability, and have low-risk business activities in Security, Medical and Fluid Treatment.

Our positive outlook on Oil and Gas, Mining and Aerospace is unchanged.

So together with International, we think these elements offset the increased risks in U.S.

Consumer, U.S.

Automotive and U.S.

Housing.

But even on housing, we believe that we will see the bottom of the U.S.

Housing market, and comparisons will get easier from that time on.

So this is a time when we intend to get ever stronger, to take market share from our competitors, and a lot of that is available to us.

I can tell you that we intend to make our competition feel the heat a lot more than we do in this coming year.

So where does all this take us?

We stress-tested our earnings numbers against various economic circumstances, and we believe that we can deliver 10% EPS growth even in these confused and occasionally trying circumstances.

But we need to keep a proper sense of perspective.

The rebuilding of capability we have done on many fronts in the last two years will serve us well in this venture.

As far as the first quarter is concerned, because of the fabulous first quarter we had in 2007, the year-over-year financial comparisons will be a little challenging, and the period in and around the Easter holiday, which impacts business activity in both Europe and Latin America, falls in the first quarter this year but it was in the second quarter in 2007.

There is also a slightly longer Chinese New Year holiday this year, that will reducing sales in Asia a little.

These factors will result in some shifting of sales from the first quarter to the second quarter.

Nothing fundamentally flawed here, just timing.

Year-on-year comparisons get a little easier in the quarters farther out, particularly in the second half.

We are pleased to affirm again that we will deliver 10% EPS growth in 2008.

Investors should not presume we have or are implying here that we have exact precision on the EPS number growth either, but that the 10% is what we say it is, a minimum.

From my perspective, this forecast shows the resilience and strength of 3M.

We will continue to manage investments and overall costs prudently in the next year.

With that said, we welcome any questions you might have on our conference call.

Thank you very much, everybody.

(OPERATOR INSTRUCTIONS)

Our first question will comes from the line of Stephen Tusa with J.P.

Morgan.

Hi, good morning.

Just a question on Healthcare, I might have missed it, but the margins there, you know, they bounce around a little bit.

What happened in the margin there this quarter?

Anything specific going on?

I wouldn't say there's anything specific at all.

We ran, I think, 27 in the quarter and we ran 27.5 for the year, so really nothing unusual there, Steve, at all.

So there is nothing in the - I know there are moving parts, like the supply agreement and things like that might be skewing the incremental margin this year.

Is there anything next year that we should be thinking about with regards to the incremental profitability at Healthcare?

No, I think it will be very much like this year, Steve.

Great.

Thanks a lot.

Your next question will come from the line of John Inch with Merrill Lynch.

Please proceed.

Thank you, good morning.

I want to ask about growth and sort of a couple parts to the question.

It looks like Asia/Pacific organic was 3.2, but that obviously and assumes the drag from optical and D&G.

And I guess 3.8 for the year, I mean how does that dovetail, George, with what I think is somewhere around the 5% to 8% organic growth target for 2008?

Does that still seem to be - based on everything that's going on, does that still seem to be the good number to shoot for?

Well, we - thanks, John, we are still shooting for this longer-term, twice IPI growth; IPI may be a little bit slower this year.

So we don't feel perturbed at the number.

It seems to be consistent with the overall goal we're looking at long term.

I don't think there is any real cause for concern there, John.

I mean, was anything going on in Asia, ex optical film?

It just seemed to have decelerated.

Optical was the principal factor, John.

We saw, as you can imagine, we saw some sort of easing and we saw some accelerating different markets, a little bit of softer Japan was a factor in Asia, we saw some softer business in Korea; but other than that, it was fine.

And again, I stress, John, mostly driven by optical.

Pat here.

I just want - in my comments, Asia, if you strip out optical, actually had their best growth of the year.

So it was heavily impacted by optical in the fourth quarter.

Almost all dominated by that, John.

Okay.

And then just as a follow-up, I think the $0.02 of special items included, what, 4 or $5 million of restructuring charges?

I don't think - I mean, that didn't round to a penny, but my question is, George or Pat, are you planning, presuming there's more restructuring to come at 3M, ar you planning to run these charges, these whatever through the numbers, or are planning to call them out every quarter?

Because I think it just has a perspective on how people are going to view the quality of the earnings.

So just - what's the philosophy of what is baked into the forecast?

I guess you have to take - kind of put them in context.

First of all, materiality, and are they just routing in nature that we would generally run through our businesses, is normally what we do.

We specifically - you had two this time and one around - one around Display and Graphics and Industrial both that accumulated to 20 million bucks, okay?

So we thought that was sizable to call that out separately.

Last, Pat, minority interest, it's sort of been running as a $16 million drag and then it all of the sudden dropped.

Did I miss something?

Was there something going on - did you sell a component of that business, or what happened again?

No, most of that minority interest shows up in our 75% ownership of Sumitomo 3M, and in the fourth quarter we actually had a true-up of some of our inner-company pricing agreements between the parent and Sumitomo.

So minus 16 is still the run rate, kind of per quarter?

Probably would be, maybe a little less on a going-forward basis but not too far off.

Okay, thank you.

Your next question comes from the line of Mark Gulley with Soleil-Gulley & Associates.

Good morning.

George, when you take a look at the portfolio, it certainly looks like Healthcare is kind of re-assuming its leadership role and D&G looks like it is receding a bit.

Can you drilldown a little bit more for us and talk about can Healthcare its current excellent pace, and what do you need to do to make that happen?

Well, in the Healthcare - it's a great question, Mark.

In the Healthcare, that business just had, just a fabulous set of results all through the year, and they have done just incredibly well.

And we've brought a lot more focus to that business.

You saw it through the acquisitions, you saw it through some of the plant bills that we have been doing, and we are seeing it in internal investments, trying to get new product streams back in the fold.

And a few long plays on some of these sort of megatrends like infection detection, that we are playing some cards there.

So I think generally speaking Healthcare is going to have a lot of good news associated with it, and so it will be one of the primary focuses; it may end up being the primary focus, Mark, of investments in the near term for us.

So I don't think interest is any reason to conclude that Healthcare can't enjoy a lot growth again.

On Display and Graphics, Display and Graphics, as we've said many times, is going through a transition.

Of the three businesses in that area, Traffic Safety, Commercial Graphics and Optical, the Traffic Safety and Commercial Graphics businesses, Mark, are doing extraordinarily well.

We will live this year, in this transition year, as we are building up the volume in these a little bit further down the market, so we will see that business probably slide sideways during the years as we are making that transition, but with a clear desire longer term to reinvigorate growth in that business.

If I can just sort of canter on on the rest of our businesses, E&C seems to be, certainly towards the back end of the year, undergoing a resurgence, more strong demand on electronics - there's some areas of that business which struggle.

A consistent performance in the Electrical markets, so utility-based business there, and also pretty good performance in the Communications market.

So there's no reason to believe, Mark, that we won't see good results from that business as well.

In the Industrial and Transportation business, of course we could be impacted by an industrial slowdown in the United States, but what seems to have happened is many of those big businesses like Industrial Tapes, Abrasives, Automotive, Personal Care, are doing extraordinarily well in making really good jobs of penetrating the marketplace, so they seem really solid.

So again at this moment in time, we don't expect much to change with them.

So we're very encouraged.

Consumer and Office, the good news in that business is it's growing much, much stronger now internationally.

Yes, it will be impacted by the U.S.

economy, but even drilling down in their numbers, the Consumer and Home Improvement business still did very, very well in the fourth quarter there.

So we're going to see some impact there in Consumer and Office, I think from the U.S., Mark.

But beyond that, I don't know that it's going to be a big issue, and we expect still to have strong International growth.

So all in all, the rework is mostly in Display and Graphics, and the vast majority of the rest of our business is running pretty well.

As a follow-up, if I had a chance to talk to the R&D people in Austin, Texas, is there any replacement for Microflex coming down the pike or is that something that you are going to have to fight through?

Well, you know, one product that George hit on is the composite conductor, okay?

Now, that's not a direct replacement, but if you talk about Austin as a business, the composite conductor is down in Austin, Mark.

So it won't be necessarily the same field, but that would be one of the high-growth projects that we continue to work on down there.

Thank you.

Thanks, Mark.

Your next question will come from the line of David Bleustein with UBS.

In your closing remarks you mentioned material prices and some expectations of positive experience.

Can you walk through which commodity prices you are referring to and give us some sensitivity?

For instance a penny a pound, or some metrics to help guide us?

Well David, it is a general feel from our procurement people that we're seeing some betterment in commodity prices more generally.

We have seen easing of copper, some easing of aluminum - copper is a big component for us.

We found better uses and better ways to be more efficient, shall we say, with the uses of gold.

We've seen some of, not all of, the chemical components easing in price.

We are seeing some easing - early signs of easing in wood pulp, although it's countered to some degree by increased costs in steel.

So all in all, and when we mix it up in our blend of components, David, we see more tailwinds now in commodity purchasing than we do headwinds.

George, what I am looking for is how many pounds of copper do you use, how many ounces of gold?

Just some measure so that if we see $100 move, we can figure out what that means for you.

I think we can do it offline, David, because I don't know - I know the prices of those materials, but I don't know how many we use, off the top of my head.

We will get you those offline, David.

Fair enough.

Thanks.

Your next question comes from the line of John McNulty with Credit Suisse.

Just a quick question.

With a question with regard to the growth revitalization and the ramp up of the new plants that you've brought up over the past couple of years, have we passed in your mind kind of the tipping point there, where the incremental number of new facilities that necessarily need to be ramped up or built up are going to be smaller going forward, and maybe some of the ramp-up costs tied to that will start to wain off a little bit as well?

Yeah, I think it's close now, John, and I think we're at the cusp of that, and probably just going down the other side of that, so I think we will see some betterment from here and going on.

How many roughly do you expect to ramp up in 2008, just so we have a rough idea on that, too?

I think there is about seven?

Six or seven, John.

Thanks a lot.

Your next question will come from the line of Deane Dray with Goldman Sachs.

Good morning.

I was hoping we could get additional color on the price and volume dynamics in optical film, and was also interested in hearing - in the quarter, you commented that the mix - you saw more of a mixed shift back to the 1080p and do you think that is more of a fourth quarter event, or is that something more sustainable?

We think it is more sustainable long-term trend; the question is, what is going to happen on a quarter-by-quarter basis?

Deane, obviously we'll see how that plays out, but we do think that's kind of a longer term trend.

Really nothing has changed significantly from the presentation that Mike Kelly gave in New York in December relative to the pricing, you know, pricing action.

That plan is still in place, and the scope of the change that we laid out for D&G and for the optical business at that meeting is still, you know, our best estimate.

What is happening, Deane, is we are seeing some very positive moves in the industry.

And you know, I do think we have sort of alarmed a few of our competitors with our willingness to fight in some of these other areas, because obviously they know that we have the manufacturing capability, the capacity and the technological innovation capability to be able to win these contracts.

In the end, some of this is still about price, but Mike is very encouraged, i was speaking to him yesterday about it, Mike is very encouraged with the contract progress he has been making, with the contracts he is winning, he's expecting to see - still a lot to be done yet, Deane, but he's expecting to see significant pick-up in [bed] volume.

We have the [de-bed] volume stabilized, and we have made some quite significant - I mentioned in my call, Deane, significant steps forward in using recycled products.

You know, the yield coming out of these manufacturing processes is not as high as some people might imagine, so the ability to recycle material and get it back and still make an optically clear product is a very important step forward for us in controlling gross margins.

so, early signs are cost reductions in the plants are going well, some of them are ahead of plan, so at least the early news, Deane, and it is early news, we have to be careful that we don't sort of get people too optimistic, but the early news is very encouraging.

Can you provide any specifics regarding what actually went on in the quarter regarding pricing and volume?

Well, there were a number of contracts that were let, Deane, and obviously I am not going to go through those contracts, I don't even know the detail of those contracts, and it would be commercially intensitive to talk about different kinds of contracts that people had with different pricing structures.

But nevertheless, there were incentives on price in these contacts to secure volume and secure longer-term volume.

And if we did get the volume, then the prices weren't offered.

So it was typical of sort of end-volume, discount-type structures that you'd see in cases like these that we offered.

We won contracts with most of the large players in the industry, not all but most of the large players, and some are still ongoing in negotiation.

And Deane, Pat here.

I think it's fair to say that you will start to see more of that play out as we get into 2008.

You didn't see much of that really at the tail end of 2007, so it will be more in the 2008 results.

Some of these products, Deane, don't launch until February or even March.

So, Pat is absolutely right.

Thank you.

Your next question will come from the line of David Begleiter with Deutsche Bank.

Good morning.

George, back in December, I believe you said that you expected D&G EBIT to fall just $80 million in '08, and in response to an earlier question I believe you said you expect D&G to move sideways in '08..

Are you raising your forecast for D&G EBIT for all - optical films?

No, I'm not.

The move sideways was a non-scientific observation, and non-financially accurate.

There is nothing that we know in that business, David, that would tell you anything different than what we forecast back in December.

When I "sideways," it's a sort of general - we don't see margins improving significantly or sales growth improving significantly.

It was just a sort of general observation, David, but thank you for asking the question.

My pleasure.

One more item on optical.

What is your expectation for the optical profits to decline for 2008 versus 2007?

Pat here.

We haven't given optical numbers.

We kind of scoped the D&G in the December meeting.

We kind of gave you a - kind of a margin range for D&G as a total business, and that is still our best expectation for 2008.

Thank you very much.

Thank you, David.

Your next question will come from the line of Jeff Sprague from Citigroup.

Good morning, everyone.

Could we just go back, actually I think it was the first question on the Healthcare margins.

Pat, I would assume that the supply agreements did impact the margins from a comparison basis, '06 versus '07, but now that we move '07 to '08, wouldn't we expect to see some more incremental leverage on that strong revenue growth that you are getting in the business?

Or is there some R&D or other thing going on in that business that holds back the margin?

Dave, let's me just think about that for a second, make sure we are on the same page.

We rolled those supply agreements in, so they're part of the base business in '07, and effectively they will carry forward in '08.

So on a year-on-year basis there is really not a significant change relative to the supply agreements.

The only thing that obviously it will impact is to the degree that the volume changes there.

So that hasn't significantly changed.

So if you look at the margins of Healthcare in total, we think that if they can continue to grow the top line the way we expect, they probably should get a little bit of a margin expansion, but the 27% margins they had for the share are really, you know, really stellar, okay?

And we would continue to hold those and if everything goes well, we might be able to expand them a little bit.

But it is also critical, that is one of our key investment areas for the future as well.

And you know, especially with the economy looking the way it is, we want to make sure that Healthcare gets the combination of resources they need to keep the growth going as well as keep the sales rate up in 2008.

I meant that the supply agreements were not in '06, so we had '06 versus '07 comp, and now '07 versus -

That is true.

But I would have to share with you that the supply agreements are less than what the Healthcare average margins are.

So, they would be dilutive to that number.

But now that they're in the base going forward, you know, the base rate that Healthcare has is a good stepping-off point.

That's my point, though.

It diluted the '06 versus '07 - we can follow up.

So it is now in the base, so it should be dilutive on an incremental basis, I guess.

That's correct.

And is there any way to think, Pat, about the fall through to earnings on currency?

You know, with conversion rate on margin and or some other metric, just to kind of get our arms around what that might mean in '08?

Well, it is, we tried to scope this at the meeting, Jeff, you know on the upside, if you look at the current upside, if credit rates hold where they are at kind of at the end of the year, you could be, you know, $0.15, $0.20 positive for us in 2008.

Okay.

And can I just sneak one in for George?

Go right ahead.

George, thinking of spend on the new versus kind of the end of life - and I guess it kind of goes a little bit to that tipping point question on the plants.

I mean, you're always going to have end of life, given your tens of thousands of products, but do you see a point where, you know, rarely you feel compelled to cull it out, because you've now got kind of enough momentum on the front end that it really is not of consequence?

Is there some kind of visible pipeline momentum that would get us to that point?

Yeah, I think one more year, the Flex stuff, Jeff, has about another year to go, and then there is some price adjustments where we lack, and we probably then won't see it in year-over-year worsen, and we wouldn't see it in worsen between '08 and '09, so I think this is the last year, Jeff, where we're likely to have to cull those things out.

Thank you very much.

Your next question will comes from the line of Scott Davis with Morgan Stanley.

Good morning, everyone.

Good morning.

How does, I mean one thing that has changed I guess since December is your stock price has down a bit.

I mean how does this sub-$80 stock change your view at the margin on kind of buybacks or buybacks versus M&A?

I know before you weren't planning on substantial buybacks in '08, but has that changed at all?

Scott, kind of referring back to some of George's comments.

It is an interesting world, because of course the M&A market will be a more attractive market for the quality products that are out there, so obviously we want to keep a close eye on those.

To go back to the October meeting, we had talked about a share repurchase program that would probably extend another two years, and that is probably still our best view today.

Obviously, it will move around on a quarter-by-quarter basis.

We bought back about - spent about $500 million during the fourth quarter, and I would say that is probably - will be about the run rate we have here in the first quarter.

Okay.

And going back to the comments on CapEx, maybe George, you can share with us your vision, your longer-term vision.

I mean certainly 3M was maybe under-investing for a period of time, and now adjusting that, when you think about kind of spending in the range now of almost 120% of D&A, I mean does this trail off in '09, as a majority of the projects are over with and we can start to think about more, you know, 100, 105% of D&A, more historical 3M levels?

Yes, in fact the early numbers, Scott, CapEx will probably come down a little bit this year, not by a lot, maybe by $100 million, and we suspect that that will probably ease as the next few years go on, dropping from the peak that we had at 1.4, 1.5 billion, probably $100 million dollars a year for the next couple of years, bringing it back down to levels that are more consistent with historical spend that 3M has had.

So we are already beginning to see some easement of that now.

Okay.

Last, just to clean up for you, Pat, I don't think in December you were able to give us much guidance on pension, or I think you said it was neutral [issues].

Has that changed at all since then for '08?

Yes, it has.

That is an another tailwind for us.

Right now, we are probably looking at about $100 million reduction in expense, when we look at '08 versus '07, for our pension expense.

Super.

Thanks, guys.

Your next question will come from the line of Shannon O'Callaghan with Lehman Brothers.

Good morning, guys.

So you know, looking across the different businesses now, we talked a little bit about Healthcare and Display, but as you're thinking about trying to drive the organic growth up 4%, you know, into the 5 to 8% range, where do you really see it coming from?

Healthcare has already been growing pretty strong.

You know, what gets better from here as you look out?

Well, I think Shannon, the increasing preponderance of sales that occur overseas tend to lift our growth rates.

Increasing investments that we're making in security tend to life out growth rates.

Healthcare, as Pat already pointed out, tends to lift our growth rates.

We are actually beginning to see better growth rates in the industrial heartland of 3M also.

We have to be fair that these are slow-moving indications, and they take some years to roll forward.

And we actually are in the position hopefully in both Display and Graphics and in some of the Flex circuits that in Optical's case it'll begin to turn around, in Flex will [lack] and it will no longer be a factor.

So generally speaking, the investments in higher growth spaces, in Water, in Security, in Track and Trace, are all adding to our overall growth rate, so gradually I think you are going to see, Shannon, this movement tick up gradually over the next couple of years.

I mean, are you seeing the new capacity that you are putting on, is it contributing the way you expected it to, in terms of filling up those plants?

Is the demand there as you envisioned?

Is it going along as you expected?

It is in most cases and obviously in one case, like in our Occupational Health business, a piece of our demand is pure random; it's tenders it's x factors, so it is very, very difficult to know how to forecast in advance.

And that's an area, I think, that is a little more uncertain but generally speaking, the capacity is being used, certainly Medical is being used, certainly in Blue Tape that we put on, the capacity we've put on is being used.

Certainly in the Filtrete areas, that is actually probably - we're even still a little bit short of capacity there.

That is becoming a real rocket ship in terms of growth.

So for the most part, I think the observation is that it is working out pretty well.

Okay.

Great.

Thanks a lot.

That concludes the question and answer portion of our conference.

At this time we will turn the call back over to 3M for closing comments.

Thank you, very much, everybody for listening.

We appreciate your questions and comments and look forward to talking to some of you a little bit later in the day.

So thanks, everybody.

Take care, bye bye.

Ladies and gentlemen, that does conclude the conference for today.

You may all disconnect.

Thank you for participating.