Credit Suisse 16th Annual Chemical Conference

CSFB 16th Annual Chemical Conference© 3M 2007. All Rights Reserved.

George BuckleySeptember 26, 2007

3MInnovation and Growth

© 3M 2007. All Rights Reserved.

2CSFB 16th Annual Chemical Conference

Forward-Looking StatementsThis presentation contains forward-looking information (within the meaning of the Private Securities

Litigation Reform Act of 1995) about the company’s financial results and estimates, business prospects, and products under development that involve substantial risks and uncertainties. You can identify these

statements by the use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,”“believe,” “will,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Among the factors that could cause actual results to differ materially

are the following: (1) worldwide economic conditions; (2) competitive conditions and customer preferences; (3) foreign currency exchange rates and fluctuations in those rates; (4) the timing and acceptance of new product offerings; (5) the availability and cost of purchased components, compounds, raw materials and

energy (including oil and natural gas and their derivatives) due to shortages, increased demand or supply interruptions (including those caused by natural and other disasters and other events); (6) the impact of

acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio management actions and other evolving business strategies, and possible organizational restructuring; (7) generating less productivity improvements than estimated; and (8) legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2006 and its subsequent Quarterly Reports on Form 10-Q (the “Reports”). Changes in such assumptions or factors could produce significantly different results. A

further description of these factors is located in the Reports under Part I, Item 1A (Annual Report) and Part II, Item 1A (Quarterly Report), “Risk Factors.” The information contained in this presentation is as of the

date indicated. The company assumes no obligation to update any forward-looking statements contained in this presentation as a result of new information or future events or developments.



Outstanding Second Quarter

EPS*

$1.23$6.1 Billion

Sales

+8% +17.1%

+11.8%ex. pharma

*Excludes special items. Refer to 3M’s July 26, 2007 press release for a complete list and explanation of these items.

+23.0%ex. pharma



Sales Recap Q2 2007 vs. Q2 2006

*Total Local Currency = Volume + Price + Acquisitions

(1.4%)1.3%(0.4%)Price

2.8%2.8%2.8%Volume - acquired

9.9%2.1%6.9%Volume - organic

(3.7%)(4.0%)(3.8%)Divestiture

4.1%--2.5%Translation

11.7%2.2%8.0%Total Sales Growth

11.3%6.2%9.3%Total Local Currency*

U.S.WW Int’l



Balance Sheet & Cash Flow

$527$348$261

$3,171$2,557

5.2$539

Q2 2006$866(a)$670(a)Free Cash Flow

$1,164$350$304

$3,444$2,714

5.0

Q1 2007

$346Dividends Paid

5.0Net W/C Turns

$3,620Receivables-Net

$1,035Share Repurchases

$348Cap-ex

$2,779Inventories

Q2 2007($ in Millions)

(a) Excludes certain special items that impacted cash flow. Refer to 3M's July 26, 2007 press release for an explanation of these items.Note: Refer to 3M’s July 26, 2007 press release for a complete discussion of net working capital turns and free cash flow

(non-GAAP measures).

© 3M 2007. All Rights Reserved. CSFB 16th Annual Chemical Conference

Our Principal Mission

Driving Growth


7

CSFB 16th Annual Chemical Conference

Built firm Six Sigma and Lean Processes in manufacturingFundamental principles remain

Protect our premium margins

Defend our premium ROIC

Reemphasize innovation

Leverage central overhead

Adding growth, taxes and supply chain as new value creators

Build on 3M’s enduring franchisesBuilding value and margin for our customers

(#)Innovation

Comparative Tax Rate (3M at 34% in 2007)

Ingersoll Rand 16% 2150 bpsTyco 21% 1450 bpsITW 31.5% 150 bpsDanaher 27.3% 920 bpsUTX 26.8% 994 bpsJ&J 23.8% 1449 bpsAvery 20.4% 1943 bps3M 34% 0 bps

Tax Rate Margin Advantage

Conclusion; We fight to maintain high margins, and we reduce our competitiveness and growth rates, but waste it all in paying higher taxes

© 3M 2006 All Rights Reserved

Relative Value Of Growth

MMM 5.2GE 11.4

IBM 3.5DHR 5.1

PG 7.2XOM 2.1GM 2.4

WMT 1.6#REF! #REF!#REF! #REF!#REF! #REF!

0.0

2.0

4.0

6.0

8.0

10.0

12.0

MMM GE IBM DHR PG XOM GM WMT

Company Ticker

Rel

ativ

e Va

lue

of G

rowth

► Ratio of value creation from 100 bps of growth to 100 bps of margin► Acquisitions add value by blending the value lost from margin dilution

and the value added from incremental growth and mass

Value Of Growth Vastly Exceeds Value Of Margin Expansion For 3M

Source:HBR April 2005

Great Opportunities Remain for 3M


8


Plan Essentials

Higher Growth remains fundamental to our long term

success

Rebuilding R&D to improve new product flow and impact

Financing the growth through supply chain re-engineering

Developing a more entrepreneurial and responsive culture


9


Operational ExcellenceGrowthProtect and

Grow the CoreAdjacencyBuild Out

1. New Technology 2. New Products

5. Breakthrough Opportunities

(BTO’s)7. Go to Market

3. Solve Low Turns Inventory

4. Service & Quality Revolution 5. Sourcing6. Localized, Simplified

Supply Chains

1. Factory Cost Reduction

2. Control Price Leakage

6. Lean Six Sigma

Growth Inspired by Customers’ Needs, Balanced with Operational Excellence

3. M&A

Organizational excellence within a growth culture essential


10


Reducing Growth To Its Simplest FormThink of growth as a pipeline; work the inputs and the outputs and clear the pipe of pluggage and obstructionsAt the “sending end” of the pipe: Invent and develop more products

Get scientists and engineers back in the business of inventing new productsAt the “receiving end” of the pipe; sell and market better

More feet on the street, and more advertising and merchandisingStop unnecessary complexity in SKUs Acquire local brands to penetrate distribution faster

The pipe itselfProvide a large enough diameter pipe: CapacityKeep the pipe as short and simple as possible

Stop the pipe leakingPrice giveaways and market share loss


11


So We Tailor Made A Growth Program For 3MRebuilding & extending the core; lowest risk and fastest results

Protect and defend the core; inventing a new futureFixing chronic capacity issuesBroaden the product portfolio to become more important to customers

Invest in the futureR&D spending increases, protecting our flanks and reengaging the labs Acquisitions, Break Through Opportunities (BTOs) and “feet on the street”

Improving supply chain speed and efficiencyShortening most of our supply chainsDriving growth by going “local” with regional brands and manufacturingReleasing working capital and lowering entropy costs and effective tax rate

Experiment with new marketsEmerging Business Opportunities (EBOs) and other adjacencies

Greater emphasis on International markets growth


12


• Seeded by small M&A• Mega Trends • Track and Trace• Minerals extraction• Oil & Gas• Food safety

Grow the Current Core Business

Build New Businesses

StrategicThrust

Complementary Acquisitions

International Growth

• Defend and extend the core• Build scale• Build relative share• Localization• Disruptive technologies• Build long term competency

• Follows core strategy• Supports adjacencies• Mostly tuck-ins• Occasional transformation

• BRICP• No country left behind

A Visual Of Our Basic Strategy


13


Core Growth Remains The First Mission

• Imagine, dream and invent• Beat competitors to the future• Plan for cannibalization• Licensing • Avoid NIH syndrome

Invent a New Future

Build Broad LongTerm Competencies

• Develop broad based long-term capabilities• Acquire supporting technology with quality brands• Build volume and scale

• Constant reinvention• Localization• Differentiation• Build key partnerships

Grow the Current Core

Extend The Core

• Build first where we’re strong• Build scale & relative share• Fill product “white spaces”• Be important to customers• Use dual branding• International localization• Local acquisitions• Private labeling


14


We Made Solid Progress in 2007Reinvigorating R&D

11% increase over 2006*Building on EBOsNew product vitality index up from 20% to 24%

Accelerated International GrowthBuilding local/regional brandsPursued profitable adjacencies

Invest in a better Supply Chain28% increase in Capex over 2006Improving local source of supply

• Korea – New respiratory facility • Poland – New optical facility • Canada – New CHIM tape facility • China – New Industrial tapes facility

Seed Further Growth in the Core via acquisitions13 acquisitions YTD in 2007

*ex-pharma, Brontes in 2006


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The 3M Growth Strategy Is Taking Hold3M

LC

Rev

enue

Gro

wth

4.7%5.6%

1.1%

2.3%5.8%

03-05

8.0%

06-07 YTD

Acquisition

Organic

Oil And Housing Headwinds Plus a Slowing

GDP in US and Asia

Increasing growth, without favorable economic conditions


16


We Are Making The Necessary Growth Investments

R&D investment

Capex

Acquisitions -technology

2005($MM)

1,274

943

1,293

2006($MM)

1,522*

1,168

793

2Q07 YTD($MM)

677

652

194

Change2005-2006 (%)

20%

24%

Investments in critical growth elements

* Includes Brontes acquisition and other special items


17


$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Sustain Strategic Growth Optical

Since 2000, Optical spending equaled all other growth capital combined

Growth Capital increase almost all Optical Films53% Decline in

Capital Spending

Historical Capital Spending


18


AcquisitionsHigher organic growth results from more

frequent acquisitions

Base

Growth

Acquisitions

Acquisitions are not only about bulk, but can be helpful in:

1. Strengthening the base by filling in white spaces

2. May facilitate growth through entry into a new market

3. May provide a key new technology or brand

4. Fast capacity acquisition


19


The Expanding Impact of M&A

10% Increase in acquisitions in 2007 following 350% increase in 2006

18

4

2005 2006

~20

2007


20


High Jump

HornellCUNO

Gen'l Ind'l Diamond

Omni

Mercury

Info-XSiemen's

Interconnect Interchemall Dom

0%

5%

10%

15%

20%

2004 2005 2006

Targ

et G

row

th R

ate

%Thoughtful Acquisitions Help Drive Core Growth

3M Historical Growth ~4%

Less than $100MM Greater than $100MM


21


The International Growth Opportunity Remains LargeInternational growth rates 2X – 3X US62% of 3M sales are outside the United States today, ~ 65% in 2012Continued focus on BRICP and high growth countries; adding ~31% of International growth

BRICP adding ~$2.5 Billion → 2012 (China $1.1 Bn)Next growth focus – “Plus” (Vietnam, Indonesia, Kazakhstan, Ukraine, Gulf/UAE, Turkey)“Plus” adding ~$0.5 Billion

China growing ~ 21% CAGR, W. Europe continues increased growthAcquire local brands and manufacturing as well as organic expansion


22


3M’s Subsidiary Network: A Platform For Growth

KeySales & MarketingManufacturing/ConvertingTechnical Capabilities

Canada

Puerto Rico

Trinidad& Tobago

Brazil

Uruguay Argentina

Venezuela

Chile

Peru

Colombia

Ecuador

Panama

Jamaica

Costa RicaEl Salvador

Guatemala

Dominican Republic

Mexico

UAE

Switzerland

Austria

Greece

Italy

Pakistan

SaudiArabia

Lebanon

Kuwait

Egypt

KenyaSouth Africa

Morocco

Tunisia

China

Korea

Japan

Taiwan

Hong Kong

Vietnam

Philippines

Thailand

India

Malaysia

Indonesia

New ZealandAustralia

Singapore

Sri Lanka

France

Germany

United Kingdom

Ireland

Belgium

Netherlands

Denmark

Norway

Sweden Finland

Spain

Portugal

Poland

CzechRepublic

Hungary

Russia

Turkey

Romania

UkraineEast

Israel


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International Sales Growth(Billions)

$7.8$8.2

$8.9$8.5

$8.9

$10.7

$12.1$12.9

$14.1

5.0

7.0

9.0

11.0

13.0

1998 1999 2000 2001 2002 2003 2004 2005 2006

$15.0

© 3M 2007. All Rights Reserved. CSFB 16th Annual Chemical Conference

Operational Excellence


25


Challenges in Working Capital Management

$575$557Change in WC

$342$457Total sales growth

Q1 2007Q4 2006(YoY Growth in Millions)

Streamlining of our supply chain is essential


26


Supply Chain Improvements3M’s history led to very complex supply chains

Average time to traverse the global supply chain is 125 daysMultiple plant hops, often backward and forward across continents, is the norm at 3M

• Structure drives up inventory and working capital usage and lowers fill rates

→Led to expensive, if flexible, machine tools→Frequent machine set ups and high Excess and Obsolete

inventoryAir freight, manual intervention and expediting are normalLarge numbers of SKUs complicate the picture, compounded by chronic capacity shortages


27


3M’s Convoluted Supply ChainPlant A

Six OwnersPlant B

Four Owners

Plant C

Eight Owners

Plant D

Four Owners

• Any plant may have up to eight “owners” in 40 combinations

• Lead owner varies plant to plant

Raw Material In

Distribution Center


28


And Here’s What We Are Beginning To DoPlant A

Six OwnersPlant B

Four Owners

Plant C

Eight Owners

Plant D

Four Owners

Raw Material In

Distribution Center


29


Supply Chain – Focused FactoriesPlant A

Six Product Lines

Plant CEight Product Lines

Plant BFour Product Lines

RawMaterial In

DistributionCenter

Plant DFour Product Lines


30


Supply Chain – Focused FactoriesPlant A

Six Product Lines Plant CEight Product Lines

Plant BFour Product Lines

RawMaterial In

DistributionCenterFocused Factory

Plant DFour Product Lines


31


CANADA

Capacity And Supply Chain Improvements In Progress

USA

MEXICO

Filtrete Mfg.

CHIM TapeMedical: M6 Solvent Coater-Brookings, SD

Automotive Acrylic Tape-Aberdeen, SD

CHIM: LFBMF Lines, Aberdeen, SD

Northridge DDSD Packaging Line

PolyesterGreenville, NCD11 MOF Line

Decatur, AL


32


RUSSIA

Tapes

POLANDManufacturing

KOREAINDIA

CHINA

Industrial Tapes

OHES

Suzhou LCD II

CHJ III Mfg

Medical Mfg. GuangZhou

Capacity And Supply Chain Improvements In Progress

Optical


33


Getting Closer to the Customer – New Korean Plant Example

24%13051706Aycliffe

31%31284555Valley

13%17572012Aberdeen

% Closer to Customer (With Korea)

With Korea

Supplying APAC

Before Korea

Weighted Ave Miles to Customer (Worldwide)

Nil11191119Knoxville

51%23944900Hutchinson

% Closer to

Customer (With Korea)

With Korea

Supplying APAC

Before Korea

Weighted Ave Miles to Customer (Worldwide)

Korea operations shortens WW supply chains by ~30% for key product lines

Maintenance Free Respirators (4350)

Laminating Adhesives (2470)


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Regional PPF

Nevada

Brookings

Hutchinson

Trient

2007

Knoxville

2012

$7.7MM CAPEX

Automotive Regional Paint Protection FilmIt’s Not Just a Global Issue; Division Example

Brady

$2 MillionFreight Savings$20.5 MillionMaterial Cost Savings$4 MillionInventory ReductionFrom 150 to 45 daysLead TimeFrom 96% to >99%Service - LOT

5 Year Benefits


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Brontes Technologies


36


Track & Trace Has Broad-Based Opportunities

Existing and Potential 3M Solution Spaces

How Am I?

Where Am I? Sensor Networks SensorsTempVibrationHumidityLightContaminants

Who Am I?RFIDBarCodeDatabase

Tracking Software RFID NetworkWireless LocationRTLSGPS Road Tolling

Improve and Advantage Me!Location-Based ServicesSupply Chain OptimizationCompetitive “Superiority”in Order Fulfillment

Supply ChainDistribution


37


Electrical Power Transmission


38


New Consumer Products


40


3M’s Strategy Reduces to Five Principal Elements

Get our labs back in the business of developing and releasing new products faster

Better prioritization of what we do, and don’t do, and where we do it

Go local (or regional) in brands and sales coverage to drive growthGet all elements of the supply chain closer to customers to facilitate growth and reduce costs and W/C demandsAccelerate technological capability, distribution penetration, customer satisfaction and manufacturing capacity through acquisitions

Becoming more important to customers

Leverage the growthStop price leakage and share lossesTrim non-essential corporate services


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Cash Back to Shareholders

For The Period 2001-06:

$8.9 billion in share repurchases$6.7 billion in dividends paidDividend CAGR of 9%No equity dilution policyReturned ~103% of reported net income via dividends and share repurchases

0

500

1000

1500

2000

2500

2001 2002 2003 2004 2005 2006

Stock Repurchases $'000s

600

800

1000

1200

1400

2001 2002 2003 2004 2005 2006

Dividends $'000s


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3M’s Summary Longer Term Strategy

Technology ensures upsidesInvestment through the economic cyclesDriving growth as a way of doing business

Drill into the core. Build scale where markets are largeInnovation remains vitalMove towards higher relative share in smaller marketsHeavy up on globalizationAccelerated M&A to improve core growth and fill gapsCareful tradeoffs of share and growthBuilding brands and technology

Organic Sales Growth

EPS Growth

Investment Returns

2X IPI ≈ 8% and up

12 -15%

20%+

Credit Suisse 16th Annual Chemical Conference

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