3M 2008 Annual Report Download - page 2

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George W. Buckley
Chairman of the Board,
President and Chief Executive Offi cer
To our shareholders
2008 was a year of tremendous challenge for 3M as it was for many
companies. The people of 3M confronted the downturn with both resiliency
and resolve. Fighting through deteriorating economic conditions in the fi rst
half of the year and combating a secular transition of the Optical Systems
Division, the company posted revenue growth of 9.3 percent in the fi rst six
months of 2008.
The second half of the year was a different story. We worked hard to get ahead of the looming
recession, making many adjustments in costs, staffi ng levels and capital projects in anticipation
of the slowdown, and doing so before the need was apparent to many. We also dealt with the
ongoing commoditization of our Optical Systems business, a trend which ran throughout the
whole year. While the company’s corrective cost actions could not fully mitigate the accelerating
slowdown in the second half of the year, they were certainly a signifi cant factor in our ability to
make the best of a very tough situation.
For the total year, we posted sales of $25.3 billion, another all-time record, compared with
$24.5 billion the year before. Net income was $3.5 billion, or $4.89 per share in 2008, versus
$4.1 billion, or $5.60 per share, in the previous year. Excluding special items, 2008 earnings were
$5.17 per share, versus $4.98 per share in 2007.
For many years, 3M’s prudent and conservative approach to
managing its assets has been well known and for the most 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 items). In 2008 alone, 3M
additionally paid out $1.4 billion in dividends. In the last fi ve years,
3M has returned greater than 100 percent of reported net income
to shareholders via dividends of $6.6 billion and an additional
$11 billion in share buy-backs. In addition, even in this most uncertain
of times, we increased our payback to shareholders by increasing
our 2009 quarterly dividend to 51 cents per share. 3M has now
increased its dividend every year for the last 51 years.