3M 2009 Annual Report Download - page 2

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George W. Buckley
Chairman of the Board,
President and Chief Executive Officer
To our shareholders
We all know that 2009 saw probably the worst economic downturn since the
Great Depression. When you sail on the stormy seas of an economic crisis like
this, you learn so much more than when sailing on figuratively calm waters. It
changes your outlook and in some ways it alters you permanently. 2009 was
a truly formative time that will likely stay with each of us forever.
Crisis notwithstanding, over the course of the year we accomplished a great deal strategically as
we worked to overcome tough economic challenges while simultaneously protecting the future.
Consequently, 3M is a much stronger and more innovative enterprise than it was even a year ago.
I simply can’t say enough good things about our people and their superb execution in a time of
crisis. Our results reflect their good work.
The company posted full-year 2009 sales of $23.1 billion and earnings per share of $4.52,
down 8.5 percent and 7.6 percent, respectively. Excluding special items, 2009 earnings declined
9.3 percent to $4.69 per share. While there was obviously a contraction in sales, I’m especially
proud that our full-year EPS of $4.69 per share was well within our original forecast range from
one year ago. This was really a quite remarkable accomplishment.
The key to 2009 was staying on a clear and simple plan: tight control of spending and factories
while retaining a focus on generating cash…and working hard to ethically drive sales and market
share everywhere. Underpinning that, we stayed the course on our R&D and new business
investments. We never gave up on the future at a time when
some people wondered if there would even be one. Simplicity and
focus were essential and will remain so until we are fully past this
downturn. There is plenty of economic rebuilding still to be done
in many nations around the world.
To me, a hugely important distinguishing factor of 2009 was this
resolve to maintain investments in the future. We maintained
investments of more than a billion dollars in R&D at a time when
many companies were forced to dramatically cut back. And we
still managed to achieve an impressive free cash flow conversion,
about 126%, even with $900 million capital investment last year
and nearly $1.4 billion put into our pension and postretirement
plans, the majority of which was cash. These investments are a
clear and present signal of our confidence in the future of 3M and
will only serve to make us stronger yet.